Darling International Inc. (DAR), Phillips 66 (PSX), Valero Energy Corporation (VLO): Oil and Gas Refinery Companies Utilizing Alternative Means to High Revenue Ends

Other partner, Valero Energy Corporation (NYSE:VLO) will operate this plant and transport the diesel through its strong network of pipelines. The global demand for renewable diesel is expected to increase from 21 billion liters in 2012 to 24 billion liters in 2013. This plant will produce 530 million liters of renewable diesel, which implies that this project alone will supply 2.1% of global demand, benefiting the company.

Crude oil prices are increasing along with demand and, conversely, natural gas prices are falling. With the high demand for crude oil, Valero Energy Corporation (NYSE:VLO) monetized the opportunity by opening an additional hydrocracker unit at its existing refinery, St. Charles. Hydrocracking is a technique for refining feedstock into oil products by using pressure in feedstock. This new unit will convert natural gas into crude oil with the Hydrocracker process. Valero has spent $1.6 billion on this project, which will increase the profits of the company by providing high priced crude oil, made with low price natural gas. The project could generate an additional EBITDA of $500 million for Valero Energy Corporation (NYSE:VLO) by the end of this year.

Conclusion:

All the above companies are moving towards low cost feedstock to refine oil products. Phillips 66 (NYSE:PSX) is moving towards price-advantage crude oil, and it will add transportation revenue with its new pipelines. Valero Energy Corporation (NYSE:VLO) will take advantage of using lower priced natural gas as a feedstock to produce high priced crude oil. Further, Valero is entering a joint venture with Darling International Inc. (NYSE:DAR) to produce high demand renewable diesel. Looking at the potential of the above companies, I recommend a buy for all three stocks.

Madhukar Dubey has no position in any stocks mentioned. The Motley Fool recommends Darling International. The Motley Fool owns shares of Darling International.

The article 3 Oil and Gas Refinery Companies Utilizing Alternative Means to High Revenue Ends originally appeared on Fool.com.

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