Category Archives: Refinery emissions

Valero, other refiners spend more on U.S. clean fuel standards, look for savings through exports

Repost from Reuters
[Editor: Significant quote: “The price of credits has fuel makers like PBF Energy Inc and Valero looking to increase exports, which are not subject to the regulations, as a way to escape the costs.”  (emph. added) – RS]

Refiners on track to spend record on U.S. clean fuel standards

By Jarrett Renshaw, Aug 10, 2016 4:26pm EDT

Major refiners like Valero Energy Corp are on track to pay record amounts this year for credits to comply with U.S. renewable fuel rules, corporate filings show, a trend that hurts profits and has some looking to export more to avoid the cost.

Refiners and fuel importers are required to meet a U.S. biofuel quota of roughly 10 percent through blending products like ethanol into gasoline and diesel. If they fall short, they can buy credits generated by companies in compliance. But the cost of the credits, known as Renewable Identification Numbers (RINs), has jumped.

The rising costs have hurt a sector already struggling with huge global fuel stockpiles. The S&P 1500 index of refining and marketing companies has fallen 18 percent so far in 2016, compared with a 6.5 percent gain for the broader market.

In the first half of 2016, a collection of 10 refinery owners including Marathon Petroleum Corp, spent at least $1.1 billion buying RINs, a Reuters review of their filings showed. This puts them on track to surpass the annual record of $1.3 billion the same group spent in 2013.

Refinery executives sharply criticized the regulations during recent earnings calls, saying the burden helped bring about the weakest profits in five years.

“RINs continue to be an egregious tax on our business and have become our single largest operating expense, exceeding labor, maintenance and energy costs,” CVR Refining Chief Executive Jack Lipinski said last month.

Marathon Chief Executive Gary Heminger said on a call last month that demand for RINs are going to outpace supply and the company wanted to see renewable fuel standards eased.

Refiners without blending or retail outlets, such as Delta Air Lines and CVR, have to buy a greater percentage of RINs because they don’t create their own. Delta is part of a refiner group challenging fuel standards through the courts.

Supporters of the existing policy, including the influential corn lobby, said the regulations have produced the desired effect: more renewable fuels in the nation’s gasoline and diesel. They noted refiners can avoid the cost of RINs by investing in blending operations.

“Companies that refuse to blend more renewable fuel will end up paying a premium to other market participants, including speculators, but this is a choice,” said Emily Skor, CEO of Growth Energy, which represents ethanol producers.

ESCAPE THROUGH EXPORTS

Renewable fuel credits averaged about 78 cents apiece in the second quarter, about 25 percent above the same period a year ago, according to Oil Price Information Service data analyzed by Reuters.

Prices for the credits have rallied on more ambitious targets from U.S. regulators on the volumes of ethanol required to be blended with gasoline, traders and industry sources said.

The price of credits has fuel makers like PBF Energy Inc and Valero looking to increase exports, which are not subject to the regulations, as a way to escape the costs.

PBF Chief Executive Thomas Nimbley said on an earnings call last month that it was “very important” that they expand their refined product export operations, citing RINs as a driver.

Refiners are also lobbying to shift the responsibility of compliance from their industry to blenders and distributors who mix gasoline with ethanol for delivery to filling stations.

(Editing by Jeffrey Hodgson)
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Letter: Bay Area Air Board needs to step up for cleaner air

Repost from the Vallejo Times-Herald

Where our mayor, supervisor stand

By Michelle Pellegrin, 08/04/16, 4:09 PM PDT

There are 24 people in the Bay Area with the power to regulate the air we breathe. Their decisions cause or reduce asthma, cancer and other illnesses that can and have resulted in death.

This regional board has so much power to affect peoples’ lives and deaths, yet most people haven’t even heard of this agency with the unwieldy name: The Bay Area Air Quality Management District — or BAAQMD.

The 24 members of this board — which includes Vallejo Mayor Osby Davis — have a mandate to protect public health.

