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Phillips 66 to convert refinery to renewables: Update

  • : Biofuels, Emissions, Oil products
  • 20/08/12

Adds details and context throughout.

US independent refiner Phillips 66 plans to convert its San Francisco refining complex to the largest renewable fuels production site planned in the US.

The company over the next three years will idle crude processing at its 120,000 b/d San Francisco refinery and convert units in its Rodeo plant to produce 52,000 b/d of renewable fuels. The plans would halt crude processing at the refining complex by the end of 2023 to shift to renewable diesel, naphtha and jet fuel production in early 2024, pending regulatory approval.

Phillips 66 joins a wave of refinery conversions to renewables picking up speed after efforts to slow the spread of Covid-19 sharply reduced transportation demand. Marathon Petroleum earlier this month said it may convert its idled 166,000 b/d refinery in nearby Martinez to begin 48,000 b/d of renewable diesel production in 2022. Marathon said today that it continues to evaluate that project. HollyFrontier ceased crude processing this month at its struggling 52,000 b/d refinery in Cheyenne, Wyoming, refinery, with plans to convert the facility to 6,000 b/d of renewable diesel production in 2022. And CVR Energy is on a fast track to convert one of its units at the 73,000 b/d refinery in Wynnewood, Oklahoma, to renewable diesel production, while continuing to process crude oil.

State and federal incentives in California extend practical advantages for renewable diesel. Unlike biofuels such as ethanol and biodiesel, renewable diesel is chemically identical to petroleum diesel. That means the fuel can move in existing pipelines and other transportation options, and faces no blending limits in fuel systems. The distinction reduces the barrier to entry for an otherwise costly fuel. Producers may process renewable diesel from soybean oil, used cooking oil, animal fats and other feedstocks.

A federal tax credit extended last year through 2022 offers a $1/USG incentive for each renewable diesel or biodiesel gallon blended into the US transportation supply. The fuel generates 1.7 credits used to comply with federal blending mandates called the Renewable Fuel Standard, compared to 1 credit per gallon for ethanol and 1.5 credits per gallon for biodiesel. The fuel also generates credits under California's low carbon fuel standard, which vary in value depending upon the feedstock used.

Phillips 66 had previously considered a smaller conversion before deciding to halt petroleum processing completely. The company now plans what it said would be the largest renewables facility in the world. Production capacity at the site would surpass Valero's joint venture Diamond Green Diesel facility in Norco, Louisiana, where expansion work underway would bring the output to 44,0000 b/d next year, from 18,000 b/d currently.

"Quite frankly, the Rodeo refinery is uniquely positioned to become a renewable diesel plant," Phillips 66 executive vice president of refining Bob Herman said. "With its current infrastructure and location, the plant really lends itself to producing a lot of renewable fuels."

Extended shutdown

The San Francisco complex connects crude upgrading units in Arroyo Grande to refining units almost 200 miles away in Rodeo. The combination allows the complex to run a full gamut of crudes, from heavy, acidic and sour Canadian output, sour Opec imports and light sweet domestic production. Opec sour barrels averaged the highest share of imports to the facility over the past five years, according to the Energy Information Administration (EIA).

But a 2015 pipeline break disrupted supplies to the landlocked Arroyo Grande facility, and local regulators rejected rail and waterborne proposals for supply alternatives.

Phillips 66 declined to comment on specific operating margins for the San Francisco complex, but said its performance had worsened over the past three years. "Crude feedstock costs have been even more expensive than the price for benchmark crude," Herman said.

Phillips 66 plans to convert units in the Rodeo end of its complex and to shut the Arroyo Grande units in 2023. Associated crude pipelines would be taken out of service beginning in 2023.

The refinery produces 65,000 b/d of distillates, compared to 60,000 b/d of gasoline, making it one of three Phillips 66 refineries in the world tilted toward diesel. Rodeo also is a key supplier of US west coast 2pc sulphur petroleum coke. City officials earlier this year restricted coke movements through a key Richmond terminal, a decision challenged by companies including Phillips 66 and headed to oral argument in a federal court next week.

