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Small refiner on both sides of the SRE debate

A farmer-owned cooperative is currently caught in the middle of the Small Refinery Exemption (SRE) debate.  Indiana-based CountryMark received small-refinery waivers to the RFS in 2017 and 2018.

Matt Smorch, VP of refining and logistics, says their company believes renewable fuels are good for farmers and the US economy, but doesn’t think the SRE’s have led to reduced renewable fuels blending.  “It’s kind of supply and demand,” he says.  “And there’s an oversupply of ethanol for the demand.  Demand for gasoline blending has been fairly constant in the US but the exports have gone down.  So there was probably some overproduction of ethanol.”

He tells Brownfield the exemptions are retroactive, and it isn’t contributing to demand destruction.  For example, the 2017 exemption wasn’t granted until the first quarter of 2018 and the exemption for 2018 wasn’t granted until August 2019.  “The government data – if you look at it nationwide – ethanol use in gasoline has been fairly consistent and it has been consistent with the demand for gasoline – because it does track with gasoline demand.”

But, Smorch says there is a better solution – and that involves changing the gasoline standards in the United States and raising the octane.  “That increase in octane would allow ethanol to compete to allow more ethanol into the gasoline pool,” he says.  “Ethanol is a great product from the fact that it is high octane and it has a good vapor pressure.”  He says the increase in octane could also help increase access to E-15 in parts of the country where ethanol production is prevalent. 

CountryMark refines about 30,000 barrels a day – well below the EPA’s definition of a small refinery which is 75,000 barrels or less per day.  In 2018 the company purchased over 20 million gallons of ethanol and over 5 million gallons of biodiesel giving CountryMark one of the highest renewable blend percentages in the Midwest. 

AUDIO: Matt Smorch, VP of refining and logistics, CountryMark