The neighborhoods around the refineries have suffered severe health effects from emissions. The 2012 Chevron toxic explosion and fire in Richmond sent more than 15,000 people to the hospital, which is now closed. A broad coalition of Bay Area groups would like to see refinery emissions, which have continuously gone up for the past 20 years, capped and then methods found to reduce harmful emissions. The first step in this process is an Environmental Impact Report (EIR).

On Wednesday, July 20, after four long years and several refinery incidents, the board, in a room with standing room only, was to vote on this. What appeared as a simple slam dunk became a political football between clean air advocates and Big Oil.

Bay Area refineries have been preparing to process heavier dirtier crudes, which will increase emissions and their diseases. The wave of Crude By Rail (CBR) of proposed projects, such as the Valero Benicia CBR project, are designed to facilitate the importation of extreme crudes, such volatile oil from the Bakken fields and volatile heavy crude from the Canadian Tar Sands.

BAAQMD staff, in what can only be seen as another move to interminably delay implementing modern and necessary emission standards on Bay Area refineries, supported combining the simpler refinery emission cap EIR with a complex EIR on toxic chemical emissions for up to 900 businesses.

Bay Area refinery corridor communities and their allied cities want the EIRs to be conducted separately, as the EIR on refineries can be done much more quickly than the more complex toxic chemical EIR because it requires no infrastructure changes. They want answers and relief from the constant health problems they are suffering.

And here is where our mayor stepped in to show his stripes. Davis, just recently appointed to the board, gave a critical speech supporting combining the two EIRs. Who would have thought the BAAQMD’s newest member would have such sway with the board?

Anyone with respiratory health problems or cancer can give a big round of applause to our mayor and Solano County Supervisor Jim Spering, who made the motion to combine the two EIRs. We in Solano County have the dubious distinction of having the most anti-public health, pro-corporate members on the board.

Even the Contra Costa appointees where four of the five refineries are located weren’t as instrumental as the Solano reps in pushing for the delay of this most important EIR.

Luckily, other board members did uphold their duty to the public’s health and a compromise was reached. The EIRs will be combined but if they become bogged down then they will be separated out. In addition, and a very important one from the public’s point of view, there will be citizen oversight of the process.

The irony here is that this is a false dichotomy. Big Oil will keep functioning and we need them for those cars we drive. These companies provide jobs and add to our economies. But it is no longer legitimate to trade health for jobs. It is an outmoded model and has no place in deciding public policy. It is no longer acceptable for companies to dominate local economies and the policies of the people in those communities where they are located.

Big Oil has known for years that this is the direction things are moving. A 2014 article in the San Jose Mercury News notes the refineries are already working on improving their systems in anticipation of processing the dirtier and volatile oil from outside California.

As Tom Griffith, head of the Martinez Environmental Group back in 2014 stated, “The missed opportunity here is for the oil companies to refocus their sights on the future of renewable energy.”

We should be working together to improve public health. The corporate stranglehold on such important regional boards must end. Citizens need to be attend BAAQMD board meetings and provide input on upcoming board decisions for this to happen. The next meeting is Wednesday, Sept. 21, at 9:30 a.m. at the BAAQMD headquarters at 375 Beale St. San Francisco.

And here in Vallejo we need to do the same and be more engaged. We have seen the result of complicity between politicians and corporations that excluded public input: The absurd notion of putting a cement factory in a residential area with its disastrous public health consequences. Don’t let Mayor Davis and his cronies put our community in harm’s way. Say “no” to the Orcem/VMT cement plant and don’t vote in November for any candidate who supports it!

