HollyFrontier to convert petroleum refinery into renewable diesel plant
The company said it has decided to go ahead with the conversion as it anticipates future free cash flow generation from the refinery to be challenged. Its gross margins have taken a hit from the COVID-19 crisis and compressed crude differentials, among others.
HollyFrontier said it expects to invest between $650 million and $750 million in its renewables business.
“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,” said Chief Executive Officer Mike Jennings.
Including the previously announced renewable diesel unit at the Artesia Refinery, New Mexico, HollyFrontier is expected to have a capacity to produce more than 200 million gallons of renewable diesel a year.
The conversion will result in the company ceasing petroleum refining at the refinery and cutting 200 jobs.
Smaller peer CVR Energy Inc said earlier in May that it was looking to convert certain units in its refineries to renewable diesel production to reduce its exposure to the cost of renewable fuel credits. (Reporting by Shanti S Nair in Bengaluru; Editing by Shinjini Ganguli)
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