Kansas City Star: After secret talks fail refinery settles on prior agreement: “secret deal making between petroleum refineries and the government”

BY SETH BORENSTEIN

Knight Ridder Newspapers

Posted 18 July 04

DELAWARE CITY, Del. - (KRT) - The public got a rare glimpse into the often-secret deal making between petroleum refineries and the government when the industry lost a key battle here.

In August 2001, Motiva Enterprises, a division of Shell, finalized a court agreement with the state and federal governments to install new high-tech, low-emission pollution scrubbers at its 47-year-old refinery. The next spring, the company quietly persuaded the U.S. Environmental Protection Agency and Delaware to allow it to substitute much cheaper technology.

When details of the new deal became public, residents and the environmental community went ballistic. Scientists said the technology would result in large amounts of sulfur going into the Delaware River. The company was pulling a classic bait and switch, critics said.

Delaware eventually insisted that the company stick to the terms of the court agreement.

"We won a big battle here," said Alan Muller, executive director of the environmental group Green Delaware. "But the war isn't yet won. The scrubbers are still not on."

Because the company lost, the Delaware City refinery, purchased this spring by Premcor Refining Group, will be the poster child for new emission-reducing technology, company and state officials said.

What's about to happen has "a lot of people who know about this in the industry paying close attention to how this plays out," said David Small, Delaware's deputy secretary for natural resources and environmental control.

If it works, other U.S. refineries may have to install the same costly scrubbers, experts said. If it doesn't, refineries will say they can't clean up emissions as much as had been projected, environmental activists fear.

"We're making an investment of $200 million with the idea that it's going to work," said James Fedena, the new environmental, health and safety manager for the Premcor plant. "We're really taking a risk here."

The refinery is in an area with a number of other pollution-producing plants. And across the street is a toxic-waste site. Chemical plants are nearby.

Yet the refinery has long been the target of most complaints by local residents. The sulfur smell, even three miles away, was so bad at times that David Bailey, a community activist, once figured he had a sewer line break as he worked in his basement. But the smell was coming from Motiva.

Motiva and Shell did not return several phone calls seeking comment.

The EPA announced the agreement in March 2001, saying that it would require the refinery to install two sets of cutting-edge scrubbers and make other changes. The scrubbers would be regenerative, recycling the caustic soda used to remove sulfur, as well as the sulfur itself, instead of dumping sulfur-laden byproducts into the river or elsewhere.

But in July 2001, one of the more than 100 tanks on the sprawling Motiva property exploded, killing one boiler worker and injuring six others. The explosion sent more than 1.1 million gallons of sulfate into the Delaware River.

"It put the fear of God in you," worker John Patchell said.

Motiva eventually pleaded no contest to charges of criminally negligent homicide, and federal investigators found Motiva's safety and maintenance system inadequate in five ways. Among the problems: Months earlier the company ignored repeated recommendations by tank inspectors to shut down the tank that exploded.

In spring 2002, Motiva asked the EPA and Delaware to let it install more-traditional technology that would be $70 million cheaper. It would remove more pollution from the air than the high-tech scrubbers but would dump almost 1.5 million gallons of sulfates into the Delaware River daily, Delaware officials said.

Delaware was initially wary, Small said.

But the EPA "clearly already signaled that they were willing to entertain the change, which put us in a somewhat difficult position," said a former senior Delaware official who spoke on condition of anonymity. "I wouldn't characterize EPA's position on this as aggressive."

After Delaware's environment secretary left office and Motiva made small concessions, the state agreed to the changes, Small said.

Once details of the plan became public during a hearing on the tank accident, though, the Delaware General Assembly voted unanimously against the idea; scientists noted that toxic mercury as well as massive amounts of sulfates would be dumped into the water.

"It was a pretty loud message," Small said.

Thwarted by the state, Motiva asked for and received a two-year extension on deadlines to install the new equipment.

Mike Pollauf, Premcor's new refinery manager, said his company is trying hard to fulfill Motiva's promises. But there are a lot of problems and inefficiencies at the plant, he said. As Premcor tries to install the new scrubbers to meet the extended deadline in 2006, it is also cutting refinery staff from 650 to 550, which Pollauf said can be done safely because of the new company's expertise.

Pollauf also said state and federal officials have been in the Premcor plant frequently in the last two months, although EPA records showed that the plant hadn't had a comprehensive inspection between since August 2001.

Wary neighbors said they have seen several companies come in, promise to clean up and then sell without doing the job. Neighborhood activist Martha Dennison said she doesn't believe that the company can cut 100 workers, run the plant safely and still reduce pollution as promised.

But she said she hopes Premcor succeeds "because it's going to set a precedent for the rest of the country."

© 2004, Fort Worth Star-Telegram.

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