— Michelle Pellegrin/Vallejo
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CA Crude by Rail, from the Bakken Shale and Canada’s Tar Sands to California Refineries

Repost from FracTracker
[Editor:  Although the Map of CA Crude by Rail Terminals needs to be updated with information about Valero Benicia’s proposed crude by rail terminal, this is a highly recommended, carefully researched report out of the Center for Science, Technology and Society, Drexel University.  – RS]

CA Refineries: Sources of Oil and Crude-by-Rail Terminals

By Kyle Ferrar and Kirk Jalbert, May 23, 2016

Refineries in California plan to increase capacity and refine more Bakken Shale crude oil and Canadian tar sands bitumen. However, CA’s refinery communities that already bear a disparate amount of the burden (the refinery corridor along the north shore of the East Bay) will be more impacted than they were previously. New crude-by-rail terminals will put additional Californians at risk of accidents such as spills, derailments, and explosions. Additionally, air quality in refinery communities will be further degraded as refineries change to lower quality sources of crude oil. Below we discuss where the raw crude oil originates, why people are concerned about crude-by-rail projects, and what CA communities are doing to protect themselves. We also discuss our GIS analysis, showing the number of Californians living within the half-mile blast zones of the rail lines that currently are or will be supported by the new and existing crude by rail terminal projects.

Sources of Raw Crude Oil

Predictions project that sources of raw crude oil are shifting to the energy intensive Bakken formation and Canadian Tar Sands. The Borealis Centre estimates an 800% increase of tar sands oil in CA refineries over the next 25 years (NRDC, 2015). The increase in raw material from these isolated locations means new routes are necessary to transport the crude to refineries. New pipelines and crude-by-rail facilities would be necessary, specifically in locations where there are not marine terminals such as the Central Valley and Central Coast of CA. The cheapest way for operators in the Canadian Tar Sands and North Dakota’s Bakken Shale to get their raw crude to CA’s refinery markets is by railroad (30% less than shipping by marine routes from ports in Oregon and Washington), but this process also presents several issues.California’s once plentiful oil reserves of locally extracted crude are dwindling and nearing depletion. Since 1985, crude extraction in CA has dropped by half. Production from Alaska has dropped even more, from 2 million B/D (barrels per day) to around 500,000 B/D. The 1.9 million B/D refining capacity in CA is looking for new sources of fuels. Refineries continue to supplement crude feedstock with oil from other sources, and the majority has been coming from overseas, specifically Iraq and Saudi Arabia. This trend is shown in figure 1:

Crude oil supply sources to CA refineries

CA Crude by Rail

More than 1 million children — 250,000 in the East Bay — attend school within one mile of a current or proposed oil train line (CBD, 2015). Using this “oil train blast zone” map developed by ForestEthics (now called Stand) you can explore the various areas at risk in the US if there was an oil train explosion along a rail line. Unfortunately, there are environmental injustices that exist for communities living along the rail lines that would be transporting the crude according to another ForestEthics report.

To better understand this issue, last year we published an analysis of rail lines known to be used for transporting crude along with the locations of oil train incidents and accidents in California. This year we have updated the rail lines in the map below to focus on the Burlington Northern Santa Fe (BNSF) and Union Pacific (UP) railroad lines, which will be the predominant lines used for crude-by-rail transport and are also the focus of the CA Emergency Management Agency’s Oil by Rail hazard map.

The specific focus of the map in Figure 2 is the five proposed and eight existing crude-by-rail terminals that allow oil rail cars to unload at the refineries. The eight existing rail terminals have a combined capacity of 496,000 barrels. Combined, the 15 terminals would increase CA’s crude imports to over 1 million B/D by rail. The currently active terminals are shown with red markers. Proposed terminals are shown with orange markers, and inactive terminals with yellow markers. Much of the data on terminals was taken from the Oil Change International Crude by Rail Map, which covers the entire U.S.

Figure 2. Map of CA Crude by Rail Terminals

View Map Fullscreen | How Our Maps Work | Download Rail Terminal Map Data

Additional Proposals

The same type of facility is currently operating in the East Bay’s refinery corridor in Richmond, CA. The Kinder Morgan Richmond terminal was repurposed from handling ethanol to crude oil, but with no public notice. The terminal began operating without conducting an Environmental Impact Report (EIR) or public review of the permit. Unfortunately, this anti-transparent process was similar to a tactic used by another facility in Kern County. The relatively new (November 2014) terminal in Taft, CA operated by Plains All American Pipeline LLC also did not conduct an EIR, and the permit is being challenged on the grounds of not following the CA Environmental Quality Act (CEQA).

