Good day, and welcome to the Clean Energy Fuels Third Quarter 2022 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Robert Vreeland, Chief Financial Officer, please go ahead, sir.
Thank you, operator. Earlier this afternoon, Clean Energy released financial results for the Q3 ending September 30, 2022. If you did not receive the release, it is available on the Investor Relations section of the company's website at www.cleanenergyfuels.com, where the call is also being webcast. There will be a replay available on the website for 30 days. Before we begin, we'd like to remind you that some of the information contained in the news release and on this conference call contains forward looking statements that involve risks, uncertainties and assumptions that are difficult to predict.
Words of expression reflecting optimism, satisfaction with current prospects, As well as words such as believe, intend, expect, plan, should, anticipate and similar variations identify forward looking statements, but their absence does not mean that the statement is not forward looking. Such forward looking statements are not a guarantee of performance and the company's actual results could differ materially from those contained in such statements. Several factors that could cause or contribute to such differences are described in detail in the Risk Factors section of the Clean Energy's Form 10 Q filed today. These forward looking statements speak only as of the date of this release. The company undertakes no obligation to We update any forward looking statements or supply new information regarding the circumstances after the date of this release.
The company's non GAAP EPS and Adjusted EBITDA will be reviewed on this call and exclude certain expenses that the company's management does not believe are indicative of the company's core business operating results. Non GAAP financial measures should be considered in addition to results prepared in accordance with GAAP and should not be considered as a substitute for or superior to GAAP results. The directly comparable GAAP A reconciliation between these non GAAP and GAAP figures is provided in the company's press release, which has been furnished to the SEC on Form 8 ks today. With that, I will turn the call over to our President and Chief Executive Officer, Andrew Littlefair.
Thank you, Bob. Good afternoon, everyone, and thank you for joining us. I'm pleased to report that we expanded our leadership as the largest renewable natural gas fueling provider in the United States. In the Q3 of this year, we sold 54,000,000 gallons of RNG, a 28% increase compared to the amount we sold in the same quarter of last year. Year to date, we have sold 122,000,000 gallons of RNG into the transportation market, which is 18% more than we sold this time a year ago.
Our revenue for the quarter came in at $126,000,000 compared to $86,000,000 in Q3 of 2021, A 50% increase. The increase in this quarter's revenue was mostly driven by the growth in our fuel volumes as well as 2 additional quarters of the alternative fuel tax credit. End of the Q3 with $134,000,000 of cash and investments. Overall, we find ourselves with a strong balance sheet, a rapidly growing business and a defined pathway to the future expansion of our renewable fuels business. Key feature of that plan for future growth is our relationship with Amazon as it continues to expand its fleet stations around the country for over a year.
A significant milestone was met in this last quarter with the opening of the first station that we built from the ground up As part of our agreement with Amazon, the station just outside Columbus, Ohio is a state of the art Fueling facility that will allow more than 50 Amazon Class 8 trucks to fuel at the same time. It also has public Access lanes for fast fueling for Amazon trucks and other fleets in the area. I had the privilege to cut the ribbon at the station with members Of Amazon senior leadership, business partners and Ohio dairymen who will be providing RNG to our fueling network, The local congressman and other political and community leaders. Upon opening, 53 brand new Amazon trucks began fueling With RNG at this one station, allowing Amazon to realize huge carbon emission savings compared to diesel trucks. It's interesting to note that the other alternatives in the heavy duty vehicle space continue to struggle to roll out that many trucks in total, Making RNG the leader in clean fuel transportation.
Plans to expand this site and increase the Capacity to be able to accommodate 84 Amazon trucks are already in the works. This station opening was just the beginning Sylvania and Florida should be flowing RNG to the Amazon fleet in about a month, with more by the end of the year and others opening early next year. Our relationship with Amazon continues to deepen and we are excited about their long range plans for their clean fleet of RNG trucks. The Amazon stations are only a portion of our active construction portfolio. We plan to complete 27 Station projects this year for our refuse, transit, trucking and airport customers and an additional 43 stations are in some stage of the construction process.
This is a solid backlog. In September, we signed a 3 year agreement to expand our relationship with Our longtime customer Waste Management for 3 station projects where they will fuel their RNG refuse trucks. That will bring total stations at Clean Energy Services for Waste Management to 96 in the U. S. And Canada.
