Market Update: California's recently re-adopted Low Carbon Fuel Standard (LCFS) will go into effect starting in 2016. It is my understanding that all the Carbon Intensity values will change at this time and producers must use the new CA-GREET 2.0 model to calculate their updated scores. I have included a chart on page 20 with some of the changes that will occur. However, each producers' pathway is different and will require a new score to be calculated. I believe the pathway identifier's with T's at the end are temporary scores that will be used until producers get an updated score using the new model.
SG Preston recently announced an agreement with IHI E&C to build 5 renewable diesel plants in the U.S. Midwest and Canada each with an intial capacity to produce 120 million gallons of renewable diesel and jet fuel. The first plant is planned to be built in South Point, OH for $400 million and would begin commerical operations in 2017. The other plants will be located in Van Wert, OH; Logansport, IN; Michigan; and Ontario, Canada. The plant in Van Wert is looking to make long-term contracts with local farmers to grow seed provided by Preston that can also be used as a cover crop. The facility in South Point and Logansport are planning to use waste fats, oils, greases because these are proven technologies. Specific details of feedstocks are not being completely disclosed as SG Preston wants to control these costs and make long-term contracts with all their feedstock providers.
Analysis: 2.746 billion pounds of soybean oil was used to produce biodiesel in the first seven months of 2015, with 446 mil lbs used in July. Soybean oil's share of inputs to biodiesel production is up only .01% for 2015 through July at 45.12%. Corn oil used to produce biodiesel increased in July to 106 mil lbs, bringing 2015 through July numbers to 554 mil lbs.
PRX estimates US biomass-based diesel (biodiesel & renewable diesel) production for 2015 at 1.415 billion gallons, with actual production falling in July to 122 MMgal and YTD data at 752 MMgal. The EIA's Oct-STEO (solely biodiesel) has 2015 production estimated down at 1.405 billion gallons with actual monthly data decreasing slightly for Sept. to 136.1 MMgal, while still forecasting 2016 production at 1.504 billion gallons. EPA D4 Domestic RIN generation volume data for Jan to Sept of 2015 is at 1.068 billion gals (EPA D4 data understates total domestic biodiesel and renewable diesel production because some is generated as D5 RINs). PRX estimates Jan to Sept 2015 US renewable diesel production at 135 MMgal and is continuing to be lower than expected because REG's Geismar facility is down until late January of 2016 from a seond fire.
PRX estimates US biomass-based diesel consumption for 2015 at 1.72 billion gallons, with actual EPA data from Jan to Sept at 1.249 billion gallons and EIA data for July at 182.1 MMgal. The EIA's Oct-STEO has 2015 biodiesel and imported renewable diesel consumption forecasted down at 1.764 billion gallons for 2015, without including PRX's estimated 171 MMgal of domestically produced renewable diesel that is likely to be consumed. Also, the Oct-STEO still has 2016 consumption forecasted at 2.043 billion gallons (not counting US renewable diesel consumed), which is above PRX's forecast of 1.92 billion gallons of biomass-based diesel.
PRX estimates biomass-based diesel imports of 372 MMgal for 2015, with EIA's PSM actual data for Jan to July of 2015 at 250.026 MMgal, of which Neste Oil's plant in Singapore sent 101.766 MMgal, Argentina had a big increase in July of 20.958 MMgal bringing its total to 54.978 MMgal, Indonesia 47.04 MMgal, and Canada 37.254. These imports made a big jump in July to 71.046 MMgal, reaching levels seen back in 2013. PRX estimates US biodiesel exports in 2015 at 87 MMgal, with actual EIA's PSM data from Jan to July of 2015 showing 52.416 MMgal of biodiesel exported (exports in July were 10.71 MMgal).
