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HollyFrontier to build biodiesel plant in New Mexico
The renewable diesel unit would be located in New Mexico at HollyFrontier’s Artesia refinery.
NEW MEXICO
US-BASED refiner HollyFrontier has unveiled plans to build a new biodiesel plant as it seeks to meet its requirements under the Renewable Fuel Standard. The renewable diesel unit (RDU) would be located in New Mexico at HollyFron- tier’s Artesia refinery. The unit, which would have a production capacity of about 125mn gal- lons (473mn litres), would process soybean oil and other feedstocks into biodiesel.
The plant, along with rail infrastructure and storage tanks, is projected to cost $350mn and is due to be completed in the first quarter of 2022, HollyFrontier said in a statement. The company expects to fund construction of the RDU with cash on hand and anticipates that it will generate an internal rate of return (IRR) of 20-30%.
HollyFrontier is aiming to lower costs related to blending renewable fuels by building the plant. This comes as refiners are having to blend increasing volumes of renewable fuels with their petroleum products or purchase credits, known as Renewable Identification Numbers (RINs), in order to meet US biofuel requirements. Holly- Frontier’s RIN costs amounted to $184mn last year.
The US Environmental Protection Agency (EPA) recently released a notice requesting more public comment on the proposed volumes of biofuels set to be required under the RFS pro- gramme in 2020 and 2021. A hearing on the proposal was held in October, and comments are due by November 29.
The move comes as agricultural and biofuels groups have criticised the proposed blending rules, arguing that the way the agency proposes
to calculate biofuel volumes would result in them being much lower than had originally been promised by US President Donald Trump.
However, the original promise had been made in part to make up for waivers that Trump’s government had granted to certain refineries. The number of waivers granted has increased dramatically during Trump’s time in office, reducing demand for biofuels. Last month, bio- fuels groups filed a petition in the US Court of Appeals in Washington, DC, against the EPA, challenging the EPA’s process for granting the exemptions. In the petition, the groups asked the court to review a decision made in August that retroactively exempted over 31 small refineries from meeting their 2018 biofuel requirements.
The EPA under Trump has also taken steps to compensate some companies for biofuel waiv- ers denied under former US President Barack Obama. HollyFrontier was awarded tens of mil- lions of dollars’ worth of RINs by the EPA for 2018 after the company argued that the agency had wrongly denied it waivers from biofuel man- dates going back to 2014 under Obama. Sinclair Oil was awarded RINs last year for the same reason. HollyFrontier is also among the compa- nies that says it has since received exemptions in recent years under Trump.
At the same time as saying it would build its new RDU, HollyFrontier announced that it was launching a $1bn share buyback pro- gramme. The buyback replaces all existing share repurchase authorisations, of which there were roughly $281mn remaining, the company said.™
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w w w . N E W S B A S E . c o m Week 46 20•November•2019