BP says to double renewable diesel output from Washington state refinery

Source: By Janet McGurty, S&P Global • Posted: Tuesday, October 5, 2021

BP will invest $269 million in its 242,000 b/d Cherry Point refinery in Ferndale, Washington, to increase output of renewable fuels as well as improve the plant’s efficiency as the company looks to cut its carbon footprint, the company said Oct. 4.

“The investment is aligned with BP’s aims to be net zero across its operations by 2050 or sooner and to reduce the carbon intensity of the products it sells by 50% by 2050 or sooner,” the company said in a statement.

As part of the project, BP will spend $45 million to more than double current renewable diesel production at the refinery to about 2.6 million barrels/year or about 62 million gal/year at the refinery by 2022.

The refinery – the largest in the Pacific Northwest — began co-processing renewable feedstocks alongside hydrocarbon-based feedstocks in 2018, producing “drop-in” fuels chemically identical to petroleum-based diesel and distributed using the same logistical systems.

Increased RD production is expected to reduce Cherry Point diesel production CO2 emissions by about 400,000 to 600,000 mt/year, BP said.

US West Coast demand for renewable diesel is expected to increase as more policy support is put into place.

In May, Washington Governor Jay Inslee signed legislation to help the state reach its net-zero climate pollution goal by 2050, but stopped short of allowing climate cap and trade and low-carbon fuel credits akin to those available under the California’s Low Carbon Fuel Standard and Oregon’s Clean Fuels Program.

The price of US West Coast renewable diesel has also been rising, even without the layering of credits, making it competitive with ULSD. In the third quarter, USWC RD without credits averaged $2.3249/gal compared with Seattle-priced ULSD of $2.3895/gal, according to Platts assessments.

Including California’s LCFS credits, as well as the federal credits, the price of USWC RD with credits averaged $6.8996/gal in Q3.

BP’s plans also include the refinery’s hydrocracker and cooling water system. The company plans to spend $169 million to upgrade the refinery’s 65,000 b/d hydrocracker to make it more efficient, reliable and use less hydrogen, it said.

“Upon project completion, the hydrocracker will consume less hydrogen, which is produced at the refinery by conversion of natural gas, producing CO2 emissions, BP said. “In addition, the hydrocracker will require less heat input from the consumption of gaseous fuel in refinery process heaters than it does today.”

Reduced hydrocracker demand for hydrogen will increase its supply at a time when hydrogen’s role in transportation fuels is growing, particularly in sectors where greenhouse emissions from fossil fuels are hard to abate, such as bunker fuel for ships.

Also included in BP’s plans to reduce Cherry Point’s carbon footprint is a $55 million investment to increase current cooling water infrastructure efficiency while cutting CO2 emissions, the company said.

Work on both the hydrocracker and cooling water infrastructure will begin later in 2021 and be completed in 2023, BP said. Both projects together are estimated to reduce CO2 emissions from operations at Cherry Point by approximately 160,000 mt/year, or 7% – equivalent to taking more than 32,000 US cars off the road, it said.