HollyFrontier Corp. has let a contract to KP Engineering LP (KPE) to provide a series of services for construction of a previously announced new renewable diesel unit (RDU) at its 100,000-b/d Navajo refinery in Artesia, NM (OGJ Online, Nov. 19, 2019).
As part of the contract with HollyFrontier subsidiary Artesia Renewable Diesel Co. LLC (ARDC), KPE will deliver engineering, procurement, and construction management (EPCm) for the on-site portion of the proposed RDU, the service provider said.
KPE did not disclose a value of the EPCm contract.
ARDC previously awarded a contract to Haldor Topsoe AS to license its proprietary HydroFlex technology, as well as supply basic engineering, proprietary equipment, catalysts, and technical services, for the new RDU, which comes as part of HollyFrontier’s expansion into renewable fuels (OGJ Online, Jan. 29, 2020).
Implementation of HydroFlex technology for the unit will enable the refinery to reduce its cost of compliance with US Environmental Protection Agency (EPA) mandates for how much biofuel must be blended into fuels sold in the US market by enabling production of clean, renewable diesel from all-renewable feedstocks.
Upon announcing the project in late 2019, HollyFrontier said the RDU will have a production capacity of about 125 million gal/year (9,000 b/d), allowing the refinery to process soybean oil and other renewable feedstocks into renewable diesel to help meet demand for low-carbon fuels while covering the cost of the operator’s annual EPA-regulated RIN purchase obligation under current market conditions.
HollyFrontier said it expects a total capital cost of $350 million for the RDU project, which will include corresponding rail infrastructure and storage tanks.
To be funded with cash on hand and anticipated to generate an internal rate of return between 20-30%, the RDU project is scheduled to be completed during first-quarter 2022.