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Phillips 66 adds dedicated low-carbon unit amid evolving energy landscape

Highlights

To continue to reduce GHG emissions from ongoing projects

Renewable diesel, solar to play a role in GHG reduction

New York — Phillips 66 is moving its emerging energy operations to a separate segment, which will stand alongside its current and more traditional operating segments to address the "dual challenge of providing energy and deploying the technologies and products that will continue to reduce greenhouse gas emissions," CEO Greg Garland said on Jan. 7.

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"We've created a new group in our company. It's called Emerging Energy... and its organization is charged with helping us establish a low-carbon sustainable business platform," Garland told attendees at Goldman Sachs Global Energy Conference 2021.

"The focus is on commercializing and implementing emerging energy technology within our operations and also our portfolio of assets," he said.

"The ultimate goal is to have an emerging energy business which will stand beside our Midstream, Chemicals, Refining, Marketing and Specialities businesses," he added.

Garland said that Phillips 66 had reduced greenhouse gas emissions by 28% between 2012 and 2018 and the company is "working toward setting attainable targets for greenhouse gas emissions that are tied to identified projects."

The project list includes Rodeo Renewed – Phillips 66's marquee renewable fuel project – where the company is repurposing its 120,000 b/d San Francisco-area crude oil refinery into a renewable diesel (RD) plant using UCO (used cooking oil), tallow and soybean oil to replace crude as a feedstock.

By mid-2021, an initial 9,000 b/d of RD will be produced from the facility, with 50,000 b/d of RD production expected by early 2024 when the project is fully completed, with existing hydrocrackers converted and a feedstock pre-treatment built.

"A big part of the investment is the pre-treatment so we can run a wide range of feedstock. I think about it like advantaged crude," said Garland.

Carbon intensity metrics

Much like individual crude quality impacts refining margins, the carbon intensity of a feedstock is key for RD economics.

"Used cooking oil has the lowest carbon intensity, which will generate the highest value, where soybean has the highest carbon intensity, it will generate the least value," Garland added. California's Low Carbon Fuel Standard credits are valued on the carbon intensity of the feedstock, with lower CI feedstocks creating more value.

Garland said Philips 66 estimates that there is between 2 million b/d and 3 million b/d of renewable feedstock available currently, and while that will grow with time, so will the demand from the 1 million b/d of other refineries which have announced their intention to convert to RD plants.

"I do think that some point in time, when you reach the 3 million b/d marker, then you start having this food-for-fuel conversation," he added.

Phillips 66 is also working Ryze Renewables to build two new Nevada RD facilities, which will add between 10,000 b/d and 11,000 b/d of RD production to Phillips 66's output.

At its Humber refinery in the UK, Phillips 66 completed recently a project that increased RD production to 3,000 b/d with a further expansion increasing production to 5,000 b/d by 2024.

Garland said Phillips 66 is also "pursuing some solar projects" at both its Rodeo plant as well as its 200,000 b/d Ponca City, Oklahoma, plant that will replace coal and gas-fired electricity currently powering the plants, thus lowering greenhouse gas emissions.