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UPDATE 1-Phillips 66, partner cancel renewable diesel project in Washington

(Adds details on the facility, background)

Jan 21 (Reuters) - U.S. refiner Phillips 66 and biodiesel producer Renewable Energy Group Inc have abandoned construction of a renewable diesel plant in Washington state following delays in receiving permits and uncertainties, the companies said.

This marks a setback in what has been a major push by refiners including Marathon Petroleum, HollyFrontier and Valero to produce diesel from soybeans and other organic products and earn lucrative tax credits for generating the fuels.

The proposed 250-million-gallon-per-year project would have been the largest renewable diesel refinery on the West Coast of the United States, the companies said on Tuesday.

The refinery was planned to be constructed adjacent to Phillips 66’s Ferndale Refinery, looking to take advantage of existing infrastructure that includes tank storage, rail and truck rack access.

“While we believe the Ferndale Refinery is a strategic fit for this renewable diesel project, permitting uncertainties were leading to delays and higher costs,” Robert Herman, Phillips 66 executive vice president of refining, said in a statement.

The companies did not immediately respond to a request for details on the uncertainties.

Phillips 66, Renewable Energy Group had been expected to make a final investment decision in 2019 on the project, which was announced in 2018.

The companies said on Tuesday they were working to wind down the permitting process. (Reporting by Arundhati Sarkar in Bengaluru; Editing by Shounak Dasgupta and Sriraj Kalluvila)

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