Chevron, Exxon seek ‘small refinery’ waivers from US biofuels law

NEW YORK: Global energy giants Chevron Corp and Exxon Mobil have asked US regulators for exemptions to the nation’s biofuels policy that have historically been reserved for small companies in financial distress, according to sources familiar with the matter.

The requests will add fuel to a raging dispute between Big Oil and Big Corn over how the Trump administration should manage the US Renewable Fuel Standard – a 2005 law that requires oil refiners to mix biofuels such as corn-based ethanol into the nation’s fuel supply, or buy government-awarded credits from other energy firms who do the blending.

The US Environmental Protection Agency (EPA) has already issued an unusually high 25 hardship waivers to small refineries in recent months, according to an agency source, driving blending credit prices down and helping the oil industry reduce compliance costs.

But the agency won’t name the firms receiving the exemptions, citing a concern over disclosing private company information.

Both Chevron and Exxon, among the world’s most profitable energy companies, have asked EPA for waivers for their smallest facilities – Chevron’s 54,500 barrel-per-day refinery in Utah and the Exxon’s

Several competitors have reportedly received exemptions from the RFS.

60,000 bpd refinery in Montana, two sources briefed on the matter told Reuters on condition of anonymity.

The exemptions would free the plants from their obligation to hand in blending credits earned or purchased for 2017, which came due this year, the sources said.

The disclosure of the Chevron and Exxon applications, which have not been previously reported, follow a Reuters report this month that the EPA has exempted three of ten refineries owned by Andeavor, one of the biggest US refining companies.

The waivers could save Andeavor US$50 million or more in regulatory costs for the company’s 2016 obligations under the biofuels law.

Husky Energy – a Canadian oil giant backed by a Hong Kong billionaire – will also be seeking an exemption, this one covering the 2018 requirements for its small Superior, Wisconsin plant, spokesman Mel Duval told Reuters, disclosing the waiver for the first time.

Duval said Husky inherited a 2017 exemption when it bought the 50,000 bpd Superior refinery from Calumet Specialty Products Partners for US$435 million in November.

The waivers are intended for facilities producing less than 75,000 barrels per day (bpd) that can also prove compliance with the policy would cause them “disproportionate economic hardship.”

A spokesman for Chevron, Braden Reddall, declined to confirm or deny the application, but said waivers provide an edge.

“Several competitors have reportedly received exemptions from the RFS,” he said in a written statement to Reuters. “If true, any refinery which has not been exempted from the RFS will be at a competitive disadvantage.”

Exxon spokesman Dan Carter declined to comment.

The exceptions and the EPA’s refusal to disclose them have infuriated the corn lobby, which argues the waivers hurt farmers by undermining demand for corn and should be used only sparingly for tiny facilities in dire straits.

Braden Reddall, spokesman for Chevron