Shell Rock Soy Processing (SRSP), which is building a new crushing plant in Butler County to process 40 million bushels of soybeans per year, last week announced it had signed an agreement to deliver all of its soybean oil to Phillips 66.

The Texas-based petroleum giant has agreed to purchase 100% of SRSP’s soy oil production when the crushing plant is operational in late 2022.

Phillips 66 said it will use the soybean oil, estimated at around 4,000 barrels per day, to make renewable fuels.

“This is really a big deal, which represents the petroleum industry’s strong interest in directly accessing soybean oil,” said Mike Kinley, CEO of Conrad-based Mid-Iowa Cooperative, a developing partner of SRSP. “This is really the first big signal that the petroleum industry is getting very serious about securing soybean oil supplies for renewable fuels.”

Earlier this month, the Iowa Economic Development Authority (IEDA) approved $4.1 million in state tax credits for the new soybean crushing plant.

SRSP is projected to create 51 jobs with an average salary of $20.71 per hour. Along with soybean oil, the new plant is projected to annually produce 847,000 tons of soybean meal for the livestock industry and 847 tons of pelleted soybean hull. About 75% of the plant’s production is expected to be sold outside of Iowa.

Phillips 66 will use the soybean oil to make renewable diesel, a fuel that is chemically similar to petroleum diesel but is 100% renewable and sustainable.

This direct substitute for diesel fuel is refined from lower carbon and renewable materials, including soy oil.

“This strategic investment ex­­pands our reach into the re­­newable diesel value chain and provides secure feedstock,” said Brian Mandell, Phillips 66 Executive Vice President of Marketing and Commercial. “It also reflects our commitment to play an important role in a lower-carbon energy future.”

SRSP broke ground on the site near Shell Rock last fall and is off to a good start , Kinley said.

“We were able to take advantage of the open fall to complete a lot of the dirt work, and we are about a month ahead of schedule,” he said.

When it’s running next year, the plant will offer area farmers a strong market for their soybeans, Kinley said.

Farmers in Butler and surrounding counties of north central Iowa have been at a disadvantage because they had to transport their crop to soybean processing plants several counties away or to river terminals for export, he said.

“Having a local market is just so important for farmers,” Kinley said. “This plant will be a huge breakthrough on the operational side for farmers in this area, and it will also allow them to participate directly in these new renewable fuel markets that are adding value.