Recently signed a new transit customer, Valley Regional Transit in Idaho, which operates 30 buses. We also extended our relationship with Santa Monica's Big Blue Transit Agency, winning a contract to supply them with 1,800,000 gallons of RNG for 177 buses. In addition to Amazon's adoption of RNG, carriers for other big brands like McDonald's And Unilever are ordering RNG trucks. So it's interesting to note that the carrier which won the Unilever bid Did so by meeting the Unilever Biogenic Criteria Assessment. That assessment wanted to know 3 criteria.
1, Could the feedstock of the fuel be used as a food source? 2, is there a non deforestation and land impact use of the feedstock and 3, is there a better alternative use of the fuels feedstock? In the Unilever bid, RNG had a perfect score. We also recently signed a contract with U. S.
Foods to fuel 14 heavy duty trucks one of our stations in Sacramento. These companies continue to be focused on reducing greenhouse gas emissions and meeting sustainability goals And are not waiting for other technologies and their costly and uneconomic fueling infrastructure to be developed. Program with Chevron at the ports of LA and Long Beach continues to have success with a total of 850 heavy duty trucks Either already financed or going through the approval process. And speaking of the ports, another exciting event In the Q3 for me was attending a ceremony at the Port of Long Beach celebrating the 1st bunkering with liquefied natural gas of new container ship. This is the 1st ship to use this clean fuel in the West Coast of the United States.
300,000 gallons of LNG went into the 774 foot ship from our liquefaction plant in Boron, California. Atisha will be expanding its fleet with 2 additional container ships that will travel back and forth from Long Beach to the Hawaii, powered by LNG. The second is expected to launch in May of next year, followed by the 3rd ship in October 2023. In total, the 3 ships are expected to consume 105,000,000 gallons of LNG from our Boron plant over the next 5 years. Being the first is not always easy.
I want to congratulate the Clean Energy team, which worked for years to get the deal done with PACHA And World Fuel Services that included providing bunkering support at the dry dock facility in Brownsville, Texas, where the Newly built ship was commissioned. As you can imagine, the demand for bulk LNG continues to grow with volatile global energy markets. Our 2 LNG plants in California and Texas have been very busy. In fact, with the Patia LNG fuel deal, We are expanding the capacity at our Boron plant. The 3rd train should be completed in the Q2 of next year and will add 50% more capacity And increased production capability by 90,000 LNG gallons for a total of 270,000 gallons a day.
Our Boron liquefaction plant is the only one of its kind in the state of California, which gives us a competitive advantage as demand increases. And speaking of production, our investment in new RNG sources, primarily at dairies, continues at a healthy clip. We have great partners in Total Energies and BP that not only bring capital and strong balance sheets, but bring know how in major projects like RNG Digesters. Doesn't seem like that long ago when I put a shovel in the dirt at Del Rio Dairy in Texas to break ground for the construction of our first new Low carbon RNG digester. With great effort from the team, the first RNG molecules are expected to be produced at Del Rio In early 2023.
We've all been reading the announcements about the M and A activity in the RNG production space, which we see as a positive because it validates that there is a market and the importance of owning production assets. This was emphasized during the call with BP's CEO, Bernard Looney, after their announcement to buy Arkea. Bernard and VP Executives spoke of the value of their marketing relationship with clean energy that gives them access to our fueling infrastructure. No company is as well positioned as we are by owning and operating the largest fueling infrastructure in the country where the highest value of the RNG is captured. I'll close with saying that we are very pleased that the extension of the alternative fuel tax credit was included in the Inflation Reduction Act.
This is assurance that for the next several years, RNG Transportation fuel will be rewarded with a $0.50 a gallon credit. This is also recognition by policymakers that this ultra clean expansion and adoption of RNG as well. A new and significant investment tax credit of up to 30% For qualified biogas projects like our current and future RNG digesters at dairies was in the legislation. And the clean fuels production credit in the bill creates a valuable tax credit for the production of low emissions transportation fuels like RNG. Those are the highlights of a very productive Q3.
I feel good about the last quarter and the progress we've made as a company, I feel even better about the future. And with that, I'll hand the call over to Bob.
