New York—Calumet Specialty Partners is looking for a partner to produce renewable diesel at its Montana refinery, where it plans to co-process hydrocarbons and renewables, a company executive said March 3.
Calumet's Montana refinery will be able to co-process renewables and hydrocarbons due to two "over-sized" hydrocrackers, said Bruce Fleming, Calumet's executive vice president of strategy and growth on the March 3 results call. Energy Information Administration data shows the plant has 24,000 b/d of catalytic gas oil hydrocracking capacity."That I think is the point of trying to put renewables in without taking the crude out," he added.
Calumet is seeking a partner in the venture to defray costs as well to possibly secure a renewable feedstock supply contract.
"The complementary interest of whoever is our final selection as a strategic is an important determination" in selecting the what feedstock the plant will use, said Bruce Fleming, Calumet's executive vice president of strategy and growth on the results call.
Fleming said that the amount of announced renewable diesel projects is a "whopping" 5% of the US diesel demand and that, despite concerns about feedstock availability, he does not see any problems obtaining plant-based feedstock. However, as more projects are announced, the price of feedstock like soybean oil is rising. This increases feedstock costs and the carbon intensity while lowering the value of the credit assigned to the product.
"The animal side is a lot different. It's a lot harder to parse. It would also require investment in pretreating facilities. So for all these reasons, the strategic partner we eventually take on is going to have a strong voice in what is determined," he added.
Fleming said if they find a strategic partner on the animal feedstock side, and end up using a feed like animal tallow, "we're going to have to design and incorporate some treating facilities that right now are not in the vision." Animal fat like tallow has a lower carbon intensity and is more valuable as a renewable feedstock, credit wise.
Once a strategic partner is in place, Fleming said then the sequence of engineering activities will begin to get one of the hydrocrackers converted to running renewable feed.
"We will have feed in by early next year," he said. "We'll have full capability no worse than 12 months after that."
The renewable diesel produced will also be geared to its destination.
"On the product side, whether we go to Canada and therefore tune the operation for a more arctic spec or we are sending it to [Los Angeles], where it is nice and warm, these are all material considerations," he said.
California already has a Low Carbon Fuel Standard, which provides credits for renewable diesel on the top of the $1/gal federal Blenders Tax Credit.
A similar program goes into force in Canada in 2022. The state of Washington has a similar bill that has passed the house and is awaiting the Senate, which is likely to vote on it in April.
