Dave Heppner: Yes. Theresa, this is Dave again. I’ll touch on that. So yes, the LF Bioenergy investment, that joint venture is progressing as we planned. We are building out the facilities. The plan is to build out 13 of those RNG facilities collecting a very low CI dairy RNG and then monetizing that, again, as I touched on a little bit with the hydrogen hub taking that RNG into our renewable diesel facilities such as Dickinson and Martinez, will lower the CI of that base renewable diesel product coming out. So relative to the relationship and the investment, we’re very happy with the investment, the management team there, the projects we’ve — that they’re identifying, they’ve got a good runway of portfolio projects and they’re coming on line as planned.
And the second part of your question, is this a one-off or a foundation for subsequent investments in renewable diesel space or the renewable natural gas space. So, we continue, as I said earlier, we look at a lot of stuff. There are some opportunities out there. But we — the key to this one was we got in early and didn’t overpay for a built-out system. So when we think of subsequent investments, I think of them that way. If there’s one that we can step in early and participate in the build-out of the infrastructure and integrate it with our business rather than paying for a built-out system, we’ll continue to evaluate those opportunities.
Operator: Our next question comes from Matthew Blair with TPH.
Matthew Blair: Maybe sticking with the renewables. For some operators, the next leg of the RD story is moving into SAF, is that an option for Martinez? And if so, any thoughts on timing or cost to add that flexibility?
Dave Heppner: Yes, Matthew, this is Dave again. So yes, there is no question both from a Dickinson and Martinez, both those have the opportunity to convert to SAF. And HEFA SAF is one of the most cost competitive on a CapEx per barrel basis for SAF production. With that said, the challenge in SAF is the premium associated to justify the investment. And while the IRA has been communicated, there’s a lot of unknowns out there and a lot of clarity that still needs to be determined relative to the IRA, not only from the sliding scale and the CI benefit of it, but also the long-term duration. Right now, it ends in 2027, as far as the documented incentives relative to that. So it’s hard to make multi-hundred million dollar investments without that clarity going forward. So lack of clarity and lack of premium from airline industry makes it very difficult to justify those investments at this time.
Mike Hennigan: Hey Matthew, it’s Mike. I’ll just add to your and to Theresa’s question. I think what you’re trying — or hopefully, what you’re seeing from us is we’re attentive to this whole low-carbon world, whether it’s investment in RNG, like Theresa talked about or as Dave just mentioned, SAF, in my opinion, is going to happen at some period. As Dave said, there’s a little bit of wrangling around the economics of it at this point. But when those opportunities present themselves to us, we’ll continue to optimize our portfolio. So, I think if you take a stair step over time, you’re going to see us continue to be conscious of that, at the same time, recognizing that the base business is still the majority of what we do.
But over time, we’re going to continue to look, whether it’s RNG, whether it’s SAF, whether it’s continued build-out in some other areas, those are things that we continue to evaluate. Dave and his team is constantly looking at it, and we’ll make some investment there. But we’re not looking for the big splash of a major investment, as Dave just said. We’re not looking to buy something that’s already been proven out. We’re looking to get ourselves in and grow with those opportunities.
Matthew Blair: Sounds good. And then, do you have any early thoughts on refining margin capture into the fourth quarter? Do you think it would be up on tailwinds from things like butane blending and getting the reformer back for at least part of the quarter?
Maryann Mannen: Hey Matthew, it’s Maryann. Yes, I think it’s hard for us to project capture. But when you talk about the things you did, obviously, as we shared, the reformer we expect will begin to come back up mid-November, our guidance reflects the fact that it will be operational at planned rates mid-December. We talked about some secondary headwinds. We talked about marketing margins changing. You heard Brian talk about that as well. Those things clearly have a positive influence on capture. But as you know, it’s difficult to predict where capture would otherwise go. But certainly, those things point to improving capture from the third quarter.
Operator: Our last question will come from Ryan Todd with Piper Sandler.
Ryan Todd: Maybe if I could I have one follow-up on the Martinez conversion project. Can you talk about where you are from an operational point of view there? Maybe how much throughput you had in — during the third quarter from Phase 1 of the project? And maybe as we think about startup of Phase 2 of that project by the end of this year, is there any ramp that we should associate with it, either in terms of total throughput or in terms of the type of fees that you anticipate working their way into the system? So, how should we think about the progress from an operational point of view from — for that asset?
Tim Aydt: Okay. Ryan, this is Tim Aydt. Thanks a lot for the question there. I would say that, first off, the project is going exceptionally well, both from a safety and on-time and on-budget standpoint. The team’s really done a great job, and I do want to give them a shout out because it really kind of demonstrated one of Marathon’s key strengths here and that they can execute on a complex project. We did, as you likely know, we start up the pretreatment unit in late second quarter, and it is operating very well. We’re able to pretreat the entire production that comes about with the Phase 1 Martinez capacity. And now we’re going to be looking to ramp that pretreatment capacity with the production of RD that’s coming on toward the end of the year when we finish the project.
And as Maryann said earlier, when we do finish the project, we’re going to be able to produce 730 million gallons annually, and that should happen by the end of the year. So, all-in-all, operationally and project wise, we’re moving forward, wrapping it up, and we’ll be ready at the end of the year.
Kristina Kazarian: All right. With that, thank you so much, everyone, today for your interest in Marathon Petroleum Corporation. Should you have additional questions or would you like clarification on topics discussed this morning, please reach out, and our team will be available to take your calls. Thanks so much for joining us.
Operator: Thank you. That does conclude today’s conference. Thank you for participating. You may disconnect at this time.
