Phillips 66 to Convert Oil Refinery to Renewable Fuels

Phillips 66 and its predecessor companies have been in the oil business for more than 120 years. During this time, virtually all of the oil produced at its refineries has come from petroleum-based sources.

Now the company is taking a step toward the future.

Soybeans, Grease and Fats

The oil giant plans to fully convert its crude refinery in Rodeo, Calif., into a renewable fuels plant by early 2024.

The facility will have the capacity to produce more than 800 million gallons per year of renewable blends (including a mix of gasoline, diesel and jet fuel), which Phillips claims will make it the largest such refinery in the world. The output will include about 680 million gallons from the revamped operations and 120 million gallons from another project that’s due to come online by mid-2021.

In place of current sources, the refinery will derive fuels from used cooking oil, fats, greases and soybean oils.

Benefits

Once reconfigured, the Rodeo plant, which was opened in 1896, will no longer transport or process any crude oil.

As a result, Phillips says, the plant will generate 50% less carbon dioxide and 75% less sulfur dioxide emissions than the site’s current crude oil refinery. Other pollutants will be reduced by about 60%.

The project includes constructing pre-treatment processes and repurposing existing hydrocracking systems to enable production of renewable fuels. Total cost of the conversion is estimated at $800 million, and Phillips expects operating costs to produce the renewable fuels will be lower than for products made from crude.

Green Wave?

Phillips also announced plans to shut down its Rodeo Carbon Plant and Santa Maria refining facility (the latter is located about 260 miles south in Arroyo Grande, Calif.). Associated crude oil pipelines will be taken out of service in phases starting in 2023.

Several other refineries in the San Francisco Bay area are evaluating similar strategies.

Late last month, Marathon Petroleum announced it is "indefinitely idling" a nearby crude oil refinery due to sharp reductions in demand for gasoline during the COVID-19 pandemic. At the time, the company said it is evaluating whether to convert the facility to the output of renewable diesel.

Chevron Richmond and the Martinez Refining (formerly Shell Martinez) also operate refineries in the area.

"We believe the world will require a mix of fuels to meet the growing need for affordable energy,” says Phillips 66 Chairman and CEO Greg Garland. He adds that renewable fuels produced in Rodeo will be an important part of the future.