Phillips 66 Co. is on schedule to begin production of renewable diesel in early 2024 from its ongoing Rodeo Renewed project to convert the 120,000-b/d portion of its San Francisco conventional refining complex in Rodeo, Calif., into a renewable fuels refinery (OGJ Online, June 6, 2022).
Now estimated for completion at a revised overall investment of $1.25 billion due to higher-than-anticipated material and labor costs, Rodeo Renewed is on track to begin commercial operations during first-quarter 2024 as planned, Phillips 66 said in its second-quarter 2023 earnings update on Aug. 2.
While project execution was impacted early on by inclement weather and challenges to permitting, Phillips 66 said potential earnings from sticking to the project’s original schedule justified additional spending to ensure its timely completion.
“We recognize that earnings from [Rodeo Renewed] are going to far exceed the earnings we realized to date from the San Francisco refinery [conventional scheme],” said Mark Lashier, Phillips 66’s president and chief executive officer.
“We wanted to stick to the schedule…[s]o we incurred some more cost to compensate for the productivity loss during bad weather and delays around permitting,” Lashier said.
Recent appeals to the project’s environmental impact report supporting permitting also will not slow ongoing site works, Rich Harbison, the operator’s senior vice-president of refining, told investors.
“[T]he good news is the [current] court ruling found several issues in the favor of Phillips 66, [most notable of which is that] construction of the Rodeo Renewed project can continue [while we work] closely with [California’s Contra Costa County] and the courts to provide the necessary information to reconsider the open issues,” Harbison said.
While additional spending on the refinery conversion project in 2023 will amount to about $200 million, Phillips 66 said Rodeo Renewed’s revised capital cost of about $1.60/gal remains highly competitive and well-below similarly announced projects.
Once operable, Rodeo Renewed will have a renewable diesel production capacity of more than 800 million gal/year (50,000 b/d). While the refinery conversion project also has been designed with capability to produce 20,000 b/d of sustainable aviation fuel (SAF) in addition to 10,000 b/d of renewable jet fuel for blending with conventional, crude oil-based jet production.
The switch to SAF production at Rodeo, however, will be dictated by market indicators, according to Lashier.
“We believe that SAF will be an important part of our path toward renewable fuels. But today at Rodeo, the economics favor renewable diesel,” he said.
Once those economics are in place, Harbison said the Rodeo complex can quickly shift to the renewable jet-SAF production scheme, with potential also in place to increase the site’s SAF capacity via future investment.
“But any additional investment to produce more SAF would require something that would incentivize us to divert away from renewable diesel into SAF,” Lashier said.
CPChem operational updates
Phillips 66 also revealed Chevron Phillips Chemical Co. LP (CPChem)—a joint venture with Chevron Corp.—has completed construction of a grassroots on-purpose 1-hexene plant near the operator’s Sweeny petrochemical complex in Old Ocean, Tex. (OGJ Online, June 22, 2021).
Equipped with CPChem’s proprietary technology the new 1-hexene unit—which will use a feedstock of ethylene to produce 586 million lb/year of high-purity, comonomer-grade 1-hexene, a critical component used in producing polyethylene—is scheduled to begin operation by the end of the third quarter, Phillips 66 said.
Phillips 66 additionally confirmed that CPChem, by yearend, also will commission a new 1-billion lb/year C3 splitter designed to convert a refinery-grade mixture of propylene and propane into a high-purity propylene product at its Cedar Bayou chemical complex in Baytown, Tex. (OGJ Online, Mar. 30, 2022).
Following a late-2022 final investment decision (FID) to proceed with construction of joint venture Golden Triangle Polymers Co. LLC’s proposed grassroots petrochemical complex along the Texas Gulf Coast in Orange, Tex., Phillips 66 said CPChem and partner QatarEnergy are due to complete project financing by yearend for a previously announced plan to jointly build and operate the proposed Ras Laffan petrochemical project (RLPP) in Ras Laffan Industrial City, Qatar (OGJ Online, Nov. 17, 2022; June 9, 2022).
Each to be equipped with a 2.08-million tpy ethane cracker and two high-density polyethylene (HDPE) units, both the Golden Triangle Polymers and RLPP projects remain on course for startup in 2026, Phillips 66 said.
