Questions on PG&E shut-offs prompt Benicia response
Vallejo Times-Herald, June 15, 2019
In response to question about PG&E’s public safety power shut-offs [PSPS’s] and their potential impact to the city of Benicia and the Valero Benicia Refinery, the Benicia Fire Department said Fire Chief Josh Chadwick has been working closely with the State Office of Emergency Services and PG& E to gather answers.
Here is what is known at this time:
• The power interruptions in Benicia on Monday and Tuesday were not related to a PG& E PSPS.
• PSPSs are designed to shut power off in either the Elevated or Extreme California Public Utilities Commission (CPUC) Fire-Threat Districts. There are no CPUC Extreme Fire- Threat Districts in Solano County. The only Elevated Fire-Threat Districts in Solano are in North Vacaville near Lake Berryessa and in the West area of Green Valley.
• Valero Refinery has two separate sources of power — one that comes in from the north and the other that comes in from the south. Their system is designed so that if one of the sources were to be shut off, the second source would be sufficient to keep the power to Valero uninterrupted.
• Per PG& E, PSPS are essentially based on upcoming weather events and should not come without warning.
• Unlike a sudden and unexpected power loss, with prior notice Valero has the ability to limit impacts through a controlled shut-down.
• Portable generators would not have the capacity to provide sufficient power to supply the refinery.
• There are numerous major commercial, industrial, and critical infrastructure facilities located throughout California which would be severely impacted by a loss of power. State OES personnel are currently working with the California Public Utilities Commission to address these facilities.
Valero says it’s facing $342,000 or more in fines from county and regional agencies after a major air pollution incident earlier this year at its Benicia refinery.
In a filing last week with the federal Securities and Exchange Commission, the company says it expects to face $242,840 in proposed penalties from the Solano County Department of Resource Management and at least another $100,000 in fines to settle a dozen notices of violation from the Bay Area Air Quality Management District.
The reported penalty amount is about 1/100th of 1% of the San Antonio, Texas-based company’s reported adjusted net profit for 2018 — $3.2 billion.
“While it is not possible to predict the outcome of the following environmental proceedings, if any one or more of them were decided against us, we believe that there would be no material effect on our financial position, results of operators, or liquidity,” the company said in its filing.
The SEC document also reported a much larger penalty, $1.3 million, that Valero believes it faces in connection with an incident in the Texas city of Corpus Christi, where contaminated backflow from a company asphalt plant contaminated the area’s water supply for several days.
A local environmentalist who has followed the Benicia refinery’s recent problems said the penalties barely amount to a drop in the bucket.
“These fines don’t mean much to a giant oil company worth tens of billions of dollars,” said Hollin Kretzmann, an Oakland-based lawyer for the Center for Biological Diversity.
“It’s likely only a matter of time before we see another incident, so the communities near these dangerous refineries deserve better protection from toxic air pollution,” Kretzmann said.
Lillian Riojas, a Valero spokeswoman, said the company would not comment beyond its public filing.
Ralph Borrmann, a spokesman for the BAAQMD, emphasized that the Valero fines were not settled yet.
The district tends to spend several years negotiating settlements with local refineries, bringing together a handful of violations into a package long after they are the subject of media coverage.
For instance, the district announced in March that Shell had agreed to pay $165,000 to settle violations at its Martinez refinery that took place in 2015 and 2016.
Solano County’s investigation into Valero’s most recent incident is ongoing, according to Terry Schmidtbauer, the county’s assistant director of resource management, who emphasized that the agency has yet to produce or negotiate any final violations in connection with Valero’s March releases.
But Schmidtbauer said it was typical for his department to discuss tentative findings and potential penalties with companies it’s investigating, talks he said would be preliminary.
Two refinery components — a processing unit called a fluid coker, which heats up and “cracks” the thickest and heaviest components of crude oil, and a flue gas scrubber, which is supposed to remove fine particles before they’re released from the facility’s smokestacks — are under scrutiny in Solano County’s probe.
They began malfunctioning on March 11, resulting in the release of sooty smoke from the refinery. The releases intensified two weeks later when the facility belched out a large amount of black soot, leading to elevated levels of particulate matter.
The smoke prompted county officials to issue a health advisory for those with respiratory problems. Refinery managers shut down the facility.
The resumption of operations at the facility coincided with a slow and very small drop in gas prices, after two months of increases. On March 24, the day Valero shutdown, the average cost of a gallon of unleaded gasoline in California was $3.49, according to AAA.
On May 7, as the Benicia refinery gradually got back on-line, the the average price was $4.10. On Tuesday, it had dipped slightly to $4.07
Energy experts have said Valero’s shutdown coupled with other refinery problems in California and the high cost of crude oil globally led to the state’s recent gas price hikes, which are currently the subject of a state Energy Commission investigation.
Valero is restarting its Benicia refinery more than 40 days after a major malfunction and pollution release forced the energy giant to shut down the facility, contributing to the state’s recent spike in fuel costs.
“The Valero Benicia refinery has commenced the startup process, which is a multi-day sequenced event,” the company said in a notification sent to Benicia city officials over the weekend. The message warned of potential “visible, intermittent flaring” as a necessary safety precaution.
That flaring began Tuesday morning, according to a state hazardous materials database, and included a release of sulfur dioxide. The Bay Area Air Quality Management District sent staff to the refinery to observe the flaring, said agency spokesman Ralph Borrmann.
Valero has also been in touch with the Benicia Fire Department about the startup and flaring, according to Fire Chief Josh Chadwick.
The air district, which issued 12 notices of violation against Valero for the most recent releases, does not have a stationary air monitoring device in Benicia’s residential areas and had to drive a van to the area to monitor the situation.
The shutdown took place several weeks after California’s gas prices began to increase.
Energy experts correctly predicted that the refinery’s problems, coupled with maintenance issues at several other California refineries, would prompt an increase in crude oil prices.
The average cost of a gallon of unleaded gasoline in California on the day Valero shut down its Benicia refinery was $3.49, according to the American Automobile Association. It has increased by more than 60 cents since then, and on Tuesday stood at $4.10.
But the average price increases have slowed in recent days, and an AAA representative said Tuesday that costs may be beginning to stabilize.
“The news about Valero was actually a pretty big reason for the prices evening out,” said AAA Northern California spokesman Mike Blasky.
He said just the talk of the Benicia refinery restarting contributed to a recent 8-cent drop in the average wholesale cost of a gallon of gas.
“When those units do restart, that’s going to really contribute to a higher utilization rate, which will lower prices as we see our stocks resupplied,” Blasky said. “Any major refinery shutdown in California tends to really throw things out of whack.”
KQED’s Peter Jon Shuler contributed reporting to this story.