Lane Riggs: We would have to get back to you. It’s going to be a lot. I mean, I have to go back and see how much we incremented on in terms of the volume. So, — and we’ll have to get back with you. We can get back with Homer disclose that I don’t know. I don’t know what–
Paul Cheng: And second question is that in your North Atlantic, the margin in this quarter is really, really strong, even comparing to the benchmark indicator. Can you maybe help us better understand that what may be some driver outside just the market conditions? Yes, any?
Lane Riggs: So Paul, which margin — Valero’s overall–
Paul Cheng: North Atlantic — your North Atlantic?
Lane Riggs: Well, I didn’t really — it’s not that much stronger versus the prior quarter. I mean, just the way we look at it is
Paul Cheng: North Atlantic we see — I think $29.
Lane Riggs: No, but I’m saying versus prior like I said.
Homer Bhullar: Capture was only up a margin.
Lane Riggs: Yeah. Capture rate was up just a little bit.
Paul Cheng: Okay. Thank you.
Operator: Thank you. The next question is coming from Ryan Todd of Piper Sandler. Please go ahead.
Ryan Todd: Thanks. Maybe €“ a follow-up on some things that you maybe touched on a little bit earlier on the call. I think from a macro point of view, as some of the €“ what appear to be at least whether they’re structural or lingering improvements and kind of underlying profitability for the business. It seems like the global system is exceptionally tight in terms of generating low sulfur product, and maybe that’s a post IMO effect. But is that a fair statement? Have you seen kind of a post IMO have you seen a structural change or tightness in the ability of the global refining system to generate ultra-low-sulfur product? And is that something that sticks with us for a long time and on the margin drives higher distillate margins?
Gary Simmons: Yes, I think so. So you can see that a couple of places, you can really see at the low to high spread on fuel oil, you can certainly see the gap that’s occurred and then just general weakness in high sulfur fuel. I think it tells you that the industry really is tight on capacity to upgrade high sulfur fuel into low-sulfur products. And we’ve really seen that starting early last year, and it’s continuing, and we don’t see anything that changes that.
Ryan Todd: Right. Thanks. And then maybe just one on the renewable diesel side. I mean early guidance for the 2023 to 2025 time frame didn’t appear very supportive for renewable diesel on its surface. Any thoughts on what your takeaways were overall, whether you see the market as potentially oversupplied this year? And whether this may result in pushing more marginal players out of the market? Obviously, you have a structural cost advantage, so you’re on the low end of the curve. But do you expect €“ I guess, how did you read the guidance? What do you think the impact will be over the next year or two on the market?
Jason Fraser: Well, so one thing that we saw with the RFS obligation is that they kept the ethanol target at 15 billion gallons, which means you’re still going to be in a situation at some point in the year where you have to use the D4 RIN to cover the D6 obligation because the ethanol blending won’t reach 15 billion gallons. So that mechanism is still in there. To your point, the future obligations were higher, but not as high as people expected. And when you saw that announcement come out, you did see a big drop in soybean oil prices as well as a lot of pressure on €“ or question on whether or not all these soybean crush facilities were going to get built based on that lower obligation going forward. So it’s a little bit of a mixed bag that, there’s still going to be short on the D6 RIN, but there is definitely a lower growth curve on the D4 RIN in this current proposal.
So we’ll have to see how that plays out. There’s still a lot of talk about a lot of the policy trying to move away from soybean oil as a feedstock, both in Europe and in the US, at least in terms of conversations. And so as everyone’s trying to figure out is that part of what’s at play with this lower RFS proposal. So €“ but overall, as you said, we’re a waste oil units that isn’t affected by that. And as you said, we will be competitive regardless of the obligation compared to our peers. So we’ll have to see how the — we’ll just have to see how this plays out. I don’t know, Rich, you had other comments about the future outlook on the RFS proposal. I know we’re
Rich Walsh: Yeah. I mean, one thing I would hit on is the elements that they put in that’s probably the thing that we find most problematic with the rule. EPA is trying to convert the RFS into a subsidy for EVs, for autos. And, obviously, we’ll be commenting very heavy on that. We feel that the RFS is really set out by Congress and the intent was for it to be used to promote liquid renewable fuels like the use of soybean and corn and for ethanol. And we don’t think trying to convert this into some kind of a user it for EV purposes really is consistent with the underlying obligations and intent of Congress with the RFS.
Ryan Todd: Good. Thank you.
Operator: Thank you. The next question is coming from Connor Lynagh of Morgan Stanley. Please go ahead.
Connor Lynagh: Yeah. Thanks. I, kind of, want to continue that line of questioning there. I appreciate this is a little bit ridiculous since you just brought DGD 3 online. But what is the policy vision make you think about DGD 4 or some of the opportunities that you’ll have when you have your carbon capture system online for your ethanol plants? Just where is your head on where future renewables growth for you guys might be?
Gary Simmons: Well, previously, we said we would take a pause after DGD 3 and reassess the market. So we’re — like you said, we’re still lining out DGD 3. Its project went great. It came in under budget. It was nine months ahead of schedule. It’s met design. It’s met its design rates already. And I’ll just say that the project team, the operations team and the fuel compliance team did a great job making this a very smooth start-up, and we’re not having any problem moving sales out of DGD 3 into markets. So as I said before, we haven’t seen an increase in feedstock prices. So everything looks very competitive with DGD3 coming up. That all being said, I think we continue to do the engineering on the SAP project. For the DGD platform, and then we continue to support the Navigator pipeline for the CO2 sequestration for our ethanol plants. So all of that still says that there’s a lot of opportunity with our platform, given its location and competitive position.
