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Kinder Morgan, Neste team up for Louisiana renewables feedstock storage

Highlights

Modifications to be made to existing tanks

Upgrades for transportation infrastructure

Project expected to start up in 2023

Kinder Morgan has joined forces with Neste, leading global supplier of sustainable aviation fuel, to modify tanks and piping at its facility in Harvey, Louisiana to store more renewable feedstocks, the companies said Sept. 13 in a joint statement.

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"Upon completion of the project, Kinder Morgan's Harvey, Louisiana facility will serve as the primary hub where Neste will store a variety of raw materials including, for example, the used cooking oil it collects from more than 40,000 restaurants across the United States," the statement said.

In the initial phase of the project, Kinder Morgan will modify 30 existing tanks and piping for a variety of raw materials. The project also includes a new boiler for heating tanks and railcars, as well as improvements to rail, truck and marine infrastructure.

According to Kinder Morgan's website, its Harvey terminal has access to the Mississippi River with 192 tanks ranging in size from 334 barrels to 200,000 barrels for a total storage capacity of 3.099 million barrels. Currently, the facility handles chemicals, vegetable oils, alcohols, animal fats, diesels and renewable fuels.

The joint Neste-Kinder Morgan project, supported by a long-term commercial contact with Neste, is expected to start in the first quarter of 2023. The project's scope can be expanded at Neste's option.

The commitment is one of Neste's largest to date in the U.S., the statement said.

"Neste and Kinder Morgan are transforming existing terminal assets into what can be considered green infrastructure, which will ultimately enable more American businesses and cities to power their fleets and supply chains with renewable fuels and other products." said Jeremy Baines, president of Neste U.S. in the statement.

Deepening relationship

In 2020, Neste began supplying SAF to the airport at San Francisco via a Kinder Morgan Pipeline, with more than 1 million gallons of SAF supplied to date.

"We are thrilled to partner with Neste, a global leader in renewable fuels, on this important logistics project," said John Schlosser, president of Kinder Morgan Terminals.

"As North America's largest terminal operator with existing infrastructure including 80 million barrels of storage, 266 docks, 462 truck bays and 6,800 rail car spots, Kinder Morgan Terminals is uniquely positioned to play a leading role in the transition to renewable fuels," he added.

Increasing production of drop-in renewable fuels like SAF and renewable diesel are increasing demand for renewable feedstocks which is making them more expensive.

The price of beef tallow -- a lower carbon intensity feedstock used to make renewable fuels -- averages 50.50 cents/lb so far in the third quarter of 2021, according to S&P Global Platts assessments, up from 55 cents/lb seen in the second quarter. The price of soybean oil, which is more available, has also risen to average 65.04 cents/lb so far in the third quarter, up from 52.13 cents/lb seen in the second quarter.