Oil major ConocoPhillips and Tyson Foods Inc., the world's largest meat producer, said Monday that they're teaming up to produce and market diesel fuel for U.S. vehicles using beef, pork and poultry fat.
The companies said they have collaborated over the past year on ways to combine Tyson's expertise in protein chemistry and production with ConocoPhillips' processing and marketing knowledge to introduce a renewable diesel fuel with lower carbon emissions than petroleum-based fuels.
ConocoPhillips planned to spend about $100 million over several years to produce the fuel, Chairman and Chief Executive Jim Mulva said at a news conference. It hopes to introduce the fuel at gas stations in the Midwest in the fourth quarter of this year.
Tyson said it also would make capital improvements this summer to begin preprocessing animal fat at some of its North American rendering plants. Tyson President and CEO Richard Bond said his company's potential investment would likely be less than that of ConocoPhillips.
The oil company and Tyson, based in Springdale, Ark., said the finished product would be renewable diesel fuel mixtures that meet all federal standards for ultralow sulfur diesel. They expect to ramp up production over the next couple of years to as much as 175 million gallons a year, which Mulva said would amount to about 3 percent of ConocoPhillips' total U.S. diesel production.
"That doesn't sound like much, but it's very significant," Mulva said. "In a tight market, every incremental increase helps improve supply availability and reduces retail-price pressure."
Aside from its environmental benefits, the fuel can be distributed via existing fuel systems and pipelines and should have no ill effect on vehicles' fuel economy or performance, Mulva said. Because of tax incentives for producers, its price will be competitive with conventional fuels, he said.
The processing technology was developed at ConocoPhillips, which began commercial production of renewable diesel using soybean oil in Ireland late last year.
But the rising cost of soybean and other oils, which account for the bulk of biodiesel fuel stock, has led to the push to use cheap and plentiful animal fats. That shift to animal fat as a fuel stock could be key to making the budding biodiesel industry a reliable fuel source for U.S. trucking fleets, among other uses, experts say.
Biofuels are seen as a way to reduce harmful emissions and wean Americans and the rest of the world off fossil fuels. President Bush has proposed increasing production of such alternative fuels, like those used in some vehicles. For now, they account for an extremely small percentage of the world's fuel market, the AP reports.
Early this year, U.S. President George W. Bush called for increased use of renewable fuels to reduce reliance on oil from the Middle East.
Energy companies have come under pressure from environmentalists to increase production of renewable fuels.
In 2006, U.S. biodiesel makers produced between 225 million and 250 million gallons, or less than 6 million barrels, of the fuel, according to the National Biodiesel Board. That compared with an overall on-road diesel market of about 38 billion barrels, the board said.
Only a very small percentage of the biodiesel currently produced in the United States comes from animal fat. The main feedstock currently used to make biodiesel is soybean oil.
ConocoPhillips and Tyson said the fats will be processed with hydrocarbon feedstocks to produce a high-quality diesel fuel that meets all federal standards for ultra-low-sulfur diesel.
They said that, unlike ethanol, the fuel can be transported via pipelines.
ConocoPhillips already produces biodiesel from soybeans at its Whitegate refinery in Cork, Ireland.
Tyson, which formed a renewable energy unit late last year, has said it has access to about 2.3 billion pounds of animal fat annually -- the equivalent 20,000 barrels a day of feedstock that can be turned into renewable fuel, Reuters reports.
Prepared by Alexander Timoshik
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