Phillips 66 to book $100-MM charge as it winds down Los Angeles refinery

U.S. oil refiner Phillips 66 expects to book about $100 MM of charges to idle its 139,000-bpd Los Angeles-area refinery, which will cease operations by year-end, the company said on Wednesday.

These include around $70 MM to mitigate groundwater contamination, and about $30 MM for its midstream segment to retire transportation assets.

"Several process units have been placed in an idle state. The remaining units will be idled in a phased manner through the end of 2025," the Houston, Texas-based company said.

The refinery received its last waterborne crude on September 30. The final crude processing date is expected to be in mid-October.

Phillips 66 began winding down its Los Angeles refinery in September.

Fuel oil imports to the U.S. Gulf Coast surged to a two-and-a-half-year high in September, driven by a jump in cargoes from the Middle East, as refiners seek alternatives to dwindling Venezuelan crude supplies, according to preliminary ship tracking data, analysts and a refinery source.

U.S. Gulf Coast refiners are ramping up fuel oil imports to fill a widening gap left by declining heavy crude supplies, particularly from U.S.-sanctioned Venezuela.

Meanwhile, domestic fuel oil stocks have been in decline after the U.S. sanctioned Russian crude and oil products following its invasion of Ukraine in 2022, cutting off a key fuel oil supplier and forcing refiners to find alternative barrels.

Fuel oil imports into the U.S. Gulf Coast, home to more than 55% of total U.S. refining capacity, have been on the rise since July and were on track to reach 541,000 bpd last month, marking their highest since February 2023, according to Kpler.

In August and September, fuel oil imports from Gulf countries hit record highs, bolstered by volumes from Saudi Arabia, Iraq and Kuwait, per Kpler.

Shipping Iraqi high-sulfur fuel oil to the U.S. Gulf Coast on Suezmax tankers has been economically viable since early July, according to Sparta commodity owner Hoa Nguyen, referring to tankers that can ship up to a million barrels.

The end of the power generation season in the Middle East has also freed up more high-sulfur residual fuel oil barrels to meet strong demand on the U.S. Gulf Coast, Nguyen added.

"In short, there is way more availability of high-sulfur residuals right now, which the U.S. refining system is hungry for and which will help boost the diesel yield there," Nguyen said.

A drop in available crude supplies from Venezuela and more available fuel oil from the Mideast, coupled with strong product margins have led some U.S. Gulf Coast refiners to run more fuel oil in the last couple of months, according to a refinery source.

Gulf Coast refineries are designed to process heavy, sour crude, qualities typical of Latin American grades. When those supplies tighten, refiners can pivot to fuel oil, which secondary units can process into higher-value products like gasoline and diesel.

Crude imports to the refining hub have been in decline since July, falling 143,000 bpd on the month to just 880,000 bpd in September, according to preliminary Kpler data, their lowest since November 2022.

U.S. crude imports from Venezuela fell to 6,000 bpd in July, according to the U.S. Energy Information Administration (EIA), following the South American country's cancellation of cargoes to U.S. producer Chevron, ahead of a deadline set by the Trump administration to wind down oil transactions.

The Chevron authorization was reinstated with restrictions in late July but volumes have yet to recover, with weekly U.S. imports totaling just 49,000 bpd last week, compared with the 2025 high of 416,000 bpd in January, per EIA data.

"This has deprived U.S. Gulf refiners of precious heavy crude supplies, forcing them to turn to residual imports," said Roslan Khasawneh, senior oils analyst at Kpler.

Weekly U.S. residual fuel oil stocks fell 487,000 bbl last week to 20.63 MMbbl, compared with 29.2 MMbbl in the same week in 2021, prior to Russia's invasion of Ukraine, according to EIA data.

Berkshire Hathaway and Occidental announced a definitive agreement for Berkshire Hathaway to acquire Occidental’s chemical business, OxyChem, in an all-cash transaction for $9.7 billion, subject to customary purchase price adjustments. OxyChem is a global manufacturer of commodity chemicals vital to quality of life, with applications in water treatment, pharmaceuticals, healthcare and commercial and residential development.

