Advanced BioFuels USA

by Janet McGurty (S&P Global Platts) Government incentives drive renewable diesel projects growth; Demand up as regional low carbon regulations increase — Once the scourge of the US refining industry, some refiners are now looking to renewable fuels to help their bottom lines and keep their facilities operational.

Despite many millions spent over the years on Capitol Hill lobbying against the Renewable Fuel Standard, some US refiners now are moving quickly to repurpose their oil refineries into renewable fuel facilities.

This attitude shift allows them to keep plants running while reducing overcapacity of US hydrocarbon refining capacity laid bare by the sharp coronavirus-led drop in transportation fuel demand, thus increasing traditional hydrocarbon refining margins.

According to S&P Global Platts’ calculations, about 1 million b/d of North American refining capacity is soon to be shuttered, with rationalization needed for another 1 million b/d to 1.5 million b/d to balance the market.

Refurbishing hydrocarbon plants to run renewable feed stocks like soybean oil, tallow and used cooking have an added bonus to shore up sagging refining cash flow — opening access to government credits by making renewable diesel and sustainable aviation fuel, or SAF.

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As more refiners latch onto the renewable bandwagon, renewable diesel and SAF production will grow, with nearly 20 US renewable diesel projects in the planning stage — including Phillips 66’s plan to convert its San Francisco refinery to the world’s largest renewables fuel plant.

Platts Analytics forecasts that the total renewable diesel supply will exceed 3 billion gallons in 2023 and 5 billion gallons by 2025. And California’s LCFS incentives make it the target market for most of the supply, according to Platts Analytics’ California Low Carbon Fuel Standard Scorecard.  READ MORE

More refineries switch to biofuel production as oil demand slumps (Biofuels International)

Covid Restaurant Shutdowns Threaten Oil Refiners’ Biofuel Dreams (MSN.com/Bloomberg)

Massive refiners are turning into biofuel plants in the West (NewsBreak/Bloomberg)

Permanent oil refinery closures accelerate as pandemic bites – IEA (Reuters)

With COVID dragging down gasoline demand, refineries look to biofuels to prop them up (Houston Chronicle)

China to Take Oil-Refining Crown Held by U.S. Since 19th Century (Yahoo!Finance/Bloomberg)

Oil And Gas Industry Facing A ‘Sea Change’ Toward Renewable Fuels: The pandemic has forced some refineries to shut down, and hastened a shift toward refining products like vegetable oil into “renewable diesel.” (Texas Standard; includes AUDIO)

Excerpt from MSN.com/Bloomberg: Prices are already rising as supply gets tighter, squeezing refiners’ profit margins. Including inflation, the cost of tallow is set to rise by about 20% in the next five years, while used cooking oil will become 16% more expensive, according to data from Stratas Advisors. In Rotterdam, where a large share of Europe’s biodiesel is produced, used cooking oil prices are about 15% higher than they were a year ago, SCB Brokers data showed.

The race to secure feedstocks for renewable diesel plants has already taken casualties. In May, New Zealand’s Z Energy Ltd. shut a biodiesel plant after an overseas bidder drove up the cost of domestic tallow, used to make fuel for the U.S. market, local media reported.

“Basically this means that small-scale, inefficient waste-based biodiesel producers will have most difficulties staying in business,” said Marijn Van der Wal, biofuel manager at Stratas Advisors. “They can’t afford to pay as much as the big renewable diesel players do.” READ MORE

Excerpt from Texas Standard:  Matt Smith, director of commodity research at ClipperData, tells Texas Standard that the pandemic hastened what was already a “sea change” in the industry toward more renewable fuels.

“The drumbeat is building for peak gasoline demand,” Smith said. “So whether that’s due to the behavioral changes we’ve seen this year in terms of working from home, or if it’s technological advances due to greater fuel efficiency, or if it’s simply just that move towards more electric vehicles, there is that sea change underway.”

What you’ll hear in this segment:

– Why factors beyond the pandemic are forcing the oil and gas industry to change course

– How some oil refineries are being retrofitted to process vegetable oil into “renewable diesel”

– How California leads the way when it comes to importing renewable fuels  READ MORE; includes AUDIO