Category Archives: Bay Area Refineries

Bay Area refineries taking a new path – going from processing crude oil to renewable energy

Refineries Renewed  – Phillips 66, Marathon move to renewable biofuels

East Bay Express, By Jean Tepperman, September 16, 2020
OIL CHANGE: Local residents stand tall in front of the Phillips 66 refinery, which will become the world’s biggest producer of renewable fuels by 2024. PHOTO BY GLENN HUMMEL

Residents of East Bay refinery communities, public officials and environmental organizations had mixed reactions to recent surprise announcements by two Bay Area oil refineries: Phillips 66 said its Rodeo refinery will stop processing petroleum and switch to producing biofuel—made from living plants. It will also close its Rodeo carbon-processing plant. Days later, Marathon announced it would close its Martinez refinery and consider using it to produce biofuel.

“It’s really historic to see 50 percent of the refineries in Contra Costa make a decision to go from processing crude oil to renewable energy,” said Supervisor John Gioia. “It moves us in the right direction, knowing it’s not where we want to end up.” He added that, since the converted refineries will probably employ fewer workers, the county’s big challenge will be “to assist workers to find replacement jobs with equal pay [and create] pre-apprenticeship programs to get local people into jobs.”

Rodeo resident Maureen Brennan said, “I’m 60 percent excited for the community about this new technology and 40 percent worried. I’m happy to have less pollution from the refinery. I’m just suspicious.” She noted that Phillips 66 hasn’t withdrawn permit applications for “two tar-sands-related projects.” Nancy Rieser, another refinery neighbor, was skeptical about the refinery’s mention of “used cooking oil” as a raw material. She said she feared that, instead, rainforests in Brazil and Paraguay would be cleared for “industrial soybean production” to supply the biofuel industry.

And Greg Karras, author of a recent report calling for gradual decommissioning of California refineries, said the move to biofuel is a “strategy to protect oil companies’ stranded assets.” State and federal support for this strategy diverts resources from the real solution: electrification of transportation.

Phillips 66 announced that, starting in 2024, the refinery will become the world’s biggest producer of “renewable diesel, renewable gasoline, and sustainable jet fuel,” reducing the use of fossil fuel. The company said the change will cut carbon dioxide emissions from the refinery by 50 percent, sulfur dioxide by 75 percent and reduce pollution in general. The plant will produce 50,000 barrels of biofuel a day, compared to its current output of 122,000 barrels a day of petroleum products.

In addition, the project’s website, Richmond Renewed, says it “will provide high-paying family-wage jobs with healthcare benefits. Crude oil refinery workers will have the opportunity to transition to produce renewable fuels. Construction jobs for refinery conversion will help the county recover from the COVID-induced recession.”

The Phillips 66 biofuel project—and the possible project at Marathon in Martinez—reflect an oil-industry trend that started before the current economic problems. Many California policies have been promoting a move from fossil-fuel transportation. And environmental activists have been winning battles against planned fossil-fuel expansion. “There’s a lot about this project that’s way less terrible” than previous proposals, said Karras. San Luis Obispo County recently nixed a Phillips 66 plan to bring crude oil by rail from Canada’s tar sands to its Santa Maria refinery. And for years community opponents have stalled two Rodeo refinery proposals they say are also about tar sands: construction of propane and butane storage tanks and expansion of tanker traffic.

For starters, refinery neighbors and environmental organizations are focusing on making sure the county won’t approve the new proposal without a thorough public study. “To understand the details—local pollution shifts, where the feedstock will come from, how many millions of acres could be needed for soy, palm trees, you name it—there must be a full-scale environmental review combined with a 180-degree shift away from their planned tar sands expansions,” said Wilder Zeiser of Stand.earth.

Just Transition

Many are also concerned about the loss of jobs. Mike Miller, president of United Steelworkers Local 326, which represents workers at Phillips 66, said the company told him they could probably handle the reduction in jobs through attrition—10 or 20 people typically retire every year, Miller said, and “there are a lot of older people at our facility.” He added that when the company tells the union something, “most of the time they tell us the truth.” He said the company also mentioned the possibility of transferring workers to other Phillips facilities.

Supervisor Gioia reported that in his conversations with Marathon about its possible conversion to biofuels, managers estimated that the new plant would employ fewer than half of the number soon to be laid off from its Martinez refinery.

The problem, Gioia said, is that “the new jobs in the green economy aren’t there yet.” Many communities whose economies depend on fossil fuel, he said, are looking to the example of the electric-bus manufacturing plant recently opened in L.A. County. “Contra Costa is ground zero” for figuring out how to make a just transition from fossil fuels, Gioia said.

