CVR Energy delays renewable diesel conversion

CVR Energy on Aug. 3 announced it will delay plans to complete a conversion project to enable renewable diesel production at its existing oil refinery in Wynnewood, Oklahoma, due to high feedstock prices. Company officials discussed the decision during a second quarter earnings call.

“Construction on the Wynnewood renewable diesel unit has been progressing as planned,” said David Lamp, CEO of CVR Energy. “We have reached a point where we are ready to bring the hydrocracker down to complete the final steps of the conversion process. However, renewable diesel feedstock prices have increased considerably---particularly for refined, bleached and deodorized soybean oil—to a level where the economics do not make sense for use to complete the conversion at this time.”

Lamp said he expects the company to be ready to take down the unit to complete the conversion in September, but stressed the “economics must be favorable based on available feedstocks before we proceed.”

Despite the delays in phase one of CVR Energy’s renewable diesel strategy, Lamp said the company is continuing work on phase two, which involves adding pretreatment capabilities for low-cost and lower carbon intensity (CI) feedstocks. Work is also progressing on the process design for phase three, which would create renewable diesel production capacity at CVR Energy’s refinery in Coffeyville, Kansas.

Lamp said the spike in renewable diesel feedstock pries is likely attributed to the recent start-up of two new renewable diesel plants in the U.S. As more renewable diesel facilities are constructed in the U.S., he said the company expects the feedstock market to react to increasing demand and begin pricing according to Low Carbon Fuel Standard credit values and freight economics.

“We believe [renewable diesel] producers with feedstock contract expirations coming up will be forced to give up some of the margin they currently enjoy,” Lamp added. He also noted the feedstock pre-treatment unit CVR Energy plans to install should give the company the flexibility to use any type of feedstock and said CVR Energy is currently talking to a variety of nearby feedstock suppliers.