Marathon provides update of Martinez conversion project

The first phase of Marathon Petroleum’s renewable diesel conversion project at its Martinez refinery in California is expected to be mechanically complete by the end of the year, according to comments made by President and CEO Michael Hennigan during the company’s second quarter earnings call, held Aug. 2.

According to Marathon, the final environment impact report for the conversion project was certified on May 3, 2022. On July 22, 2022, the Bay Area Air Quality Management District opened a 30-day comment period on the facility’s air quality permit.

The first phase of the conversion project is expected to be mechanically complete by the end of this year, with production capacity of 260 MMgy. Pretreatment capabilities are expected to come online during the second half of 2023, with the Martinz refinery expected to have the capacity to produce 730 MMgy of renewable fuels by the end of 2023. Marathon cautioned that these development timelines are dependent on the timing of air quality permits for the facility.

Hennigan also discussed the planned joint venture with Neste. That joint venture, announced in March, aims to produce renewable diesel at the Martinez refinery following its conversion. According to Hennigan, the Neste joint venture is expected to close in the coming months.

Raymond Brooks, executive vice president of refining at Marathon, fielded questions regarding the economics of renewable diesel during the earnings call. He explained that there are a lot of moving parts to the economics of renewable diesel production right now, including some recent headwinds. He said that the price for California Low Carbon Fuel Standard credits is currently lower than the company anticipated, with feedstock prices a little higher than expected. He also noted there are several economic tailwinds, including a bigger contribution from renewable identification number (RIN) pricing and a bigger contribution from renewable diesel prices.

For the company’s renewable diesel facility in Dickinson, North Dakota, which reached full capacity in August 2021, Brooks said these headwinds and tailwinds have caused the facility to be mostly on par with what Marathon expected from the project in terms of economics. He said the company expects the same type of contribution with Martinez going forward.