U.S. Midwest refiners have looked to boost their profits by refitting to process plentiful supplies of Canadian heavy oil.Charles Dharapak/The Associated Press
BP PLC has agreed to spend hundreds of millions of dollars to reduce harmful emissions at a major refinery in the United States to settle a dispute with American regulators and environmental groups.
The British energy giant plans to invest an additional $400-million (U.S.) into its refinery in Whiting, Ind., which it is revamping so it can process more heavy oil, including Alberta's controversial bitumen. BP made the announcement Wednesday, in concert with the U.S. Environmental Protection Agency and the U.S. Department of Justice. The company must also pay $8-million in fines thanks to previous alleged clean-air violations, the trio said.
Some of the new pollution-control requirements are similar to those recently imposed on Marathon Petroleum Corp., and green groups believe other refining projects will be forced to meet these more stringent environmental policies. This puts many companies that are retooling refineries in the cross-hairs as challengers aim to stop, or at least slow, the flow of crude from the oil sands.
BP received approval to re-engineer its existing Whiting refinery around 2008, but citizen and environmental groups challenged the regulatory permits. The opponents went to the EPA, and when the regulator reviewed their emissions math, it sided with BP's critics, sparking years of disagreement. BP's detractors agreed to drop their lawsuits as part of the settlement deal.
"This settlement is going to have large-scale impact nationwide … because what it really does is sets the bar for future permitting," said Ann Alexander, the lead attorney on the Natural Resources Defense Council's challenge. "It was never our goal or expectation that we were going to stop [the refinery] Our goal was to protect the community and really make the tar sands pay their freight."
The NRDC does not have any other refining projects in its sites right now, she said.
The Whiting operation is the sixth-largest refining facility in the U.S., processing 405,000 barrels of oil per day. Heavy oil currently makes up about 30 per cent of the crude it turns into usable products like gasoline and jet fuel. When the redesign is done, it will be able to process up to 90 per cent heavy oil. The switchover is expected to be done in 2013, although the refinery has operated throughout the construction process.
BP, which continues to take heat over the Deepwater Horizon offshore oil spill in 2010, said its last cost estimate on the Whiting makeover rang in at $3.8-billion, according to Chicago-based company spokesman Scott Dean.
"The project has always been designed to be protective of the environment and reduce emissions," he said. "This agreement just simply makes a good agreement even better."
BP will now build a "state-of-the-art" system to reduce flaring of refinery gas, and additional controls to lower emissions, the company said in a statement. Improvements will also include a "refinery fence line monitoring system" to track air quality for the local community.
The Sierra Club, the Environmental Integrity Project, NRDC, the Environmental Law and Policy Center, the Hoosier Environmental Council, and Save the Dunes, as well as Indiana and the federal government were all part of the BP refinery negotiations and settlement deal.
Carrie Tait