Modifications included construction of a hydrogen plant, construction of a new sulfur recovery unit, modification of another unit to maintain octane levels, and integration of the existing refinery with the new coker unit.“

CHS is dead set against using ethanol now because they invested in upgrading this refinery to run.. producing higher octane gasoline.. without an octane enhancer additive such as ethanol.

Here’s where.. and I can’t really explain it well.. but a good chunk of the refineries in the US have the ability through an FCCU.. a Fluid catalytic converter unit.. or in the case of CHS McPherson a “coker” to process octane from the reformulation of other output products.. back into higher octane.

edit add is a FCCU the same as a Coker? “No, a coker is not the same as an FCCU (Fluid Catalytic Cracking Unit). While both are secondary processing units used in oil refineries to convert heavy oils into more valuable, lighter products, they use fundamentally different chemical processes and serve different functions.”  AI.

hmmm.. okay but it’s a different way to get there.. so.. different.. but kind of the same..  again.. in order to be 100% accurate.. I’d have to write a book.  The point is additional processing components have been added or upgraded in order to comply with the need for higher octane gasolines given the type of crude as well as the markets they are “refining” for..

You can bypass this process with a “less complex” refinery by adding ethanol.. which is net effect cheaper.

However, since this is a sunk costs.. they are gonna run it.. the result is less output.. but higher octane gasoline.. hence.. it costs more.

Due to the market structure.. without the RFS.. and its requirements.. w1891 is correct.  The players.. in the refining industry.. will operate their plants.. cranking out more expensive gasoline.. while ignoring “somebody else’s” cheaper alternative.. in ethanol.

”it’s not hard headedness.. it’s just simple economics.. they already spent the $$$ to do it to comply.. they aren’t going to tear that out and redo it.. going forward.. the industry may.. or may not adapt to ethanol.. but probably less so without the RFS.. even though.. it’s cheaper.. cleaner.. (my opinion) better..

The value today is Diesel and jet fuel.. so.. maybe.. or.. maybe not.

However, we’re still living with sunk costs in the refining industry to comply with the clean air act.. which both breathed life into ethanol.. as well as forced refineries to comply by spending big big money to comply.. without ethanol. 

That’s why there’s an export market need for ethanol to produce higher octane gasoline while not spending beau coup $$$ upgrading refineries to comply.. while lowering output.. in overseas markets.

it’s kind of a conundrum.

Somebody else could explain this better.. but..there ya go.

FCCUs “the expensive heart” of a modern day refinery.

https://en.wikipedia.org/wiki/Fluid_catalytic_cracking

https://www.youtube.com/watch?v=-eit-gFtmwU  

edit add.. interesting side note from wiki link.. “ It is said that the Houdry and TCC units were a major factor in the winning of World War II by supplying the high-octane gasoline needed by the air forces of Great Britain and the United States for the more efficient higher compression ratio engines of the Spitfire and the Mustang.^[16][17][18]Supplies of American aviation gas also negated the deficit of high-octane gasoline for the Red Army Air Force.”

A solution is higher compression.. higher efficiency.. higher octane engines.. which convert energy to work more efficiently.. whether you get ther by alcohol.. or FCCUs or whatever.. you’d increase demand for octane.. while stretching a limited resource.. Crude oil.

hmmmm..

apologies.. but there ya go.. we could devote whole threads to this subject.. but.. it’s an issue.

In short, it’s not “hard headedness”.. it’s economics.  “But it’s cheaper to use ethanol”. Correct.  So that would win out.. hmmm.. probably not.

So they would continue to crack at a higher costs.. without ethanol?

.. probably.. yes.

 That makes no sense..  correct. 

Now you could reconfigure.. and get more diesel or kerosene output.. vs higher octane gasoline.. and TODAY that’s where the $$$ is.. but.. you’d have to revamp your refinery.. aka spend big $$$ to do it..

so.. ???

hey we were wrong.. put it back the way it was.. like that’s gonna happen.  And still they must comply with air quality standards.. so.. it’s an interesting question.

I don’t believe the RFS is wrong minded.. despite the disparaging positions from the refineries.  The world marches on.. strait of Hormuz or not..

a way forward will come to be.

ethanol is cheaper.

and we have a big crop coming.