Cheyenne Refinery Announces ~200 Layoffs

Jun 1, 2020

Image of HollyFrontier's Cheyenne Refinery on its website
Credit HollyFrontier

HollyFrontier Corporation, a Texas-based independent petroleum refiner, announced it plans to transform its Cheyenne Refinery to focus on a new product and reduce its overall workforce by about 75 percent. Rather than producing conventional diesel, it will now look to renewable diesel.

"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," said HollyFrontier President and CEO Mike Jennings.

In an investor presentation, the company wrote renewable diesel is a cleaner burning fuel with less than half the greenhouse gas emissions of its conventional counterpart.

Meanwhile, the company's federal filing said the outlook is weak for the crude oil market, due to COVID-19, and foresaw weakened cash flow generation from its current path. The decision also came down to the loss of an important exemption at the federal level.

HollyFrontier expects to lay off about 200 of its Cheyenne Refinery employees due its transformation plan and will cease all conventional diesel operations by July. The total number of employees sits at around 280 employees, according to HollyFrontier.

The company plans to finish its conversion of the plan to renewable diesel by the first quarter of 2022.

"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," said Jennings.

HollyFrontier did not give a timeline to when the layoffs would take place. It also did not detail any severance packages or aid given to those laid-off.

Layoffs will occur over the next 12 to 18 months, though HollyFrontier said it could be earlier for some. Employees will know where they stand by the end of the week, according to Liberty Swift with the company. She said HollyFrontier is working individually either to offer outplacement services or working with local unions; Swift said many employees have also worked enough years to retire.

Cheyenne Mayor Marian Orr said the news itself is difficult, but not surprising given the coal and oil industries were strained even before COVID-19.

"We all know that that's the way things are going. The world is moving away from coal, the world is moving away from oil. And so, this pivot... it's going to cost jobs," Orr said, adding the renewable industry is growing.

Gov. Mark Gordon released a statement in response to HollyFrontier's announcement.

"This cost-saving decision is a reflection of both the changing nature of our country's energy supply and trends that were present before the COVID-19 pandemic. It is a small consolation that Holly Frontier will continue operating in the area and will offer some employees positions in other locations," he said.

Both Mayor Orr and the governor requested the DWS make itself available to provide assistance and resources to workers.

Over the next 12 months, HollyFrontier anticipates to spend between $25 and $45 million to decommission its assets and $5 and $7 million for its severance obligations.

UPDATE 2:49 pm: The story was updated with new information from HollyFrontier regarding unemployment benefits, number of employees at the refinery, and timeline for the layoffs.

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