Phillips 66 to reconfigure California refinery for renewable fuels

(This Aug 12 story corrects the location of the Santa Maria refining facility.)

(Reuters) - U.S. refiner Phillips 66 plans to convert its Rodeo, California, crude oil refinery into a renewable fuels plant using cooking oil and food wastes.

Its proposal comes as U.S. refiners HollyFrontier Corp, CVR Energy and Marathon Petroleum have begun or pledged to convert existing facilities to renewable fuel. HollyFrontier and CVR are exploring projects to supply California, the largest U.S. market for the fuel.

The state’s low carbon fuel standard (LCFS) aims to cut carbon emissions and reduce petroleum in transportation fuels.

Phillips 66’s proposal would cost up to $800 million to produce 680 million gallons a year of renewable diesel, renewable gasoline and sustainable jet fuel beginning in 2024. The company’s existing renewable diesel project at the Rodeo site, near San Francisco, is targeting 120 million gallons by mid-2021. [nBw9HyF5ra]

Refiners see renewable diesel as helping underutilized refineries stay in operation and to offset compliance costs associated with U.S. blending laws.[nL1N2DO25D]

Earlier this year, Phillips 66 canceled a 250 million gallon per year renewable diesel plant proposed for Ferndale, Washington, citing uncertainties and permitting delays.

At the time, it said was evaluating “new opportunities to provide consumers with renewable fuels that comply with low-carbon fuel standards.”

Exxon Mobil on Tuesday struck an agreement with Global Clean Energy to buy 2.5 million barrels of renewable diesel per year for five years to help reduce its carbon footprint. [nL4N2FD3OP]

Phillips 66 also said it plans to shut down its carbon plant in Rodeo and Santa Maria refining facility in Arroyo Grande in 2023. The crude oil pipelines that supply those facilities will be taken out of service in phases starting that year.

Total U.S. consumption of renewable diesel last year was 900 million gallons, according to Energy Information Administration data.

Reporting by Arathy S Nair in Bengaluru; Laura Sanicola and Stephanie Kelly in New York, and Erwin Seba in Houston; Editing by Krishna Chandra Eluri and Cynthia Osterman