CHEYENNE, Wyo. (AP) — One of Wyoming’s major oil refineries will lay off over two-thirds of its workforce and undergo a major reworking in response to tough economic conditions.

Dallas-based HollyFrontier said it plans to lay off about 200 employees at the Cheyenne refinery over the next 18 months.

The company plans to spend about $150 million to convert the refinery to produce renewable diesel fuel, or diesel made from agricultural byproducts.

High operating and capital costs, compounded by the effects of COVID-19, forced the shift in refinery operations, HollyFrontier CEO Mike Jennings said in a statement.

“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 refinery is among Cheyenne’s biggest employers, whose ranks also include the U.S. Air Force, state government and the Union Pacific Railroad.

The refinery will employ about 80 people after its conversion, HollyFrontier spokesperson Liberty Swift said.

The announcement was “a gut punch” to Wyoming’s capital city of 64,000 people, Mayor Marian Orr said.

“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.

Frontier Days brings around $28 million to the southeastern Wyoming economy every summer.

The event’s cancellation this year “wouldn’t even come close” to the effects of the refinery layoffs, Greater Cheyenne Chamber of Commerce CEO Dale Steenbergen said.

“There’s no revenue replacement potential for a job that just disappears,” Steenbergen said.

He expressed hope the local economy would regain demand for skilled workers.