Posts on ‘January 7th, 2008’

Mon Jan 7, 2008 11:50pm GMT 
(Recasts, updates with Shell comment and lawyer comment)
By Erwin Seba

HOUSTON, Jan 7 (Reuters) – The Sierra Club, the largest and oldest U.S. environmental organization, filed a federal lawsuit on Monday against Shell Oil Co and subsidiaries over pollution at a refining and chemical plant complex along the Houston Ship Channel.

Shell could face a maximum fine of $32,500 for each of an estimated 1,000 incidents between 2003 and 2007 when the Deer Park, Texas, refinery and chemical plant exceeded levels of pollution allowed under permits issued by Texas regulators.

Shell has been cited by regulators and paid fines for some of the incidents, Joshua Kratka of the National Enviromental Law Center, which represents the Sierra Club and Environment Texas in the lawsuit, told reporters.

The fines have not been enough to stop preventable pollution, Kratka said.

“Shell is paying to pollute,” he said. “Shell is factoring these fines into its costs of operating these facilities.”

Shell declined comment on the specifics of the lawsuit, but said the company hoped to continue discussions with the Sierra Club and Environment Texas about the issues raised in the lawsuit.

“Shell Deer Park refining and chemical share the goal of the Sierra Club and Environment Texas to improve air quality,” the company said in a statement.

Pollution from the refinery and chemical plant is regularly pushed by prevailing Gulf Coast winds to neighborhoods along the ship channel, said a resident of the area.

“We don’t have a magical fence that stops it from coming to us,” said Karla Lands, a resident and business owner in the Houston suburb of Channelview, Texas, north of the Deer Park complex.

A former U.S. Environmental Protection Agency enforcement offical said to be successful the organizations will have to prove the state enforcement efforts, which include plans to prevent future malfunctions, were ineffective.

“They’re going to have to address that these problems have already been addressed,” said Richard Alonso, attorney with Bracewell, Giuliani.

A University of Texas study released in 2007 found a possible link between childhood leukemia and living within 2 miles of the Ship Channel’s refinery row.

The Sierra Club lawsuit was filed in the U.S. District Court for Southern District of Texas under the U.S. Clean Air Act which allows citizen lawsuits to gain enforcement of the act’s provisions.

The Deer Park refinery is the eighth-largest U.S. refinery and a 50-50 joint venture between Shell and Mexico’s state-owned oil company, Pemex.

Shell Oil Co, based in Houston, is the U.S. unit of Royal Dutch Shell Plc (RDSa.L: Quote, Profile, Research).

(Editing by David Gregorio)

© Reuters2008All rights reserved.

CINDY GEORGE
Copyright 2007 Houston Chronicle
Jan. 7, 2008, 2:49PM

Environmental activists filed a federal lawsuit today against Shell Oil on behalf of citizens, saying state and federal environmental officials have failed to enforce the Clean Air Act at the company’s Deer Park plant.

Environment Texas Citizen Lobby and the Sierra Club claim Shell and several of its subsidiaries have released millions of pounds of excess air pollutants along the Houston Ship Channel over the last five years, including benzene and other toxins that can cause cancer and respiratory problems.

During a news conference this morning, group leaders accused the Texas Commission on Environmental Quality and the U.S. Environmental Protection Agency of not stopping the violations.

“On average, more than once a week, Shell Oil Co. has self-reported that it violated its permit limits and released millions of pounds of chemicals and harmful pollutants into the air around the Houston Ship Channel,” said Luke Metzger, executive director of Environment Texas. “Already, Shell Oil is authorized to emit staggering amounts of pollutants into the air and with Houston’s air as bad as it is, it is simply unforgivable for them to exceed those permits .”

EPA spokesman David Bary declined to comment on the case, but said the agency is doing its job. He noted that most of the authority for permitting and enforcement has been delegated to TCEQ.

“The EPA …will continue to vigorously enforce our nation’s environmental laws to ensure protection of public health and the environment,” Bary said.

