What changed in this filing

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Item 1. Business

2021-02-23 compared with 2020-02-20 · 152 added, 115 removed, 259 unchanged (51% of the section changed)

CVR Energy, Inc.

is a diversified holding company formed in September 2006 which is primarily engaged in the petroleum refining and nitrogen fertilizer manufacturing industries through its holdings in CVR Refining, LP (the “Petroleum Segment” or “CVR Refining”) and CVR Partners, LP (the “Nitrogen Fertilizer Segment” or “CVR Partners”).

is a diversified holding company formed in September 2006 which is primarily engaged in the petroleum refining and nitrogen fertilizer manufacturing industries through its holdings in CVR Refining, LP which was a publicly traded limited partnership prior to January 29, 2019, (the “Petroleum Segment” or “CVR Refining”) and CVR Partners, LP a publicly traded limited partnership, (the “Nitrogen Fertilizer Segment” or “CVR Partners”).

CVR Refining is an independent petroleum refiner and marketer of high value transportation fuels.

CVR Partners produces and markets nitrogen fertilizers in the form of UAN and ammonia.

As used in this Annual Report on Form 10-K, the terms “CVR Energy”, the “Company”, “we”, “us”, or “our” generally include CVR Refining, CVR Partners, the Company’s publicly traded limited partnership, and their respective subsidiaries, as consolidated subsidiaries of the Company with certain exceptions where there are transactions or obligations between and among CVR Refining, CVR Partners, and CVR Energy, including their subsidiaries.

As used in this Annual Report on Form 10-K, the terms “CVR Energy”, the “Company”, “we”, “us”, or “our” generally include CVR Refining, CVR Partners, and their respective subsidiaries, as consolidated subsidiaries of the Company with certain exceptions where there are transactions or obligations between and among CVR Refining, CVR Partners, and CVR Energy, including their subsidiaries.

Refer to “Petroleum” and “Nitrogen Fertilizer” below for further details on our two business segments.

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As of December 31, 2020, we owned the general partner and approximately 36% of the outstanding common units representing limited partner interests in CVR Partners, with the public owning the remaining outstanding common units of CVR Partners.

On January 17, 2019, the general partner of CVR Refining assigned to the Company its right to purchase all of the issued and outstanding CVR Refining common units not already owned by CVR Refining’s general partner or its affiliates.

On January 29, 2019, the Company purchased all remaining CVR Refining common units not already owned by the Company or its affiliates (the “Public Unit Purchase”).

In conjunction with the Public Unit Purchase, the Company purchased all CVR Refining common units owned by IEP and its subsidiary, American Entertainment Properties Corporation (“AEP”) (the “Affiliate Unit Purchase,” and together with the Public Unit Purchase, the “CVRR Unit Purchase”).

As of December 31, 2020, we owned the general partner and all outstanding common units of CVR Refining, which common units of CVR Refining not then owned by the Company or its subsidiaries were purchased on January 29, 2019 from unaffiliated common unitholders following assignment by CVR Refining’s general partner to the Company of its right to purchase all such common units (the “Public Unit Purchase”) and from IEP pursuant to an agreement containing substantially similar terms as the Public Unit Purchase (the “Affiliate Unit Purchase” and together with the Public Unit Purchase, the “CVRR Unit Purchase”).

As a result of the CVRR Unit Purchase, CVR Refining’s common units were delisted effective January 29, 2019, and its reporting obligations under Sections 13(a) and 15(d) of the Exchange Act were suspended as of February 8, 2019.

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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 and vacuum towers, three sulfur recovery units, and four hydrotreating units.

The Coffeyville Refinery benefits from significant refining unit redundancies, which include two crude oil distillation and vacuum towers, three 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.

In addition, the Coffeyville Refinery has a redundant supply of hydrogen pursuant to its feedstock and shared services agreement with a subsidiary of CVR Partners.

In addition, the Coffeyville Refinery has a hydrogen sale agreement with a subsidiary of CVR Partners where a fixed monthly volume of hydrogen is sold to a CVR Partners’ subsidiary.

Wynnewood Refinery - We own a complex crude oil refinery in Wynnewood, Oklahoma approximately 65 miles south of Oklahoma City, Oklahoma and approximately 130 miles from Cushing with 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”).

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Similar to the Coffeyville Refinery, the Wynnewood Refinery benefits from unit redundancies, including two crude oil distillation and vacuum towers and four hydrotreating units.

In December 2020, our Board of Directors approved the renewable diesel project at our Wynnewood Refinery, which would convert the Wynnewood Refinery’s hydrocracker to a renewable diesel unit capable of producing 100 million gallons of renewable diesel per year (the “RDU”).

Total estimated costs for the project are currently $110 million and completion of the RDU is expected in June 2021.

As a result of the conversion of the hydrocracker to RDU service, the crude oil capacity of the Wynnewood Refinery will be reduced by approximately 17,000 bpd to 57,500 bpd.

Throughput by Refinery

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Total production 139,749 74,497 214,246

The Coffeyville Refinery has the capability to process blends of a variety of crude oil ranging from heavy sour to light sweet crude oil.

The Coffeyville Refinery has the capability to process a variety of crude oil ranging from heavy sour to light sweet crude oil.

Currently, 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.

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Valley to Hooser 8” 20 9,600

Hooser to Broome 8” 43 22,800

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Refer to Item 8, Note 3 (“Equity Method Investments”) for further discussion of these investments.

(2) This pipeline is in the process of being taken out of service.

(2) On February 1, 2021, we acquired approximately 600 miles of crude oil pipeline and related crude oil storage capacity on the pipelines located primarily in Oklahoma with a capacity of 40,000 bpd.

The table below does not reflect this pipeline.

(3) In support of our Coffeyville Refinery, we own and operate a tank storage facility in close proximity to the Coffeyville Refinery (the “East Tank Farm”).

