Phillips 66 to convert refinery to renewables: Update

Spanish Market: Biofuels, Emissions, Oil products
12/08/20

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.

By Elliott Blackburn

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23/04/25

India, Saudi Arabia to establish two Indian refineries

Mumbai, 23 April (Argus) — India and Saudi Arabia will collaborate on establishing two refineries and petrochemical projects in India, according to an Indian government release today. Indian prime minister Narendra Modi met Saudi prime minister Mohammed bin Salman in Jeddah on 22 April, as part of the India–Saudi Arabia Strategic Partnership Council. Saudi Arabia in 2019 had pledged to invest $100bn in India in multiple areas including energy, petrochemicals, infrastructure, technology, fintech, digital infrastructure, telecommunications, pharmaceuticals, manufacturing and health. The government did not disclose further details, but industry sources said that one of the two refineries might be Indian state-run BPCL's planned refinery in Andhra Pradesh , which Saudi Arabia's state-controlled Saudi Aramco may join as an investor. The other one might be a refinery in Gujarat, under a partnership with Indian upstream firm ONGC and Aramco. But plans for a 1.2mn b/d refinery in Ratnagiri in collaboration with IOC and Adnoc have mostly been ruled out, because of logistical issues relating to the size of the refinery and land acquisition hurdles, among others. Saudi Arabia is the third-largest crude supplier to India, making up 15pc or 712,000 b/d of India's total imports in January-March, data from oil analytics firm Vortexa show. Saudi Arabia's share in the Indian market has declined, after Russia became India's biggest supplier following its war with Ukraine. Modi's trip to the Middle East comes close on the heels of US vice president JD Vance's visit to India on 21 April. The visit included negotiations for an India-US bilateral trade agreement and efforts towards enhancing co-operation in energy, defence, strategic technologies and other areas. JD Vance in India Vance said on 22 April at his speech in Jaipur that India will benefit from US energy exports and said the US wants to help India explore its own considerable natural resources, including its offshore natural gas reserves and critical mineral supplies. US president Donald Trump has pushed India to step up its purchases of US crude and LNG. Crude imports from the US doubled on the month to 289,000 b/d in March, of which 65,000 b/d was Canadian Cold Lake crude, according to trade analytics firm Kpler. The visits come at a time when geopolitical and trade uncertainty has risen, because of Trump's volatile tariff policies. By Roshni Devi Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

New Zealand could raise ETS auction volumes by 2028-30

23/04/25

New Zealand could raise ETS auction volumes by 2028-30

Sydney, 23 April (Argus) — New Zealand's government should consider increasing auction volumes under the local Emissions Trading Scheme (ETS), as the existing surplus of carbon units has fallen faster than expected, the country's Climate Change Commission (CCC) said today. The CCC estimates 30.5mn New Zealand Units (NZUs) could be available for auctions over 2026-30, 13.6mn more than previously forecast, it disclosed on 23 April in its annual advice report to the climate change minister. The difference is mainly because the 2024 auctions did not sell all units available , and to lower industrial allocation forecasts because of plant closures, lower production and updated baselines, as well as other factors, the CCC said. This has prompted the commission to recalculate its central estimate to a surplus of 50.2mn units as of the end of 2024, down from the previous estimate of 68mn as of September 2023 . The government could readjust auction volumes over 2026-30, but the commission recommends the excess units to be "backloaded" over 2028-30, with a preferred option to auction 7mn in each of those three years, compared with the current schedule of 3.3mn for 2028, 2.4mn for 2029 and 1.7mn for 2030. Volumes are scheduled at 5.2mn for 2026 and 4.3mn for 2027 (see table) . Total private unit holdings in the New Zealand ETS registry, also known as the stockpile, fell to 150.4mn at the end of 2024 from 160.8mn the year before. This reflects that more NZUs have been surrendered for emissions liabilities over the past year than have been allocated into the market through auctions, industrial free allocation and forestry activities, the CCC noted. Price settings should not change The commission has also recommended that price control settings — the auction reserve price, or floor, and the cost containment reserve, or ceiling — remain as they are, only adjusting for inflation. The auction price floor is currently set at NZ$68 ($40.75) in 2025, NZ$71 in 2026, NZ$75 in 2027, NZ$78 in 2028 and NZ$82 in 2029, while the ceiling price — which triggers additional reserve volumes under the auctions — ranges between NZ$193-235 over that same period. NZU spot prices in the secondary market have been hovering just above NZ$50 in recent days, far below the 2025 auction price floor. Two of the four quarterly auctions of 2024 failed to clear as prices in the secondary market were lower than the NZ$64 floor last year . Prices around or above the current NZ$68 auction floor are needed to support gross emissions reductions in New Zealand, the CCC said, noting "a range of evidence" indicating that. The government will now need to consider the advice and conduct public consultation before making decisions in time for the regulations to be updated by 30 September this year and come into force on 1 January 2026. The government last year decided to more than halve auction volumes over 2025-29 , mostly following the CCC's advice. By Juan Weik NZU auction volumes and proposed updates mn units 2026 2027 2028 2029 2030 Current auction volumes 5.2 4.3 3.3 2.4 1.7 Proposed updates 5.2 4.3 7 7 7 Source: Climate Change Commission Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

