Vertex Energy on Track to Start Producing Renewable Diesel in Alabama This Spring

January 18, 2023

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by Ron Kotrba (Biobased Diesel Daily) Vertex Energy Inc. provided an update Jan. 17 on the construction of its renewable diesel conversion project in Mobile, Alabama.

The company said the project, which is designed to convert the existing hydrocracking unit to produce renewable diesel on a standalone basis, remains on schedule, on budget and on track for mechanical completion by late March.

Vertex Energy completed shutdown procedures on the hydrocracker unit Jan. 6 for the next stage of construction activities, as planned.

The unit is scheduled to remain offline for a total of approximately 70 days while the project is finalized, with mechanical completion expected the final week of March.

Once completed, the refinery is expected to begin production of renewable diesel in the second quarter. READ MORE

Vertex Energy Provides Operational Update for Q4 2022 -- Renewable diesel conversion project remains on schedule, on budget, and on track for mechanical completion by late March (Vertex/Business Wire)

Vertex Energy renewable diesel project on track for completion by late March (Seeking Alpha)

Vertex Energy Renewable Diesel Project on Track for Completion by Late March (Biofuels Central)

Vertex: Alabama plant to begin renewable diesel production in Q2 (Biodiesel Magazine)

Vertex Hydrogen secures 1 GW of offtake agreements (Bioenergy International)

Vertex Energy on schedule to start-up Alabama renewable diesel production in April (Biofuels Digest)

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Vertex Energy Announces On-Time and On-Budget Mechanical Completion of Renewable Diesel Unit (Barrons)

Vertex Energy completes construction of renewable diesel unit at Mobile, Alabama, refinery (Biobased Diesel Daily)

Vertex Energy Cuts Ribbon on First Renewable Diesel Unit (Vertex)

Alabama Starts Its First Renewable Biodiesel Production (Transport Topics)

Vertex Energy suffers failure in feedstock-pumping system during start-up of renewable diesel unit (Biobased Diesel Daily)

Vertex Energy reports delayed startup of renewable diesel unit (Biomass Magazine)

Vertex Energy Announces Commercial Production of Renewable Diesel and Entry Into Working Capital Facility for Renewable Diesel Business (Vertex/Business Wire)

Excerpt from Biobased Diesel Daily: Following Vertex Energy’s ribbon-cutting ceremony for the company’s renewable diesel unit at its Mobile, Alabama, refinery, held April 28, the facility’s feedstock-pumping system suffered a critical equipment failure.

“These pumps are responsible for supplying feedstock to the renewable diesel hydrocracker,” said James Rhame, chief operating officer, during a first-quarter earnings call May 9.

Vertex Energy reached mechanical completion March 31 and the ribbon-cutting a month later marked the transition from commissioning to the start-up phase.

Once running at full rate, initial renewable diesel volumes are expected to be between 114 million gallons and 143 million gallons per year (mgy), with a ramp up to approximately 200 mgy upon installation of additional required infrastructure.

The company stated that soybean oil is initially serving as the primary feedstock for renewable diesel manufacturing.

The feedstock-pumping failure occurred during unit start-up sequencing before any hydrotreated fuel was actually produced.

“Upon failure our safety system worked as designed, and our team responded appropriately to bring the unit down in a safe and controlled manner, preventing further impacts, including preserving the catalyst in our hydrocracker,” Rhame said.

The event was isolated to the feed-pumping system with no known effects on the reactor or other processing equipment, Rhame said, adding there were also no impacts to the conventional refining capability.

“These are brand new pumps designed specifically for this case,” Rhame said. “What we found is they were designed for the product we had. However, there’s a transitionary period during start-up they were not designed for. As result, we damaged the pumps.”

Rhame added that the damaged feedstock pumps are positive-displacement pumps.

The manufacturer is currently repairing them and will return the equipment once the rework is completed, company officials said.

“Currently the renewable diesel unit is safely parked, and we have a number of internal and external expert resources engaged in root-cause analysis, repair and restart,” Rhame said. “We expect repairs to be completed prior to the end of the second half of May, after which we plan to reinstall and resume the start-up sequence of the renewable diesel unit.”

Management confirmed the availability of the necessary parts to repair these specialty pumps, as these components were purchased prior to the failure in case of any potential operational issues.

It was stated on the call that the failure “was more mechanical than human error.” READ MORE

Excerpt from Vertex/Business Wire: Commercial Production of Renewable Diesel Now Underway
After a two-week period of downtime related to the previously disclosed repairs on the feedstock pumping system, repair and reinstallation operations have been successfully completed. Startup procedures were completed last week and the Company is pleased to report that the renewable diesel facility has achieved initial production as of May 27, 2023.

"We are grateful for the dedication and hard work put in by our team and contractors to successfully execute this conversion project in a safe and timely manner," said James Rhame, Chief Operating Officer at Vertex, who stated further, "It is a great achievement to see our project transition from concept to production, and we couldn't have done it without the focus and coordination of everyone involved."

Renewable Supply and Offtake Agreement with Macquarie
Vertex also announced the entry into a Renewable Supply and Offtake Agreement (“RSOA”) with existing liquidity provider, Macquarie for the liquidity needs required to acquire feedstock inventory and monetize renewable diesel and regulatory credits for its renewable diesel facility. The new working capital facility is similar in nature to the existing Supply and Offtake Agreement in place with Macquarie used to monetize Vertex's crude oil feedstock and products needs on the conventional side of the business. The terms of the RSOA were filed with the SEC in a Current Report on Form 8-K concurrently with this release.

"Today, we mark a significant development milestone in our pursuit of excellence and innovation," said Benjamin P. Cowart, CEO at Vertex, who stated further, "Our team's exceptional achievements have propelled us forward, and we are proud to share this momentous occasion with our stakeholders who have stayed committed in the journey alongside us. This not only marks a historic accomplishment for this site and for Vertex, but for the great State of Alabama."

Stroock & Stroock & Lavan LLP acted as legal advisor to Vertex with respect to the transaction. The Company plans to commence the commercial sale of renewable diesel in June 2023, after receiving required EPA certifications for Renewable Identification Numbers. READ MORE