site Storage 7 million gallons of feedstock storage and 10 million of biodiesel storage Plant Info

Transcription

1 AFOA 2015

2 Company Highlights Premier operating asset in the industry in terms of: Scale single largest biodiesel production site in North America Flexibility pretreatment system enables use of lower grade soy and blending with higher FFA feedstocks such as used cooking oil Location plant is in the refining and petrochemical production region of the Texas Gulf Coast and is connected to a deepwater dock, giving it unparalleled market access Quality RBF is a BQ-9000 certified producer in its fifth year of operation, with an established reputation for delivering quality product from a variety of feedstocks Operating costs several factors in addition to scale enable RBF s plant to realize lower processing costs than its Company Info: competitors, including a unique synergistic relationship with Headquarters: Houston, TX Huntsman Petrochemical, from whom site utilities, certain Founded: 2006 process chemicals, and other services are obtained at cost Expandability plant capacity can be doubled on existing Plant Location: Port Neches, TX site Operations Date: Late 2008 Storage 7 million gallons of feedstock storage and 10 million of biodiesel storage Plant Info Logistical optionality existing deepwater dock with barge Description: BQ-9000, Multi-feedstock biodiesel and ship capability; connected to a Tier 1 rail line; brand new marine dock fully permitted and designed; could, with minimal production facility investment, tie into fuel pipelines if approved for biodiesel Byproducts: Glycerin blends Storage: Over 17 million gallons R&D capability plant site includes state-of-the-art Logistical Access: Barge, ship, rail and truck (possibly laboratory unrivaled in the industry pipeline) Privileged and Confidential 2

3 What is the Biodiesel Complex? RINs LCFS Credits Agri Input Biodiesel Energy Output IRS Tax Credit 3

4 Market Snapshot Today 4

5 The Biodiesel Complex: The Reality CA LCFS: If RFS2 wasn t complicated enough RINs D4 D5 Weather, Energy Costs Dirty Hedges RIN Complex aka Wolfpack D6 Geopolitical Agri Input Biodiesel Energy Output VVO High FFA GHG/CI ILUC Sustainability Food vs Fuel IRS Tax Credit Retro/Fwd? PTC/BTC? Tax Credit Sharing?? ULSD Heating Oil 5

6 Why are we always talking about the HOBOs? In the North American market one of the main drivers to biodiesel production economics is rooted in the spread between Soybean Oil Futures and Heating Oil Futures These benchmarks serve as the strongest nearby market structure for the young Biodiesel market. Global variations of this agri-input to energy-output include: POHO = Palm Oil to Heating Oil POGO = Palm Oil to GasOil BOGO = Bean Oil to GasOil Even High FFA inputs are often hedged to BO futures versus taking flat price risk 6

7 BOHO YTD

8 BOHO Spread 2014 and

9 BOHO 5-year Historical (RFS2 Years) 9

10 BOHO 10-year Historical 10

11 RINs: Love them, hate them, trade them, spread them ~ OP s going to have to get a lot more of them! In 2009 RINs emerged as the currency for the EPA s RFS2 program Despite relaxed timelines, overzealous favorites out of the gates and a few bad apples along the way these wily credits are beginning to find some traction Most important they have significant market impact along with the BOHO spread in establishing critical market components such as: blend margins and production margins The biodiesel complex today in the US can best be described structurally as having BOHO, RINs and of course the ever elusive IRS tax credit, with now LCFS Credits the most recent development to consider in certain states. 11

12 BOHO to D4 RIN Correlation moments of some resemblance of structure emerging 12

13 The D4 RIN - Pricing History 13

14 RIN Complex

15 2013 The RIN wolfpack emerges 15

16 EMTS Year to Date RBF s estimate of EMTS breakdown: 16

17 No Shortage of Oil 17

18 2015 US Biodiesel Feedstock 18

19 US Domestic Biodiesel Production 12,000 10,000 Million Pounds 8,000 6,000 4,000 Poultry Palm oil Other Tallow White grease Canola oil Corn oil Yellow grease Soybean oil 2,

20 Low Flat Price = Tighter Diffs 20

21 Biodiesel Feedstock Differentials 21

22 Renewable Diesel Has Arrived 22

23 Argie Imports 23

24 Expected Argie Imports Balance of Year 24

25 Market Snapshot Today 25

26 Present Market Economics Horror Show Disconnected, broken, dysfunctional some of the terms often mumbled in the markets these days that I can print.. BTC priced in to the economics first for producers, then blenders and now even compliance driven end receivers (OP s) Despite encouraging long awaited D4 targets from EPA market has proven to easily meet even the provisional mandates due to be set in stone November 30 th, 2015 However it is unclear whether Obligated Parties are in an act as if strategy around these still provisional targets and whether December could get interesting Throw in the PTC and a more balanced S&D scenario marks perhaps the light at the end of the tunnel or year 26

27 P T C Ø Despite being oriented as a blender s tax credit the IRS program was created to support the development of the US Biodiesel and Renewable Diesel industry: Domestic manufacturing jobs energy source 27

28 Producer s Tax Credit Balanced supply and demand EPA s provisional RVO s due to be finalized November 30 th Billion gallons Billion gallons Billion gallons Matched to 2 Billion gallons of reported North American production Original intention of program arguably to support US manufacturing, jobs and Renewable Fuels market. 28

29 Odds on how this plays out 29

30 Grassley Amendment Language Excise Tax 24.4 cpg BioHeat Implications: both biodiesel and heating oil traditionally tax exempt TVM, operations/logistics and administrative problems NAFTA Canadian Trade Flow Mexico the next greenfield target? 10 million Gallon blender s threshold Is this watering down the PTC? 30

31 RINs LCFS Credits Agri Input Biodiesel Energy Output IRS Tax Credit 31

32 Sources Ø SCB Ø The Jacobsen Ø EIA Ø EMTS Ø USDA 32