REG Upgrades Biodiesel Plant to Take Fats, WVO

REGalbertlea2Biodiesel giant Renewable Energy Group (REG) recently finished a $21 million upgrade to one of its biodiesel plants in Minnesota that allows the refinery to also use locally-sourced agricultural byproducts, such as animal fats, used cooking oils, inedible corn oils and yellow grease as well as vegetable oils. This REG news release says the Albert Lea plant is already cranking out a high-quality fuel.

REG LogoWithin days of start-up, all biodiesel produced met the company’s REG-9000® quality specifications, which exceed the industry’s ASTM B100 standard. The multiple feedstock product has been available since June 19, 2013 and enhances biodiesel product availability options as the State of Minnesota prepares to increase its diesel blending requirement from B5 to B10.

The company will hold a formal ribbon-cutting ceremony later this summer. REG has more than 225 million gallons per year of owned/operated production capacity at its network of refineries nationwide.

REG Restarts Texas Biodiesel Plant

REG New Boston1Biodiesel-producing giant Renewable Energy Group (REG) restarted an idled biodiesel plant in Texas. According to Biodiesel Magazine, the Iowa-based green energy producer re-opened the former North Texas Bio Energy, a commercial scale biodiesel production facility near New Boston, Texas, acquired by REG in October 2012:

[N]ow named REG New Boston, [the plant] employs 25 people and can produce 15 MMgy of biodiesel from recycled fats, oils and greases. The company scheduled a ribbon-cutting ceremony for June 28.

REG says the facility was idle for about four years and underwent some repairs and minor upgrades before the new start-up. The company also points out that besides the 25 workers at the plant, there will be indirect jobs, including truck drivers for the hundreds of inbound and outbound trucks that will channel through the plant each month.

REG Signs Agreement with Iowa Biodiesel Plant

reg-logoIt appears biodiesel giant Renewable Energy Group (REG) has inked a contract manufacturing agreement with an Iowa biodiesel maker. Biodiesel Magazine reports REG signed the 12-month contract with Iowa Renewable Energy LLC to purchase raw materials for the 30 MMgy multifeedstock plant and market biodiesel produced at IRE’s refinery.

“We are pleased REG has chosen to work with Iowa Renewable Energy,” said Ron Lutovsky, IRE’s chief operations officer and chief financial officer. “Our focus on fuel specifications and our BQ-9000 processes are aligned with REG’s commitment to biodiesel quality.”

Biodiesel from the IRE facility will be used to meet growing national and regional demand according to Gary Haer, REG’s vice president of sales and marketing. “We are working closely with the IRE team to include their gallons with biodiesel from our existing REG plant network to fulfill new and existing contracts.”

“IRE’s processing technology allows REG to expand our diverse raw material procurement strategy as well as our transportation and logistics programs to meet our growing customer demand,” said Dave Elsenbast, REG’s vice president of supply chain management.

REG was the actual general contractor and technology provider for the construction of the IRE facility back in 2007.

REG Plans to Buy Soy Energy 30 MGPY Biodiesel Plant

reg-logoThe nation’s largest biodiesel maker is going to get a bit bigger. Ames, Iowa-based Renewable Energy Group (REG) announced it is buying Mason City, Iowa’s Soy Energy and its 30-million gallon per year capacity biodiesel plant for $11 million in cash and the issuance of a $5.6 million promissory note to Soy Energy. This company news release says the plant was originally built in 2006, bought by Soy Energy and upgraded in 2010 to use more raw materials, such as animal fats and used cooking oil, but was shuttered last year.

“Renewable Energy Group’s offer provides the best value for Soy Energy unit holders while helping unit holders achieve their mission for promoting economic development in the area,” said Jeff Oestmann, Soy Energy’s President and CEO. “In addition, REG’s procurement know-how and proven business model of using lower cost raw materials makes them a reliable operator for this plant.”

