Regan Brown
Phillips 66, a company founded over a century ago, has played a significant role in the natural gas industry, particularly in the extraction of liquids from natural gas. With a history of producing fossil fuels, Phillips 66 is now facing a transition. While the company has been associated with a range of brands and acquisitions over the years, its future is marked by a shift towards renewable energy sources. This includes the development of a biofuels project and the closure of some refineries, signalling a move away from traditional fossil fuel production.
| Characteristics | Values |
|---|---|
| Decision to shut down LA refineries | High-cost operations and a long-term decline in demand for crude oil products |
| Refinery location | Rodeo, California |
| Refinery history | Seven "major accidents" since 2001 |
| Fossil fuel operations | Uncertain future |
| Biofuel project | Expected to start operations in early 2024 |
| Greenhouse gas emissions | Projected 29% increase due to higher natural gas usage |
| Environmental impact | Uncertain reduction in community pollution |
| Renewable diesel feedstocks | Soybean oil, beef tallow, used cooking oil, vegetable oils, animal fats, and animal feed |
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What You'll Learn
Phillips 66's history with fossil fuels
Phillips 66 has a long history with fossil fuels, dating back to its early years as a major player in the natural gas industry. Founded in 1917 as the Phillips Petroleum Company, the company specialised in extracting liquids from natural gas and quickly became the nation's largest producer of natural gas liquids.
In the following decades, Phillips 66 continued to expand its presence in the fossil fuel industry. In 1983, Phillips Petroleum purchased the General American Oil Company, further solidifying its position in the oil and gas sector. In 2000, the company created a joint venture with Chevron Corporation's chemicals and plastics division, and in 2001, it acquired Tosco, which included Union 76 gasoline.
However, in recent years, Phillips 66 has started to shift away from fossil fuels towards renewable energy sources. In 2012, the company split from ConocoPhillips and began to rebrand itself as "The Performance Company," promoting innovations in non-automotive products. Phillips 66 has also invested in biofuel projects, with plans to halt crude oil processing and build a renewable diesel plant in Rodeo, California. The company's San Francisco Refinery has already converted from fossil fuels to renewable diesel fuel.
Despite these moves towards renewable energy, Phillips 66 continues to have a significant presence in the fossil fuel industry. The company has faced criticism from environmentalists and local residents for its contribution to pollution and health issues in communities near its refineries. In 2024, Phillips 66 announced the closure of its Los Angeles Refinery, citing high-cost operations and a decline in demand for crude oil products. However, the company still supplies about 8% of California's gasoline demand and has stated that it will continue to work with the state to meet ongoing consumer demand.
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The company's transition to biofuels
Phillips 66, a company founded over a century ago, has a long history in the natural gas industry. In recent times, the company has been taking steps to transition to renewable energy sources, with a focus on biofuels.
In 2023, Phillips 66 announced a significant biofuels project, dubbed “Rodeo Renewed”, at its San Francisco Refinery. The project aims to convert the refinery to process renewable feedstocks, such as soybean oil, beef tallow, and used cooking oil, into renewable diesel and jet fuel. This renewable diesel is touted as the cleanest-burning option for heavy-haul trucking, reducing greenhouse gas emissions and certain regulated pollutants. The company expects to process up to 12,000 barrels per day of renewable feedstock.
However, the transition to biofuels has not been without its challenges and controversies. Some environmental experts have questioned the marketing of renewable diesel as a green fuel, noting the increased emissions and spill risks associated with the production process. There are also concerns about the project's environmental impact on the local community, which has a history of industrial pollution.
Despite these concerns, Phillips 66 maintains that the biofuels project will lead to substantial reductions in greenhouse gases and local emissions. The company's spokesperson, Bernardo Fallas, acknowledged the uncertainty around the future operation of the fossil-fuel refinery processing units but assured that they intend to keep operating permits for now.
Phillips 66's transition to biofuels is a response to the growing demand for renewable energy. By investing in renewable diesel and jet fuel production, the company is positioning itself to meet the rising demand for sustainable energy solutions. This shift towards biofuels could significantly impact the company's future operations and contribute to a more sustainable energy landscape.
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Fossil fuel production's environmental impact
Phillips 66, a company founded over a century ago, has been involved in the rapidly developing natural gas industry since the discovery of the huge Panhandle gas field in Texas in 1918. The company has a presence in the Eastern markets, including the New York City metro region, and has been diversifying its portfolio by acquiring stakes in pipeline operations and renewable fuel businesses.
Phillips 66's operations include refineries in Los Angeles (now closed), Lake Charles, San Francisco, and Sweeney, which processed crude oil from the Amazon River Basin. The San Francisco Refinery has transitioned from fossil fuels to renewable diesel fuel. The company has also been involved in marketing gasoline and other products under brand names such as Phillips 66, Conoco, and 76.
While Phillips 66's specific fossil fuel production quantity data is unavailable, the environmental impact of fossil fuel production and usage is significant. The burning of fossil fuels releases harmful pollutants, such as nitrogen oxides, particulate matter, carbon monoxide, and mercury, contributing to air pollution and the formation of smog and acid rain. Additionally, the extraction, transportation, refining, and burning of fossil fuels generate externalities, or hidden costs, that are not reflected in market prices.
The use of fossil fuels has severe climate, environmental, and health consequences. For instance, coal, a fossil fuel, is responsible for over 0.3°C of the 1°C increase in global average temperatures, making it the largest single source of global temperature rise. Oil, another fossil fuel, releases about a third of the world's total carbon emissions when burned, contributing significantly to global warming. The production and burning of fossil fuels have led to a critical milestone, with global temperatures surpassing 1.5°C in 2024.