As of early afternoon, Shell had not responded to a request for comment. A TCEQ spokesman said the agency does not comment on lawsuits.

Houston and Harris County have been home to some of the nation’s worst smog and air pollution.

“The air where I live is very bad,” said Karla Land, who owns a motorcycle salvage yard and repair shop in Channelview and has lived there for 30 years. “When the wind blows up from the south, like it usually does, I know I am breathing whatever is coming out at the Shell Deer Park plant. There’s a very strong smell of sulfur sometimes from that direction.”

According to TCEQ, Shell’s Deer Park facility is the second-largest air polluter in Harris County, behind Exxon Mobil’s Baytown refinery.

Shell has permits that govern the type and amount of pollutants that can be emitted from the 1,500-acre Deer Park facility. There are hourly and annual limits. Shell is required to tell state officials every time an equipment breakdown or malfunction leads to an unpermitted release of air pollutants.

“We’ve collected over 300 of those reports — self-reported illegal emissions from upset events over the last five years … which add up to a total of more than 1,000 separate violations of Shell’s own permit. We know Shell’s breaking the law because Shell tells us they’re breaking the law,”said Joshua Kratka, a senior attorney with the Boston-based National Environmental Law Center, which represents citizen groups across the country in similar lawsuits. He said the technology exists to prevent most upset emissions.”The TCEQ repeatedly sends notices of violations to Shell for these incidences. Sometimes the TCEQ also issues a fine or a penalty and Shell pays some of those penalties and yet, the violations keep continuing. In effect, Shell is paying to pollute,” Kratka said.

The Clean Air Act allows private citizens to file an enforcement suit against any company violating the laws when regulatory agency enforcement has been nonexistent or ineffective. Before filing a legal action, the alleged violator must be send a notice letter to the company, EPA and TCEQ. Environment Texas and the Sierra Club sent their notice in October.

After several upset emissions in November and December, the groups decided to sue.

“Until the state of Texas starts enforcing the law and making our air safe to breathe again, the people of Texas are going to have to do their job for them,” Metzger said.

cindy.george@chron.com

http://www.chron.com/disp/story.mpl/business/energy/5433848.html

Mon Jan 7, 2008 8:24pm GMT 
By Erwin Seba

HOUSTON (Reuters) – The Sierra Club, the largest and oldest U.S. environmental organization, filed a federal lawsuit on Monday against Shell Oil Co and subsidiaries seeking to stop pollution during malfunctions from its refining and chemical plant complex along the Houston Ship Channel.

Shell could face a maximum fine of $32,500 for each of an estimated 1,000 incidents between 2003 and 2007 when the Deer Park, Texas, refinery and chemical plant exceeded levels of pollution allowed under permits issued by Texas regulators.

Shell has been cited by regulators and paid fines for some of the incidents, Joshua Kratka of the National Environmental Law Center, which represents the Sierra Club and Environment Texas in the lawsuit, told reporters.

The fines have not been enough to stop preventable pollution, Kratka said.

“Shell is paying to pollute,” he said. “Shell is factoring these fines into its costs of operating these facilities.”

Shell representatives did not have immediate comment about the lawsuit on Monday.

Pollution from the refinery and chemical plant is regularly pushed by prevailing Gulf Coast winds to neighborhoods along the ship channel, said a resident of the area.

“We don’t have a magical fence that stops it from coming to us,” said Karla Lands, a resident and business owner in the Houston suburb of Channelview, Texas, which is north of the Deer Park complex.

A University of Texas study released in 2007 found a possible link between childhood leukemia and living within 2 miles of the Ship Channel’s refinery row.

The Sierra Club lawsuit was filed in the U.S. District Court for Southern District of Texas under the U.S. Clean Air Act which allows citizen lawsuits to gain enforcement of the act’s provisions.