Thank you, Andrew. Good afternoon to everyone. We reported solid 3rd quarter results, which benefited from continued growth in RNG volumes as well as the alternative fuel tax credit that we anticipated, despite seeing some pressure from elevated natural gas costs. Our results are a testament to the resilience of our diverse business model. I want to take a moment here to discuss Improvements, simplifications we've made in how we report our volumes.
We're now disclosing 2 distinct Volume categories of fuel gallons and O and M Services gallons. These two volume categories align with their respective volume related revenue included in our product and services revenue on our income statement. And you'll notice we've expanded disclosure of our product and service revenues as part of this change. While disclosing our total gallons Has been meaningful and a good metric. We feel with our focus on RNG fuel and the divergent economics around fuel gallons versus O and M Services gallons that we often talk about that going forward, it will be more beneficial to report fuel volumes And O and M Services volumes separately.
Now moving to the 3rd quarter results. On a GAAP basis, we reported a GAAP net loss of $9,000,000 for 3rd quarter on revenues of $125,700,000 This compares to a GAAP net loss of $3,900,000 on revenue of 86,100,000 In the Q3 of 2021, the Q3 of 2022 benefited from approximately $10,000,000 $8,800,000 in accelerated depreciation expense related to the removal of equipment at select pilot locations that we talked about on our last call. On a non GAAP basis, we reported net income of $12,500,000 for the Q3 of 2022 versus Non GAAP net income of $1,600,000 in the prior year Q3. The 2022 non GAAP income benefited from the incremental I'll turn to fuel tax credit revenue when compared to a year ago. The year over year growth in revenue, as we've Mentioned is attributed to the growth in fuel volumes and a rise in fuel prices compared to last year, as well as the catch up on the alternative fuel tax credit revenue.
Our RIN and LCFS revenues of $11,900,000 For the Q3 of 2022 came in where we expected, reflecting lower credit pricing, particularly lower LCFS prices. Really the story on Q3 of 2022, which we're pleased with the results was really We did see a squeeze on fuel margins due to what some might say was a historic spike in natural gas costs That persisted for 2 thirds of the quarter. And since oil and diesel prices were flat to lower in that period, We did not have as much room to raise our fuel prices. So our underlying fuel margins did get squeezed. My estimate on that on the squeeze is about $3,000,000 for the quarter.
Thus far in the Q4, we have seen natural gas Costs come down from the highs in the Q3. So we are anticipating an improvement in fuel margins in the 4th If we continue to see lower natural gas costs along with the continued elevated fuel prices. Having said this and looking at our adjusted EBITDA, we reported $24,100,000 of adjusted EBITDA for the Q3 of 2022, Which also benefited from the incremental alternative fuel tax credit during the quarter. A year ago, 3rd quarter Adjusted EBITDA was $13,400,000 which had 1 quarter of alternative fuel tax credit revenue. Year to date, our GAAP loss is $46,400,000 and adjusted EBITDA is $37,400,000 And we're guiding to approximately $58,000,000 of a GAAP loss for the year and $60,000,000 approximately $60,000,000 of adjusted EBITDA for the year, Which implies the 4th quarter needs cooperation from credit prices and fuel margins among others, but Given our continued fuel volume growth and control on discretionary spend, we believe that our guidance can be met.
On the balance sheet and capital front, we remain active in securing a modest level of debt at the corporate level. We're targeting about $150,000,000 as a bridge into 2023 And we are actively in that process as we speak. And then one last comment on the inflationary on the Inflation Reduction Act. Of course, we think this act provides a significant tailwind to further support the development of RNG as a transportation fuel. The investment tax credit component helps returns, but importantly extends our capital resources, frankly, the whole and add significant incentives to each gallon of RNG that's produced.
We're engaged in all the feedback And evaluation of what ultimately will come back through the Treasury Department and we look forward to getting more With that operator, please open the call to questions.
From the line of Eric Stine with Craig Hallum.
Hi, Andrew. Hi, Bob.
Hey, Eric. Hi, Eric. Hey. So first of all, I really think that the added disclosures are great. I mean these are questions that I've gotten from people for a long time and I know it's in your filing, but take some work to kind of Slash out, so for you to give them is a very good thing.
So thanks for that. Maybe First, could you just comment on volume growth or volumes that you're seeing across your 4 main segments? And I know one of the issues the industry is having right now is just supply chain and even though the economics are good, ability to get trucks. So maybe volumes now and maybe what you expect as that starts to improve?
