Renewable Diesel is Out: Unexpected Shifts Back to Conventional Fuel at Vertex Energy

Vertex Energy Focuses on Conventional Fuel at Mobile Refinery

Vertex Energy, Inc., a company known for refining and selling fuels, shared important news for the second quarter of 2024. The spotlight is on their Mobile Refinery in Alabama, which is key to their plans during a tough time when the market is challenging.

Mobile Refinery’s Performance

The Mobile Refinery, a major facility for Vertex Energy, continued running safely during the second quarter of 2024. The refinery processed 67,758 barrels of oil each day, showing it can keep up production even when times are tough.

The refinery produced valuable products like gasoline, diesel, and jet fuel, which made up 64% of its total output. However, profits from these products dropped because the market was difficult. The difference between the cost of crude oil and the price of finished products, known as crack spreads, decreased by 28%, affecting the refinery’s earnings.

Changing Direction from Renewable Diesel: The “Pause and Pivot” Plan

Facing these market challenges, Vertex Energy decided to make a big change called the “pause and pivot” plan. This means they are temporarily stopping renewable diesel production at the Mobile Refinery and switching back to conventional fuel. They made this decision after using up all the renewable materials and shutting down the equipment for renewable diesel.

This change is part of a bigger plan to focus on conventional fuels, which are currently more stable and profitable. The company plans to have the refinery fully switched to conventional fuel production by the end of 2024.

Financial Impact of Abandoning Renewable Diesel and What’s Next

This switch is expected to help Vertex Energy improve its position in the market, but it has been tough financially. The company reported a profit of $6.4 million from conventional refining operations, down from $37.5 million in the first quarter of 2024. The profit per barrel of oil also dropped from $12.63 in the first quarter to $5.67 in the second quarter, showing the market’s impact.

Despite these challenges, Vertex Energy is sticking to its goals of managing money, cutting costs, and improving profits. The company secured $15 million and $20 million loans in June and July 2024 to support these efforts. These funds are important for helping the company deal with the current challenges and carry out its plans.

The Future of the Mobile Refinery

The shift back to conventional fuel production at the Mobile Refinery is expected to play a key role in Vertex Energy’s future plans. By focusing on conventional products, the refinery aims to tap into more stable markets and improve financial results. The company has also scheduled maintenance in 2024 to update the equipment for conventional fuel production.

This planned maintenance is part of the company’s broader strategy and is expected to be completed without major changes to its budget, allowing Vertex Energy to stay on track while adapting to market needs.

Looking Ahead

Vertex Energy’s Mobile Refinery is central to the company’s efforts to adapt to tough market conditions. By shifting its focus to conventional fuels and cutting costs, the company is positioning itself to better handle the current economic challenges. The success of these efforts will be closely watched as Vertex Energy works to improve profits and maintain strong operations.