CHEYENNE— HollyFrontier Corporation announced Monday that it will be laying off about 200 employees at its Cheyenne refinery over the next 18 months.
The layoffs will come as part of the company's plan to convert its Cheyenne oil refinery into one that processes diesel fuel from renewable materials.
HollyFrontier CEO Mike Jennings said in a statement Monday that the challenges of high operating and capital costs, compounded by the effects of COVID-19, forced the shift in operations at the refinery.
"We realize that this decision affects many employees, their families and the community," Jennings said. "Our goal and expectation is to continue to operate as a community partner in Cheyenne and Wyoming for years to come.”
The layoffs will likely occur in phases, HollyFrontier communications manager Liberty Swift said Monday. The company will continue to employ roughly 80 people at the refinery after the conversion, which will take 12 to 18 months and begin in the late summer.
Cheyenne Mayor Marian Orr, while relieved the company was staying put, called the announcement "a gut punch" to the community in an interview Monday morning.
"Our community will continue to be here for those workers who will be transitioning out of their jobs, and we'll do whatever we can to find them new opportunities in the workforce," Orr said.
Gov. Mark Gordon, in a statement Monday afternoon, said he had asked the Wyoming Department of Workforce Services to deploy its rapid-response teams to help any HollyFrontier workers who are laid off.
"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,” Gordon said in a statement. "It is a small consolation that HollyFrontier will continue operating in the area and will offer some employees positions in other locations.”
The company estimates it will cost between $125 million and $175 million to convert the refinery, which has been in Cheyenne since World War II. Once completed, the site will annually produce about 90 million gallons of renewable diesel fuel.
HollyFrontier, which runs multiple refineries in mid-America, has never converted one of its facilities to process fuel from renewable materials. But Swift said market conditions had made the refinery’s oil-processing operations economically unsustainable.
“While it might look different, this kind of version will allow us to continue operating in the Cheyenne community, and it’s something we had to do, essentially,” Swift said.
The Cheyenne refinery has also been facing recent regulatory hurdles. In January, a federal court ruled the Environmental Protection Agency had granted biofuel waivers inappropriately to a handful of small oil refineries, including the one in Cheyenne.
Greater Cheyenne Chamber of Commerce CEO Dale Steenbergen said those regulatory issues, combined with the COVID-19 pandemic and the oil industry’s recent downturn, had created “a perfect storm” to force the change.
Steenbergen, who has worked with the chamber since 2007, couldn’t recall past layoff announcements in Laramie County on the same scale as Monday’s announcement, especially since the area's largest employers are public.
“I'm sure there's been that many employees laid off in the oilfield between multiple companies, but as far as this announcement, that's not one of those cyclical industries. Cheyenne has just been pretty fortunate not to be impacted by a lot of the ups and downs of the economy,” Steenbergen said. "But this one, it's going to leave a mark.”
The layoffs deal yet another blow to the local community following last week's cancellation of Cheyenne Frontier Days. Yet while the CFD cancellation will put a major dent in local tax revenues and economic activity, Steenbergen said the cancellation “wouldn't even come close” to the effects of the layoffs.
“Businesses that depend on (CFD) are going to have a percentage loss to their income, but … they can make up part of it,” Steenbergen said. “There's no revenue replacement potential for a job that just disappears."
Looking ahead, Steenbergen was hopeful the local economy could regain some of the demand for skilled workers that it had before the pandemic.
"If you would have been looking for a job March 1, you wouldn't have had much trouble,” Steenbergen said.
Yet while an economic rebound could happen someday, local officials like Orr underscored the devastating blow that the layoffs represent for the community.
"It seems like the bad news just keeps coming," Orr said.