To address these environmental challenges, a mass switch to renewable energy sources and improved energy efficiency is necessary. By transitioning to renewable energy, organizations can reduce their environmental impact, mitigate air pollution, and decrease greenhouse gas emissions. Additionally, increasing the social cost of carbon (SCC) can help account for the economic damages caused by carbon dioxide emissions, providing a more accurate evaluation of climate change policies.
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Phillips 66's acquisition deals
Phillips 66 is an American multinational energy company headquartered in Westchase, Houston, Texas. The company was formed in 2012, ten years after Phillips Petroleum merged with Conoco to form ConocoPhillips.
Phillips 66 has been involved in several acquisition deals over the years, including:
The acquisition of EPIC Midstream's NGL business:
In April 2025, Phillips 66 completed the acquisition of EPIC Midstream's NGL business, including the companies EPIC Y-Grade GP LLC and EPIC Y-Grade LP. The deal was worth $2.2 billion and included NGL pipelines, fractionation and distribution systems, and several subsidiaries. This acquisition strengthened Phillips 66's position in the downstream energy market and improved its ability to deliver energy products efficiently.
The acquisition of DCP Midstream's pipeline operations:
In January 2023, Phillips 66 acquired all the publicly traded stocks of DCP Midstream's pipeline operations for $3.8 billion. This acquisition doubled Phillips 66's stake in DCP to 86.8%.
The acquisition of Propel Fuels:
In December 2017, Phillips 66 made a bid to acquire Propel Fuels, and the two companies began working together, with Propel disclosing proprietary data and strategies. However, in August 2018, Phillips 66 terminated the acquisition deal.
Joint venture with Chevron Corporation:
In 2000, Phillips Petroleum created a joint venture with Chevron Corporation's chemicals and plastics division, known as Chevron Phillips Chemical. This joint venture focused on the research and development of emerging energy sources and the marketing of natural gas liquids (NGL) petrochemicals.
Purchase of Tosco and ARCO Alaska:
In 2001, Phillips Petroleum purchased Tosco, which included Circle K convenience stores and Union 76 gasoline. Phillips Petroleum also acquired ARCO Alaska from BP around the same time.
Sale of natural gas assets in Texas:
In September 2024, Phillips 66 sold its natural gas gathering and processing assets in East Texas to Voyager Midstream Holdings, a portfolio firm of Pearl Energy Investments. The company stated that this transaction was part of its plan to monetize non-core assets and generate over $3 billion in proceeds to further its strategic priorities.
Phillips 66 has been actively managing its portfolio through acquisitions, joint ventures, and divestitures to strengthen its position in the energy market and adapt to evolving industry dynamics.
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The future of Phillips 66's refineries
Phillips 66, a prominent name in the oil and gas industry, is facing a pivotal moment in its history as it navigates shifting energy landscapes and societal demands for a more sustainable future. The future of Phillips 66's refineries is marked by a transition towards renewable energy sources and a departure from its traditional fossil fuel operations. This evolution is evident in their recent endeavours, including the development of a massive biofuels project and the adaptation of their refineries to produce renewable diesel and sustainable aviation fuel.
The company's journey towards a more sustainable future is not without its challenges and complexities. Phillips 66 has faced scrutiny and legal battles, such as the lawsuit filed by Propel in 2022, accusing the company of violating trade secrets as it ventured into the renewable fuel business. Additionally, community concerns have been raised regarding the environmental impact of their refineries, particularly the projected increase in greenhouse gas emissions and local air pollution.
Despite these obstacles, Phillips 66 is committed to adapting to the changing energy landscape. They have shut down their Los Angeles refineries, citing high-cost operations and a long-term decline in demand for crude oil products. The company intends to repurpose part of the site as an oil terminal for storing and distributing imported petroleum products, while the remaining land will be cleaned up and potentially sold for other industrial uses.
The San Francisco Refinery, another Phillips 66 facility, has undergone a significant transformation, converting from fossil fuels to renewable diesel fuel. This renewable diesel is produced from feedstocks like soybean oil, beef tallow, or used cooking oil, and can power heavy-duty trucks without requiring engine modifications. The company's biofuels project, approved in May, is expected to start operations in early 2024, marking a significant step towards a greener future.
As Phillips 66 navigates the complexities of transitioning from fossil fuels to renewable energy sources, the future of its refineries remains uncertain. The company has not provided explicit details on how it plans to meet consumer demand and continue supplying fuel markets, particularly in California. However, their efforts to adapt to changing market demands and embrace renewable energy sources indicate a commitment to staying competitive in a rapidly evolving energy industry. The success of their biofuels project and the reception of their renewable diesel endeavours will undoubtedly shape the trajectory of Phillips 66's refineries in the years to come.
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Frequently asked questions
It is unclear how much fossil fuel Phillips 66 produces. However, the company has a history in the fossil fuel industry, with refineries in Los Angeles, Lake Charles, San Francisco, and Sweeney. In 2024, Phillips 66 announced the closure of its Los Angeles refinery, which supplied about 8% of California's gasoline demand.
Phillips 66 is transitioning towards renewable energy sources and has made efforts to reduce its fossil fuel operations. The company has converted its San Francisco refinery to produce renewable diesel and sustainable aviation fuel made from vegetable oils, animal fats, and animal feed. Additionally, Phillips 66 has announced a biofuels project expected to start operations in 2024, signalling a move towards a greener future.
Phillips 66, founded over 100 years ago, has a long history in the fossil fuel industry. The company was previously known as the Phillips Petroleum Company, formed in 1917 with assets in Oklahoma and Kansas. In the following years, the company became heavily involved in the natural gas industry, specialising in extracting liquids from natural gas. By 1925, Phillips Petroleum Company was the nation's largest producer of natural gas liquids. Over the years, Phillips 66 has expanded its operations through acquisitions and mergers, including a notable merger with Conoco in 2002 to form ConocoPhillips.