U.S. Representative Mark DeSaulnier said in a statement, “Workers must be taken into consideration and supported through [this] process—including with proper training, advanced warning, and jobs worthy of their skills. I have already begun and will continue to bring together local stakeholders to ensure that a transition away from fossil fuels does not leave anybody behind.”

In his report, Karras calls on governments to require fossil-fuel producers to pay up-front into a fund to help communities recover from their economic and environmental impacts and to provide income support and retraining for laid-off workers. Noting the support for biofuels from state and federal government, he said, “The project being proposed is so heavily subsidized that there’s every justification for holding the company responsible for making the workers and the community whole.”

In addition to jobs, neighbors are concerned about leftover toxic pollutants. Crockett resident Rieser said Phillips has “tanks of toxins and old oil sludge on both sides of Route 80. How will these be dealt with? Abandoned?” In addition to converting the refinery, Phillips 66 says it will close the nearby carbon-treatment plant, leaving another toxic site. A requirement to clean up the pollution, she said, should be a condition of any permit the county may grant.

Clean Fuel?

Biofuel helps reduce the amount of climate-disrupting carbon dioxide produced each year because it’s made from living plants. The carbon dioxide they absorb when they grow balances that emitted when they’re burned. “It’s probably true that biofuel will be some of what we need” to transition from a fossil fuel transportation system, Karras said. That’s because biofuel can be substituted for petroleum in existing vehicles and distribution systems, although for use in airplane engines, it must be blended with at least the same amount of petroleum fuel.

But according to the nonprofit Biofuel Watch, biofuel is “misleading as a climate solution,” for several reasons. One is that producing biofuel still releases carbon dioxide and toxic pollutants. Phillips 66 says the new facility will be 15 percent solar-powered, implying that the other 85 percent of the power will come from burning some kind of fuel.

Hydrocracking, the process Phillips 66 says it will use to produce biofuel, requires large amounts of hydrogen. And the refinery’s process for producing the hydrogen also produces large amounts of carbon dioxide, Karras said—along with health-harming pollutants.

In addition, burning biofuel in vehicles produces some of the same kinds of pollution as burning petroleum products, especially the “particulate matter” that causes the most harm to human health. A report from the National Institutes of Health evaluated research comparing the pollution from burning biofuel and petroleum. Results varied depending on the exact composition of the fuels, but in general the biofuels produced substantial amounts of particulate and other pollution, although less than petroleum. Low-income people of color are mostly likely to live near the refineries and freeways where those pollutants are concentrated.

A 2019 study compared two “pathways” for California to get off fossil fuel, one focusing on renewable fuels, the other on electrification of transportation. It estimated that the electrification pathway would reduce particulate pollution enough to avoid about 12,000 premature deaths a year. The renewable-fuels pathway would also avoid some premature deaths from particulate matter—but only about a quarter as many, 2,800 a year.

Land and Climate

The other big concern about biofuel is where the raw material comes from. Phillips 66 says it will be processing “used cooking oil, fats, greases and soybean oils.” But according to Biofuel Watch, the supply of used cooking oil is very limited. Phillips 66 has said that it will use soy oil from the Plains states, but these supplies are also limited. Many fear that the demand for soy and other biofuel crops is adding to the large-scale destruction of forests.

“Where biofuel production has been successful – using vegetable oils, corn, and sugarcane for example – the environmental and social consequences of vast new demand for these commodities has had severe and rippling effects on markets, food production, biodiversity, and human rights,” wrote Gary Hughes of Biofuel Watch. Destroying forests and soil to produce biofuel sometimes releases several times as much carbon as burning the fossil fuels they replace, according to a report from that organization.

State and federal policies heavily subsidize biofuels, according to Marijn van der Wal of Stratas Advisors, quoted in the Los Angeles Times story on the Phillips 66 announcement. Under the California Low Carbon Fuel Standard and the federal Renewable Identification Number program, producers of biofuel earn “credits” they can sell. They also get $1 per gallon through the federal Blenders Tax Credit program. Altogether, van der Wal estimated, this adds up to “about $3.32 a gallon . . . enough to cover production costs.”

Most American biofuel is produced in California “due to economic benefits under the Low Carbon Fuel Standard,” according to the US Department of Energy. But in a recent letter to the California Department of Energy, Biofuel Watch said this policy “locks in fossil fuel reliance” and “provides cover” for continuing the use of fossil fuel. That’s because it perpetuates the “liquid-fuel supply chain” and liquid-fuel vehicles. This “distracts from the imperative of deep transformation of our energy economy.”