REG plans to repair then restart the refinery and further upgrade the plant in the future. The acquisition would increase REG’s biodiesel production capacity to 257 million gallons annually. REG currently owns seven active biodiesel refineries in five states, including nearby plants in Newton and Ralston and Albert Lea, Minn.

“We are committed to the people of Mason City, Midwestern farmers and livestock producers and those who supply the fats, oils and greases we will buy,” said Daniel J. Oh, REG president and CEO.

The re-opening of the plant will put 30 full-time wage earners back on the payrolls.

Biodiesel Giant REG Has Best First Quarter Ever

reg-logoRenewable Energy Group (REG), the nation’s largest producer of biodiesel, posted its best first quarter ever. The Iowa-based producer of the green fuel announced its financial results for the quarter that ended on March 31, 2013, with the first quarter 2013 adjusted EBITDA at $22.0 million after adjusting for the $57.4 million related to the 2012 retroactive reinstatement of the Biodiesel Mixture Excise Tax Credit, commonly referred to as the blenders tax credit (BTC). This compares to the same quarter a year ago of an adjusted EBITDA of $12.7 million before including the allocation of the 2012 retroactive BTC of $10.4 million. REG sold 38.9 million gallons of biodiesel during the first quarter, up 14 percent from the first quarter of 2012:

“This was our strongest first quarter ever for production and gallons sold,” said Daniel J. Oh, President and Chief Executive Officer. “Biodiesel demand is being driven by a number of positive factors including the 2013 RVO and biodiesel’s ability to meet certain advanced biofuel targets that are not being fulfilled by imported sugar cane ethanol.”

Oh added, “Demand also benefited from the reinstated tax credit, and new counter-seasonal markets such as Northeast heating oil. We are optimistic about industry conditions for the months ahead, and are taking concrete actions to capitalize on them.”

REG officials also credited their use of biodiesel Renewable Identification Numbers (RINS) to fulfill the advanced biofuel and renewable fuel (corn ethanol) renewable volume obligations (RVO) for helping the bottom line. REG also has a Rochester, New York distribution point to help boost winter heating oil mixed with biodiesel demand.

REG Makes Case that Biodiesel Helps Food Supply

reg-logoApparently tired of false claims that biodiesel takes from the food supply, biodiesel maker Renewable Energy Group has put out a whitepaper that actually shows how the green fuel is helping the food supply. Biodiesel Magazine has this good summary of “Food THEN Fuel: How the American Biodiesel Industry Is Strengthening Food Security.”

“[C]ritics of biofuels have [tried] to convince the public that biodiesel is merely part of an amorphous group of energy sources that share the same alleged disadvantages,” the paper states. “Indeed, they would have the public believe that biodiesel not only depletes the food supply by creating a competing use in fuel, but that it also contributes to higher prices at the grocery store. In reality, biodiesel is playing a vital role in strengthening America’s food security and reducing rising pressures on food prices. Rather than competing with food, biodiesel production applies a “food THEN fuel” approach by adding economic value for food industry byproducts and sending economic signals to the market to produce more. Biodiesel production helps make the food and agricultural sectors more profitable, incentivizes the production of protein and generally helps keeps grocery items, like meat, from increasing in price more than they already would due to inflation and petroleum energy costs.”

Some of the facts REG cites are that soybean oil is the historic primary feedstock for U.S. biodiesel and still makes up the largest single feedstock used. With the soy oil used for biodiesel, that still leaves more than 80 percent of the bean to be made into meal for livestock, keeping feed costs down for livestock producers.

In addition, other feedstocks for biodiesel, such as animal fats and used cooking oils, have created value-added markets in those food industries to help farmers and restaurant owners make more money and allow them to them to produce even more food at cheaper prices.