The Deer Park refinery is the eighth-largest U.S. refinery and a 50-50 joint venture between Shell and Mexico’s state-owned oil company, Pemex.

Shell Oil Co, based in Houston, is the U.S. unit of Royal Dutch Shell Plc.

(Editing by Matthew Lewis)

© Reuters2008All rights reserved.

The Shell boss Jeroen van der Veer says higher oil prices is not all good news for producers

By Russell Hotten
Last Updated: 4:08pm GMT 07/01/2008

The chief executive of Royal Dutch Shell, Jeroen van der Veer, has warned that higher oil prices are slowing the start of new production projects.

Governments, which award operating licenses, are driving a harder bargain to ensure they get a share of the revenues.

Mr van der Veer told Shell’s in-house magazine that governments’ “active interest” in their domestic oil industry is starting to “have an influence on the tempo in which new projects start production.”
  
He said: “You’d think that higher oil and gas prices result in an acceleration of the decision-making, but in reality the opposite happens….[Governments] negotiate longer than in the past about their share in the proceeds.”

Last week oil prices in New York briefly topped $100 a barrel for the first time as the cold weather in Europe and America boosted demand and violence in Nigeria, Africa’s largest producer, heightened concerns about a disruption to supplies.

Mr van der Veer told Shell Venster magazine that he was “relatively” surprised by the strength of demand despite the high oil price. “But I think that demand will react at the current price, albeit with a certain delay,” said Mr van der Veer, who expects slowing demand. There’s also a lot of psychology in the oil price, he said.

Shell, Europe’s largest oil company, invested about $2bn a month in 2007. The company estimates by 2015 about 15pc of its production will come from unconventional oil projects, such as its oil sands operations in Canada.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/01/07/bcnshell107.xml

7 January 2008

With the price of oil tipping over $100 a barrel for the first time in history shortly after the turn of the year following a controversial ‘vanity trade’ by an overnight dealer, it has emerged that bets are being placed on the price topping $200 a barrel during 2008.

Figures from New York’s Nymex commodities exchange show a 10-fold rise in options being taken on a price rise to $200 over the next year.

Most investment houses forecast oil will average between $80 and $90 a barrel this year, and the options bets have been dismissed as long-shot insurance against a low-probability event.

Qantas set for surcharge rise

Qantas today said it is to raise fuel surcharges on international routes for the second time in less than a year.

Australia’s largest airline said the increases of as much as 16.7%, to take effect from 17 January, were in response to record fuel prices.

Passengers flying between Australia and Europe will have to pay a surcharge of A$210 (£93.56), up from A$185.

http://www.thisismoney.co.uk/investing-and-markets/article.html?in_article_id=428938&in_page_id=3

Rosalie Marshall and Dave Bailey, IT Week, 07 Jan 2008
 
This year will see in a shift in the IT services market as firms turn to direct sourcing from hosted software providers, rather than traditional outsourcing opportunities, according to industry experts.

Richard Sykes, chair of the Outsourcing Group at IT trade association Intellect, pointed to the difference between direct sourcing and classic outsourcing as “very high productivity server farms at work rather than thousands of IT professionals”.

In reaction to recent reports about Royal Dutch Shell’s plans to outsource around 3,000 IT staff to three services providers ­ EDS, AT&T and T-Systems­ Sykes said this would be a “conservative deal” that is unlikely to achieve maximum cost savings. “Shell could become more competitive by buying services straight off the internet,” he added, for example online email and CRM systems provided by Google and Salesforce.com respectively.

A new book due to be published tomorrow by Nicholas Carr, ­famed for his IT Doesn’t Matter article, also promotes the direct sourcing model.

Carr argues that the cost benefit to firms through use of large utility computing providers, whose economies of scale would dwarf in-house efforts, will eventually lead to on-demand software dominating firms’ IT infrastructures.

“It may take decades for companies to abandon their proprietary supply operations and all the investments they represent. But in the end the savings offered by utilities become too compelling to resist, even for the largest enterprises,” he explained.

