Phillips 66 will shut historic Wilmington-area refinery complex

Phillips 66 announced Wednesday that it will shut its historic Wilmington-area oil refinery complex but will work with the state to continue supplying fuel to consumers.

The refinery near the Port of Los Angeles will cease operations in the fourth quarter of 2025, with the company saying it will replace its output with sources “inside and outside its refining network” and with renewable diesel and sustainable aviation fuels from a San Francisco Bay-area complex. The refinery contributes about 8% of the state’s gasoline supply.

“Phillips 66 remains committed to serving California and will continue to take the necessary steps to meet our commercial and customer demands,” said Mark Lashier, chairman and chief executive of Phillips 66. “We understand this decision has an impact on our employees, contractors and the broader community. We will work to help and support them through this transition.”

About 600 employees and 300 contractors currently operate the refinery, the company said.

The refinery complex consists of two facilities linked by pipeline located five miles apart in Wilmington and Carson, about 15 miles southeast of Los Angeles. The Carson facility was built in 1923 and the Wilmington facility was built in 1919, according to the company’s website.

“There’s no question we are going to lose refineries over time, because demand is going to go down as we transition to electric vehicles, but I did not expect to see any of them exiting this quickly,” said Severin Borenstein, faculty director of the Energy Institute at UC Berkeley’s Haas School of Business.

California “over the medium term” will now have to rely more on imports, he said. “I think part of the response the state’s going to need to consider is how to make sure that we can import sufficient gasoline to meet our needs.”

In announcing the closure, Phillips 66 said that the “long-term sustainability of our Los Angeles Refinery” was “uncertain and affected by market dynamics.” However, the closure immediately became a political football, with Republicans and gas station operators blaming the policies of California Gov. Gavin Newsom.

The announcement comes the same week the governor signed a new state law that allows the state to require oil refiners to maintain a minimum inventory of fuel to avoid supply shortages that create higher gasoline prices. It also authorizes the California Energy Commission to require refiners to plan for resupply during refiner maintenance outages.

“Thanks to Gavin Newsom’s showboating and incompetence, hundreds of workers will lose their jobs while California drivers will face a massive price hike,” Assembly Republican Leader James Gallagher of Yuba City said in a statement. “Great work, Gavin.”

The California Fuels and Convenience Alliance, an industry trade group representing fuel marketers, gas station owners and others, directly blamed the legislation.

“Unfortunately, the announcement today is not much of a surprise, as we continually warned the Legislature and Administration about how ABX2-1 would negatively impact supply,” said Alessandra Magnasco, the alliance’s governmental affairs and regulatory director. “This is exactly what happens when our leaders are more concerned with political theater than solving real problems.”

The association blamed higher gas prices on “exploding overhead costs to run our stations, costly environmental regulations.”

However, a spokesperson for Phillips 66 told Politico the announcement was not in response to Newsom’s signing the law.

The governor’s office referred questions to the California Energy Commission.

“The company has committed to minimizing impacts on Californians while they continue to meet fuel demands, maintain reliable supplies, and ensure they take necessary steps to fulfill both commercial and customer needs,” California Energy Commission Vice Chair Siva Gunda said in a statement.

Phillips 66 said it has has engaged Catellus Development Corp. and Deca Cos. to examine future uses for the 650-acre site.

“Historically, the South Bay industrial real estate market has been extremely tight and this will allow a ton of new inventory and capacity that should help the market by providing more warehouse and distribution space” around the Port of Los Angeles, said real estate broker Mike Condon Jr. of Cushman & Wakefield, who helped manage the process of selecting a development partner for Phillips 66.

The company, based in Houston, also has been the subject of controversy over its role in climate change, leading to calls for the removal of its iconic “76” sign at Dodger Stadium.

In the second quarter, Phillips 66 posted net income of $1.02 billion, down 40% from the same period a year ago. Shares have dropped 17% in the last six months. They closed Wednesday at $132.31, up nearly 1%.

Times staff writer Roger Vincent contributed to this report.