Oil Refineries Find New Life as Renewable Diesel PlantsBy Cas Biekmann | Thu, 06/04/2020 - 14:43
Marking what could potentially become a global trend, US company HollyFrontier is adapting its crude oil refinery in Wyoming to become a renewable diesel plant, based on a report by Reuters. As demand for renewable diesel and other biofuels rises worldwide, the question arises if this could be an interesting niche for Mexican companies as well.
The refinery will stop operations in July, leading to the layoff of 200 people. HollyFrontier mentioned complications in demand due to the COVID-19 pandemic, as well as predictions that cashflow will decrease for the time being. The fact that biofuel is more and more in demand boosted the decision, Chief Executive Mike Jennings told Reuters: “Demand for renewable diesel, as well as other lower carbon fuels, is growing and taking market share based on both consumer preferences and support from substantial federal and state government incentive programs,” he said.
The company is planning to invest up to US$175 million to transform its refinery toward biofuel-producing capacity, of which it predicts to reach 90 million gallons per year. The project will be finished in 2022.
HollyFrontier is not the first crude oil refining company aiming to make a switch. On May 12, Biomass Magazine reported that Global Clean Energy Holdings purchased the Alon Bakersfield Refinery for US$40 million. The refinery would be repurposed to produce renewable diesel.
Biofuel can be produced from a number of sources, such as used vegetable oil or resources usually associated to livestock feeding. Mexican farmers are well-positioned to contribute in this supply chain. Expansión, for instance, reported how farmers of sugar cane could easily contribute their product for ethanol production, an important biofuel additive for gasoline. But the vegetable oil needed for renewable diesel specifically can be sourced from Mexico as well.
Oil and Gas Magazine reported that the Ministry of Agriculture, Livestock, Rural Development, Fisheries and Food (SAGARPA), now SADER, has promoted 960 projects for the production of biofuels in Mexico since 2013. In addition, seven biofuel plants have been installed. Six of these are for biodiesel production and one for ethanol. In total, they have a production capacity of 11.1 million gallons per year.
One issue related to biofuel is that it is still fuel and therefore does have emissions. But José Domenech, Director at Reoil International, said that biodiesel made in Europe with UCO emits 83 percent less greenhouse gases (GHG) when burned compared to petro-diesel, while biodiesel made with unused vegetable oil reduces emissions only by 20-30 percent. “This shows just how important it is to take full advantage of the potential of biofuels,” he told Mexico Energy Review in 2018.