Phillips 66 has become the latest in a string of U.S. refiners to announce plans to convert an oil refinery into a biofuel plant.
The company said Wednesday that its 120,000 barrel-a-day Rodeo refinery near San Francisco will become the world’s biggest plant that makes so-called renewable diesel, as well as gasoline and jet fuel, out of used cooking oil, fats, greases and soybean oils.
The announcement came about a week after Marathon Petroleum Corp. said that it may convert two refineries into renewable diesel plants. In June, HollyFrontier Corp. said it would turn its Cheyenne, Wyo., refinery into a renewable diesel plant by 2022.
As refiners across the U.S. struggle with depressed fuel demand amid the pandemic, California’s low-carbon fuel trading scheme may represent a pathway for survival. Demand for so-called renewable diesel is surging in the Golden State as refiners buy increasing numbers of credits under the low-carbon fuel standard program, which aims to cut vehicle emissions 20% by 2030.
“There is overcapacity on the refining market,” Marijn van der Wal, biofuel advisor at Stratas Advisors in Singapore, said in an interview Wednesday. “Are we going to shut down our refineries or are we going to repurpose them?”
Renewable diesel is chemically identical to diesel derived from fossil fuels, according to Neste Oyj, the word’s biggest producer of the fuel.
The LCFS credits as well as federal RIN D5 credits and recently reintroduced Blenders Tax Credits generate about $3.32 a gallon in subsidies for renewable diesel producers, enough to cover production costs, Van der Wal said in a June report.
“It’s a mind-boggling amount of money,” he said by phone. “You will make a lot of money as long as all these subsidies come in.”
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The Rodeo plant could start operating as early as 2024, producing 680 million gallons a year of renewable diesel, gasoline and jet fuel, the company said. Combined with production from an existing project in development, the plant would produce more than 800 million gallons a year. In addition to repurposing the Rodeo refinery, the company also announced it would be closing its 45,000-barrel-a-day plant in Santa Maria in 2023.
Last week, Marathon said it will convert its 166,000-barrel-a-day Martinez, Calif., refinery into a terminal facility and that may include a 48,000-barrel-a-day renewable diesel plant as soon as 2022. The company is turning its 19,000-barrel-a-day North Dakota plant into a renewable diesel plant by the end of this year.
The surge of new entrants into the California biofuel market is creating its own problems, Van der Wal said. Existing renewable diesel suppliers to California, including Neste and Valero Energy Corp., have locked up much of the feedstock, leaving less tallow and cooking oil for the newcomers. Additionally, so many projects are being proposed that there may not be enough diesel demand in California to absorb the additional fuel.
Repost from KQED News [Editor: Significant quote for Benicia: “Last Friday afternoon there was a problem at the Valero refinery in Benicia, prompting the facility to send out flares for at least the next 63 hours. The “unscheduled flaring” released more than 500 pounds of sulfur dioxide into the air…The company will not answer any questions about the incident.”
Local Air Regulators Investigating Three Separate Recent Refinery Problems
By Ted Goldberg, June 30, 2016 (Updated 8:30 a.m., Friday to include more details of Tuesday’s upset at the Phillips 66 refinery in Rodeo.)
Bay Area air regulators are looking into several recent malfunctions at Chevron’s Richmond refinery, Valero’s Benicia facility and the Phillips 66 plant in Rodeo that led each facility to send flares into the sky.
All three companies, though, are releasing little information about what caused the problems.
The most recent plant upset took place at the Phillips 66 refinery on Tuesday evening.
One of the facility’s cooling devices shut down at 6:20 p.m., prompting flaring that sent sulfur dioxide into the air, according to Randy Sawyer, Contra Costa County’s chief environmental health and hazardous materials officer.
Sawyer said that one of the water pumps that cools gases as they travel through part of the refinery malfunctioned. Initially, it was thought that one of the plant’s entire units had shut down.
The county determined that the incident did not have an “adverse acute impact on the health and safety of the community,” said Sawyer.
