Efforts to increase U.S. refinery capacity move along, slowly

In his State of the Union address one month ago, President Bush called for an increase in domestic oil production, which his office said would include continuing to work with Congress to encourage investments in refinery capacity.

One place where such investment started long before the president’s speech is Arizona. There, a company called Arizona Clean Fuels Yuma has been working for the past seven years to try to get the necessary approval to build a refinery. If it is built it will be the first new refinery in the United States since 1976, according to news reports.

Meanwhile, officials at ConocoPhillips’ Wood River Refinery in Roxana, Ill., are in the early stages of a lengthy process to get environmental approval to put more emissions into the atmosphere as part of an expansion project. The refinery will be a major player in a venture by ConocoPhillips and the Canadian oil corporation EnCana in the coming years.

The project will result in the Wood River Refinery pumping out an additional 100,000 barrels of product refined from heavy Canadian crude oil each day, to a total of more than 400,000 barrels by the year 2013.

The project splits operations 50-50 between the two corporations.

Before the joint venture was announced last October, the Wood River Refinery already had upgrades in the works and had applied for the heftier permit from the Illinois Environmental Protection Agency in May 2006, according to a Feb. 19 article in The Telegraph, a newspaper in Illinois.

With the announcement that the refinery would boost its output, the application process became more complex.

"The application review process is still under way," Jim Ross, manager of the Division of Air Pollution Control for the Illinois EPA in Springfield, told The Telegraph.

Preliminary statistics from the application review supplied by Ross show that the refinery would emit less particulate matter (150 tons less), more volatile organic material (388 tons more) and less nitrogen oxides (3.6 tons less).

Ross explained that volatile organic material and nitrogen oxides are pollutants that contribute to smog.

Melissa Erker, spokeswoman for the ConocoPhillips Wood River Refinery, said the permit application process typically takes at least a year.

"We were fully aware this was at least a year process; there’s nothing unusual about that," Erker said.

Erker said the refinery filed for a Prevention of Significant Deterioration, a permit that calls for pollution controls such as scrubbers on smokestacks and catalytic crackers.

Erker said the refinery is not putting up the protective equipment because of the permit application, but because of another agreement with the U.S. EPA.

"It’s something we’re doing to help alleviate environmental issues in the area," Erker said.

Madison County has what is known as a non-attainment rating, meaning pollutants in the air there are higher than national air quality standards allow. Environmental officials cite large industrial zones, such as the refinery and the U.S. Steel Granite City Works, as contributors to the non-attainment status in the county.

Ross, who was in the area Jan. 31 as part of a ConocoPhillips town hall meeting about energy production, said last week that there would be chances for the community to comment on the permit application process.

"If a substantial number of people request a public hearing, we likely will have one," Ross said. "The (IEPA) will come to the area and discuss the draft of the permit and answer questions. People will have another 30-day period after the hearing to submit comments."

In Arizona, the effort to acquire land to build a new refinery in eastern Yuma County recently moved one step closer to fruition, according to a Jan. 9 report in The Yuma Sun.

The U.S. Bureau of Reclamation has released a final environmental impact statement that describes the potential effects of a proposed title transfer of land and facilities to the Wellton-Mohawk Irrigation and Drainage District, The Sun reported. Completion of the statement clears the way for a decision to be made by the bureau.

The proposed transfer involves approximately 40,000 acres, one of the larger such land transfers in the agency’s history, said Joe Liebhauser, WMIDD transfer project manager.

The bulk of it, about 28,197 acres, is land in the irrigation project for which WMIDD has reimbursed the bureau. The district also is seeking ownership of an additional 19,429 acres for which it would pay fair market value, Liebhauser said. A portion of that land is being sought for the refinery.

A record of decision is to be issued by the USBR Lower Colorado Regional Office in early February outlining what action is to be taken. That action could be approval of all, a portion of, or none of the proposed transfer, Liebhauser said. However, the transfer is the "preferred alternative."

"It’s a relief to have gotten to this point," said Charles Slocum, WMIDD manager. "Hopefully, it will lead to a quick decision and transfer of title."

The district’s intent, Slocum said, is to purchase the land in phases. The first phase would include about 6,500 acres. Of that, the district has agreed to sell 1,450 acres to Arizona Clean Fuels to develop the proposed refinery.

"Once the transfer is completed, we can purchase the property," said Glenn McGinnis, chief executive officer of Phoenix-based Arizona Clean Fuels. "We have an agreement with the district and we have the funding available to buy it."

And once that happens, he said, Arizona Clean Fuels can apply to Yuma County for rezoning of the property to heavy industrial. That process could take about six months, he added.

The Yuma County 2010 Comprehensive Plan already has been amended to designate industrial use of the property, McGinnis said.

While proceeding with the rezoning request, Arizona Clean Fuels also will be working on the design, engineering and survey work for the proposed refinery in preparation for applying for building permits, McGinnis said.

Liebhauser said the intent of the transfer is to relieve the bureau of the liability and responsibility of the project that can be managed locally.