Category Archives: Valero

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.

CBS TV Sacramento: uprail communities concerned as crude by rail spikes

Repost from CBS13 Sacramento
[Editor: Rather a poor report, with a few errors (for instance, six explosions, not three) and a pessimistic ending.  But good tv exposure on the issue.  See the excellent quote by Davis Mayor Joe Krovoza, and note how the Valero Benicia spokesperson evades the reporter’s question on “Who will pay for safety?” in the interview near the end.  – RS]

Crude Oil Shipment Spike Has California Residents Along Railways Concerned

May 13, 2014


DAVIS (CBS13) — It’s been a deadly year for the oil and railroad industries as crude oil tankers on North American railways explode in three separate incidents, calling into question what dangers are we willing to accept in our insatiable quest for fuel.

Welcome to North Dakota, where the earth is gushing oil. But the black gold blessing is quickly becoming a shipping curse.

The number of trains carrying crude oils is rapidly expanding, putting residents like Errin Enos of Davis at risk.

“Of course I’m scared, they go right past my house,” he said.

About 1 million barrels of oil a day is being extracted from the Bakken Oil Field in North Dakota. Getting it from there to refineries in California has created a controversial and dangerous dilemma.

“Frankly, it’s just the odds,” said California state Sen. Beth Jackson. “If we’re transporting more things by rail, it’s just going to happen at some point no matter how we try to be careful.”

Oil industry insiders know about the controversy involving the third-largest refining state.

For the most part, crude oil is transported around the world on ships, through pipelines and by trains. Each of those has risks.

Three accidents involving oil trains have occurred in the last year alone:

July 2013: A train carrying crude oil derailed and exploded in Quebec, Canada, leveling portions of the town of Lac Megantic and killing 47 people.

December 2013: An oil train collided with a derailed train near Casselton, North Dakota.

April 30: A train loaded with crude oil derailed in Lynchburg, Virginia. Some cars burst into flames, others plunged into the James River.

But even shipping has its dangers.

November 2007: A Cosco Busan oil tanker rammed the Bay Bridge, spilling 53,000 gallons of bunker fuel into the San Francisco Bay—or less than two rail cars full of oil.

March 1989: The Exxon Valdez struck a reef in Prince William Sound Alaska. Up to 750,000 barrels of crude oil spilled, making it one of the most devastating human-caused environmental disasters.

On land, millions of barrels of crude oil are moved through pipelines and trains. So which is safer?

Juan Acosta represents Burlington Northern Santa Fe railroad and recently testified at a hearing at the state Capitol.

Even though pipelines are safer, he says, environmental groups strongly oppose building new pipelines, meaning America’s overflowing oil reserves are now hitting the rails.

Crude Spike Means Busy Railways

Railroads have several lines to bring crude oil into California. Many of them converge at refineries in our part of the state in cities like Richmond and Benicia. In the coming years, officials estimate that 25 percent of crude coming into California will arrive on trains.

Cities and towns that line these train tracks are fighting the trend, because there’s a plan to send even more crude oil through Northern California.

That has Davis Mayor Joe Krovoza concerned.

“If those same tracks are going to be be carrying hundreds of thousands of cars of crude oil through Davis every day, that’s absolutely a situation we can’t have in this community,” he said.

The plan would send 82,000 barrels of North Dakota Bakken crude oil on California tracks through Roseville, West Sacramento and Davis on their way to the Valero refinery in Benicia.

Chris Howe is the director of health, safety and environment at the refinery where they convert crude oil into gasoline, diesel and jet fuel. They hope to build a special station where they can offload North Dakota’s oil from train cars.

“Today about 80 percent of the crude oil that we process at the refinery comes in by marine tanker,” he said.

Currently, a little more than five percent of oil comes into the state by rail, but that’s almost certain to increase dramatically.

With a record amount of crude oil being extracted from North Dakota and a lack of pipelines to ship it, and with the world’s appetite for oil products increasing in places such as China and India, the oil industry says it’s a basic business principle of supply and demand.

And it’s not just in Benicia. Oil is alreayd being offloaded from rail cars and onto tanker trucks at McClellan Park near Sacramento.

Who Will Pay For Safety?

At a recent hearing at the state Capitol, Lisa Stark testified for Union Pacific, saying safety is a top priority.

“I know we’re very aggressive on safety, so it may not make a huge difference here in California because we already have a very aggressive program here,” she said.

But at that same hearing, emergency responders from a host of state agencies were concerned about their ability to respond to a catastrophe.

“What we did learn is that there really is no preparedness,” said State Sen. Jerry Hill.

He says not only are local emergency crews not prepared, but he says only the railroads are willing to pay to train local firefighters, not oil companies.

