Benicia's Valero Refinery could cease operations next year

Valero Energy Corporation's subsidiary, Valero Refining Company-California, on Wednesday submitted notice to the California Energy Commission of its intent to idle, restructure, or cease refining operations at the Benicia Refinery by the end of next April.

In a news release sent out Wednesday morning, Valero said it continues to evaluate strategic alternatives for its remaining operations in California.

"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, Chairman, CEO and President of Valero.

Benicia City Manager Mario Giuliani, speaking to the Times-Herald Wednesday, said he spoke with Valero earlier in the day and that the news was stressful but not shocking. He said the Benicia City Council passing an Industrial Safety Ordinance 5-0 earlier this month was a separate entity and that the reasons for the possible departure had more economic and political reasons.

"There has been a sale in the works for some time with Valero, so I don't believe the passage of the ordinance has anything to do with this," Giuliani said. "San Antonio has highlighted some trust issues for some time, so to that extent this news isn't shocking. When Valero announced a sale, we had heard rumors for some time. Everyone is looking for the best way to reassess and structure what needs to be done.

"However, the news that they might be leaving entirely, that is shocking."

Valero Energy Corporation has owned and operated the Benicia Refinery since 2000. The refinery was originally built for Humble Oil, later called Exxon. Construction of the facility began in 1968 and was completed in 1969.

Valero Energy Corporation, through its subsidiaries (collectively, Valero), is a multinational manufacturer and marketer of petroleum-based and low-carbon liquid transportation fuels and petrochemical products, and sells its products primarily in the United States, Canada, the United Kingdom, Ireland and Latin America.

Valero owns 15 petroleum refineries located in the U.S., Canada and the U.K. with a combined throughput capacity of approximately 3.2 million barrels per day.

Valero Headquarters in San Antonio, Texas, and has more than 9,900 employees, with approximately 400 at the Benicia venue. That refinery has a throughput capacity of 170,000 barrels per day, according to the company. According to a list from the California Energy Commission, Benicia has 8.94 percent of the state's crude oil capacity.

In connection with the evaluation of strategic alternatives for Valero's operations in California, a combined pre-tax impairment charge of $1.1 billion was recorded for the Benicia and Wilmington refineries, and is expected to be treated as a special item and excluded from first quarter 2025 adjusted earnings. Also included in this amount is the recognition of expected asset retirement obligations of $337 million as of March 31.

Giuliani said that the City of Benicia "won't make any rash decisions" as discussions will continue later this week. Giuliani said he had "a candid conversation" with Paul Adler of Valero on Wednesday morning and said he plans to talk with Valero General Manager Lauren Bird in the next few days as the city seeks clarity and the scope of the proposed operational changes while attempting to keep the community informed about potential economic impacts.

Giuliani also wanted to remind the community that the key word in Valero's news release was the word, "or" ("current intent to idle, restructure, or cease refining operations") and that nothing was set in stone yet.

"We want to keep the community informed and reassure all we can," Giuliani said. "I want to remind the community that we are used to facing this kind of adversity and we've faced challenges before. I still believe that the refinery is too big of an asset to close its doors. We have a strong working relationship with Valero and that's a good asset to have. At the same time we will prepare as a city as talks continue over the next 30, 60 and 90 days."

Benicia Mayor Steve Young said, "Valero has long been a part of Benicia's identity and economy, and today's news is deeply impactful for our entire community."

"While this potential transition raises many questions, I want to reassure our residents that the City is committed to transparency, collaboration, and careful planning," Young said in a press release. "We will be working with Valero, regional partners, and state agencies to better understand the path ahead."

While Valero is a big part of Benicia business, is it not without its critics — particularly after the refinery became the site of a series of air pollution incidents. This includes a hydrogen vent at the refinery that had been leaking 2.7 tons of toxics into the air for 15 years. That discovery resulted in an historic $84 million fine imposed by the Bay Area Air Quality Management District (an oversight agency) in 2024.

Critics also point to inspectors reporting that Valero management had known about the leaks for years, but failed to report them or take steps to mitigate the leak. The fine reportedly was the largest penalty ever assessed by the district.

Valero was one of four other refineries that in 2023 didn't meet requirements as defined by BAAQMD and Rule 12-15. That rule — passed in 2016 — requires refineries to monitor and report fugitive gasses from their operating equipment, such as valves, compressors, and storage tanks. These emissions impact the health of the surrounding communities — the toxic gases released include noxious chemicals like the cancer-causing benzene.

The Benicia City Council on April 2 voted 5-0 on a safety ordinance that aims to help protect Benicians against potential fires, explosions and toxic emissions connected to the Valero Refinery and other facilities causing health concerns in the city. Before the vote, Benicia was previously the only Bay Area refinery town to not yet have an Industrial Safety Ordinance.

This is a developing story. Look for updates at timesheraldonline.com.

Originally Published: April 16, 2025 at 12:41 PM PDT