Soybeans and 'green diesel' will combine in a big way through 2 North Dakota plants
The recently announced ADM soybean processing plant in Spiritwood, N.D., will provide soybean oil to make renewable diesel at Marathon Petroleum Corp.'s Dickinson refinery, allowing the firms to capitalize on low-carbon tax credits in the California market.
FARGO — The recent announcement of a $350 million soybean processing plant at an industrial complex in Spiritwood, N.D., was heralded by politicians as a major new market for farmers that will benefit the state.
But the project, slated for completion in 2023, has another big winner: the Marathon Petroleum Corp. refinery near Dickinson, 200 miles to the west and along the same rail line.
Marathon has converted the refinery so that its entire production now involves making renewable diesel, a fuel that is equivalent to conventional diesel but with a much lower carbon footprint that is increasingly in demand, especially in California, which offers financial incentives for low-carbon fuels.
And a major feedstock for the renewable diesel — sometimes called green diesel — at Marathon’s Dickinson refinery will be soybean oil from the Archer Daniels Midland Co. refinery in Spiritwood, according to officials including a legislative leader.
Marathon has not publicly disclosed any plans to use soybean oil feedstock from the ADM plant once available, but when the soybean plant was announced Agriculture Commissioner Doug Goerhing said plans called for the soybean oil to be shipped to a refinery in western North Dakota to make renewable fuel.
Only one refinery fits that description — the Marathon refinery near Dickinson, said David Ripplinger, an economist at North Dakota State University who studies biofuels.
Also, Sen. Rich Wardner, R-Dickinson, the majority leader of the North Dakota Senate, said local officials in Dickinson recently were briefed by Marathon about its plans to use soybean oil from the Spiritwood processing plant.
“They’re looking forward to doing business with that ADM plant at Spiritwood,” he said.
Marathon has disclosed plans to buy wind power from five turbines that will provide 45% of the Dickinson refinery’s electricity.
A Marathon spokesman declined to comment on plans to use ADM soybean oil in its plant, but Marathon previously has announced that the Dickinson refinery will use corn and soybeans to make renewable diesel. “We don’t typically provide comment on those types of commercial matters,” Marathon communication manager Jamal Kheiry said, referring to its fuel feedstock source.
Using wind power will help reduce the carbon footprint of the renewable diesel the refinery produces — entitling it to carbon credits from the state of California that will increase profitability, Ripplinger said.
“That really helps their carbon footprint and it increases the price of the product,” Wardner said. “They get premium dollar for their product because it practically has no carbon footprint at all.”
Also, the ADM soybean processing plant in Spiritwood will use waste steam from the Dakota Spirit ethanol plant, a neighboring facility at the 550-acre Spiritwood Energy Park 10 miles east of Jamestown.
That likely would further reduce the carbon footprint of green diesel that will be produced at the Marathon refinery, Ripplinger said, making the association between the refinery and the soybean plant highly advantageous.
“It’s a great opportunity for North Dakota farmers,” he said. “It’s a great opportunity for ADM and Marathon. It’s a really great deal.”
Wardner agreed, and noted the two plants are not far apart and are connected to the same rail line, which will decrease shipping costs for the soybean oil used to make green diesel. “It’s ideal,” he said.
Besides its low-carbon footprint, green diesel offers other advantages over biodiesel because it is equivalent to petroleum diesel, Wardner and Ripplinger said. That means vehicles that run on diesel don’t have to be converted to burn green diesel, and the same tanks and pipelines can be used to store or carry both fuels.
“It seems like the renewable diesel is really getting to be sought after,” Wardner said.
The refining industry is making a huge shift toward green diesel, moving away from biodiesel, Ripplinger said.
“It’s going to expand,” he said. “That’s what everybody’s looking at. You’re going to see a tremendous increase in renewable diesel.”
The production capacity of the refinery and soybean crushing plant suggests that the Marathon refinery will be a major customer of the ADM plant, Ripplinger said.
The soybean crushing plant will be able to process up to 150,000 bushels per day, and the refinery can produce 12,000 barrels of renewable diesel per day.
“It matches almost perfectly,” he said. “Absolutely everything points in that direction,” meaning a close relationship between the refinery and soybean plant.
Soybean oil is the leading feedstock for renewable diesel, Ripplinger said, but other vegetable oils, including canola oil, as well as animal fats can be used.
The industry is moving away from conventional biofuels, including biodiesel, and toward green diesel because the incentives increase profitability. But the refining process to make renewable diesel, equivalent to petroleum processing, is much more involved and capital intensive, so it requires a higher return, Ripplinger said.
The ADM plant will provide a market for about 25% of the soybeans North Dakota grows, Ripplinger said, and likely will capture essentially all of the soybeans within a 100-mile radius of the plant.
The big shift toward green diesel, and the popularity of soybeans as a feedstock, mean that in the coming years there likely will be more refineries dedicated to producing renewable diesel, Ripplinger said. It’s possible that another plant could be built on the northern Plains, but it’s not clear whether North Dakota would be chosen, he said.
Last year, North Dakota was ranked ninth in the nation among soybean growing states, producing 190 million bushels. North Dakota is the second-ranked petroleum state behind Texas, and ranks 10th in wind energy production.
North Dakota also is making significant investments to try to make it economically feasible to capture and store carbon emissions from coal-burning power plants. Some of the carbon emissions could be used to help pump oil from North Dakota’s Bakken formation.
“Things like this kind of put North Dakota in the center of the universe,” Ripplinger said.
Now, most of North Dakota’s soybeans are shipped overseas as a protein source. Having the Spiritwood crushing plant, he said, will enable North Dakota growers to capture more of the economic value of their crop.
For that reason, Gov. Doug Burgum called the recent ADM announcement a “game-changer.” He also has predicted that the state’s agriculture and energy industries will increasingly overlap.