Phillips 66 to restart SAF production in 1Q 2025

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Phillips 66 announced announced plans to push the production timeline for sustainable aviation fuel (SAF) at its Rodeo refinery.

The company plans to initiate SAF production in the first quarter of 2025, focusing on higher carbon intensity (CI) feedstocks for renewable diesel (RD) production in the meantime.

“I’ll caution that in Q4, we’re likely not to produce renewable jet [SAF] we’re currently running off higher CI feedstocks for the plant as we prepare for the production tax credit next year, but we expect to be in steady state at renewable diesel — renewable complex by Q1 of next year. And so by then, you should see us producing renewable jet [SAF],” said Brian Mandell, EVP for marketing and commercial at Phillips 66 while speaking at the third quarter earnings call.

The delay is attributed to the company’s strategy to capitalise on the Inflation Reduction Act’s (IRA) 45Z tax credit, which provides significant incentives for renewable fuel production. By prioritising RD production with higher CI feedstocks, Phillips 66 aims to maximise the benefits of the tax credit.

While the company successfully produced SAF in September, it has decided to postpone larger-scale SAF production until early next year.

“We did actually produce sustainable aviation fuel in September. So we have in the past indicated that, that was our intention … But we will fully intend to be a supplier of sustainable aviation fuel to the marketplace,” said Rich Harbison, EVP, refining at P66.

Earlier in July, the company announced that their Rodeo site will begin SAF production from the third quarter of 2024 but the timeline has been pushed further back by the company.

Despite the delay in SAF production, Phillips 66 remains optimistic about the future of renewable fuels.

Phillips 66 anticipates stronger renewable diesel margins in the fourth quarter and beyond. Lower feedstock costs, coupled with reduced imports of renewable fuels into the US, will create favorable conditions for domestic producers.

Additionally, the tight fossil diesel market on the West Coast, particularly strong demand, will support higher margins for renewable diesel. Furthermore, a tightening credit market may disincentivise biodiesel production, further benefiting renewable diesel.

The company reported a $116m loss in the renewable fuels business in the third quarter, compared to a $22m profit in the same period last year.

 

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