FERC commissioner Phillips resigns from agency

22/04/25

FERC commissioner Phillips resigns from agency

Washington, 22 April (Argus) — Democratic commissioner Willie Phillips has resigned from the US Federal Energy Regulatory Commission (FERC) after serving more than three years at an agency responsible for permitting natural gas infrastructure and regulating wholesale power markets. Phillips' departure will clear the way for President Donald Trump to nominate a replacement at FERC, who once confirmed by the US Senate would provide Republicans a 3-2 majority for the first time since 2021. Phillips, whose term was not set to expire until June 2026, had a reputation for negotiating bipartisan deals on contentious orders involving pipelines and power market issues in the two years he served as FERC's chairman under former president Joe Biden. Phillips has yet to release a statement explaining his abrupt resignation. But Trump has already fired Democratic commissioners and board members at other agencies that, like FERC, are structured as independent from the White House. Two of the fired Democrats, who were serving at the US Federal Trade Commission, have filed a lawsuit that argues their removal was unlawful under a 1935 decision by the US Supreme Court. The White House did not respond to a question on whether it had pressured Phillips to resign. FERC chairman Mark Christie, a Republican, offered praise for Phillips as a "dedicated and selfless public servant" who sought to "find common ground and get things done to serve the public interest". Christie for months has been downplaying the threats to FERC's independence caused by Trump's executive order that asserts sweeping control over FERC's agenda. Energy companies have come to depend on FERC in serving as independent arbiter in disputes over pipeline tariffs and electricity markets, without the consideration of political preferences of the White House. Former FERC chairman Neil Chatterjee, a Republican who served in Trump's first term, said in a social media post it was "disappointing" to see Phillips pushed out after he "played it straight" in his work at the agency. As chairman, Phillips was able to authorize a "massive LNG project" — the 28mn t/yr CP2 project — at a time when Biden had sought to pause LNG licensing, Chatterjee said. Separately, Paul Atkins was sworn in as the chairman of the US Securities and Exchange Commission (SEC) on 21 April, after the US Senate voted 52-44 earlier this month in favor of his confirmation. Atkins was previously the chief executive of financial consulting firm Patomak Global Partners and served as an SEC commissioner from 2002-08. Republicans will now have a 3-1 majority at the SEC. By Chris Knight Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Tariff ‘shock’ prompts IMF to cut growth outlook

