msnbc.com news services
updated 4/16/2007 1:24:20 PM ET 2007-04-16T17:24:20

Oil company ConocoPhillips said Monday it will partner with meat producer Tyson Foods Inc. to make renewable diesel fuel.

The two companies, each among the largest in their industries, said they will use beef, pork and poultry byproduct fat to create the transportation fuel.

ConocoPhillips said Tyson will make capital improvements this summer so that it can start preprocessing animal fat from some of its North American rendering facilities later in the year. Meanwhile, ConocoPhillips said it will make capital expenditures so that it can produce the fuel in several of its refineries.

To make the fuel, the animal fats will be processed with hydrocarbon feedstocks to improve its "storage stability and handling characteristics," ConocoPhillips said.

The fuel will meet all federal standards for ultra-low-sulfur diesel, the company said.

ConocoPhillips added that the two companies plan to make as much as 175 million gallons per year of renewable diesel.

Production is slated to begin late this year. Tyson said it expects the project to add between 4 cents and 16 cents per share in additional annual earnings.

Tyson said production is expected to start late in 2007 and ramp up through spring 2009. At full production, Tyson expects annual earnings of 4 cents to 16 cents a share from the project.

The companies did not disclose how much they expect to spend on the alliance or which plants would be used for the project.

"We are firmly committed to leveraging our leadership position in the food industry to identify and commercialize renewable energy opportunities," said Tyson Chief Executive Richard Bond in a statement.

Early this year, President 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 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.

The Associated Press and Reuters

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