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Area biodiesel plant announces shutdown

REG cites lapsed federal tax credit; facility's closure to affect 25 workers by Junius Stone | July 28, 2019 at 4:52 a.m. | Updated July 28, 2019 at 4:52 a.m.
The Renewable Energy Group biodiesel facility, at TexAmericas Center, has announced it will shut down because of tough market conditions. (Submitted photo)

Leaders at an area biodiesel refinery have announced plans to shut down the plant, which will affect 25 workers at the TexAmericas Center facility. Renewable Energy Group officials said this is a reaction to "challenging business conditions and continued federal policy uncertainty, most notably the long-lapsed federal biodiesel tax credit."

"The industry as a whole is feeling these difficulties," said REG spokesman Scott Hedderich. "But this is the only (REG) plant that necessitated this action."

The plant, near New Boston, Texas, converts organic material, such as oil and animal fats, to diesel fuel.

"Despite significant bipartisan support, Congress' inaction on this value-added incentive has led to unsustainable market conditions," said Cynthia J. Warner, REG president and CEO.

"We are working on retention or relocation of our people," Hedderich said. "Some of the labor force will be involved in the shutdown. But as we work on relocating and continuing employment, we will be formulating our shutdown plan and our force needs for that. We will focus on our folks, continued operations and a safe plant shutdown."

REG has transition plans for the plant employees, both those who will be staying with the company as well as those who will leave.

As for the plant itself, Hedderich said "it is likely we will sell the place. A few scenarios exist where a different operational decision could be made, but the sale is the most likely scenario."

Scott Norton, executive director and CEO of TexAmericas Center, said he is aware of the difficulties over the biodiesel tax credit, but did not see something like this coming this quickly.

"REG is not a tenant on our property, they own the land and the facility outright," he said. "It is sad to see them go, but we will get set for the next owner. We will do what we can to help REG out and get a new owner/operator there as soon as possible."

Norton says the shutdown of the REG plant will not affect TexAmericas Center.

"We will do what we can to promote the property as well as help out the REG employees in any way we can," he said.

As to why the plant shut down, besides the uncertainty around the federal biodiesel tax credit, Norton believes Texas is a tough market for such a business.

"This is not a local issue at all. This is about national policy," he said. "Also, just my opinion, but Texas is such a petroleum-based state, it may have made things tougher for them. We will continue to work with REG as the prepare the property for shutdown and look forward to working with the new owner.

The company acquired the 15-million-gallon per-year plant in October 2012 and began producing biodiesel at the site over the following months.

The facility had been closed for four years when REG took it over, previously operating as Red River Biodiesel.


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