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Fair Value Measurements
 6 Months Ended
Jun. 30, 2022
Fair Value Disclosures [Abstract]  
Fair Value Measurements Fair Value Measurements
Assets and Liabilities Measured at Fair Value on a Recurring Basis
Derivative Instruments
We utilize commodity derivative contracts to manage our price exposure to our inventory positions, future purchases of crude oil, future purchases and sales of refined products, and cost of crude oil consumed in the refining process. We may utilize interest rate swaps to manage our interest rate risk.
    We classify financial assets and liabilities according to the fair value hierarchy. Financial assets and liabilities classified as Level 1 instruments are valued using quoted prices in active markets for identical assets and liabilities. These include our exchange traded futures. Level 2 instruments are valued using quoted prices for similar assets and liabilities in active markets and inputs other than quoted prices that are observable for the asset or liability. Our Level 2 instruments include OTC swaps and options. These derivatives are valued using market quotations from independent price reporting agencies and
commodity exchange price curves that are corroborated with market data. Level 3 instruments are valued using significant unobservable inputs that are not supported by sufficient market activity. The valuation of the embedded derivatives related to our J. Aron repurchase and MLC terminal obligations is based on estimates of the prices and differentials assuming settlement at the end of the reporting period. Estimates of the J. Aron and MLC settlement prices are based on observable inputs, such as Brent and West Texas Intermediate Crude Oil (“WTI”) indices, and unobservable inputs, such as contractual price differentials as defined in the Supply and Offtake Agreement and Washington Refinery Intermediation Agreement. Such contractual differentials vary by location and by the type of product and range from a discount of $8.61 per barrel to a premium of $71.58 per barrel as of June 30, 2022. Contractual price differentials are considered unobservable inputs; therefore, these embedded derivatives are classified as Level 3 instruments. We did not have other commodity derivatives classified as Level 3 at June 30, 2022, or December 31, 2021. Please read Note 10—Derivatives for further information on derivatives.
Gross Environmental credit obligations
     Estimates of our gross environmental credit obligations are based on the amount of RINs or other environmental credits required to comply with U.S. Environmental Protection Agency (“EPA”) regulations and the market prices of those RINs or other environmental credits as of the end of the reporting period. The gross environmental credit obligations are classified as Level 2 instruments as we obtain the pricing inputs for our RINs and other environmental credits from brokers based on market quotes on similar instruments. Please read Note 13—Commitments and Contingencies for further information on the EPA regulations related to greenhouse gases.
Financial Statement Impact
    Fair value amounts by hierarchy level as of June 30, 2022, and December 31, 2021, are presented gross in the tables below (in thousands):
June 30, 2022
Level 1Level 2Level 3Gross Fair ValueEffect of Counter-Party NettingNet Carrying Value on Balance Sheet (1)
Assets
Commodity derivatives$104,210 $35,405 $— $139,615 $(105,751)$33,864 
Liabilities
Commodity derivatives$(142,300)$(4,798)$— $(147,098)$105,751 $(41,347)
J. Aron repurchase obligation derivative— — (45,191)(45,191)— (45,191)
MLC terminal obligation derivative— — 36,699 36,699 — 36,699 
Gross environmental credit obligations (2)— (460,931)— (460,931)— (460,931)
Total Liabilities$(142,300)$(465,729)$(8,492)$(616,521)$105,751 $(510,770)
December 31, 2021
Level 1Level 2Level 3Gross Fair ValueEffect of Counter-Party NettingNet Carrying Value on Balance Sheet (1)
Assets
Commodity derivatives$4,283 $4,513 $— $8,796 $(7,536)$1,260 
Liabilities
Commodity derivatives$(3,964)$(5,003)$— $(8,967)$7,536 $(1,431)
J. Aron repurchase obligation derivative— — (15,151)(15,151)— (15,151)
MLC terminal obligation derivative— — (22,170)(22,170)— (22,170)
Gross environmental credit obligations (2)— (311,014)— (311,014)— (311,014)
Total Liabilities$(3,964)$(316,017)$(37,321)$(357,302)$7,536 $(349,766)
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(1)Does not include cash collateral of $81.7 million and $15.6 million as of June 30, 2022, and December 31, 2021, respectively, included within Prepaid and other current assets and Other long-term assets on our condensed consolidated balance sheets.
(2)Does not include RINs assets and other environmental credits of $160.4 million and $120.1 million presented as Inventories on our condensed consolidated balance sheet and stated at the lower of cost and net realizable value as of June 30, 2022, and December 31, 2021, respectively.
    A roll forward of Level 3 derivative instruments measured at fair value on a recurring basis is as follows (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Balance, at beginning of period$(52,678)$(21,162)$(37,321)$(30,958)
Settlements56,753 20,569 149,061 55,512 
Acquired— — — — 
Total gains (losses) included in earnings(12,567)(35,771)(120,232)(60,918)
Balance, at end of period$(8,492)$(36,364)$(8,492)$(36,364)
    The carrying value and fair value of long-term debt and other financial instruments as of June 30, 2022 and December 31, 2021 are as follows (in thousands):
June 30, 2022
Carrying ValueFair Value
ABL Credit Facility due 2025 (2)$— $— 
7.75% Senior Secured Notes due 2025 (1)
286,348 275,723 
Term Loan B Facility due 2026 (1)203,546 200,477 
12.875% Senior Secured Notes due 2026 (1)
29,977 34,408 
December 31, 2021
Carrying ValueFair Value
ABL Credit Facility due 2025 (2)$— $— 
7.75% Senior Secured Notes due 2025 (1)
290,621 299,700 
Term Loan B Facility due 2026 (1)208,903 214,827 
12.875% Senior Secured Notes due 2026 (1)
65,034 75,758 
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(1)The fair value measurements of the 7.75% Senior Secured Notes, Term Loan B Facility, and 12.875% Senior Secured Notes are considered Level 2 measurements in the fair value hierarchy as discussed below.
(2)The fair value measurement of the ABL Credit Facility is considered a Level 3 measurement in the fair value hierarchy.
    The fair value of the 7.75% Senior Secured Notes, Term Loan B Facility, and 12.875% Senior Secured Notes were determined using a market approach based on quoted prices. The inputs used to measure the fair value are classified as Level 2 inputs within the fair value hierarchy because the 7.75% Senior Secured Notes, Term Loan B Facility, and 12.875% Senior Secured Notes may not be actively traded.
The carrying value of our ABL Credit Facility was determined to approximate fair value as of June 30, 2022. The fair value of all non-derivative financial instruments recorded in current assets, including cash and cash equivalents, restricted cash, and trade accounts receivable, and current liabilities, including accounts payable, approximate their carrying value due to their short-term nature.