Communicator

Valero Benicia Refinery @Valero

April 16, 2025 | Valero Energy Corp.

Valero Energy has announced it will shutter its Benicia refinery near San Francisco by the end of April 2026, marking another major reduction in California’s refining capacity. The company formally notified the California Energy Commission of its intent to idle, restructure, or cease operations at the 145,000-barrel-per-day facility, which accounts for nearly 9% of the state’s gasoline production. Valero is also weighing strategic alternatives for its remaining California operations, including its Wilmington refinery near Los Angeles, as part of a broader review of its business in the state

This decision comes as California’s regulatory environment for refiners becomes increasingly stringent. Recent state legislation has imposed new mandates, including requirements for refineries to maintain minimum gasoline inventories and develop contingency plans to prevent price spikes. These rules, combined with California’s aggressive emissions targets and unique fuel standards-such as the exclusive requirement for California Reformulated Blendstocks for Oxygenate Blending (CARBOB)-have raised compliance costs and operational complexity for in-state refineries

The Benicia closure follows a similar move by Phillips 66, which plans to shut its Wilmington refinery by the end of 2025. Together, these closures will eliminate almost 300,000 barrels per day of refining capacity, raising concerns about fuel supply stability and the potential for even higher gasoline prices in a state where drivers already pay some of the highest prices in the country

California’s policies aim to reduce gasoline consumption and transition to cleaner energy, but the rapid pace of regulatory change has contributed to a wave of refinery exits and conversions to renewable fuels.

Valero has recorded a combined pre-tax impairment charge of $1.1 billion for its Benicia and Wilmington refineries, reflecting the financial impact of these strategic shifts. The company also faces significant asset retirement obligations as it prepares for the Benicia shutdown

Industry analysts warn that the loss of refining capacity could make California more reliant on imported fuels, further exposing the market to price volatility and supply disruptions.

As California continues to pursue its ambitious climate goals, the state’s refining landscape is undergoing a profound transformation, with traditional operators reassessing their future amid intensifying regulatory and market pressures.

#valero  #benicia  #refinery  #refineryclosure  #wilmington  #california  #regulatorypressures 

South Bay History: Phillips 66 oil refinery has been a Wilmington fixture since 1919 @Daily Breeze

Phillips 66 has announced it will cease operations at its Wilmington refinery, located just outside Los Angeles, by the fourth quarter of 2025. Wilmington is a facility part of the Los Angeles refinery, with a processing capacity of 139,000 barrels of crude oil per day and has long been a major supplier of gasoline, diesel, and jet fuel for Southern California. The company will work with the state to ensure continued fuel supply, including exploring alternative sources within its network and increasing production of renewable fuels from its other facilities

The closure comes as California tightens its regulatory environment for refiners. Recent legislation, including AB 1 X2 signed by Governor Gavin Newsom, grants the California Energy Commission expanded oversight of refinery operations and requires companies to maintain minimum gasoline inventories and develop contingency plans to prevent supply disruptions

These measures are intended to stabilize fuel markets and prevent price spikes but have added to the operational complexity and cost for in-state refiners.

California’s unique fuel requirements further complicate the situation. Only specialized gasoline formulations, known as California Reformulated Blendstocks for Oxygenate Blending (CARBOB), can legally be sold in the state. These stringent standards, combined with the state’s Low Carbon Fuel Standard and aggressive emissions reduction targets, have made it increasingly difficult for traditional refineries to remain profitable

The state’s geographic isolation from other major refining hubs and lack of interstate pipelines means California must produce most of its own motor fuels or import them from overseas, increasing vulnerability to supply disruptions.

The Wilmington refinery closure is part of a broader trend, as several California refineries have either shut down or converted to renewable fuel production in recent years. Industry analysts warn that continued regulatory pressure and declining demand for conventional fuels could lead to further closures, potentially impacting fuel prices and supply stability across the region.

#california  #refineryclosure  #phillips66  #losangeles  #wilmington  #motorfuels  #carbob  #emissionsreduction  #regulatorypressure