August 23, 2012:

RICHMOND -- This month's fire at Chevron's Richmond refinery represented a systemic failure that must be addressed through robust community input and stiff sanctions by regulators, local environmentalists and elected leaders said Thursday. A town-hall meeting organized by Andres Soto and local group Communities for a Better Environment drew about 120 people to the downtown headquarters of the Richmond Progressive Alliance. "This has really set us back," said Mayor Gayle McLaughlin, a member of the Green Party. McLaughlin said the black cloud emitted from the fire, which occurred in the No. 4 crude unit that processes diesel crude oil, was a new stain on the city's improving reputation. Panelists at the meeting included Greg Karras, senior scientist for Communities for a Better Environment, Global Monitoring's Executive Director Denny Larsen and Councilwoman Jovanka Beckles.

Karras said the recent fire at the 240,000-barrel-per-day facility may have stemmed from a 1998 transition toward processing crude with higher sulfur content, which accelerates corrosion in parts like the 8-inch pipe that sprung a leak Aug. 6, creating a massive vapor cloud that ignited minutes later. "That decision increased the inherent hazard of refining," Karras said. Investigators for the U.S. Chemical Safety Board, one of the several agencies probing the incident site, have said that the history of the pipe and decisions not to replace it are a key line of inquiry in their investigation. The pipe is believed to have been in use since the 1970s. Karras said that after the pipe containing 600-degree diesel oil first sprung a leak, the decision to not shut the unit down may have contributed to the subsequent fire. The fire broke out at 6:15 p.m., about two hours after the leak was discovered. Workers removed insulation from the pipe in an effort to avert a larger incident but evacuated before the fire ignited. Four workers suffered minor injuries.

Larsen criticized Chevron and the Bay Area Air Quality Management District, saying both institutions played a role in the failure to install real-time air-quality monitoring equipment in the surrounding community, which he said was a condition of a tax settlement between the city and the refinery in 2010. County Supervisor John Gioia, chairman of the air quality district board, said Friday that the blame should not fall on the district. Gioia said Chevron failed to install ground-level air monitors, which it agreed to as part of the tax settlement. "I have proposed more air quality monitors around all Bay Area oil refineries, and that issue will get discussed at a special meeting of the board on Sept. 10," Gioia said. More than 14,000 people have visited area hospitals since the fire, complaining of respiratory problems and other discomforts, but data on exactly what toxins were in the air have been scant. Karras and Larsen said it is imperative that Richmond residents be privy to real-time monitoring of particulates and other airborne toxins in their community, of which Chevron's refinery has been a part for more than a century.

Chevron has released statements saying that it works with more than 30 agencies under some of the nation's strictest pollution rules and has drastically reduced emissions in recent decades. Chevron also opened claim centers near downtown and in North Richmond to reimburse residents for expenses incurred as a result of the fire. McLaughlin said Communities for a Better Environment and other community groups have been instrumental in prodding Chevron and investigators to accept community input and provide regular updates as the investigation unfolds. The final report on the fire's cause may not be ready for months. A community meeting is scheduled for 10 a.m. Monday in the Richmond City Council chamber. City officials and representatives from several investigative agencies, including the Environmental Protection Agency and the state Division of Occupational Safety and Health, are expected to attend. Karras said that community mobilization could force meaningful reforms. "This is an unprecedented opportunity to be part of the investigation," Karras said.

By Mercury News

August 23, 2012:

The press baron backing a proposed C$13 billion ($13.1 billion)refinery on Canada's west coast to process crude oil shipped on Enbridge Inc's Northern Gateway pipeline said on Wednesday he's confident the project will be economic. David Black, whose Black Press Ltd runs 150 newspapers in Canada and the United States, last week said he wants to build what would be Canada's largest refinery at Kitimat, British Columbia, near the planned terminus of Enbridge's planned 525,000 barrel-per-day Northern Gateway line. Black, who has spent a year studying the potential of a refinery capable of processing 550,000 barrels of crude per day, said he sees the facility as a way to lower the environmental risks of shipping heavy crudes from Canada's oil sands by tanker and to provide jobs in the province's north. Black, whose company Clean Kitimat Ltd is looking to complete environmental studies at the facility site over the next two years, said he is certain the refinery will be profitable. "Is it economic? Yes it is," Black said in an interview. "The budget is pretty solid I think. I employed two different consultants and they came up with basically the same numbers and I ran them by one of the big oil companies and they confirmed the numbers." Black's plan is the latest twist in the Northern Gateway saga, which has pitted governments against each other, riled many aboriginal communities in British Columbia and dominated headlines in Canada. Under current plans, tankers would take diluted bitumen from an oil port at Kitimat and ship it to California and across the Pacific.

