Renewable Energy Group, Inc. (NASDAQ:REGI) Q3 2018 Earnings Conference Call - Final Transcript
Nov 06, 2018 • 04:30 pm ET
that covers the Continental US with notable concentration in states that provide the highest value for renewable fuels, such as California, Illinois, Iowa, Minnesota and Texas.
The regulatory environment also drives demand. This being election day, we are expecting a lot of activity in the weeks ahead as we move past the elections, and Congress returns to tackle important end-of-the-year legislation. We are pleased that participants across the various industries associated with biomass-based diesel remain united in the desire for a long-term extension of the BTC. This support is broad-based from feedstock suppliers, including farmers and ranchers, to producers, to blenders and, ultimately, to the end users represented largely by the trucking industry. We continue to expect congressional action on the retroactive reinstatement and extension of the BTC before year-end.
EPA appears on track to publish the final 2019 advanced biofuel and 2020 biomass-based diesel RVOs by the end of the month. We expect the EPA to finalize the RVOs largely at the level set forth in the EPA's proposed rule earlier this year, ensuring meaningful growth in both the biomass-based diesel and advanced biofuels category.
In California, which has proven its leadership as one of the most important markets for clean fuels globally, the LCFS extension through 2030 was approved, creating a deeper, smoother and longer demand profile. Within the context of steadily growing demand for our cleaner burning renewable fuels, we're looking carefully at a balanced capital allocation strategy that will both drive growth in our business and offer attractive returns to our shareholders.
Let me expand a bit on the relationship with Phillips 66 that I mentioned earlier. Last week, we announced that planning is underway for the possible construction of a large-scale renewable diesel plant on the US West Coast. The plant would utilize our proprietary BioSynfining technology. It is currently contemplated that the new facility will be constructed adjacent to Phillips 66 in its Ferndale Refinery in Washington state. The Ferndale Refinery offers existing infrastructure, including tank storage, a dock and rail and trucking access. We have been collaborating with Phillips 66 for more than a year on this exciting project. We expect the final decision to be made in 2019. If approved, and provided that the engineering and construction schedules proceed as currently envisioned, commercial production at the new facility would be expected to commence in 2021.
As discussed before, we are also reinvesting our cash flow into incremental improvements in the existing fleet and growing our renewable diesel production. We also expect to announce our decision regarding potential expansion and logistic improvements at our Geismar renewable diesel plant. Beyond that, we are continuing with preliminary engineering on building another production train at this site that would approximately double our Geismar capacity. The economics around renewable diesel are compelling, and we believe it can be an engine of growth for us for years to come.
In our Life Sciences business, our market-leading research program with ExxonMobil to convert cellulosic sugars into biodiesel continues to