Cooperative Relies on RFS Waivers

first_imgShare Facebook Twitter Google + LinkedIn Pinterest By Todd NeeleyDTN Staff ReporterOMAHA (DTN) — The farmer-owned CountryMark cooperative and fuel refinery is caught in the middle of the small-refinery exemption controversy.The company operates in Indiana, Illinois, Michigan, Ohio and Kentucky — most of its customers at more than 100 retail stations are farmers and rural communities that have benefitted from the commodities markets bolstered by the Renewable Fuel Standard since 2005.It is — by EPA’s definition — a small refinery producing 75,000 barrels per day or less.In 2017 and 2018, CountryMark received small-refinery waivers to the RFS.It is one of the few refiners owned by farmers, and small-refinery waivers made CountryMark’s business more viable in 2017 and 2018.On the other hand, the refiner is a big supporter of the RFS. The company blends as much ethanol and biodiesel as possible and fulfills the rest of its legal obligation through buying biofuels credits.Kent Hoffman, an Indiana farmer and CountryMark board member, told DTN the refiner’s need for waivers started in 2015 when its bottom line took a hit when crude oil prices dropped. Yet costs to comply with the RFS continued to rise, he said.“In 2015 it was a huge loss for our refinery as crude oil prices collapsed,” Hoffman said.According to the U.S. Energy Information Administration, lower crude oil prices led to a decline in U.S. production that began in the second quarter of 2015. By the end of 2015 prices dipped to below $40 a barrel — the lowest price since 2009.Click on the link to see the EIA price decline report: https://www.eia.gov/…The price of renewable identification numbers, or RINs, for all biofuels categories in 2015 remained mostly below $1 throughout the year. The highest price for any RIN in 2015 was $1.13 for a D3 cellulosic RIN on July 27, according to EPA’s database.Click this link to view EPA RIN trades and price information: https://www.epa.gov/…In 2016, the price of D3 RINs spiked to a high of $2.35 on Dec. 12, while the prices of other RINs ranged from 52 cents to $1.10 throughout the year.CountryMark’s RFS compliance costs ballooned to more than 350% of profits in 2016, Hoffman said.Refiner costs for natural gas to run the plant and maintenance was about $18.1 million, employee costs came in at around $20.4 million, he said.The costs to comply with the RFS, however, topped them all at about $22.9 million.“Over the next five years, we’re projecting $70 million for compliance costs,” Hoffman said.The refinery started as a gusher well discovered on farm ground in the southwestern tip of Indiana in the 1930s.The farmers who owned the newly discovered oil decided to cash in, so they built a 2,000 barrel-per-day refinery near Mount Vernon, Indiana. Today, it processes about 30,000 barrels per day.The CountryMark refinery brings to market about 450 million gallons of finished fuel products each year to farms, fleets and families. The refiner is owned and operated by CountryMark’s farmer cooperatives.WAIVERS NECESSARYMatt Smorch, CountryMark vice president of refining and logistics, said the process to apply for a waiver isn’t easy but sometimes necessary. The EPA asks companies for a lot of detailed financial information, so a waiver isn’t granted automatically.Because CountryMark has received waivers retroactively, he said the company is allowed to un-retire RINs it has on hand, even though it met its RFS obligation through blending and buying RINs throughout the year. Un-retiring RINs, he said, has led to more RINs flooding the market. That has created lower demand and lower prices for RINs.When it comes to CountryMark’s un-retired RINs in 2018, however, Smorch said the law allows the company to use just 20% of those credits for 2019 compliance.Since RINs prices have fallen, the company may not be petitioning EPA for a 2019 waiver.“Depending on how the rest of the year comes in and where the markets are at, and if our RFS compliance costs are not very high, with the way everything is this year we probably won’t apply for an exemption,” Smorch said.“It wouldn’t pass the red-face test.”The company supports the RFS because it understands its importance to the rural economy and its cooperative members, he said.“We’re a farmer-owned cooperative so we blend as much in our products that we can, and we incent our members to blend,” Smorch said. “Even with everything we do through blending, we are still short.”The company blends 60% to 65% of its obligation and fills the rest through RINs purchases.“We have to go out and buy credits,” Smorch said. “Typically we buy biodiesel and sell it at the diesel price. That’s part of our cost. We don’t own retail. We have branded stations but we don’t own them. With the way the RFS is set up today, mandates are so high that it’s hard to meet in the marketplace. If we fall short of blending, the waivers are a fallback.“Is applying for an exemption something we will do every year? Probably not. It really is there for a safety valve. We’re very supportive of the RFS. We’re in rural Indiana, our refinery is in the southwest part of the state. This is what saving rural jobs looks like.”BIOFUELS DEMANDEthanol and biodiesel interests contend 85 waivers granted by the EPA has destroyed biofuels demand to the tune of about 4 billion gallons since 2016.President Donald Trump reportedly is ready to make a peace offering to farm country at some point, to alleviate the sting felt in rural America where agriculture interests have doubts about where the president stands on the RFS.Smorch said he is unconvinced small-refinery waivers have led to reduced demand for biofuels, especially since the exemptions were granted retroactively.That’s because, as an example, CountryMark already blended as much biofuels as it could and bought RINs throughout the year to comply with the RFS. The company would like to blend more but doesn’t have the ability.If CountryMark decided it was going to meet its RFS obligation only through blending, it would face the daunting task of having to blend ethanol at a blend rate of greater than 12% of all of its gasoline and sell all diesel fuel at greater than B5, or a 5% biodiesel blend.CountryMark, however, is expanding its fuel offering of E15 and continues to look for other biofuels opportunities.Hoffman said the ability to ask for waivers is important to CountryMark’s business.“It is critical to our survival,” he said.“Waivers have made a huge difference on our profitability.”Todd Neeley can be reached at todd.neeley@dtn.comFollow him Twitter @toddneeleyDTN(BAS/CZ)© Copyright 2019 DTN/The Progressive Farmer. All rights reserved.last_img read more