(4) The Midway JV pipeline will have an estimated 150,000 bpd capacity resulting from expanded pumping capacity which is planned to be completed during the Coffeyville Refinery turnaround in the spring of 2020.

For the acquisition of crude oil within close proximity of the Refineries, we operate a fleet of approximately 115 trucks and have contracts with third-party trucking fleets to acquire and deliver crude oil to our pipeline system or directly to the Refineries for consumption or resale.

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Regionally-sourced crude oils delivered to the Refineries usually have a transportation cost advantage compared to other domestic or international crudes given the Refineries’ proximity to the producing areas.

However, sometimes slightly heavier and more sour crudes may offer good economics to the Refineries, including the higher cost of transportation.

However, sometimes slightly heavier and more sour crudes may offer good economics to the Refineries, notwithstanding the higher transportation costs.

The regionally-sourced crude oils we purchase are light and sweet enough to allow the Refineries to blend higher percentages of lower cost crude oils, such as heavy Canadian sour, to optimize economics within operational constraints.

Crude oils sourced outside of our gathering system are delivered to Cushing by various third-party pipelines, including the Keystone and Spearhead pipelines on which we can be subject to proration, and subsequently to the Broome Station facility via the Midway JV pipeline.

Our current contracted capacity includes the Pony Express and White Cliffs pipelines, respectively.

From the Broome Station facility, crude oil is delivered to the Coffeyville Refinery via the Petroleum Segment’s 170,000 bpd proprietary pipeline system.

Crude oils are delivered to the Wynnewood Refinery through third-party and joint venture

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pipelines and received into storage tanks at terminals located on or near the refinery.

Crude oils are delivered to the Wynnewood Refinery through third-party and joint venture pipelines and received into storage tanks at terminals located on or near the refinery.

We also lease tank storage totaling 2.1 million barrels, including 1.9 million barrels at Cushing.

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The Coffeyville Refinery is connected to the mid-continent natural gas liquid commercial hub at Conway, Kansas by the inbound Enterprise Pipeline Blue Line.

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In addition, Coffeyville Refinery’s proximity to Conway provides access to the natural gas liquid and liquid petroleum gas fractionation and storage capabilities.

Through the crude oil and other feedstock supply operations outlined above, and the associated markets available to it, we are able to source and refine crude oils from different locations and of different compositions when it is economically advantageous to do so.

Through the crude oil and other feedstock supply operations outlined above, and the associated markets available to us, we are able to source and refine crude oils from different locations and of different compositions when it is economically advantageous to do so.

The tables below present the total crude throughput by refinery for the years ended December 31, 2020 and 2019:

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Heavy Canadian 1,020 1 % — — % 1,020 1 %

Other Crude Oil 5,151 6 % — — % 5,151 3 %

Total crude throughput 100,722 100 % 70,636 100 % 171,358 100 %

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WTI 67,382 52 % 3 — % 67,385 33 %

WTL 473 — % 668 1 % 1,141 1 %

Midland WTI 3,888 3 % 10,995 15 % 14,883 7 %

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We typically sell 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”), which are reported by industry market-related indices such as Platts and Oil Price Information Service (“OPIS”).

Rack sales are at posted prices that are influenced by the competitive forces in the Group 3 market.

Rack sales are at posted prices that are influenced by the competitive forces in Group 3 of the PADD II region.

In addition, the Coffeyville Refinery sells hydrogen and by-products of its refining operations, such as pet coke, to an affiliate, CVR Partners, pursuant to multi-year agreements.

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feedstocks, refinery complexity, refinery efficiency, refinery product mix, and product distribution and transportation costs.

The location of the Refineries provides us with a reliable supply of crude oil and a transportation cost advantage over our competitors.

We primarily compete against five refineries in the mid-continent region.

In addition to these refineries, we compete against trading companies, as well as other refineries located outside the region that are linked to the mid-continent market through an extensive product pipeline system.

feedstocks, refinery complexity, refinery efficiency, refinery product mix, product distribution and transportation costs, and costs of compliance with government regulations, including the Renewable Fuel Standards (“RFS”).

The locations of the Refineries provides us with a reliable supply of crude oil and a transportation cost advantage over our competitors.

We primarily compete against CHS Inc.’s McPherson Refinery, Holly Frontier Corporation’s El Dorado Refinery, Tulsa East and West Refineries, Phillips 66 Company’s Ponca Refinery and Valero Energy Corporation’s Ardmore Refinery in the mid-continent region.

These competitors include refineries located near the Gulf Coast, the Great Lakes, and the Texas panhandle region.

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Demand for diesel fuel is higher during the planting and harvesting seasons.

As a result, its results of operations for the first and fourth calendar quarters are generally lower compared to its results for the second and third calendar quarters.

As a result, our results of operations for the first and fourth calendar quarters are generally lower compared to its results for the second and third calendar quarters.

In addition, unseasonably cool weather in the summer months and/or unseasonably warm weather in the winter months in the markets in which we sell petroleum products can impact the demand for gasoline and diesel fuel.

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For the years ended December 31, 2020, 2019, and 2018, the Coffeyville Fertilizer Facility purchased approximately $18 million, $20 million, and $13 million, respectively, of pet coke, which equaled an average cost per ton of $35.25, $37.47, and $28.41, respectively.

For the years ended December 31, 2019, 2018, and 2017, we upgraded approximately 90%, 93%, and 88%, respectively, of our ammonia production into UAN, a product that presently generates greater profit than ammonia.

We upgrade substantially all of our ammonia production at the Coffeyville Facility into UAN and expect to continue to do so when the economics are favorable.

For the years ended December 31, 2020, 2019, and 2018, we upgraded approximately 87%, 90%, and 93%, respectively, of our ammonia production into UAN, a product that generally generates greater profit than ammonia but, not true for 2020.

