Phillips 66 to Convert California Refinery to Biofuel Production
Phillips 66 announced plans to convert its oil refinery in Rodeo, Calif., to the production of plant-based renewable fuels, becoming the latest U.S. refiner to back away from oil in favor of greener products.
Phillips said the “Rodeo Renewed” project’s timeline had a production of gasoline, jet fuel, and diesel made from soybean, used cooking oils and grease beginning in 2024, and reaching an annual capacity of 680 million gallons. The plant, located in the San Francisco Bay area, will operate in concert with an existing renewables project Phillips already undertaking in the area, ratcheting combined capacity up to around 800 million gallons per year, making it the largest operation in the world.
Chairman and CEO Greg Garland said the decision would help Phillips meet anticipated demand for such green fuels in California and other West Coast states. “Phillips 66 is taking a significant step with Rodeo Renewed to support demand for clean-burning renewable fuels and to help California meet its low carbon objectives,” said Garland. “We believe the world will require a mix of fuels to meet the growing need for affordable energy, and the renewable fuels from Rodeo Renewed will be an important part of that mix.”
The conversion plan must first be approved by Contra Costa County officials and the Bay Area Air Quality Management District.
The refinery currently can process around 120,000 barrels of crude per day, producing roughly the same amount in conventional gasoline and distillates. Garland said the conversion would also reduce the plant’s operating costs and enable it to permanently shut down the affiliated Santa Maria refinery in Arroyo Grande and its associated crude pipelines beginning in 2023. Santa Maria takes in heavy crudes from central California’s oil fields and converts it to feedstocks that are shipped through a 200-mile pipeline to the Rodeo plant.
Phillips will also benefit from state tax incentives as well as the federal Biodiesel Tax Credit of $1 per gallon, which was reauthorized and extended through 2022 by Congress late last year.
Phillips’ announcement came a few days after Marathon said it would indefinitely shut down its refineries in Martinez, Calif., and Gallup, N.M., and was exploring the possibility of converting Martinez to renewable-fuel production. Marathon is also on track to this year to complete the conversion of its Dickinson refinery in North Dakota to produce 12,000 barrels per day of biofuels from corn oil and soybean oil.
Moreover, HollyFrontier Corp. launched a plan in June to convert its Cheyenne, Wyo. refinery to renewable diesel. “Demand for renewable diesel, as well as other lower carbon fuels, is growing and taking market share based on both consumer preferences and support from substantial federal and state government incentive programs,” President and CEO Mike Jennings said in a statement at the time. “This represents an exciting opportunity to enhance both the profitability and environmental footprint of HollyFrontier through organic investment.”
