Darling, Valero apply for DOE loan guarantee

By Susanne Retka Schill
Posted September 15, 2009, at 2:50 p.m. CST

The nation's largest independent renderer, Darling International Inc. has teamed up with Valero Energy Corp. to apply for a U.S. DOE loan guarantee to build a facility capable of producing over 10,000 barrels per day (135 MMgy) of renewable diesel on a site next to Valero's St. Charles oil refinery near Norco, La.

The two are planning a joint venture to build the proposed facility to convert waste animal fats and waste vegetable oil into renewable diesel. Darling and Valero applied for a loan guarantee from the U.S. DOE $8.5 billion fund for loan guarantees for innovative technologies for energy efficiency, renewable energy and advanced transmission and distribution. Brad Phillips, treasurer of Darling International, said they expect to be competing with numerous applications from solar, geothermal and other new technologies for the loan guarantees. The companies should learn by mid-November if they've made the first cut, with the final awards not due to be announced until early 2010.

"We have long considered various paths that would allow Darling to participate in the country's growing interest in using renewable fuels," Darling CEO and chairman Randall Stuewe said. "We believe that the combination of Darling's ability to provide low-cost carbon-friendly feedstocks and Valero's experience as North America's largest independent petroleum refiner and marketer has the potential to create a sustainable biofuel facility geared toward meeting America's growing renewable energy demands."

Valero, the nation's largest oil refiner, entered the biofuels market this past year with the purchase of seven Midwest ethanol plants from bankrupt VeraSun Energy Corp. giving it a combined ethanol capacity of 780 MMgy.

Darling will be making its first venture into the biofuels arena, although it has long been a supplier of tallow and yellow grease to the biodiesel industry. The company estimates it handles about 30 percent of the nation's waste fats and oils among independent renderers, and about 15 percent of the captive renderers such as Cargill Inc., Tyson Foods Inc. and Smithfield Foods Inc. "Many times in the past few years we've turned down offers for long-term contracts with biodiesel producers," Phillips said. For some time, the company has been studying the biofuels arena and "looking for the right partner," he said. The company is not announcing the technology provider at this time, although Phillips said it will be the type of hydrotreating process that the oil refinery industry is familiar with that has will be down-sized into a smaller 10,000 barrel-per-day size.