We upgrade substantially all of our ammonia production at the Coffeyville Fertilizer Facility into UAN and expect to continue to do so when the economics are favorable.

East Dubuque Fertilizer Facility - We own and operate a nitrogen fertilizer production facility in East Dubuque, Illinois that includes a 1,075 ton per day capacity ammonia unit and a 1,100 ton per day capacity UAN unit (the “East Dubuque Fertilizer Facility”).

The East Dubuque Fertilizer Facility has the flexibility to vary its product mix enabling it to upgrade a portion of ammonia production into varying amounts of UAN, nitric acid, and liquid and granulated urea, depending on market demand, pricing, and storage availability.

The East Dubuque Fertilizer Facility has the flexibility to vary CVR Partners’ product mix enabling it to upgrade a portion of ammonia production into varying amounts of UAN, nitric acid, and liquid and granulated urea, depending on market demand, pricing, and storage availability.

The East Dubuque Fertilizer Facility’s largest raw material expense used in the production of ammonia is natural gas, which it purchases from third parties.

For the years ended December 31, 2019, 2018, and 2017, the East Dubuque Facility incurred approximately $21 million, $23 million, and $26 million for feedstock natural gas, respectively, which equaled an average cost of $3.08, $3.15, and $3.26 per MMBtu, respectively.

For the years ended December 31, 2020, 2019, and 2018, the East Dubuque Fertilizer Facility incurred approximately $22 million, $21 million, and $23 million for feedstock natural gas, respectively, which equaled an average cost of $2.35, $3.08, and $3.15 per MMBtu, respectively.

The nitrogen products we produce are globally traded commodities and are subject to price competition.

The customers for its products make their purchasing decisions principally on the basis of delivered price and, to a lesser extent, on customer service and product quality.

The customers for CVR Partners’ products make their purchasing decisions principally on the basis of delivered price and, to a lesser extent, on customer service and product quality.

The selling prices of its products fluctuate in response to global market conditions and changes in supply and demand.

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As a result of these factors, UAN typically commands a premium price to urea and ammonia, on a nitrogen equivalent basis.

However, during 2020, UAN commanded a discount price to urea and premium to ammonia, on a nitrogen equivalent basis.

Nutrients are depleted in soil over time and, therefore, must be replenished through fertilizer use.

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According to the IFIA, from 1976 to 2018, global fertilizer demand grew 2% annually.

Global fertilizer use, consisting of nitrogen, phosphate and potassium, is projected to increase by 34% between 2010 and 2030 to meet global food demand according to a study funded by the Food and Agricultural Organization of the United Nations.

Global fertilizer use, consisting of nitrogen, phosphate and potassium, is projected to increase by 1% through 2023 to meet global food demand according to a study funded by the Food and Agricultural Organization of the United Nations.

Currently, the developed world uses fertilizer more intensively than the developing world, but sustained economic growth in emerging markets is increasing food demand and fertilizer use.

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Based on Fertecon Limited’s (“Fertecon”) 2020 estimates, the United States is the world’s third largest consumer of nitrogen fertilizer and the world’s largest importer of nitrogen fertilizer.

Fertecon is a reputable agency which provides market information and analysis on fertilizers and fertilizer raw materials for fertilizer and related industries, and international agencies.

Fertecon is a reputable agency which provides market information and analysis on fertilizers and fertilizer raw materials for fertilizer and related industries, as well as international agencies.

Fertecon estimates indicate that the United States represented 11% of total global nitrogen fertilizer consumption for 2020, with China and India as the top consumers representing 22% and 17% of total global nitrogen fertilizer consumption, respectively.

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In 2020, our supply of pet coke from the Coffeyville Refinery declined to approximately 33%, generally attributable to increased processing of shale crude oil, which reduced the amount of pet coke produced by the refinery and increased the amount of third-party purchases made at spot prices.

Additionally, the Coffeyville Fertilizer Facility relies on a third-party air separation plant at its location that provides contract volumes of oxygen, nitrogen, and compressed dry air to the Coffeyville Fertilizer Facility gasifiers.

With increased reliance on third-party pet coke, we have contracts with four vendors, which could be delivered primarily by truck, railcar or barge.

Additionally, our Coffeyville Fertilizer Facility relies on a third-party air separation plant at its location that provides contract volumes of oxygen, nitrogen, and compressed dry air to the Coffeyville Fertilizer Facility gasifiers.

The reliability of the air separation plant can have a significant impact on our Coffeyville Fertilizer Facility operations.

In 2020, to mitigate future

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impacts, we executed a new product supply agreement that provides for a consistent volume of oxygen that will be maintained within tanks provided by the on-site vendor.

Should the oxygen volume fall below a specified level, the on-site vendor will provide excess oxygen through its own mechanism or through third party purchases.

East Dubuque Fertilizer Facility - The East Dubuque Fertilizer Facility uses natural gas to produce nitrogen fertilizer.

We are generally able to purchase natural gas at competitive prices due to the facilities’ connection to the Northern Natural Gas interstate pipeline system, which is within one mile of the facility, and a third-party owned and operated pipeline.

The pipelines

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are connected to a third-party distribution system at the Chicago Citygate receipt point and at the Hampshire interconnect from which natural gas is transported to the East Dubuque Fertilizer Facility.

The pipelines are connected to a third-party distribution system at the Chicago Citygate receipt point and at the Hampshire interconnect from which natural gas is transported to the East Dubuque Fertilizer Facility.

As of December 31, 2020, we had commitments to purchase approximately 1 million MMBtus of natural gas supply for planned use in our East Dubuque Fertilizer Facility in both January and February of 2021 at a weighted average rate per MMBtu of approximately $2.60 and $2.52, respectively, exclusive of transportation cost.

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UAN and ammonia, including freight, accounted for approximately 65% and 28%, respectively, of our Nitrogen Fertilizer Segment’s net sales for the year ended December 31, 2020.

