Betting On Renewable Diesel: Valero or Darling?
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...
Sketches of DuPont’s Cellulosic Ethanol Project in Nevada, Iowa
Jim Lane It towers above the surrounding Iowa countryside like the Launch Assembly Building lords it over Cape Canaveral it’s the new DuPont (DD) cellulosic ethanol project, on the outskirts of the town of Nevada. Functional yet inspiring, imposing yet accessible when it opens before year end 2014 it is sure to be a monumental addition to the cellulosic biofuels landscape. Last week we wrote: “There are strategic reasons to develop this new industrial bioscience business in central Iowa not just the “we’d love to have you, wages are low, cost of...
Covanta and Green Plains Partners Don’t Let A Crisis Go To Waste
by Tom Konrad, Ph.D., CFA
Last week, two of the stocks in my Ten Clean Energy Stocks model portfolio cut their dividends. Covanta Holding Corp (CVA) dropped its quarterly payout from $0.25 to $0.08 (a 68% cut) while Green Plains Partners (GPP) slashed its quarterly distribution from $0.475 to $0.12, a drop of 74.75%.
Before reducing their dividends, both companies had payout ratios near 100%, meaning that substantially all of their free cash flow was going to pay dividends. In general, companies are very reluctant to cut their dividends because it is a signal that their management thinks they cannot grow...
Conversions To Renewable Diesel
by Helena Tavares Kennedy
The seasons are changing in many parts of the world right now, but what really is changing this autumn is how the world is looking at renewable diesel. Phillips 66 and REG’s announcement about a new renewable diesel plant on the U.S. West Coast planned for 2021 comes after a notable increase in refineries that are being converted and changed over to renewable diesel. Change is good, especially in this case.
As Bob Dylan sang, “For the loser now, Will be later to win, For the times they are a-changin’.” And who knew he was singing about the RFS...
Senator Inhofe: 9x Cost for Biofuels Is Too Much, but 29x Was OK for...
Jim Lane Arch-critic of the cost of military biofuels Oklahoma Senator James Inhofe comes under scrutiny over earmarks for natural gas-based military fuels that cost 29 times more than conventional fuels. In Washington, the battle over advanced military biofuels took a turn for the bizarre this week, amidst revelations that a leading Senate sponsor of legislation to restrict Navy purchases of advanced biofuels, James Inhofe of Oklahoma, had previously secured earmarks for Syntroleum Corporation (SYNM) to produce natural gas-to-liquid alternative fuels which were priced 29 times higher than conventional fuels. Overall, Syntroleum reported receiving nearly $6...
A Simple Fix To Farmer’s Tariff Woes?
by Jim Lane
As most know by now, the US and China have fired opening salvos in a trade war, with the US targeting a range of commodities including steel and aluminum, and China retaliating with, to date, stiff tariffs on a range of agricultural products, but primarily hitting soybeans and corn because of the volume of trade in those agricultural goods. Overall, China imports $24 billion of agricultural goods from the US and is a leading export market for the US.
The trade wars prompted North Dakota farmer Kevin Skunes, president of the National Corn Growers Association, to state:
“Farmers are...
Biodiesel Tax Credit Back In US Budget Deal
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...
Advanced biofuels pioneer Terrabon files for chapter 7 bankruptcy: One-off or trend?
Jim Lane Closely-watched green gasoline producer collapses as Waste Management (WM) declines next financing round. What does it mean for companies like Fulcrum Bioenergy, Enerkem, Agilyx, Agnion, Renmatix, Genomatica, and InEnTec? The Digest looks at the inside story. In Texas, Terrabon filed for Chapter 7 bankruptcy protection; the company’s operations will cease and a trustee will be tasked with liquidating the company’s assets for the benefit of creditors. The complete Chapter 7 announcement is here. In a statement, Terrabon’s leadership said that company could not obtain additional corporate funding to finish developing and engineering its...