Refinery closings by Marathon Petroleum and Phillips 66 would leave Chevron and newcomer PBF Energy to continue petroleum refining in the immediate San Francisco area. Valero's 145,000 b/d refinery in Benicia, California, also supplies the northern California market.

Phillips 66 describes Rodeo as an export facility to Latin America, potentially tightening supplies along the west coast of Latin America, as well.


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25/03/19

Global temp 1.34-1.41°C above pre-industrial era: WMO

Global temp 1.34-1.41°C above pre-industrial era: WMO

London, 19 March (Argus) — Global temperatures are at around 1.34°C-1.41°C above pre-industrial levels, although 2024 was likely to have breached 1.5°C, the World Meteorological Organisation (WMO) said today in its State of the Global Climate 2024 report. The long-term 1.34°C-1.41°C range is the best estimate currently possible, but "given the uncertainty ranges, the possibility that we have already exceeded 1.5°C cannot be ruled out", the WMO said. The Paris climate agreement seeks to limit the rise in global temperatures to "well below" 2°C above pre-industrial levels, and preferably to 1.5°C. But last year was the hottest on record , at 1.55°C above the pre-industrial average, with a margin of uncertainty of 0.13°C either above or below that figure, the WMO said in January. The organisation uses datasets from six weather and science agencies. Individual years that exceed the 1.5°C level do not mean that the Paris agreement goals are out of reach, as the temperature limits sought by the accord work on a timeframe of at least 20 years. But "it is a wake-up call that we are increasing the risks to our lives, economies and to the planet", WMO secretary general Celeste Saulo said. The record-high temperatures in 2023 and 2024 were owed to "the ongoing rise in greenhouse gas emissions" (GHGs) as well as "a shift from a cooling La Nina to warming El Nino event", the WMO found. Other contributing factors may include solar cycle changes, volcanic eruptions and a decline in cooling aerosols, it added. The atmospheric concentration of CO2 in 2023 was higher "than at any time in at least 2 million years", the WMO found. Concentrations of other key GHGs methane and nitrous oxide in 2023 reached their highest in the last 800,000 years, while data show that levels of those GHGs continued to increase in 2024, it added. The concentration of CO2 in 2023 was at 420 parts per million (ppm) — 2.3ppm more than in 2022 — and at 151pc of the pre-industrial concentration. CO2 levels correspond to 3.276 trillion t in the atmosphere, the WMO said. Concentrations of methane and nitrous oxide in 2023 stood at 265pc and 125pc of pre-industrial levels, respectively. The majority of surplus heat goes into warming the ocean, which — along with ice loss on land — causes sea levels to rise. The "rate of sea level rise has doubled since satellite measurements began", from 2.1mm/yr between 1993 and 2002, to 4.7mm/yr between 2015-2024, the WMO said. The organisation also flagged the number of extreme weather events in 2024, citing wildfires, hurricanes, floods, droughts and more, which led to the "highest number of new displacements recorded for the past 16 years, contributed to worsening food crises, and caused massive economic losses". By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

