Exports key to US refining’s future, HollyFrontier exec says

US refiners will need to be able to export more products to offset falling domestic gasoline demand, a HollyFrontier Corp. executive told the US Energy Association’s sixth annual Energy Supply Forum. “Gasoline is two thirds of what refineries produce. The only thing that’s keeping us going is exports,” said David L. Lamp, chief operating officer of the Dallas-based independent refiner.

Following his remarks, Lamp emphasized to OGJ that he referred to US refining in general, which exports 2 million b/d of products, and not HollyFrontier specifically. “We live and die by the crack spread,” he said, adding, “We’ve always had to be versatile. That’s not going to change.”

Lamp, who also is the American Fuel & Petrochemical Manufacturers’ chairman, said Latin American refining infrastructure investments have not kept pace with those in the US, which has created opportunities to export products to Mexico in particular. Recent proposals to reform that country’s energy regime could have an impact, but its extent is far from certain, he indicated.

US policymakers will need to address problems with the federal Renewable Fuel Standard and other regulations before US refiners are able to fully realize product export opportunities, Lamp maintained. The RFS’s expanded ethanol mandates under the 2007 Energy Independence and Security Act have become increasingly unworkable as US crude production has grown and gasoline demand has declined, Lamp said.

The law gives the US Environmental Protection Agency authority to adjust quotas, but only for a year, Lamp said. “Congress will need to step in and seriously consider possibly repealing the RFS,” he concluded.

Contact Nick Snow at nicks@pennwell.com.

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