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Delaware governor seeks fuel blending waiver

31 Jan 2018 17:51 GMT
Delaware governor seeks fuel blending waiver

Houston, 31 January (Argus) — Federal fuel blending requirements pose a severe economic harm to Delaware and should be reduced, the state's governor said in a letter to the Environmental Protection Agency (EPA).

Governor John Carney (D) requested EPA waive or reduce fuel blending obligations under the Renewable Fuel Standard (RFS) for PBF Energy, which operates a 190,000 b/d refinery in Delaware City, Delaware.

The refinery incurred $90mn in costs under the program last year, Carney said in the 30 January letter. A PBF representative could not be immediately reached for comment. EPA did not immediately comment on the letter.

Carney's request referenced this month's bankruptcy filing by Philadelphia Energy Solutions (PES), which cited costs for renewable identification numbers (RINs) needed to prove compliance with the mandates.

"We need a Renewable Fuel Standard policy that truly balances both the needs of our economy and our environment," Carney said in the letter. "It is important that we work to reduce the United States' dependence on foreign oil by crafting policies that work to both stabilize the RIN market and ensure that independent refineries here in Delaware and the Mid-Atlantic continue to remain strong."

Midcontinent pipeline construction and the resumption of US crude exports in 2015 have returned all US Atlantic coast refineries to dependence upon foreign crude. Rising prices for light, sweet Bakken production curbed discounts that allowed profitable movements of the crude by rail to the east coast and into terminals owned by PBF and PES.

RFS requires refiners, importers and other companies to each year ensure minimum volumes of renewables blend into the fuels they add to the US transportation supply. Companies that do not directly blend these fuels must acquire RINs demonstrating that blending from competitors or other companies.

Refiners including PBF have for years criticized the program and sought its reduction or repeal. But the industry has split over whether refiners and importers bear the cost alone or have passed the price on to consumers.

Pennsylvania governor Tom Wolf (R)requested a similar economic harm finding in November.