Another Bay Area refinery shutting down fossil fuel production – Phillips 66 in Rodeo

Phillips 66 is turning a California oil refinery into a biofuel plant

Phillips 66 said its Rodeo refinery near San Francisco will make fuel from used cooking oil, fats, greases and soybean oils. Above, a taco shell, dripping oil, emerges from a deep fryer. (Barbara Davidson / Los Angeles Times)
Los Angeles Times, by Bloomberg, August 12, 2020

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.

Closing of California’s 4th largest oil refinery will cost thousands of jobs

Shutdown of Marathon’s Martinez Refinery Prompts Calls for ‘Just Transition’ for Oil Workers

KQED News, by Ted Goldberg, Aug 3, 2020
A view of the Marathon Petroleum Corp. refinery in Martinez. (Tesoro)

Elected officials, union leaders, industry representatives and environmentalists are expressing concern about the hundreds of workers set to lose their jobs at California’s fourth-largest refinery in the coming months.

That’s after Marathon Petroleum announced over the weekend that it plans a permanent halt to processing crude oil at its Martinez plant.

“The decommissioning of the Marathon refinery means the loss of thousands of good paying, California blue collar jobs at a time of great economic uncertainty,” said Robbie Hunter, president of the State Building and Construction Trades Council of California, which represents thousands of people who work at the plant in the course of a year.

Marathon executives told employees at its Contra Costa County and Gallup, New Mexico, refineries on Friday that it plans to cut workers.

“We will indefinitely idle these facilities with no plans to restart normal operations,” the company said on its website.

The company had idled both refineries in April after shelter-at-home orders drastically cut demand for gasoline and jet fuel. That meant processing units at the plants stopped making transportation fuels and other refined products. For months the refineries have been maintained in “standby” mode.

The Friday announcement means “most jobs at these refineries will no longer be necessary, and we expect to begin a phased reduction of staffing levels in October” the company said on its website.

Marathon employs 740 staff workers at its Martinez refinery, which has gone through several owners and name changes. It was formerly known as the Tesoro, Golden Eagle, Tosco Avon and Phillips Avon refinery. Marathon bought the facility in 2018.

In addition to the full-time employees, the refinery relies on between 250 and 2,500 contract workers depending on operational needs, according to Marathon representative Patricia Deutsche.

“There is also the ‘multiplier’ effect. They say for every one refinery job there are eight in the community that support that,” Deutsche said.

“This move is a big loss for our workforce and potentially the economy,” said Rep. Mark DeSaulnier, D-Concord, who represents Martinez and has been a longtime advocate for refinery safety.

DeSaulnier said that before the coronavirus pandemic and the oil industry downturn, he began bringing together labor unions, environmental groups and local governments to prepare for a shift to green energy in Contra Costa County.

“The transition needs to be as successful as possible for everyone and we cannot leave workers behind — they need to be guaranteed meaningful and comparable work,” DeSaulnier said in an emailed statement Sunday.

A spokesman for a leading trade group that represents the oil industry in California said he feels for the local economy that relies on the refinery, which can process about 160,000 barrels of crude per day.

“Obviously, this impacts a lot of people, families and the community and we are concerned for them,” said Kevin Slagle, a representative for the Western States Petroleum Association.

The refinery has seen its share of incidents. The worst in the last decade took place in February 2014, when the facility was run by Tesoro. Two workers were burned and 84,000 pounds of sulfuric acid were released. A month later sulfuric acid sprayed and burned two contract workers, leading to an investigation by the U.S Chemical Safety Board that raised concerns about the refinery’s safety culture.

Like the Bay Area’s other four refineries — Valero in Benicia, Chevron in Richmond, PBF Energy in Martinez and Phillips 66 in Rodeo — the facility has had to send gases to its flares scores of times over the years, many times to deal with malfunctions.

Local environmentalists who’ve been critical of the region’s oil industry say it’s time for the refinery, its dangers and pollution to go away, but the change should include a plan for workers.

“This is what an unplanned transition looks like,” said Greg Karras with Community Energy reSource.

It’s “the tip of the iceberg for why we need a planned, just transition to sustainable energy and a livable climate,” Karras said.

Some environmentalists and union advocates have used the term “just transition” to explain a fair way of getting fossil fuel industry workers and their surrounding communities, businesses and local governments to move into a green energy economy.