Clive Longbottom, service director at analyst Quocirca, pointed out that the biggest barrier to Carr’s model is mindset. “For large organisations in particular, it would be a very brave CIO and COO who would go the whole hog. The first time there’s a break in connectivity they’d suddenly say, ‘Hell, we can’t do anything at all’,” he added.

According to Sykes, the trend by small and medium-sized enterprises towards direct sourcing deals will also result in fewer contracts involving Indian locations because the services are more automated and less people intensive.

The movement to locations for offshore services other than India is an outsourcing trend set to continue in 2008. Indian provider Cognizant has about 500 professionals in Shanghai and plans to double the headcount in the next 12 to 18 months, according to Henry Yang, head of the firm’s China Development Centre.

Meanwhile, experts are playing down reports that Indian offshoring giant Wipro is looking to acquire Capgemini. In late December, a Hindustan Times story said that a bid is expected to take place in January. Ovum analyst Phil Codling said the deal made little sense “in terms of business strategy and logic”.

http://www.itweek.co.uk/itweek/news/2206587/rise-hosted-spells-gloom-3732882

By Nick Heath

Published: Monday 7 January 2008

Shell is facing the threat of legal action from trade union Amicus over staff redundancy terms, which could hit the oil giant’s plans to outsource up to 3,200 tech jobs.

The oil multi-national is in the process of finalising contracts with AT&T, EDS and T-Systems to run the bulk of its global IT infrastructure as part of a cost-cutting drive.

But the outsourcing plans may be affected by wider legal action being threatened by Amicus to force Shell to reinstate a company redundancy package worth up to £200,000.

Amicus said Shell replaced the £200,000 pay-off provision in June last year with an agreement where employees who are made redundant will now only receive a package worth up to £50,000.

Regional Amicus officer Graham Tran told silicon.com there is widespread unhappiness among Shell staff and a feeling that “loyal” employees are being “dumped”.

He said: “We just want Shell to look after its loyal employees. It no longer has a commitment to the workforce.”

Amicus is hoping legal action will force Shell to reinstate the more favourable HR policy before the IT outsourcing contracts are signed.

As well as securing better payouts for any immediate lay-offs, this would mean those IT workers who are transferred from Shell to the outsourcing companies will be guaranteed the higher pay-out should their new employers decide to make them redundant further down the line.

Trans said: “If we are successful [in getting Shell to honour the original HR policy] the new employer will pick up responsibility for that.”

That could potentially cost AT&T, EDS and T-Systems millions when they take on Shell IT staff as part of the outsourcing contracts to run the oil company’s IT infrastructure.

Shell is apparently arguing the previous redundancy package with the larger payout terms only applied to offshore oil rig staff and not IT workers, something Amicus is disputing.

Tran said: “Shell is arguing that it did not apply to the IT people. [But] it was negotiated by the staff rights committee and both offshore and onshore workers had representatives on that committee.”

Shell declined to comment on its HR policies and redundancy terms.

Tran said the bulk of the IT employees affected were in the UK, with many at Shell’s HQ in Aberdeen, and the rest based in Europe.

He said: “The majority of staff will be transferred but I would not rule out redundancies in future. The feeling is that these people are being dumped by Shell after years of loyal service.”

Contracts for the IT outsourcing are expected to be signed in March, with EDS taking over end user computing services, T-Systems hosting and storage services and AT&T managed network services.

