NEW YORK: U.S. oil company ConocoPhillips and meat products firm Tyson Foods Inc. are planning to collaborate to produce biodiesel from animal fat, the companies announced Monday.
ConocoPhillips, the No 3 oil company in the country, said it has earmarked $100 million over a three-to-five-year period to set up refineries that can process meat -- beef, pork and chicken fat -- from Tyson's facilities to produce fuel. The first of the refineries to make biodiesel this way will be its Borger, Texas refinery.
Tyson, which is the world's largest meat products vendor, said it plans to make capital improvements at some of its plants so it can start pre-processing the animal fat.
Dick Bond, president and chief executive of Tyson, said the joint venture is a win-win situation as it diversified into renewable fuel sources away from corn into animal fats. He has been a critic of the government's policy in making available corn, which is mainly required as animal feed, to produce ethanol. He believed this will have a ripple effect on global food prices.
Both ConocoPhillips and Tyson hope their venture will be able to produce 175 million gallons of biodiesel annually. The production should reach this level in about 18 months after it starts later in 2007. Biodiesel enjoys a tax credit of $1 per gallon.
The two companies believe the joint venture will increase energy security as it will to a certain extent reduce dependence on import of fossil fuel.
ConocoPhillips chief executive officer James Mulva said the biodiesel project can become viable only with the tax credit, which is set to expire in 2008 but both the companies expect the government to extend it for a further period.
At present, only a negligible quantity of biodiesel is produced in the country using animal fat as it is largely made from soybean oil. ConocoPhillips has a refinery at Whitegate in Cork, Ireland, which uses soybeans to make biodiesel. The company plans to process the animal fat with hydrocarbon feedstocks to produce high-quality fuel that will meet all federal standards for ultra-low-sulfur diesel. The fuel can also be transported using pipelines unlike ethanol.
Tyson said it can generate about 2.3 billion pounds of animal fat annually, which is equivalent of 20,000 barrels a day of feedstock that can be turned into renewable fuel.
