Chevron Corp. plans to run higher-sulfur Alaskan and Middle Eastern crudes when it completes work at Northern California’s largest refinery in 2016, not the Bakken oil helping spur the U.S. path to energy independence.
Chevron’s 245,300-barrel-a-day Richmond refinery is seeking regulatory approval to replace a hydrogen plant and increase capacity at the fluid catalytic cracker’s hydrotreater and sulfur-recovery system. The upgrade will take about two years and could be done as soon as mid-2016 if city officials green-light the project in June or July, Nicole Barber, a company spokeswoman, said in an interview at the plant yesterday.
Richmond imports mostly light, sour crudes from Saudi Arabia, government data show. It will use the same sources after the work, Barber said. The U.S. supplied 86 percent of its own energy needs last year as horizontal drilling and hydraulic fracturing, or fracking, unlocked supplies from shale formations such as North Dakota’s Bakken and Texas’s Eagle Ford. Imports also climbed from Canada’s tar sands.
“Bakken is too light to fully utilize our equipment and tar sands are too heavy,” Barber said. “This refinery processes more intermediate crudes. The middle of the barrel is our sweet spot. That’s the best type of crude we can run.”
Saudi Arab Light crude to the U.S. dropped $1.16 a barrel to $97.05 as of 11:47 a.m. New York time today, data compiled by Bloomberg show. Bakken oil for delivery at Clearbrook, Minnesota, was down 91 cents to $96.83 a barrel. Tesoro Corp., the largest refiner on the U.S. West Coast, has said it costs $9 to $10 a barrel to ship Bakken by rail to Northern California.
Groups including Communities for a Better Environment and Earthjustice have fought the project, saying that the proposal would allow Chevron to process heavier and more polluting feedstock such as crudes from Canada’s oil sands.
The plans are San Ramon, California-based Chevron’s second attempt to upgrade the 112-year-old Richmond refinery, after a Superior Court judge halted a broader revamp in 2009. The hydrogen plant was about halfway done at the time of the ruling, which said an environmental review of the work was flawed.
Columns, one as long as 100 feet (30 meters), have been sitting at the refinery since then as the company awaits approval to restart construction.
“There’s still electrical work to be done, piping, and we’ve still got a bit more construction above ground,” Barber said. “It’s about two years’ more work to be done.”
Earthjustice described the court’s ruling in 2009 as an “environmental justice victory” that would prevent the plant from poisoning the community.
A fire at the refinery’s crude unit in August 2012 that sent a plume of smoke thousands of feet into the air further increased scrutiny over the hydrogen project. Federal and state investigators have said the line that ruptured, igniting the fire, appeared to have corroded after being exposed to sulfur compounds at high temperatures.
A series of train explosions and derailments of rail-cars carrying crude have also fueled concern that Chevron will use the project to run more shale oil from North Dakota’s Bakken formation. Most of it is delivered by rail-car.
The Richmond refinery isn’t equipped to unload oil from trains and receives all of its crude by tanker, Brian Hubinger, a technical adviser on the project, said at the plant yesterday.
Chevron would upgrade piping at the crude unit as part of the hydrogen-plant work, Hubinger said.