Shell has been quoted as saying it plans to make pre-tax cost savings of about $500m per year through streamlining its structure and cutting and outsourcing jobs. Shell employs about 108,000 people worldwide.

http://management.silicon.com/government/0,39024677,39169570,00.htm

 

Former Shell brand Executive, Paddy Briggs

I attended the memorial service on Friday of David – an old colleague and boss of mine who joined Shell way back in 1952 and who had been retired a couple of decades. He was a wonderful man – individualistic, cantankerous, intelligent, rude, caring, creative, trusting and above all humane. The church was full and there were many of his old colleagues present to pay their tributes. As I watched them, and thought about David, I wondered what he and they would make of the spiteful, greedy, selfish, ignorant bunch that run the show today. Perhaps David would have shrugged his shoulders and said something about bygones…and maybe he would have been right!  But he would certainly have been disillusioned and disappointed by the Shell hypocrisy that on one hand says that it will:

“respect the human rights of our employees and provide them with good and safe working conditions, and competitive terms and conditions of employment…promote the development and best use of [their] talents …create an inclusive work environment where every employee has an equal opportunity to develop his or her skills and talents… encourage the involvement of employees in the planning and direction of their work… provide them with channels to report concerns.” (Shell Group Business Principles or SGBP)

whilst on the other hand laying them off in vast numbers in homage to the great God of “outsourcing”.

I have told a personal “outsourcing” story from my last years in Shell elsewhere before – but it is worth repeating again to throw light on the current imperatives.

Seven years ago I was working for Shell in Dubai where there was a small and successful downstream (marketing) operation. This was a fairly conventional business involving the marketing of a wide range of petroleum products to a variety of different customers across the United Arab Emirates. A key element of this business was, and always had been, the operation of a product distribution/transportation activity involving oil depots, vehicles and drivers. For more than thirty years this business had been built up as a professional, cost-effective and customer focused operation. It also had an admirable safety record (in a high risk area) and the staff of thirty or so tanker drivers were a loyal, skilled and motivated team. In the late 1990s Shell’s Central offices sent a new Distribution man to the region and, operating out of Oman, he visited Dubai charged with the responsibility of “outsourcing” the transportation operation. When challenged by me and others in the management team in Dubai as to why this was necessary he said that it was now “company policy” to outsource this business (i.e. to sack the drivers and sell the vehicles). A number of us were incensed by the insensitivity of this and we demonstrated that not only would no cost savings occur but that we would be needlessly disposing of the services of a team of loyal and skilled drivers each of whom was proud of his personal safe driving record and a motivated member of the local Shell family.

Well the battle raged on for a while with the argument that to go arm lengths in an area as safety sensitive as dangerous fluids distribution was bad practice – especially as no possible cost savings would result. Furthermore to dispense with the services of the drivers many of whom had up to thirty years service hardly sat well with the SGBP! But this was ideology at its most sinister. The man from Oman had on his “scorecard” the target of outsourcing in Dubai. If he succeeded his remuneration would benefit – as well, of course, as showing that he was a loyal implementer of the new edict. He didn’t care one jot about the employees or their futures – all he cared about was showing himself off in a good light. Well we did fight on but in the end we lost. The drivers were sacked and the operation was outsourced. The irony of this story is that there was no financial benefit to Shell at all from the decision. Outsourcing (in this instance) wasn’t cheaper – it was simply the application of a dogma!

Back to my late friend David. He worked in Shell in an era (as did I mostly) when the commitment to employees wasn’t just words but reality. That was why so many of us, including David, were “one company” men and women. It wasn’t perfect and it had its frustrations and disappointments – but it was rarely if ever malign or uncaring. A business like Shell is about people – and when people are treated as disposable commodities then the values of the corporation disappear and the rot sets in. And today, sadly, Shell is rotten at the core.

Article Ends

About Paddy

Paddy Briggs worked for Shell for 37 years during the last fifteen of which he was responsible for Brand management in a number of appointments. He was the winner of the “Shell/Economist” writing prize (internal) in 2001. Paddy retired from Shell in 2002 to form the brand consultancy BrandAware ™ and to write and speak on brand and reputation matters. He is also active as a director of training courses on brand and reputation management. Paddy is also an active sports journalist and a member of the “Sports Journalists Association” and the “Cricket Writers’ Club”. He has a regular weekly column in the “Bahrain Tribune” and was previously a columnist in the “Khaleej Times” and the “Emirates Evening Post”. In September 2006 he was appointed Sports Editor of “AME Info” the UAE based news and information website. Paddy’s book of light verse “Jumeira Jane” was published in Dubai in 2001 and the first edition print run of 5000 copies was sold out. For Paddy’s website go to…

http://www.brandaware.co.uk/
 

EXTRACT: Besides relying on federal grants, LSU is working with corporations. For instance, O’Keefe said, Shell Oil Co. has given the university about $4 million for research into coastal restoration, an issue that has achieved paramount importance since Hurricane Katrina swept through. 

