May 17, 2008 - 11:13PM
The Telegraph
ROXANA - Officials of ConocoPhillips are hoping for an early resolution to an appeal by environmental groups that is holding up a $2 billion expansion project.
The project would increase capacity of the Roxana plant and make use of a Canadian crude oil source, but environmental objections are delaying the project.
"We can't hold on to our resources forever," said Melissa Erker, a spokeswoman for ConocoPhillips, referring not only to capital, but human resources, such as engineers and skilled craftsmen who are lined up to build the project.
Environmentalists have filed a federal appeal of a construction permit granted by the Illinois Environmental Protection Agency.
A lawyer appealing the IEPA's clean air permit to build the plant said her clients have no problem with an expedited hearing, as long as the panel hearing the appeal makes the decision carefully and according to law.
ConocoPhillips operates the plant under the name WRB Refining Wood River Refinery. The project will employ an average of 1,500 workers and up to 2,500 at its peak. When completed, the expansion will provide about 100 new full-time jobs.
The firm has filed a motion with the U.S. EPA Environmental Appeals Board for expedited consideration, but people on both sides of the issue said they do not know how soon a decision will be made.
In its motion to expedite, the company says the petition for appeal is "meritless" and that oral argument would be of no help in the appeals board's decision.
The firm also argues that there are agreements in place with other agencies (consent decree) that took 30 months to negotiate.
"The consent decree has compliance deadlines for the facility involved in this permit appeal. Failure to comply could result in fines and penalties in amounts ranging from $750 a day to $10,000 a day," the company's motion states.
The firm also cites the need to prevent disruption in Midwest fuel supplies. Its lawyers claim a delay in resolving the issue would jeopardize its ability to attract and retain skilled labor.
Ann Alexander, the senior attorney with the Natural Resources Defense Council, said her organization has appealed the issuance of a construction permit given to the company by the IEPA, primarily out of a concern over the amount of carbon dioxide, a "greenhouse gas," cause by "flaring" of gases that are byproducts of the refining process.
The Defense Council, the Sierra Club and the American Bottom Conservancy are claiming the IEPA permit does not sufficiently limit the amount of carbon dioxide and other gases being emitted. They claim federal law requires such limits and requires refiners to use the most effective technology available to reduce emissions.
The Appeals Board is the final U.S. EPA decision-maker on administrative appeals under all major environmental statutes the agency administers. The board typically sits in panels of three judges and makes decisions by majority vote. Currently, nine experienced attorneys serve as counsel to the board.
"We appealed because we don't believe the Illinois regulations on carbon dioxide, methane and carbon monoxide are adequate," said Kathy Andria, president of the American Bottom Conservancy and member of the Clean Air Campaign for the Illinois Sierra Club.
Alexander said voluminous briefs have been filed in the case, but a formal hearing has not been set. If the decision goes against the environmentalists, there will likely be an appeal to a federal court, which could cause the case to drag on, potentially for years.
Meanwhile, the case could be settled among the environmentalists, the IEPA, the "respondent" in the appeal, and the company, which is an "intervenor."
So far, however, there has been no move toward a settlement.
ConocoPhillips operates the last remaining, out of three, oil refineries in The Telegraph area.
The company announced the expansion in April 2007. Officials said the project was scheduled to begin in 2007 and was scheduled for completion in 2011.
The capacity would expand from 306,000 barrels per day of crude processed to 352,000.
The Wood River refinery (which is actually in Roxana) supplies all the jet fuel to Lambert-St. Louis International Airportand about half the jet fuel of O'Hare International in Chicago
The refinery also provide about half the gasoline to the St. Louis metropolitan area.
The expansion involves using oil sands crude oil, imported by pipeline from Canada. The company has formed a joint venture with EnCana to supply a heavier form of crude from the oil sands of Alberta.
Erker emphasized one of the most important advantages of the project would be that it would make use of crude oil from Canada, a reliable supply from an adjacent country with which the United States has a long friendship. It would reduce dependence on oil from unstable countries in the Middle East and South America, she pointed out.
Erker said the company will build a new "coker," and much of the existing plant will also be refurbished. The end result will allow the company to make more fuels, such as gasoline and jet fuel, from heavier oils. The refurbished plant will make more fuels, not only from the Canadian crude, but also from heavier remnants of raw crude that would normally be used only for asphalt.
The existing coker would also be kept in operation, she said. Once the lighter elements of the heavier crude are removed and sent to other units in the refinery, the remaining coke can be sent to area power plants to be used as fuel in those operations, Erker said.
With all the expansion, the company would still improve on reduction of certain waste gases, such as sulfur dioxide, which would go down by 95 percent, and nitrogen oxide, which would be reduced by 25 percent. The refinery would produce low-sulfur gasoline and diesel fuel, Erker said.
Both company officials and the environmental groups agree that Illinois does not have a standard for carbon dioxide in its clean air permit regulations.
Andria pointed out that other states, like California, have in place stricter requirements for the volume of carbon dioxide, and the plants in that state have better technology for flaring waste gases.
Alexander pointed out that the IEPA should be required to use standards similar to those in California before it issues clean air permits.
"Why should we not enjoy the same clean air benefits as they have in California?" Andria said.
She pointed out that her organization attended a hearing on the IEPA permit and submitted briefs that suggested higher technology controls, but the agency failed to fully follow its suggestions.
Andria acknowledged that the higher standard flaring equipment would cost more, but the company is receiving record high prices for its products. "ConocoPhillips can well afford it," she said.