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.
By Andrés Soto, April 27, 2020
Andrés Soto, Benicia CA
As we wound down the first shelter in place Earth Day/Week, I was prodded into chuckling at the Herald’s front page story of Valero diverting some of its ethanol production to the making of hand sanitizing liquids! This is like applying antibiotic ointment to a bleeding gun shot wound. Thanks Valero.
Valero and the other fossil fuel companies have been knowingly contributing to the destruction of our atmosphere and trying to exacerbate the problem by moving into refining extreme crudes such a tar sands and fracked crude. Thanks Valero.
It is now understood that those who have been suffering the greatest health burdens over time from the fossil fuel economy are – surprise, surprise – also the most vulnerable to infection from COVID 19! Benicia and other refinery towns are on the front line with children and seniors suffering disproportionately from asthma and other auto-immune diseases. Thanks Valero.
Of course, to protect their position to profit from poison they need political support. The 2018 Benicia election saw Valero and its deep pocket “boots on the ground” building trades union allies spend an obscene amount of money to personally destroy the reputation of Planning Commissioner Kari Birdseye and and pump up the pro-polluter candidates Lionel Largaespada and Christina Strawbridge to victory. Thanks Valero.
If Valero and its fellow oil cartel members really wanted to help Benicia and Earth it would join community members, workers and city representatives in the planning of a managed decommissioning of the refinery and reduce risks to COVID 19, massive wildfires and toxic pollution. Thanks Valero.
Thousands of Americans are dying, millions have filed for unemployment, and frontline health care workers are risking their lives as the coronavirus pandemic sweeps across the U.S. In the midst of this crisis, the fossil fuel industry, particularly the oil and gas sector, has been actively seeking both financial relief and deregulation or dismantling of environmental protection measures.
A new briefing by UK-based think tank InfluenceMap summarizes this fossil fuel lobbying during the time of the pandemic, pointing to specific examples of how fossil fuel interests around the world are using the cover of the coronavirus crisis to advance their agenda.
InfluenceMap, which tracks and measures corporate influence over climate policy, focused on recent corporate lobbying for both financial interventions and relating to climate or energy regulations. “The oil and gas sector appears to be the most active globally in the above two lobbying areas, demanding both financial support and deregulation in response to the COVID-19 crisis,” the report states.
In the U.S., the top oil and gas producer in the world, this activity has been particularly pronounced. While the oil and gas sector is struggling amid plummeting prices and demand, the struggle is due to factors far beyond the pandemic, and mostly of the industry’s own making.
Many shale companies had amassed large debts that allowed them to rapidly spend and expand production, for example. And the oil and gas giant ExxonMobil’s stock hit a 10-year low in late January, and a 15-year low by March 5, before the pandemic reached a crisis point in the U.S.
Nevertheless, the Trump administration and Republican lawmakers have looked to use the COVID-19 crisis as an excuse to shore up the petroleum producers. In mid-March, the President announced his intention to buy up crude oil to fill the government’s Strategic Petroleum Reserve, which Democrats and climate advocates slammed as a reckless bailout of Big Oil.
Republicans in Congress tried unsuccessfully to give away $3 billion in the recent economic stimulus package to fund that emergency oil stock-up, but the package still contains nearly $500 billion for broad corporate interests with little oversight that oil companies will likely look to access. Senator Lisa Murkowski (R-AK), chair of the Senate Committee on Energy and Natural Resources, sent a letter on April 1 to Treasury Secretary Steve Mnuchin urging him to use the CARES Act stimulus funds to support oil and gas companies.
The rapidly declining coal industry, with many companies already bankrupt, has likewise turned to the government for financial assistance. The National Mining Association wrote to President Trump and Congress asking to suspend royalties and fees, including payments that support victims of black lung disease. Congress did not include the trade group’s requests in the stimulus package, but the group has said it will continue to make its demands.
Beyond seeking their own financial relief through the government’s coronavirus response, fossil fuel interests are using front groups to push back against attempts to include clean energy or climate-related measures in the economic relief bills.
“U.S.-based think tanks linked to fossil fuel-based interests such as [the] Koch brothers have been active in opposing support for green energy programs in the U.S. federal government’s response to the crisis,” InfluenceMap said in a emailed statement. The InfluenceMap briefing cites a new project of the Texas Public Policy Foundation (TPPF) called Life:Powered, which promotes fossil fuels and was originally launched under the name “Fueling Freedom” in 2015 “to combat the Obama-era Clean Power Plan.”
A coalition of over two dozen right-wing, free market think tanks, led by TPPF and the Competitive Enterprise Institute, sent a letter to Congress on March 23 under the umbrella of the Life:Powered project urging lawmakers to reject any incentives or support for “unreliable ‘green’ energy” in the latest stimulus package. The letter includes several false claims about renewable energy and argues, “climate change is not an immediate threat to humanity.”
Some of these same conservative free market groups, members of the State Policy Network, have been buying ads on social media attacking efforts to use the COVID-19 economic relief efforts to also address climate change, which medical experts have said poses “unprecedented threats to public health and safety.”
A Facebook ad from Life:Powered and the Texas Public Policy Foundation, promoting a petition in favor of the U.S. oil industry.
Deregulation is another form of assistance the oil and gas industry has pursued. And whether by weakening existing climate policies like Obama-era clean car standards or waiving environmental compliance requirements, the Trump administration has granted much on the industry’s wish list.
One example cited in the InfluenceMap briefing is the Environmental Protection Agency’s (EPA) recent policy suspending civil enforcement of environmental rules and relaxing compliance requirements. The American Petroleum Institute sent a letter to President Trump and EPA Administrator Andrew Wheeler specifically asking for relief from environmental compliance.
