MRC) -- In the EIA’s February Short-Term Energy Outlook (STEO), they introduced new forecasts of US production, consumption, and the net of imports less exports of biodiesel, renewable diesel, and other biofuels in the US, according to Hydrocarbonprocessing.
This new breakout provides a more detailed forecast for U.S. renewable diesel production. In previous STEO releases, the EIA forecast biomass-based diesel consumption, which combined all production and imports of biodiesel consumed in the US. with imported volumes of renewable diesel, not including domestically produced renewable diesel. Differentiating biodiesel from renewable diesel, provides a more precise accounting of biomass-based diesel.
Like biodiesel, renewable diesel is used to comply with the renewable volume obligations for biomass-based diesel in the Renewable Fuel Standard (RFS) administered by the US. Environmental Protection Agency (EPA). The two fuels also supply 95% or more of the RFS requirement for non-cellulosic advanced biofuels. The EPA’s proposed rule for 2022 calls for higher production in both of these categories. In addition, state-level programs, including California’s Low Carbon Fuel Standard and Oregon’s Clean Fuels Program, have encouraged several petroleum refineries to convert to renewable diesel. As a result of these conversions and new construction of renewable diesel refineries, the EIA expects US production capacity of renewable diesel to nearly triple by the end of 2023 from the current production capacity of 77,000 bpd.
Based on renewable diesel plant construction and the EPA’s proposed rule for the 2022 RFS, the EIA forecasts that renewable diesel production will increase significantly in 2022 and 2023.
The EIA also assumes a significant ramp-up in the US production capacity of renewable diesel will add upward pressure to already high feedstock oil prices, which limits actual production growth in their forecast.
As MRC informed earlier, EIA forecasts that crude oil prices will fall in 2022 and 2023 from 2021 levels, according to its January 2022 Short-Term Energy Outlook (STEO). In the fourth quarter of 2021, the price of Brent crude oil, the international pricing benchmark, averaged USD79 per barrel (b). EIA forecasts that the price of Brent will average USD75/b in 2022 and USD68/b in 2023.
We remind that oil supply will soon overtake demand as some producers are set to pump at or above all-time highs, the International Energy Agency (IEA) said last Wednesday, while demand holds up despite the spread of the Omicron coronavirus variant.
MRC