Gevo’s Glow
Specialty chemicals developer Gevo, Inc. (GEVO: Nasdaq) is celebrating a string of market wins for its renewable chemicals and fuels. Since its beginning thirteen years ago this month, Gevo has been doggedly perfecting its synthetic biology and chemical technologies and turning it into products that are in demand by consumers and industry. Last week shareholders were treated to an announcement by the U.S. Environmental Protection Agency (EPA) raising the amount of isobutanol for on-road use to 16% blend level from 12.5%. As a producer of renewable isobutanol Gevo will be a direct beneficiary of the EPA action. Following directly on the heels of that news,...
REG Buys Imperium Renewables
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...
Insider View on REGI
by Debra Fiakas CFA Insider buying is not one of my regular screening criteria in selecting long plays in the small cap sector. However, to learn a chief executive officer has taken out his/her check book to buy shares in their company is influential. In November 2016, the CEO of biofuel producer Renewable Energy Group (REGI: Nasdaq) reported an increase in his stake in the company in recent months. With REGI shares just above the prices paid by the CEO just three months ago, it is timely to look more closely from the outside. In...
Rapidly Growing Alternative Energy Companies
The last post highlighted several companies in the alternative energy, conservation and environment technology fields that have delivered exceptional price performance over the last year. Prospects for growth in sales or earnings appeared to be key drivers of the price movement. It makes sense to seek indicators of growth as cues for those companies that may become tomorrow’s price movers.
Crystal Equity Research’s novel alternative energy indices were a good place to go on a ‘quest for growth.’
Beach Boys Index - Biodiesel
The two analysts who publish estimates for Renewable Energy Group (REGI: Nasdaq)apparently expect a surge in growth in the current year followed by a leveling...
The Future of Alternative Fuels: Coal-to-Liquids
Last week I wrote a post about the future of ethanol. In it, I promised a sister piece on the future of coal-to-liquids (CTL). This comes a bit later than initially promised…I apologize to those who had been holding their breaths. I already wrote a post discussing the future of CTL not very long ago. I’m thus not going to repeat myself here, but rather supplement that post with some new info. CTL In The News As stated at the outset of the ethanol article, what drove me to write a series of posts on alternative...
Abengoa Bioenergy files for Chapter 11
In Missouri, Abengoa (ABGB) Bioenergy US Holding, LLC filed for Chapter 11 bankruptcy relief in the US Bankruptcy Court for the Eastern District of Missouri on behalf of itself and 5 of its US bioenergy subsidiaries. The companies involved in the filings include the US holding company; companies that own and operate four of Abengoa Bioenergy’s six US starch ethanol plants; as well as various support/service companies for Abengoa’s US bioenergy operations.
This action follows the filing of two separate involuntary bankruptcy proceedings in Nebraska and Kansas earlier this month concerning the company’s starch ethanol facilities located in Ravenna and...
ADM Selects Columbus, Nebraska as First Location for Ethanol Expansion
Archer-Daniels-Midland Co. (ADM) announced that it has selected Columbus, Nebraska as the first location for its ethanol capacity expansion. The Company will build a dry corn milling plant with an initial annual capacity of 275 million gallons adjacent to the existing ethanol plant in Columbus. In September, ADM previously announced that it planned to expand ethanol capacity by 500 million gallons through the addition of two dry milling plants at existing ADM ethanol facilities. Construction, expected to be complete in early 2008, is subject to applicable governmental approvals.
Gevolution 2014: Gevo’s Progress, And Detours
Jim Lane This week, Gevo (GEVO) reported its year-end results, generally in line with expectations, with a $0.35 loss per share and $24.6M in the bank. Given the company’s rate of progress with isobutanol, the cash burn rate, the low share price, and high prices for ethanol the company announced that it is “transitioning the Luverne plant to the production of both isobutanol and ethanol…Producing both ethanol and isobutanol allows Gevo to fully utilize the Luverne plant and increase cash flow as Gevo continues to commercialize its isobutanol production capabilities.” “Our original vision was to focus...