Outside the U.S., corporate interests including oil and gas have also used the pandemic to lobby for their agendas, which run counter to the Paris climate agreement and actions necessary to address climate change. Examples cited in the InfluenceMap briefing include:
The European Automobile Manufacturers Association (ACEA) recently sent a letter to the president of the EU Commission asking for laxer timelines for complying with the EU vehicle climate regulations.
“Oil and Gas UK produced a business outlook report that referenced the COVID-19 crisis, while arguing that protecting the UK oil and gas industry is essential in ensuring the sector can contribute to providing the UK with net-zero emissions solutions.”
“The Australian Petroleum Production and Exploration Association Chief Executive Andrew McConville referenced the need for measures to ensure economic recovery from COVID-19 pandemic while commenting in favor of a draft government commission report published on Australian resource sector regulation. APPEA stated support for a number of findings, including advice against bans on natural gas exploration. McConville argued the report constituted an ‘an important contribution as we consider vital recovery measures.’”
Several Canadian oil and gas companies and the Business Council of Alberta are calling on the Canadian federal government to postpone any regulatory changes or tax increases including a planned increase to the carbon tax. The Canadian Association of Petroleum Producers has also been gunning for a $15 billion bailout package from the federal government.
Trump Meets With Oil CEOs
President Trump is scheduled to hold an in-person meeting Friday, April 3 with the heads of leading oil and gas companies to discuss their concerns, such as the Russia-Saudi Arabia oil price war and depressed demand as a result of the pandemic response.
According to Greenpeace USA, the executives expected to meet with Trump personally earned at least a combined $100 million in 2018 alone between salaries, bonuses, stock options, and other compensation.
In honor of the Oil CEOs who are going to the White House to beg Trump for corporate bailouts, here’s a running list of terrible things the fossil fuel industry has been doing during the #COVID19Pandemic
“Where the rest of the world sees a global health and economic crisis, fossil fuel CEOs see an opportunity to line their pockets,” Greenpeace USA Climate Campaign Director Janet Redman said in a statement. “We cannot let our government’s response to the COVID-19 pandemic be driven by corporate executives looking to exploit a crisis for their own gain instead of supporting health care providers and working families. Nurses need masks. Hospitals need ventilators. Workers need paychecks. People need help all over this country. And what is Trump doing? He’s making sure oil executives have golden pandemic parachutes. It’s disgraceful.”
In the Northwest, the number of trains carrying oil along the Columbia River could dramatically increase, and that’s sharpened a debate over oil train safety in Washington state and Oregon. There’s a plan to ship more oil from the Bakken region to a proposed oil terminal in Washington. As Conrad Wilson of Oregon Public Broadcasting reports, a recent derailment has shown the potential danger the area faces.
CONRAD WILSON, BYLINE: On a Friday in early June, more than 40,000 gallons of Bakken crude spilled in a fiery oil train derailment that burned for 14 hours.
EMILY REED: It is an incredibly scary thing to have something like this happen so – and within our city limits, so close to our school.
WILSON: Emily Reed is the city council president in Mosier, Ore., the town where the derailment took place. About 500 people live in Mosier, and 100 of them were forced to evacuate when the oil train derailed. Reed points out the town’s deep in the Columbia River Gorge, a canyon with steep cliffs, where winds can reach 40 miles per hour during the summer.
REED: If the wind had been as it is today or more, we would have had a fire going up more than four of those cars, all the way through town and wiping out our town.
WILSON: Union Pacific was to blame for the derailment that caused the oil spill, according to a preliminary report by the Federal Railroad Administration. It says Union Pacific didn’t maintain its tracks properly. However, an inspector certified by that same federal agency checked the tracks and gave them the OK a little more than a month before the derailment.
JERRY OLIVER: It was unfortunate for the community.
WILSON: Jerry Oliver is a port commissioner in Vancouver, Wash., and a vocal supporter of what would be the largest oil-by-rail terminal in the country, known as the Vancouver Energy Project.
OLIVER: It’s also unfortunate because it gives a tremendous black eye to anything related to fossil fuels.
WILSON: If built, the terminal would more than double the number of mile-long oil trains traveling along the Columbia River, to about 46 trains per week. Serena Larkin is with the Sightline Institute, a Seattle-based think tank that opposes the oil terminal. She says until Mosier, oil train derailments were the kind of thing that happened somewhere else.
SERENA LARKIN: Mosier proved that we’re not any different. We are just as vulnerable. We are facing the exact same risks from oil trains that everyone else in North America is facing right now.
WILSON: Despite low oil prices, proponents of the project say the terminal is needed to reduce foreign imports and move domestic oil. For now, it’s relying on oil trains because there aren’t enough pipelines to move oil from North Dakota to the West Coast. Larkin says Mosier’s a turning point in the debate surrounding the Vancouver oil terminal and one that will weigh heavily on whether the project gets permitted.
LARKIN: It showed what the Vancouver oil terminal is really asking Northwest communities to shoulder in risk.
DAN RILEY: I strongly believe that all accidents are preventable.
WILSON: Dan Riley is vice president of government affairs for Tesoro, an oil company behind the project. Since the derailment in Mosier, he says there has been more scrutiny.
RILEY: I think that the criticism is not of the project, but of the rail system.
WILSON: Reilly says Tesoro has also pledged to only allow tank cars with thicker shells and other safety features designed to withstand a derailment into the Vancouver facility. But that’s done little to ease the safety concerns of firefighters and environmental groups. Ultimately, Washington Gov. Jay Inslee has the final say on whether the project gets approved. That decision could come later this year. Inslee’s acknowledged the risk oil trains pose. He says the Mosier derailment is among the things he’ll consider when determining whether or not he’ll permit the oil terminal. For NPR News, I’m Conrad Wilson in Vancouver, Wash.
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