P66, REG back out of Washington state renewable diesel JV on permit issues

Phillips 66 and Renewable Energy Group are ending plans for a joint venture to add 250 million gal/year of renewable diesel production at the former's Ferndale, Washington, refinery because of permit issues, the company said Tuesday.

"While we believe the Ferndale Refinery is a strategic fit for this renewable diesel project, permitting uncertainties were leading to delays and higher costs, said Robert Herman, Phillips 66 executive vice president of refining, in a joint statement.

The project's cancellation came as companies look for ways to increase production of the biofuel, which generates high numbers of credits under various emissions programs around the US.

Renewable diesel can be produced from feedstocks similar to biodiesel, but is made through different processes and fits the same ASTM specification as petroleum-derived diesel. That makes it easier to blend and use with existing infrastructure.

Oregon and California, both of which have carbon programs in addition to the federal Renewable Fuel Standard, consume the lion's share of renewable diesel in the US to capture value from both state and federal programs.

The Washington facility would have been well-poised to supply those key markets.

NEXT Renewable Fuels is currently building a plant to produce renewable diesel in Port Westward, Oregon, slated to come online in 2021, similarly positioned to sell into the key West Coast markets.

REG currently produces renewable diesel at its Geismar, Louisiana, facility and has looked to expand production.

"Although we are disappointed in this result, REG is undeterred and continues to develop numerous opportunities to grow our renewable diesel production," said REG CEO Cynthia "CJ" Warner in the joint statement.