HollyFrontier readies renewable diesel projects for startup

HollyFrontier is getting ready to start up their two renewable diesel projects at the Cheyenne, Wyoming, and Artesia, New Mexico, facilities as it grapples with weather-related operational issues in its traditional hydrocarbon refinery segment.

HollyFrontier CEO Mike Jennings said during its fourth-quarter results call Feb. 23 the company was "pleased to announce the 6,000 b/d Cheyenne [renewable diesel unit] is fully operational and we are aligning the unit out to produce on-spec product."

HollyFrontier's renewable diesel operations include the complete conversion of its Cheyenne, Wyoming, refinery to a renewable diesel facility as well as adding a pre-treatment unit and an RDU at its 110,000 b/d Navajo refinery in Artesia, New Mexico, due online Q1 and Q2 2022, respectively.

"Once completed, we have the ability to produce [about] 15,000 b/d on renewable diesel with advantaged feedstock sourcing and flexibility through our own pretreatment unit," Jennings said.

Sinclair deal to close

HollyFrontier is waiting for regulatory approval to close on its purchase of Wyoming-based Sinclair Refining, which will add more RDU and pretreatment capacity, with expectations the deal will close in 2022.

The Sinclair, Wyoming, facility already has 115 million gal/year renewable diesel capacity at its 75,000 b/d refinery and Sinclair is adding a pretreatment unit to the facility, which is expected online in Q2 or Q3 2022.

Pretreatment units give greater latitude to the kind of feedstocks that renewable diesel plants can process, an advantage as more RD plants online means greater pull on traditional feedstocks like soybean oil and beef tallow.

HollyFrontier has already locked in some feedstock supply contracts "to get it through the remainder of this year and into 2023," according to HollyFrontier President Tim Go.

"We don't see any problems going forward. We still believe in our strategy of having the PTU in place so that gives us more flexibility to buy different feeds," he added.

As more RD facilities come online, California's Low Carbon Fuel Standard credits are softening, lowering the economics of all RD projects.

"We don't expect those [lower LCFS prices] to continue in the long term ... we didn't build these units on today's economics. We've built them over 20-year economics," said Tom Creery, HollyFrontier's head of renewables.

According to S&P Global Platts Analytics, US RD production reached the 1 billion gal/year mark in 2021 and the output is expected to grow rapidly as new projects come online.

Weather-related issues plague the refining sector

HollyFrontier's newly purchased 145,000 b/d Puget Sound refinery in Washington was affected by extreme cold and flooding, which contributed to the company's lower Q4 throughput of 421,000 b/d "below our initial guidance of 450,000 b/d to 470,000 b/d because of heavy planned and unplanned refinery maintenance and weather-related downtime during the quarter," said Jennings.

HollyFrontier expects Q1 crude throughput of 490,000 b/d and 510,000 b/d, which includes continued downtime of Puget Sound, a scheduled turnaround at its 39,300 b/d Woods Cross, Utah, refinery and maintenance activities at the Navajo refinery.

Like other operators of Washington-state refineries, HollyFrontier also was hobbled by the shutdown of Canada's Trans Mountain pipeline from flooding, cutting off crude supply.

The "remaining issue pertains to the coker unit and a compressor" damaged by the extreme cold, Go said, adding that the plant is "in the process of returning to full rates."