Stock Rising for Biodiesel Giant REG

REG logoThings are looking up for Renewable Energy Group. According to this article on DailyPolitical.com, Piper Jaffray has increased the Iowa-based biodiesel maker’s stock price target from $9.00 to $13.00 in a research note released on Friday morning:

“We are lifting our estimates and raising our price target due to strengthening industry fundamentals where biodiesel RINs continue to improve and feedstock costs are declining. Biodiesel RINs are currently trading at ~$0.80 up from approximately $0.50 at the beginning of the quarter due to the unique ability for biodiesel RINs to qualify for both the advanced biofuel market and the ethanol market and REGI is well positioned to benefit from this opportunity. In addition to higher RINs values, feedstock costs, including soybean oil and low cost feedstocks, have been falling since February. We are adjusting our model where 1Q13 adjusted EBITDA is modestly above management’s previously guided range of $5-$15 mil and our 2Q13 adjusted EBITDA is at the high end of management’s $15-$25 mil range.,” Piper Jaffray’s analyst commented.

The article goes on to say that several other analysts have issued buy ratings for REG’s stock.

Biodiesel Giant REG Inks Deal for Fuel Tax Software

reg-logoThe nation’s largest biodiesel maker, Ames, Iowa-based Renewable Energy Group (REG), signed a multi-year deal with energy industry software and services company FuelQuest Inc. Biodiesel Magazine reports the deal will give REG a more accurate, transparent and agile way to calculate fuel taxes on invoices:

“Our business is growing quickly across North America,” said Jonathon Schwebach, senior manager of tax at REG. “With Zytax Determination integrated into our JD Edwards back office, we expect to achieve efficient automation of tax calculations for all of our fuel transaction invoices, which will also reduce tax accounting and support costs within the organization. Zytax Determination will allow us to scale with confidence, meeting the expectations of our customers as a reliable supplier providing accurate invoices and a seamless customer experience.”

FuelQuest Zytax Determination automates the identification and calculation of taxes for fuel, including petroleum products, natural gas, biodiesel and other products. A leading cause of inaccurate fuel invoices is incorrect tax calculations, which leads to higher internal processing and support costs as well as increased levels of customer dissatisfaction.

Phil Fraher, COO and CFO of FuelQuest [says,] “Fuel taxes are highly complex and continuously evolving. Automating tax calculations with Zytax Determination software that tracks and applies rates and rules for all major jurisdictions is the only way to achieve operational scale and reduce risk.”

The article goes on to say that Zytax Determination will give biodiesel makers more financial control, more reliable and trusted invoicing, and streamlines complex and changing tax rates and rules.

More B For Me Please

More B For MeMore biodiesel please. If you were on the look out for biodiesel it could definitely be seen during the 10th Annual National Biodiesel Conference in Las Vegas. Last year was a roller coaster year for the industry but some good things happened, one of which was the $1 per gallon tax credit coming back. Another – increasing the volume of biodiesel as part of the Renewable Fuel Standard (RFS).

Biodiesel can be a good tool in a farm business but Alicia Clancy, Manager of Corporate Affairs for the Renewable Energy Group (REG) said that biodiesel can play a bigger role than it currently is. What does she mean? Biodiesel can be used in farm equipment such as tractors and trucks and many use B2 blends. But, said Clancy, equipment and many trucks are approved to use up to B20.

Choose BiodieselIt is this fact that spurred the biodiesel promotion, More B for Me. Clancy said the goal of the promotion is to increase awareness of biodiesel use in farming equipment. As part of the campaign, farmers (or consumers) are encouraged go to their local co-op or gas station and ask them to offer higher blends of biodiesel and then use blends up to B20.

Here is how it works. Go to www.morebforme.com to register. You must be a farmer in Iowa (although everyone should ask for more biodiesel). REG, along with all the sponsors of the program including the Iowa Soybean Association and the soybean checkoff, Iowa Biodiesel Board and the Iowa Renewable Fuels Association, is giving away 10 – $1,000 dollar certificates at the end of March, just in time for planting season.

