Refinery Gets First Fed Nod to Make Renewable Fuel in FTZ

HONOLULU, Hawaii — Par Hawaii, a refiner of renewable fuels, is now the first entity of its kind in the nation to win federal approval to produce its goods in a Foreign-Trade Zone.

Now that the U.S. Commerce Department has given its blessing, the Foreign-Trade Zones Board expanded Par Hawaii’s FTZ production authority to manufacture fuels such as renewable diesel, sustainable aviation fuel and naphtha, another liquid hydrocarbon, made from domestically sourced crude soybean oil and refined soybean oil.

The company is currently working with Hawaii-based Pono Pacific in the planting of camelina crops to test the suitability of that oil seed for state production.

“This approval, handed down on Monday by the federal government, is another step forward for Hawaii and solidifies our commitment in reaching our renewable energy goals,” said Gov. Josh Green, M.D.

“This clearly shows the state as a leader in the creation and utilization of alternative fuels production,” Green said.

David Sikkink, administrator of Foreign-Trade Zone No. 9, where the facility is located, said, “it has consistently shown itself to be an innovator and leader in leveraging Foreign-Trade Zones to expand and sustain the state’s economy.”

Under federal Foreign-Trade Zone statute, all activity within an FTZ must first receive FTZ Board and U.S. Customs approval.

A Foreign-Trade Zone is a designated location in the United States where companies can use special customs procedures that help encourage U.S. activity and value added — in competition with foreign alternatives — by allowing delayed or reduced duty payments on foreign merchandise, as well as other savings.

The announcement of the FTZ authorization coincides with Par Hawaii’s announcement that it plans to invest roughly $90 million to develop the state’s largest liquid renewable fuels manufacturing facility at its Kapolei refinery, near Honolulu.

The project is expected to produce approximately 61 million gallons per year of renewable diesel, sustainable aviation fuel, renewable naphtha and liquified petroleum gases. If market conditions are supportive, yield can be shifted to over 90% renewable diesel.

In 2022, Par Pacific and Hawaiian Airlines, the largest air carrier in the state, announced a joint feasibility study to explore ways to make sustainable aviation fuel commercially viable.

Company officials said the latest announcements mark a significant milestone in the efforts of the refinery and the airline to produce renewable fuels in Hawaii.

Par Pacific also is assessing development opportunities at the former Chevron refinery location in Kapolei, near its current operations, including projects that would further support the state’s efforts to decarbonize its electrical grid.

Dan can be reached at [email protected] and @DanMcCue