REG, the Ames-based company that spun off of a biofuels venture at West Central Cooperative in Ralston, has its eyes on much more than biodiesel now. 

The company wants to use natural feedstocks to produce high-value chemicals that can be used in perfumes, as lubricants and in advanced biofuels, for example. The venture will expand on the company’s use of soy oil, animal fat, used cooking oil and inedible corn oil to make biodiesel. REG is the nation’s top producer of biodiesel and also makes a bio heating oil.

REG has had a lot of reason to watch the news lately. The U.S. Environmental Protection Agency in May set new targets for the amount of biofuels that refiners must blend into the nation’s gasoline supply. The requirements are less than than the biofuels industry wanted, but more than the EPA had proposed earlier.

In general, company President and CEO Daniel Oh liked what he saw. 

“It provides enhanced demand for our industry,” Oh said. “We have demand and a need, but the government is calling for more because of air quality benefits and rural economic development.”

“It made it very clear that biomass-based diesel is something our country is going to depend on for a long time,” Oh added.

REG’s stock price rose sharply on the news, hitting its highest level since last September. 

The news was worse at the Statehouse, where the Iowa Legislature failed to pass a tax-credit  package for a renewable chemical production tax credit that was one of the Iowa Economic Development Authority’s top priorities for the session. The legislation passed a committee in the Senate, but leaders didn’t bring it to the floor for a vote. Insiders say the bill got tangled in the politics surrounding education funding.

“It’s good for the state to produce materials for use in products, but also to harvest the intellectual property,” Oh said. He still supports the tax credits.

While the company has moved to diversify its product line, it also has made some strategic buys.

REG paid $61.5 million in 2014 for LS9 of San Francisco, which uses genetically modified E. coli bacteria to produce a variety of chemicals for use in detergents, shampoos and fuels. Oh sees this field as another promising growth market for REG.

Also last year, the company paid $20.9 million, in new shares, to take a 69 percent equity position in Germany-based Petrotec AG, and paid $15.4 million for IC Green Energy’s loan to Petrotec. REG made an offer for all Petrotec shares, and now owns 85 percent of the company.

About the same time, REG reopened a plant it bought in Geismar, La., in June. That facility  makes renewable hydrocarbon diesel from fats and oils. The plant closed after an April fire that injured workers and is expected to reopen in the third quarter. Oh said the investigation continues and the employees are recovering.

In the center of all this is Oh, who worked in pharma for four years. He considers himself a businessman. “I’m not a science guy,” he said. 

He is, however, immersed in a world driven by science, and excited about it. Oh gives a reporter and photographer a tour of a sprawling Ames complex that is expanding. Samples of various products are displayed in places, and displays in the halls describe what the company does. His excitement about the company’s growth, and move into renewable chemicals, shows.

“Our company is a fusion of ag and chemical technologies, and life sciences,” Oh said. “Renewable chemicals are very important strategically to us. They are coming, but there are factors that will determine if they come quickly or slowly.”

REG has Iowa plants in Newton, Mason City and Ames. In all, the company employs 500 people, with 200 of them in Ames. The company gets raw materials from 200 suppliers.

When REG started, it looked into making a graffiti remover, but then moved into the biodiesel market. Now, it considers products ranging from perfume ingredients to lubricants, jet fuel and fuel oil. “We may even get into water treatment,” Oh said. 

Some of the fats, perfume ingredients and other chemicals could be sold to customers in Central America, South America and eastern Asia, Oh said. Biofuels will continue to have strong demand in North America and Europe, he added.

We’ll see 10 years of growth in biofuels at least,” Oh said. 

REG has arranged for 12,000 more square feet in Ames, and is spending $1 million a month on research and development.

The company is very much a community player, too. REG is in Ames largely because of the presence of Iowa State University and its researchers, and Oh is on the MBA advisory committee at ISU. This summer, REG arranged for 35 interns in the hopes of grooming future employees. “We are trying to plant seeds,” Oh said. “For us, this is the best way to recruit.”

“We have the same workforce issues that every other company in Central Iowa has. The more specialized, the more you have to look.”