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AMERICAS REFINING NET ZERO TRACKER: Valero furthers its commitment with CCS pipeline

Highlights

CCS pipeline cuts biofuel carbon intensity

More renewable projects announced

New York — Valero Energy's teaming up with BlackRock Global Energy and Navigator Energy Services to build an industrial scale carbon capture storage pipeline serving US Midwestern biofuel refineries will help lower the refiner's carbon footprint and greenhouse emissions.

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Valero, the first mover among US refiners into the renewables fuels space, is an anchor tenant for the pipeline which will be able store 5 million of CO2 annually. The 1,200 mile pipeline, due in service late 2024, will run across the Nebraska, Iowa, Minnesota, and Illinois where storage facilities will be located, the company said in a March 16 statement.

Valero and other refiners are using a myriad of ways to reduce their carbon footprint and the carbon intensity of their products, and carbon capture storage is just one tool in their arsenal.

Valero is the world's second largest producer of corn ethanol with 1.7 billion gallons/year of production from 14 plants stretching across the Midwest along the path of the proposed pipeline. Valero expects the ethanol plants to offset 4.7 mt CO2 equivalent by 2025, according to its sustainability report.

During its Jan. 28 earnings call, Valero's COO Lane Riggs said it was using ethanol plants as a test case to understand and learn more about the process of sequestration because "the gas coming off the plant is largely carbon dioxide" which means "they don't have to treat it before they sequester it."

"So we are trying to understand that, how that works, try to understand the technology and certainly all the policy and all the other sort of regulatory regime that's going to be around carbon sequestration," Riggs said.

Testing the waters

Some refiners, like PBF Energy, who have yet to formally issue a sustainability report or get into the renewables space, said on its Feb. 11 fourth quarter results call it is evaluating whether to repurpose an idled hydrocracker to make renewable diesel at its 190,000 b/d Chalmette, Louisiana, refinery as a way to offset the rising cost of RINs, which have doubled since the third quarter of 2020.

RINs are renewable credits that refiners must buy if they cannot meet their annual renewable volume obligation under the Renewable Fuels Act by blending or producing renewables.

Refiner Calumet Specialty also floated the idea that it would co-process hydrocarbons along with renewable feed at its 37,000 b/d Great Falls, Montana, refinery. Plans include converting a 24,000 b/d gas oil hydrocracker to run between 10,000 b/d and 12,000 b/d of renewable feedstock while maintaining the ability to continue to run between 10,000 b/d and 12,000 b/d of crude.

But before it commits to the project, the company is looking for a partner to help defray the cost of the conversion, most likely a renewable feedstock supplier which will also determine what kind of feedstock it uses

Across the Canadian border, Tidewater Midstream is also considering a 3,000 b/d stand-alone renewable diesel and renewable hydrogen complex at its 12,000 b/d refinery in Prince George, British Columbia.

The project is still in the evaluation phase as the company seeks funding. CEO Joel McLeod said on the March 11 fourth quarter results call if the company "can achieve a financing plan" within the next 60 days it is possible for the plant to be online in early 2023.

The company has already received about C$100 million of commitments from the province of British Columbia in the form of BC Low Carbon Fuel Standard Credits, which based on current market value, will fund about 45% of the project.

North American Refiners Target Greenhouse Gas Emissions

Company

Market Capitalization $US

Sector

Headquarters

Net Zero Goal?

Climate Goals

ExxonMobil

$251.68 billion

Integrated

North America

No

No set targets for CO2 reduction or renewables. As of 2020, reduced GHG by 6% since 2016 including 15% methane reduction and 25% flaring reduction. By 2025 ExxonMobil aims to reduce GHG by 30% for upstream, with 40 to 50% reduction in methane intensity and a 35 to 45% reduction in flaring intensity, covering Scope 1 and Scope 2 company emissions. ExxonMobil plans to align its upstream operations to meet World Bank initiative to eliminate routine flaring by 2030.
Aims to reduce corporate-wide methane emissions by 15% by 2020, compared with 2016.

Shell

$164.96 billion

Integrated

Europe

Yes

Aims to be net-zero emissions energy business by 2050, largely through the development of renewable power, biofuels and hydrogen.
Using 2016 as baseline aims to cut emissions by 6-8% by 2023, 20% by 2030, and 45% by 2035, reaching net zero emissions by 2050.
Executive pay tied to carbon emissions.

