Phillips 66 On Track with Rodeo Renewed Alternative Fuels Project, Higher Cost

Researched by Industrial Info Resources (Sugar Land, Texas)--Phillips 66 (NYSE:PSX) (Houston, Texas) still plans for its "Rodeo Renewed" renewable diesel project in California to begin commercial operations in the first quarter of 2024, albeit with a higher price tag, according to company executives.

Phillips 66 is converting its existing 120,000 barrel-per-day Rodeo Refinery in the San Francisco Bay area to produce 680 million gallons per year of renewable diesel, renewable gasoline and sustainable aviation fuel.

"The capital to convert the facility to over 50,000 barrels per day of renewable fuels production is anticipated to be approximately $1.25 billion," said Chief Executive Officer Mark Lashier during the company's August 3 earnings conference call. "This is an increase from our original premise due to higher-than-anticipated material and labor costs, as well as impacts related to weather and permitting."

He continued: "The revised capital cost of around $1.60 per gallon remains well below similar announced projects, and the expected returns are significantly above our refining hurdle rates. The overall project timing and scope remains unchanged. We expect to begin commercial operations in the first quarter of 2024."

Phillips 66 Chief Financial Officer Kevin Mitchell said he expected the company's full-year capital spend to exceed the $2 billion budget, reflecting about $200 million of additional spending on Rodeo Renewed.

The converted facility will use waste oils, fats, greases and vegetable oils to produce renewable fuels. California, which has some of the most stringent emissions standards and loftiest renewable energy goals in the U.S., leads the country in both the number and value of alternative fuels projects under construction. For more information, see June 2, 2023 article - California Leads U.S. in Alternative Fuels Projects Under Construction.

Subscribers to Industrial Info's Global Market Intelligence (GMI) Petroleum Refining project and plant databases can click here for the Rodeo Renewed-related project reports and click here for the plant profiles.

Phillips 66 reported nearly $1.7 billion in net earnings for the just-ended quarter, down from nearly $3.2 billion reported in the same quarter of 2022.

Industrial Info is tracking 67 Phillips 66 projects with a total investment value of $2.87 billion. Subscribers can click here for a list of detailed project reports.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 Trillion (USD).