Vertex Energy delays Alabama refinery renewables project by a quarter

Sept. 12, 2022
Vertex Energy is postponing mechanical completion of its renewable diesel conversion project at subsidiary Vertex Refining Alabama LLC’s refining and petrochemical complex in Mobile, Ala., amid ongoing supply chain disruptions.

Houston-based Vertex Energy Inc., a specialty refiner of alternative feedstocks, is postponing mechanical completion of its $90-100 million renewable diesel conversion project at subsidiary Vertex Refining Alabama LLC’s 75,000-b/d refining and petrochemical complex in Mobile, Ala., amid ongoing supply chain disruptions and procurement delays in bulk-material markets.

The strategic extension of the original construction timeline for the project to modify the refinery's existing hydrocracking unit to produce renewable diesel fuel on a standalone basis results from recent coronavirus (COVID-19)-induced product delays and global supply chain shortages in several previously unimpacted markets, including common pipes, valves, fittings, and certain base bulk materials, Vertex said on Sept. 13.

To ensure all necessary parts and materials are ready and on site ahead of shutting down the hydrocracker to execute conversion works—which was planned to occur in October 2022— Vertex said it is extending mechanical completion to first-quarter 2023 for targeted startup of the revamped unit’s initial 8,000-10,000 b/d of renewable diesel production in second-quarter 2023.

Deferral of construction works delays the project’s overall timeline by a quarter from the operator’s previous targets for mechanical completion and production startup by yearend 2022 and first-quarter 2023, respectively (OGJ Online, July 8, 2022).

The converted unit’s renewable diesel production volumes will subsequently ramp up to about 14,000 b/d, according to the operator.

Vertex said it expects its decision to extend the project’s timeline will result in a positive impact of about $15-17 million to its fourth-quarter 2022 gross margin by maintaining current operating levels through yearend 2022.

Despite the incremental delay, Vertex said the project remains on budget, with procurement of items with long lead times already completed. Construction of foundations and fabrication of piping for the project also are currently under way, the operator told investors in its second-quarter 2022 earnings presentation on Aug. 9.

During second-quarter 2022, the Mobile refinery’s crude oil throughput averaged 72,133 b/d and a production rate of 71,755 b/d for an overall quarterly utilization rate of 96%, Vertex said.

Once operable, the Mobile refinery’s converted hydrocracking unit—which previously produced olefins as feedstock for petrochemical manufacturers—will be capable of processing a wide range of organic, pretreated feedstocks, including soybean and corn oil, meat tallow, and waste vegetable oils, among others, according to the operator’s website.