Marathon Petroleum to Acquire Andeavor for $23B

by Jim Lane (Biofuels Digest) ... The deal creates the largest US oil refiner (and a top-five refiner globally) at 3.1 million barrels per day of capacity — Valero is around the same size, but that includes overseas operations.

The (Marathon Petroleum) Company formed a joint venture with The Anderson’s, Inc., The Anderson’s Marathon Ethanol LLC, to construct and operate one or more ethanol plants in the U.S. Construction of the first plant, in Greenville, Ohio, began in late 2006, and the plant began production in Feb. 2008. Marathon has also acquired a 35% interest in The Anderson’s Clymers Ethanol LLC with a facility in Clymer’s, Ind., that began production in May 2007.

MPC owns a biofuel production facility in Cincinnati, Ohio, that produces biodiesel, glycerin and other byproducts. The capacity of the plant is approximately 70 million gallons per year. MPC also holds interests in ethanol production facilities in Albion, Michigan; Clymers, Indiana; and Greenville, Ohio. These plants have a combined ethanol production capacity of 415 million gallons per year and are managed by a co-owner.

In July 2017, we reported that Tesoro was looking to invest $3.5 million to retrofit its 8,000-barrel-per-day diesel hydrotreater at the Dickinson refinery to produce renewable diesel from corn oil or soy oil for supply into the state’s B5 market. The North Dakota Industrial Commission recently granted the company $500,000 towards the retrofit project that could be online by the end of the year. The company hasn’t yet agreed supply deals for its feedstock but will be looking to buy locally.

In September 2016, Tesoro reached an agreement to acquire Virent. The acquisition, the partners said, will support the scale up and commercialization of Virent’s BioForming technology for the production of low carbon bio-based fuels and chemicals. As a result of the acquisition, Virent will become a wholly owned subsidiary of Tesoro and remain in Madison, Wisconsin. In late 2015, Virent was named the #1 Hottest Small Company in the Advanced Bioeconomy by the readers and invited selectors in the Digest’s Hot 40.

In January 2016, Tesoro unveiled its plan to foster the development of biocrude made from renewable biomass, which can be co-processed in its existing refineries, along with traditional crude oil. And the company has identified three new partners in the process: Fulcrum BioEnergy, Virent, andEnsyn Corporation. Ensyn has applied for a pathway with the California Air Resources Board to co-process its biocrude, produced from tree residue – called Renewable Fuel Oil – in Tesoro’s California refineries.

Bullish on Biocrude: The Digest’s 2016 8-Slide Guide to Tesoro’s biocrude strategy and partners

Tesoro has unveiled its plan to foster the development of biocrude made from renewable biomass, which can be co-processed in its existing refineries, along with traditional crude oil. And the company has identified three new partners in the process: Fulcrum BioEnergy, Virent and Ensyn. Here, we look at Tesoro’s strategy, rationale and the partners in question.

In September 2016, we reported that $1.2 million in upgrades are planned for the Andersons Marathon Ethanol joint venture 110 million gallon facility in Greenville. Planned works include adding a processing tank for its distilling process in an effort to keep the 2008 facility up to date. The Andersons teamed with Marathon in the joint venture in 2006, with The Andersons running day-to-day operations and Marathon blending the ethanol into their gasoline. The facility also produces DDGS, E85, CO2 and corn oil in addition to ethanol. Marathon Petroleum Corp. acquired from Mitsui & Co. (U.S.A.) Inc. its interests in three ethanol companies for $75 million in cash in August 2013.

Marathon and the Renewable Fuel Standard

“We advocate repeal of the RFS,” Marathon says in its corporate guidance. “Despite the mandate reductions proposed by the EPA, which would apply only to 2014, the RFS provisions in EISA ’07 are simply unworkable. In order to satisfy the demands of the Clean Air Act, the EPA requires MPC – and other obligated parties – to force more corn ethanol biofuel into gasoline transportation fuel than the vehicle fleet can safely absorb, and to blend cellulosic biofuels that do not exist. And we face significant fines if we do not comply with these requirements.”

And Marathon is reportedly to be a prime mover in Texas Sen.John Cornyn’s plan to overhaul the Renewable Fuel Standard, favoring the D8 RIN credit that would be generated when a gallon of gasoline is produced that contains more than 10 percent ethanol. “Biofuel and agricultural voices do not support the D8 RIN,” Brooke Coleman, head of the Advanced Biofuels Business Council, told Reuters..

Industry experts have not rated this a major issue for biofuels — but we of course look at relationships with Fulcrum, Virent and Ensyn that are potentially weakened — not strengthened — by this move. READ MORE