CHICAGO, ILLINOIS, US — Archer Daniels Midland Co. (ADM) and Marathon Petroleum Corp. (MPC) on Aug. 19 announced an agreement to form a joint venture to produce soybean oil to supply rapidly growing demand for renewable diesel fuel.
Under the terms of the agreement, the joint venture will own and operate ADM’s previously announced soybean processing complex in Spiritwood, North Dakota, US, with ADM owning 75% of the joint venture and MPC owning 25%. When complete in 2023, the Spiritwood facility will source and process local soybeans and supply the resulting soybean oil exclusively to MPC.
The Spiritwood complex is expected to produce approximately 600 million pounds of refined soybean oil annually, enough feedstock for approximately 75 million gallons of renewable diesel per year.
In addition to the Spiritwood joint venture, the companies anticipate working together to explore other opportunities for agriculture to support renewable transportation fuels.
“ADM has always been at the forefront of innovative fuels made from nature, and we are uniquely positioned to take action to reduce the carbon intensity of our business and lead our industry as we live our purpose,” said Ken Campbell, president of North America Oils, Biodiesel and Renewable Chemicals at ADM. “We already provide MPC with soybean oil for renewable diesel production, but this agreement will significantly expand our collaborative relationship.
“Together, MPC and ADM have the expertise, scale and capabilities to deliver sustainable outcomes that start on the farm and go all the way to the fuel in millions of commercial and personal vehicles — and in this case, supporting renewable diesel demand that we believe may be as much as 5 billion gallons by 2025. And what’s even more exciting is that we see the opportunity to work together to do more to support sustainable solutions.”
Dave Heppner, senior vice president of strategy and business development at MPC, added, “This joint venture marks another step in advancing our ability to optimize and source logistically advantaged feedstock for our nearby Dickinson facility, and also creates a platform for further collaboration with a world-class partner as we continue to invest in a sustainable, energy-diverse future.”
When complete, the approximately $350 million complex in Spiritwood will feature state-of-the-art automation technology and have the capacity to process 150,000 bushels of soybeans per day. The construction of the new complex is supporting hundreds of jobs in the region, and the facility will employ approximately 75 people once operational. The Spiritwood complex is expected to begin production for the 2023 harvest.
In its most recent earnings report, ADM noted that the increasing use of vegetable oils for biofuel in the transportation industry provided a boost to its second-quarter earnings and will keep the Chicago, Illinois, US-based company investing in that area.
“We expect the demand for US green diesel to continue securing higher rate of growth, increasing by about 1 billion gallons per year and reaching up to 5 billion gallons by 2025,” said Juan R. Luciano, president and chief executive officer of ADM, in a July 27 earnings call. “Vegetable oils will be a key feedstock to meet that growing demand, and when you consider that it takes about 7.5 pounds of soybean oil to produce 1 gallon of renewable green diesel, you can appreciate the large potential opportunity and why we are investing to grow our participation both in North Dakota and with our expanded oil refining capacity in Quincy, Illinois.”