CVR Energy, Inc. primarily engages in the petroleum refining and marketing industry, and the nitrogen fertilizer manufacturing industry.
The company has interest in CVR Partners, LP, a publicly traded limited partnership (the Nitrogen Fertilizer Segment or CVR Partners). The Petroleum Segment refines and markets high value transportation fuels primarily in the form of gasoline and diesel fuels. CVR Partners produces and markets nitrogen fertilizers primarily in the form of urea ammonium nitrate...
CVR Energy, Inc. primarily engages in the petroleum refining and marketing industry, and the nitrogen fertilizer manufacturing industry.
The company has interest in CVR Partners, LP, a publicly traded limited partnership (the Nitrogen Fertilizer Segment or CVR Partners). The Petroleum Segment refines and markets high value transportation fuels primarily in the form of gasoline and diesel fuels. CVR Partners produces and markets nitrogen fertilizers primarily in the form of urea ammonium nitrate (UAN) and ammonia. CVR Energy also produces and markets renewable diesel.
As of December 31, 2023, Icahn Enterprises L.P. and its affiliates (IEP) owned approximately 66% of its outstanding common stock. As of December 31, 2023, CVR Energy owned the general partner and approximately 37% of the outstanding common units representing limited partner interests in CVR Partners, with the public owning the remaining outstanding common units of CVR Partners.
Petroleum
Petroleum segment consists of the assets and operations of two refineries located in Coffeyville, Kansas and Wynnewood, Oklahoma and supporting logistics assets in the region.
Facilities
Coffeyville Refinery - The company operates a complex full coking, medium-sour crude oil refinery in southeast Kansas, approximately 100 miles from Cushing, Oklahoma (Cushing) with a name plate crude oil capacity of 132,000 bpd (the Coffeyville Refinery). The major operations of the Coffeyville Refinery include fractionation, catalytic cracking, hydrotreating, reforming, coking, isomerization, alkylation, sulfur recovery, and propane and butane recovery operating units. The Coffeyville Refinery benefits from significant refining unit redundancies, which include two crude oil distillation units, two vacuum towers, two sulfur recovery units, and five hydrotreating units. These redundancies allow the Coffeyville Refinery to continue to receive and process crude oil even if one tower requires maintenance without having to shut down the entire refinery.
Wynnewood Refinery - The company operates a complex crude oil refinery in Wynnewood, Oklahoma, approximately 65 miles south of Oklahoma City, Oklahoma and approximately 130 miles from Cushing. The Wynnewood Refinery has a name plate crude oil capacity of 74,500 bpd capable of processing 20,000 bpd of light sour crude oil (the Wynnewood Refinery and together with the Coffeyville Refinery, the Refineries) with major operations including fractionation, fluid catalytic cracking, hydrotreating, reforming, alkylation, sulfur recovery, and propane and butane recovery. Similar to the Coffeyville Refinery, the Wynnewood Refinery benefits from unit redundancies, including two crude oil distillation units and two vacuum towers as well as four hydrotreating units.
The Coffeyville Refinery has the capability to process a variety of crude oils ranging from heavy sour to light sweet crude oil. The Coffeyville Refinery crude oil slate consists of a blend of mid-continent domestic grades and various Canadian medium and heavy sours and other similarly sourced crudes. Other blendstocks and intermediates include ethanol, biodiesel, normal butane, natural gasoline, alkylation feeds, naphtha, gas oil, and vacuum tower bottoms. The Wynnewood Refinery has the capability to process a variety of crude oils ranging from medium sour to light sweet crude oil. Isobutane, gasoline components, and normal butane blendstocks are also typically used.
In addition to the use of third-party pipelines, the company has an extensive gathering system consisting of logistics assets that are owned, leased, or part of a joint venture operation.
For the acquisition of crude oil within close proximity of the Refineries, the company operates a fleet of 124 trucks as of December 31, 2023 and have contracts with third-party trucking fleets to acquire and deliver crude oil to its pipeline systems or directly to the Refineries for consumption or resale. For the year ended December 31, 2023, the gathering system, which includes the pipelines outlined above and its trucking operations, supplied approximately 63% and 97% of the Coffeyville and Wynnewood Refineries’ crude oil demand, respectively.
Crude oils sourced outside of the company’s gathering system are delivered to Cushing by various third-party pipelines, including the Keystone and Spearhead pipelines, on which it can be subject to proration, and subsequently to the Broome Station facility via the Midway JV pipeline. From the Broome Station facility, crude oil is delivered to the Coffeyville Refinery via the Petroleum
Segment’s 170,000 bpd pipeline system. Crude oils are delivered to the Wynnewood Refinery through third-party and joint venture pipelines and received into storage tanks at terminals located within or near the refinery. The company also leases tank storage totaling 2.2 million barrels, including 2.0 million barrels at Cushing.
