Reports related to this article:
Plant(s): View 7 related plants in PECWeb
Unit(s): View 2 related units in PECWeb
Released April 18, 2025 | SUGAR LAND
en
Researched by Industrial Info Resources (Sugar Land, Texas)--Valero Energy Corporation (NYSE:VLO) (San Antonio, Texas) on Wednesday told the California Energy Commission (CEC) it plans to "idle, restructure, or cease" operations at its refinery in Benicia, California, by the end of April 2026, which comes as fuels producers continue to evaluate alternatives for, or halt entirely, refining operations across the state.
Valero's Benicia site, northeast of San Francisco, began operations in 1982, and Valero acquired the facility from Exxon Mobil Corporation (NYSE:XOM) (Spring, Texas) in 2020. It has two crude units with a total capacity of 157,000 barrels per day (BBL/d), producing jet fuel, gasoline, diesel, as well as asphalt.
Subscribers to Industrial Info's Global Market Intelligence (GMI) Petroleum Refining Plant Database can click here for related plant profiles.
"Valero continues to evaluate strategic alternatives for its remaining operations in California," the company said in a press release. This includes its refinery in Wilmington, California, with 86,000 BBL/d in throughput; the Wilmington site also produces asphalt, with a capacity of 6,000 BBL/d. Subscribers can click here for the Wilmington plant profiles.
In connection with the evaluation of those strategic alternatives, the company said it will take a combined pre-tax impairment charge of $1.1 billion for the Benicia and Wilmington refineries.
Last year, Valero was fined $82 million for air pollution violations at the Benicia refinery, relating from a 2019 inspection that found unreported emissions from the hydrogen system contained harmful organic compounds. In addition to the fine, the agencies said Valero needed to reconfigure the hydrogen vent system.
In Valero's third-quarter 2024 earnings call in October of last year, Chief Executive Officer Lane Riggs, in response to a question about low margins from its refining business affecting profit, said, "California is increasing its regulatory pressure on the industry, so we're really considering everything--all options are on the table."
For more information on Valero's refining footprint in California, see October 28, 2024, article - Valero Latest to Mull Refinery Presence in California.
Governor Gavin Newsom earlier in October signed legislation, AGX2-1, that mandates refiners maintain fuel storage levels to avoid any supply-side issues that would lead to price spikes at the consumer level. The measure authorized the state energy commission to develop, regulate and enforce storage requirements for in-state refiners.
"So the reality is that California policy has cost the state a number of refineries and including this most recent announcement," Riggs said in October. "And so you can't have policy that impairs supply and then expected to lower prices for customers ... So recall, all of these regulations have a caveat in them that require the CEC to implement it only if they find that the actions will lower cost for consumers. And that's going to be the challenge for them."
Valero's latest earnings results from January also showed challenging market conditions in its refining business but noted a jump in operating income in its renewable diesel segment. For more information, see January 31, 2025, article - Renewable Diesel Buoys Valero Amid Rough 2024 for Refining.
Shortly after the new legislation passed, Phillips 66 (NYSE:PSX) (Houston, Texas) (P66) announced plans to cease operations at two of its refineries in the Los Angeles area, officially halting all crude oil refining operations in the state: Los Angeles-Carson and Los Angeles-Wilmington. The company has cited "market dynamics" and questions about the long-term future of its refinery as the reason. The two plants have a combined capacity of 133,000 BBL/d. Subscribers can click here for the plant profiles.
"Once P66 Los Angeles refineries close in 2025 and then maybe Valero's Benicia refineries close in 2026 there will be basically no slack in the system," Hillary Stevenson, a senior director for energy market intelligence at Industrial Info, said. She also said that should the California refineries close as planned, the state will go from processing about 1.6 million BBL/d (the 2024 average with normal planned and unplanned outages) to a maximum of 1.3 million BBL/d in 2026, according to IIR's Refinery Capacity Insights.
Click on the image at right for a chart showing net available refining capacity in California from 2022 through October 2026.
In December 2024, the Energy Information Administration (EIA) said weak refinery margins and stringent fuel regulations have created tight market conditions in the state. For more information, see December 10, 2024, article - California Refiners May Face Steady Headwinds.
Some refiners have converted existing facilities for renewable diesel production, which is highly concentrated on the West Coast due to state-level incentives. For more information on the jump in U.S. renewable diesel production and two converted refineries in California--Phillips 66's Rodeo refinery and Marathon Petroleum Corporation's (NYSE:MPC) (Findlay, Ohio) Martinez refinery--see February 21, 2025, article - EIA: West Coast Renewable Diesel Production, Consumption on the Rise.
