Aug 3 (Reuters) – Carl Icahn’s CVR Vitality CVI.N is pausing plans to provide round 7,000 barrels per day of renewable diesel at its Wynnewood, Oklahoma, refinery as a consequence of excessive feedstock costs, the corporate stated Tuesday.
A number of U.S. refineries are ramping up operations to provide extra inexperienced fuels from vegetable oil and animal fat as they attempt to achieve a foothold within the vitality transition to lower-emitting fuels. Their demand for that feedstock has boosted costs sharply, threatening the way forward for a few of these plans.
“Renewable diesel feedstock costs have elevated significantly, significantly for refined, bleached and deodorized soybean oil to a degree the place the economics don’t make sense for us to finish the conversion at the moment,” stated CVR Chief Govt David Lamp.
He attributed the spike in feedstocks partially to the startup of latest renewable diesel crops in the USA. Refiners like Valero, Marathon Petroleum, Phillips 66, and Hollyfrontier are all competing for a restricted provide of feedstocks.
“We imagine renewable diesel producers with feedstock contract expirations developing shall be pressured to surrender a number of the margin they at present take pleasure in,” Lamp stated.
Refiners revenue essentially the most by operating “advantaged” feedstocks equivalent to tallow, together with yellow and white grease, as a result of the carbon depth of the lifecycle of these feedstocks is taken into account very low. That makes these liquids extra useful underneath federal and California state packages that reward refiners with credit for utilizing such merchandise.
CVR is planning to construct a pre-treatment unit, anticipated to be full within the third quarter of 2022, for use for bean oil when the plant does begin producing renewable fuels.
That is the second time CVR has delayed the renewable diesel unit. In Could the corporate delayed manufacturing as a consequence of extreme climate in February and delays in tools deliveries. The unit was anticipated to start out processing renewable diesel final month.
(Reporting by Laura Sanicola; Modifying by Karishma Singh)
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