US Vertex eyes renewable diesel, base oil functionality with Shell site

Author: Amanda Hay

2021/05/27

HOUSTON (ICIS)--A renewable diesel project is at the center of Vertex Energy’s purchase of Shell’s Mobile, Alabama, refinery, but the site’s base oil functionality adds upside, CEO Ben Cowart said on the transaction conference call.

"We have upside beyond renewables that ties to our core business," Cowart said of the refinery's value. "This is an amazing facility for the production of base oils, and that's a long-term part of our plan."

Vertex is a major processor of used oil and produces re-refined Group II base oil at its Ohio refinery. The company also has been a supplier of Group III base oils to the US market.

Initially, though, Vertex is planning a hydrocracker conversion that is expected to bring renewable diesel to market by the end of 2022.

Corporate advisor Dave Peel said the hydrocracker, which produces heavy olefin feedstock for chemicals from vacuum gas oil, is relatively new by refining standards.

"In terms of a conversion to renewable diesel, it really is a Rolls Royce," Peel said, which will allow for speed to market.

Vertex expects to be producing 10,000 bbl/day of renewable diesel within nine months of the project’s start, at which point the limitation will be hydrogen.

Peel said they are working with the current provider to add more hydrogen to be up to 14,000 bbl/day by mid-2023.

The refinery can produce more than 90,000 bbl/day and has 3m bbl of feedstock and product storage along with logistics assets.

Vertex plans to enter a five-year crude oil supply agreement with Shell and to source renewable feedstock from Synergy Supply & Trading.

Shell and Bunker One are expected to purchase 100% of the refinery’s conventional fuels, while Idemitsu Apollo will purchase 100% of its renewable diesel.

Thumbnail image shows a Shell gas and storage tank. Image by Shutterstock.