The flaring lasted for more than three hours, according to Ralph Borrmann, a spokesman at the Bay Area Air Quality Management District.
Paul Adler, a Phillips spokesman, confirmed that refinery operations were back to normal but offered no other details.
Last Friday afternoon there was a problem at the Valero refinery in Benicia, prompting the facility to send out flares for at least the next 63 hours.
The “unscheduled flaring” released more than 500 pounds of sulfur dioxide into the air, according to a report the company filed with the Governor’s Office of Emergency Services.
The company will not answer any questions about the incident.
“It is Valero’s policy to not comment on operations or possible outages beyond what is already publicly reported,” said Lillian Riojas, a company representative.
Flaring is a practice that allows the refinery to relieve stress from inside the facility.
In the recent Valero incident, it’s unclear how long it lasted.
Josh Chadwick, division chief at the Benicia Fire Department, says the flames stopped shooting out from the refinery at 7 a.m. on Monday.
But Borrmann, the air district spokesman, says flares continued intermittently until just before midnight on Wednesday.
That afternoon, Solano County’s Department of Human Resources learned that the operation ended, said Matthew Geisert, a hazardous materials specialist with the agency.
Geisert says his department has no other details about the incident.
That lack of information frustrates local activists who have called for tighter emissions regulations for the region’s refineries.
“What we don’t know is killing us,” said Andres Soto with Communities for a Better Environment. “It’s a deliberate policy strategy to keep the media and the public ignorant of what is going on with these dangerous chemical processes at the refinery.”
A malfunction at a processing unit at Chevron’s Richmond refinery led to flaring for several hours on June 19.
Contra Costa County health officials say the county’s dispatch center got lots of calls from concerned residents, but they didn’t feel the incident was severe enough to issue any serious warnings about it.
Contra Costa , unlike neighboring Solano County, does require more information from a refinery after certain flaring operations.
Chevron filed a 72-hour report with the county’s hazardous materials program that revealed the incident was prompted by a compressor in a processing unit tripping offline. The chemicals released during that operation did not rise above state standards, the report found.
But the company will not release more information.
“I can’t share any more detail than what we’ve provided in the county report,” said Chevron spokeswoman Leah Casey.
On March 29, Chevron’s Richmond refinery had a similar issue that caused flaring. In that incident, residents throughout the region complained of a bad odor. The upset sent sulfur dioxide and hydrogen sulfide into the air.
In the hours after the flaring took place, Chevron did not admit its refinery had a malfunction, other than to say that flaring is an important part of keeping the refinery running safely.
That prompted Sawyer to call on the company to do a better job of telling the public about problems at its local refinery.
“Chevron should be open and say they did have a problem and they’re looking at it and they’re going to investigate it and see what the problem was,” Sawyer said then.
The company said it shared with the public what it felt was important information at the time and eventually filed a report that showed one of the refinery’s monitoring devices had failed.
The air district is investigating all four incidents.
Phillips 66 oil-by-rail hearing continues next month
By Cynthia Lambert, February 25, 2016 11:11am
• After a third all-day hearing, the county Planning Commission will revisit the issue March 11
• Hundreds of speakers have praised or panned the plan to bring crude oil by rail to the Nipomo Mesa refinery
• Supporters stress the refinery’s safety record and jobs; opponents cite environmental worries
After a third all-day hearing with more than 100 speakers decrying or praising a plan by Phillips 66 Co. to upgrade its Nipomo refinery to receive crude oil by train, the San Luis Obispo County Planning Commission said Thursday that no decision will be made on the project until March 11 — or even later.
The dozens of speakers Thursday were fairly evenly split on either side of the debate, with supporters stressing the need to maintain about 200 “head-of-household” jobs at the refinery, as well as its long track record of safety and that it’s been a good neighbor in the community.
“The actual crude production in California is going down, not going up,” said Richard Black, a training administrator at Phillips 66’s Rodeo refinery in the east San Francisco Bay Area. “We have to make up the difference from somewhere.”