UAN and ammonia are primarily distributed by truck or by railcar.

UAN and ammonia are primarily distributed by truck or railcar.

If delivered by truck, products are most commonly sold on a free-on-board (“FOB”) shipping point basis, and freight is normally arranged by the customer.

We operate a fleet of railcars for use in product delivery.

If delivered by railcar, the products are most commonly sold on a FOB destination point basis, and we typically arrange the freight.

If delivered by railcar, products are most commonly sold on a FOB destination point basis, and we typically arrange the freight.

The nitrogen fertilizer products leave the Coffeyville Fertilizer Facility either in railcars for destinations located principally on the Union Pacific or Burlington Northern Santa Fe railroads or in trucks for direct shipment to customers.

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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.

We sell UAN products to retailers and distributors.

In addition, we sell ammonia to agricultural and industrial customers.

Given the nature of the nitrogen fertilizer business, and consistent with industry practice, most of our contracts with customers are for a term of 12-month or less.

Retailers and distributors are the main customers for UAN and, more broadly, the industrial and agricultural sectors are the primary recipients of our ammonia products.

Given the nature of our nitrogen fertilizer business, and consistent with industry practice, we sell our products on a wholesale basis under a contract or by purchase order.

Contracts with customers generally contain fixed pricing and most have terms of less than one year.

Some of our industrial sales include long-term purchase contracts.

For the year ended December 31, 2020, the top two customers in the aggregate represented 26% of the Nitrogen Fertilizer Segment’s net sales.

Our Nitrogen Fertilizer Segment has experienced and expects to continue to meet significant levels of competition from current and potential competitors, many of whom have significantly greater financial and other resources.

Competition in the nitrogen fertilizer industry is dominated by price considerations.

However, during the spring and fall application seasons, farming activities intensify and delivery capacity is a significant competitive factor.

We seasonally adjust inventory to enhance manufacturing and distribution operations.

Our major competitors in the nitrogen fertilizer business include CF Industries Holdings, Inc., including its majority owned subsidiary Terra Nitrogen Company, L.P.;

Our Nitrogen fertilizer production is a global market with competitors in every region of the world.

The industry is dominated by price considerations which are driven by raw material and transportation costs, currency fluctuations and trade barriers.

Our Nitrogen Fertilizer Segment has experienced and expects to continue to experience significant levels of competition from domestic and foreign nitrogen fertilizer producers, many of whom have significantly greater financial and other resources.

In the United States during the spring and fall fertilizer application periods, farming activities intensify and geographic proximity to these activities is also a significant competitive advantage for domestic producers.

We manage our manufacturing and distribution operations to best serve our customers during these critical periods.

Subject to location and other considerations, our major competitors in the nitrogen fertilizer business include CF Industries Holdings, Inc., including its majority owned subsidiary Terra Nitrogen Company, L.P.;

LSB Industries, Inc.;

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Domestic competition is intense due to customers’ sophisticated buying tendencies and competitor strategies that focus on cost and service.

We also encounter competition from producers of fertilizer products manufactured in foreign countries, including the threat of increased production capacity.

We also encounter competition from producers of fertilizer products manufactured in foreign countries, including the

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threat of increased production capacity.

In certain cases, foreign producers of fertilizer who export to the United States may be subsidized by their respective governments.

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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, which is referred to as the fill season.

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Environmental Matters

Our petroleum and nitrogen fertilizer businesses are subject to extensive and frequently changing federal, state, and local, environmental, health and safety laws and regulations governing the emission and release of hazardous substances into the environment, the transportation, storage, and disposal of waste, the treatment and discharge of waste water, the storage, handling, use and transportation of petroleum and nitrogen products, and the characteristics and composition of gasoline, diesel fuels, UAN and ammonia.

Our petroleum and nitrogen fertilizer businesses are subject to extensive and frequently changing federal, state, and local, environmental, health and safety laws and regulations governing the emission and release of hazardous substances into the environment, the transportation, storage, and disposal of waste, the treatment and discharge of wastewater and stormwater, the storage, handling, use and transportation of petroleum and nitrogen products, and the characteristics and composition of gasoline, diesel fuels, UAN, and ammonia.

These laws and regulations and the enforcement thereof impact our segments and their operations by imposing:

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Various standards and programs specific to our 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 Federal Clean Water Act (“CWA”)

The CWA and its implementing regulations, as well as the corresponding state laws and regulations that govern the discharge of pollutants into the water, affect the Petroleum and Nitrogen Fertilizer Segments.

The CWA’s permitting requirements establish discharge limitations that may be based on technology standards, water quality standards, and restrictions on the total maximum daily load of pollutants allowed to enter a particular water body based on its use.

In addition, water resources are becoming and in the future may become more scarce, and many refiners, including us, are subject to use restrictions in the event of low availability conditions.

Our Refineries and the Coffeyville Fertilizer Facility have contracts in place to receive water during certain water shortage conditions, but these conditions could change over time depending on the scarcity of water.

Renewable Fuel Standards

Pursuant to the Energy Policy Act of 2005 and Energy Independence and Security Act of 2007 (“EISA”), the EPA has promulgated the Renewable Fuel Standard (“RFS”).

The RFS requires refiners to either blend “renewable fuels,” such as ethanol and biofuels, into their transportation fuels or purchase renewable fuel credits, known as renewable identification numbers (“RINs”), in lieu of blending.

Under the RFS, the volume of renewable fuels that refineries like Coffeyville and

The EPA regulates GHG emissions under the Clean Air Act.

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, our Facilities monitor and report our GHG emissions to the EPA.

In May 2010, the EPA finalized the “Greenhouse Gas Tailoring Rule,”

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Wynnewood are obligated to blend into their finished transportation fuel is adjusted annually by the EPA based on fuel supply and other conditions to meet the statutory mandates that increase annually, but which may be waived by the EPA under certain conditions.

