Phillips 66 Schedules California Refinery Closure

Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--Phillips 66 (Houston, Texas) said it expected to run its last batch of crude oil through its Los Angeles refinery center sometime in the middle of October.

The company said it received its final batch of waterborne crude oil deliveries on Tuesday and expects to complete processing by around October 16.

"The facility is executing a detailed schedule to safely idle operations. Several process units have been placed in an idle state," the company said. "The remaining units will be idled in a phased manner through the end of 2025."

Phillips 66 had explained that market dynamics in California were in part behind its decision to shut operations at its Los Angeles plants by the fourth quarter.

Should other refiners follow suit, the U.S. Energy Information Administration (EIA), part of the U.S. Department of Energy, said California may be forced to import fuels from out-of-state refineries to meet its transportation demands.

"Phillips 66 remains committed to ensuring a steady fuel supply to meet ongoing California consumer demand," the company said. "The company expects to meet demand by sourcing gasoline from within and outside its refining network."

Subscribers to Industrial Info's Global Market Intelligence (GMI) Petroleum Refining Plant Database can read details about the Los Angeles components here and here.

Already, the state has the highest national average retail price for a gallon of gasoline in the Lower 48 U.S. states, with its $4.60 average running about $1.50 per gallon above the national average.

California state laws mandate that refiners make a special blend of gasoline that's less harmful to the environment, but it's more expensive to make. A network of pipelines, meanwhile, connects 14 refineries in the state, though declines in refining capacity leave the state heavily dependent on foreign deliveries to meet demand, largely from Canada.

AB X2-1, a measure signed into law last year, which mandates that refiners maintain minimum fuel storage volumes to avoid any supply-side issues, puts a burden on California refiners by reducing profitability.

Lawmakers, meanwhile, have already passed a handful of bills meant to ensure California has a clean economy while at the same time ensuring that its refineries can keep running. A state Senate measure, SB-237, would permit 2,000 new wells annually in oil-rich Kern County starting in 2026. With that, legislators want to secure about 25% of its feedstock with domestic supplies.

Downstream, however, is dwindling. Valero Energy (San Antonio, Texas) announced plans in April to close its Benicia refinery, sidelining another 144,000 barrels per day in state refinery capacity.

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