US-headed independent petroleum refiner and marketer HollyFrontier Corporation has announced plans to construct a new renewable diesel unit (RDU) at its Navajo Refinery in Artesia, New Mexico. The RDU will have a production capacity of approximately 125 million (US) gallons (≈ 473 million litres) a year and allow HollyFrontier to process soybean oil and other renewable feedstocks into renewable diesel.
Headquartered in Dallas, Texas, HollyFrontier is an independent petroleum refiner and marketer that produces high-value light products such as gasoline, diesel fuel, jet fuel, and other specialty products. HollyFrontier owns and operates refineries located in Kansas, Oklahoma, New Mexico, Wyoming, and Utah and markets its refined products principally in the Southwest United States., the Rocky Mountains extending into the Pacific Northwest and in other neighboring Plains states.
In addition, HollyFrontier produces base oils and other specialized lubricants in the US, Canada, and the Netherlands, and exports products to more than 80 countries. HollyFrontier also owns a 57 percent limited partner interest and a non-economic general partner interest in Holly Energy Partners, L.P., a master limited partnership that provides petroleum product and crude oil transportation, terminal, storage, and throughput services to the petroleum industry, including HollyFrontier.
Meet demand and cover RIN costs
According to a statement, this investment in the renewable diesel unit (RDU) will provide HollyFrontier the opportunity to meet the demand for low-carbon fuels while covering the cost of its annual renewable identification numbers (RIN) purchase obligation under current US market conditions.
The RDU, along with corresponding rail infrastructure and storage tanks, is estimated to have a total capital cost of US$350 million and is expected to be completed in the first quarter of 2022. The RDU will be funded with cash on hand and is expected to generate an internal rate of return between 20 – 30 percent.
Today’s announcements illustrate HollyFrontier’s commitment to both grow our business and deliver superior cash returns to shareholders. We expect our new renewable diesel plant will generate attractive returns and help us meet our requirements under the Renewable Fuel Standard (RFS), remarked Franklin Myers, Chairman of the Board of HollyFrontier.
