HOUSTON On the heels of last month's Paris agreement to curb carbon emissions, independent refiner Tesoro Corp said it is working with several biofuel companies to run more crude made from renewable plants and waste at its California refineries, the company told Reuters on Tuesday.
Using so-called biocrude from Fulcrum BioEnergy Inc and other partners is intended to lower Tesoro's costs to comply with California's Low Carbon Fuel Standard (LCFS), which requires refineries to run more environmentally friendly produced crude.
Rather than build or overhaul units to produce biofuels, Tesoro can blend biocrude into other crudes that feed existing refineries to generate LCFS credits, C.J. Warner, executive vice president of strategy and business development, said.
Fuels made from the mix would be "indistinguishable" from current output, requiring no changes or upgrades to pipelines, fuel pumps or vehicles, she said.
Tesoro also aims to satisfy federal Renewable Fuel Standard (RFS) requirements to produce fuels made from biomass.
Initially, the amount would be 1 percent or less of the combined 546,000 barrels per day of crude Tesoro's Los Angeles and San Francisco refineries can process.
Warner said it will take time for the biocrude suppliers to increase output to a commercial scale. The California Air Resources Board and the U.S. Environmental Protection Agency also must grant approvals before suppliers can move forward.
In the meantime, Tesoro can work with the biocrude to ensure its addition to crude mixes have the right chemical makeup to run properly at the refineries.
"It's another reason to get started now. There are a lot of things for us to do before we get this running at significant volumes," Warner said.
It may be a while before consumers can put fuel made in part from biocrude in their gasoline tanks.
Tesoro has a deal with Fulcrum BioEnergy to provide biocrude made from municipal solid waste at its $266 million, 10 million gallons per year Sierra plant under development near Reno, Nevada, expected to start up in 2018, the company said.
The U.S. Department of Agriculture in 2014 awarded Fulcrum a $105 million loan guarantee to build the plant.
Tesoro also is working with Ensyn Corp, which operates a 3 million gallon per-year biomass plant in Ontario.
That plant has been qualified by the EPA to generate cellulosic renewable identification numbers (RINs) under the RFS.
A third partner is Virent Inc, which also works with Royal Dutch Shell Plc.
(Reporting By Kristen Hays; Editing by Terry Wade)