Phillips 66 closes its Los Angeles refineries. What’s next?

Phillips 66 announced last week it will close its Wilmington and Carson oil refineries by the end of next year, marking the end of an era.

Departure over 100 years agorefineries transformed crude oil into billions of gallons of gasoline, diesel and jet fuel from their locations near the nation’s largest ports. Together, the refineries supply about 8% of all California’s gasoline demand. They also contribute to the development of California the largest source of pollution linked to global warming from the industrial sector.

The move comes as demand for gasoline continues to decline and an aging facility faces costly maintenance and upgrades to meet pollution regulations.

Around 600 employees and 300 subcontractors will be affected by the closure, according to the company.

What does the closure mean for neighboring communities?

Pollution from refineries has been linked to higher rates of asthma and cancer in neighboring communities. Homes in Wilmington, for example, are a stone’s throw from Phillips 66’s facility, directly across from a cinder block wall. The Wilmington and Carson area has the largest concentration of oil refineries in California.

“These facilities are linked to so much suffering and death that they will never pay for,” said Alicia Rivera, an organizer with Communities for a Better Environment, which has advocated for better protection against refinery pollution for more than 20 years. from Wilmington.

She said she was happy the refinery was closing, but worried the site would simply be transformed into another health-damaging facility like the one in hydrogen, biofuel productionOr carbon capture. These types of operations may reduce carbon pollution linked to global warming compared to traditional oil and gas production, but they may also significantly increase or fail to reduce health-harming local air pollution. , and have other impacts.

“I hope Phillips 66 is not planning another polluting operation…continuing the trend of fossil fuels fueling the neighborhood and climate disease catastrophe,” Rivera said. “Neighbors are vigilant about the projects.”

An aerial view shows Marathon Petroleum Corp’s Los Angeles refinery in Carson, California. It is the largest gasoline producer in the state. It is one of several refineries in the Wilmington-Carson area, including the Phillips 66 refinery in Los Angeles, which will close next year.

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David McNouveau

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Getty Images

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Phillips 66 converted its other California refinery in San Francisco to produce “renewable diesel” and “sustainable aviation fuel,” made primarily from vegetable oils, animal fats and animal feed. However, this facility may not reduce carbon pollution as much as claimed and could increase local air pollution.

Rivera said the community has not yet been involved in discussions about what might be next for the site.

The redevelopment would be subject to a full public process under the California Environmental Quality Act.

What’s next for refineries?

“With the long-term sustainability of our Los Angeles refinery uncertain and affected by market dynamics, we are working with leading land development companies to evaluate the future use of our unique and strategically located properties near the port from Los Angeles,” said Mark Lashier. , president and CEO of Phillips 66, in a press release. “These sites offer the opportunity to create a transformational project that can support the environment, generate economic development, create jobs and improve the region’s critical infrastructure. »

A Phillips 66 spokesperson declined to provide further details about its future plans for the 650-acre site.

Phillips 66 has been trying to sell its aging refineries for years, said David Hackett, president of Stillwater Associates, a transportation energy consulting firm in Irvine.

Phillips 66 is not one of their clients, but Hackett said they called him about the closure before the public announcement.

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Courtesy of Nick Souza Photography via Port of Los Angeles

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Hackett told LAist that his representative told him part of the 650-acre site would be converted into an oil terminal, which would store and distribute imported petroleum products.

He hopes the rest of the site will be cleaned up and reused for other industrial uses, such as warehousing. The land is zoned industrial.

“Land zoned industrial is very expensive in Southern California,” Hackett said. “So they could basically recycle the land, scrape the buildings off it, clean the dirt off, and then sell it to someone for other industrial uses. There are many examples of this in the industry. You see this quite frequently.

Why now?

Gasoline request has been in constant decline since the early 2000s due to slowing population growth, more efficient petrol and diesel vehicles and, now, the increasing adoption of electric vehicles. Phillips 66 LA refineries also face higher costs to maintain and upgrade their aging facilities and meet pollution reduction requirements.

Hackett said he wasn’t surprised that Phillips 66 decided to close the aging refinery, but he was surprised by the timing.

“What we anticipate is that demand will decline to such an extent, before the end of the decade, that the economics of operating a refinery will be poor,” Hackett said. “At that point, someone would give up and quit. We didn’t think anyone would resign next year. We thought it would be around 2027.”

A Phillips 66 spokesperson said in a statement that the decision was primarily related to high costs of operations and a long-term decline in demand for crude oil products.

Will gas prices be affected?

Phillips 66 said in its press release that despite closing at the end of next year, it will continue to “work with the State of California to supply fuel markets and meet continued consumer demand.”

The company declined to provide further details to LAist on exactly how it will respond to this request.

Hackett said the shutdown could lead to higher gas prices because the company will likely have to import more gasoline to meet demand.

“Even if demand goes down, it’s not going to go down 8% by the end of next year,” Hackett said. “This supply of gasoline…is going to come in by tanker from somewhere else.”

And imported gasoline costs more on average, Hackett said.

“Instead of being produced locally, it will be produced elsewhere: in India, Korea or the United Kingdom. These are the places that produce the most California gasoline, so it must come from the other side of the world” , Hackett said. . “It’s going to be expensive.”

Refineries will close at the end of next year, so the exact impact won’t be entirely clear until then.