Opponents, meanwhile, said commissioners should not take into account the company’s safety record or personal relationships. Residents and elected officials from communities along the main rail line from San Francisco to Los Angeles have told commissioners they fear a catastrophic train derailment.
“Their plan is an irreversible disaster,” Nipomo resident Nora Lee said. “The effects will be felt instantly with poisonous air pollution.”
The company has applied to San Luis Obispo County to build a 1.3-mile spur with five parallel tracks from the main rail line to the Nipomo Mesa refinery, an unloading facility at the refinery and on-site pipelines.
The public has another chance to speak March 11 — county planning staff believe they’re nearing the end of public comments — and then the commissioners can ask questions, deliberate and even make a decision, or continue the process once again to a future date.
Whatever decision they make is expected to be appealed to the county Board of Supervisors, and a new round of hearings would be held.
The first two days of the Planning Commission hearing, held Feb. 4 and 5, drew hundreds of people to San Luis Obispo from around the state, with many urging the commissioners to reject the project. Planning staff has recommended denial of the project, which as proposed would allow five trains a week, for a maximum of 250 trains per year to deliver crude oil to the refinery.
Each train would have three locomotives, two buffer cars and 80 railcars carrying a total of about 2.2 million gallons of crude oil, according to county planners.
During a previous hearing day, representatives from Phillips 66 urged the commissioners to approve an alternate plan to allow three trains a week instead of five, or a maximum of 150 trains a year.
The county staff report states that three trains a week — or 150 a year — would reduce the significant toxic air emissions to no longer be considered a “Class 1 significant impact” at the refinery, which refers to the highest level of negative impacts referenced in the project’s final environmental impact report.
But emissions of diesel particulate matter would still remain a “Class 1” impact on-site, according to the staff report, and there would still be 10 “Class 1” impacts along the main rail line, such as impacts to air quality, water resources, potential demands on emergency response services and an increased risk to the public in the event of a derailment.
A few residents brought some audio-visuals along: One person showed a news clip of coverage of a massive train derailment in West Virginia last year; another played an audio recording of what he said a “typical crude oil terminal” sounds like, with train wheels squealing along tracks.
“Once an oil train derails and catches fire, you and your town will never fully recover,” she said. “Lac-Mégantic was a peaceful and beautiful community, just like San Luis Obispo.”
In response, supporters of the Phillips 66 project said that heavier crude oil — not lighter crude oil from the Bakken field in North Dakota or Canada that was linked to the Lac-Mégantic disaster and was being carried by a CSX train when it derailed in West Virginia — would be type of crude oil that would be transported and can be processed at the refinery.
The commission heard from more than a dozen Phillips 66 employees who work at the Nipomo Mesa refinery or at the company’s other facilities in California, as well as union representatives and other businesses owners and individuals in support of the project.
Rachel Penny, a safety and health professional at the Nipomo Mesa refinery, said she chose to work in the oil and gas industry because “it’s vital to the economy.”
“In order for us to continue providing energy and improving lives, we need crude oil,” she said, noting that the refinery would not be increasing the amount of crude oil processed at the refinery with the project.
“It is the safest company that I’ve ever worked for,” said Jerry Harshbarger, who works in purchasing. “We still have a strong demand for fossil fuels and stopping this project will not stop that demand.”
Another San Luis Obispo resident said the products of gas and oil could be seen throughout the room, and he urged: “We as a community should work toward how to do this.”
“You drive a car and go up to the pump,” Laura Mordaunt said. “A truck is there filled with gas that is way more volatile. Your vehicle parked in your garage is far more dangerous than this process and yet you continue to drive.”
But another local resident, Gary Lester of the opponent organization Mesa Refinery Watch Group, said Nipomo residents moved there knowing the refinery existed and are not calling for it to be closed.
“We respect you as individuals and the work you do,” he said. “We are objecting to the construction of a loud, dangerous, invasive rail terminal just 3,000 feet from our homes.”