22/04/25

Tariff ‘shock’ prompts IMF to cut growth outlook

Washington, 22 April (Argus) — Global economic growth is expected to be significantly lower in 2025-26 than previously anticipated because of the steep tariffs President Donald Trump is pursuing for most imports and the uncertainty his policies are generating, the IMF said. The IMF, in its latest World Economic Outlook released today, forecasts the global economy will grow by 2.8pc in 2025 and 3pc in 2026. That compares with the 3.3pc/yr growth for 2025-26 that the IMF was expecting just three months ago. Today's forecast is based on the tariffs that Trump had in place as of 4 April, before he paused steep tariffs on most countries and escalated tarrifs on China. These barriers had pushed up the effective US tariff rate to levels "not seen in a century", the IMF said. While Trump has altered his tariff levels repeatedly, he has imposed an across-the-board 10pc tariff on most imports, a 25pc tariff on steel and aluminum, a 25pc tariff on some imports from Canada and Mexico, and a 145pc tariff on most imports from China. "This on its own is a major negative shock to growth," the IMF said. "The unpredictability with which these measures have been unfolding also has a negative impact on economic activity and the outlook." IMF forecasts are used by many economists to model oil demand projections. The US and its closest trading partners appear to be among those hardest hit by tariffs and corresponding trade countermeasures. The IMF's baseline scenario forecasts US growth at 1.8pc this year, a decrease of 0.9 percentage points from the forecast the IMF released in January, reflecting higher policy uncertainty, trade tensions and softer demand outlook. Mexico's economy is now projected to shrink by 0.3pc in 2025, rather than grow by 1.4pc, while Canada's growth is forecast at 1.4pc in 2025, down from 2pc. The release of the IMF report comes as Trump has given no indications of a shift in thinking on tariffs, which he says are generating billions of dollars for the US and will prompt companies to relocate their manufacturing capacity to the US. "THE BUSINESSMEN WHO CRITICIZE TARIFFS ARE BAD AT BUSINESS, BUT REALLY BAD AT POLITICS. THEY DON'T UNDERSTAND OR REALIZE THAT I AM THE GREATEST FRIEND THAT AMERICAN CAPITALISM HAS EVER HAD!" Trump wrote on social media on 20 April. The next day, major stock markets indexes declined by more than 2pc, continuing their crash from when Trump began announcing his tariff policies. Trump on 21 April escalated his attacks against US Federal Reserve chair Jerome Powell for failing to lower interest rates as Trump has demanded. There could be a "SLOWING of the economy unless Mr. Too Late" — his nickname for Powell — "a major loser, lowers interest rates, NOW," Trump wrote. The IMF also ratcheted down its expectations for the Chinese economy. China's economy is expected to grow by 4pc/yr in 2025-26, down from the 4.6 and 4.5pc, respectively, the IMF was anticipating in January. The euro area is forecast to grow by 0.8pc in 2025 and 1.2pc in 2026, a decrease of 0.2 percentage points from the IMF's previous forecast. By Chris Knight Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

IMO incentive to shape bio-bunker choices: Correction

21/04/25

IMO incentive to shape bio-bunker choices: Correction

Corrects B30 pricing in paragraph 5. New York, 21 April (Argus) — An International Maritime Organization (IMO) proposal for ship owners who exceed emissions reduction targets to earn surplus credits will play a key role in biofuel bunkering options going forward. The price of these credits will help determine whether B30 or B100 becomes the preferred bio-bunker fuel for vessels not powered by LNG or methanol. It will also influence whether biofuel adoption is accelerated or delayed beyond 2032. At the conclusion of its meeting earlier this month the IMO proposed a dual-incentive mechanism to curb marine GHG emissions starting in 2028. The system combines penalties for non-compliance with financial incentives for over-compliance, aiming to shift ship owner behavior through both "stick" and "carrot" measures. As the "carrot", ship owners whose emissions fall below the IMO's stricter compliance target will receive surplus credits, which can be traded on the open market. The "stick" will introduce a two-tier penalty system. If emissions fall between the base and direct GHG emissions tiers, vessel operators will pay a fixed penalty of $100/t CO2-equivalent. Ship owners whose emissions exceed the looser, tier 2, base target will incur a penalty of $380/t CO2e. Both tiers tighten annually through 2035. The overcompliance credits will be traded on the open market. It is unlikely that they will exceed the cost of the tier 2 penalty of $380/t CO2e. Argus modeled two surplus credit price scenarios — $70/t and $250/t CO2e — to assess their impact on bunker fuel economics. Assessments from 10-17 April showed Singapore very low-sulphur fuel oil (VLSFO) at $481/t, Singapore B30 at $740/t, and Chinese used cooking oil methyl ester (Ucome), or B100, at $1,143/t (see charts). If the outright prices remain flat, in both scenarios, VLSFO would incur tier 1 and tier 2 penalties, raising its effective cost to around $563/t in 2028. B30 in both scenarios would receive credits putting its price at $653/t and $715/t respectively. In the high surplus credit scenario, B100 would earn roughly $580/t in credits, bringing its net cost to about $563/t, on par with VLSFO, and more competitive than B30. In the low surplus credit scenario, B100 would earn just $162/t in credits, lowering its cost to approximately $980/t, well above VLSFO. At these spot prices, and $250/t CO2e surplus credit, B100 would remain the cheapest fuel option through 2035. At $70/t CO2e surplus credit, B30 becomes cost-competitive with VLSFO only after 2032. Ultimately, the market value of IMO over-compliance credits will be a major factor in determining the timing and extent of global biofuel adoption in the marine sector. By Stefka Wechsler Scenario 1, $70/t surplus credit $/t Scenario 2, $250/t surplus credit $/t Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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