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BP Plans to Commence SAF Production in Australia by 2025
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BP plc (BP - Free Report) plans to start sustainable aviation fuel (SAF) production in Australia by 2025, following the conversion of its Kwinana oil refinery to produce renewable fuel, per a report by Reuters.
The company did not reveal the volume of SAF it plans to produce. Production would depend on demand since the facility would be able to switch production between SAF and biodiesel every day. The project is estimated to cost hundreds of millions of dollars.
The Kwinana refinery played a crucial role in the development of Western Australia. However, BP decided to stop fuel production at the Kwinana facility and convert it into an import terminal as it was no longer economically feasible due to the regional oversupply and lower refining margins.
The aviation industry, which aims to reach carbon neutrality by 2050 through SAF, is responsible for 2% of global carbon emissions. SAF can reduce more than 80% of carbon emissions compared with fossil jet fuel. The global aviation industry expects SAF consumption to increase from 100 million liters per year in 2021 to at least 449 billion liters per year within 30 years.
There is currently no SAF available in Australia and has no mandates for the fuel. BP plans to be the country’s first sustainable fuel producer from 2025. Notably, the European Union recently approved plans to require suppliers to blend a minimum of 2% of SAF into their jet fuel from 2025, bringing it to 85% in 2050.
BP’s facility and a A$50-million biorefinery being developed by Oceania Biofuels on the east coast will be the first two SAF facilities in Australia. Australia-based Oceania Biofuels’ facility will be capable of producing more than 350 million liters per year of SAF and renewable diesel.
The Australia government ought to impose mandates or provide subsidies, tax cuts or a carbon pricing mechanism to accelerate the development of the industry, which would be crucial to making long-distance travel affordable for Australia as the world transits to clean energy.
Company Profile & Price Performance
Headquartered in London, the U.K., BP is a fully integrated energy company, with a strong focus on renewable energy.
Shares of the company have outperformed the industry in the past three months. The stock has lost 14.2% compared with the industry’s 15.1% decline.
Kinder Morgan, Inc. (KMI - Free Report) is a leading midstream energy infrastructure provider in North America. KMI expects to generate a net income of $2.5 billion in 2022. The company anticipates DCF and adjusted EBITDA of $4.7 billion and $7.2 billion, respectively. Moreover, to strengthen the balance sheet, it is planning to end this year with a net debt to adjusted EBITDA of 4.3 times.
With a strong focus on returning capital to shareholders, Kinder Morgan projects the annual dividend at $1.11 per share. The company’s board of directors approved a cash dividend of 27.75 cents per share for the first quarter of 2022. This suggests a 2.8% increase from the prior dividend of 27 cents per share.
Enterprise Products Partners (EPD - Free Report) is among the leading midstream energy players in North America. The partnership is also well-positioned to generate additional cash flow from under-construction growth capital projects worth $4.6 billion.
Enterprise Products Partners is strongly committed to returning cash to shareholders. The partnership’s board of directors increased its cash distribution to 46.5 cents per unit, suggesting a 3.3% hike from the previous dividend of 45 cents.
Suncor Energy, Inc. (SU - Free Report) is Canada’s premier integrated energy company. In 2021, Suncor reduced net debt by almost C$4 billion and returned the same to shareholders through dividends and share repurchases.
Suncor has cash and cash equivalents of C$2.1 billion. The company’s robust liquidity position will allow it to sustain its dividend, even if oil prices stay lower for longer. SU recently hiked its dividend by 12% to 47 Canadian cents per share (after doubling it previously) and increased the buyback authorization to roughly 10% of its public float.
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BP Plans to Commence SAF Production in Australia by 2025
BP plc (BP - Free Report) plans to start sustainable aviation fuel (SAF) production in Australia by 2025, following the conversion of its Kwinana oil refinery to produce renewable fuel, per a report by Reuters.
The company did not reveal the volume of SAF it plans to produce. Production would depend on demand since the facility would be able to switch production between SAF and biodiesel every day. The project is estimated to cost hundreds of millions of dollars.
The Kwinana refinery played a crucial role in the development of Western Australia. However, BP decided to stop fuel production at the Kwinana facility and convert it into an import terminal as it was no longer economically feasible due to the regional oversupply and lower refining margins.
The aviation industry, which aims to reach carbon neutrality by 2050 through SAF, is responsible for 2% of global carbon emissions. SAF can reduce more than 80% of carbon emissions compared with fossil jet fuel. The global aviation industry expects SAF consumption to increase from 100 million liters per year in 2021 to at least 449 billion liters per year within 30 years.
There is currently no SAF available in Australia and has no mandates for the fuel. BP plans to be the country’s first sustainable fuel producer from 2025. Notably, the European Union recently approved plans to require suppliers to blend a minimum of 2% of SAF into their jet fuel from 2025, bringing it to 85% in 2050.
BP’s facility and a A$50-million biorefinery being developed by Oceania Biofuels on the east coast will be the first two SAF facilities in Australia. Australia-based Oceania Biofuels’ facility will be capable of producing more than 350 million liters per year of SAF and renewable diesel.
The Australia government ought to impose mandates or provide subsidies, tax cuts or a carbon pricing mechanism to accelerate the development of the industry, which would be crucial to making long-distance travel affordable for Australia as the world transits to clean energy.
Company Profile & Price Performance
Headquartered in London, the U.K., BP is a fully integrated energy company, with a strong focus on renewable energy.
Shares of the company have outperformed the industry in the past three months. The stock has lost 14.2% compared with the industry’s 15.1% decline.
Image Source: Zacks Investment Research
Zacks Rank & Key Picks
BP currently has a Zack Rank #3 (Hold).
Investors interested in the energy sector might look at the following companies that presently flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Kinder Morgan, Inc. (KMI - Free Report) is a leading midstream energy infrastructure provider in North America. KMI expects to generate a net income of $2.5 billion in 2022. The company anticipates DCF and adjusted EBITDA of $4.7 billion and $7.2 billion, respectively. Moreover, to strengthen the balance sheet, it is planning to end this year with a net debt to adjusted EBITDA of 4.3 times.
With a strong focus on returning capital to shareholders, Kinder Morgan projects the annual dividend at $1.11 per share. The company’s board of directors approved a cash dividend of 27.75 cents per share for the first quarter of 2022. This suggests a 2.8% increase from the prior dividend of 27 cents per share.
Enterprise Products Partners (EPD - Free Report) is among the leading midstream energy players in North America. The partnership is also well-positioned to generate additional cash flow from under-construction growth capital projects worth $4.6 billion.
Enterprise Products Partners is strongly committed to returning cash to shareholders. The partnership’s board of directors increased its cash distribution to 46.5 cents per unit, suggesting a 3.3% hike from the previous dividend of 45 cents.
Suncor Energy, Inc. (SU - Free Report) is Canada’s premier integrated energy company. In 2021, Suncor reduced net debt by almost C$4 billion and returned the same to shareholders through dividends and share repurchases.
Suncor has cash and cash equivalents of C$2.1 billion. The company’s robust liquidity position will allow it to sustain its dividend, even if oil prices stay lower for longer. SU recently hiked its dividend by 12% to 47 Canadian cents per share (after doubling it previously) and increased the buyback authorization to roughly 10% of its public float.