RBN Energy

It could be argued that no sector in the energy industry has seen more uncertainty the past three years than refining. In rapid succession, it experienced a historic collapse in demand, a shaky recovery, a run-up in crude oil and other feedstock prices, the disruption in Russian supply, and the wrath of the public and politicians alike when gasoline and diesel prices rocketed higher earlier this year. Prices at the pump may have sagged in recent months, but don’t think for a second that refining has reverted to anything resembling stability and normalcy — refiners still face a host of challenges and unknowns. For starters, what’s ahead for crack spreads, which have been spiking up and down lately? How quickly will electric vehicles (EVs) undermine demand for traditional motor fuels? And what about renewable diesel? New environmental regulations? More refinery closures? In today’s RBN blog, we look at the long list of challenges domestic and international refiners will face through the rest of the 2020s.

Alkylate is an important and valuable part of the U.S. gasoline pool, prized for its high octane, low volatility and low sulfur content. There are two primary catalysts that refiners can opt to use in the production of alkylate: hydrofluoric acid, or HF, and sulfuric acid, or H₂SO_4.  Each is quite popular, with HF and sulfuric acid technologies each representing about half of domestic alkylation capacity — and with those shares varying significantly on a regional basis. While refiners have been safely operating both types of “alky” units for many decades, HF alkylation for some time has been in the crosshairs of the Environmental Protection Agency, which recently proposed that refiners be required to undertake extensive evaluations of potentially safer alternative technologies. It’s hard to know for sure, but if EPA’s proposed rule is made final it could ultimately force many refineries to make very costly changes — into the hundreds of million dollars per unit — or maybe even shut down entirely. In today’s RBN blog, we look at alkylate, how it’s made, and the potentially profound effects of the impending regulation.

The U.S. market for distillates has been crazy the past few months — especially in PADD 1 —  and given all that’s going on, it’s likely to stay that way for months to come. Inventories of ultra-low-sulfur diesel, heating oil and other distillates are at their lowest levels for this time of year since before the EIA started tracking them 40 years ago and diesel prices are in the stratosphere, all despite diesel crack spreads being in record-high territory — a strong incentive for refineries to churn out more distillate. In the encore edition of today’s RBN blog, we discuss the many factors affecting distillate supply, demand, inventories and prices and take a look ahead at where the market may be headed next.

The dramatic increase in the price of the D6 Renewable Identification Number a decade ago was one of the more spectacular moves in the history of major commodity trading. The spike in the price of RINs — the credits used to certify compliance with the federal Renewable Fuel Standard (RFS) — was brought on by a sudden uptick in demand and stakeholders who lacked sufficiently deep awareness and understanding of the complex RIN credit system. In today’s RBN blog, we use the story of 2013’s “Big Bang” in D6 RIN prices to explain the fundamental mechanism that determines RIN prices, consider whether such a price shock could occur again, and discuss what stakeholders can do to prepare.

The U.S. market for distillates has been crazy the past few months — especially in PADD 1 —  and given all that’s going on, it’s likely to stay that way for months to come. Inventories of ultra-low-sulfur diesel, heating oil and other distillates are at their lowest levels for this time of year since before the EIA started tracking them 40 years ago and diesel prices are in the stratosphere, all despite diesel crack spreads being in record-high territory — a strong incentive for refineries to churn out more distillate. In today’s RBN blog, we discuss the many factors affecting distillate supply, demand, inventories and prices and take a look ahead at where the market may be headed next.

In these uncertain times, with the energy transition in flux and a recession looming, it takes moxie for a company to make a major capital investment in an energy-related project, especially one that could arguably be called the first of its kind. But that’s what’s happening at a site along the Houston Ship Channel (HSC) in Pasadena, TX, where Next Wave Energy Partners, which is now completing an ethylene-to-alkylate plant, is planning an adjoining ethanol-to-ethylene facility that will enable the company to produce bioethylene, renewable alkylate and/or sustainable aviation fuel (SAF), depending on market demand, production economics and other factors. In today’s RBN blog, we discuss the ins and outs of Next Wave’s Project Lightning.

What has been the most controversial topic in the U.S. refining industry over the last 10 years? Well, it’s a matter of opinion but, judging from time spent in earnings conference calls, law offices, courtrooms, congressional committees, the White House, and other forums of business and political debate, Renewable Identification Numbers — or RINs — would have to be a top contender for that prize. In today’s RBN blog and the final episode of this series, we consider two differing viewpoints on the effects of the RIN system and specific disagreements — or are they misunderstandings? — about the financial consequences of RINs that have dominated the debates and legal cases.