Renewable fuel standards not stressing refiners: EPA
Basic competitive issues have pressured US independent refiners more than federal fuel blending mandates, the US Environmental Protection Agency (EPA) said this month.
The agency dismissed refiner arguments that Renewable Fuel Standard obligations had pressured refining profits. Pennsylvania governor Tom Wolf earlier this month sought an economic hardship waiver for refineries in his state.
An oversupply of fuel in recent years had strained some companies, rather than requirements to ensure minimum volumes of renewable fuels enter the US transportation supply, the agency said in a formal denial of petitions to change the program.
"We do not believe the challenges faced by some refiners in the current market are the result of their designation as obligated parties in the RFS program," the agency wrote last week.
EPA included the comments in a final, sweeping rejection of refining petitions to change to program the agency issued just before the US holiday weekend. Regulators formally ruled against petitions made last year to make blenders and other companies join refiners and importers in ensuring minimum volumes of renewable fuels enter the US transportation supply each year.
Obligated companies prove compliance by submitting renewable identification numbers collected for each ethanol-equivalent gallon of fuel blended into the US supply. Companies that blend fuel collect RINs directly, while merchant refiners that do not operate such wholesale businesses purchase the markers from other companies.
Valero, CVR Energy and Delta Air Lines subsidiary Monroe Energy, among others, have complained that RINs spending has outpaced costs for crude or personnel.
Northeastern refiners, in particular, argued that the program as structured put fuel supplies and thousands of jobs at risk.
Governors for Delaware and Pennsylvania have spoken against the program in a campaign with refining executives and union workers. Wolf said the program could put roughly 2,000 Pennsylvania jobs at risk and sought the EPA waiver and support from President Donald Trump.
Wolf's office said the governor had not received a response to the petition.
Last week's EPA filing does not represent a response to the governor's request, which the agency said today remained under review. But the EPA made clear in the filing that refiner petitions earlier in the year had not convinced the agency. Higher petroleum fuel blendstock prices offset RIN costs for most companies, the agency said.
"All obligated parties, including merchant refiners, are generally able to recover the cost of the RINs they need for compliance with the RFS obligations through the cost of gasoline and diesel fuel they produce," the agency wrote.
PBF Energy head of government relations Brendan Williams said the agency's response demonstrated broad misconceptions about the fuel market.
"Despite what they said on the point of obligation, there still seems to be a growing recognition that there is a problem with this program," Williams said. "It is not working for refiners and it is not working for ethanol."
Both industries now wait for EPA final blending volumes for next year and 2018, due tomorrow.
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Low Argentina rivers lift Brazil biodiesel
Low Argentina rivers lift Brazil biodiesel
Sao Paulo, 26 September (Argus) — A drop in river levels in Argentina's Parana upriver region amid a historical drought has snarled transport and inflated soybean oil and biodiesel prices in Brazil. The depth of the Parana River in Argentina's San Lorenzo city, a major hub for soybean oil shipments, dropped to 9.44m (30ft) on 20 September, the lowest level since January 2023, according to information provided by maritime agencies T&T and Antares. The lower river flow is forcing soybean oil traders to reduce how much product they load onto tankers that stop at Argentinian ports by between 5-12.5pc, according to Argentina market sources. A 12.5pc capacity reduction on a standard tanker would mean a loading 28,000 metric tonnes (t) instead of 32,000t. These restrictions have affected the Brazilian soybean oil and biodiesel market, as trading companies seek additional volumes in Brazilian seaports to complete shipments for export. A change in Chicago Board of Trade (CBOT) differentials at the port of Paranagua was first observed on 27 September, when the premium for selling soybean oil for shipment in October rose to 8¢/lb in relation to the future contract traded on the CBOT. Earlier in the week, offers were close to 1.8¢/lb. On 25 September, negotiations ranged between premiums of 2.5-5.5¢/lb in relation to the soybean oil future contract due in October, corresponding to prices between $1,034-1,100/t fob Paranagua. Last week, the Argus fob Paranagua indicator closed between $934-1,009/t. Soybean