Phillips 66, ADM in talks on biofuels joint venture - sources
08/08/2023 12:00
By Stephanie Kelly, Karl Plume and Jarrett Renshaw
NEW YORK, Aug 8 (Reuters) - U.S. oil refiner Phillips 66
PSX.N and grain trader Archer-Daniels-Midland ADM.N are
discussing a biofuels joint venture with an aim toward producing
lower-carbon jet fuel, three people familiar with the matter
said.
The oil and corn-based ethanol industries, which were at
odds for years over blending mandates, have increasingly become
allies amid a series of partnerships aimed at securing crop
feedstocks to produce lower-carbon biofuels without costly
refinery upgrades.
The two companies are discussing putting ADM's dry corn mill
operations into a venture that would convert grain-based alcohol
to jet fuel, the people said.
ADM, an ethanol pioneer and for years the top U.S.
producer, has sought to downscale its role in the business in
recent years. It put the dry corn mills up for sale in 2016 and,
after failing to find a buyer, spun off the assets into a
wholly-owned subsidiary called Vantage Corn Processors.
ADM sold its Peoria, Illinois, dry mill in 2021. Its
two remaining dry mills
in Columbus, Nebraska, and Cedar Rapids, Iowa, are among
the country's largest, with a combined capacity to produce 613
million gallons of ethanol a year, according to Renewable Fuels
Association data.
Meanwhile, Houston-based Phillips next year plans to start
making renewable fuels at a Rodeo, California refinery converted
from crude oil to processing fats, used cooking oils and soybean
oils into 50,000 barrels per day of renewable diesel, gasoline
and jet fuel.
Several U.S. states, led by California, have set up
low-carbon fuel markets that reward fuel producers for
developing motor fuels that emit less carbon. They can earn
credits for producing fuels with lower carbon intensity compared
with refining crude oil.
Phillips declined to make an executive available for comment
and both ADM and Phillips 66 declined to comment. Potential
value of the deal could not be immediately learned.
TECH LINED UP
Axens SA, which provides technology to convert oil and
biomass to lower-carbon fuels, in May agreed to provide its
ethanol-to-fuels conversion technology to Phillips, ADM or a
joint venture. The deal was a carve out between Paris-based
Axens and Gevo Inc GEVO.O , which had an exclusive license for
the ethanol conversion technology.
The carve out gave Axens rights to directly license its
technology for a dry mill in Cedar Rapids, Iowa, and a dry mill
and co-generation plant in Columbus, Nebraska, according to a
Gevo company filing.
The agreement could result in payments of least $125 million
to Gevo, the report said.
Axens and Gevo did not respond to requests for comment.
ADM already formed a joint venture in 2021 with top U.S. oil
refiner Marathon Petroleum Corp MPC.N to churn out renewable
diesel from soybeans. Their jointly-owned Green Bison Soy
Processing crush plant in North Dakota is set to begin
processing soybeans later this year.
Top oilseed processor Bunge BG.N and Chevron CVX.N last
year formed Bunge Chevron Ag Renewables to make renewable fuels
from soybeans and canola. As part of one deal, Chevron invested
$600 million in the joint venture, helping double processing
capacity at two Bunge soybean crushing facilities.
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Phillips 66 to reconfigure California refinery for renewable
fuels https://www.reuters.com/article/phillips-66-biofuels/phillips-66-to-reconfigure-california-refinery-for-renewable-fuels-idUSL4N2FE3MY
Chevron to invest in Bunge boybean crushers to secure renewable
feedstock https://www.reuters.com/business/energy/chevron-invest-bunge-soybean-crushers-secure-renewable-feedstock-2021-09-02/
Corteva, Bunge, Chevron partner to produce renewable fuels https://www.reuters.com/business/energy/corteva-bunge-chevron-partner-produce-renewable-fuels-2023-03-14/
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(Reporting by Stephanie Kelly in New York, Karl Plume in
Chicago, and Jarrett Renshaw in Washington; additional reporting
by Erwin Seba in Houston
Editing by Marguerita Choy)
((Stephanie.Kelly@thomsonreuters.com; 646-737-4649; Reuters
Messaging: stephanie.kelly.thomsonreuters.com@reuters.net))