Under the terms of the agreement, Earth Biofuels will buy 100% of the yellow grease collected by Alliance at a fixed price over an initial three month term followed by a three year term.
The fixed price is based on the current market price for yellow grease, which is substantially lower than the current market price of soybean oil, the primary feedstock oil used in most biodiesel production facilities in the US.
Initial volumes are expected to be 267,000 gallons to 400,000 gallons of yellow grease per month. Alliance reportedly collects used yellow grease mainly from restaurants across Texas.
