可再生柴油:仔细考察项目的回报和风险.docx
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1、Equity ResearchAmericas | United StatesCreditSuisseRenewable DieselCloser Look at Returns and Risks for ProjectsOil & Gas Refining & Marketing | Expert InsightsResearch AnalystsManav Gupta212 325 6617Research AnalystsManav Gupta212 325 6617In this report we take a closer look at the 8 renewable dies
2、el projects announced by US independent refiners. We are calculating EBITDA (with and without BTC), IRR, cost of capacity additions ($/gal) and breakeven carbon price needed to keep projects above 10% IRR. We are also highlighting strengths and weaknesses of individual projects. The Debate: Dependin
3、g upon how bullish or bearish an investor is on carbon pricing, we would classify them as: 1) Carbon price optimist - believes in widespread LCFS adoption that will support higher carbon prices; 2) Pragmatist - believes carbon prices will move up in the longer term but sees near-term volatility if a
4、ll announced capacity additions (2.6Bn gal/ yr) come online; 3) BTC optimist - believes renewables is the future, but still bearish on carbon pricing, and sees BTC getting extended past 2022 as Congress wants to encourage use of lower carbon fuels; and 4) Pessimist - bearish on carbon prices and bel
5、ieves renewable trade is IMO 2020 version 2.0. Since we are in early stages, we expect the carbon price optimist to be the most engaging and drive the renewables trade. Our Preference: While multiple projects have been announced, we have a strong preference for projects that are using feedstock with
6、 lower carbon intensity (Cl). VLOs St. Charles and Port Arthur can deliver good returns even without BTC or in an environment where carbon prices drop to $120/ton. It does cost more to construct projects with lower Cl feedstock, but a project using feed with Cl of 25 have an almost $0.75/gal gross m
7、argin advantage over a project using Cl of 53.86. Put another way, a project with Cl of 25 has an almost $50-$60/ton carbon pricing advantage over a higher Cl project. A lower Cl project can withstand a much weaker carbon price environment vs. higher Cl feed project. On paper, both Martinez (IRR 42%
8、) and Rodeo (IRR 24%) conversions look attractive, but given the proximity of the two refineries, we expect competition for feedstock as well as product placement. At this stage, Martinez full conversion (Phase 1 2022 startup) has a first-mover advantage over Rodeo full conversion (2024 startup). Up
9、side and Risks: If LCFS becomes a national mandate, carbon prices will move up ($220-$250/ton) and LCFS credits will price higher, raising IRR of all projects. On the other hand if LCFS does not get wider adoption outside of California and all announced capacity expansions come online, carbon credit
10、 bank would build rapidly and carbon prices would drop, putting economics of many projects in single digits (IRR below 10%). California diesel demand is flat; refineries converting to renewable diesel facility (Martinez and San Fran) are going to produce diesel at the expense of gasoline. Eventually
11、, Californias diesel market will become oversupplied and gasoline undersupplied (bullish PBF). Conclusion: With this magnitude of capacity announcements, refiners are making an implicit assumption that the Democratic presidential candidate will take the White House in November. This will significant
12、ly increase the possibility of LCFS becoming a national mandate, or at least a more rapid adoption across multiple states, pushing up carbon prices, raising EBITDA and IRR projections. In the event President Trump gets re-elected, some of these projects could be delayed or cancelled.DISCLOSURE APPEN
13、DIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the
14、 Firm may have a conflict of interest that couldA Closer Look at Individual ProjectsHFC - Artesia and CheyenneIn November 2019 HFC announced plans to construct a new renewable diesel unit (RDU) at its Artesia refinery. The RDU will have a production capacity of 125 million gallons a year and allow H
15、FC to process soybean oil and other renewable feedstocks into renewable diesel.In early June, HFC announced plans to convert the Cheyenne Refinery to renewable diesel production and to construct a pre-treatment unit (PTU) located at the Artesia Refinery. Including the previously announced renewable
16、diesel unit at the Artesia Refinery, HFC is expected to have a combined capacity to produce over 200 million gallons per year of renewable diesel and pre-treat over 80% of its feedstock.Why are we treating this as a single project vs. 2 different projects? The two projects are similar in terms of ti
17、meline of startup and the feedstock consumption. More importantly, the pretreatment unit is being constructed at Artesia but it will supplying to both plants. If we ascribe all of pre-treatment cost only to Artesia, then that makes Cheyenne look unfairly attractive and Artesia as a very low returns
18、project.Key Project Details Capacity: 210 Million gal/ yr or 13.7mb/d Startup: IQ 2022 Capex: $710M Feed: Soybean oil (90%), Bleachable fancy tallow and Non edible Corn oil (10%) Avg. Cl of Feed: 51.6 (90%* 53.8+ 10%* 32 = 51.6) LCFS credit (Carbon $196/ton): $1.05/gal Normalized EBITDA (without BTC
19、): $150M IRR (without BTC extension): 24% EBITDA (with BTC extension of 5 years at $0.50/gal ending 2027): $250M IRR (with BTC extension of 5 years at $0.50/gal ending 2027): 32% Carbon credits generated: 1.05 Million Metric TonSensitivity Analysis - EBITDAOur base case normalized EBITDA estimates a
20、re calculated on current carbon prices of $196/ton. However, as shown in Fig. 12 we have run sensitivities on EBITDA based on carbon prices range of $140-$240/ton. Our normalized EBITDA estimates excludes any benefit of BTC. Fig.13 shows scenario analysis on these two projects to calculate EBITDA as
21、suming BTC does gets extended for 5 years post 2022, but a lower credit benefit of $0.50/gal vs. current $l/gal.Figure 12: EBITDA (excluding anv benefit of BTC extension) Figure 13: EBITDA (with BTC extension)1401601802002202400.55$70$91$111$132$152$1730.60$86$107$127$148$169$1890.65$102$123$144$164
22、$185$2050.70$119$139$160$181$201$2220.75$135$156$176$197$217$2380.80$151$172$193$213$234$2541401601802002202400.55$70$91$111$132$152$1730.60$86$107$127$148$169$1890.65$102$123$144$164$185$2050.70$119$139$160$181$201$2220.75$135$156$176$197$217$2380.80$151$172$193$213$234$254Carbon Pricing ($/ton)=ec
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