REG claims title as largest biodiesel producer in US

March 16, 2010

Renewable Energy Group said yesterday that its acquisition of two commercial-scale biodiesel plants in Iowa and Illinois have made it North America’s largest wholly-owned biodiesel manufacturer.

The company, which has its head office in Ames, Iowa, completed a stock takeover of Central Iowa Energy LLC and Blackhawk Biofuels LLC late last month.

The moves gave it, respectively, a 30 million gallon per year biodiesel facility in Newton, Iowa, and a 45-million-gallon-per-year facility in Danville, Illinois.

the distillate market is demanding technical expertise, dependable supply, more efficient distribution and creative pricing options” - Jeff Stroburg, REG

REG said the consolidation brings its total production capacity to 122 million gallons a year, and will put it in a better position to meet anticipated demand for biofuels from the petroleum industry by streamlining logistics and achieving better economies of scale.

Demand

The demand for biofuels is being driven by the federal Renewable Fuels Standard, which will require petroleum fuel suppliers to supply a growing proportion of biofuel within their fuels.

As finalized by the US Environmental Protection Agency last month, the RFS requires 12.95 billion gallons of biofuel to be supplied in 2010, rising to 36 million gallons by 2022.

REG’s Chairman and Chief Executive Officer Jeff Stroburg said demand by major petroleum distributors and oil refiners was a “key factor” in REG’s decision to move forward with plant consolidation.

Mr Stroburg said: “With the Renewable Fuels Standard (RFS) now in effect, the distillate market is demanding technical expertise, dependable supply, more efficient distribution and creative pricing options from major biodiesel partners.”

“Complex”

REG has actually been working towards the acquisition of the two additional plants since May 2009.

Daniel J Oh, REG’s President and Chief Operating Officer said the delay of the Renewable Fuels Standard and lapse in the federal blenders’ tax credit had not helped the process.

He said: “This process has been a complex, integrated process bringing together the Central Iowa Energy, LLC and Blackhawk Biofuels, LLC boards of directors, legal teams, accounting teams, financial partners and shareholders to consolidate these two facilities under the REG umbrella during some of the industry’s most difficult times.”