Eric, it's a good question and we have seen some supply. I know our friends in the refuse industry, for instance, were seeing some supply bottlenecks. Frankly, it had really nothing to do with the natural gas components. I mean, it was examples given to me were doors And the locking mechanisms for doors and things like that. So we've seen some of that slowed the delivery in the last quarter on refuse That seems to have picked up some.
We've seen the same thing with some of our over the road truck customers on Class 8 trucks. I know that there's been some delays that I think is really is not only happened for the Several months this year, but also is going into the order book for next year. So we do see some of that. I guess I'm a remain to be an optimist. I think that'll Begin to smooth out and catch up.
I know it was troubling, particularly troubling earlier in the year. So I just I guess we just have to hope that that gets to be more normalized. Bob, maybe you have Yes,
I mean from the
From our segments.
Yes, from the sectors, we've anticipated all year that We would have a ramp up in volumes as we moved through the year and we did see that in the Q3. We are pleased to see that and that was pretty much across the board on between refuse and transit, Particularly trucking and fleet services. So it was good to see Most of the sectors really all do what we were wanting them and thought they would do for this quarter and frankly, Looking into Q4 as well.
Eric, we've always had good volume growth, just the way the cycle works in the refuse sector, For instance, when they order trucks and when they get delivery trucks, we always see begin to see a pickup in volume in the 3rd and 4th quarters of Refuse, I can't put my finger on what happens on transit often on the delivery of buses. And of course, we see more trucks being delivered into our some of our over the road trucking customers and are expecting increased volume in the 4th
Okay. That's helpful. And then certainly hearing, I know you've talked about it in the past, but I'm hearing From others that there is a lot of demand for the 15 liter and I know it's not coming till early 2024, That's really not that far off. I mean is that any details that you can share in terms of I know there are a few fleets that Are considering some pretty significant rollouts once that Cummins engine is available.
I was last week in South Carolina at the Natural Gas Vehicle America's Annual Conference, which had a very Big attendance, which pleased me. The gentleman in charge of The 15 leader from Cummins was there and of course we'd love to have him. He was the hot commodity. Everybody wanted to know when the Engines were going to hit the ground and how many test units and when was the order book open. And he by the time I got there, he said, don't ask me any more questions.
But There is great interest in that. And as I've said is that engine is the right engine now at the right time. The 15 liter, just as an industry goes, the 15 liter has a 75% or Higher market share. So I mean that's what diesels are. And so I think our industry is very excited about now adding this into the So We're pleased with it.
Those test engines, as you know, I think we discussed and Don't hold me to the exact dates here, but there's going to be a slug of test fleets that will begin to get Those 15 leaders in their hands at the very late part of this year and early into the Q1, and then they're going to run those engines a lot. As they say in the business, you're going to try to break them. And then they go to school on that and then they begin Make the final adjustments and then those the order book sometime late in 'twenty three will begin to open. So we're excited about it. I know the large fleets, we've all talked about the Walmart and other fleets of that ilk wanting to be involved and talking about being involved in the test.
We're also seeing a similar interest in Canada. Very large trucking fleets up there are very much interested in the 15 leaner. Canada allows For heavier freight. I think it's £100,000 or £110,000 and so 15 liter is really important there. This engine is what the industry needs and with the RNG, you'll have Really for the first time, the cleanest, lowest carbon engine providing all the torque and horsepower that you need in the business.
Okay. I'll take the rest offline. Thank you.
Okay. Thank you, Herb.
We'll take our next question from the line of Rob Brown with Lake Street Capital Markets. Please go ahead.
Andrew, hi Bob.
Hey Rob. Hi Rob.
On the RNG Production kind of capacity adds that you're doing, could you kind of give us an update of where you'll think your RNG production, I guess, your JVs will be sort of as you get this first wave done, what sort of the gallon volume of production you think you can get to?
Well, Rob, I think without getting into the minutiae of which project is We're in the construction cycle and all that. I mean, we as I've said, I'm sticking with the fact that we're on track What we talked about on R&G Day, we've got 7 and soon to be 8 projects Actually, with earning dirt and under construction and a like number ready to enter To the construction projects, we feel really good about that. And then what's different on this call from the last call is that we have 7 more projects that have now moved into development. That's advanced engineering and due diligence before you would actually have them sign. Now you're spending money, so you sure Anticipate you're going to bring all those on.