Listen to my interview with Alicia here: More B For Me

2013 National Biodiesel Conference Photo Album

REG Reduces Debt with Seneca Payoff

REG LogoThe country’s largest biodiesel producer, Renewable Energy Group (REG), has paid off its long-term debt obligations of its operating biorefinery subsidiary in Seneca, Illinois. REG Seneca, LLC retired its outstanding long-term debt obligation of $34.5 million on December 21 with cash generated from operations since April 2010. This amended and restated credit agreement went into effect April 2010 with Portigon AG (formerly WestLB AG).

“When we acquired Seneca, we believed the restrictive debt structure was appropriate because the plant was purchased out of bankruptcy. As REG Seneca came online and our state-of-the-art production technology was proven, the natural cash flow generated from this 60 million gallon refinery allowed us to pay off the debt,” said Daniel J. Oh, REG President and CEO.

Oh added, “This debt repayment makes it more likely that we will be able to grow our business, implement new refining technologies, and grow our employee base.”

Fiscal Cliff Aversion Benefits Biodiesel

The U.S. House of Representatives burned the midnight oil of the first day in the New Year and signed the Senate’s “fiscal cliff” bill. The package includes several tax extenders items, including the reinstatement of the 2013 biodiesel blenders tax credit as well as retroactive credit for 2012. Shortly after the vote, the biodiesel industry reacted including the Renewable Energy Group (REG), the country’s largest biodiesel producer.

us-capitol-fiscal-cliff-vote Photo: Bloomberg | ANDREW HARRAR“We are thankful that Congress and the President support the growth of the biodiesel industry through the reinstatement of the credit and for recognizing biodiesel’s important role in energy and food security and job creation. This tax credit provides certainty for our petroleum distributor customers and, in turn, market stability for commercial biodiesel producers like us.”

The National Biodiesel Board will have something good to celebrate during its 10th Annual Conference: Momentum next month. The $1-per-gallon biodiesel tax incentive was first implemented in 2005. Congress has allowed it to lapse twice, in 2010 and again in 2012. Under the legislation approved by the House on Tuesday and first passed by the Senate on Monday, the incentive will be reinstated retroactively to Jan. 1, 2012 and through the end of 2013. Each time the tax credit lapsed, thousands of jobs were lost and production dropped.

“It’s been a long year with a lot of missed opportunity and lost jobs in the biodiesel industry. But we’re pleased that Congress has finally approved an extension so that we can get production back on track,” said Anne Steckel, vice president of federal affairs at the National Biodiesel Board (NBB). “This is not an abstract issue. In the coming months, because of this decision, we’ll begin to see real economic impacts with companies expanding production and hiring new employees.”

Randy Olson, executive director of the Iowa Biodiesel Board, added,  “The passage of the biodiesel tax incentive will mean tangible job creation in Iowa and beyond.  Encouraging production of American-made fuel brings economic development and energy security – two of our nation’s top priorities.  This is an investment in American energy that will pay dividends.  Although the federal Renewable Fuel Standard helped create market stability, one Iowa plant was forced to shut its doors temporarily. The reinstatement of the tax incentive will help Iowa biodiesel reach its full potential.  In 2013, we can expect a thriving industry that contributes even more to the state’s economy.”

It is expected that President Obama will sign the package quickly. The new Congress begins on January 3, 2013 and members have stated that they will continue to work through the country’s financial issues.

REG Newton Extends Loan Agreement

REG LogoRenewable Energy Group (REG) has announced that its REG Newton, LLC loan with AgStar Financial Service, PCA was extended for one additional year. The biodiesel facility entered into this debt agreement with AgStar in conjunction with the related March 2010 acquisition of the assets of Central Iowa Energy, LLC.

“We’re pleased that the lender syndicate saw fit to extend this note in a routine manner,” said REG Chief Financial Officer, Chad Stone.

The new maturity date is March 2014, and all material terms remain the same for the 30 million gallon per year biorefinery.

Biodiesel Maker REG to Go Into Four NY, NJ Terminals

The Big Apple (and the surrounding area) will be turning a little greener. Iowa-based biodiesel producer Renewable Energy Group (REG) announced its biodiesel will be available at new positions at four biodiesel terminals in the New York metropolitan area.

