Valero energy’s Q3 ethanol performance report showed the ethanol business has generated operating incomes of $35 million for Q3 this year, down $163 YoY due to lower gross margins driven primarily by a decline in ethanol prices. So far this year, the ethanol division has generated a total operating income of $155 million, contributing 2.71% of the company’s total operating profits, and down 75.32% YoY.
Average ethanol production volumes were at 3.9 million gallons per day in Q3 2015, up 297,000 gallon per day on 2014 Q3 levels. This is as a result of the incremental production volumes from the newly acquired Mount Vernon plant which began operating in August 2014. Demand for ethanol in the US remans strong, driven by strong demand for gasoline. Valero are also looking further at opportunities to export to other foreign markets.
The third quarter results didn’t give a break down on details of productions of the Diamond Green Diesel plant, which has the capacity to produce 11,000 barrels per day of renewable diesel made from animal fat, restaurant grease, corn oil, etc. Valero told PRIMA they are continuing to evaluate expansion plans to meet anticipated demand for renewable diesel fuel.
Despite falling profits in the ethanol business, the refining sector still saw an increase of $6.31 million in operation profits, as the refining margin increased from $11.81 per barrel last year to $14.38. This was mainly driven by stronger gasoline margins and margins of some other products.