“This transaction strengthens our financial position and catalyzes a significant resource opportunity we’ve been building in our oil and gas business for the last decade. I’m incredibly proud of the impressive work the team has done to create this strategic opportunity that will unlock 20+ years of low-cost resource runway and deliver meaningful near and long-term value,” said Vicki Hollub, President and Chief Executive Officer. “OxyChem has grown under Occidental into a well-run, safely operated business with best-in-class employees, and we are confident the business and those employees will continue to thrive under Berkshire Hathaway’s ownership.”

“Berkshire is acquiring a robust portfolio of operating assets, supported by an accomplished team,” said Greg Abel, Vice Chairman of Non-Insurance Operations at Berkshire. “We look forward to welcoming OxyChem as an operating subsidiary within Berkshire. We commend Vicki and the Occidental team for their commitment to Occidental’s long-term financial stability, as demonstrated by their plan to use proceeds to reinforce the company’s balance sheet.”

Transaction Details

Under the terms of the agreement, Occidental will sell OxyChem to Berkshire Hathaway for cash consideration of $9.7 billion, subject to customary purchase price adjustments. Occidental expects to use $6.5 billion of the transaction proceeds to reduce debt and achieve the target of principal debt below $15 billion set following the December 2023 announcement of its CrownRock acquisition. An Occidental subsidiary will retain OxyChem’s legacy environmental liabilities, and Glenn Springs Holdings Inc. will continue to manage existing remedial projects for that subsidiary. The transaction is expected to close in the fourth quarter of 2025, subject to regulatory approvals and other customary closing conditions.

At the International Refining and Petrochemical Conference (IRPC), Sudipto Chakraborty, Technology Manager for Advanced Plastic Pyrolysis Technology at Lummus Technology, presented groundbreaking advancements in scaling pyrolysis for chemical recycling of plastics. His talk, “Advancement in Large Scale Pyrolysis Technology”, outlined a path toward commercializing pyrolysis as a critical component of the circular plastics economy.

Chakraborty highlighted the pressing need for technologies capable of addressing post-consumer plastic waste, much of which is currently landfilled, mismanaged, or incinerated. Lummus envisions pyrolysis as a scalable solution that can transform mixed plastic streams—primarily polyethylene (HDPE, LDPE) and polypropylene—into high-value chemical feedstocks. While minor fractions of polystyrene, PET, PVC and other plastics are unavoidable, the process has been engineered to manage their impact effectively.

Reactor and process innovations. A key breakthrough in the Lummus design is the separation of plastic melting and pyrolysis reaction into distinct sections. This innovation overcame heat transfer challenges that have long hindered scale-up.

Chakraborty revealed that the latest commercial design employs a four-zone reactor with independently controlled temperatures. This allows optimized cracking, higher yields at lower temperatures, and—critically—continuous removal of pitch from the reactor bottom. By preventing buildup, the system enables 50+ days of continuous operation, a milestone for the industry.

Capacity has also been multiplied:

A melt tank doubled throughput
Redesigned reactor internals boosted capacity five-fold.
Together, these enhancements increased processing ability ten times over the original batch setup, enabling one reactor to handle 70 tpd.

The Lummus system produces a spectrum of products:

Light pyrolysis oil (cracker-compatible, paraffinic and hydrogen-rich)
Pyrolysis gas (up to 35% C3–C5 olefins, recoverable as olefinic LPG or usable for power)
Pitch (4%–5% of feed, flowable and pumpable, serving as a sink for heavy metals and silica).
An additional heavy oil thermal cracking (HOTC) stage converts heavy fractions into lighter oils, while optional isoconversion units can further upgrade medium-range oils, maximizing cracker-ready outputs.

Contaminant management breakthroughs. One of the toughest challenges in chemical recycling is contamination from fillers, metals, and PVC-derived chlorides. Lummus has devised a multi-layered solution:

Melt tank pretreatment removes ~50% of chlorides before the reactor
Onsite alkaline addition reduces remaining chlorides to ~50 ppm
Continuous pitch removal extracts silica and metals, protecting oil quality.
In collaboration with Chevron, Lummus has also filed a patent for a novel non-catalytic purification process. This system removes 98% of chlorides and 92% of silica, reducing contaminants to levels as low as 2 ppm–3 ppm chloride. This positions pyrolysis oil for direct blending into steam crackers or mild hydrotreating—without costly retrofits to existing refinery infrastructure.

