Renewable Energy Producer S.G. Preston Interested in Buying PES Refinery

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August 26, 2019

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by Catalina Jaramillo (WHYY) Philadelphia-based biofuel company S.G. Preston Co. is the first of at least two prospective buyers to publicly express interest in taking over the damaged Philadelphia Energy Solutions refinery to make renewable diesel, marine diesel and jet fuel, according to Reuters.

It could mean a transition from fossil fuel to energy being made from plants and waste.

The company would use part of the plant to make renewable fuels from fats, oils and grease from surrounding communities, sources told Reuters.

“We can use the existing equipment, labor and regional waste streams to show the rest of the country how to bring back our jobs and industries,” Randy LeTang, chief executive of S.G. Preston, said in a Reuters article that appears on the company’s website.

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Local unions say they have met with two parties interested in bidding on the refinery operation.

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S.G. Preston is planning a facility in Ohio with the capacity to produce 120 million gallons per year of renewable diesel and jet fuel from fats, oils and greases. The plant is expected to begin operations in 2020 and be powered by plant oils.

The company’s website mentions “acquiring shuttered or existing refinery facilities scheduled for closure” as part of its business model. The plan is to convert those facilities to 100% renewable biofuels and chemicals and resell to petroleum and chemical partners in need of renewable-energy credits.

About a year ago, LeTang spoke about “a commercial-scale, fully integrated biorefinery” during a panel at Penn State University.

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“In addition, the PES site is a natural candidate for this type of activity, given the infrastructure in place. Lastly, S.G. Preston is one of the few established commercial-scale advanced non-ethanol biofuel producers in the country,” said Simeone (Christina Simeone, a senior fellow at the University of Pennsylvania’s Kleinman Center for Energy Policy), who’s currently pursuing a doctorate in advanced energy systems jointly offered by the Colorado School of Mines and the National Renewable Energy Laboratory.

“Is it still going to be an industrial operation that has emissions? Yes. So is everybody going to love it? Probably not. But in my mind, from an environmental perspective, it’s certainly better than a petroleum refinery,” she added.

Although the renewable-fuel operations would probably take place on a far smaller production scale than PES carried out, the biofuel company has been in conversations with local unions to hire some of their members.

Meenal Raval, a member of the local environmental organization Philly’s Ready for 100, said the proposal looks interesting and could help the city reach its sustainability goals.

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About a year ago, RNG Energy Solutions proposed a $120 million biogas plant at the 1,300-acre PES site. That project envisioned the capacity to divert 1,100 tons of regional commercial food waste from landfills, instead turning it into renewable gas using anaerobic digesters.

At the time, environmentalists were cautiously optimistic. A plant like that could have reduced methane from landfills and carbon dioxide by supplying renewable fuels for vehicles. READ MORE

Exclusive: Biofuels company proposes to buy fire-damaged Philadelphia refinery (Reuters)

Philly refinery closure: Why gas pump isn’t where you should look for the impact (Philadelphia Inquirer)

It’s Oil Over: Refinery workers mull future after massive layoffs (Daily Times)

Bankrupt Philly refinery’s request to pay secret executive bonuses raises objections (Philadelphia Inquirer)

Cause of Philadelphia fire sounds alarm over aging U.S. refineries (S.G. Preston)

Massive oil refinery leaks toxic chemical in the middle of Philadelphia (NBC News)

Excerpt from Philadelphia Inquirer: While PES is responsible for about 5 percent of the East Coast’s gasoline production, it produces 30 to 40 percent of the region’s diesel and heating oil, according to the Oil Price Information Service — and that could portend a supply crunch in the winter.

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Potential winter shortages of heating oil could be magnified because of an impending change in regulations requiring all ocean-going vessels to emit less sulfur after Jan. 1, 2020. That new rule may divert large amounts of low-sulfur diesel and heating oil now used in trucking and in home furnaces, creating shortages and price spikes.

The new International Maritime Organization regulations, which reduce the allowable limit of sulfur in marine fuels from 3.5 percent to 0.5 percent by weight, have created such a demand for the cleaner-burning marine fuel that the world’s largest container-shipping company, Maersk, has signed up to buy low-sulfur fuel produced at an idle asphalt plant in Paulsboro, N.J.

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PBF Logistics in October will begin to supply A.P. Moller-Maersk with low-sulfur fuel produced and blended at PBF’s Crown Point International site, according to S&P Global Platts. The terminal, a former asphalt plant that PBF acquired last year, is located near PBF’s Paulsboro refinery. PBF will supply about 10 percent of Maersk’s annual fuel from the plant.

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Several potential buyers who are said to be sniffing around the shuttered PES refinery in Philadelphia are also interested in serving the marine fuel market, including a Philadelphia biofuels producer that this week became the first company to publicly step forward and express an interest in PES.

The company, S.G. Preston Co., said it would modify the equipment to make renewable diesel, marine, and jet fuels from fats and oils. R. Delbert LeTang, founder and chief executive of S.G. Preston, said in an interview Friday that his company supplies biofuels to buyers under long-term contracts to satisfy renewable-fuel mandates, and is less vulnerable to the volatile prices and low margins that undid PES.

“The economics of the products we produce are better than conventional fuels,” LeTang said. S.G Preston signed an agreement in 2016 to supply JetBlue with 33 million gallons a year of jet fuel produced from 30 percent biofuel.

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PES is also disadvantaged because it is configured to use light, sweet crude, which is more expensive to buy than heavy crude, and produces more gasoline and less of the higher-profit fuels like diesel and fuel oil.

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After PES announced its closure, Buckeye settled a lawsuit allowing more mid-continent fuel to flow into Pennsylvania, which should allow refiners from the Great Lakes to step into markets previously dominated by PES. READ MORE

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