Valero plans JV biodiesel plant with Darling International

San Antonio, Texas-based refiner Valero Energy (NYSE:VLO) said it plans to grow its diesel production through a joint venture with Irving, Texas-based Darling International (NYSE:DAR), which processes by-products of the food industry.

The proposed biodiesel plant in Louisiana is expected to produce 10,000 gallons per day, or 135 million gallons per year. The companies declined to reveal financial terms of the venture or a time line, but said they want to secure a loan guarantee from the U.S. Department of Energy.

The plant is expected to make biodiesel from feedstocks including used cooking oil and animal fat. Darling processes used cooking oil and by-products from the beef, pork and poultry processing industries, making them into tallow, hides, and animal feed.

The move represents Darling's first in the renewable fuel sector.

"We have long considered various paths that would allow Darling to participate in the country’s growing interest in using renewable fuels," CEO Randall Stuewe said in a news release.

Valero first entered the renewable sector this year with its high-profile purchase of seven corn-based ethanol plants from bankrupt VeraSun Energy for $477 million (see Valero eyes cellulosic ethanol with $477M VeraSun buy).

Valero also recently took an undisclosed stake in Houston, Texas-based Terrabon which developed a technology to turn municipal solid waste into potable water and transportation fuel. The technology can also be used as new method of desalination using highly efficient heat exchangers (see Waste Management takes stake in waste-to-fuel startup Terrabon).

The biodiesel facility is expected to be built adjacent to a Valero refinery near Norco, La.