Aug 3 - CVR Energy is pausing plans to produce around 7,000 barrels of renewable diesel per day at its Wynnewood, Oklahoma, refinery because of high feedstock prices, the company said Tuesday.
Several refineries are ramping up operations to produce more bio-degradable fuels from vegetable oil and animal fats as they try to gain an foothold in the transition to lower-emission fuels. Their demand for that feedstock has boosted prices sharply, threatening the future of some of these plans.
Renewable Diesel feedstock prices have increased significantly, specifically for refined, bleached & deodorized soybean oil to a level where the economics do not make sense for us to complete the conversion at this time, said CVR Chief Executive David Lamp.
He attributed the spike in feedstocks in part to the startup of renewable diesel plants in the United States. Refiners like Valero, Marathon Petroleum, Phillips 66, and Hollyfrontier compete for a limited supply of feedstocks.
We believe renewable diesel producers with feedstock contract expirations coming up will be forced to give up some of the margin they currently enjoy, Lamp said.
Refiners profit the most by running advantagesd feedstocks such as tallow along with yellow and white grease, because the carbon intensity of the cycle of these feedstocks is considered very low. That makes them more valuable by federal and California state programs that reward refiners with credits for using such liquids.
CVR is planning to build a pretreatment unit, expected to be completed in the third quarter of 2022, when it is used for bean oil when the plant starts producing renewable fuels.
This is the second time CVR has delayed the renewable power station. In May the company was delayed due to heavy rain in February and delays in equipment deliveries. The unit was expected to continue summing renewable diesel last month.