EIRs are an important component of the permitting process for any hydrocarbon-related facility. In April 2015 in Pittsburg, for example, a proposed 50,000 B/D terminal at the WesPac Midstream LLC’s railyard was abandoned due to community resistance and criticism over the EIR from the State Attorney General, along with the larger proposal of a 192,000 B/D marine terminal.

Still, many other proposals are in the works for this region. Targa Resources, a midstream logistics company, has a proposed a 70,000 B/D facility in the Port of Stockton, CA. Alon USA has a permitted project for revitalizing an idle Bakersfield refinery because of poor economics and have a permit to construct a two-unit train/day (150,000 B/D) offloading facility on the refinery property. Valero dropped previous plans for a rail oil terminal at its Wilmington refinery in the Los Angeles/Long Beach port area, and Questar Pipeline has preliminary plans for a  rail oil terminal in the desert east of the Palm Springs area for a unit-train/day.

Air Quality Impacts of Refining Tar Sands Oil

Crude-by-rail terminals bring with them not only the threat of derailments and the risk of other such accidents, but the terminals are also a source of air emissions. Terminals – both rail and marine – are major sources of PAH’s (polycyclic aromatic hydrocarbons). The Sacramento Valley Railroad (SAV) Patriot rail oil terminal at a business park on the former McClellan Air Force Base property actually had its operating permit withdrawn by Sacramento air quality regulators due to this issue (read more). The terminal was unloading and reloading oil tanker cars.

FracTracker’s recent report, Emissions in the Refinery Corridor, shows that the refineries in this region are the major point source for emissions of both cancer and non-cancer risk drivers in the region. These air pollution sources get worse, however. According to the report by NRDC, changing the source of crude feedstock to increased amounts of Canadian Tar Sands oil and Bakken Shale oil would:

… increase the levels of highly toxic fugitive emissions; heavy emissions of particulate, metals, and benzene; result in a higher risk of refinery accidents; and the accumulation of petroleum coke* (a coal-like, dusty byproduct of heavy oil refining linked to severe respiratory impacts). This possibility would exacerbate the harmful health effects faced by the thousands of low-income families that currently live around the edges of California’s refineries. These effects are likely to include harmful impacts to eyes, skin, and the nervous and respiratory systems. Read NRDC Report

Petroleum coke (petcoke) is a waste product of refining tar sands bitumen (oil), and will burden the communities near the refineries that process tar sands oil. Petcoke has recently been identified as amajor source of exposures to carcinogenic PAH’s in Alberta Canada (Zhang et al., 2016). For more information about the contributions of petcoke to poor air quality and climate change, read this report by Oil Change International.

The contribution to climate change from accessing the tar sands also needs to be considered. Extracting tar sands is estimated to release on average 17% average more green-house gas (GHG) emissions than conventional oil extraction operations in the U.S., according to the U.S. Department of State. (Greenhouse gases are gases that trap heat in the atmosphere, contributing to climate change on a global scale.) The refining process, too, has a larger environmental / public health footprint; refining the tar sands to produce gasoline or diesel generates an average of 81% more GHGs (U.S. Dept of State. Appendix W. 2015). In total this results in a much larger climate impact (NRDC, NextGen Climate, Forest Ethics. 2015).

Local Fights

People opposed to CA crude by rail have been fighting the railway terminal proposals on several fronts. In Benicia, Valero’s proposal for a rail terminal was denied by the city’s Planning Commission, and the project’s environmental impact report was denied, as well. The city of Benicia, however, hired lawyers to ensure that the railway projects are built. The legality of railway development is protected regardless of the impacts of what the rails may be used to ship. This legal principle is referred to as “preemption,” which means the federal permitting prevents state or local actions from trying to limit or block development. In this case, community and environmental advocacy groups such as Communities for a Better Environment, the Natural Resources Defense Council, and the Stanford-Mills Law Project all agree the “preemption” doctrine doesn’t apply here. They believe preemption does not disallow the city or other local governments from blocking land use permits for the refinery expansion and crude terminals that unload the train cars at the refinery.

