In the United States (US), CVR Energy, Inc. has announced that it has received full approval from the Company’s Board of Directors for its Wynnewood renewable diesel project, which will convert the refinery’s hydrocracker unit for renewable diesel service.
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Headquartered in Sugar Land, Texas (TX), CVR Energy, Inc. is a diversified holding company primarily engaged in the petroleum refining and nitrogen fertilizer manufacturing industries through its holdings in two limited partnerships, CVR Refining, LP and CVR Partners, LP.
CVR Refining is an independent downstream energy limited partnership formed by CVR Energy, Inc., to own, operate and grow the holding company’s refining and related logistics businesses. CVR Refining’s subsidiaries currently operate a complex full coking, medium-sour crude oil refinery with a capacity of 132 000 barrels per calendar day (bpcd) in Coffeyville, Kansas (KS), and a complex crude oil refinery with a capacity of 74 500 bpcd in Wynnewood, Oklahoma (OK).
We are pleased to report that our Board of Directors has granted final approval on Phase 1 of our renewable diesel strategy. By leveraging assets already in place, particularly the existing hydrocracker unit and underutilized hydrogen plant at our Wynnewood refinery, we believe we can deliver one of the lowest-cost renewable diesel projects in the industry, said Dave Lamp, CEO of CVR Energy.
Upon completion, which is expected in mid-2021, the Wynnewood refinery should have the capability to produce nearly 100 million (US) gallons (≈ 378 million litres) of renewable diesel per year and more than 6 million gallons (≈ 22.7 million litres) of renewable naphtha per year, significantly reducing its annual Renewable Identification Number (RIN) exposure under the Clean Air Act’s Renewable Fuel Standard (RFS).
Detailed engineering design work for the project is underway. We also have ordered long lead-time equipment and began construction work, as authorized by the Oklahoma Department of Environmental Quality’s permitting rules. We continue to expect the unit to be in service by July 1, 2021, Dave Lamp said.
The company currently estimates total capital costs for the project to be approximately US$110 million, or US$1.10 per gallon of renewable diesel capacity, most of which should be recouped by the end of 2022 through the generation of RINs as well as Blender’s Tax and Low Carbon Fuel Standard (LCFS) credits.
The project is expected to produce more than 100 million gallons of renewable diesel and renewable naphtha per year, which would generate 170 million to 180 million RINs.
Once completed, this project should further enhance our stated goal of reducing our reliance on RIN purchases to comply with the flawed RFS program. Between our existing blending capabilities and the RINs generated from renewable diesel, we expect our total net purchases would be less than 80 million RINs per year once the unit is up and running, Dave Lamp concluded.