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U.S. refiners talk up renewable projects after a year of lousy fuel demand

February 09/2021

MOSCOW (MRC) -- Following a year of grim losses amid pandemic lockdowns that dented demand for fuel as people stuck close to home, the largest U.S. independent refiners are promoting plans to boost production of renewable fuels, said Hydrocarbonprocessing.

Renewable fuels represent a silver lining for refiners under threat of being left behind by the shift to electric vehicles and away from fossil fuel processing. As the big refining companies in recent days reported year-end results, executives devoted plenty of time to discussing how they will create fuels that emit fewer emissions that contribute to global warming.

"Renewables is the hot topic, and I think we're in a real good position to put ourselves in a good spot there," Marathon Petroleum Chief Executive Mike Hennigan said. Marathon reported losses of USD12.2 billion for 2020. Hennigan said the company isn't clear what gasoline and diesel demand will be post-pandemic.

The company is currently converting its Martinez, California, refinery to renewable fuels, with plans to spend nearly all of its USD350 million 2021 renewables budget on that refinery, which was idled last year. Marathon's Dickinson, North Dakota, refinery, started producing renewable fuels sold in California late last year.

Currently, refiners make the most money selling into California as the state's low carbon fuel standard encourages the production of renewable diesel, which is subsidized by federal and state policies. Notably, renewable diesel was the only segment that turned a profit for Valero Energy in 2020. The company, the second largest independent U.S. refiner, lost USD1.4 billion for the year, but its renewable diesel segment posted a USD638 million profit.

"The reality is that cleaner fuels are going to be part of the future. ... The internal combustion engine is far from being extinct," Valero's chairman and CEO, Joe Gorder, said on an earnings call last week. Valero and partner Darling Ingredients are planning a USD1.45 billion facility in Port Arthur, Texas, that will be able to process 1.2 billion gallons of renewable diesel per year from sites in Texas and Louisiana.

Phillips 66 reported result, posting a USD4 billion loss for 2020. It, too, talked up its plans to produce renewable fuels at its former Rodeo refining plant in San Francisco, and a joint venture with Ryze Renewables in Nevada to produce renewable diesel. "We want to participate in energy transition. We want to do it where we can invest and earn returns that are above our weighted average cost of capital," said Greg Garland, Phillips 66 chairman and CEO.

As MRC informed before, in October 2020, US refiner Phillips 66 said it plans to reconfigure its refinery in Rodeo, California to produce renewable fuels from used cooking oil, fats, greases and soybean oils.

We remind that US-based Phillips 66 remains open to developing another ethane cracker for its Chevron Phillips Chemical (CP Chem) joint venture, the refiner's CEO said in March 2018.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's DataScope report, PE imports to Russia decreased in January-November 2020 by 17% year on year and reached 569,900 tonnes. High density polyethylene (HDPE) accounted for the greatest reduction in imports. At the same time, PP imports into Russia increased by 21% year on year to about 202,000 tonnes in the first eleven months of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
Author:Anna Larionova
Tags:petroleum products, crude oil, PP, PE, neftegaz, petrochemistry, ConocoPhillips, Phillips 66.
Category:General News
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