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Diamond Green Diesel, a joint venture between energy firm Valero Energy Corporation (VLO - Analyst Report) and animal by-product recycler Darling International Inc. (DAR) reported mechanical completion and the start-up process of its renewable diesel project.

The commissioning of Diamond Green Diesel’s project will lead to full production at the joint venture. Upon starting operations at 100%, the plant – with a capacity of 9,300 barrel per day – will process recycled animal fat, cooking oil and corn oil into renewable diesel fuel that has similar characteristics to petroleum-based diesel. The renewable diesel can be transported through pipeline and meet low-carbon fuel standards.

The new plant will not only enable the production of renewable diesel from U.S.-based feedstock, it will also generate employment, decrease greenhouse-gas emissions and endorse energy security.

Among all the independent refiners, Valero offers the most diversified refinery base with a capacity of 2.8 million barrels per day in its 14 refineries located throughout the U.S., Canada and the Caribbean. More importantly, Valero is best positioned to profit from increased refining margins mainly on account of its strategic refinery structure that enables it to use cheaper oil for over half of its needs.

The company is one of the largest independent retailers of refined petroleum products in central and southwestern U.S. and in eastern Canada, with more than 5,800 retail outlets under various brand names, including Diamond Shamrock, Valero, Ultramar and Beacon. Valero is also a leading ethanol producer with 10 ethanol plants in the Midwest that has a combined capacity of 1.2 billion gallons per year.

Valero carries a Zacks Rank #3 (Hold). However, there are other Zacks Ranked #1 (Strong Buy) stocks – PetroQuest Enerrgy Inc. (PQ - Snapshot Report) and Hornbech Offshore Services, Inc. (HOS - Snapshot Report) – that are expected to perform impressively over the short term.

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