Valero reports increased ethanol production, reduced RIN costs

By Erin Voegele | February 01, 2019

On Jan. 31, Valero Energy Corp. released fourth quarter and full-year 2018 financial results. The company’s ethanol segment reported a $27 million operating loss for the quarter and $82 million in operating income for the full year.

According to Valero, its ethanol segment reported a $27 million operating loss for the fourth quarter of 2018, compared to $37 million of operating income for the same period of 2017. The decrease in operating income was primarily attributed to margin pressure resulting from lower ethanol prices.

Ethanol production volumes for the fourth quarter averaged 4.3 million gallons per day, up 211,000 gallons per day when compared to the fourth quarter of 2017. The company said the increase is primarily due to added production from the three plants it acquired from Green Plains Inc. in November.

For the full year, Valero reported its ethanol segment reported $82 million in operating income, down from $172 million in 2017. Ethanol production volumes for 2018 averaged 4.109 million gallons per day, up from 3.972 million gallons per day in 2017.

During an investor call, Homer Bhullar, vice president of investor relations at Valero, said the ethanol segment is expected to produce 3.8 million barrels per day during the first quarter. For 2019, the company expects RIN expenses to be between $400 and $500 million, he added.

Within its refining segment, Valero reported biofuel blending costs reached $105 million in the fourth quarter, down $206 million when compared to the same quarter of 2017. For the full year, biofuel blending costs were $536 million, down $406 million when compared to 2017. The company primarily attributed the decrease to lower renewable identification number (RIN) prices.

Overall, Valero reported net income attributable to Valero stockholders of $952 million, or $2.24 per share, for the fourth quarter, compared to $2.4 billion, or $5.42 per share, for the same period of last year. For the full year 2018, Valero reported net income attributable to Valero stockholders of $3.1 billion, or $7.29 per share, compared to $4.1 billion, or $9.16 per share, for 2017.

Valero currently operating 14 ethanol plants with a combined production capacity of 1.73 billion gallons per year. The company also owns 50 percent of Diamond Green Diesel Holdings LLC, which operates a 10,000-barrel-per-day renewable diesel plant. In addition, Valero operates 15 petroleum refineries with a combined throughput capacity of 3.1 million barrels per day.