September 13 (Reuters) – Pipeline operator Kinder Morgan Inc (KMI.N) plans to convert some reservoirs and piping infrastructure in Louisiana to store used cooking oil and other raw materials for the Finnish gas giant. Neste renewable fuels (NESTE.HE), the companies told Reuters.
US energy companies want to modify existing infrastructure to increase the supply of renewable fuels that emit less carbon than traditional refined products like gasoline or diesel.
Houston-based Kinder Morgan has entered into a long-term contract with Neste to make rail, trucking and marine improvements as part of the expansion of the Harvey, Louisiana facility, the companies said. .
Neste will initially use 30 converted tanks as the main US hub to store raw materials used to produce renewable diesel, sustainable aviation fuel and renewable plastics.
The tanks will be able to hold more than 650,000 barrels of oil, about a fifth of the farm’s current capacity, the companies said.
“The United States has all the infrastructure in place,” said Jeremy Baines, president of Neste US
The companies did not disclose the terms of the deal, but Kinder Morgan said its terminal division planned to fund the project internally.
The first stage of the project is expected to be completed in the first quarter of 2023.
“We’ve been seeing this market shift for some time,” said John Schlosser, president of Kinder Morgan Terminals, adding that the hub will reduce logistics costs for Neste.
Neste is one of the largest refiners of renewable fuels in the world. The company is doubling the size of its Singapore refinery to be able to produce up to 1 million tonnes of sustainable aviation fuel, renewable diesel, and renewable feedstocks for polymers and chemicals. By 2023, the company expects to be able to produce more than 515 million gallons of SAF per year.
It buys from companies that collect used cooking oil from restaurants across the United States, including Illinois-based Mahoney Environmental in 2020 and Minnesota-based Agri Trading last week. Used cooking oil is less carbonaceous than most other vegetable oil raw materials.
Its processing may be more cost effective than for other vegetable oils due to state and federal incentives to use such raw materials.
Refiners generate federal and state tax credits for manufacturing certain types of biofuels such as renewable diesel, which also helps them meet the requirements of the Renewable Fuels Standard.
Neste is one of the few companies that has successfully sourced used cooking oil. US oil refiners such as Chevron (CVX.N), Marathon Petroleum Corp (MPC.N) and Phillips 66 (PSX.N) recently invested in obtaining soybean oil for their new refinery conversion projects.
Last week, President Joe Biden said he was seeking a sustainable aviation fuel tax credit as part of a $ 3.5 trillion budget bill proposed by his fellow Democrats in Congress for attempt to reduce aviation emissions by 20% by 2030. Industry has said the tax credit is necessary. to offset the higher cost of fuel production.
Reporting by Laura Sanicola; Editing by William Mallard and David Evans
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