The fight for local communities along the rail-lines is more complicated when the refinery is far way, under the jurisdiction of other municipalities. Such is the case for the Phillips 66 Santa Maria Refinery, located on California State Highway 1 on the Nipomo Mesa. The Santa Maria refinery is requesting land use permits to extend track to the Union Pacific Railway that transits CA’s central coast. The extension is necessary to bring the rail cars to the proposed rail terminal. This project would not just increase traffic within San Luis Obispo, but for the entirety of the rail line, which passes directly through the East Bay. The project would mean an 80-car train carrying 2 million gallons of Bakken Crude would travel through the East Bay from Richmond through Berekely and Emeryville to Jack London Square and then south through Oakland and the South Bay.  This would occur 3 to 5 times per week. In San Luis Obispo county 88,377 people live within the half-mile blast zone of the railroad tracks.

In January, the San Luis Obispo County Planning Department proposed to deny Phillips 66 the permits necessary for the rail spur and terminals. This decision was not easy, as Phillips 66, a corporation ranked Number 7 on the Fortune 500 list, has fought the decision. The discussion remained open with many days of meetings, but the majority of the San Luis Obispo Planning Commission spoke in favor of the proposal at a meeting Monday, May 16. There is overwhelming opposition to the rail spur project coming from 250 miles away in Berkeley, CA. In 2014, the Berkeley and Richmond city councils voted to oppose all transport of crude oil through the East Bay. Without the rail spur approval, Phillips 66 declared the Santa Maria refinery would otherwise transport oil from Kern County via 100 trucks per day. Learn more about this project.

GIS Analysis

GIS techniques were used to estimate the number of Californians living in the half mile “at risk” blast zone in the communities hosting the crude-by-rail lines. First, we estimated the total population of Californians living a half mile from the BNSF and UP rail lines that could potentially transport crude trains. Next, we limited our study area to just the East Bay refinery corridor, which included Contra Costa and the city of Benicia in Solano County. Then, we estimated the number of Californians that would be living near rail lines if the Phillips 66 Santa Maria refinery crude by rail project is approved and becomes operational. The results are shown below:

  1. Population living within a half mile of rail lines throughout all of California: 6,900,000
  2. Population living within a half mile of rail lines in CA’s East Bay refinery communities: 198,000
  3. Population living within a half mile of rail lines along the UP lines connecting Richmond, CA to the Phillips 66 Santa Maria refinery: 930,000

CA Crude by Rail References

  1. NRDC. 2015. Next Frontier for Dangerous Tar Sands Cargo:California. Accessed 4/15/16.
  2. Oil Change International. 2015. Rail Map.
  3. Global Community Monitor. 2014. Community Protest Against Crude Oil by Rail Blocks Entrance to Kinder Morgan Rail Yard in Richmond
  4. CEC. 2015. Sources of Oil to California Refineries. California Energy Commission. Accessed 4/15/16.
  5. Zhang Y, Shotyk W, Zaccone C, Noernberg T, Pelletier R, Bicalho B, Froese DG, Davies L, and Martin JW. 2016. Airborne Petcoke Dust is a Major Source of Polycyclic Aromatic Hydrocarbons in the Athabasca Oil Sands Region. Environmental Science and Technology. 50 (4), pp 1711–1720.
  6. U.S. Dept of State. 2015. Final Supplemental Environmental Impact Statement for Keystone XL Pipeline. Accessed 5/15/16.
  7. U.S. Dept of State. 2015. Appendix W Environmental Impact Statement for Keystone XL Pipeline Appendix W. Accessed 5/15/16.
  8. NRDC, NextGen Climate, Forest Ethics. 2015. West Coast Tar Sands Invasion. NRDC 2015. Accessed 4/15/16.

** Feature image of the protest at the Richmond Chevron Refinery courtesy of Global Community Monitor.

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