August 22, 2012:

Media magnate David Black’s daring proposal to build a massive refinery in Kitimat on the northern British Columbia coast may be getting the cold shoulder outside the province — but inside it’s stirring some interesting debate about how to capture economic opportunities from a large and growing oil-and-gas sector that is largely run from Alberta. Those giving it guarded backing include Kitimat City Council. Mayor Joanne Monahan said Wednesday she could support the refinery plan because it would bring jobs to the north coast while avoiding the shipment of thick, tarry bitumen by tanker through B.C.’s treacherous coastal waters. Ms. Monahan has remained silent on the controversial Northern Gateway pipeline proposed by Calgary-based Enbridge Inc. that would end in Kitimat.     I think it’s a healthy development even if it doesn’t come to fruition. In corporate Vancouver, the plan is attracting lots of commentary and is seen as worthy of a close look, said Jock Finlayson, executive vice-president and chief policy officer at the Business Council of Business Columbia. “I think it’s a healthy development even if it doesn’t come to fruition,” he said. “It’s interesting and it adds a dimension to the whole discussion around economic development in the energy sector.”

And according to Neil Godbout, managing editor of the Prince George Citizen, the plan, proposed by Mr. Black and his company, Kitimat Clean Ltd., is “crazy” but also “tantalizing,” as it addresses Premier Christy Clark’s desire to gain further financial benefits from the Northern Gateway pipeline and would position the province as a major player in the global refining business. “Regardless of whether Kitimat Clean ever sees the light of day, Black’s plan is a bold suggestion to turn a problem into an opportunity, rather than just opposing the pipeline without offering alternatives,” Mr. Godbout writes. Mr. Black, a successful B.C. entrepreneur, said last Friday he wants to submit an environmental assessment application for a 550,000 barrel-per-day refinery to process all the output of the Northern Gateway pipeline. The refinery would be specifically designed to process Alberta heavy crude oil from the oil sands and sell refined products in Asia. Mr. Black is convinced the refinery would reduce the threat of offshore pollution from an oil spill because transportation of refined fuels is safer and is looking for financial backers.  The plan would be the first significant B.C.-grown initiative to take advantage of oil and gas opportunities emerging in the province. The discovery of immense shale gas resources, plans for at least three major liquefied natural gas export terminals, and plans for two major oil sands pipelines, are turning B.C. into one of North America’s hottest energy regions. Yet not a single major energy industry player is based in the province.

The vast majority of decisions are made in corporate headquarters in Calgary and elsewhere around the world, from the United States to Asia. The void is no doubt contributing to the backlash against the oil pipeline schemes, pitting B.C.-based environmental and aboriginal groups against what are perceived as outside interests. The void may also explain why oil and gas has not been seen as a platform for value-added growth. Rather than capitalize on its natural gas resources to power its economy, the provincial government has implemented aggressive greenhouse gas reduction targets that discourage its use, said Mr. Finlayson. “One of the things missing in B.C. is any discussion about what are the value added opportunities around natural gas development,” Mr. Finlayson said. “We actually have a policy regime in B.C. that says we don’t want to use natural gas as a domestic energy source or as a feedstock for manufacturing. It’s an odd position to take for a jurisdiction that is drowning in natural gas, when all around the world jurisdictions are rushing to take advantage of the bounty.”

    The Western World has all the refinery capabilities they need

Mr. Finlayson said the refinery proposal is unusual for B.C., where “you rarely hear of anybody who is contemplating building new large greenfield industrial facilities. It shows the whole narrative around value added industrial development tends to be rather impoverished here on the West Coast.” Meanwhile, the province, once a refinery hot bed, has seen more shutdowns than any other region in the country. Five refineries closed in the province in the last 30 years. The two remaining refineries, one run by Chevron Corp. and the other by Husky Energy Inc., are small and account for only 3% of Canadian production, according to a report by the Conference Board of Canada on the challenges faced by the country’s refining sector. Would a massive, independent refinery focused on Asian exports do better? Unlikely, based on today’s economics and existing plans. Bill Simpkins, spokesman for the Canadian Petroleum Products Institute, said refinery plans are floated often as a way to promote economic development, but get discarded when there is a fuller understanding of the tough environment. Calgary-based expert Michael Ervin, principal of MJ Ervin & Associates, said the plan is not feasible and is unlikely to attract investors.

Demand for petroleum products in North America is declining, while markets in Asia are building huge plants that will exceed demand for a long time, resulting in a soft market for refined products, Mr. Ervin said. Columba Yeung, CEO of Calgary-based Value Creation Group, which has worked on various oil sands development and upgrading plans, said shipping products is expensive, refining is more expensive than assumed by Mr. Black, and margins are very volatile. “The Western World has all the refinery capabilities they need,” he said. “Developing and emerging economies want the refineries in their lands.” Yet refineries in Atlantic Canada have increased their capacity and are exporting petroleum products abroad. North Atlantic Refining in Come by Chance, Nfld., produces 115,000 barrels a day and is owned by Korea National Oil Corp. Irving Oil owns Canada’s largest refinery in New Brunswick, with the capacity to produce 300,000 barrels a day.

