This major Bay Area refinery may close by next year
Benicia faces major financial hit as Valero considers refinery closure
Valero is considering shutting down its Benicia refinery by 2026, citing rising costs and strict environmental regulations. The move could cost the city millions in revenue and hundreds of jobs.
BENICIA, Calif. - The Valero Benicia Refinery is considering closing its operations by April 2026, according to a press release from Valero Energy Corporation, which owns the refinery.
The company has submitted notice to the California Energy Commission stating it plans to "idle, restructure, or cease" refining operations at the Bay Area facility. Valero has owned and operated the refinery since 2000 and is one of the largest employers in Benicia and Solano County.
It is a move that city officials say would deliver a significant blow to the local economy.
"If they close altogether and another refinery doesn’t come in and buy the facility, we’re looking at probably maybe $10 million a year in reduced revenue, and that’s on a $60 million budget," said Mayor Steve Young. "It could be significant."
The Valero team did not lay out exact plans for other refineries in California, saying only that the company is evaluating "strategic alternatives" for those operations.
"We understand the impact that this may have on our employees, business partners, and community, and will continue to work with them through this period," said Lane Riggs, CEO and president of Valero.
A Valero refinery in Benicia, California, US, on Monday, March 25, 2024. Valero Energy Corp. is expected to release earnings figures on April 25.
More than 400 employees at the refinery could be seeking new employment after the closure.
The company said in a statement that the decision follows years of regulatory pressure, significant fines for air quality violations, and a recent lawsuit settlement related to environmental concerns.
In October, Valero was fined nearly $82 million by the Bay Area Air Quality Management District - the largest penalty ever issued by the agency. The fine stemmed from a history of toxic chemical releases and other violations dating back to 2003. A 2019 inspection found the company failed to report toxic emissions from the facility’s hydrogen system.
"Valero corporate has been dropping fairly loud hints for at least the last year that they weren’t happy with California in general and with the governor in particular, and with some of the regulations the state legislature has adopted which they believe are anti-fossil fuel and make the business environment difficult for them," Young said.
Locals react
Locals expressed concern about how the closure could affect local businesses.
"I was very shocked actually. Valero’s the backbone of this community, it employs a lot of people from town and surrounding towns, it puts a lot of money in our town here," said Corrie Core. "I’ve been a resident here for 55 years until about four years ago, but I still work here."
She worries that small galleries, shops, restaurants, and bars will suffer.
Rob Storelee, a longtime resident and business owner, said Valero’s support goes beyond taxes.
"All the taxes to donations, support for Little League to the city - they’re the biggest donators to this city. It’s going to hurt," Storelee said.
The announcement comes just two weeks after the Benicia City Council passed new refinery safety regulations, including an air quality monitoring program. Mayor Young said he does not believe the local ordinance played any role in Valero's decision given the strict state-level regulations and pressure from the air district.
Young said he has been in contact with the local refinery manager and is focused on how the city can support affected employees, and plan for what's next.
Refineries are receiving criticism after multiple flaring incidents and fires
What we know:
Bay Area refineries have received negative attention in recent years due to multiple flaring incidents.
Last month, a glaring report was released after an investigation into a fire at Marathon Martinez Renewable Fuel Facility in 2023, owned by Marathon Petroleum Corporation. The fire happened Nov. 11, 2023.
As the refinery was restarting operations for the first time after shifting to a renewable fuels refinery, the U.S. Chemical Safety and Hazard Investigation Board found that an extra valve was left open by mistake.
The error allowed temperatures inside the refinery to grow unchecked before a fire sparked.
The fire eventually caused a pipe to burst days later, burning a worker standing nearby. The employee suffered burns over 80% of his body, and he was recovering for more than six months.
A fire at the Martinez Refining Company in early February left six people injured and forced the refinery to cease operations for some time.
A town hall held in Martinez last month brought together local leaders with administrators from Martinez Refining Co.
The refinery plans to begin partial functions this year.