BENICIA >> Valero’s oil refinery in Benicia faces an uncertain future after the company alerted state energy officials that plans were in the works for an array of options for the plant, including its closure.

Valero Energy Corp. announced on Wednesday that its subsidiary, Valero Refining Company-California, notified the California Energy Commission of its “intent to idle, restructure, or cease refining operations at Valero’s Benicia Refinery.”

The announcement jolted Benicia city officials.

“Valero has long been a part of Benicia’s identity and economy, and today’s news is deeply impactful for our entire community,” Benicia Mayor Steve Young said. “While this potential transition raises many questions, I want to reassure our residents that the city is committed to transparency, collaboration, and careful planning.”

At least 400 people work at the Benicia refinery, according to a fact sheet posted by Valero Energy.

“This is a moment of significant transition for our city and community,” Benicia City Manager Mario Giuliani said. “Benicia has shown time and again that we are resilient.”A decision about the refinery’s future would be made by the end of April 2026, Valero Energy told the state entity. Benicia officials said they would work with Valero Energy to clarify the timeline and scope of the potential operating changes at the refinery.

The company warned that the strategy review might extend well beyond the Benicia oil refinery.

“Valero continues to evaluate strategic alternatives for its remaining operations in California,” the company reported to the state commission.

Valero also owns and operates an oil refinery in a Los Angeles neighborhood known as Wilmington.

The strategic evaluation — and the potential results of the review — are expected to be costly.

“In connection with the evaluation of strategic alternatives for Valero’s operations in California, a combined pre-tax impairment charge of $1.1 billion was recorded for the Benicia and Wilmington refineries,” Valero Energy Corp. stated on Wednesday.

Publicly held companies often take impairment charges for assets they intend to write off or jettison. It wasn’t immediately clear what might occur in Benicia.

Valero said it’s possible its final decisions could have major effects on the Bay Area and Los Angeles.

“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,” said Valero CEO Lane Riggs.

Benicia city officials said they will endeavor to collect as much information as possible about how the Bay Area community will be affected by a potential shutdown.

“We will be working with Valero, regional partners, and state agencies to better understand the path ahead,” Young said.

The forbidding prospect of a refinery shutdown in California arrives at a delicate time for the state.

California is effectively a gasoline island due to the government’s restrictions on the environmentally friendly blend of gas that’s allowed in the Golden State.

Daily refinery capacity in California is slightly more than 1.6 million barrels a day. The Valero refinery in Benicia refines 145,000 barrels of oil a day, or 8.9% of the statewide refinery capacity, the state Energy Commission reported in October 2024.

During 2024, California’s daily oil consumption was slightly below 1.4 million barrels a day, according to a report posted by think tank California Policy Center.

“California’s refinery capacity is stretched to the limit,” the policy center stated.

In Martinez, an accidental fire in February knocked out the refinery that’s operated by PBF Energy. The Martinez refinery might be back to partial production by the end of June and full production by the end of this year.

After Phillips 66 reported that it has decided to shutter its refinery in Long Beach by the end of this year, shrinking refinery capacity could cause gasoline prices to drift higher in California as a long-term trend.

A growing number of oil companies have expressed displeasure or dismay regarding what they see as onerous environmental burdens on their energy production endeavors in the state.

In October 2024, the Bay Area Air Quality Management District and California Air Resources Board announced a decision to impose what the two regulatory agencies described as “historic” fines totaling $82 million against the Benicia refinery.

“Significant air pollution violations by Valero Refining Co. at its Benicia refinery” were the primary reasons that the regional entity and state agency imposed the $82 million fine, they stated. The two government entities added, “This penalty is the largest ever assessed in the Air District’s history.”

The possible refinery shutdowns in California also could pose fresh hazards for California’s already wobbly job market.

“The blue-collar economy in California is at risk,” said Michael Bernick, an employment attorney with law firm Duane Morris and a former director of the state Employment Development Department.