Valero Energy's chief executive on Thursday said the company's decision to close its 149,000 b/d Benicia, Calif., refinery by April 2026 was a "consequence" of state regulatory policy and a "difficult" operational environment.

Valero last week announced plans to "idle, restructure or cease refining operations at Benicia and said it was evaluating strategic options for its other California refinery, the 93,500 b/d Wilmington plant near Los Angeles.

In a Thursday call to discuss the company's first-quarter financial results, Chief Executive Lane Riggs said the company plans to shut the plant.

"When you think about the West Coast, California has been pursuing policies to move away from fossil fuels for the past 20 years and the consequence of that regulatory and enforcement environment is the most stringent, difficult of anywhere else in North America," Riggs said.

He added that the Benicia refinery in Northern California operates in the "more difficult part" of state in terms of regulatory and enforcement agencies. In addition, he said the refinery is considerably more expensive to operate than the Wilmington facility.

California officials have expressed concerns over the planned closure and the California Energy Commission is working to minimize the market impacts, Rich Walsh, Valero's executive vice president and general counsel, said.

"I do think there's a genuine interest in California to avoid the closure, but ... it's also a really very complex regulatory and policy driven environment that we're dealing with. We are having discussions with the state, but our intent right now is to close the refinery," Walsh added.

Valero reported a $1.13 billion impairment loss for both California refineries.

It said Benicia accounted for $901 million of the total.

Greg Bram, Valero's vice president of refining services, said that over the last 10 years Benicia has had higher operating costs, lower Ebitda, higher capital and lower cashflow than the Wilmington refinery.

"When you have a large turnaround in front of you, which is a large cash outlay, and you think about how the facility has performed ... that's no guarantee of the future," he added.

He said those factors led the company to ask "whether or not this is the time to take different action, which is what you see us doing."

This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.

--Reporting by Bayan Raji, braji@opisnet.com; Editing by Jeff Barber, jbarber@opisnet.com

(END) Dow Jones Newswires

April 24, 2025 13:15 ET (17:15 GMT)

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