So that's increasing the number of projects that we have. And then as I've talked about before, just to kind of try to keep the numbers somewhat same is and then we now Continue to have in addition to those 20 more in the pipeline. So I feel very good about where we stand and where we Said we would be in terms of the production. I will say that the construction projects can slip 2 months from to there. I mean, there's still roughly the same amount of time to build as we've always said between the time that You sign a deal and you bring it on production and begin to go into commercial production and count the RNG It's the better part of 18 months.
So we've got to get these projects on and we're making good progress on that. We are also, Rob, if you go back and if you would those on the call look at RNG Day, we've had a very good year 20 22 of adding in our 3rd party RNG. And that as you know is an important component To go alongside with the projects that we'll have under development construction with our partners ourselves.
Okay, great. Thank you. And then kind of second question is around the Amazon On activity, it's starting nicely. How has their long range plans changed? Are they still sort of on track with their plans?
Are they They're thinking or just where is that sort of at longer term?
Well, I get in big time trouble if I start talking about what their plans are, Rob, a good try. But I guess what I can say is I was very encouraged to meet all the senior team of transportation out At our Groveport, Ohio station, and we had dinner and meetings with them in and around that opening. I think it was really important for them to see those trucks, those beautiful Amazon Blue trucks all hooked up and fueling. They've ordered a lot of trucks and I'll let their numbers and their Press releases and some of their tweets speak for itself about how many they've done, but they have said in their Sustainability reporting that upwards of 2,000 trucks and we're seeing those come. They've ordered those trucks.
Those trucks these stations need to get open to be able to begin to fill those trucks. And So we're it can't be any too soon to get a lot of these stations completed. So I feel real good about it and I really can't say anymore about their next Phase 3 or Phase 4. You could imagine though That we're staying very close with them as they're developing those plans.
Okay, great. Thank you. I'll turn it over.
Thank you.
Our next question comes from the line of Dushyant Ailani with Jefferies. Please go ahead, sir.
Thank you. So maybe just The first question was a little bit more kind of digging into the demand. How have your conversation been with customers in terms of just deploying capital Towards some NGV's in the light of maybe potential weakness in the economy. I know you talked about some positives, but is that Across the board or how do we think about that?
Well, I think
and Desant, first off, welcome aboard. I know you're covering us newly covering us, so we appreciate it. I think it's true that these fleets are struggling with lots of things, right? They are looking at the uncertainties of the economy Inflation pressures, employee shortages and supply chain, so it hasn't been exactly business as usual Certainly trucking companies. Now the good news is freight was up and the economy was fairly strong, But there's a lot on their mind and yet at the same so I would say that they're being cautious.
You have to keep in mind that we're asking somebody to go out and buy a brand new truck. Now good news is these fleets replace And are on normal replacement cycle. So it's not like we're asking to do something they wouldn't otherwise be doing. And yet at the same time, they're all facing an ever increasing Pressure on their climate reduction goals and sustainability goals. And so we find them to be very open And we're having very meaningful discussions.
And we have a large sales force that does nothing but calls on trucking fleets. And we We're making, I think, very good progress. I think some of our fleets are probably really have an eye on what's happening on 15 liter, a lot of them will avail themselves to a 15 liter. Not all need that. I mean, Amazon has taken 11.9 liter.
I don't want to give the impression that the business will stop and wait for the new engine. But I know a lot of the largest For hire fleets, we'll want the 15 leader as well. So there's a little time here, I think is what you see too.
Understood. Thank you. And I think my next question was primarily on how do we think about for the Just the level of debt that you'll be taking on, how you consider project financing or how do you kind of think about the different
Yes, sure.
Yes. Bob, why don't you go ahead and then I'll
Yes. I mean, I think it's Well, it's a little bit of a step process, but yes, we will consider absolutely project financing. Our first step being though at At the clean energy corporate level, because we literally have no debt that we can put on and I'll call $150,000,000 a modest level Of debt. And so we would do that. That kind of bridges us into then further evaluate that project financing Landscape, right?
