Oloechem Analytics — CVR Energy, a petroleum refiner based in Sugar Land, Texas, will delay plans to complete a renewable diesel conversion project at its Wynnewood, Oklahoma, refinery amid high feedstock prices, Chief Executive, David Lamp said in a second-quarter earnings conference call on August 3.
The project was originally expected to be completed in July and planned to produce up to 100 million gallons/year of renewable diesel from soybean oil.
“Construction on the Wynnewood renewable diesel unit has been progressing as planned, and we have reached a point where we are ready to bring the hydrocracker down to complete the final steps of the conversion process,” Lamp said during the earnings call. “However, renewable diesel feedstock prices have increased considerably, particularly for refined, bleached and deodorized soybean oil to a level where economically it does not make sense for us to complete the conversion at this time,” Lamp said.
Lamp mentioned he believes that “the recent spike in renewable diesel feedstock prices, particularly for soybean oil, can likely be attributed to the recent start-up of two new renewable diesel plants in the US.”
As more renewable diesel plants are constructed in the US, the company expects feedstock market to react to increasing demand and begin pricing according to low carbon fuel standard credit values and freight economics, Lamp said.
In addition, Lamp said he believes some renewable diesel producers with feedstock contracts expirations coming up will be forced to give up the margins they currently enjoy.
“The biggest problem right now is the basis of bean oil, and frankly all other oils,” Lamp said. “To be able to get the refined bleached and deodorized bean oil, you’re paying another 28 cents/pound roughly to get it delivered. And that right there is really the problem.”
Although the Wynnewood conversion project is on hold, Lamp said CVR Energy has started the process design engineering on the Wynnewood’s pretreatment unit, which will take approximately three months. This would add pretreatment capabilities for low-cost and lower-CI feedstocks to convert into renewable diesel.
The board has already approved engineering and the purchase of long lead time equipment for the pretreatment unit.
The unit is expected to be online in the third quarter of 2022, Lamp said.
As far as company’s plans for a similar hydrocracker conversion at its Coffeyville, Kansas, refinery, Lamp said the initial engineering will be done but the project will not be sanctioned until CVR Energy sees how feedstocks sort out.