While Black will pay the costs of the environmental studies, he is looking for investors willing to fund construction of the massive refinery. While no company has yet stepped forward to back the proposal, he expects there will be more interest as his plans move forward. "I want to prove to them I can get the permits and that will remove a lot of the question marks around this," Black said. "And the second thing I want to do is more work on the offshore marketing of the refined fuels ... and talk to the oil patch about getting contracts with them. Once I've done that then the whole thing is financeable." Most of the fuel produced at the site is expected to go to Asian markets. The plant would produce 240,000 barrels a day of diesel, 100,000 of gasoline and 50,000 of kerosene or aviation fuel, from 550,000 bpd of diluted oil sands bitumen. The diluent, an ultra light oil, would be stripped from the bitumen and shipped back to Alberta. Construction would start in 2014 and take six years. Black also said he does not expect construction costs to exceed his C$13 billion forecasts. He plans to have most of the facilities modules built in Asia then shipped to Kitimat for assembly at the site.

"The consultants built in quite a contingency (to the cost estimate)," he said. "The price will go up or down depending on the current price of steel, but the whole approach here is to tender as much of the construction as we can offshore, to low wage areas that are technically competent." Enbridge has not commented on the proposal other than to say it remains committed to the regulatory process for reviewing Northern Gateway, which would move oil sands heavy crude over a 1,177-km (731-mile) route. If built, the refinery would be larger than Irving Oil Ltd's 300,000 bpd refinery in Saint John, New Brunswick, now Canada biggest, and one of the largest anywhere. "It's a big refinery," Black said. "We are talking about revenues in the order of C$22 billion a year.

By Reuters

August 23, 2012:

HONG KONG (AP) — China's biggest oil and gas company, PetroChina Co., posted a 6 percent decline in first-half profit on Thursday on lower crude prices and continuing refining losses and warned the rest of the year would be "tortuous" as the global economy slows. The world's biggest publicly traded energy producer, one of a number of big companies reporting disappointing earnings, painted a grim picture. "The road to global economic recovery will remain sluggish and tortuous in the second half of 2012," PetroChina said. "The worsening euro debt crisis will continue to spread. Developed countries lack the growth momentum whilst emerging economies are expected to grow at a slower pace." The economic slowdown in China, the world's second-biggest economy, will continue, the majority state-owned company added. PetroChina pumped 667.9 million barrels of oil and natural gas in the first half, up 3.8 percent over the year before. Some 62.5 million barrels came from overseas production facilities. Last year, the company overtook Exxon Mobil as the biggest publicly traded oil producer after its daily output rose to 2.4 million barrels a day. Almost all output is for domestic use. The company has grown by pumping everything it can from reserves in China, estimated to contain more than 6.5 billion barrels. It has also expanded overseas by acquiring new reserves in Iraq, Australia, Africa, Qatar and Canada.

Profit for the first six months of the year fell to 62 billion yuan ($9.7 billion), or 0.34 yuan (5.3 US cents) per share, from 66 billion yuan, or 0.36 yuan a share, in the same period last year. Operating profit at PetroChina's exploration and production, or upstream, division in the first half rose 9.7 percent to 113.8 billion yuan. But the division's earnings in the second quarter were down from the first quarter, dropping 11.5 percent to 53.4 billion yuan. The company said global oil prices fell "substantially" in the second quarter, reflecting looser supply and demand. The refining and chemicals division lost 28.8 billion yuan, which the company blamed on China's slowing economy, prolonged weakness in the petrochemical market and government price controls on refined products aimed at keeping inflation in check.