And that can come in different flavors, where it goes and what parties get involved. There's a lot of interest on that front. So it's not at all lack of interest out there On that, so it's just the time, so we're kind of first things first, we'll go quarter
Dushyant, we have said that we would put Project level dead on as these projects become a little bit more developed and we've imagined that that level would be somewhere $200,000,000 $400,000,000 at the project level. So as Bob says, it's kind of a step process. We'll put it on the corporate debt and then The next piece will be sort of at the project level and you'll see that next year, in the first part Yes,
I mean we're considering all everything. We're working on all of that right now. In terms of the strategy behind all that.
Sounds good. Thank you. I'll turn it over.
Okay. Thank you.
We'll take our next Question from the line of Matthew Blair with TPH. Please go ahead.
Hey, guys. This is Keel Andari filling in for Matthew Blair. Thanks for taking the questions. So First, I know it may be too early for this question and there's still a lot of unknowns, but just curious what your guys' thoughts are on eRINs being included in the RFS, how that might impact D3 RIN pricing and CLME?
Yes. No, it's a good question. We I guess, if I've handicapped the Upcoming RVO, I'm imagining the ERIN will be in it. And we have Put out formal comments and met with EPA that and I think most of the industry has Saying that we believe that for them to develop a constructive RVO and maintain a healthy RIN pricing is that they should be thinking of the ERIN to be additive To the upcoming volume obligations. We'll see.
We'll see if it is Completely additive, partially additive, but I think you could imagine that it will be. I think long term it should be in the count. And I also think that I'm hopeful that they'll move the RVO up. And I think that should end up in sort of the middle to longer term, it will all be constructive, I think, for RIN pricing. I think it would be a mistake and I hope I can see right now The EPA administrator, you know what, these are political these are somewhat quasi political decisions and you got to be expensive gasoline.
So they're very sensitive. But I think I also believe that the EPA believes that they should include electricity in this And I think they will and I think eventually it will all end up making for Important part of the whole renewable fuel standard.
Thanks for that. Sounds good. And on the second one, just By the way, by the way,
one thing on that, just to interrupt. I'm sorry to interrupt. We think that there are a lot of dairies in the United States, I mean literally probably 1,000 of them That are probably too small for Participating or putting in a digester that then would clean up the gas and put it into a pipeline. But we believe there are lots and lots of dairies, thousands of dairies that would end up Using manure and generating power. And what you'll find is that RNG will be the cleanest feedstock To create low carbon electrons, and those will end up participating in the whole program and also in the low carbon fuel standard.
I think that it will be constructive for the RNG business.
Yes, makes sense. And so on the second one, just noticing that the Amazon warrant charge outlook was reduced To the lower end of the previous outlook. And if I recall correctly, those warrant charges are based on Amazon's roll Or have some relation to Amazon's rollout. And so, just wanted to ask if Amazon's rollout at today is Trending in line with expectations?
Well, it's trending in line with kind of Renewed expectations that we probably saw back when we kind of moved some of our guidance and What earlier in the year, so they're trending there. But from a guidance standpoint, The amount that you're seeing is really what would what factors into being at approximately $60,000,000 of adjusted EBITDA. So it's really not a it's not really a bring it's really coming off of a high range that was in our previous guidance of $65,000,000 adjusted EBITDA. So it was that really is just probably the more likely number. That's why we Moved the range to just really approximately $60,000,000 and that's the number that's in there.
So it's meeting expectations with what we've guided to and where we think we'll finish the year.
Sounds good. Thanks so much for the time.
We'll take our next Question from the line of Graham Price with Raymond James. Please go ahead.
Hi. Thanks for taking the question. I guess first one, just on the RNG projects, What kind of ramp up period should we expect for projects to get to kind of steady state operations? Just wondering if there's sort of a rule of thumb there?
Well, No, it's a good question, Graham. I mean, after you bring after you commission a project, there's actually about a 6 month period as you wait For certification of the pathway of the CARB and fixing your carbon intensity, right, before you really generate any credits. So you have to kind of think about it. The construction period and on the front end and then the year of Construction, so it's 16 months to 18 months and then there's been anywhere between 4 month, 6 month Period, while you basically before you're really in commercial generation of credits, while you're just kind of waiting for the Barb to certify your carbon intensity. Now the industry is working to see if there isn't any way to speed that up.
