Phillips 66 is targeting a 67% uptick in renewable fuels production in San Francisco by the end of second-quarter 2024, which will position the downstream energy company “as a world leader in renewable fuels,” CEO Mark Lashier said during the company’s first-quarter earnings presentation.

Renewable fuels production from Phillips 66’s Rodeo Renewable Energy Complex is currently averaging about 30,000 bbl/d. The facility is on track to produce 50,000 bbl/d at full throttle — equivalent to about 800 million gallons per year — by the end of the next quarter, Lashier said on April 26.

“During the first quarter, we achieved a major milestone with the startup of our Rodeo Renewable Energy Complex,” Lashier said. “The facility benefits as a superior location to secure renewable feedstocks and market renewable fuels. The project leverages existing assets and is expected to generate strong returns.”

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Once the conversion is complete, Houston-based Phillips 66 will be able to produce renewable jet fuel, a key component of sustainable aviation fuel, Lashier said.

The first transition at Rodeo occurred at the first hydrocracker, which went into renewable fuels feedstock production in March 2024, Rich Harbison, Phillips 66’s refining executive vice president, said during the webcast.

“That's allowed the facility with Unit 250 and the first hydrocracker to produce about 30,000 bbl/d of renewable fuel,” Harbison said. “The second hydrocracker and the pretreatment unit will both finish construction in the May timeframe, and we will start those up in the June timeframe. So, by the end of the second quarter, the facility will be at full production rates.”

Rodeo evolution

Phillips 66’s San Francisco Refinery consists of two facilities linked by the company’s pipelines. The Santa Maria facility is in Arroyo Grande, California, 200 miles south of San Francisco. The Rodeo facility is located in the San Francisco Bay Area.

Intermediate refined products from the Santa Maria facility are shipped by pipeline to the Rodeo facility for upgrading into finished petroleum products.

Phillips has advanced conversion plans at Rodeo to address the growing demand for renewable fuels. As a result, Phillips 66 ceased operations of the Santa Maria facility in February 2023, the company said in a statement on its website.

Once the conversion at Rodeo is complete, the repurposed facility will reduce emissions and produce lower carbon intensity transportation fuels. Phillips 66 plans to distribute its renewable diesel through new and existing channels, including 600 branded retail sites in California.

Monetizing European assets

Phillips 66 is planning to sell off assets that no longer fit its long-term strategy, executives said.

The company is progressing on the divestiture of its retail marketing business in Europe. Completion of the dispositions is subject to satisfactory market conditions and customary approvals, according to the company’s first-quarter earnings release.

“We're selling the Germany and Austria retail assets,” Phillips 66 CFO Kevin Mitchell said during the webcast, responding to analyst questions.

Phillips 66 markets retail and wholesale products in Austria and Germany under the JET brand.

“That's a company-owned dealer operated model, with almost 1,000 sites across those two countries. It's a high performing business, top rated … and great business, but doesn't really integrate with the core strategic focus areas that we have as a company,” Mitchell said.

The divestments don’t include Phillips 66’s ownership in the Mineraloelraffinerie Oberrhein GmbH (MiRO) Refinery located on the Rhine River in Karlsruhe, Germany, some 95 miles south of Frankfurt.

“And the reason for that is the majority of buyers for those types of retail assets would not be interested in refinery ownership,” Mitchell said. “If there's a buyer that is interested then that's a separate conversation and we'll handle that separately, but this package right now is focused on those marketing assets.”

Phillips 66’s other marketing businesses are in Switzerland and the U.K., which also markets products under the JET brand, Lashier said.

“The two are very different in that the Switzerland business is somewhat of a standalone retail business, but it's also in a joint venture structure and so the dynamics are a little bit different around that,” Lashier said.

The U.K.’s marketing business is integrated with Phillips 66’s refining in the U.K., Lashier said. That arrangement is in line with the U.S. model, in which the marketing business helps ensure product placement coming out of the Humber refinery. The refinery is located on the east coast of England in North Lincolnshire, approximately 180 miles north of London.

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