Valero idles 8 ethanol plants, reduces production at 6 facilities

By Erin Voegele | April 13, 2020

Valero Energy Corp. filed an 8-K with the U.S. Securities and Exchange Commission on April 13 announcing it has temporarily idled eight of its ethanol plants and is reducing production at its remaining six ethanol plants in response to falling demand due to COVID-19.

The filing provides investors with an update on the impact and effects of the COVID-19 pandemic and certain developments in the global oil markets on its business and operations.  

Valero explains that the demand for refined petroleum products coupled with the decline in the price of crude oil has resulted in a significant decrease in the price of the refined petroleum products manufactured by its refining segment. Because ethanol is primarily blended into gasoline, ethanol demand has also declined, as has the price of products manufactured by the company’s ethanol segment. While the gasoline markets have been significantly impacted, Valero explains that essential businesses continue to operate, including the critical logistics infrastructure to move and transport goods produced by those businesses, which has blunted the decrease in the demand for diesel. Demand for renewable diesel is consistent with the demand for diesel, Valero said, noting that its renewable diesel segment has not been impacted as significantly as its refining and ethanol segments.

Valero’s ethanol segment has temporarily idled eight ethanol plants and reduced the amount of corn feedstock processed at the company’s remaining six ethanol plants to address the decreased demand for ethanol. The 8-K does not specify which of Valero’s ethanol plants are idle and which have reduced production. The company’s 14 ethanol plants have a combined 1.73 billion gallons per year of production capacity.

The company’s renewable diesel segment includes operations of Diamond Green Diesel Holdings LLC, a consolidated joint venture with Darling Ingredients that operates an 18,000-barrel per day facility in Norco, Louisiana. The Diamond Green Diesel facility is currently undergoing an expansion that will more than double annual capacity to 675 M MMgy, or about 44,000 barrels per day.