On Wednesday, Phillips 66 announced plans to close the refinery located off Highway 1 in rural Arroyo Grande, as those familiar with the local industry said they were trying to analyze the impact to existing operations and future projects but expected a significant ripple effect.
Phillips intends to convert a Bay Area facility into the largest renewable fuels plant.
A day after the announcement, the company withdrew its application for a pipeline replacement project submitted to the Santa Barbara County Planning Department’s Energy Division.
Additionally, the looming closure is likely to lead to a reassessment for an interim oil trucking project related to restarting drilling operations for the offshore oil platforms.
“This announcement may have really broad ramifications across the state and in our region,” Linda Krop of the Environmental Defense Center said.
The refinery has been the recipient of oil pulled from the Central Coast by existing producers, who now will have to find a destination for the product.
Oil drilling projects have attracted strong supporters, who favor high-paying jobs, and opponents, who fear various environmental effects.
The Santa Maria Refinery on 1,780 acres has operated for nearly 60 years and processes about 44,500 barrels, or 1.9 million gallons, of crude oil per day. The facility employs 140 full-time Phillips 66 workers along with specialized contractors at the site.
The refinery converts heavy crude oil, typically arriving via pipeline from the Central Coast, into a high-quality feedstock for further processing into gasoline, diesel and jet fuel, according to Phillips 66.
As part of the refinery’s closure, Phillips said associated crude oil pipelines will be taken out of service in phases starting in 2023.
“Until the pipelines are taken out of service, we will continue to maintain and operate these assets to our high standards for operating excellence and in accordance with regulatory requirements,” Phillips 66 representative Joe Gannon said.
Phillips 66 didn’t waste time withdrawing the application to replace and relocate segments of the existing Line 300 pipeline system in Santa Barbara and San Luis Obispo counties. It had aimed at replacing about 35 miles of pipeline.
The proposal has remained in the environmental analysis phase, according to Santa Barbara County planning staff.
Another project in the works involved the ExxonMobil application to allow trucks, about 70 a day, to carry oil collected from offshore platforms at Gaviota and transport the crude to Phillips 66 facilities in Santa Maria or Kern County.
County staff has recommended that the trucks travel only to the Santa Maria Refinery to reduce potential environmental impacts. That would have kept the trucks from traveling along narrow Highway 166.
Hearings before the Santa Barbara County Planning Commission had been set for Sept. 2 and Sept. 9, but supervising planner Errin Briggs said those dates are now in doubt because of significant changes brought by the Phillips 66 announcement.
Environmental groups called on ExxonMobil to withdraw its trucking plan.
“ExxonMobil’s proposal was already ill-conceived from an environmental and climate justice point of view, and now it is unsuitable in light of Phillips’ plans to convert its refinery to renewable fuels. There is even less reason now for ExxonMobil to put our coast and communities at risk,” said Linda Krop, chief counsel for the Environmental Defense Center, which represents Get Oil Out! and the Santa Barbara County Action Network.
A few years ago, the Santa Maria Refinery suffered a setback for expanding its operations when San Luis Obispo County rejected a planned rail spur so that train cars could carry oil to the site. Neighbors and environmental groups had fiercely fought the proposal.
The Santa Maria Refinery’s closure announcement occurred as the firm revealed plans to reconfigure its San Francisco Refinery in Rodeo to produce renewable fuels by 2024. The Rodeo site in Contra Costa County received the semi-refined products from the Central Coast facility to be turned into finished petroleum products.
Instead of producing fuels from crude oil, the facility instead would make fuels from used cooking oil, fats, greases and soybean oils under a project dubbed Rodeo Renewed.
“Phillips 66 is taking a significant step with Rodeo Renewed to support demand for renewable fuels and help California meet its low-carbon objectives,” Phillips 66 Chairman and CEO Greg Garland said.
The Phillips 66 Rodeo Renewed project would produce 680 million gallons annually of renewable diesel, renewable gasoline and sustainable jet fuel, Phillips officials said in a statement.
“Providing the people of California and the West safe, affordable and reliable energy now and for the foreseeable future requires that we have a mix of petroleum, natural gas and renewable fuels,” said Catherine Reheis-Boyd, Western States Petroleum Association president. “Our industry is doing what it has always done — innovating and leading the way towards a sustainable energy future.”