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.
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.
“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.
Excellent 6-minute video report on local concerns about Phillips 66 expansion proposal
A KPIX 5 original report is revealing new plans underway to build more petrochemical tanks inside Phillips 66’s Rodeo refinery, next to the facility where two storage tanks exploded and burned last week. Andria Borba reports. (10-22-2019)
SAN FRANCISCO, CA (Traditional Chochenyo and Karkin Ohlone Lands) — In a state where oil and gas drilling have increased in recent years, a group of local residents today launched the Protect the Bay coalition to educate the Bay Area community about the expansion proposal at Phillips 66’s San Francisco Refinery in Rodeo to bring in more oil tankers and process more heavy crude oil like Canadian tar sands.
“The proposal would impact local health and the climate by increasing refinery emissions and worsening air quality for nearby communities, while also increasing tanker traffic and the risk of a devastating oil spill in San Francisco Bay,” according to a press release from the coalition.
The San Francisco Bay Delta Estuary is the largest estuary on the West Coast of the Americas — and the increased risk of an oil spill on the bay threatens many fish populations that migrate through, reside, spawn or rear in the bay, including Chinook salmon, steelhead, halibut, striped bass, rockfish, lingcod, leopard sharks, sixgill sharks, soupfin sharks, bat rays, brown smoothhound sharks, green sturgeon, white sturgeon, Pacific herring, anchovies, jack smelt, over a dozen species of surfperch and many other species.
“If the refinery’s full expansion moves ahead, more than twice as many crude oil tankers could travel to the refinery, some of them carrying tar sands from Canada, which is extremely difficult to clean up. This could add up to as much as a tenfold increase in the amount of tar sands processed in Bay Area refineries,” the group said.
The coalition said the Canadian federal government is expected to announce next week whether it will approve the new Trans Mountain Pipeline that would likely supply the tar sands to Phillips 66’s San Francisco Refinery.
“Economists have questioned Canadian Prime Minister Justin Trudeau’s claims that the pipeline would help Canada reach new markets in Asia, instead of simply expanding into existing U.S. markets in California and Washington,” the group stated.
The coalition launched an extensive website at protectthebay.org with factsheets, presentations, and more on the refinery proposal. The coalition asks local community members to get involved to help illustrate the community’s growing opposition to the refinery expansion proposal by:
Signing the petition urging decisionmakers to reject the Phillips 66 refinery expansion proposal at protectthebay.org/take-action. The petition will be sent to Bay Area Air Quality Management District, Contra Costa County Board of Supervisors, California Gov. Gavin Newsom, and others.
Sharing your opposition to the Phillips 66 refinery expansion proposal and the increase in oil tankers in San Francisco Bay on social media using the hashtag #TarSandsFreeSFBay.
Coalition members include Communities for a Better Environment (CBE), Crockett-Rodeo United to Defend the Environment (CRUDE), Idle No More SF Bay, Interfaith Council of Contra Costa County, Rodeo Citizens Association, Stand.earth, and Sunflower Alliance. Supporting organizations include 350 Bay Area, Amazon Watch, Fresh Air Vallejo, and San Francisco Baykeeper.
Representatives of the groups in the coalition commented on the launch of the new group.
“Our community knows refinery expansions are a dead end,” said Isabella Zizi, Stand.earth. “We need our public officials like the Contra Costa County supervisors to stand with us in preventing new pollution sources from harming our health, and supporting real solutions like a just transition for refinery workers and local economic development that protects air and water quality.”
“Phillips 66’s reckless plans to increase tanker deliveries to its wharf and refine tar sands at its Rodeo refinery are opposed by tens of thousands of Bay Area residents,” said Shoshana Wechsler, Sunflower Alliance. “These plans endanger our neighbors living near that refinery and the entire San Francisco Bay, and they worsen an already severe climate crisis. People power stopped an oil terminal in Pittsburg, and oil train projects in Benicia and San Luis Obispo. We won’t rest until Phillips 66’s tar sands proposals are dead in the water.”
“The refinery’s latest plan to expand dilbit imports, cracking of that bitumen, and recovery of those diluent oils threatens to lock in a worst-case future for our climate, air, health, safety, and Bay,” said Greg Karras, Communities for a Better Environment. People have a right to know about this unnecessary threat.”
“The small towns of Rodeo and nearby Crockett are ‘ground zero’ for tar sands processing in the San Francisco Bay Area, but it’s not just us who will be affected. Sounds from increased tanker traffic will negatively impact the already stressed, killer whale population and hasten its long-term slide to extinction,” said Nancy Rieser, Crockett-Rodeo United Defend the Environment. “Equally important, is the plight of the indigenous communities of Alberta, Canada whose waterways and lands have been devastated by tar sands mining. It is our sincere hope that the Contra Costa County Board of Supervisors stand in solidarity with the people they are tasked to serve and do what’s right for the West Coast.”
“Rodeo Citizens and our neighbors throughout Contra Costa County have been overwhelmed with toxic chemical releases from this refinery,” said Janet Pygeorge, Rodeo Citizens Association. “The asthma rate in Contra Coast County school children is higher than surrounding areas, as is the cancer rate when compared to the national average.”
The coalition is hosting this upcoming event in the Bay Area:
July[date TBA] – Toxics Tour with community members
Take a guided tour of the Bay Area’s refineries and learn about the toxic pollution that people living near the refineries experience every day. This event is open to the public, and reporters are welcome to attend. Contact info [at] protectthebay.org with questions or to RSVP.
Most Californians, including many environmentalists, are unaware of how effectively Big Oil and the Western States Petroleum Association (WSPA) have captured California regulators, in spite of the state’s “green” image.
A review of state permitting records in last year’s report “The Sky’s The Limit: California,” shows that more than 21,000 oil and gas well drilling permits were issued during the Jerry Brown administration. These wells include 238 new offshore wells approved between 2012 and 2016, according to Department of Conservation data analyzed by the Fractracker Alliance: http://www.fractracker.org/…
The Western States Petroleum Association (WSPA) is not a household name in California, but it should be. It’s the trade association for the oil industry and the largest and most powerful corporate lobbying organization in the state. If you want to know the industries, organizations and people that control California, WSPA and Big Oil are right at the top of the list.
WSPA represents a who’s who of oil and pipeline companies, including AERA. BP, California Resources Corporation, Chevron, ConocoPhillips, Exxon, Plains All American Pipeline Company, Valero and many others. The companies that WSPA represents account for the bulk of petroleum exploration, production, refining, transportation and marketing in Arizona, California, Nevada, Oregon, and Washington, according to the WSPA website, http://www.wspa.org.
WSPA and Big Oil wield their power and influence over public discourse in 6 major ways: through (1) lobbying; (2) campaign spending; (3) serving on and putting shills on regulatory panels; (4) creating Astroturf groups: (5) working in collaboration with media; and (6) contributing to non profit organizations.
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