“They’re fine with most of what’s being proposed,” he said. “It’s the oil companies who are opposed to any additional fees that would be imposed on crude oil that comes.”

Something Howe doesn’t confirm, but doesn’t deny either.

REPORTER: So you think Union Pacific would be willing to go into some of these smaller communities and offer training?

HOWE: I’ve read their commitment to do that and it’s my understanding …

REPORTER: But it’s not something Valero would be willing to do?

HOWE: I would surely encourage the railroad to help do that.

Living along the tracks, Enos believes more trains filled with explosive crude oil will be rolling by his home in the near future.

“They’re gonna get their way,” he said. “I mean I could talk, talk, talk and it’s not gonna make any difference, I don’t believe.”

Sacramento officials concerned, will meet with Area Council of Governments

Repost from The Sacramento Bee
[Editor: Excellent article by Bee reporters Bizjak & Tate.  It’s encouraging that Sacramento is waking up to the threat of catastrophic accidents.  We will want to keep an eye on the April 22 meeting of the Sacramento Area Council of Governments.  – RS]

Refinery plans to ship 100 train cars of crude oil through Sacramento

By Tony Bizjak and Curtis Tate, The Sacramento Bee
Published: Wednesday, Apr.  2, 2014

A Bay Area refinery’s plan to run up to 100 train cars of highly flammable crude oil daily through Sacramento is prompting a late push by area leaders to protect cities on the rail line.

Sacramento officials say they only recently learned that a proposed rail terminal at the Valero company’s refinery in Benicia could dramatically increase the number of trains carrying crude oil through the region, including through populated downtowns. They say they are scrambling to fashion a joint statement to Valero officials expressing concerns.

The trains would travel on the Union Pacific line that runs through both the Roseville and downtown Sacramento railyards, as well as through downtown West Sacramento and Davis. Those are the same tracks that carry Capitol Corridor passenger trains between Sacramento and the Bay Area.

The Valero rail terminal is one of several being proposed by refineries responding to a major shift in how crude oil is transported nationally. Currently, the Benicia refinery receives most crude via pipeline and ships. But Valero and other companies are moving quickly toward more rail transport to align with the boom in hydraulic fracturing, or fracking, in inland areas like North Dakota, where much of the new oil is a lighter, more flammable type from the Bakken oil fields.

“These rail shipments are the wave of the future,” Sacramento city official Fran Halbakken said, “but there is not much information out there.”

Data compiled by the California Energy Commission shows crude oil shipments into the state via rail from other states jumped from  1 million barrels in 2012 to more than  6 million in 2013. Local fire officials, who would be the first responders in case of crashes or derailments, say they do not receive detailed information on how many of those train cars come through Sacramento.

“We’re trying to figure what is the baseline that comes through now,” said Davis city official Mike Webb. “All jurisdictions would want to know.”

Union Pacific officials say their company, one of the major rail transporters in California, shipped less than 1,000 carloads of crude oil statewide on a monthly basis last year – or 33 cars a day. A UP spokesman declined this week to say how much of that goes through Sacramento. “We are not currently breaking out how much crude we move through a specific community,” UP’s Aaron Hunt said. “We are only giving out our state number.”

BNSF, the other major rail transporter in California, also declined to discuss crude oil routing information.

Valero’s terminal project description offers a brief but clear statement on plans for major shipments through Sacramento: “(Union Pacific Railroad)-operated locomotives would haul up to 100 crude oil rail cars a day from the UPRR Roseville railyard to the refinery,” the report states.

And more rail shipments could be on their way: Phillips 66 says it intends to begin deliveries of crude by rail sometime next year to its coastal refinery in Santa Maria. Union Pacific would deliver as many as five 80-car trains a week of oil “from a variety of sources in North America.” One route could pass through Sacramento.

Officials with the state Office of Spill Prevention and Response say refineries around the state may ultimately have the capacity to process up to 143 million barrels of crude shipments via rail a year, far more than the  6 million shipped last year.

Last year, a train carrying Bakken crude oil derailed in a Quebec town, sparking a massive fire that killed 47 people and leveled the town center. Subsequent derailments in Alabama and North Dakota, though not fatal, caused fires and evacuations and showed that disaster could strike again.

While such incidents are rare, local fire officials say the pressure is on to be more prepared for that possibility.

“Any time you increase numbers, you increase the probability of problems that would come with that,” said Sacramento City Interim Fire Chief Dan Haverty.

Last week, The Sacramento Bee reported that McClellan Business Park is being used as a transfer station where oil, including Bakken crude, is being moved from rail cars to tanker trucks. Local safety officials told The Bee they knew little about the McClellan operation.

