Phillips 66 evaluating assets as it further embraces clean energy projects: Garland

As it moves forward with its cornerstone Rodeo Renewed project, Phillips 66 considers all its assets as candidates to participate the company's energy transition, CEO Greg Garland said Jan. 5.

Speaking at the virtual Goldman Sachs' Global Energy and Clean Technology Conference, Garland said that as the call for low carbon energy sources intensifies, Phillips 66 is looking for a competitive advantage within its refining, chemical and midstream segments to create the most value with the assets they have.

"Energy has been a business of transition for 140 years," Garland said. "So this isn't really new to us. Our products are embedded in such a way [people] don't even realize they are using them in everyday life."

Already underway is Phillip 66's marquee energy transition project, Rodeo Renewed.

The project is repurposing its 120,200 b/d San Francisco Bay Area refinery, characterized by Garland as a "perennial underperformer, into one of the world's largest renewable diesel producers.

When it comes online in 2024, Phillips 66 will be able to produce 800 million gal/year of renewable diesel, sustainable aviation fuel and sustainable gasoline to meet growing demand for renewable fuels in California and the region.

"Renewables is certainly the easiest to see, it's molecule management," Garland said. "We know how to do that really well. We've a great opportunity of Rodeo Renewed."

Similar criteria

Garland said that the biggest part of the $800 million investment in Rodeo Renewed is around feed and pretreatment to allow the facility to run a wide range of low carbon intensity feedstocks.

"We'll optimize the carbon intensity, just like we optimize the crude advantage, around Rodeo Renewed," he said.

Phillips 66 has earmarked $408 million out of its $1.9 billion 2022 capital spending for the project.

Even prior to the Rodeo Renewed announcement in August 2020, Phillips 66 had already begun converting a diesel hydrotreater at the San Francisco plant to run soybean oil as a "first step to get our foot into the marketplace," said Mark Lashier, Phillips 66's president and chief operating officer, speaking at the conference.

However, soybean oil has a high carbon intensity and so to make lower carbon fuels, a pretreatment is necessary.

Rodeo Renewed will "allow us to process everything from soybean oil to corn oil, canola oil, used cooking oil, animal fats, anything we can get our hands on across the planet to process," Lashier said.

Feedstock procurement teams already in place in London and Singapore currently supply the Rodeo unit and the company's Humber refinery in the UK with renewable feedstock, he added,

The criteria for successful hydrocarbon processing and renewables processing is not dissimilar, with location and feedstock key elements, he added.

"We are sitting right there on the water in San Francisco," Lashier said. "We've got the world at our doorstep to get the right feedstocks in there."

Other projects

While Rodeo Renewed is the biggest piece of Phillips 66's move into energy transition, smaller opportunities exist, ranging from using wind power to create green hydrogen at Humber, to selling hydrogen as a transportation fuel in Switzerland, and repurposing pipelines in the US to transport CO2.

Phillips 66 has looked at "what it would take to convert them to carry CO2, and we are getting an understanding of that," Garland said.

In January 2021, Phillips 66 created an Emerging Energy unit to work on reducing greenhouse gas emissions from existing operations and to study the opportunities around the energy transition. The unit focuses renewables, hydrogen, carbon capture and batteries – four areas where the company has some experience as it expands past liquid renewable transportation fuel production.

"There's fortunes to made and lost in emerging energy," Garland said. "And so I think we are going to be careful about how we invest in emerging energy."