Marathon Seeks Permission to Undertake Renewable Fuel Project

Marathon Petroleum Corporation MPC applied for permits for the conversion of its Martinez petroleum refinery — idled indefinitely — into a renewable diesel facility. While seeking permission is a key step toward producing lower-carbon-intensity fuels, the Martinez conversion project is still being estimated. The company earlier announced its plan to indefinitely stop production at its Gallup and Martinez refineries in response to the collapsing product demand.

The renewable diesel project, if sanctioned, is expected to start production of renewable diesel in 2022, with an upgrade to full-capacity in 2023. Marathon is likely to have a full productive capacity of 736 million gallons per year of renewable fuels, primarily diesel from biorenewable feedstocks namely animal fat, soybean oil and corn oil. Renewable diesel is more eco-friendly than petroleum diesel and is a perfect substitute for traditional fossil-based diesel fuel as  it can be consumed in any proportion in conventional diesel engines without combining with other fuels or modifying engine systems.

Further, the Martinez project is expected to append itself with other renewable fuel projects of the company that are underway for years. This include the conversion of the North Dakota refinery to a renewable diesel plant, investment in Virent, advanced biofuels subsidiary and the production of ethanol through a Midwest joint venture.

The company’s objective to attain the world’s growing energy requirements, while reducing carbon emissions, coordinates with Martinez’s renewable fuel production. On its part, the Ohio-based refining giant aims to bring down greenhouse gas emissions to 70% of 2014 levels by 2030. Marathon’s conversion of the Martinez facility is intended to reduce the facility’s greenhouse gas emissions by 70%, total criteria air pollutants by 70% and water use by 1 billion gallons per year.

About the Company & Price Performance

Headquartered in Findlay, OH, Marathon is an integrated, downstream energy company. It operates the country’s largest refining system, with more than 3 million barrels of crude oil capacity per day across 16 refineries. Its marketing system includes branded locations across the United States, including Marathon brand retail outlets. Its shares have outperformed the industry in the past six months. The company’s shares have gained 24.7% against the industry’s 3.6% decline.



Zacks Rank & Stocks to Consider

Marathon currently has a Zack Rank #4 (Sell). Some better-ranked players in the energy space are Plains Group Holdings LP PAGP, DCP Midstream Partners, LP DCP and CNX Resources Corporation CNX, each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Over the past 60 days, the Zacks Consensus Estimate for 2020 earnings for CNX Resources has been raised by 42.9%.

Plains Group is expected to see earnings growth of 160.6% in 2021, whereas DCP Midstream is likely to see earnings growth of 156.3% in 2021.

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