In February 2021, the company acquired pipelines from Blueknight Energy Partners, LP (the BKEP / CRCT Pipeline System), which complemented the Petroleum Segment’s existing refineries and pipeline systems. The BKEP / CRCT Pipeline System is based in the Wynnewood area and consists of gathering pipelines, which provide the ability to deliver local crude oil to the Wynnewood Refinery. In addition to the gathering capability, the BKEP / CRCT Pipeline System also provides the optionality to deliver and/or receive crude oil from Cushing on two separate lines.
The Coffeyville Refinery is connected to the mid-continent natural gas liquid commercial hub at Conway, Kansas by the inbound Enterprise Pipeline Blue Line, through which natural gas liquid blendstocks, such as butanes and natural gasoline, are sourced and delivered directly into the refinery. In addition, the Coffeyville Refinery’s proximity to Conway, Kansas provides access to natural gas liquid and liquid petroleum gas fractionation and storage capabilities.
Marketing and Distribution
The company’s Coffeyville product marketing efforts are focused in the central mid-continent area through rack marketing, which is the supply of product through tanker trucks and railcars directly to customers located in close geographic proximity to the refinery and to customers at terminals on third-party refined products distribution systems; and bulk sales into the mid-continent markets and other destinations utilizing third-party product pipeline networks.
The Wynnewood Refinery ships its finished product via pipeline, railcar, and truck, focusing its efforts in Oklahoma and parts of Arkansas, as well as eastern Missouri. The pipeline system used by the Wynnewood Refinery is capable of multi-directional flow, providing access to Texas markets, as well as adjoining states with pipeline connections. Jet fuel produced at the Wynnewood Refinery is sold to the U.S. Department of Defense via the segregated truck rack at the Wynnewood Refinery.
Customers
Customers for the Refineries’ petroleum products primarily include retailers, railroads, farm cooperatives, and other refiners/marketers in Group 3 of the PADD II region because of their relative proximity to the Refineries and pipeline access. The company typically sells bulk products to long-standing customers at spot market prices based on a Group 3 basis differential to prices quoted on the New York Mercantile Exchange (NYMEX) subject to other terms or adjustments, which are reported by industry market-related indices, such as Platts and Oil Price Information Service.
In addition, the company sells hydrogen and by-products of its refining operations in Coffeyville, Kansas, such as pet coke, to an affiliate, Coffeyville Resources Nitrogen Fertilizer, LLC (CRNF), which is an indirect, wholly-owned subsidiary of CVR Partners. The Petroleum Segment’s top two customers represented 27% of its net sales for the year ended December 31, 2023.
Competition
The company primarily competes against CHS Inc.’s McPherson Refinery; HF Sinclair Corporation’s El Dorado and Tulsa Refineries; Phillips 66 Company’s Ponca Refinery; and Valero Energy Corporation’s Ardmore Refinery in the mid-continent region.
Seasonality
The company’s Petroleum Segment operations experience seasonal fluctuations as demand for gasoline products is generally higher during the summer months than during the winter months due to seasonal increases in highway traffic and road construction work. Demand for diesel fuel is higher during the planting and harvesting seasons. As a result, the company’s results of operations for the Petroleum Segment for the first and fourth calendar quarters are generally lower compared to its results for the second and third calendar quarters (year ended December 31, 2023).
Nitrogen Fertilizer
The company’s Nitrogen Fertilizer Segment consist of the assets and operations of CVR Partners, including two nitrogen fertilizer manufacturing facilities located in Coffeyville, Kansas and East Dubuque, Illinois.
Facilities
Coffeyville Fertilizer Facility – The company owns and operates a nitrogen fertilizer production facility in Coffeyville, Kansas that includes a gasifier complex having a capacity of 89 million standard cubic feet per day of hydrogen, a 1,300 ton per day capacity ammonia unit and a 3,100 ton per day capacity UAN unit (the Coffeyville Fertilizer Facility). The Coffeyville Fertilizer Facility is the only nitrogen fertilizer plant in North America that utilizes a pet coke gasification process to produce nitrogen fertilizer.
East Dubuque Fertilizer Facility - The company owns and operates a nitrogen fertilizer production facility in East Dubuque, Illinois that includes a 1,075 ton per day capacity ammonia unit and a 950 ton per day capacity UAN unit (the East Dubuque Fertilizer Facility). The East Dubuque Fertilizer Facility has the flexibility to vary its product mix, thereby enabling it to upgrade a portion of its ammonia production into varying amounts of UAN, nitric acid, and liquid and granulated urea, depending on market demand, pricing, and storage availability.
Commodities
The nitrogen products the company produces are globally traded commodities.
Marketing and Distribution
The company’s Nitrogen Fertilizer Segment primarily markets UAN products to agricultural customers and ammonia products to agricultural and industrial customers. UAN and ammonia, including freight, accounted for approximately 69% of its Nitrogen Fertilizer Segment’s total net sales for the year ended December 31, 2023.
UAN and ammonia are primarily distributed by truck or railcar. If delivered by truck, products are most commonly sold on a shipping point basis, and freight is normally arranged by the customer. The company also utilizes a fleet of railcars for use in product delivery.