And so we all think that that could be done faster. And we hope that that will be the case. And then ARB is working on a True period and this and that. So we'll see how all that all comes about. But we'd like to think that that's more of administrative And it would be really nice if that could be tightened some.
Got it. Thanks. Yes, no, that's clear. And then, I guess switching gears a little bit on the new fuel and service volumes breakout that you provide. You indicated that certain gallons are included in both fuel and service volumes.
So I was just wondering if it would be possible to get The number of gallons that are kind of being counted in both of those buckets?
Yes. So there are what that relates to is Really in the past, we had a category of volumes where we provide fuel and we do the services. And so, we're giving our comment there is giving you a heads up that there That that is going on and that was really so that maybe because those that have followed us for a long time would maybe naturally just Add these together and some and then maybe try to get to a total volume and we're cautioning on that. Now the reason I'm not jumping out with a number per se on that is because our focus is on The fuel gallons that are generating our fuel revenue, our volume related fuel revenue and the service gallons that are generating volume related service revenue. And to know if there's some that are in both is not necessarily Relevant at this point, what you want to know is what are your fuel volumes that drive the fuel revenue and what are your service Volumes that drive service revenue.
Now, we've made this change a bit overnight, if you will, the new quarter, Kind of cold turkey. All I'll say is if you look back at kind of prior quarters, that category Was around 20,000,000 gallons that you would say, oh, you do both fuel and Services on. And that's probably in the ballpark of what this quarter was. But I appreciate the question on it. Just to clarify That aspect of us looking at the volume set distinctly somewhat separate And really, we've always talked about it.
We've always gone through and talked about our volumes and made folks aware that there was a service Volume and economics associated with that as well as fuel and some that where we do both. I mean, we love the ones where we do both. I mean, that's typically I mean that's where we're going to get some of our highest margins because we're doing both service and fuel and so we make a lot.
And I just may mention there, one of the reasons that we continue to go out and do service For our customers. Some would say, gosh, you make a lot less on those gallons than you do on providing the fuel is because often New York City Transit is a good example. We were doing the service on those gallons and then one day they called us up and said, hey, could you provide us RNG? And now we do. We provide them RNG.
So we're doing we're fueling them now. So that's why it's important for us We will continue to be able to provide that as well to our customers because someday we will be able to since we are the leader in the RNG, we will end up Inverted those to our G fuel gallons.
Got it. Understood. And that absolutely makes sense. Thank you very much.
Okay. Thank you for the questions.
Our next question comes from the line of Betty Jiang with Scotiabank. Please go ahead.
Thank you. First question is going to be on Del Rio. You mentioned in your prepared remarks that the first Okay. So, I guess, I'll just ask a question. I'll just ask a question.
Okay. So, What could be causing that delay?
Betty, first off, welcome to your bank. Thank you for the coverage. We figured we would get that project on and be in Commercial operations at the very tail end of 2022 and it looks like now it's going to be in the very front end of 2023.
And that's some supply chain things. I mean, there's, I think a couple components, if you will, that will get here, but just going to move that schedule of commissioning and kind of getting into commercial operation into the 1st part of 'twenty three. I mean, So that's it. I mean that project is going well. It's very exciting.
I mean, we're there's a lot going on to gear up for everything, maintenance and the gallons, The dairyman is
I mean, if you're out there, Betty, we just had a bunch of people tour the other day. I mean, you'd look at it and say, wow, this thing's done. So it's very it's getting there. It's very close. So it's impressive.
Got it. Okay. Thank you. And the next question is on BP's acquisition of Arkea. You had You mentioned this a bit in your prepared remarks, but wanted to dig in a bit more.
How does it impact your existing JV with them. And then, they also did mention wanting to expand their distribution footprint with you guys. What do you think that could entail?
Yes. We're very excited for that. I don't want to speak too much For BP, BP though I think has been fairly public in saying that they believe that R and G and transportation sector is the highest use For RNG, they have I think they said on their call that they envisioned that some of that RNG from the landfill projects, the current ones and So we're very excited about it. We see it as a big new source for us and Very, very pleased with that partnership and happy that they're bringing all that into The marketing agreement as it comes.
Got it. Thank you.
And there are no further questions at this time. I'd like to turn the call back over for additional or closing remarks to Mr. Littlefair.
Well,