Chevron

$208.44 billion

Integrated

North America

No

Aims to cut net GHG emission intensity 35% by 2028 and eliminate routine flaring by 2030. Reduce kg CO2e/BOE by 2028 from 2016 baseline for oil GHG from 40 to 24; gas GHG from 32.3 to 24; flaring intensity GHG from 8.7 to 3.0; and methane intensity from 4.3 to 2.0. Launched $300 million Future Energy Fund II to focus on clean energy technologies.

Suncor

$36.07 billion

Integrated

North America

No

Aims to reduce GHG emissions intensity of its operations by 30% by 2030.
Since 2014, the company has reduced its intensity by 10%.

Phillips 66

$37.28 billion

Downstream

North America

No

Reduced air emissions 28% between 2012 and 2019. Working toward setting attainable targets for GHG reductions tied to identified projects.

Valero

$32.39 billion

Downstream

North America

No

Targeting to reduce and offset GHG emissions by 63% through approved investments with the potential to achieve 72% with projects under consideration. Since 2010, reduced GHG by 2020 by 21%. Scope 1 and 2 GHG from refining is 31.2 million mt in 2011 with expectations of 11.9% in 2025.Partnership with Diamond Green Diesel reduced GHG by 80%, ethanol production reduced GHG by 30%. GHG offsets from ethanol from 2011 to 2025 are 4.7 million mt/yr; 5.9 million mt/yr from RD; 7.9 million mt/yr from blending. 1,075 million gallons/yr of RD production by 2024. Aims to reduce GHG emissions to 11.9 million mt of CO2 equivalent by 2025. In 2019, Scope 1 and Scope 2 GHGs were 30.5 and 7.8 million mt of CO2e, mostly from refining. Offsets include renewable diesel projects, closure of refineries, refinery cogeneration facilities, and refinery efficiency projects.

Marathon Petroleum Corporation

$36.78 billion

Downstream

North America

No

Plans to reduce Scope 1 and 2 GHG intensity/BOE to 30% below 2014 by 2030. 2014 and 2019 GHG intensity levels were 29.9 mt and 23.8 CO2e/thousand barrels of oil processed, respectively. Goal is 20.9 in 2030. Offsets include renewable fuel facilities, ethanol plants, carbon capture, and wind power for electricity generation at some facilities. From 2020-2023 20% growth capex will be spent on sustainable energy projects. GHG intensity goal in line with 2.5% annual reduction recommended to support the Paris Climate Initiative.
Tied executive compensation to goals based on scope 1 & scope 2 GHG emissions divided by the manufacturing inputs processed at oil refineries, renewable fuel refineries and gas processing plants.

MPLX LP

$27.31 billion

Midstream

North America

No

Reduce methane intensity of MPLX gathering and processing operations to 50% below 2016 by 2025. MPLX Methane Emission Intensity in 2016 levels was just under 0.04% MMcf CH/MMcf natural gas throughput.

Imperial Oil Limited

$18.09 billion

Integrated

North America

No

Reduced operated oil sands GHG emissions intensity (GHGi) by more than 20 percent from 2013 to 2018. Future target to reduce GHG by 10% in 2023 vs 2016. Imperial's progression to lower-carbon energy is lifted by a developing suite of advanced technologies that could reduce GHGi by about 25 to 90 percent for future oil sands production. Sarnia refinery, Imperial has reduced sulphur dioxide emissions by 60 percent since the early 2000s, and reduced benzene emissions by
88 percent over the past 25 years. reduced sulphur dioxide emissions by 60 percent since the early 2000s, and reduced benzene emissions by 88 percent over the past 25 years.

Parkland

$4.81 billion

Downstream

North America

No

A review of Scope 1 and Scope 2 emissions underway.

PBF Energy

$2.03 billion

Downstream

North America

No

None given.

Delek US

$1.77 billion

Downstream

North America

No

Delek US' refining segment reported scope 1 GHG emissions of 2.269 million mt/yr CO2e and .359 million mt/yr of scope 2 emissions. Carbon intensity per thousand barrels of refinery throughput was 26.5 mt/CO2e in 2019 and 25.4 mt/CO2e in 2018. Employee pay is tied to meeting environmental and social metrics.

Tidewater Midstream

$0.297 billion

Downstream

North America

No

Planned RD project would reduce carbon intensity and GHG by 80%-90% and 65% to 70% respectively.

Market capitalization as of 3/17/2021

CO2 = carbon dioxide

GHG = greenhouse gas

Sources: S&P Global Platts, S&P Global Market Intelligence, company reports, documents and email