Tesoro Makes Its Move on Renewable Biocrude

by Jim Lane (Biofuels Digest) In Texas, 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.

Fulcrum BioEnergy, Inc.: Fulcrum plans to supply biocrude produced from municipal solid waste to Tesoro to process as a feedstock at its Martinez, California Refinery. An estimated 800 barrels of biocrude per day will be produced at Fulcrum’s Sierra BioFuels Plant in Reno, Nevada, which is expected to be operational in early 2018.

Virent, Inc.: Tesoro and Virent are working to establish a strategic relationship to support scale-up and commercialization of Virent’s BioForming technology which produces low-carbon, biofuel and chemicals.

Ensyn 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.

You might ask, why, and why now — given that we are in an era of ultra-low crude oil prices?

Converting renewable biomass into biocrude is expected to enable existing refining assets to produce less carbon-intensive fuels at a significantly lower capital and operating cost than competing technologies. This approach could lower Tesoro’s compliance costs with the federal renewable fuel standard and California’s Low Carbon Fuel Standard by generating credits, while producing less carbon-intensive fuels which are fully compatible with the nation’s existing fuel infrastructure as well as current vehicle fleet warranties.

In short, California policy isn’t going to turn back towards fossil fuels, and the US Renewable Fuel Standard is going away any time soon, so the opportunities in low-carbon fuels might be about the closest thing to a sure thing as refiners look to opportunities in this extremely turbulent market.

And AltAir is coming on-line with 40 million gallons of new capacity and CEO Bryan Sherbacow noted that “the chasllenges for us are about producing in-spec fuels based on affordable feedstock, at capacity. If we hit our cost targets there are five gallons of demand for every gallon we could supply.”

Jet fuels are another area of opportunity, although currently jet fuel is not yet included as a qualifying fuel under the California Low Carbon Fuel Standard.

As the Great Green Fleet sailed into the Pacific yesterday, launching a long-awaited era of renewable military fuels and diversified energy supply and conservation for the US Navy, AltAir Fuels was justly in the limelight as the provider of 77 million gallons of in-spec renewable fuel blends.

But given that AltAir’s bid was limited by its own production capacity to a 10% biofuels blend — you might wonder who the partner was for the other 90%, which is traditional fossil-based diesel. That would be Tesoro, and AltAir CEO Bryan Sherbacow has been pointed in his praise of Tesoro, noting that the economics and logistics of the Great Green Fleet’s debut were not exactly a no-brainer.

Conversely, many assume that low oil prices would kill off advanced renewable fuels. In fact, it’s shifted some refiners to use a time of strong margins to look for reliable opportunities in biocrude. It’s killed off a lot of investment in tight oil extraction and choked off the natural gas boom. Renewable chemicals have strong opportunities, but more selectively than before. And electric cars are very hard pressed to compete on the economics of diesel. READ MORE and MORE (Tesoro) and MORE (Biomass Magazine)