availability in the Brazilian market is reduced amid strong demand in the domestic market, driven by an increase in the biodiesel blending mandate to 14pc from 12pc in March. The rise in domestic demand has also reduced the competitiveness of Brazilian exports, contributing to a drop in soybean oil shipments to ports. Brazil's association of vegetable oil industries Abiove predicts that 2024 exports will total 1.15mn t, nearly half of the volumes dispatched in 2023. Lever effect The low availability of soybean oil in the Brazilian market was concerning market participants even before the deterioration of the situation in Argentina. The price of soybean oil for export is the main factor in the price equation for most supply contracts between biodiesel producers and distributors. Logistics problems associated with a lower Parana River contribute to the imbalance between increased demand for soybean oil in the biodiesel sector and a shortage of product in the market. Soybean oil is the main input for biodiesel production in Brazil, accounting for 72.5pc of all feedstocks used in national production in the first eight months of 2024, according to data from hydrocarbons regulator ANP. And rising soybean oil prices tend to boost prices of other raw materials, such as beef tallow, which represented 6.5pc of biodiesel inputs in the same period. Faced with the rising cost of inputs, Brazilian biodiesel plants have been prioritizing the delivery of volumes contracted for the September-October supply period and the delivery of overdue volumes for the previous bi-monthly period. That has limited the availability of spot market volumes. This sudden rise in the price of soybean oil in Paranagua has also reduced the domestic market premium in relation to the export market. This makes it more attractive for regional producers to sell product abroad. By Amance Boutin and Joao Marinho Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Aug wildfires in Brazilian state surge eightfold
Aug wildfires in Brazilian state surge eightfold
Sao Paulo, 26 September (Argus) — Fires in Sao Paulo, Brazil's most populous state, increased eightfold in August from the same month last year, an "alarming rate" amid extreme climate conditions that harm the sugarcane industry, sector associations said. The state had 11,628 fire outbreaks last month, more than triple the historic average of 3,550. Nearly half of the fires took place on 23 August alone, according to data from industry association Canaoeste and fire monitoring network GMG Ambiental. Fires hit 658,600 hectares. The town of Pitangueira had the most blazes, at 354. Altinopolis and Sertaozinho came in second and third, with 252 and 296, respectively. Nearly all of the most affected towns have high production of sugarcane. The groups highlighted that 20-24 August fires happened as low humidity, high temperatures and strong winds put Sao Paulo in "extreme risk" for wildfires. The data was shown in a meeting with several industry representatives, such as Canoeste, Unica and Orplana. The groups added that sugarcane producers were not responsible for the fires nor were benefiting from them, defending themselves from accusations that they could be lighting fires to accelerate harvesting — an old common practice supposedly abolished. By Maria Ligia Barros Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US Gulf oil shut-ins drop as Helene nears landfall
US Gulf oil shut-ins drop as Helene nears landfall
New York, 26 September (Argus) — US Gulf of Mexico oil production shut-in levels fell today as Hurricane Helene bore down on Florida's west coast as a category 3 storm, bringing the threat of dangerous storm surge and winds. Around 441,923 b/d of US offshore oil output, or 25pc, was off line as of 12:30pm ET, according to the Bureau of Safety and Environmental Enforcement (BSEE). That is down from 29pc on Wednesday as the eastern Gulf path of the storm took it farther away from most offshore production facilities. About 363.39mn cf/d of natural gas production, or 20pc of the region's output, was also off line today, up from 17pc on Wednesday. Operators have evacuated workers from 27 offshore platforms. Helene was last about 145 miles west-southwest of Tampa, Florida, packing maximum winds of 120mph, according to a 4pm ET advisory from the US National Hurricane Center. Further intensification is likely and Helene could approach the coast at category 4 strength, with winds of at least 130mph. Landfall is expected near Port Leon on Apalachee Bay Thursday evening before Helene is forecast to turn northwestward and slow down over the Tennessee Valley on Friday and into the weekend. Earlier this week, offshore operators including BP, Equinor and Chevron took the precaution of suspending some operations and evacuating workers from offshore facilities in advance of the hurricane. Some facilities have since started back up as the hurricane's track shifted away from the main oil and gas hub in the region. By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Opec+, Saudis have no target oil price: sources
