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HollyFrontier to construct renewable diesel plant at New Mexico refinery

By Mary Page Bailey |

HollyFrontier Corp. (Dallas, Tex.; www.hollyfrontier.com) announced a series of strategic actions targeting growth, risk management and shareholder returns: a new renewable diesel unit (RDU) project, regular dividend annual growth target and a new HollyFrontier share repurchase authorization.

Commenting on the announcements, Franklin Myers, Chairman of the Board of HollyFrontier, stated, “Today’s announcements illustrate HollyFrontier’s commitment to both grow our business and deliver superior cash returns to shareholders. We expect our new renewable diesel plant will generate attractive returns and help us meet our requirements under the Renewable Fuel Standard. At the same time, we are increasing cash returns to shareholders through an increase in our regular dividend with a path for future dividend growth and a new HollyFrontier share repurchase authorization.

HollyFrontier plans to construct a new RDU at its Artesia refinery in New Mexico. The RDU will have a production capacity of approximately 125 million gallons per year and allow HollyFrontier to process soybean oil and other renewable feedstocks into renewable diesel. This investment will provide HollyFrontier the opportunity to meet the demand for low-carbon fuels while covering the cost of annual RIN purchase obligation under current market conditions. The RDU, along with corresponding rail infrastructure and storage tanks, is estimated to have a total capital cost of $350 million, and is expected to be completed in the first quarter of 2022. The RDU will be funded with cash on hand and is expected to generate an internal rate of return between 20% and 30%.

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