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.”
Find out why the smallest details can be the most important.
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.
Petrochemical Industry Presence in East Bay CA’s North Coast Refinery Corridor
Who Lives Near the Refineries?
By Kyle Ferrar, Western Program Coordinator & Kirk Jalbert, Manager of Community-Based Research & Engagement, March 30, 2016
Communities living along the North Coast of the East Bay region in California are the most impacted by the presence of the petrochemical industry in their communities.
Emissions from these facilities disproportionately degrade air quality in this corridor region putting residents at an elevated risk of cancer and other health impacts.
People of color are more likely to live near the refineries and are therefore disproportionately affected.
Refinery Corridor Introduction
The North Coast of California’s East Bay region hosts a variety of heavy industries, including petroleum refineries, multiple power plants and stations, chemical manufacturing plants, and hazardous waste treatment and disposal facilities. Nationwide, the majority of petroleum refineries are located in heavily industrialized areas or near crude oil sources. The north coast region is unique. Access to shipping channels and the location being central to the raw crude product from North Dakota and Canada to the North, and California’s central valley oil fields to the south has resulted in the development of a concentrated petrochemical infrastructure within the largely residential Bay Area. The region’s petrochemical development includes seven fossil fuel utility power stations that produce a total of 4,283 MW, five major oil refineries operated by Chevron, Phillips 66, Shell Martinez, Tesoro, and Valero, and 4 major chemical manufacturers operated by Shell, General Chemical, DOW, and Hasa Inc. This unequal presence has earned the region the title, “refinery corridor” as well as “sacrifice zone” as described by the Bay Area Refinery Corridor Coalition.
The hazardous emissions from refineries and other industrial sites are known to degrade local air quality. It is therefore important to identify and characterize the communities that are affected, as well as identify where sensitive populations are located. The communities living near these facilities are therefore at an elevated risk of exposure to a variety of chemical emissions. In this particular North Coast region, the high density of these industrial point sources of air pollution drives the risk of resultant health impacts. According to the U.S.EPA, people of color are twice as likely to live near refineries throughout the U.S. This analysis by FracTracker will consider the community demographics and other sensitive receptors near refineries along the north coast corridor.
In the map below (Figure 1) U.S. EPA risk data in CalEnviroscreen is mapped for the region of concern. The map shows the risk resulting specifically from industrial point sources. Risk along the North Coast is elevated significantly. Risk factors calculated for the region show that these communities are elevated above the average. The locations of industrial sites are also mapped, with specific focus on the boundaries or fencelines of petrochemical sites. Additional hazardous sites that represent the industrial footprint in the region have been added to the map including sites registered with Toxic Release Inventory (TRI) permits as well as Superfund and otherComprehensive Environmental Response, Compensation, and Liability Act (CERCLA) sites. The Toxmap TRI sites are facilities that require a permit to emit hazardous air pollutants. The superfund and other CERCLA sites are locations where a historical footprint of industry has resulted in contamination. The sites are typically abandoned or uncontrolled hazardous waste sites that are part of register for tax-funded clean-ups.
Figure 1. Interactive map of risk in the East Bay’s North Coast refinery corridor
Oil refineries in particular are unique sources of air emissions. There are 150 large domestic refineries throughout the United States. They are shown in the map in Figure 2 below. The majority (90%) of the refined products from these refineries are fuels; motor vehicle gasoline accounts for 40%. The refinery sites have hundreds of stacks, or point sources, and they emit a wide variety of pollutants, as outlined by the U.S. EPA:
Criteria Air Pollutants (CAPs)
Sulfur Dioxide (SO2)
Nitrogen Oxides (NOx)
Carbon Monoxide (CO)
Particulate Matter (PM)
Volatile Organic Compounds (VOCs)
Hazardous Air Pollutants (HAPs)
Carcinogens, including benzene, naphthalene, 1,3-butadiene, PAH
Non-carcinogenic HAP, including HF and HCN
Persistent bioaccumulative HAP, including mercury and nickel
Greenhouse Gases (GHG)
Hydrogen Sulfide (H2S)
Figure 2. Map of North American Petroleum Refineries
Disparate health impacts are therefore a known burden for these Bay Area communities. The region includes the cities of Richmond, Pinole, Hercules, Rodeo, Crockett, Port Costa, Benicia, Martinez, Mt. View, Pacheco, Vine Hill, Clyde, Concord, Bay Point, Antioch, and Oakley. In addition to preserving the ecological system health of this intercostal region is also important for both the ecological biodiversity of the marsh as well as commercial and recreational purposes. These wetlands provide a buffer, able to absorb rising waters and abate flooding.