Valero and Benicia officials are expected to publish a draft environmental impact report later this month on the company’s planned rail terminal next to Interstate 680 just north of the Benicia-Martinez Bridge. Sacramento officials say they likely will issue a joint statement to Valero on what they think should be done to increase safety in “up-line” cities.

The Sacramento Area Council of Governments is planning a meeting of its 32 local cities and counties on April 22 to discuss the issue.

West Sacramento Fire Chief Rick Martinez said officials may ask that Valero be required to finance extra emergency training and safety equipment for up-line communities, and that there be tight rules on when or whether trains are allowed to sit on track sidings.

He said the emerging national discussion about rail safety may provide a platform for cities to push for other safety improvements, such as better “real-time” information on what materials are coming through town, so fire and hazardous materials crews know what they are getting into as they head to a call.

“As they look at this Bakken oil, is there a way through technology to get more information to local agencies?” Martinez said. “We are trying to take advantage of the interest to pose the questions that may guide” future regulations.

Aides to Rep. Doris Matsui, D-Sacramento, say she has begun exploring the issue as well. Matsui’s office issued a statement this week, saying “it is imperative that the rail cars are safe and that local agencies are prepared for the increased risk.” Aides said Matsui sent a letter to the Department of Homeland Security recently, “seeking additional federal funding for first-responder training, arguing that the increased risk posed by these oil cars warrants additional federal funds.”

Although the federal government regulates rail shipments, federal rules haven’t caught up to the surge in oil traffic on the nation’s rail network. That’s left local leaders and community activists in cities around the country at the forefront of pushing for changes in state and federal laws.

Last week, the city councils of Berkeley and Richmond voted to oppose crude shipments on rail lines through their cities. The resolutions call for state lawmakers and members of Congress to seek tougher regulations.

Several environmental groups filed a lawsuit last week against pipeline operator Kinder Morgan and the Bay Area Air Quality Management District. The groups said the agency quietly issued a permit to Kinder Morgan for a crude-by-rail facility in February without reviewing potential environmental and health impacts.

“We don’t accept that as a foregone conclusion,” said Diane Bailey, a senior scientist with the Natural Resources Defense Council, one of the groups in the lawsuit.

A group of community activists in Benicia and Martinez has been trying to stop Valero and another refiner, Tesoro, from expanding their crude oil deliveries by rail. And they’re pressing local, state and federal officials to push for tougher oversight of crude oil shipments by rail.

“People are afraid that anybody along the rail line could become the next (Quebec),” said Andres Soto, a community activist in Benicia.

Oil industry officials say fears of derailments and fires are overstated. The Association of American Railroads, an industry group, says 99.997 percent of hazardous materials shipped by rail reach their destination without incident.

Charles Drevna, president of the American Fuel & Petrochemical Manufacturers Association, dismissed the movement to oppose new terminals and additional rail shipments, saying “you’re always going to see the anti-fossil fuel mentality in California.” He said, given the cost savings, “the vast majority of Californians will be happy to get Bakken crude.”

Valero fined $183,000 for 2010 incidents

Repost from The Contra Costa Times
[Editor: These fines are for violations in 2010.  In October of 2013, Valero agreed to pay $300,300 in fines for violations occurring in 2011 and 2012 (see SFGate story, Benicia Herald story).  At that time, Mayor Patterson and I asked the Bay Area Air Quality Management District (independently) to consider making the fines available to the local setting where the violations occurred, a practice not without precedent.  I never a definitive answer on my request from Eric Stevenson, the District’s Director of Technical  Serevices.  He did inform me in November 2013 that the District had scheduled a meeting with Mayor Patterson to discuss this request.  I wonder what happened?  It makes sense to me that the City of Benicia could finance better air monitoring using these funds.  – RS]

Benicia refinery hit with $183,000 fine for air quality violations

(Vallejo) Times-Herald   03/28/2014 04:56:30 PM PDT

BENICIA — Valero has agreed to pay $183,000 to settle air quality violations at its Benicia refinery, the Bay Area Air Quality Management District announced Friday.

The civil penalty covers seven notices of violation that the air district issued to Valero in 2011 for incidents that occurred in 2010, according to an air district news release.

The violations were related to a December 2010 upset of Valero’s fluid catalytic cracking unit, which converts heavy gas oils into gasoline and other lighter compounds. The upset resulted in intermittent violations of opacity and particulate standards at Valero’s main stack over a 10-day period, as well as violations of carbon monoxide and sulfur standards at other affected equipment, the district said.

All settlement funds will be used to fund air district activities such as the inspection and enforcement activities that led to the settlement.