June 1, 2020, DALLAS – HollyFrontier Corporation (HollyFrontier) today announced that its Board of Directors has approved a plan to convert the Cheyenne Refinery to renewable diesel production. The conversion will repurpose a portion of the existing assets to produce renewable diesel and is expected to cost between $125 million – $175 million, with the remaining assets de-inventoried and safely idled.
The conversion project will take 12-18 months and result in a headcount reduction of approximately 200 employees over that time. Ultimately, the Cheyenne site is expected to produce 90 million gallons per year of renewable diesel and employ approximately 80 people.
Mike Jennings, HollyFrontier’s President and Chief Executive Officer, commented, “Demand for renewable diesel, as well as other lower carbon fuels, is growing and taking market share based on both consumer preferences and support from substantial federal and state government incentive programs.
“After 86 years as a petroleum refinery, Cheyenne will take on a new challenge. As a petroleum refinery, we do not see a sustainable business in Cheyenne due to the lower margins resulting from the effects of COVID-19 and compressed crude differentials due to dislocations in the oil market, coupled with high expected operating and maintenance capital costs in the next three to five years and the anticipated loss of the EPA’s small refinery exemptions, which have been vital to the Cheyenne Refinery. Conversion to renewable diesel presents an exciting path forward for Cheyenne.
“We realize that this decision affects many employees, their families and the community. We are thankful to all of our colleagues in Cheyenne and will work closely with those impacted by this decision. Our goal and expectation is to continue to operate as a community partner in Cheyenne and Wyoming for years to come.”
HollyFrontier is committed to assisting employees affected by this decision to the best extent possible. The company intends to provide outplacement services to salaried employees and will work with local unions through the effects bargaining process. The company intends to place as many impacted employees as possible at other HollyFrontier sites.
City of Cheyenne Mayor Marian Orr has provided the following statement to our community:
This morning I received a call from HollyFrontier CEO Mike Jennings with the unfortunate, but not surprising, news of changes coming to our refinery. Before COVID-19, we saw hits to our coal and oil industries including increasingly and costly regulatory compliance burdens. It certainly feels as if the hits keep coming. This is the world we now live in, a world that is moving away from coal and oil and moving towards clean and reliable new energies such as biodiesel.
These job losses are real. And they hurt. This morning I alerted Wyoming Department of Workforce Services Director Robin Cooley of this news, so that their office may stand at the ready to help employees’ transition to new job opportunities. And there are opportunities out there. The good news is we have time. HollyFrontier isn’t leaving our community, and I know they will continue to be good community partners well into the future.
I mentioned opportunity. With change and challenge comes opportunity, and I know that while it is a dark day in Cheyenne, we will still have a beautiful Wyoming sunrise in the morning and a hopeful future as we manage change together.