The Bay Area Air Quality Management District’s (BAAQMD) Cumulative Impacts report identified areas where air pollution’s health impacts are relatively high in the San Francisco Bay Area. The report is does not limit their analysis to the North Coast, but shows that these regions with the most impacts are also the most vulnerable due to income, education level, and race and ethnicity. The report shows that there is a clear correlation between socio-economic disadvantages and racial minorities and the impacted communities. Figure 3 shows the regions identified by the BAAQMD as having the highest pollution indices.
This analysis by FracTracker focuses specifically on the north shore of the East Bay region. Like the BAAQMD report, National Air toxic Assessment (NATA) data to identify census tracts with elevated risk. Specifically, elevated cancer and non-cancer risk from point sources emitting hazardous air pollutants (HAPs) as regulated by the U.S. EPA were used. CalEnviroScreen 2.0 data layers were also incorporated, specifically the U.S. EPA’s Risk Screening Environmental Indicators (RSEI) data. RSEI uses toxic release inventory (TRI) data, emission locations and weather to model how chemicals spread in the air (in 810m-square grid units), and combines air concentrations with toxicity factors.
The census tracts that were identified as disproportionately impacted by air quality are shown in the map below (Figure 4). The demographics data for these census tracts are presented in the tables below. Demographics were taken from the U.S. census bureau’s 2010 Census Summary File 1 Demographic Profile (DP1). The census tracts shapefiles were downloaded from here.
Figure 4. Interactive Map of Petrochemical Sites and Neighboring Communities in the East Bays North Coast Industrial Corridor
Buffers were created at 1,000 ft; 2,000 ft; and 3,000 ft buffers from petrochemical sites. These distances were developed as part of a hazard screening protocol by researchers at the California Air Resources Board (ARB) to assess environmental justice impacts. The distances are based on environmental justice literature, ARB land use guidelines, and state data on environmental disamenities (Sadd et al. 2011). A demographical profile was summarized for the population living within a distance of 3,000 feet, and for the census tracts identified as impacted by local point sources in this region. The analysis is summarized in Table 1 below. Additional data on the socioeconomic status of the census tracts is found in Table 2.
Based on the increased percentage of minorities and indicators of economic hardship shows that the region within the buffers and the impacted census tracts host a disproportionate percentage of vulnerable populations. Of particular note is 30% increase in Non-white individuals compared to the rest of the state. We see in Table 2 that this is disparity is specifically for Black or African American communities, with an over 150% increase compared to the total state population. The number of households reported to be in poverty in the last 12 months of 2014 and those households receiving economic support via EBT are also elevated in this region. Additional GIS analysis shows that 7 healthcare facilities, 7 residential elderly care facilities, 32 licensed daycares, and 17 schools where a total of 10,474 students attended class in 2014. Of those students, 54.5% were Hispanic and over 84% identified as “Non-white.”
Table 1. Demographic Summaries of Race. Data within the 3,000 ft buffer of petrochemical sites was aggregated at the census block level.
Hispanic or Latino
Hispanic or Latino (%ile)
Impacted Census Tracts
3,000 ft. Buffer
Table 2. Additional Status Indicators taken from the 2010 census at the census tract level
Indicators (Census Tract data)
Children, Age under 5
Black or African American
Food Stamps (households)
The results of the refinery corridor analysis show that the communities living along the North Coast of the East Bay region are the most impacted by the presence of the petrochemical industry in their communities. Emissions from these facilities disproportionately degrade air quality in this corridor region putting residents at an elevated risk of cancer and other health impacts. The communities in this region are a mix of urban and single family homes with residential land zoning bordering directly on heavy industry zoning and land use. The concentration of industry in this regions places an unfair burden on these communities. While all of California benefits from the use of fossil fuels for transportation and hydrocarbon products such as plastics, the residents in this region bear the burden of elevated cancer and non-cancer health impacts.
Additionally, the community profile is such that residents have a slightly elevated sensitivity when compared to the rest of the state. The proportion of the population that is made up of more sensitive receptors is slightly increased. The region has suburban population densities and more children under the age of 5 than average. The number of people of color living in these communities is elevated compared to background (all of California). The largest disparity is for Black or African American residents. There are also a large number of schools located within 3,000 ft of at least one petrochemical site, where over half the students are Hispanic and the vast majority are students of color. Overall, people of color are disproportionately affected by the presence of the petrochemical industry in this region. Continued operation and any increases in production of the refineries in the East Bay disproportionately impact the disadvantaged and disenfranchised.