Hollin Kretzmann, an Oakland attorney with the Center for Biological Diversity, said the air quality benefits of a refinery shutting down are welcome but expressed concern about workers.

“Communities near this dangerous refinery can breathe a little easier now that operations have halted, but the state desperately needs a just transition plan that protects workers when oil companies toss their employees to the curb with little warning,” Kretzmann said.

Marathon says its Martinez refinery will be converted to an oil storage facility. The company says it’s considering turning the facility into a renewable diesel facility.

“The Marathon refinery’s (potential) conversion into a renewable diesel facility is a forecast of the future as the demand for fossil fuels declines over time, resulting in healthier air and reduced greenhouse gas emissions,” said Contra Costa County Supervisor John Gioia.

“We will see more future refinery closures as a result of continued decreasing consumption of fossil fuels under California’s policies transitioning our transportation system to zero emission,” said Gioia, who sits on the the Bay Area Air Quality Management District board and the California Air Resources Board.

“We need to immediately start addressing a just transition for these workers as more fossil fuel facilities close,” he said.

Marathon’s decision to end oil processing at its Martinez plant is the latest piece of evidence showing California’s oil industry suffering under a pandemic that’s led to severe drops in fuel demand.

San Ramon-based Chevron, one of the world’s largest oil companies, announced its worst quarter in decades on Friday. The company said it lost more than $8 billion during the three months ending June 30.

“All the oil majors have been clobbered by COVID,” said David Hackett, president of Stillwater Associates, a firm that specializes in analyzing the transportation fuels market.

Earlier this month, the California Resources Corporation, one of the state’s largest oil producers, filed for bankruptcy.

In May, the Newsom administration granted a request by another oil trade group, the California Independent Petroleum Association, to drop a proposal to add dozens of staff members to the agency that oversees oil and gas drilling that would have cost the industry $24 million. State regulators also agreed to postpone a deadline for oil and gas producers to pay fees and submit plans to manage thousands of idle oil wells.

In April, PBF Energy, the New Jersey-based company that bought Shell’s refinery in Martinez, sold two hydrogen plants at the facility for hundreds of millions of dollars — a move aimed at cutting costs and raising revenue to deal with fuel demand drops.

That same month, more than 1,000 contract electricians, pipefitters and other skilled workers were cut from Bay Area refineries.

Marathon Refinery in Martinez Closing, most jobs no longer needed

Details posted on Refinery website July 31

By Roger Straw, August 1, 2020

The PLAN to close the Gallup and Martinez Refineries was announced in April, but Marathon posted a newsworthy update on July 31.

Quotes and details:

  • Will “…indefinitely idle these facilities with no plans to restart normal operations.”
  • Will convert to a “terminal facility.”  (Reuters suggests this means an “oil-storage facility.”)
  • VERY interesting that they are “evaluating the strategic repositioning of Martinez to a renewable diesel facility.” Renewable diesel may be cleaner and greener, but burning of any fuel in any combustion engine produces carbon dioxide (CO2).  (See “4 Things To Know About Renewable Diesel“)
  • Big news: “most jobs at these refineries will no longer be necessary” with the start of “phased reduction of staffing levels in October.”

Here’s the UPDATE from the Marathon website:

Update on Gallup & Martinez Refineries

On July 31, we informed employees at our Martinez and Gallup refineries that we will indefinitely idle these facilities with no plans to restart normal operations. As part of these changes, Martinez will be converted to a terminal facility. We are also evaluating the strategic repositioning of Martinez to a renewable diesel facility, which aligns with California’s Low Carbon Fuel Standards objectives and MPC’s greenhouse gas reduction targets. Indefinite idling unfortunately means most jobs at these refineries will no longer be necessary, and we expect to begin a phased reduction of staffing levels in October. We do not anticipate supply disruptions in these regions, and we will continue to utilize our integrated system to meet customer commitments.


Breaking news coverage of the update: 

Marathon Petroleum to permanently close two US oil … – Reuters
August 1, 2020 Marathon Petroleum plans to permanently close two small U.S. oil refineries in Martinez, California, and Gallup, N.M., the company said, in response to … to request for comment on whether the closings would require a charge to earnings.

Marathon Martinez Refinery ‘Indefinitely Idled’ On Friday … – SFGate
August 1, 2020 Marathon Martinez Refinery ‘Indefinitely Idled’ On Friday. The Marathon Petroleum Co. will “indefinitely idle” its refinery in unincorporated Contra Costa County and convert the site to a terminal facility, the company announced on its website Friday night.