HollyFrontier Corp. expects to spend $645-810 million on capital projects in 2022, a notable drop from a year in which it spent about $300 million on turnarounds and more than $500 million to set up a renewable diesel operation.
The leaders of Dallas-based HollyFrontier outlined their spending plans for next year in a US Securities and Exchange Commission filing, saying they are looking to put to work between $250 million and $270 million on their refining and marketing operations. That’s an increase of $60 million from 2021’s range and comes after HollyFrontier paid $614 million for a Shell refinery in the Seattle area. The company also plans to spend $45-60 million on its lubricants division, a small increase from 2021.
The two areas bringing the biggest change from this year are turnarounds-catalysts and renewables. In the former of those categories, HollyFrontier executives plan to spend between $70 million and $100 million, a drastic dropoff this year’s program. The change is in line with the company’s 2019-2020 cycle, when it spent $318 million and $95 million, respectively.
HollyFrontier’s renewables push – which involves renewable diesel production units in Cheyenne, Wyo., and Artesia, NM, as well as a pre-treatment unit at the latter complex – garnered nearly half of the company’s roughly $1.2 billion in capex this year. Those three projects will eventually cost the company between $800 million and $900 million; 2022 will see the last $225 million to $300 million of that amount put to work. (The midpoint of that range is about $60 million higher than had been forecast this fall (OGJ Online, Nov. 4, 2021) because of the timing of some invoices.)
The Wyoming renewable diesel unit should book its first sales in first-quarter 2022 after being converted from crude refining. It will be followed in the second quarter by the New Mexico plant, and the pre-treatment unit – which execs expect to cover about 80% of their total feedstock needs – is nearing completion. Combined, the two renewable diesel units will have the capacity to produce 210 million gal/year. HollyFrontier will also begin to report their results as a standalone segment.
Shares of HollyFrontier (Ticker: HFC) were changing hands around $31 on the afternoon of Dec. 20. They are down slightly over the past 6 months.