With this information, FracTracker will be elaborating on the work within these communities with additional analyses. Future work includes a more in depth look at emissions and drivers of risk on the region, mapping crude by rail terminals, and working with the community to investigate specific health endpoints. Check back soon.
Bay Area Air Quality Management District approves plan to cut pollution at oil refineries
By Denis Cuff , 12/18/2014
SAN FRANCISCO — Regional air pollution regulators on Wednesday approved a far-reaching blueprint to cut Bay Area oil refinery emissions by 20 percent.
Under the plan, the Bay Area Air Quality Management District board will consider a package of air pollution rules in 2015 to reduce emissions from five refineries.
More rigorous monitoring of refinery emissions will be required. To assure continued clean air improvements, refiners will be required periodically to assess their pollution and ways to reduce it.
“This strategy will ensure that refineries are taking the strongest steps to cut emissions and minimize their impacts on neighboring residents and the region as a whole,” Jack Broadbent, the air district’s executive officer, said.
The plan was approved unanimously by the air board, which regulates pollution in nine counties.
The five Bay Area refineries are Chevron, Shell, Valero, Phillips 66 and Tesoro.
Repost from The Economist [Editor: An interesting European perspective on the future of world oil production and sales. Note references to Valero near the end. – RS]
A fuel’s errand
Making the most of a difficult business
THE sprawling acres of pipes, towers and tanks, which smash and rebuild hydrocarbon chains to turn crude oil into petrol, diesel and other useful stuff are vast and complicated. But the impressive scale of oil refineries is not matched by their profits. Refining in Britain is a miserable business these days.
In the 1960s big oil companies were so sure that demand for petrol would rise forever that they built the refineries to match. But demand for road fuels has peaked and is now falling—by 8% between 2007 and 2011. High fuel prices and stalling sales of vehicles that are anyway far more efficient are to blame. The result is wafer-thin margins and closures. Since 2009 two British refineries, at Coryton in Essex and in Teesside, have shut down. All but one of the remaining seven has been sold or been put up for sale in recent years.
Refineries operate in a global market. Petrol and diesel can be sent by tanker around the globe as readily as crude. Competing with sparkly, super-efficient new refineries in Asia and the Middle East is hard. Moreover, Britain’s older refineries were designed to produce petrol, which is increasingly the wrong fuel. Petrol sales by volume fell by 34% in the decade to 2011 while diesel grew by 73%. Around 40% of diesel is now imported. Nor do British refineries produce enough kerosene, which powers passenger jets, to supply the home market.
Big oil firms have sold up, preferring to invest in exploration and production. But why was anyone buying? For one thing, refineries are going cheap. Shell sold Stanlow to Essar Oil, an Indian firm, in 2011 for $350m (then £220m). In the same year Valero, an American refiner, bought Pembroke from Chevron for $730m.
The efforts to squeeze more returns from Stanlow show how refining can pay. Independent refiners like Essar and Valero are prepared to spend more time and money than big oil firms. Expertise and investment has put Stanlow, a 75m barrels-a-year refinery, well on the way in its plan to improve margins by $3 a barrel by 2014.
Essar aims to make Stanlow at least break even in bad times (in 2011 two-thirds of European refineries were losing money) and make decent profits when conditions improve. Generating energy using gas and tweaking technology to take crude from sources other than the North Sea, at better prices, is helping. Stanlow also has some natural advantages. It is the only refinery in the north-west and the closest to Liverpool, Manchester and Birmingham. Though refined fuel can be moved by pipeline, some 55% of the refinery’s output goes “off the rack”, loaded into road tankers to feed a big local market. More distant refineries, with higher transport costs, would have trouble competing.
But the market for fuel is still shrinking and tiny margins mean profits can be wiped out by small shifts in the price of crude or other costs. In the past five years Europe has lost 2.2m barrels a day (b/d) of refining capacity. Volker Schultz, Essar Oil’s boss in Britain, reckons that another 1m b/d needs to go. But that is not his only concern. Efforts in Britain to introduce a carbon floor-price will put its refineries at a disadvantage to European ones, and European environmental legislation will make the whole continent’s refineries even less competitive. It must seem to the industry as if it has a large hole in its tank and a small patch to fix it.