The volume of renewable fuels required by EISA increased from 9 billion gallons in 2008 to 22 billion gallons in 2016 and increases to 36 billion gallons in 2022.

which established GHG emissions thresholds that determine when stationary sources, such as the Refineries and the nitrogen fertilizer facilities, must obtain permits under 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.

The Biden Administration has signaled that it will take steps to address climate change.

On January 27, 2021, the White House issued its Executive Order on Tackling the Climate Crisis at Home and Abroad, as well as a formal notification re-accepting entry of the United States into the Paris Agreement.

The EPA’s approach to regulating GHG emissions may change again under future administrations.

Therefore, the impact on our Facilities due to future GHG regulation is unknown.

Recent Greenhouse Gas Footprint Reduction Efforts

In October 2020, the Nitrogen Fertilizer Segment announced that it generated its first carbon offset credits from voluntary nitrous oxide abatement at its Coffeyville Fertilizer Facility.

The Nitrogen Fertilizer Segment has similar nitrous oxide abatement efforts at its East Dubuque Fertilizer Facility.

According to the EPA, nitrous oxide represents approximately 7% of carbon dioxide-equivalent (“CO 2 e”) emissions in the United States.

The Nitrogen Fertilizer Segment previously entered into a Joint Development Agreement with ClimeCo, a pioneer in the development of emission-reduction projects for nitric acid plants, to jointly design, install and operate a tertiary abatement system at one of its nitric acid plants in Coffeyville.

The system was designed to abate 94% of all N 2 O in the unit while preventing the release of approximately 450,000 metric tons of carbon dioxide equivalent on an annualized basis.

The N 2 O abatement systems at the East Dubuque Fertilizer Facility’s two nitric acid plants have abated, on average, the annual release of approximately 233,000 metric tons of CO 2 e during the past five years.

CVR Partners’ N 2 O abatement projects are registered with the Climate Action Reserve (the “Reserve”), a carbon offset registry for the North American market.

The Reserve employs high-quality standards and an independent third-party verification process to issue its carbon credits, known as Climate Reserve Tonnes.

The Nitrogen Fertilizer Segment also sequesters carbon dioxide that is not utilized for urea production at its Coffeyville Fertilizer Facility by capturing and purifying the CO 2 as part of its manufacturing process and then transferred to its partner, Perdure Petroleum LLC, that compresses and ships the CO 2 for sequestration through Enhanced Oil Recovery (“EOR”).

In January 2021, the Internal Revenue Service published final regulations under Section 45Q which provides tax credits to encourage CO 2 sequestration.

We believe that our process for CO 2 sequestration would qualify for tax credits under Section 45Q and intend to pursue a claim of those credits starting in 2021.

Combining our nitrous oxide abatement and CO 2 sequestration activities reduces our CO 2 e footprint by over 1 million metric tons per year.

In addition, our Coffeyville Fertilizer Facility is uniquely qualified to produce hydrogen and ammonia that could be certified ‘blue’ to a market that is increasingly demanding reduced carbon footprints.

These greenhouse gas footprint reduction efforts support our core Values of Environment and Continuous Improvement, and our goal of continuing to produce nitrogen fertilizers that feed the world’s growing population in the most environmentally responsible way possible.

Renewable Fuel Standards

Pursuant to the Energy Policy Act of 2005 and Energy Independence and Security Act of 2007 (“EISA”), the EPA has promulgated the RFS, which requires refiners to either blend “renewable fuels,” such as ethanol and biofuels, into their transportation fuels or purchase renewable fuel credits, known as RINs, in lieu of blending.

Under the RFS, the volume of renewable fuels that refineries like Coffeyville and Wynnewood are obligated to blend into their finished transportation fuel is adjusted annually by the EPA based on fuel supply and other conditions to meet the statutory mandates that increase annually, but which may be waived by the EPA under certain conditions.

The volume of renewable fuels required by EISA increased from 9 billion gallons in 2008 to 30 billion gallons in 2020.

The EPA has statutory authority to determine RFS volumes after 2022.

In addition to the total renewable fuel volume mandate, there are sub-mandates for advanced biofuels, cellulosic biofuel, and biomass-based diesel.

Under the cellulosic waiver authority provided to the EPA by the CAA, if the EPA’s projected volume of cellulosic biofuel for a calendar year is less than its statutory mandate, the EPA must reduce the required volume of cellulosic biofuel accordingly and provide obligated parties the opportunity to purchase cellulosic waiver credits.

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cellulosic biofuel accordingly and provide obligated parties the opportunity to purchase cellulosic waiver credits.

The EPA also has the discretion to reduce the total renewable fuel and advanced biofuel requirements by the same amount as it reduced the cellulosic biofuel volume.

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The cost of purchasing RINs and cellulosic waiver credits fluctuates and can be significant.

The price of RINs has been extremely volatile as the EPA’s proposed renewable fuel volume mandates approached and exceeded the “blend wall.” The blend wall refers to the point at which the amount of ethanol blended into the transportation fuel supply exceeds the demand for transportation fuel containing such levels of ethanol.

The blend wall is generally considered to be reached when more than 10% ethanol by volume (“E10 gasoline”) is blended into transportation fuel.

The price of RINs was extremely volatile when the EPA’s proposed renewable fuel volume mandates approached and exceeded the “blend wall.” The blend wall refers to the point at which the amount of ethanol blended into the transportation fuel supply exceeds the demand for transportation fuel containing such levels of ethanol.

The blend wall is generally considered to be reached when more than 10 percent ethanol by volume (“E10”) is blended into transportation fuel.

RIN prices also increased significantly in volatility in response to a number of uncertainties regarding the implementation of the RFS program in 2020 and continuing into 2021.

In May 2019, the EPA finalized regulatory changes to allow gasoline blended with up to 15 percent ethanol (“E15”) to take advantage of a waiver during the summer months that previously only applied to E10.

