Roger Read: Great. Thank you.
Operator: Thank you, Roger. Manav Gupta from UBS. Your line is now open. Please go ahead.
Manav Gupta: Good morning, guys. My question here is, and I know kind of answer, most likely you will not answer it, but we get this question a lot. A very strong result on the West Coast again. A weaker default in price environment. Is there a possibility you could let Rodeo Renewed a little longer and capture higher margins and then just wait for LCFS to rebound later in 2024? So is there a way you could – is there a possibility you could move the timing of startup of Rodeo to better coincide with higher LCFS prices and, in the meantime, make more money on the West Coast?
Rich Harbison: Manav, I’ll start that answer and then maybe give – hand it over to Brian here to add a little color on the backside. So at Rodeo, maybe I’ll just step back a little bit and level set on everything that’s going on at Rodeo here. So Rodeo, there was two NGOs that filed a suit against at Contra Costa County, alleging that the Rodeo Renewed project environmental impact report insufficiently address project impacts. The ruling for the suit was received earlier this year. And actually, there were several issues in our favor, but there were three issues identified as insufficient in the county-certified EIR. The judge explicitly allowed construction to continue with the project while Contra Costa County works through and addresses the three deficiencies that were identified in the EIR.
The county actually posted that revised EIR update on October 24. That initiated a 45-day public comment period. The county will respond to the comments and then likely issue a final EIR early 2024. So right now, our project construction remains on track to complete in the first quarter, and we’re committed to that time line. However, I want to add, we have options. We’ve talked a little bit about this, but let me be a little bit more explicit on this one. There is flexibility to continue crude operation in the event that circumstances beyond our control prevent the start-up of the project. I want to say we are committed to the start-up of the project. But if, for some reason, we don’t have that authority, we will continue to operate in crude operation.
This is a staggered conversion process. In the past, we’ve called this a ramp-up plan, so that creates natural flexibility for us. It allows us to continue to process crude, or it allows us to start up the Rodeo Renewed project, which, I want to remind people, that’s equivalent to removing emissions of 1 million cars from the roads. So we remain pretty confident. We remain confident, I should say, that we will start up the operation of Rodeo Renewed at the end of the first quarter. And we’re focused on executing that conversion plan. But we have this planned flexibility, and we will continue to process the crude oil, if necessary. Now the outlook on the market and what your – the other part of your question is really this outlook of LCFS and – in this relationship.
I’m going to hand that over to Brian, who can explain that relationship a little bit more. It’s more complicated than just the LCFS credit program.
Brian Mandell: Hi, Manav, it’s Brian. So when you think about the RD margins, you have to think about not just the credits but the price of the feedstock, the price of the RD when it comes to market. So even though we’ve had lower LCFS and RINs, we’ve had these distillate prices that have outrun soybean prices. In fact, soybean prices are off. We have more low CI feedstocks that are making their way into the U.S. Kinder Morgan pipeline is allowing RD on their pipelines now, so that means more reach of RD into the California market for consumption. We’ve had – domestic demand is expected to continue to grow. We’ve converted all our stations. We’re seeing RD demand in Oregon and Washington continue to mature as those programs mature.
