(Reuters) - Valero Energy Corp (NYSE:VLO) said on Wednesday it was taking a $1.1 billion pre-tax impairment related to its California refineries and told state regulators it would permanently shut or restructure its San Francisco-area refinery in Benicia, California by the end of April 2026.
The move comes as refiners face growing regulatory and cost pressures in California, the largest U.S. gasoline market, where the state’s emissions targets and proposed refinery transparency rules have weighed on long-term investment decisions.
The Benicia converts an average of 145,000 barrels per day (bpd) of crude oil into motor fuels, according to the U.S. Energy Information Administration.
"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," Lane Riggs, chief executive of San Antonio-based Valero, said on Wednesday.
Valero also said on Wednesday it was weighing strategic options for its 91,300 bpd Los Angeles-area refinery.
Riggs said in October that the company was keeping all options on the table for its two California refineries.
The number of refineries in California processing crude oil has been shrinking with companies citing increased regulation like the state’s plans to ban the sale of gasoline-powered automobiles by 2035. Six plants have shut since 2008. Two of those have converted to producing renewable diesel.
Competing U.S. refiner Phillips 66 (NYSE:PSX), also in October said it would shutter its 139,000 bpd Los Angeles refinery within a year. That announcement came days after a state law was signed by Governor Gavin Newsom requiring refineries to keep stockpiles of fuel on hand to limit price spikes.
Gasoline prices in California are among the highest in the United States due to the state’s reliance on West Coast refineries or imports from Asia or the Middle East. Unlike other U.S. regions, there are no pipelines connecting California with refining centers along the Gulf Coast or in the Midwest.
The Benicia refinery in the northeast of San Francisco Bay has a throughput capacity of 145,000 barrels per day.