By Bloomberg

August 23, 2012:

CORPUS CHRISTI — Flint Hills Resources has proposed $250 million in upgrades to the company’s West Refinery, which company officials said will help them process more Eagle Ford Shale crude oil and reduce emissions. The project — which would not add refining capacity — requires approval from the company’s board and permits from the Texas Commission on Environmental Quality and the U.S. Environmental Protection Agency, company officials said Thursday. Eagle Ford Shale crude accounts for more than 50 percent of the oil Flint Hills processes each day. Drilling continues to boom atop the 50-mile-wide, 400-mile-long patch of deeply buried oil and gas deposits which begins about 65 miles northwest of Corpus Christi. Eagle Ford crude is known in the industry as “light sweet,” meaning it is less dense and has a lower sulfur content than other types. As the crude is heated to take out component parts such as gasoline and kerosene, its lighter quality causes more expansion. “Processing light crude just takes more volume in the units to be able to make it work to do the separation,” Flint Hills Vice President and Refining Manager Phil Gaarder said. The modifications include equipment such as additional towers for processing, modified heaters, piping, tank work, pumps, valves and seals at scattered sites around the plant.

Flint Hills projects the enhanced processing capability would reduce the plant’s emissions of criteria air pollutants. Those pollutants — sulfur dioxide, carbon monoxide, nitrogen oxides, volatile organic compounds and particulate matter — are considered by the EPA as major sources of smog and pose health hazards. The criteria pollutants are covered by the TCEQ air permit. A separate permit outlining how the company will try to minimize emissions of the greenhouse gas carbon dioxide will be filed with the EPA, Gaarder said. The permitting process could take two to four years, Gaarder said. Construction would last about two years and require as many as 1,000 additional workers at times. Additional permanent workers could be necessary to handle the extra processing. “This is a good project for us, this is a good project for Corpus Christi and this is a good project for Texas,” Gaarder said. The company also will gather a panel of neighboring residents and representatives from nearby churches, businesses and schools — a new step for the company — to be facilitated by an outside person, Flint Hills spokeswoman Katie Stavinoha said. Community input is meant to address concerns or questions during the permitting process.

“It’s not just reaching out to our friends, it’s reaching out to people who may be some of our critics,” Gaarder said. “They deserve to be heard as well.” Flint Hills’ Corpus Christi refinery complex consists of the West Refinery, which processes about 230,000 barrels of crude per day. The East Refinery processes 70,000 barrels per day. Flint Hills’ previous major investments in the West Refinery were $250 million spent on a system to extract sulfur from diesel and a system to recover extracted sulfur in 2007. In all, $3 billion has been invested in the West Refinery since parent company Koch Industries acquired the facility in 1981, with $1 billion of that spent in the past decade.

By Caller.com

August 23, 2012:

BUSINESSDESK: New Zealand Refining, operator of the country's only oil refinery, turned a first-half loss as its refinery margin shrank and a high kiwi dollar ate into its processing fee revenue. The net loss was $1.5 million in the six months ended June 30 from a profit of $31 million a year earlier, the company says. Revenue tumbled 28% to $113 million, while operating expenses rose 1.7% to $113.9 million. The shares rose 2.3% to $2.66 and have fallen 8.9% this year. The company will pay a first-half dividend of 2 cents, against forecasts that it may omit this year's interim payment. NZ Refining's average gross refinery margin was $US4.36 a barrel in the first half, down from $US6.56 in the same period last year. The kiwi dollar averaged 80 US cents in the last period from 78 cents in the first half a year earlier. "The impact on the profitability of our competitor refineries is apparent with closures continuing in Europe, the US and Australia, where Shell brought forward the closure of its Clyde refinery and Caltex Australia revealed plans to close Kurnell near Sydney," the company says.

"Further reduction of the overcapacity in the global refining sector will go some way to easing the pressure on refiners' margins." It says margins have strengthened "slightly" since the end of June though it can't be sure that will be sustained for the remainder of the year. It did not give a forecast for full-year earnings. "Continuing poor growth in global economies, in particular, slowing growth in China and India, has contributed to a falling off in demand for oil products."  A highlight of the first half was winning shareholder approval for its $365 million continuous catalyst regeneration platformer project. Energy companies are the biggest shareholders. Mobil Oil NZ owns 19%, Z Energy 17% and BP New Zealand 15%.

By nbr.co.nz