UPDATE 1-HollyFrontier to build biodiesel plant, buy back $1 bln in shares

(Updates with details of the plant and buyback)

Nov 18 (Reuters) - U.S. refiner HollyFrontier Corp said on Monday it would build a biodiesel plant in New Mexico to lower costs related to blending renewable fuels and announced a $1 billion share buyback program.

Oil companies, including refiners, have to blend increasing amounts of renewable fuels with their petroleum products or purchase credits, known as Renewable Identification Numbers (RINs), to meet U.S. biofuel requirements.

The company's RIN costs totaled $184 million in 2018.

HollyFrontier plans to build the plant at its Artesia refinery to process soybean oil and other feedstocks into biodiesel, with production capacity of about 125 million gallons a year.

The plant, along with rail infrastructure and storage tanks, is expected to cost $350 million and will be funded with cash on hand.

The project, which is expected to be completed in the first quarter of 2022, will generate an internal rate of return of between 20% and 30%, the company said.

The buyback replaces all existing share repurchase authorizations, of which there was about $281 million remaining, the company said.

HollyFrontier had on Friday said it would bring in its former Chief Executive Officer Michael Jennings to replace George Damiris, who will retire at the end of the year. (Reporting by Arunima Kumar in Bengaluru; Editing by Anil D'Silva)