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In addition, the Petroleum Segment seeks to reduce the variability of commodity price exposure by engaging in hedging strategies and transactions that will serve to protect gross margin as forecasted in the annual operating plan.
−Removed: With regard to its hedging activities, the Petroleum Segment may enter into, or has entered into, derivative instruments which serve to (1) lock in or fix a percentage of the anticipated or planned gross margin in future periods when the derivative market offers commodity spreads that generate positive cash flows, (2) hedge the value of inventories in excess of minimum required inventories, and (3) manage existing derivative positions related to a change in anticipated operations and market conditions.
+Added: With regard to its hedging activities, the Petroleum Segment may enter into, or has entered into, financial instruments which serve to (1) lock in or fix a percentage of the anticipated or planned gross margin in future periods when the derivative market offers commodity spreads that generate positive cash flows, (2) hedge the value of inventories in excess of minimum required inventories, and (3) manage existing positions related to a change in anticipated operations and market conditions.
+Added: The Nitrogen Fertilizer Segment has commitments to purchase natural gas for use in the East Dubuque Fertilizer Facility at the spot market and through short-term, fixed supply, fixed price, and index price purchase contracts.
+Added: In the normal course of business, nitrogen-based fertilizer products are produced throughout the year to supply the needs of our customers during the high-delivery-volume spring and fall seasons.
+Added: The value of fertilizer product inventory is subject to market risk due to fluctuations in the relevant commodity prices.
+Added: Prices of nitrogen fertilizer products can be volatile.
+Added: We believe that market prices of nitrogen products are affected by changes in grain prices, demand, natural gas prices, and other factors.
RFS Compliance Price Risk
−Removed: As a producer of transportation fuels from crude oil, the Petroleum Segment is required to blend biofuels into the products it produces or purchase RINs in the open market in lieu of blending to meet the mandates established by the EPA.
−Removed: The Petroleum Segment is exposed to market risk related to volatility in the price of RINs needed to comply with the RFS that are not otherwise generated through blending of renewable fuels in our refining and marketing operations.
−Removed: To mitigate the impact of this risk on the Petroleum Segment’s results of operations and cash flows, the Petroleum Segment blends ethanol and biodiesel to the extent possible.
−Removed: Additionally, in December 2020, the Board approved full funding for the development of a RDU at our Wynnewood Refinery, which we estimate will result in the generation of approximately 180 million RINs each year.
+Added: As a producer of transportation fuels from crude oil, the Petroleum Segment’s obligated-party subsidiaries are required to blend biofuels into the products it produces or purchase RINs in the open market in lieu of blending to meet the mandates established by the EPA.
+Added: The Petroleum Segment’s obligated-party subsidiaries are exposed to market risk related to volatility in the price of RINs needed to comply with the RFS that are not otherwise generated through blending of renewable fuels in our refining and marketing operations.
+Added: To mitigate the impact of this risk on the Petroleum Segment’s results of operations and cash flows, the Petroleum Segment’s obligated-party subsidiaries blend ethanol and biodiesel to the extent possible.
+Added: In April 2022, we completed the renewable diesel project at our Wynnewood Refinery, to convert the Wynnewood Refinery’s hydrocracker to
+Added: December 31, 2022 | 75
+Added: a RDU, at a total cost of $179 million, which is capable of producing approximately 100 million gallons of renewable diesel per year and generating approximately 170 to 180 million RINs annually.
+Added: In November 2021, the Board approved the renewable feedstock pretreater project at the Wynnewood Refinery, which is currently expected to be completed in the third quarter of 2023 at an estimated cost of $95 million.
We continually monitor the impact of the RFS on our business and evaluate strategies to mitigate the impacts of the RFS program, the administration thereof, and the market volatility for RINs on our business.
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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.