Valero Energy Corporation Purchases Plant to Increase Its Ethanol Capacity to 1.3 Billion Gallons

Valero (NYSE: VLO  ) announced today that it has expanded its ethanol production through the purchase of its 11th corn ethanol plant. The plant purchased from Aventine Renewable Energy Holdings is located in Mount Vernon, Ind., and has an annual production capacity of 110 million gallons.

As a result of the purchase, Valero, through its Valero Renewable Fuels Company subsidiary, will now have a total capacity of 1.3 billion gallons per year in ethanol production. When Valero purchased its 10th ethanol plant near Jefferson, Wis., in February 2010, it had a total capacity of 1.1 billion gallons in ethanol production, meaning today's transaction will boost its total ethanol production by approximately 10%. 

Valero highlighted the plant purchased today has many logistical advantages, including access to corn suppliers as well as ample forms of transportation from rail, truck, and barge access. The press release did note the plant purchased today had been shut down for almost two years.

"We're looking forward to hiring employees, restarting the plant and producing ethanol," said the Valero Vice President of Alternative Energy and Development Martin Parrish, in the announcement. "We intend to invest in the Mount Vernon plant to make it competitive with other top-tier ethanol facilities, and we will use the technical expertise we have gained at our other plants to look at ways to improve Mount Vernon's reliability, production rate and product yields."

The financial terms of the transaction were not disclosed, but Valero did highlight it plans to resume the production at the plant within "the next several months."

"This purchase diversifies Valero Renewables' portfolio of assets and access to markets, and it will be positive for the Mount Vernon area as well," concluded the overseer of the ethanol plant acquisitions by Valero, Gene Edwards, in the announcement.


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Patrick Morris

After a few stints in banking and corporate finance, Patrick joined the Motley Fool as a writer covering the financial sector. He's scaled back his everyday writing a bit, but he's always happy to opine on the latest headline news surrounding Berkshire Hathaway, Warren Buffett and all things personal finance.

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9/1/2015 4:04 PM
VLO $57.40 Down -1.94 -3.27%
Valero Energy Corp CAPS Rating: ****