Subscribers can click here for a full list of the plants mentioned in this article.
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 over 200,000 current and future projects worth $17.8 Trillion (USD).
Valero's Benicia site, northeast of San Francisco, began operations in 1982, and Valero acquired the facility from Exxon Mobil Corporation (NYSE:XOM) (Spring, Texas) in 2020. It has two crude units with a total capacity of 157,000 barrels per day (BBL/d), producing jet fuel, gasoline, diesel, as well as asphalt.
Subscribers to Industrial Info's Global Market Intelligence (GMI) Petroleum Refining Plant Database can click here for related plant profiles.
"Valero continues to evaluate strategic alternatives for its remaining operations in California," the company said in a press release. This includes its refinery in Wilmington, California, with 86,000 BBL/d in throughput; the Wilmington site also produces asphalt, with a capacity of 6,000 BBL/d. Subscribers can click here for the Wilmington plant profiles.
In connection with the evaluation of those strategic alternatives, the company said it will take a combined pre-tax impairment charge of $1.1 billion for the Benicia and Wilmington refineries.
Last year, Valero was fined $82 million for air pollution violations at the Benicia refinery, relating from a 2019 inspection that found unreported emissions from the hydrogen system contained harmful organic compounds. In addition to the fine, the agencies said Valero needed to reconfigure the hydrogen vent system.
In Valero's third-quarter 2024 earnings call in October of last year, Chief Executive Officer Lane Riggs, in response to a question about low margins from its refining business affecting profit, said, "California is increasing its regulatory pressure on the industry, so we're really considering everything--all options are on the table."
For more information on Valero's refining footprint in California, see October 28, 2024, article - Valero Latest to Mull Refinery Presence in California.
Governor Gavin Newsom earlier in October signed legislation, AGX2-1, that mandates refiners maintain fuel storage levels to avoid any supply-side issues that would lead to price spikes at the consumer level. The measure authorized the state energy commission to develop, regulate and enforce storage requirements for in-state refiners.
"So the reality is that California policy has cost the state a number of refineries and including this most recent announcement," Riggs said in October. "And so you can't have policy that impairs supply and then expected to lower prices for customers ... So recall, all of these regulations have a caveat in them that require the CEC to implement it only if they find that the actions will lower cost for consumers. And that's going to be the challenge for them."
Valero's latest earnings results from January also showed challenging market conditions in its refining business but noted a jump in operating income in its renewable diesel segment. For more information, see January 31, 2025, article - Renewable Diesel Buoys Valero Amid Rough 2024 for Refining.
Shortly after the new legislation passed, Phillips 66 (NYSE:PSX) (Houston, Texas) (P66) announced plans to cease operations at two of its refineries in the Los Angeles area, officially halting all crude oil refining operations in the state: Los Angeles-Carson and Los Angeles-Wilmington. The company has cited "market dynamics" and questions about the long-term future of its refinery as the reason. The two plants have a combined capacity of 133,000 BBL/d. Subscribers can click here for the plant profiles.
"Once P66 Los Angeles refineries close in 2025 and then maybe Valero's Benicia refineries close in 2026 there will be basically no slack in the system," Hillary Stevenson, a senior director for energy market intelligence at Industrial Info, said. She also said that should the California refineries close as planned, the state will go from processing about 1.6 million BBL/d (the 2024 average with normal planned and unplanned outages) to a maximum of 1.3 million BBL/d in 2026, according to IIR's Refinery Capacity Insights.
In December 2024, the Energy Information Administration (EIA) said weak refinery margins and stringent fuel regulations have created tight market conditions in the state. For more information, see December 10, 2024, article - California Refiners May Face Steady Headwinds.
Some refiners have converted existing facilities for renewable diesel production, which is highly concentrated on the West Coast due to state-level incentives. For more information on the jump in U.S. renewable diesel production and two converted refineries in California--Phillips 66's Rodeo refinery and Marathon Petroleum Corporation's (NYSE:MPC) (Findlay, Ohio) Martinez refinery--see February 21, 2025, article - EIA: West Coast Renewable Diesel Production, Consumption on the Rise.
Subscribers can click here for a full list of the plants mentioned in this article.
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 over 200,000 current and future projects worth $17.8 Trillion (USD).
