Vertex Returns Alabama Refinery to Traditional Fuels Production

The Mobile, Alabama refinery that Vertex Energy Inc. retrofitted to also enable renewable diesel production after acquisition from Shell PLC is back to producing only conventional fuels.

Houston, Texas-based Vertex, which filed for bankruptcy last month, had said the reconversion would cut costs and improve margins.

However, it said in a statement Wednesday, “In line with the previously stated plan, the Mobile refinery has preserved renewable fuels production capabilities, should future market conditions warrant”.

The reconverted hydrocracker started producing “higher-value refined products, including gasoline and diesel”, Vertex said.

President and chief executive Benjamin P. Cowart said, “With this key asset shift safely executed, our focus continues on further optimization of the business in pursuit of sustained performance and longer-term growth”.

Vertex had reported a conventional throughput of 67,758 barrels per day (bpd) at the refinery in the second quarter while renewable diesel throughput totaled 3,092 bpd. “Total production of finished high-value, light products, such as gasoline, diesel, and jet fuel, represented approximately 64 percent of total production in the second quarter of 2024, flat with the first quarter of 2024, and in line with management’s original expectations, reflecting a continued solid yield at the Mobile conventional refining facility”, it said in its quarterly report August 8.

It acquired the refinery in 2022 for a base price of $75 million plus about $25 million related to capital expenditures and other transaction closing adjustments.

“As part of the transaction, Vertex has acquired approximately 3.2 million barrels of product storage, inventory, logistics and distribution assets, more than 860 acres of developed and undeveloped land, together with the Blakeley Island Crude and Products Terminal”, Vertex said in a press release April 1, 2022, about the purchase from units of British energy giant Shell.

Last month Vertex initiated Chapter 11 cases before the United States Bankruptcy Court for the Southern District of Texas and said it was exploring a potential sale. Chapter 11 bankruptcy allows a company to continue operating while reorganizing its finances to come up with a repayment plan, in a court-supervised process.

“To fund this process and continue operating in the ordinary course, the Consenting Term Loan Lenders have agreed to provide the Company with an additional $80 million Debtor-In-Possession financing facility subject to certain terms and the satisfaction of certain conditions precedent”, it said in a statement September 24.

As of the end of the first half of the year, Vertex had $303.8 million in total debt outstanding including $15.2 million in 6.25 percent senior convertible notes, a term loan of $207.2 million and $67.5 million in finance lease obligations. Meanwhile it held cash and cash equivalents of $18.9 million. Vertex’s net debt position as of June was $284.9 million, as reported by the company.

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