Renewable Diesel and Biodiesel

Jim Lane Sales increase 35 percent at participating test sites and survey results reveal driver preference for algae-based Soladiesel over conventional fuels. In California, Propel Fuels and Solazyme (SZYM) announced that sales grew by 35 percent at Propel stations, offering SoladieselBD in a B20 blend during a 30-day retail pilot program, compared to non-test sites. The pilot was conducted at Propel’s Clean Fuel Points in Redwood City, San Jose, Berkeley, and Oakland. In addition, a follow-on consumer preference study with Propel’s customers found 92 percent of participants noted that they would be more likely to...

Valero Energy (VLO:  NYSE) recently disclosed ongoing discussions to expand its renewable diesel production to a second plant that would be built and managed by its Diamond Green Diesel joint venture with Darling Ingredients (DAR:  NYSE).  The proposed plant that would be located in Port Arthur, Texas and turn out 400 million gallons of renewable diesel and 40 million gallons of naptha per year.  As a food by-products processor Darling has easy access to low-cost used cooking oils and animals fats that serves as the feed stock for Diamond Green’s renewable diesel production.  Valero management has cited increasing global demand for low- to no-carbon...

Jim Lane “On the way” forever, talked up by all, deployed by some – technologies that handle high free fatty acid feedstocks like used cooking oil are coming into their hey-day, via players like REG, Novozymes, Pacific Biodiesel, Blue Sun, Piedmont, COMAC and more. Christmas come early for advanced biofuels? One of the most alluring targets in advanced biofuels although cruelly mis-named is in the world of free fatty acids. Most of the oils currently used for biodiesel are sourced from soybeans, palm or rapeseed, and precisely because they contain less than 0.5%...

by Debra Fiakas CFA Who doesn’t like a bargain?  FutureFuel Corporation (FF:  NYSE) is trading near $13.15 per share, below nine times net earnings.  Yet, the enticing earnings multiple might be only part of the story. The stock has gapped down in price twice in the last six months, trailing off after each leg down.  The stock now appears oversold. Based in Missouri, FutureFuel produces biodiesel and biobased speciality chemical products.  In the twelve months ending June 2014, the company reported $396.9 million in sales, providing $53.5 million in net income or $1.52 per share. ...

Preparing for a world in which financing will be much more difficult to come by, I have been selling companies which are likely to need financing in the next couple of years.  A listing of the companies I've discussed so far is at the end of this entry. My sale of Nova Biosource Fuels (AMEX:NBF) continues my general moves out of biofuels, also discussed in my entries on Pacific Ethanol and Dynamotive Energy Systems.  I have long argued that electric propulsion is a superior way to power ground transport than even "Second Generation" biofuels such as cellulosic ethanol.  My...

by Debra Fiakas CFA   Few would make the connection, so Methes Energies International (MEIL: Nasdaq) chief executive office explains his company’s unusual business model in McDonald’s terms.  Methes, which is a contraction of ‘methyl ester,’ has developed a biodiesel system that accommodates various feedstocks that yield methyl esters.  The system is a handsome, compact configuration of stainless steel tanks and piping that are all capable of automated operation. The company operates its own commercial-scale facilities in Ontario, Canada.  Sales of biodiesel represent the majority of Methes revenue, which totaled $10.3 million in the twelve months ending...

Jim Lane The biggest US biodiesel, renewable diesel producer Renewable Energy Group (REGI), or "REG" buys the biggest US facility in asset deal. The fully-operational 100-million gallon nameplate capacity biorefinery will be renamed REG Grays Harbor. The facility includes 18 million gallons of storage capacity and a terminal that can accommodate feedstock intake and fuel delivery on deep-water PANAMAX class vessels as well as possessing significant rail and truck transport capability. REG will pay Imperium $15M in cash and issue 1.5 million shares of REG common stock in exchange for substantially all of Imperium’s assets. In addition to...

Jim Lane A now-complete 142 million gallon green diesel monster project will easily deliver big on renewable energy targets and greenhouse gas emissions reduction. But it also offers a material path to profits for its parents, Valero Energy and Darling International. In Louisiana, Darling International (DAR) announced that Diamond Green Diesel, the joint venture between Valero (VLO) subsidiary Diamond Alternative Energy LLC and Darling International , has reached mechanical completion and the startup process will lead to full production of renewable diesel. Once in full operations, the 9,300 barrel-per-day (142.5 million gallon) plant in Norco,...

The first and last word in any discussion of biofuels should always be "Feedstock."  Feedstock is the "Bio" out of which biofuels will eventually be made, whether it be corn, sugar, jatropha, algae, palm oil, switchgrass, forestry waste, or municipal solid waste.   Before the era of peak oil, we lived in a world of plenty, which meant that we could squander energy, not only by driving Hummers, but by feeding energy intensive products such as corn crops to livestock, and by dumping "free" sources of energy such as garden waste and used cooking oil into landfills. The era of...

by Debra Fiakas CFA This week Darling Ingredients (DAR:  NYSE) reported earnings of $100,000 on net sales of $874.7 million in the first quarter ending March 2015.  Darling is a recycler of sorts, collecting by-products of the food production industry and recycling the left-overs and waste into proteins, fats and leathers.  Nothing goes to waste.  Every last chicken feather, hide, gallon of used cooking grease and cake crumb gets up-cycled to a usable material for feed, food, fuel or clothing.  Its customers include pet food producers, personal care manufacturers and textile users, among others. Darling used...

by Jim Lane In Washington, the US Congress passed its budget deal, and among the items in the deal was a retroactive restoration of the $1 per gallon biodiesel tax credit for 2017. The bill did not include a provision for 2018 and future years. The budget compromise had run into headwinds in the Senate, in the form of a voting delay imposed by Rand Paul of Kentucky, while opposition in the House from a group of Democrats and hardline conservatives had put the bill into some degree of jeopardy.Renewable Energy Group CEO Randy Howard said “We are pleased that Congress recognized...

by Debra Fiakas CFA Earlier this week FutureFuel Corporation (FF:  NYSE) reported financial results for the second quarter ending June 2015.   Sales of the company’s biodiesel and specialty chemical products increased 53.7% to $104.6 million compared to the prior-year quarter when reported revenue was $68.0 million.  The company delivered a profit as usual, but traders appeared unimpressed.  The stock gapped lower on the news and two days later set a new 52-week low price.  Granted net income was lower year-over-year by 30.9%, coming in at $3.8 million or $0.09 per share.  A closer look...