This is a huge story and a huge congratulations for the Jamestown community and all those involved in pushing this project forward, sticking with this project over the past decade.
Although "food to fuel" seems a bit immoral when folks are talking about a "global food crisis" in the very near future. But that's neither here nor there for this story.
I think folks know the real reason this is being done. But that's neither here nor their for this story.
Let's just enjoy the story for what it is. Another first for North Dakota.
From August 4, 2018, almost four years ago:
Too many soybeans?
The North Dakota solution -- process soybeans into "renewable" diesel and ship it to California where there's a huge market. Now that the Chinese have imposed a new tariff on US soybeans, what's not to like? Making America great again. From what I can tell, everybody wins on this one.
From The Billings Gazette -- the Andeavor Dickinson Refinery would like to build a pilot project at the existing refinery that processes vegetable oil and Bakken crude to create a 5% renewable diesel blend.
From The Bismarck Tribune today: ground broken for $350 million soybean plant near Jamestown; oil will be used by Dickinson refinery.
Officials on Thursday broke ground east of Jamestown for what will be the first dedicated soybean plant in North Dakota.
The $350 million facility at the Spiritwood Energy Park will be owned by Green Bison Soy Processing, a joint venture of the ADM agribusiness conglomerate and Marathon Petroleum Corp.
By harvest 2023 the plant is expected to be producing about 600 million pounds of refined vegetable oil annually, which will be supplied to Marathon for use in making renewable diesel fuel.
“Renewable diesel is a potentially transformative opportunity for the oilseed industry, for farmers, and for the sustainability of our transportation system," said Ken Campbell, ADM’s president of North America oils, biodiesel and renewable chemicals.
The plant will have the capacity to process 150,000 bushels of soybeans per day. The oil will be used to produce 75 million gallons of renewable diesel annually at Marathon's refinery in Dickinson.
How is this story playing nationally? Glad you asked. From S&P Global, February 10, 2022, from global agribusiness major Bunge:
"We'll see the US transform from being an exporter to an importer of vegetable oils [in the coming years]," CEO Gregory Heckman said on the Feb. 9 results call. "You'll see development of cover crops (rye, barley) that will add to vegetable oil supply and even higher capacity utilization of the crushing footprint," he said.
Demand for soybean oil from the US biofuel industry has been rising markedly since 2020 as crushers and vegetable oil-based biofuel processors have become more confident about the government's commitment toward energy transition.
Out of total US soybean oil production of 25.7 billion lb in marketing year 2021-22 (September-August), the country's biofuels sector is projected to consume 11.5 billion lb, the Department of Agriculture said. In MY 2020-21, the US biofuel sector was estimated to have used 9.1 billion lb out of total soybean oil output of 25.2 billion lb, USDA data showed.
According to average analyst estimates, US biodiesel production in 2021 is estimated at 750 million gallons, up 36% year on year. For 2022, the output is projected around 2 billion gallons, almost four times the level seen in 2020.
With each passing year, the rate of biodiesel production is slated to rise significantly. In fact, by 2025, US renewable diesel capacity is expected to reach 5 billion gallons, some analysts said.
FY - CY - MY? This is the first time I've seen "MY" used in this context. I believe it stands for "multi-year." Link here.
More from Bunge:
Bunge sees strong demand for soybean meal and oil in 2022 on strong crush margins.
"With strong oil and meal demand, the curves, of course, are telling us that they (margins) are strong now," Heckman said.
Bunge also expects China, which is the world's largest soybean purchaser, to use more beans instead of wheat in livestock feed in 2022.
"China continues to be volatile, but we'll see lower wheat feeding this year versus last year," Heckman said.
What is Bunge? Wiki here.
- competes with Cargill (private) and Archer Daniels Midland (public)
- when you hear "Bunge," think soybean
What does this all mean for soybeans and soybeans farmers? Bottom line: North Dakota farmers are sitting in the catbird seat when it comes to soybeans: everything is in their favor, including global warming which will extend the season for soybeans, maybe get in two crops a year someday.
But look at this, from Progressive Farmer, last December, 2021:
Analysts are having a hard time modeling out the soybean oil needs in the near term and long term as more renewable diesel projects are announced. For now, forecasts call for higher soybean prices, expanded acreage, and not enough soybean oil to go around.
If everything is built out as projected, farmers would have to add tens of millions of acres of soybeans and yield increases to keep up with the crush demand. To hit the numbers, soybean production would have to grow by roughly 3.6 billion bushels by 2030.
USDA's Economic Research Service this week projected soybean oil will see greater demand starting in 2022, while Rabobank offered a similar outlook projecting greater crush capacity starting in 2023 as more renewable diesel facilities come online.
Renewable diesel right now has multiple government policies driving new production. The Renewable Fuel Standard generates renewable identification numbers, or RINs, for renewable diesel. Then there is the $1-per-gallon Biodiesel and Renewable Diesel Tax Credit that is set through 2022 but could be extended through 2026 in the Build Back Better Act.
California's low-carbon fuel standard (LCFS) is the biggest factor right now as California and a few other states move to decarbonize liquid fuels. Under California's law, there are a lot of products and pathways to reduce emissions, but renewable diesel has taken hold.
"They (California) put together their law to meet their annual goals of reducing carbon emissions, which is an admirable goal, and we'll make that comment up front," said Steve Nicholson, senior grains and oilseed analyst at Rabobank.
That's ramped up production to the point renewable diesel is now the single-largest fuel segment for generating LCFS credits at $153 per carbon ton, down in value about $32 a ton since early July. While each facility gets a different carbon score, an LCFS credit generally translates into 83 cents to 86 cents a gallon for renewable diesel or biodiesel.
Oil refiners are helping drive the move to renewable diesel by modifying their refineries or building new ones. They are also increasingly partnering with agricultural companies to make that happen.
And more, mentioning the North Dakota project:
The list of proposed and under-construction renewable diesel facilities around the country would spike production from 770 million gallons in 2021 to at least 3 billion gallons in 2023. EPA already forecasts 2022 production at 1.59 billion gallons. The U.S. Soybean Export Council projected total new capacity looking ahead at 5.97 billion gallons.
That stacks on top of biodiesel production, which is a separate product and different fuel. Without diving into a technical paper, renewable diesel is a hydrocarbon while biodiesel is a mono-alkyl ester, produced in different processes. Renewable diesel can replace petroleum diesel, while biodiesel is approved to blend with petroleum diesel fuel, according to the Department of Energy.
ADM and Marathon Petroleum Corp. on Wednesday announced they are partnering on a $350 million soybean processing facility in Spiritwood, North Dakota "to supply the rapidly growing demand for renewable diesel fuel." Their project, which is expected to be completed in 2023, "is expected to produce approximately 600 million pounds of refined soybean oil annually, enough feedstock for approximately 75 million gallons of renewable diesel per year."
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