German climate fund draws interest from Africa


25/03/18
25/03/18

German climate fund draws interest from Africa

Berlin, 18 March (Argus) — The €100bn climate action allocation in Germany's proposed €500bn infrastructure fund is a "very strong signal" which could help Africa with the huge challenges the continent faces in mobilising private capital, delegates heard at the German-African Energy Forum in Berlin this week. Germany's €100bn climate fund "couldn't come at a better time", Johannesburg-based Africa Investor Group chief executive and chairman Hubert Danso said, given South Africa's presidency of the G20 and the presidency's focus on reducing the cost of capital for developing countries through the planned set-up of a "cost of capital commission", which Danso said is addressing the "unjustified" premiums paid by developing countries. Germany's budget allocation could "fold into" the work of the G20 and the run-up to the UN Cop 30 climate summit in Belem, Brazil, later this year, Danso suggested. Michael Kellner, junior minister at the economy and climate ministry of Germany's outgoing government, told delegates that the multi-billion euro package will provide "much more finance for fighting climate change". Kellner, a member of the Green Party which lost the election but was instrumental in pushing through the €100bn allocation, said that the finance will also be used outside Germany. He pointed to Germany's "flagship" green hydrogen import scheme, H2Global, which is likely to see more co-operation with Africa. Kellner flagged the "impressive" production of green iron in Namibia, which could be of interest to German carmakers. "We will be watching [the €100bn climate allocation] closely," Danso told Kellner and representatives from Germany's development ministry. The main challenge, and opportunity, is to make developing countries' nationally determined contributions (NDCs) to the Paris climate agreement more "investable", Danso said. The next round of NDCs, to be submitted this year, must become more "strategic" and "programmatic", Danso urged. In this context, NDCs can drive carbon markets by opening up collaborative approaches, consultant CarbonWise founder and chief executive Toni Heigl told delegates. If a country decides to exceed its NDC, for instance by pushing certain activities that are dependent on external funds, this "helps to trigger the funding", Heigl said. Carbon markets offer "vast" opportunities in Africa, especially the schemes under Article 6 of the Paris deal, Heigl said. With the final Article 6 rules passed at Cop 29 last year , most companies still "underestimate" the potential of these carbon markets, Heigl said, despite Article 6 credits being "8-10 times" more valuable than those under the voluntary carbon market. By Chloe Jardine Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

NWE HVO paper trade at record high on mandates, policy


25/03/18
25/03/18

NWE HVO paper trade at record high on mandates, policy

London, 18 March (Argus) — Higher mandates and policy changes are poised to continue to support Northwest Europe HVO paper market liquidity, after a record high of 42,000t of hydrotreated vegetable oil (HVO) Class II Ice futures contracts was traded on 14 March. HVO Class II fob ARA trading activity on the Intercontinental Exchange (Ice) rose as European fuel suppliers increasingly seek renewable diesel made from used cooking oil (UCO) to meet higher mandates and overcome the 7pc restriction for blending conventional methyl ester biodiesel into diesel. The total traded volume for the first two weeks of March (1-14) was 120,000t, close to the previous full-month high in January of 138,000t (see chart). The Ice contract — a cash-settled future that settles based on Argus spot price assessments — launched in 2022 as both a differential to Ice low sulphur gasoil and outright, with the former most commonly traded. Physical HVO interest has been more measured through the beginning of 2025, although spot trade rose year on year. Changes to key biofuels policies in Germany and the Netherlands are expected to support overall demand and anticipation of this has supported HVO paper liquidity. Germany has paused the carryover of surplus tickets that would otherwise go towards meeting its greenhouse gas (GHG) savings quota, meaning obligated parties will have to use more physical biofuels to meet mandates, while the Netherlands has limited the amount of tickets allowed to be carried from year to year, driving a similar dynamic. The start of the year is often a slower physical trading period in northwest Europe as market participants look to finish off compliance submissions for the previous year. Anticipating changes to ticket carryover policies, some physical biofuels were stored in tank to be used at the start of the year, particularly in Germany, suppressing prompt demand. Class II HVO has also been affected by high feedstock prices, which have pressured production margins, and strong imports from east of Suez. Ticket values in Germany and the Netherlands have been below the equivalent cost of blending physical Class II HVO, further limiting demand. In the Dutch market HBE-IXB prices have been pressured by supply of UCO-based sustainable aviation fuel (SAF) blends, which generate 2.4 HBEs per GJ as per the biofuel portion, while German ticket prices have been affected by lower diesel demand and a focus on finishing off 2024 balances. The prompt/front-month price spread for Class II, which gives an indication of the prompt market's strength or weakness, has been volatile for the past month according to Argus assessments (see chart). The spread flipped into contango for the first week of March following a supply surge which weighed on European prices , then returned to backwardation as HVO prices tracked UCO and UCO-based biodiesel prices higher. Prompt UCO prices have in turn been supported by tighter global supply following a protracted export ban from Indonesia, which is still expected to be temporary, contributing to the forward curve backwardation. HVO paper trading on 14 March focused on the upcoming three months. An April/May spread traded at $10/t ($1,055/t, $1,045/t) for 5,000t/month, or 10,000t total, a May/June spread traded at $5/t ($1,045/t, $1,040/t) for 13,000t/month, or 26,000t total, and a second quarter contract traded at $1,065/t for 2,000t/month, or 6,000t total. All of the trades were as premiums to front-month Ice gasoil. By Simone Burgin HVO Class II AOM and Ice monthly totals t HVO Class II fob ARA range prompt and month 1 t Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