Phillips 66 officials have said that California crude oil production is declining and the company is looking for alternate sources outside the state. According to the company’s website, “The proposed change will help the refinery, and the approximately 200 permanent jobs it provides, remain viable under increasingly challenging business conditions.”
An attorney for Phillips 66 said during a previous hearing that crude oil would still come into California by rail should the project be denied — a point that is included in the “no project” alternative as laid out in the project’s environmental impact report, Phillips 66 officials said.
An average of about 6,800 barrels a day of crude oil is already being delivered by truck from the Paloma rail unloading facility near Bakersfield to a pump station east of Santa Maria, where it is moved by pipeline to the Nipomo Mesa refinery. That could increase to 26,000 barrels a day, according to the environmental document, adding about 100 truck trips a day traveling to the pump station for unloading.
If the rail project does not move forward, it’s likely that additional out-of-state crude oil would be brought to various rail unloading terminals in California and transferred to trucks to deliver to the Santa Maria pump station, according to the environmental report.
If this happened, some impacts would be shifted to the area in and around Santa Maria: trucking would generate higher levels of air emissions, resulting in significant cancer risk to the residences in close proximity to the roads; traffic congestion impacts; and potentially significant impacts to biological and water resources from an oil spill because of a truck accident.
By Janet Pygeorge and Laurel Impett, April 6, 2015 4:08pm
The fracking boom in North Dakota and increased recovery of tar sands oil in Canada have prompted dramatic growth in transport of crude oil by rail throughout the United States from regions that pipelines don’t serve. Bay Area refineries and oil and gas companies already are planning for increased rail traffic and expanded operations. These plans are understandably alarming residents because of the potential for oil-train explosions. The Contra Costa County Board of Supervisors, however, does not share this alarm.
The supervisors made that clear in February when they rubber-stamped a proposed operational expansion of the Phillips 66 refinery in Rodeo. Analyses done by Communities for a Better Environment, a nonprofit environmental justice organization that has sued to overturn this approval, show that the refinery’s expansion would significantly increase air pollution, greenhouse gas emissions and public safety risks.
The board’s position defies both science and common sense. This refinery is located in the middle of an earthquake liquefaction zone. Phillips 66 plans to dramatically increase the number of railcars that are regularly staged at the plant; it also plans to begin processing propane and expand its processing of butane, both highly explosive.
The proposal includes plans to store 630,000 gallons of liquid propane about half a mile from homes, churches, a school and a park. And yet the environmental analysis approved by the board claimed that there would be no significant risks associated with this operational expansion.
In the case of a large earthquake, Phillips 66’s operational expansion would place huge swaths of Rodeo at significant risk of death and destruction, with damage radiating from the refinery up past San Pablo Avenue to as far away as where I-80 runs through Rodeo. It is simply unacceptable for our county officials to allow this expansion without requiring stringent attention to public health and safety by putting aggressive safeguards in place.
In terms of air quality impacts, this refinery has a dismal track record. It received more than 200 notices of violation from the Bay Area Air Quality Management District between 2003 and 2014. According to the California Environmental Protection Agency, it is the seventh-most-toxic polluter of all California facilities with large chemical releases. Phillips 66’s proposed changes would significantly increase the level of air pollution the facility produces, but the company used accounting tricks to hide the ball in its air-quality analysis. County officials did not question the refinery’s flawed analytical approach.
The Board of Supervisors showed its hand when it approved Phillips 66’s operational expansion without requiring investments to protect the health and safety of residents. Three different lawsuits have been filed against the county for lack of appropriate oversight in this matter. Contra Costa residents must demand better from local elected officials.
Join us in demanding that the county put an end to approving dirty industry at the expense of the public’s health and safety. Enough is enough.
Ultimately, if elected officials won’t stand up for health and safety, the court should intervene and protect the best interests of this community.
Janet Pygeorge is president of Rodeo Citizens Association, one of the groups that has filed suit in this matter. Laurel Impett is a planner with Shute, Mihaly & Weinberger LLP, the law firm that represents the association.