HollyFrontier plans to double capex in 2021, boost renewables spending (updated)

Holly Energy Partners LP

30/11/2020 14:41

(Adds background)
    By Shradha Singh and Stephanie Kelly
    Nov 30 (Reuters) - U.S. refiner HollyFrontier Corp  HFC.N 
on Monday outlined plans to nearly double its capital
expenditure in 2021, boosting its renewables investment and
counting on an expected recovery in fuel demand after the
coronavirus pandemic tanked consumption.
    The refiner said it plans to spend between $1.05 billion and
$1.15 billion next year, up from the $475 million to $550
million slated for 2020. This year the coronavirus pandemic
slashed driving and sent the global economy into a tailspin,
leading refiners to decrease output and figure out how to stay
profitable in a year of little demand. (https://bit.ly/39oKkBT)
    U.S. refiners' utilization rate is still down more than 10
percentage points from the same time last year, Energy
Information Administration data showed. 
    Including its unit Holly Energy Partners LP  HEP.N , the
company expects to spend between $1.09 billion and $1.21 billion
in 2021.
    The Dallas, Texas-based refiner said it would spend around
$500 million to $530 million on its renewables business next
year, compared with $130 million to $145 million in 2020. 
    The coronavirus pandemic has decreased demand for
traditional fuels like gasoline and diesel and in some instances
has accelerated refiners’ plans to increase investments in
renewable fuels. HollyFrontier was one of a handful of refiners
earlier this year to announce a move toward renewable diesel,
made from feedstock such as used cooking oil from fast-food
restaurants.  urn:newsml:reuters.com:*:nL1N2FF1SR
    With renewable diesel, refiners can take advantage of
incentive programs, in particular California’s Low Carbon Fuel
Standard, in which refiners can generate tradable credits with
production of lower carbon-intensive fuels. Refiners can sell
the credits to other fuel producers for profit. 
    Meanwhile, Democratic President-elect Joe Biden has pledged
to move the United States to a zero-carbon emissions scheme by
2050, and legislation supporting demand for products like
renewable diesel could garner bipartisan support.  urn:newsml:reuters.com:*:nL1N2HR38S
    Earlier this year, HollyFrontier converted a
52,000-barrel-per-day refinery in Cheyenne into a renewable
diesel plant and said it plans to spend about $650 million to
$750 million over the next 18 months to expand its renewables
portfolio.  urn:newsml:reuters.com:*:nL4N2F8320

 (Reporting by Shradha Singh in Bengaluru and Stephanie Kelly in
New York; Editing by Aditya Soni and Jonathan Oatis)
 ((Shradha.Singh@thomsonreuters.com; within U.S. +1 646 223 8780
Ext: 2804, outside U.S. +91 80 6182 2630;))