India's base oil imports rise in 2024


25/03/18
25/03/18

India's base oil imports rise in 2024

Singapore, 18 March (Argus) — India's base oil imports rose by 15pc on the year to 2.71mn t in 2024, data from GTT show. Lower domestic production, because of plant maintenance, and higher finished lubricant consumption boosted imports in 2024. Consumption of lubricant and grease increased by 8pc on the year to 4.44mn t in 2024, oil ministry data show. India's base oil imports fell by 19pc on the year to 201,734t in December 2024. Lower-than-expected demand at the end of the year, owing to slowing economic growth in India, likely caused the decline. Base oil imports in December were largely stable as compared with the previous month. South Korea remains the top supplier to India, with imports exceeding 1.15mn t in 2024, a 27pc increase from the previous year. But imports from South Korea dropped by 28pc on the year to 82,989t in December because of reduced supply, with a key refiner having maintenance in the fourth quarter of 2024. Imports from Singapore and Taiwan increased by 25pc and 28pc respectively in 2024. Asian suppliers are diverting supply to other markets with falling demand from China. The Mideast Gulf remains a key supply region, supplying close to a quarter of India's imports in 2024. Saudi Arabia and the UAE are among top suppliers. By Chng Li Li India base oils imports unit Dec'24 m-o-m ± % y-o-y ± % Jan-Dec 24 y-o-y ± % South Korea 82,989 -9.7 -27.5 1,150,234 27.1 Singapore 41,656 129.7 69.4 399,599 25.1 Saudi Arabia 25,738 18.7 20.1 251,387 -9.0 UAE 17,198 -38.2 -30.3 266,178 18.1 Taiwan 14,221 9.4 213.7 115,877 28.0 Monthly total 201,734 -0.4 -18.8 2,713,623 14.6 Source: GTT Total includes all countries, not just those listed Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Japan's JAL, Airbus join Japanese biofuel joint venture


25/03/18
25/03/18

Japan's JAL, Airbus join Japanese biofuel joint venture

Tokyo, 18 March (Argus) — Japan Airlines (JAL) and European aircraft manufacturer Airbus have joined a Japanese joint venture to produce bioethanol from domestic woody material, for use as a feedstock for sustainable aviation fuel (SAF). Joining the project will help JAL meet its target of replacing 10pc of its conventional jet fuel with SAF by 2030, JAL announced on 17 March. It will also help Airbus to achieve its net zero emissions goal by 2050. JAL will build supply chains of biofuel to support the project, and Airbus will help obtain international certification for the woody material-based fuel as SAF. The project was originally proposed in February 2023 by Japanese paper producer Nippon Paper Industries, trading house Sumitomo and domestic biorefinery venture Green Earth Institute. The companies agreed in February 2025 to set up a joint venture, Morisora Bio Refinery , to push forward with a plan to develop domestic SAF supply chains. The companies plan to launch the joint venture in March and start producing bioethanol from local wood chips at Nippon Paper's Iwanuma Mill in the country's northeastern Miyagi prefecture in 2027. Commercial operations are scheduled to begin by around 2030. Morisora will supply bioethanol mainly for SAF production, with expectations that it will be also used in gasoline blending, fuel cells, cosmetics and chemical feedstock. By Kohei Yamamoto Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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