This company press release says the move will help augment the area’s heating oil and diesel supplies:

“Gaining access to the largest biodiesel terminal network in New York is part of Renewable Energy Group’s strategy to expand into the Northeast market as a reliable biodiesel supplier,” said Renewable Energy Group’s (REG) President and CEO, Daniel J. Oh.

“REG has biodiesel on-site in New Hyde Park today to allow area distributors and heating oil retailers to increase supply as the New York City biodiesel blend (B2) requirement goes back into effect December 1,” added Gary Haer, Vice President, Sales and Marketing for REG. The requirement first went into effect October 1, but was waived as a result of tight fuel supply issues due to superstorm Sandy.

No timetable was given as to when these additional positions will be ready to go.

REG Buys Georgia Biorefinery

Renewable Energy Group (REG) today announced the purchase of a 15 million gallon-per-year biodiesel production plant near Atlanta, Georgia.

The multi-feedstock facility, which will operate as REG Atlanta, LLC, is located in Ellenwood, Georgia, 11 miles southeast of Atlanta with easy access to major Southeast transportation routes. REG acquired the former BullDog Biodiesel operation for cash and in-kind consideration of approximately $2.6 million. No stock was issued related to the deal.

“Renewable Energy Group is focused on strategically expanding our footprint of biodiesel production facilities,” said REG President and CEO, Daniel J. Oh. “Once repaired, upgraded and restarted the REG Atlanta facility will offer us additional long-term capacity to meet high-demand diesel markets across the Southeast.”

The company has not yet set a production date for the re-start of the former BullDog Biodiesel facility, which has run intermittently since January 2008.

REG tolled the facility from April 2011 through April 2012 to support REG’s biodiesel sales in the Southeast. BullDog ceased operations in April 2012 due to a combination of poor market conditions and upgrades needed to make the facility more efficient.

“Our team has demonstrated a successful model for integrating new technologies into our network and upgrading facilities to utilize lower cost raw materials,” said REG Vice President, Manufacturing, Brad Albin. This refinery was designed to produce biodiesel from a variety of feedstocks, including used cooking oil.

Since 2008, Renewable Energy Group has acquired ten biodiesel-related firms or production facilities. Last month, REG acquired a 15 million gallon-per-year biodiesel facility in New Boston, Texas slated to begin production in the first quarter of 2013.

REG Reports 3rd Quarter Financial Results

The Renewable Energy Group (REG) has reported its third quarter financial results. Revenues were $322.9 million, an increase of 26 percent compared to revenues of $256.5 million for the same period in 2011. Third quarter 2012 adjusted EBITDA was a loss of $2.3 million, a decrease of 105 percent compared to $46.7 million for the same period in 2011. A few other third quarter highlights:
  • 2 million gallons sold, up 40 percent year-over-year
  • Cash flow from operations of $6.2 million
  • Adjusted EBITDA loss of $2.3 million due to risk management transactions and RIN price declines
  • Distribution expanded with new terminal locations in New Mexico and California
  • Acquired a 15 million gallon-per-year multi-feedstock plant in New Boston, Texas, after the close of the quarter

“REG achieved meaningful success in the quarter, even with the adjusted EBITDA loss that was caused by accounting for risk management positions and RIN price declines,” said Daniel J. Oh, President and Chief Executive Officer of REG. “Our revenues continued to increase, our gallons sold were up 40 percent compared to third quarter 2011, we acquired additional production capacity at an attractive price, and we expanded distribution.”

Oh continued, “We remain optimistic about the growing biodiesel industry and are especially pleased with EPA’s formalized 2013 Renewable Volume Obligation (RVO). With an RVO that is 28 percent above this year’s, the industry demand outlook is solid. Our acquisition of the New Boston, Texas facility is evidence of our long-term confidence and our commitment to remain a leader in the industry.”