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ConocoPhillips and Tyson Foods Inc. plan to jointly develop diesel fuel from animal fat in an effort to boost biofuels production and profits.
Fat will be processed with hydrocarbon feedstocks to produce the renewable fuel, the companies said Monday. Tyson, which produces about 2.3 billion pounds of animal fat a year, said that production would begin in late 2007 and would reach about 175 million gallons a year by 2009.
Last year, Tyson had its first annual loss since 1994 as poultry prices slumped and beef exports were restricted because of mad-cow disease.
The fat-to-fuel plan may add 4 cents to 16 cents to annual earnings at full production, Tyson said.
"This strategic alliance is a big win for the entire agricultural sector because it paves the way for greater participation of fats and oils in renewable fuels," Chief Executive Richard Bond said.
ConocoPhillips began commercial production of renewable diesel using soybean oil at its Whitegate refinery in Cork, Ireland, in December and can now produce about 42,000 gallons a day, the Houston-based company said.
Chief Executive Officer Jim Mulva said the alliance with Tyson will provide a "significant contribution" to the U.S. domestic renewable fuel supply.
U.S. biodiesel production has also been boosted by a tax incentive for refiners that took effect in January 2005.
Tyson and ConocoPhillips both lobbied the White House to expand the tax incentives to include them, over the objections of the National Biodiesel Board, which represents small producers.
The Jefferson City, Mo.-based board criticized the decision to expand the credit, saying companies such as ConocoPhillips could benefit from existing facilities while smaller producers would have to build their plants from scratch.
There are 105 biodiesel plants in the United States with a capacity to produce 864 million gallons a year, according to the board. Biodiesel production in 2006 was about 250 million gallons, the board said.
The United States will boost output of the fuel by about 1.2 billion gallons in 2008, according to a Deutsche Bank report published in December.
Fat will be processed with hydrocarbon feedstocks to produce the renewable fuel, the companies said Monday. Tyson, which produces about 2.3 billion pounds of animal fat a year, said that production would begin in late 2007 and would reach about 175 million gallons a year by 2009.
Last year, Tyson had its first annual loss since 1994 as poultry prices slumped and beef exports were restricted because of mad-cow disease.
The fat-to-fuel plan may add 4 cents to 16 cents to annual earnings at full production, Tyson said.
"This strategic alliance is a big win for the entire agricultural sector because it paves the way for greater participation of fats and oils in renewable fuels," Chief Executive Richard Bond said.
ConocoPhillips began commercial production of renewable diesel using soybean oil at its Whitegate refinery in Cork, Ireland, in December and can now produce about 42,000 gallons a day, the Houston-based company said.
Chief Executive Officer Jim Mulva said the alliance with Tyson will provide a "significant contribution" to the U.S. domestic renewable fuel supply.
U.S. biodiesel production has also been boosted by a tax incentive for refiners that took effect in January 2005.
Tyson and ConocoPhillips both lobbied the White House to expand the tax incentives to include them, over the objections of the National Biodiesel Board, which represents small producers.
The Jefferson City, Mo.-based board criticized the decision to expand the credit, saying companies such as ConocoPhillips could benefit from existing facilities while smaller producers would have to build their plants from scratch.
There are 105 biodiesel plants in the United States with a capacity to produce 864 million gallons a year, according to the board. Biodiesel production in 2006 was about 250 million gallons, the board said.
The United States will boost output of the fuel by about 1.2 billion gallons in 2008, according to a Deutsche Bank report published in December.