Because E15 can now be sold year-round rather than just eight months of the year, a higher percentage of transportation fuels can be blended with renewable fuels.

The E15 rule, however, is the subject of legal challenges in the District of Columbia Circuit (“D.C.

The E15 rule, however, is under review in the District of Columbia Circuit (“D.C.

Circuit”), which could lead to the rule being overturned.

Also, in December 2019, the EPA published the final renewable fuel volumes for 2020, and the biomass-based diesel volume for 2021 (the “2020 RFS Final Rule”).

As in past years, the volumes increased from the previous year, but with the exception of the volume for biomass-based diesel, are lower than the CAA statutory volume targets.

The EPA did not meet its November 30, 2020 statutory deadline to set the 2021 renewable volume obligations and, to date, has not issued a proposed rule for the 2021 obligations.

While there are statutory targets still in place, the ultimate renewable volume obligations that will apply for 2021 remain uncertain.

Also under review in the D.C.

Circuit is EPA’s final renewable fuel volumes for 2020, and the biomass-based diesel volume for 2021 (the “2020 RFS Final Rule”).

As in past years, the volumes increased from the previous year, but with the exception of the volume for biomass-based diesel, were lower than the CAA statutory volume targets.

The EPA set a lower volume for cellulosic biofuel based on the projected volume available for 2020 and used its cellulosic waiver authority under the CAA to set volumes below the statutory targets for advanced biofuel and total renewable fuel.

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Additional RFS-related rulemakings may occur in 2021.

One relates to a lawsuit in the U.S.

Court of Appeals for the D.C.

Circuit in which several biofuels groups challenged the EPA’s final renewable fuels volumes for 2014 through 2016.

In July 2017, the D.C.

Circuit vacated the EPA’s decision to reduce the 2016 volumes under its “inadequate domestic supply” waiver authority and remanded the rule to the EPA for further reconsideration.

In its proposed rule for the 2020 renewable fuel volumes, the EPA responded to the remand by proposing that the 2016 volume requirement for total renewable fuel should not be changed.

In its final rule, however, the EPA noted that it was still actively considering this issue and did not expect to take final agency action until early 2020.

When the EPA re-proposes the 2016 renewable volume obligations, there could be an increase in the volume mandates for 2016 and, as a result, the Coffeyville Refinery and the Wynnewood Refinery could be required to purchase more RINs for 2016 compliance.

Another rulemaking that was previously anticipated but has since been withdrawn involves the CAA “reset” provision.

A number of rulemakings, if finalized in 2021, would impact Coffeyville’s and Wynnewood’s obligations under the RFS.

First, the EPA is required to promulgate a rule setting the renewable fuel volumes for 2021, and the biomass-based diesel volume for 2022.

Under the CAA, the EPA must announce each year’s renewable fuel volumes by November 30 of the previous year.

Although EPA did not meet that deadline for the 2021 renewable fuel volumes, it is possible that EPA will propose and even finalize a rule this year.

The final 2021 renewable fuel volumes will determine the volume of renewable fuel that Coffeyville and Wynnewood will be obligated to blend into their finished transportation fuel for the 2021 compliance year .

The EPA also may promulgate a rule to reissue the 2016 renewable fuel volumes in response to a July 2017 D.C.

Circuit decision (1) vacating the EPA’s decision to reduce the 2016 volumes under its “inadequate domestic supply” waiver authority and (2) remanding to the EPA for reissuance of the 2016 renewable fuels volumes.

Although the EPA has yet to reissue the renewable fuels volumes, on January 27, 2020, the D.C.

Circuit ordered EPA to begin submitting status reports every 60 days on its progress in complying with the 2017 remand.

If the EPA re-proposes the 2016 renewable volume obligations, there could be an increase in the volume mandates for 2016 and, as a result, Coffeyville and Wynnewood could be required to purchase more RINs for 2016 compliance.

Finally, a rulemaking involving the CAA “reset” provision was previously withdrawn but the EPA could issue a new proposal.

Under the reset provision, if the EPA waives the statutory volumes for any of the four fuel categories by at least 20% for two consecutive years or by at least 50% for a single year, then the EPA must modify the statutory volumes for all subsequent years for that fuel category.

The reset has been triggered in previous years for both advanced biofuel and cellulosic biofuel and, most recently, the rules setting the 2019 renewable fuel volume requirements triggered the reset provision for total renewable fuel.

In October 2018, the EPA reported that it would begin rulemaking in 2019 to reset the volumes for cellulosic biofuel, advanced biofuel, and total renewable fuel for compliance years 2020-2022.

In May 2019, the EPA delivered its proposed “reset” rule to the Office of Management and Budget (“OMB”), which is the final step before the EPA can release a proposed rule for public review.

Then, in December 2019, the agency withdrew its draft proposal.

The EPA has not indicated how it will address the reset requirement moving forward, but if the EPA does pursue a reset rulemaking, it may modify the volumes, in either case impacting the Coffeyville Refinery’s and the Wynnewood Refinery’s obligations under the RFS.

Greenhouse Gas Emissions (“GHG”)

The EPA regulates GHG emissions under the Clean Air Act.

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, our Facilities monitor and report our 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 nitrogen

The reset has been triggered in previous years for both advanced biofuel and cellulosic biofuel.

After sending a draft proposal to reset the volumes for the 2020-2022 compliance years to the Office of Management and Budget (“OMB”), EPA then withdrew its draft proposal in December 2019.

The EPA has not indicated how it will address the reset requirement moving forward, but if the EPA does pursue a reset rulemaking, it may modify the volumes, impacting the Coffeyville Refinery’s and the Wynnewood Refinery’s renewable volume obligations.

The Federal Clean Water Act (“CWA”)

In January 2021, the U.S.