The East Dubuque Fertilizer Facility primarily sells product to customers located within 200 miles of the facility. In most instances, customers take delivery of nitrogen products at the East Dubuque Fertilizer Facility and arrange to transport them to their final destinations by truck. Additionally, the East Dubuque Fertilizer Facility has direct access to a barge dock on the Mississippi River, as well as a nearby rail spur serviced by the Canadian National Railway Company, both of which are utilized occasionally to sell and distribute the company’s Nitrogen Fertilizer Segment’s products.
Customers
Retailers and distributors are the main customers for UAN and, more broadly, the industrial and agricultural sectors are the primary recipients of the company’s ammonia products. Given the nature of the company’s nitrogen fertilizer business, and consistent with industry practice, it sells its products on a wholesale basis under a contract or by purchase order. Contracts with customers generally contain fixed pricing and have terms of less than one year. The Nitrogen Fertilizer Segment’s top two customers represented 25% of its net sales for the year ended December 31, 2023.
Competition
The company’s major competitors in the nitrogen fertilizer business generally includes CF Industries Holdings, Inc., which sells significantly more nitrogen fertilizers in the United States than other industry participants; Nutrien Ltd.; Koch Fertilizer Company, LLC; OCI N.V.; and LSB Industries, Inc.
Seasonality
The Nitrogen Fertilizer segment typically experiences higher net sales in the first half of the calendar year, which is referred to as the planting season, and its net sales tend to be lower during the second half of each calendar year (year ended December 31, 2023), which is referred to as the fill season.
Environmental Matters
The regulation of air emissions under the Federal Clean Air Act (CAA) requires that the company obtains various construction and operating permits and incur capital expenditures for the installation of certain air pollution control devices at its operations. Various standards and programs specific to the company’s operations have been implemented, such as the National Emission Standard for Hazardous Air Pollutants, the New Source Performance Standards, and the New Source Review.
The Environmental Protection Agency (EPA) regulates greenhouse gas (GHG) emissions under the CAA. In October 2009, the EPA finalized a rule requiring certain large emitters of GHGs to inventory and report their GHG emissions to the EPA. In accordance with the rule, the company’s Facilities monitor and report its GHG emissions to the EPA. In May 2010, the EPA finalized the ‘Greenhouse Gas Tailoring Rule,’ which established GHG emissions thresholds that determine when stationary sources, such as the Refineries and the Facilities, must obtain permits under the Prevention of Significant Deterioration (PSD) and Title V programs of the CAA. Under the rule, facilities already subject to the PSD and Title V programs that increase their emissions of GHGs by a significant amount are required to undergo PSD review and to evaluate and implement air pollution control technology, known as ‘best available control technology,’ to reduce GHG emissions. From time to time, the EPA has conducted inspections and issued information requests to the company with respect to its compliance with reporting requirements under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) and the Emergency Planning and Community Right-to-Know Act (EPCRA).
The company’s Refineries are subject to the Resource Conservation and Recovery Act (RCRA) requirements for the generation, transportation, treatment, storage, and disposal of solid and hazardous wastes. When feasible, RCRA-regulated materials are recycled instead of being disposed of on-site or off-site. RCRA establishes standards for the management of solid and hazardous wastes. Besides governing waste disposal practices, RCRA also addresses the environmental effects of certain past waste disposal practices, the recycling of wastes, and the regulation of underground storage tanks containing regulated substances.
In March 2004, two of the company’s subsidiaries entered into a Consent Decree (2004 Consent Decree) with the EPA and the Kansas Department of Health and Environment (the KDHE) that required it to assume two RCRA corrective action orders issued to Farmland, the prior owner of the Coffeyville Refinery. Until January 21, 2021, it is subject to a 1994 EPA administrative order related to investigation of possible past releases of hazardous materials to the environment at the Coffeyville Refinery. The company is required under the 2004 Consent Decree, as modified by a 2010 agreement between CRRM, Coffeyville Resources Terminal, LLC (CRT), the EPA, and the KDHE, to establish financial assurance to secure the current projected clean-up cost for the now-closed Phillipsburg terminal. The CAA affects the Petroleum and Nitrogen Fertilizer Segments by extensively regulating the air emissions of sulfur dioxide (SO2), volatile organic compounds, nitrogen oxides, and other substances, including those emitted by mobile sources, which are direct or indirect users of the company’s products.
The Federal Clean Water Act (CWA) and its implementing regulations, as well as state laws and regulations that govern the discharge of pollutants into the water, affect its businesses.
The company is subject to a number of federal and state laws and regulations related to safety, including the Occupational Safety and Health Act, which created the Occupational Safety and Health Administration (OSHA) and comparable state statutes, the purposes of which are to protect the health and safety of workers. It is also subject to OSHA Process Safety Management regulations, which are designed to prevent or minimize the consequences of catastrophic releases of toxic, reactive, flammable, or explosive chemicals. The company’s Refineries and the Coffeyville Fertilizer Facility are subject to the Chemical Facility Anti-terrorism Standards (CFATS). In addition, the East Dubuque Fertilizer Facility is regulated under the Maritime Transportation Security Act (the MTSA).
History
CVR Energy, Inc. was founded in 1906. The company was incorporated in 2006.
