Paul Cheng: Great. On the renewable diesel, can you share that, what is the EBITDA loss in the quarter, and what’s the growth margin? And also, I mean, if we’re excluding the market condition, what kind of self-help on initiative that we could expand for that business?
David Lamp: Well, if you look at 2023, Paul, going into the third quarter, we were pretty much what I’d call in the profit side of the equation. The fourth quarter hit, and bean oil dropped like a rock. We were unhedged on feedstock, so that took away most of that positivity we had in the first 3 quarters for the fourth quarter. So, I think we ended a year slightly negative, but not too far from breakeven. We really anticipate that the pretreater is going to make a huge difference, because most of the time on these catalyst beds that we have on untreated feed, or even bleached, refined and deodorized our bean oil. The particulates and the other stuff that’s in there just plucked up the bed. So with the pretreater on, we’re going to fix a lot of that, we believe.
That’s going to lead to yield improvements and lower costs all the way across, but we’re still – our unit is still challenged with a lack of catalyst and the high space velocity in the reactor and that’s the reason that we’re going to hold the rates back and try to improve the yields and the run length by adjusting the rate until we can answer the question on SAF. Because if we did SAF that would solve a lot of those problems and we back we’d be all the way to the nameplate at that time.
Paul Cheng: Dave, can you help us to understand why the SAF will solve that problem for you?
David Lamp: Well, we’re a single reactor system today, this gets kind of technical, but I’m happy to tell you. Today, we’re a single reactor we have the ISON [ph] catalyst with the regular whole water removal facilities. If we add another reactor we separate those two. So, we’ll have additional catalyst in the front end, which is really our constraint. And then the ISON [ph] catalyst life will be vastly improved, because you’re stripping all the impurities away that tend to poison that catalyst. So that’s how you do it.
Paul Cheng: I see. And final one for me, you’re talking about the – trying to improve the distillate yield and those projects. What is the capital cost may look like and how long it takes for the project if you do send soon yet?
David Lamp: Well, we’re still working on the numbers. But, preliminary it looks like when it was probably drawn $10 million somewhere in that neighborhood to do the entire project. Coffeyville will probably be a little bit more, but not a whole lot. I’m anticipating, because there’s 2 units we have to do there, two on the vacuum towers and two on the hydrotreater side. So that one might cost a little bit more, but it also creates a lot more volume. So…
Paul Cheng: Yeah, I mean, the yield improvement sounds so great. So what’s the catch? I mean, it is so great. I mean, I would imagine you guys have done it in the past. So the fact that it has not been done, is there any reason that why it has not been done in the past?
David Lamp: Well, I don’t know that I have a solid reason why we didn’t do it. I guess, brainstorming, looking at cracks, I guess, distillate cracks in 2022 and 2023, kind of maybe woke up our creative juices to find more diesel. So we did some analysis and did some sampling of what is recoverable. And then we went to work to figure out how. And we found it.
Paul Cheng: I see. Okay, great. Thank you.
David Lamp: You’re welcome.
Operator: Thank you. We have reached the end of the question-and-answer session. I would now like to turn the floor back over to management for closing comments.
David Lamp: Yes. Well, again, I’d like to thank you all for your interest in CVR Energy. Additionally, I’d like to thank our employees for their hard work, commitment towards safe, reliable, and environmentally responsible operations. And we look forward to reviewing our first quarter results during the next earnings call. Have a great day.
Operator: Ladies and gentlemen, this does conclude today’s teleconference. You may disconnect your lines at this time. Thank you for your participation. And have a wonderful day.
