Chris Carlson: Yes. Yes, that’s the way to think of it. So that project will continue, and it continues for two reasons. Of course, one is it helps the hydrocracker and its conversion, but if we ever choose to go back to renewables, we’ll need that hydrogen to get full rates.
Donovan Schafer: Okay, great. So that’s helpful. And then when you were running the hydrocracker for conventional throughput, before you stopped to convert it over to renewable diesel, I believe you were still, at least up until the end there, you were still getting an olefin feedstock that was coming out of that as part of the byproduct that then would go on to Shell at their petrochemical plant to then make plastics or something with it. Is that something – do we go back to that? Can you resume selling the olefin feed to Shell? How do I think about in the context of the other part? Because maybe that gets compensated for by the conversion rate for the diesel and so forth. If you’re going from 40 to 50 range, up to 60% range, maybe that’s making up for the olefin piece.
I don’t actually quite know how the olefin and what share of hydrocracker, how that fit in, and if that’s important, and if you can just turn it back to the way it was, or if you have to find another olefin counterparty. How does that work?
Doug Haugh: Yes, it’s Doug here, I’ll take that. I mean, there is, I mean, clearly, we will be. The VGO coming off the unit that isn’t converted to finished fuels will be of the previous grade that was sold to Shell or supplied internally when they were running this as a network core olefin feedstock, undetermined at this time whether we can get a value improvement for hydrocrack to VGO in this – at this grade, it certainly will be as good or better than the previous quality produced. So there’s reason to expect that those markets would be available to us again. But at this point, we aren’t – we don’t have any indication that that would be a value uplift versus the VGO market that we sell into every day today.
Donovan Schafer: Okay, just so I’m clear, it’s like the VGO comes off the primary distillation tower. You’ve got that VGO, then it’s going into the hydrocracker, a certain amount of that, say, we’ll get to 60% of that is going to get turned into much higher margin fuel. The 40% that isn’t converted into fuel that comes out, is that just the same as VGO like it kind of went in and came out and there was no change to it. And that is also synonymously or incidentally, also what was called olefin feed before, or is there actually a change to that other 40% and it’s like a different quality product, but you have to figure out what to do.
Ben Cowart: It’s different. It’s slightly better than just straight run VGO. However, we don’t. Whether it’s indeterminate, if we can get a premium for it, but…
Donovan Schafer: Okay. And then if I could squeeze just one more in. Talking about the fourth quarter, will we have – I guess, first would be by the – when fourth quarter comes around and we expect it to be running full out with conventional, will we get back to the yield, the refined product or fuel kind of yield, jet, diesel, gasoline that we had back in, I don’t know, Q2 or Q3 like a year ago, I think it was about 75% or maybe 74%. Does that nudge up a bit with the higher – will the additional hydrogen capacity beyond by then? Basically just what refined product or high margin product yield should we expect kind of on a go-forward basis in Q4?
Ben Cowart: Yes, go back to 2022 and that should be your basis, even though we believe we’re going to do better than that because we’ve made some yield improvements which were not going to back up on even with this conversion. But that at least gives you a starting point.
Donovan Schafer: Okay. And I think that’s where I got the 74 from. But I don’t have my model in front of me. Is that am I in the ballpark?
Ben Cowart: You’re in the ballpark.
Donovan Schafer: Okay. All right. Thanks, guys. I’ll take the rest of my questions offline.
Operator: Our next question comes from Saumya Jain from UBS. Your line is now open.
Saumya Jain: Hey, good morning, guys. Can you guys talk a bit about how with market conditions right now, it’s part of the reason that we’re pivoting from the renewable diesel. How easily would you guys even be able to pivot back? Should that change? How feasible would that be? Is that something you consider?
Ben Cowart: Yes, it’s a great question. I mean, just as the team has preserved our optionality on this unit going, back to conventional, we’re doing the same – taking the same engineering approach and operations approach, to preserve the optionality to come back into renewables. Obviously, frankly, each time you do it, you get better at it because you’ve got experience, but also you’ve continued to close any gaps mechanically that might have arose as you did the work. So we have a natural option, if you would. Every time we come up on a catalyst change, we’re going to evaluate the forward market conditions, look at what those yields would produce in terms of margin, and make that decision as we order catalyst and plan the turnaround.
So, for renewables, that’s every year, in conventional service, it’s roughly every two years. One could certainly make that decision earlier if there was just disproportionate or dislocated margins available for some reason and you had confidence in your ability to achieve those. But the normal schedule would be just to evaluate this every time we have a catalyst change planned and then use that turnaround as our option point to go one direction or the other.
Saumya Jain: Got it. And then I guess on another, on a separate note, would you guys, or have you considered any potential joint venture partners to help with the cash flow in regards to the refinery itself?
Chris Carlson: You mean as far as like other intermediators to come in to replace current?
Saumya Jain: Yes.
Chris Carlson: I mean, what we’re really focused on right now, the term debt is due within 11 months of basically today. So we’re really focused on, number one, as you heard, the strategic financing opportunities as well as a – I guess a refocus on refinancing the term debt at the moment.
Saumya Jain: Got it. Thank you.
Operator: Question comes from Brian Butler from Stifel. Your line is now open.
Brian Butler: Good morning. Thanks for taking my question.
Ben Cowart: Good morning.
Chris Carlson: Good morning, Brian.
Brian Butler: I just wanted to start on the going concern disclosure and the 10-Q. Can you maybe provide a little additional color and square that with what we’re discussing in the call here and what’s behind that analysis? Is it just the term loan coming due in 11 months, or what is the opportunity timeline between for refinancing that term loan?