And few thought the Kitimat LNG plant had legs when it was first proposed as an import facility about a decade ago. As it turned out, conditions changed, and it spawned a brand new B.C. industry that capitalized on a unique B.C. attribute: its Pacific Ocean-facing real estate and proximity to Asia.

By Financial Post

August 22, 2012:

Concerned about problems with Contra Costa County's emergency phone alert system during the Chevron refinery fire earlier this month, county health officials met Wednesday with a potential new vendor to administer the system. The system, currently administered by CityWatch Notification Systems, sends alerts to landline phones to inform local residents of emergencies. The notification process is supposed to take no more than 30 minutes, county Supervisor John Gioia said. Instead, it took up to three hours for many residents to receive a phone notification urging them to shelter in place, as thick black smoke spewed from the refinery the evening of Aug. 6. "That's unacceptable -- it doesn't meet our expectations of what the vendor's performance should be," Gioia said. "We're going to look at whether new technology and a new vendor makes sense so we can inform the public in a much more timely manner. We all deserve to be informed quickly after an industrial incident."

Katherine Hern, who manages the county's emergency warning system, is meeting with a prospective new phone notification system vendor in San Diego Wednesday to weigh that possibility, said Randy Sawyer, Contra Costa Health Services' chief environmental and hazardous materials officer. Sawyer said one problem with the current system is that on Aug. 6, it automatically re-dialed landlines where there wasn't a response or an answering machine. That glitch and other problems likely contributed to the system's slowness during the refinery fire, he said. But Sawyer and Gioia said that the county emergency notification system's other elements, including sirens and calls to cellphones that are registered through the sheriff's office, worked much more efficiently than the landline system. Residents can sign up to receive cellphone emergency alerts by visiting http://www.cococws.us/register.html. "We encourage people to register on their cellphone," Gioia said. Gioia, a Richmond resident, said he received an automated call on his cellphone alerting him to the fire around 6:45 p.m. on Aug. 6, about 15 minutes after the fire was reported.

The San Ramon Valley currently participates in the East Bay Regional Communications System -- collaboration between 30 cities, several special districts, as well as Alameda and Contra Costa counties -- which aims to provide an interoperable communications system in the event of disaster for both counties, along with state and federal agencies. At build out, the East Bay Regional Communications System will consist of 6 cells with a total 36 sites.

By SAN RAMON EXPRESS

August 18, 2012:

If you plot out a chart of 2012's average gasoline prices, you get what looks like a roller coaster. There's a steady increase from January to April, the spring peak around $4 per gallon, and then a steady decline in May and June. By the beginning of July, the national average was hovering around $3.42. But since then, that roller coaster chart has been heading into its second big climb. Prices have been going up since July 1, and are now approaching $3.80. So, many drivers are now wondering if we should soon expect to pay even more — or if we're near the peak. Tom Kloza, chief oil analyst for the Oil Price Information Service, thinks it's a short-term problem. "This is something you'll have to put up with for a few weeks, maybe more if you're on the West Coast," he says. "But certainly not in the majority of the country." 

Problems In The Supply Chain

Two factors are driving the recent increases. The first, as expected, is the price of crude oil, which has risen to about $94 a barrel from around $80 in June. The second factor is a bit more unusual — a series of problems in the nation's energy infrastructure have created kinks in the supply chain. "It's the end of the summer. Refineries have been running hard, and running at high rates," Kloza says. "And sometimes you get a cluster of breakdowns." A recent fire at a Chevron refinery in Richmond, Calif., was the biggest issue, but two Midwestern refineries also suffered equipment failures around the same time. Due in large part to the Richmond fire, gas is already approaching $4 per gallon on the West Coast. The increase has been more subtle in places like Pennsylvania. So much so, that some drivers, like Marie Watson, who recently filled up her car at a Harrisburg gas station, haven't even noticed it. Three pumps over, Anna Nielsen has noticed the change, but says the increase hasn't affected her driving habits. "It's just kind of something I deal with," Nielsen says. "I'm really lucky, because I get really good gas mileage." But Nielson says she'd probably cut back on travel if gas tops $4 a gallon.

"My mom lives in Lancaster," she says. "I probably wouldn't go see her as often. My best friend lives in Philadelphia. So, I probably wouldn't be doing as much of those longer trips." 

Relief In Sight

National driving demand typically starts to fall after Labor Day. So barring a major disruption in oil or gasoline supply, like a major Gulf Coast hurricane, analysts like Tom Kloza expect prices to start falling in mid-September, and stay down until the spring, when the whole cycle starts again. "In the fall and the winter, there's plenty of gasoline. We don't drive as much," Kloza says. The shift from summer- to winter-blend gas in pollution-prone areas will also help bring down the cost as the temperatures start to fall.

