On June 18, President Bush took to the Rose Garden to deliver a speech about energy in which he emphasized the pressing need to modernize US oil refineries. "With recent changes in the makeup of our fuel supply, upgrades in our refining capacity are urgently needed," he said. And if the United States is to reduce its dependence on Middle Eastern oil, the president said Congress needs to make it easier for oil companies to use unconventional sources of fuel. "It has been nearly thirty years since our nation built a new refinery," he added, "and lawsuits and red tape have made it extremely costly to expand or modify existing refineries."
The president could easily have been talking about Richmond, which is one of 22 cities studying proposed refinery modifications to accommodate changes in the industry's fuel supply. Back in 2004, the Chevron Corporation proposed a billion dollar "Energy and Hydrogen Renewal Project" at its 2,900-acre Richmond refinery. Company officials say the project is designed to modernize old equipment, produce 6 percent more California-grade gasoline, and let Chevron refine a wider, more contaminated range of crude oils — all with less pollution than before. But Chevron's critics worry that the renovations will end up fouling the air in the already-blighted Richmond neighborhoods downwind of the refinery, and have taken up arms to halt the project's progress.
The company's plans illustrate the ways in which the nation's refineries will likely respond as global demand for energy drives oil and gas prices to all-time highs. The Department of Energy expects US refiners to increase their capacity by 4.5 percent between now and 2010. And as supplies of so-called light, sweet crude oil become scarcer and ever-costlier, much of this new capacity will be dedicated to refining heavier and more polluting crude oil from Canadian tar sand reserves. Thus refineries, which turn crude oil into gasoline, must upgrade or pay the price. "This project is the camel's nose under the tent for the rest of oil refining in the West," said Greg Karras of the group Communities for a Better Environment, part of a coalition of community organizations crusading to halt the project.
Chevron's Richmond project also epitomizes the regulatory challenges described by President Bush. The expansion faces opposition from longtime critics like Karras who believe the company's actual intent is to refine dirtier and heavier grades of crude oil. Although Richmond's Planning Commission approved the project at a June 19 meeting, it imposed a number of conditions that both Chevron and its opponents thought were inadequate. Both sides swiftly appealed the decision, which is now scheduled to go before the city council on July 15. Before they cast their votes, council members will need to shrug off a din of conflicting interests and a longtime history with the company to focus on the project's complex facts. The council's decision will be a litmus test for how far the city has come since its days as a perceived Chevron "company town."
Although the oil company's plans have been reviewed by a small army of experts, there is little consensus on even the most basic of issues. Chief among them is whether it actually plans to use significantly dirtier and heavier crude oils in Richmond. Company officials declined to respond to multiple requests for an interview for this story. But in various public forums, Chevron officials have insisted that they don't plan to refine the more contaminated heavier crude oils in Richmond. "We cannot now and we will not in the future be able to run heavy crude," company representative Bob Chamberlin said at a June 5 planning commission meeting.
But there is evidence to the contrary. A recent study by the Louisiana-based Subra Company, Inc., an environmental consulting firm, suggested that similar projects at other refineries have enabled other companies to refine heavier crude oil, resulting in increased emissions of sulfur dioxide, a chemical linked to negative health effects. And in its 2007 annual report, the oil company told investors, "To improve margins, Chevron is selectively investing in its refining system to process greater quantities of low-cost heavy and high-sulfur crude oils." Finally, a December filing with the Securities and Exchange Commission suggested that these are the very factors driving its Richmond upgrade: "Design and engineering for a project to increase the flexibility to process lower API-gravity crude oils at the company's Richmond, California refinery continued in 2007."
Consequently, Chevron's opponents aren't buying its assurances. In March, Communities for a Better Environment held a press conference to address what it called the "hidden" nature of Chevron's proposed project. "Refining lower-quality oil would release five to fifty times more pollutants," Karras said. In response to the group's assertions, Attorney General Jerry Brown responded by hiring an independent chemical consultant, Geoffrey Dolbear, to review Chevron's plans. Dolbear concluded that the new equipment proposed for Richmond would indeed allow Chevron to refine heavier and potentially more contaminated grades of crude oil, which would increase the company's emissions.
This disagreement was just the latest source of confusion regarding the oil company's plans. Last December, the Attorney General's office sent a letter to Richmond officials complaining about the quality of the information the oil company had provided the city. "It appears that Chevron has provided incomplete and inconsistent material information to the different permitting agencies, which raises questions about the parameters of the project and its environmental impacts," it said. "The changing information on the data forms creates a moving target and each appears to present a different project."
As far as Karras is concerned, anything that one of the world's biggest polluters calls an upgrade could well be a downgrade for the citizens of Richmond. "What we know for sure is that this project would drastically increase flaring and other toxic pollution that would not be able to be controlled," he said. Karras believes Chevron is disguising its real plans inside a promise to make environmental upgrades that should have been completed years ago.
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