Phillips 66 oil-by-rail project may be in jeopardy – deadline Aug 15

Repost from The Tribune, San Luis Obispo

Phillips 66 oil-by-rail project may be in jeopardy

By David Sneed, July 22, 2016 8:06pm

• Oil company faces Aug. 15 deadline to pay $240,000 in fees and supply information or SLO County will withdraw the application
• County also is critical of Phillips 66’s recent decision to begin trucking crude oil to the Nipomo Mesa refinery
• It is unclear whether a Sept. 22 Planning Commission hearing on the rail project will take place

The Phillips 66 refinery on the Nipomo Mesa has been trucking in oil since February as it continues to pursue a plan to accept oil by rail.
The Phillips 66 refinery on the Nipomo Mesa has been trucking in oil since February as it continues to pursue a plan to accept oil by rail. Joe Johnston Tribune

A controversial proposal by the Phillips 66 oil company to bring crude oil by rail to its Nipomo Mesa refinery is at a crossroads.

The oil company has been given an Aug. 15 deadline to give the San Luis Obispo County department of planning and building additional information about the project — the company wants to install a rail spur connecting the refinery with the main line — and to pay more than $240,000 in fees or the project application will be withdrawn.

In a July 8 letter to the company, county supervising planner Ryan Hostetter wrote, “This letter serves to inform Phillips 66 that without the necessary information and funding, the county cannot complete processing the application as directed by the Planning Commission.”

As of July 22, the county had received only part of the information it has requested and none of the money, Hostetter said.

Phillips 66’s proposal to build the spur so it can bring in three trains per week, each carrying 2.2 million gallons of crude oil, has faced a storm of opposition. Communities on the rail line across California have weighed in, many saying they feared a disastrous derailment.

Phillips 66 did not respond directly to questions by The Tribune on Friday as to whether the company plans to meet the county’s Aug. 15 deadline to pay the fees and provide the missing information. Instead, it sent this statement:

“Phillips 66 presented a strong proposal, and we remain confident about the project,” the statement said. “We understand and respect the review and approval process with the county, and look forward to the next step in the EIR process.”

The county has also informed Phillips 66 that its recent decision to truck oil directly into the refinery is likely a violation of the county’s permit and will require a new permit as well as a trucking plan detailing the new oil-by-truck method. The refinery has been receiving crude oil by pipeline. The county found out about the trucking during an April 15 Planning Commission hearing on the rail spur project.

“Bringing in crude by truck is a modification of the refinery and, additionally, may have the potential to cause significant impacts,” Hostetter said in a June 30 letter to Phillips 66.

The refinery’s maintenance supervisor, James Anderson, responded to the county in a letter dated July 14 in which he denied the assertions that the trucking of oil is a modification of the refinery and disputes the notion that a trucking plan is required. The letter refers to the refinery’s official name, the Santa Maria Refinery.

“Phillips 66 does not need any new permits or modifications to its existing permits to deliver feedstocks by truck to SMR (Santa Maria Refinery) in the manner in which it is currently performed,” Anderson’s letter stated. “Such activity has been a long-standing practice, albeit intermittent, and is not part of the rail extension project.”

Hostetter said the July 14 letter answered some but not all of the county’s questions. No deadline was given for providing the information.

“They are not sitting on it, but we need more information to make a formal call on whether trucking is an allowed use or if they need a new permit,” Hostetter said.

Anderson’s letter went on to give some details about the refinery’s recent oil-by-truck activities:

▪ It began in February.
▪ The number of truck trips per day has ranged from 1 to 25.
▪ Trucks generally hold up to 150 barrels of oil. A barrel contains 42 gallons.
▪ The oil is delivered into an existing pipeline via a flexible hose.
▪ The oil generally originates within California.

Phillips 66 has proposed installing a 1.3-mile rail spur connecting to the main line as a way to expand its sources of crude oil and continue to support the 200 employees who work at the Nipomo refinery. The proposal calls for deliveries from three trains per week; each train would have three locomotives and 80 rail cars to haul 2.2 million gallons of crude oil.

Earlier this year, the county Planning Commission held five full days of hearings that drew thousands of people from around California. The commission has scheduled a hearing for Sept. 22, at which a final decision could be made.

At its most recent hearing, the commission asked for a variety of additional information from Phillips 66, such as how many trains per year would arrive at the refinery under the three-trains-per-week scenario, how many trains could arrive in one day and what impact that would have on air quality around the refinery.

Few of those questions have been answered. Whether the commission even has a Sept. 22 hearing and whether it will be able to make a final decision if a hearing is held, depends on how much additional funding and information Phillips 66 provides, Hostetter said. For example, the company has proposed only funding the project through the Planning Commission phase but not through the likely appeal to the Board of Supervisors.

County policy requires that development applicants pay all the county’s costs in processing their permit, including the cost to hire consultants and write an environmental impact report. The county has estimated the cost of processing the application through the Board of Supervisors appeal hearing to be $240,697.73.

If the county withdraws the application, Phillips 66 could reapply at a later date.