Start-up operations begin at Martinez, California, renewable diesel production facility

The joint-venture project between Marathon Petroleum Corp. and Neste Corp. to convert a petroleum refinery in Martinez, California, for manufacturing renewable diesel has begun Phase I commissioning and start-up activities in January, Marathon announced in its earnings call Jan. 31.

The facility is on track to reach full Phase I production capacity of 260 million gallons per year (mgy) of renewable diesel by the end of March.

Pretreatment capabilities are expected to come online in the second half of this year, and once Phase II is completed by the end of 2023, the site will be capable of producing 730 mgy.

The accomplishment of starting up Phase I marks a “significant milestone” in achieving Marathon Petroleum’s sustainable-energy goals, said Mike Hennigan, CEO.

Most of January was spent conducting start-up and commissioning activities, executives stated, adding that “we put fresh feedstock into the HVO unit yesterday.”

Finished-product storage will be complete in the first week of February.

“We feel really good about the project,” Hennigan said. “The team’s execution has been good, but in light of where the refining macro is today, it’s not the contributor that it would be, say, when we get back to a mid-cycle at some point. It will be a meaningful contributor but obviously it’s [tempered] by what’s happening in refining today.”

Maryann Mannen, chief financial officer for Marathon Petroleum, added that the company has allocated $150 million in growth-capital spending in 2023 to complete Phase II of the conversion project in Martinez.

She added that the joint venture with Neste improves the economics of the project, considering the advantaged feedstocks Neste brings.

The growing interest in sustainable aviation fuel (SAF) was also addressed on the call.

While there’s a lot of “chatter” about SAF today, as one Marathon executive put it, the challenge is having confidence in the premium required to justify the investment.

Hennigan added that the company has also optimized operations at its 184 mgy renewable diesel refinery in Dickinson, North Dakota, to be able to bring in more advantaged feedstocks, thereby lowering the carbon intensity of the fuels Marathon produces.