By npr

August 18, 2012:

The owner of a British Columbia newspaper chain Friday proposed spending 13 billion Canadian dollars (US$13.1 billion) to build an oil refinery on Canada's west coast that would refine crude from oil sands before shipment to Asia. David Black, owner of the British Columbia community newspaper chain Black Press Ltd., said the refinery built near Kitimat, British Columbia, would process crude oil from Enbridge Inc.'s Northern Gateway pipeline into refined products, including gasoline, diesel and aviation fuel. "The refinery will be state of the art and designed specifically for processing Alberta oil sands" heavy crude oil. We want it to be the cleanest and greenest upgrading and refining site in the world," Black said in a statement on the website for the new refining company, called Kitimat Clean Ltd.

Black said that the refinery would reduce the risk from tanker spills on the west coast, because refined petroleum products evaporate and aren't as hard to clean up as unrefined crude oil. The refinery would create 6,000 construction jobs over five years and 3,000 permanent refinery jobs, he said. The refinery would be able to process 550,000 barrels of oil a day and could be built by 2020. Enbridge's Northern Gateway pipeline is designed to transport 525,000 barrels a day and could be completed by 2017. Black said he has been in contact with government officials and believes they would support the project. He also said that he believes the public would be more supportive of the Enbridge pipeline if a refinery were built to both help British Columbia's economy and reduce the spill risk. However, Black said some oil sands producers have said they are not in favor of a refinery and would prefer to export unrefined heavy crude.

By Marketwatch

August 18, 2012:

RICHMOND, Calif. — Chevron and environmental groups are poised for an epic clash over the repair of the oil giant's century-old refinery in the wake of the Aug. 6 fire there. The conflict could delay a return to full production at the refinery and prolong a period of high gasoline prices for Northern California motorists. Environmentalists have seized on the fire damage as an opportunity to force Chevron to update the huge refinery, one of the Bay Area's biggest polluters, to make it safer and cleaner. But Chevron, eager to preserve exceptions the aging refinery enjoys from compliance with the 1970 Clean Air Act, appears ready to resist a major update.

"This is our most opportune time to put pressure on Chevron," said Andres Soto, an activist with Communities for a Better Environment. "We definitely want a complete modernization of the refinery." A spokesman for San Ramon, Calif.-based Chevron, though, expressed skepticism about the environmental groups' motives. He said the same environmental and community groups now calling for modernization of the refinery have in the past used litigation and other tactics to delay upgrades that, the company says, would have made the refinery more efficient and reliable while reducing emissions.

Spokesman Justin Higgs said the groups' actions "continue to impede improvements, stymie job creation and cost Richmond much-needed revenue." Community activists respond that they sued Chevron in 2010 because it had not undertaken a sufficient environmental review. They won a court order forcing the oil giant to produce a new environmental impact report. Chevron is preparing a report that should be completed by 2013. This time around, activists are pressuring Chevron not merely to replace the crude oil distillery unit destroyed in the fire but to replace aging equipment, pipes, devices and other gear with state-of-the-art, modern components. They want a thorough probe of the fire and rigorous oversight of the repairs and upgrades.

"Modernize this damn old refinery," said Denny Larson, a representative of El Cerrito, Calif.-based Global Community Monitor, which provides support for community groups in their activities. Chevron's 110-year-old Richmond plant is one of numerous aging U.S. refineries that were largely exempted from the 1970 Clean Air Act because their already creaky equipment wouldn't have passed muster under the rules established by that law. To avoid being forced to comply with today's Clean Air Act rules, refinery operators have typically avoided major expansions. Instead, they have cobbled together modifications and repairs in fits and starts as components wore out or broke down. "The activists sense this fire has created the opening to push for a modern plant," said Dara O'Rourke, an associate professor of environmental policy at the University of California at Berkeley. "This Richmond refinery is really old. At some point you have to bring it up to 2012 standards."

Local environmental groups have the backing of the 1.4 million-member Sierra Club, which has called for a thorough investigation of the fire and a careful monitoring of repairs. "It's time to move beyond oil," the Sierra Club wrote in an e-mail to its members. "Let your friends know that you're sick of Big Oil's spin machine." At full production, the Richmond plant has the capacity to process 245,000 barrels of oil per day. Chevron won't say how much production has been reduced by the fire, but Bob van der Valk, a Montana-based fuel price analyst, estimates that the refinery is running at about 60 percent capacity. Richmond City Manager Bill Lindsay said it "could be several months" before full production is restored at the refinery, suggesting that gas prices are likely to remain high in Northern California for the foreseeable future. Since the fire, gas prices in the Bay Area have spiked 26 cents, or 6.8 percent, and now are at an average $4.15 a gallon. "The Richmond refinery is important to Chevron's entire West Coast system," said Denton Cinquegrana, an analyst with the Oil Price Information Survey. "Chevron uses the refinery not only to supply the Bay Area but the entire Pacific Northwest."

By The Columbian