Bonleon drills free throw to lift AMA past Gamboa

first_imgChina furious as Trump signs bills in support of Hong Kong Don’t miss out on the latest news and information. “They did not give up until the very end,” AMA coach Mark Herrera said. “This win will boost our confidence.”Bonleon led the Titans with 16 points, while Jaycee Ascuncion tallied 14 points, five boards, two steals and two assists.FEATURED STORIESSPORTSSEA Games: Biñan football stadium stands out in preparedness, completionSPORTSPrivate companies step in to help SEA Games hostingSPORTSWin or don’t eat: the Philippines’ poverty-driven, world-beating pool starsIn the second outing, Centro Escolar University rallied late in the fourth quarter to turn back Marinerong Pilipino, 70-57, for a 4-2 slate.Orlan Wamar Jr. led with 16 points while Rodrigue Ebondo and Uri Christian combined for 24 points for the Scorpions, who erected a 68-49 cushion after a 9-1 run. —CARLO ANOLIN, CONTRIBUTOR Ethel Booba on hotel’s clarification that ‘kikiam’ is ‘chicken sausage’: ‘Kung di pa pansinin, baka isipin nila ok lang’ Trending Articles PLAY LIST 00:50Trending Articles00:50Trending Articles00:50Trending Articles02:49Robredo: True leaders perform well despite having ‘uninspiring’ boss02:42PH underwater hockey team aims to make waves in SEA Games01:44Philippines marks anniversary of massacre with calls for justice01:19Fire erupts in Barangay Tatalon in Quezon City01:07Trump talks impeachment while meeting NCAA athletes02:49World-class track facilities installed at NCC for SEA Games Pagasa: Kammuri now a typhoon, may enter PAR by weekend Pagasa: Kammuri now a typhoon, may enter PAR by weekend Cocolife holds off Generika LOOK: Jane De Leon meets fellow ‘Darna’ Marian Rivera MOST READ Nikki Valdez rushes self to ER due to respiratory tract infection Sports Related Videospowered by AdSparcRead Next Lacson: SEA Games fund put in foundation like ‘Napoles case’ LATEST STORIES Another vape smoker nabbed in Lucena Orlan Wamar. PBA IMAGESMario Bonleon nailed a clutch free throw as AMA Online Education slipped past Gamboa Coffee Mix, 67-66, to score its first win in six games in the 2017 PBA D-League Foundation Cup Tuesday at Ynares Sports Arena.Bonleon nailed one of two free throws with 8.3 seconds left after getting fouled by Gamboa’s playing coach Leo Avenido.ADVERTISEMENT View commentslast_img read more