Opec+, Saudis have no target oil price: sources
Dubai, 26 September (Argus) — Neither Saudi Arabia nor the wider Opec+ group have any specific target for oil prices, and no member of the producers' alliance is about to abandon output discipline in favour of chasing market share, multiple Opec+ sources have told Argus . Oil prices fell earlier on Thursday following unconfirmed press reports that Saudi Arabia may be willing to tolerate lower oil prices as part of a plan to increase crude output to regain market share. Sources within Opec+ have since dismissed those assertions outright, insisting that the basis for the group's collective decision-making will always be market fundamentals, and in particular the five-year average of crude inventories, rather than targeting any particular oil price. "Neither Opec+, Opec nor the Saudis have any price target, let alone $100/bl," one source said, in response to a Financial Times report that stated Saudi Arabia is ready to "abandon its unofficial price target of $100/bl". A second source said the $100/bl figure being reported is not a target but is more likely to refer to a recent estimate issued by banks and other financial institutions of Saudi Arabia's "so-called break-even oil price" — that is, the price the kingdom needs to cover its spending plans. In April, the IMF estimated Saudi Arabia's breakeven oil price at $96.20 for 2024, almost 20pc above the previous year and around a third higher than current Ice Brent futures. "The breakeven is, at best, indicative, but does not tell the full story," the source said. Focusing on it "is totally devoid of the idea that a government has a host of other tools to manage an economy — issuing bonds, borrowing, adjusting one's budget". Eight Opec+ producers, led by Saudi Arabia and Russia, were due to begin a phased return of around 2.2mn b/d of "voluntary" output cuts from the start of next month. But mounting concerns over the strength of the global economy, and in turn oil demand, prompted the group to defer the plan by two months to December. With worries around oil demand not going away, and the market looking likely to flip into a surplus from the start of next year, some observers are questioning whether there will be any need for an increase in Opec+ supply from December. And if the eight members go ahead with unwinding the cuts regardless, whether that would signal a shift in the group's focus to chasing market share. But a third source rejected that view, as the group would "only be reversing what we have cut". "As a group, we have said time and time again that these cuts were both voluntary and temporary, and always stressed that they could be paused or reversed," the source said. "And earlier this month, that's exactly what we did with the two-month deferral to December." December or bust? The rationale to delay the increase in production to December was twofold, according to Opec+ sources. It not only reflected the uncertainty around the global economy, the US and Chinese economies, interest rates and demand. But more importantly, the decision was made to allow Opec+ members that have overproduced this year ꟷ namely Iraq, Kazakhstan and Russia ꟷ more time to show they are serious about compensating for exceeding their output targets. "There is so much uncertainty today which we, as Opec+, have no control over," one of the sources said. "But what we do control is our own affairs." Iraq and Kazakhstan have been under intense pressure in recent months to not only adhere to their pledged targets, but also compensate for past overproduction. While Kazakhstan did manage to produce below its target in August, Iraq continued to struggle. All eyes will be on how these countries do in September. "The overproduction is impacting our credibility, and we need to tackle that. Discipline is paramount," the source said. Reports that Saudi Arabia is committed to start unwinding cuts from December, come what may, are wide of the mark for several reasons, another source said. "First, this is not a decision for Saudi Arabia to make. It is for all eight to decide," he said. The group also still has several weeks before it has to decide whether to proceed with the plan, or defer again, the source added. A decision is due in the first week of November, by which time the group should have better visibility on market fundamentals and Iraqi and Kazakh compensation efforts. "How could we make a decision now when we don't even have September production figures?" the source said. By Nader Itayim Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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