THE ARTICLE

1/6/2008, 5:17 p.m. CST
The Associated Press   

BATON ROUGE, La. (AP) — Louisiana State University is getting a lot of attention thanks to Monday night’s football championship game.

But the 148-year-old Baton Rouge institution is beefing up its academic side, too, and it is using the Internet, broadcast media and the program for the championship game to tout its construction projects, its aggressive hiring and its growth as a research institution.

“We are what’s called a Tier 1 Research Institution,” Chancellor Sean O’Keefe said. “That’s the highest level there is. We’re among the big-time universities in the United States.”

One way to measure a university’s research strength is in the amount of grants its researchers receive. In the three years since O’Keefe took office, that sum has risen by more than 60 percent, from $90 million a year to about $150 million annually, he said.

Besides relying on federal grants, LSU is working with corporations. For instance, O’Keefe said, Shell Oil Co. has given the university about $4 million for research into coastal restoration, an issue that has achieved paramount importance since Hurricane Katrina swept through.

“The issues now are the same as they were three years ago,” O’Keefe, 53, said. “But now the attention to this has gained this kind of support and enthusiasm from more than the usual public sources. That speaks volumes.”

LSU is hiring about 75 faculty members to augment the 1,290 on staff, he said.

In the past decade, enrollment peaked in the fall semester of 2002 with 31,582 students. Enrollment has dipped by slightly more than 4 percent, from 29,317 in 2006 to 28,019 last semester.

But at the same time, admission standards have been toughened, with an eye to selecting students likely to graduate, instead of admitting hordes of freshmen and seeing most of them flunk out.

Prospective students must have an overall B average in high school and an above-average score on standardized tests. They must rank in the top 10 percent of their classes and complete what O’Keefe calls a core curriculum that includes mathematics, science and social studies

Consequently, he said, getting accepted has become the hard part.

Instead of complaints from parents of high-schoolers who might not get in, O’Keefe said the tougher standards have motivated teenagers to do better.

“We’re competing for the best and the brightest, not just in the state of Louisiana but across the country,” said Rod West, former chairman of LSU’s Board of Supervisors.

http://www.nola.com/newsflash/louisiana/index.ssf?/base/news-36/1199658280254870.xml&storylist=louisiana

Jan. 6, 2008, 11:58PM

Some rethink expansions as legislation aims to reduce gas use

By BRETT CLANTON
Copyright 2008 Houston Chronicle

Refinery expansion is continuing, but some refiners are putting plans on hold while they review the potential effects of new energy-conservation legislation and other market factors.

The status of some big projects:

Continuing

• Motiva: Port Arthur

• Marathon Oil: Gravelly, La., and Detroit

• Valero Energy: St. Charles, La.

• Chevron Corp.: Pascagoula, Miss.

• ConocoPhillips: Wood River, Ill.

Under review/postponed

• Valero: Port Arthur and Texas City

• ConocoPhillips: Sweeny and Alliance, La.

Oil refiners may reconsider plans for some refinery expansion projects in 2008 in response to new energy legislation that could reduce gasoline use in coming years, industry groups and refiners say.

While expansion projects already under way won’t be affected, those in the early planning stages could be delayed or canceled, they said — continuing a pullback that began last year amid rising costs for refinery additions and uncertainty over future gasoline demand.