Toward commercial deployment. Chakraborty emphasized that these innovations represent not just incremental improvements, but the foundation of a commercially viable, large-scale pyrolysis platform. With trains designed for 100,000 tpy and robust tolerance for diverse, imperfect feedstocks, Lummus Technology is aiming to make advanced pyrolysis a cornerstone of the plastics circular economy.

The US Energy Department (DOE) has announced the termination of $7.56 billion in grants and loans for clean energy projects, particularly those in blue states, according to Trump administration officials, as per Chemweek.

The DOE announced late Oct. 1 that it has terminated 321 financial awards for 223 projects, following months of uncertainty for energy developers with federal funding contracts. After a review, the department determined the projects did not adequately advance the nation’s energy needs, were not economically viable or would not provide a positive return on investment.

The funds were for projects in California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maryland, Massachusetts, Minnesota, New Hampshire, New Jersey, New Mexico, New York, Oregon, Vermont and Washington, according to Russell Vought, director of the US Office of Management and Budget. Each state listed is represented in the US Senate by two Democrats except Vermont, which has one Democratic senator and one independent.

The awards were issued by the Offices of Clean Energy Demonstrations (OCED), Energy Efficiency and Renewable Energy (EERE), Grid Deployment (GDO), Manufacturing and Energy Supply Chains (MESC), Advanced Research Projects Agency-Energy (ARPA-E) and Fossil Energy (FE).

“On day one, the Energy Department began the critical task of reviewing billions of dollars in financial awards, many rushed through in the final months of the Biden administration with inadequate documentation by any reasonable business standard,” Secretary Chris Wright said. “President Trump promised to protect taxpayer dollars and expand America’s supply of affordable, reliable, and secure energy.”

Of the 321 financial awards terminated, 26% were awarded between election day and inauguration day. Those awards were valued at over $3.1 billion.

Democratic lawmakers swiftly condemned the DOE’s decision as political. The Trump administration’s announcement came on day one of a federal government shutdown after Congress failed to pass a budget deal on Sept. 30.

The announcement represents the Trump administration’s second round of DOE grant cancellations. In May, the agency canceled $3.7 billion in funds for carbon capture and other decarbonization technologies, affecting projects in both red and blue states.

The DOE did not provide a list of affected projects. However California officials said the state's $1.2 billion hydrogen hub grant was one of them. The DOE has been threatening for months to cancel contracts with clean energy projects, and the California hub was rumored to be on the agency's "hit list."

The Alliance for Renewable Clean Hydrogen Energy Systems (ARCHES) — the massive public-private coalition behind California's hydrogen hub — closed its funding contract with the DOE in July 2024. The deal garnered an additional $11.4 billion in outside financial commitments for the development of green hydrogen infrastructure and end uses. But the DOE never released more than $30 million of the $1.2 billion grant; the rest was to be made available upon completion of certain project milestones.

Despite the loss of federal funding, ARCHES will “press forward” with its hydrogen hub project, the coalition's board chair Theresa Maldonado said in an Oct. 1 statement. But the DOE's decision could still cost jobs and private-sector investment, California officials argued.

Additionally, Bloomberg News reported that the DOE scrapped $1 billion in funding that covered the Pacific Northwest Hydrogen Association (PNWH2) hub. In July 2024, PNWH2 was awarded $27.5 million is for the first tranche of funding out of the total federal cost share of up to $1 billion.

Award recipients have 30 days to appeal a contract termination, the DOE said.

In October 2023, the Biden administration announced $7 billion to be divided among seven regional clean hydrogen hubs: PNWH2; ARCHES; Heartland Hydrogen Hub (HH2H); HyVelocity Hub; Midwest Alliance for Clean Hydrogen (MACHH2); Mid-Atlantic Clean Hydrogen Hub (MACH2); and Appalachian Regional Clean Hydrogen Hub (ARCH2).

mrchub.com