California Regulators Suggest Output Cuts for Phillips 66, Marathon RD Projects


Alternatives call for reduced renewable output

California clean air objectives not supported

Environmental regulators in a Northern California county are suggesting “environmentally superior alternatives” for renewable diesel and sustainable aviation fuel projects proposed there by Phillips 66 and Marathon Petroleum, calling for both to scale back output.

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The two projects face scrutiny because of their scopes and sizes, according to draft environmental impact reports filed Oct. 15 by Contra Costa County regulators, as required under the California Environmental Quality Act. However, an alternate suggested by a draft EIR is not mandated by CEQA and often not selected as the approved project.

For Marathon, the regulators’ alternative means cutting proposed production to 23,000 b/d from 48,000 b/d after the conversion of its idled Martinez refinery to an RD and SAF plant.

“That stems from CEQA’s requirement that the county identify alternatives to our project, identify the environmental impact from these alternatives, and, if they are not chosen, explain why,” Marathon Petroleum spokesperson Jamal Kheiry said in an Oct. 18 email. “One of the criteria against which an alternative is evaluated is whether it meets project objectives.”

In Marathon’s case, the alternative does not meet the project objective, resulting in lower volumes of renewable fuels available “to support the State’s low-carbon fuel goals, and would not achieve Project objectives as well as the proposed Project,” Kheiry said. Under the California Air Resources Board’s Low Carbon Fuel Standard, the state has set out goals to reduce California’s greenhouse emissions by at least 20% by 2030 through reducing the carbon intensity of its transportation fuels.

Marathon expects its Martinez Renewable Fuels facility will produce 17,000 b/d of renewable fuels by the second half of 2022 and reach full capacity of almost 48,000 b/d by the end of 2023.

One alternative scenario offered to Marathon to keep production at 48,000 b/d would be to use green hydrogen in place of steam methane. Green hydrogen uses electricity from renewable energy sources to produce hydrogen from water.

Less renewables more petroleum

The Reduced Project Alternative presented in the draft impact report for Phillips 66’s Rodeo Renewed project served as the environmentally superior alternative for the project and calls for reduced output of transportation fuels to “supply regional market demand for transportation fuels, including renewable and conventional fuels.”

Instead of making 120,000 b/d of transportation fuels, output would be cut to 102,000 b/d, of which 50,000 b/d would be RD and SAF, 40,000 b/d would be conventional fuels and the remaining 12,000 b/d of existing capacity reserved for renewable fuels.

The lead agency, however, does not have to require said alternative if it doesn’t meet the project objectives.

“”Thus, while the facility under the Reduced Project Alternative would assist California in meeting its goals for renewable energy, GHG emission reductions and reduced CI, it would do so to a lesser extent than the Project,” according to an Oct. 18 statement from Phillips 66 spokesperson Bernardo Fallas. Decreased renewables output could result in the need for greater amounts of petroleum-based fuels, he added.

“In that case, the Reduced Project would not go as far toward assisting in the attainment of California’s climate and energy goals as the Project would,” Fallas said. “Therefore, the Reduced Project Alternative would partially achieve this objective.”

The public comment period for the draft EIRs started Oct. 18 and continues through Dec. 17 and is unlikely to affect the projects underway.

“I see no reason why a downsizing would make them less viable from a renewables point of view,” said Corey Lavinsky, biofuels analyst with S&P Global Platts Analytics. “They will still be producing large volumes of renewable fuel at a time where it is in high demand. As a plus, the lower capacities will cut down the amount of feedstock they’ll need to procure.”

This post appeared first on ACT News.

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