Within 10 years, U.S. refiners could be producing less gasoline than they are today as a result of the new energy legislation, which calls for stricter auto gas mileage standards and more ethanol output, said the National Petrochemical and Refiners Association, a trade group in Washington.

If that’s the case, “it doesn’t really make sense for refiners to spend billions of dollars expanding to meet a demand that’s not going to be there,” said Bill Day, spokesman for San Antonio-based Valero Energy Corp., the nation’s largest refiner.

But industry critics say refiners are using new energy policies as an excuse to keep refining capacity tight and their profits high. They claim refinery additions will still be needed to feed growth in gasoline and demand, as well as bridge a shortage in refining capacity today that is being filled by gasoline imports.

“Even as the legislation is implemented, we will have a shortfall of refining capacity for the entire lifetime of those specific energy goals,” said Mark Cooper, director of research at the Consumer Federation of America in Washington.

While a new U.S. refinery hasn’t been built in three decades, U.S. refiners have been expanding facilities in recent years to keep pace with fuel demands and to take advantage of one of the most profitable periods in the industry’s history.

Early last year, refiners were so confident their winning streak would continue that they told the Energy Department they planned to add 1.6 million barrels per day of new refining capacity, an increase of about 10 percent and enough to produce an additional 37 million gallons of gasoline every day.

New capacity

The nation’s 140 refineries have about 17.5 million barrels per day of capacity.

But by the summer, with material and labor costs skyrocketing and threats emerging on the policy front, several refiners canceled projects. Now the Energy Department estimates new projects planned by 2012 will add about 1 million barrels per day of new capacity.

The drop, while significant, brought expansion plans closer to their level of the last decade — an average annual capacity expansion rate of about 200,000 barrels per day, said Cindy Schild, manager of refining issues at the American Petroleum Institute, an industry trade group.

But the uncertain demand picture for gasoline, resulting from the new energy laws, may well push more projects off the table, said Tim Donohue, vice president at management consulting firm Booz Allen Hamilton’s Houston office.

“I think there will be further declines,” he said.

Signed by President Bush in December, the Energy Independence and Security Act of 2007 requires fuel economy standards for cars and light trucks to increase to an average 35 miles per gallon by 2020, an increase of 40 percent. It also boosts a mandate for renewable fuel production, mostly ethanol, to 9 billion gallons by 2009 and to 36 billion gallons by 2022. Current production of ethanol is about 5 billion gallons. The increased ethanol supplies will be blended with gasoline to extend the nation’s fuel supply.

Taken together, the two measures are projected to reduce gasoline consumption 20 percent by 2017, consistent with a target President Bush set in his 2007 State of the Union speech.

Even if they hit their mark, however, there is still a business case to be made for adding refinery capacity, Donohue said. Fuel demands likely will continue to outstrip U.S. refiners’ ability to meet them, even after the new energy laws are enacted, he said.

There are also doubts new ethanol targets can be achieved given the limitations of corn-based ethanol and still unproven technologies for making ethanol from non-food crops and agricultural waste, he said.

$7 billion project

Several major refiners recently have indicated they will move forward with expansion projects despite headwinds facing the sector.

Last month, Motiva, a joint venture between Royal Dutch Shell and Saudi Arabia’s state-owned oil company, broke ground on a $7 billion project to double the size of its Port Arthur refinery to 600,00 barrels per day, making it the largest in the nation. The project should be finished by 2010.

Others, however, remain in flux.

Last year, Valero postponed a 22,000-barrel-a-day expansion of its refinery in Texas City, and is still in the “talking stage” of a possible addition at a Port Arthur facility, Day said.

Charles Drevna, president of the National Petrochemical and Refiners Association, said he would not be surprised if more companies took a “long hard look” at refinery expansion projects in light of the changing regulatory landscape.

“There’s only so much capital to go around on these types of things,” he said.

brett.clanton@chron.com

http://www.chron.com/disp/story.mpl/metropolitan/5432731.html