Environmental Protection Agency (the “EPA”) announced that it is undertaking a plan to review, and update

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fertilizer facilities, must obtain permits under Prevention of Significant Deterioration (“PSD”) and Title V programs of the federal Clean Air Act.

In December 2010, the EPA reached a settlement agreement with numerous parties under which it agreed to promulgate New Source Performance Standards (“NSPS”) to regulate GHG emissions from petroleum refineries and electric utilities by November 2012.

In September 2014, the EPA indicated that the petroleum refining sector risk rule, proposed in June 2014 to address air toxics and volatile organic compounds from refineries, may make it unnecessary for the EPA to regulate GHG emissions from petroleum refineries at this time.

The final rule, which was published in the Federal Register on December 1, 2015, addresses air toxics and volatile organic compounds and places additional emission control requirements and work practice standards on FCCUs, storage tanks, flares, coking units, and other equipment at petroleum refineries.

Therefore, we do not currently expect the EPA to issue regulations on GHG emissions from petroleum refineries at this time, but that it may do so in the future.

In October 2015, the EPA published the Clean Power Plan, which established NSPS for carbon dioxide emissions from electric utilities.

However, since the change in administration in 2017, the EPA has shifted its regulatory approach of GHG emissions.

In December 2018, the EPA proposed amendments to the Clean Power Plan that, among other things, would replace the determination of the best system of emission reduction (“BSER”) with a less costly and burdensome BSER determination for new coal-fired units.

In June 2019, the EPA issued the final Affordable Clean Energy (“ACE”) Rule to replace the 2015 Clean Power Plan, which represented the Obama administration’s signature policy to regulate GHGs.

The ACE rule establishes new emission guidelines for states to address GHGs from existing coal-fired power plants and update the BSER for those facilities.

The ACE rule is being challenged in the courts by multiple states and a coalition of environmental organizations.

The EPA’s approach to regulating GHG emissions may change again under future administrations.

Therefore, the impact on our Facilities due to future GHG regulation is unknown.

effluent standards for many industries.

EPA is prioritizing those sectors that are ranked high in point source categories for total nitrogen discharges, including fertilizer manufacturers.

The EPA’s review eventually could result in different regulations governing the Nitrogen Fertilizer Segment.

In addition, water resources are becoming and in the future may become more scarce, and many refiners, including us, are subject to use restrictions in the event of low availability conditions.

Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) and the Emergency Planning and Community Right-to-Know Act (“EPCRA”)

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Impacts of Past Manufacturing - In March 2004, two of our subsidiaries entered into a Consent Decree (“2004 Consent Decree”) with the EPA and the Kansas Department of Health and Environment (the “KDHE”) which required us to assume two RCRA corrective action orders issued to Farmland, the prior owner of the Coffeyville Refinery.

We are subject to a 1994 EPA administrative order related to investigation of possible past releases of hazardous materials to the environment at the Coffeyville Refinery.

Until January 21, 2021, we were subject to a 1994 EPA administrative order related to investigation of possible past releases of hazardous materials to the environment at the Coffeyville Refinery.

In accordance with the order, we have conducted the required investigation and interim remediation projects and documented existing soil and groundwater conditions.

In June 2017, the Coffeyville Refinery submitted an amended RCRA post-closure permit application to the KDHE to complete closure of former hazardous waste management units at the Coffeyville Refinery and to perform corrective action at the site.

The KDHE approved the permit application report in July 2019, and we anticipate that the RCRA permit will be issued in 2020.

The now-closed Phillipsburg terminal is subject to a

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1996 EPA administrative order related to investigation of releases of hazardous materials to the environment at the Phillipsburg terminal, which operated as a refinery until 1991.

The KDHE approved the permit application report in July 2019, and the RCRA permit was issued in December 16, 2020.

The EPA terminated the 1994 administrative order on January 21, 2021.

The now-closed Phillipsburg terminal is subject to a 1996 EPA administrative order related to investigation of releases of hazardous materials to the environment at the Phillipsburg terminal, which operated as a refinery until 1991.

The Phillipsburg terminal investigation is complete and corrective measures are in place implementing the EPA’s Statement of Basis and Final Remedy Decision issued in July 2018.

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Financial Assurance - We are required, under the 2004 Consent Decree, to establish financial assurance to secure the current projected clean-up costs of $6 million for the Coffeyville Refinery and $5 million for the now-closed Phillipsburg terminal in the event we fail to fulfill our clean-up obligations.

In accordance with the 2004 Consent Decree, as modified by a 2010 agreement between Coffeyville Resources Refining and Marketing, LLC (“CRRM”), Coffeyville Resources Terminal, LLC (“CRT”), the EPA, and the KDHE, this financial assurance is currently provided by a bond in the amount of $2 million for clean-up obligations at the Phillipsburg terminal and a letter of credit in the amount of $0.3 million for estimated costs to close regulated hazardous waste management units at the Coffeyville Refinery.

Additional self-funded financial assurance of approximately $6 million and $3 million is required to meet our RCRA financial assistance obligations for the Coffeyville Refinery and Phillipsburg terminal, respectively.

The $2 million bond amount is reduced each year based on actual expenditures for corrective actions and the letter of credit and the self-funded mechanisms are re-evaluated and adjusted on an annual basis.

Current RCRA financial assurance requirements for the Wynnewood Refinery total $0.2 million for hazardous waste storage tank closure and post-closure monitoring of a closed storm water retention pond.

Waste Management - There are two closed hazardous waste units at the Coffeyville Refinery and fourteen other solid waste management units in the process of being closed pending state agency approval.

Current RCRA financial assurance

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requirements for the Wynnewood Refinery total $0.3 million for hazardous waste storage tank closure and post-closure monitoring of a closed storm water retention pond.

Waste Management - There are fourteen closed hazardous waste units at the Coffeyville Refinery.

