HollyFrontier’s Cheyenne Refinery will shift from refining petroleum to producing a diesel fuel made out of soybean oil, the company announced Monday.
HollyFrontier announced in a news release that the conversion from petroleum refining will take 12 to 18 months and by the time the work is completed, about 200 workers will have been released.
The reduction in the refinery’s workforce will occur over a period of time, said Liberty Swift, manager of corporate communications for the company.
“Everyone’s learning today what the plan is so no one would be taken by surprise,” she said. “We’re working with everybody to try to assist them through this process.”
The refinery on the south side of Cheyenne has been processing petroleum for 86 years, according to Mike Jennings, HollyFrontier’s president and chief executive officer.
But Jennings said given the crash in oil prices caused by both oil price wars and the coronavirus, the company did not believe petroleum refining was a sustainable business.
In addition, the company was looking at high operating and maintenance costs related to the refinery over the next three to five years, he said.
Swift said there is a growing demand for diesel fuel made from renewable resources, particularly in California, but also in Colorado.
The Cheyenne refinery was well-suited for the conversion because some of the equipment already in place can be used to produce the renewable diesel, she added.
Any equipment not used in the production of renewable diesel will be idled, Swift said.
The conversion process is expected to cost about $125 million to $175 million, the company said.
When the work is finished, about 80 employees will remain at the refinery.
The company will work where possible to put employees removed from the refinery to work at other HollyFrontier plants, Swift said.
She added the company wants to continue working with Cheyenne as it has in the past.
“We want to continue to be in the Cheyenne community and want to continue to be a strong community partner,” she said. “This is a way we can stay in the community.”
