Phillips 66 snaps up stake in soybean-processing plant to supply Rodeo Renewed

New York — Phillips 66 bought a minority stake in Shell Rock Soy Processing as it looks to secure renewable feedstocks for its Rodeo Renewed project due online in 2024, according to a company statement released April 20.

The statement provided no details on the size of Phillips 66's stake nor on the price paid.

The Shell Rock Soy Processing plant will be built in northeast Iowa, pending state and local approvals. No timeline was given for when the plant would come online.

Phillips 66 has an agreement to purchase 100% or about 4,000 b/d of soybean oil for Rodeo Renewed, its marquee project which will repurpose Phillips 66's 120,200 b/d crude oil refinery into one of the world's largest renewables plant. When completed, the plant will be capable of producing 800 million gal/yr of renewable diesel, renewable gasoline and sustainable aviation fuel from used cooking oils, fats, greases, vegetable oils and other feedstocks.

As plans to create more renewable fuel facilities, either newly-built or repurposed from existing oil refineries, continue to rise, the price of renewable feedstocks have risen in tandem.

So far in the second quarter of 2021, the price of soybean oil is averaging 53.81 cents/lb, almost double the 26.92 cents/lb for the second quarter of 2020, according to Platts price assessments.

The BO-HO spread – the price differential between soybean oil and the NYMEX ULSD futures contract – has also risen due to higher soybean oil prices. Second-quarter 2021 to date it is averaging $2.13/gal compared with the $1.00/gal in the second quarter of 2020.

Credit-Suisse analyst Manav Gupta noted in a recent research note that "higher soybean oil prices have been a headwind" for renewable diesel margins, noting that it takes 8.5 lbs of feedstock to create one gallon of RD.

In addition to the soybean oil, Shell Rock Soy Processing will produce more than 900,000 tonnes/year of soybean meal and hulls for livestock feed. The plant will be "located in one of the top soybean production states with rail options that provide direct access to diverse markets", the statement said. .