Vertex Energy provides progress and strategic timeline update of mobile refinery renewable diesel conversion project.
Vertex Energy, Inc. (NASDAQ:VTNR) (“Vertex” or the “Company”), a leading specialty refiner and marketer of high-quality refined products, provided an update on the Company’s Mobile, Alabama Refinery renewable diesel conversion project, including a strategic extension of the planned construction timeline.
As previously disclosed, Vertex is currently working on completing a $90-$100 million capital project designed to modify the Mobile Refinery’s existing hydrocracking unit to produce renewable diesel fuel on a standalone basis.
Upon completion of the conversion project, the refinery is expected to commence production of approximately 8,000 – 10,000 barrels per day (bpd) of renewable diesel, with production volumes anticipated to subsequently ramp up to approximately 14,000 bpd.
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This project seeks to capitalize on the rapidly growing demand for advanced sustainable fuels, while further expanding upon Vertex’s commitment to supply lower carbon fuels solutions.
After a thorough review of project execution risk by the Company, mechanical completion of the Mobile Refinery’s renewable diesel conversion project has been proactively extended from its initial target of year-end 2022, to the first quarter of 2023.
These risk considerations are the result of recent COVID-19 induced product delays and global supply chain shortages in several previously unimpacted markets, including common pipes, valves and fittings, and certain base bulk materials.
Limited visibility into a solution for these challenges, combined with the notable financial benefits associated with reduced downtime and extending current operations, have allowed the Company to respond by extending the project timeline to ensure all necessary parts and materials are ready and on-site prior to shutting the hydrocracker unit down.
Management now expects mechanical completion to occur in the first quarter of 2023, with production anticipated to begin in the second quarter of 2023, an extension of the previously communicated timeline of approximately one quarter.
Management estimates that its decision to extend the project timeline will result in a positive impact to fourth quarter 2022 gross margin of approximately $15 to $17 million, by maintaining current operations through year end 2022, assuming current refining spreads at the time of this announcement.
Benjamin P. Cowart, President and CEO of Vertex, who continued:
I am pleased with the team’s ability to remain nimble in a highly dynamic market environment.
“While we are eager to begin the production of renewable diesel, we are confident in this decision to extend the timeline, while seeking to achieve an improvement in safety and reduction in project risk, compounded by the expected incremental financial benefit of maximizing participation in current market economics.”
“We look forward to continuing to execute the project on budget, as well as advancing our commitment to supplying lower carbon fuel solutions to the market.”
ABOUT VERTEX ENERGY
Houston-based Vertex Energy, Inc. (NASDAQ: VTNR), is an energy transition company focused on the production and distribution of conventional and alternative fuels. Vertex owns a refinery in Mobile (AL) with an operable refining capacity of 75,000 barrels per day and more than 3.2 million barrels of product storage, positioning it as a leading supplier of fuels in the region.
Vertex is also one of the largest processors of used motor oil in the U.S., with operations located in Houston and Port Arthur (TX), Marrero (LA), and Columbus (OH). Vertex also owns a facility, Myrtle Grove, located on a 41-acre industrial complex along the Gulf Coast in Belle Chasse, LA, with existing hydroprocessing and plant infrastructure assets, that include nine million gallons of storage.
The Company has built a reputation as a key supplier of base oils to the lubricant manufacturing industry throughout North America.
Highlights:
- Company announcing a proactive extension of the mechanical completion target to first quarter of 2023
- Decision prompted by expanded supply chain disruption and procurement delays in historically unaffected bulk material supply markets
- Extension expected to drive an estimated $15 – $17 million of incremental gross margin in the fourth quarter of 2022, while further enhancing safety, mitigating project execution risk, and improving down-time visibility
- Project remains on budget, with significant project milestones achieved to date including foundation work and long lead-time item procurement
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Vertex Energy Provides Progress & Strategic Timeline Update of Mobile Refinery Renewable Diesel Conversion Project, September 12, 2022
