Valero Energy Corp. released fourth quarter financial results on Jan. 25, reporting an increase in renewable diesel production volumes. Operating income was down on lower renewable diesel margins, according to the company. The sustainable aviation fuel (SAF) project under development in Texas, however, remains on schedule for completion next year.

Valero’s renewable diesel segment, which consists of the Diamond Green Diesel joint venture, reported $84 million of operating income for the fourth quarter of last year, down from $261 million reported for the same period of 2022. The company attributed the decline to lower renewable diesel margins. Renewable diesel margins per gallon of sales was 65 cents during the fourth quarter, down from $1.66 during the same period of 2022.

Renewable diesel sales averaged 3.77 million gallons per day in the fourth quarter of 2023, compared to 2.44 million gallons per day during the same period of 2022. The higher sales volumes were due to the impact of additional volumes from the DGD Port Arthur plant in Texas, which began operations in the fourth quarter of 2022.

For the full year, the renewable diesel segment reported $852 million in operating income, up from $774 million in 2022. Sales volumes for the full year averaged 3.54 million gallons per day in 2023, up from 2.18 million gallons per day the previous year. Renewable diesel margin per gallon of sales for the full year 2023 was at $1.12, down from $1.45 in 2022.

Moving into 2024, Homer Bhullar, vice president of investor relations at Valero, said the company expects renewable diesel sales volumes to average approximately 1.2 billion gallons per day.

Work is ongoing at the DGD Fort Arthur plant to add SAF production capacity. The $315 million project remains on schedule to be complete in the first quarter of 2025. Half of that cost is attributable to Valero. Once complete, the project is expected to give the Fort Arthur plant the optionality to upgrade approximately 50 percent of its current 470 million gallons of annual renewable diesel production capacity to SAF.

Overall, Valero reported net income attributable to company stockholders of $1.2 billion, or $3.55 per share, for the fourth quarter, compared to $3.1 billion or $8.154 per share, for the same period of 2022. For the full year 2023, net income attributable to Valero stockholders was $8.8 billion, or $24.90 per share, compared to $11.6 billion, or $269.16 per share, in 2022.