There is one closed hazardous waste unit and one active hazardous waste storage tank at the Wynnewood Refinery.

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Environmental Remediation

As is the case with all companies engaged in similar industries, we face potential exposure from future claims and lawsuits involving environmental matters, including soil and water contamination and personal injury or property damage allegedly caused by crude oil or hazardous substances that we manufactured, handled, used, stored, transported, spilled, disposed of, or released.

As is the case with all companies engaged in similar industries, we face potential exposure from future claims and lawsuits involving environmental matters, including soil and water contamination and personal injury or property damage allegedly caused by crude oil or hazardous substances that we processed, handled, used, stored, transported, spilled, disposed of, or released.

There is no assurance that we will not become involved in future proceedings related to the release of hazardous or extremely hazardous substances or crude oil for which we have potential liability or that, if we were held responsible for damages in any existing or future proceedings, such costs would be covered by insurance or would not be material.

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The policy includes business interruption coverage.

The policy insures any location owned, leased or rented or operated by the Company, including the Refineries and the nitrogen fertilizer facilities.

The policy insures any location owned, leased, rented, or operated by the Company, including the Refineries and the nitrogen fertilizer facilities.

The policy insures certain pollution conditions at or migrating from a covered location, certain waste transportation and disposal activities, and business interruption.

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The site pollution legal liability policy and the pollution coverage provided in the casualty insurance policies are subject to retentions and deductibles and contain discovery requirements, reporting requirements, exclusions, definitions, conditions, and limitations that could apply to a particular pollution claim, and there can be no assurance such claim will be adequately insured for all potential damages.

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Health, Safety and Security Matters

We are subject to a number of federal and state laws and regulations related to safety, including the Occupational Safety and Health Act (“OSHA”) and comparable state statutes, the purpose of which are to protect the health and safety of workers.

We also are subject to Process Safety Management regulations, which are designed to prevent or minimize the consequences of catastrophic releases of toxic, reactive, flammable, or explosive chemicals.

We are subject to a number of federal and state laws and regulations related to safety, including the Occupational Safety and Health Act (“OSHA”) and comparable state statutes, the purposes of which are to protect the health and safety of workers.

We also are 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.

Our Facilities are subject to the Chemical Facility Anti-terrorism Standards (“CFATS”), a regulatory program designed to ensure facilities have security measures in place to reduce the risk that certain hazardous chemicals are weaponized by terrorists.

In addition, the East Dubuque Fertilizer Facility is regulated under the Maritime Transportation Security Act.

We operate a comprehensive safety, health, and security program, with participation by employees, consultants, and advisors at all levels of the organization.

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Refer to Part II, Item 8, Note 11 (“Commitments and Contingencies”), “Wynnewood Refinery Incident” of this Report for further discussion of OSHA.

As of December 31, 2019, the Company had approximately 1,486 employees including those employed by CVR Refining, CVR Partners, and the Company and its other subsidiaries’ corporate support functions.

Our Petroleum Segment had approximately 971 employees at December 31, 2019 across both of its refineries and its logistics operations, including approximately 511 employees covered by collective bargaining agreements that expire on various dates ranging from June 2021 to March 2023.

Our Nitrogen Fertilizer Segment had approximately 286 employees at December 31, 2019 across both of its facilities and its marketing and logistics operations, including approximately 90 employees covered by collective bargaining agreements that expire in October 2023.

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Human Capital

As of December 31, 2020, CVR Energy had 1,423 employees, all of which are located in the U.S.

Of these employees, 411 employees are covered by collective bargaining agreements with various labor unions.

We may also leverage independent contractors, to provide flexibility for our business and operating needs.

We believe that our future success largely depends upon our continued ability to attract and retain highly skilled employees.

We are committed to wages and benefits that are competitive in the aggregate with a market-based, pay for performance compensation philosophy.

Our core Values define the way we do business every day.

We put safety first, care for our environment, require high business ethics and integrity consistent with our Code of Ethics and Business Conduct, and are proud members of and good neighbors to the communities where we operate.

We believe in continuous improvement for individuals to achieve their maximum potential through teamwork, diversity and personal development.

Our employees provide the energy behind our core Values to achieve excellence for all our key stakeholders – employees, communities and stockholders.

See “Management’s Discussion and Analysis” in Part II, Item 7 for further discussion on our core Values.

We are an equal opportunity employer and are committed to maintaining a diverse and inclusive work environment free from harassment and discrimination regardless of race, religion, color, age, gender, disability, minority, sexual orientation or any other protected class.

Our commitment to diversity and inclusion helps us attract and retain the best talent, enables employees to realize their full potential, and drives high performance through innovation and collaboration.

We have an unwavering commitment to providing as safe and healthy workplace as possible for all employees.

We accomplish this through strict compliance with applicable laws and regulations regarding workplace safety, and maintaining robust training and emergency and disaster recovery plans.

Available Information

Our website address is www.CVREnergy.com.

Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports, filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are available free of charge through our website under “Investor Relations,” as soon as reasonably practicable after the electronic filing or furnishing of these reports is made with the Securities and Exchange Commission (the “SEC”) at www.sec.gov.

In addition, our Corporate Governance Guidelines, Codes of Ethics and Business Conduct, and Charters of the Audit Committee, the Nominating and Corporate Governance Committee, and the Compensation Committee of the Board of Directors are available on our website.

Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports, filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge through our website under “Investor Relations,” as soon as reasonably practicable after the electronic filing or furnishing of these reports is made with the Securities and Exchange Commission (the “SEC”) at www.sec.gov.

In addition, our Corporate Governance Guidelines, Codes of Ethics and Business Conduct, and charters of the Audit Committee, the Nominating and Corporate Governance Committee, the Compensation Committee, and the Environmental, Health and Safety Committee of the Board of Directors are available on our website.

These guidelines, policies, and charters are also available in print without charge to any stockholder requesting them.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business