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Poisonous legacy of Motiva Delaware City Refinery

delawareonline

November 30, 2009

Finding use for refinery complicated

By JEFF MONTGOMERY
The News Journal

Central Michigan economic development manager Don Schurr has waited for a decade for something to happen on the scarred and empty land where the Alma Refinery used to be.

But the site is still vacant.

“As far as redevelopment: Zero,” Schurr said.

Delaware officials worry that they face an equally grim outlook in the wake of Valero closing its Delaware City Refinery.

That refinery and Sunoco’s Eagle Point complex near Westville, N.J., which shut down indefinitely in October, were the largest to be closed in the United States since at least 1990, according to Energy Department records. And there are mounting concerns about what could happen at the sites if they become stagnant.

The market forces that led to the closings are unlikely to improve soon, and some analysts said at least one more Northeast refinery could go dark in coming months. None see an easy way to recycle the plants to create jobs.

The 5,000-acre refinery could one day present a blighted vista similar to the one motorists saw for a quarter-century along Del. 9 just south of New Castle, where Amoco’s polypropylene plant was destroyed in a deadly explosion in 1980: a scene of cracked concrete pads and battered, abandoned equipment.

For some, however, even that would be an improvement.

“Personally, I guess I’m happy that it’s shutting down,” said Judy Case, who lives in the Barbs Farm subdivision just south of the refinery. “I’m sure it’s hard for all the people who work there, but I won’t miss looking out our back door at night and seeing something that looks like Chicago.”

Delaware officials aren’t giving up on the idea of bringing a refinery back to the site.

“We would first like to see it used as the facility it is today, which is as a refinery,” said Delaware Economic Development Office Director Alan Levin. “If that’s not the case — and I didn’t say that’s not the case because we’re going to be working very hard to try to put that facility back on line — we’ve got to figure out how we can best use that land and that facility.”

Valero met last week with Department of Natural Resources and Environmental Control officials to review their vision for the site.

Meetings are expected to continue.

“They’re going ahead with planning for whatever it takes to decommission the site and potentially prepare it for another use,” said DNREC Secretary Collin P. O’Mara. “They need to make some business decisions about the best use of some of the assets, ranging from sale to some kind of use as another facility.”

But scrapping the site may be most likely.

Plenty of questions

“What does all this mean for the future? How are they going to handle that property now?” asked Seth Ross, a member of the Delaware Nature Society and Valero’s Citizen Advisory Committee. “Are they going to tear it down, sell things off? Those things need to be answered.”

Valero president Bill Klesse said last week that the closing was “permanent.”

Neil Carman, a former Texas air-quality regulator who now works for the Sierra Club’s Lone Star Chapter, said refiners face pressure to raze their sites if shut too long.

“What I’ve seen in most cases where there was a permanent closing is, they dismantle the plant and the material is sold for salvage or shipped overseas for use by whoever wants it,” Carman said.

“In a lot of places, if it goes to permanent closure, they’re going to void the permits and they have to dismantle it; get down to the ground, basically.”

That’s exactly what happened in Alma, Schurr said.

“The corporation stepped right up and took everything down, down to the sub-soil structures,” he said.

Satellite photos of the 90-acre former Alma plant show little remaining beyond the scuffed footprints of building and tank sites and a few piles of earth or rubble.

Until recently, most of the refineries closed around the country were small, inland operations that processed fewer than 100,000 barrels per day or had crushing environmental burdens, as with the Hartford, Ill., plant closed by Premcor in 2002. Few returned to life, although Conoco-Phillips resumed some production at Hartford after merging it with its Wood River complex and winning state support for a massive expansion.

Heavy industry still possible

Time is crucial for the Delaware City Refinery because of the Coastal Zone Act, which bars new heavy industries along the Delaware River. The refinery is grandfathered in.

“They have to keep that in force. If that goes, the value of the property goes as well,” Levin said. “What we would like to do is see it go into a mothball status, if that’s the proper term, while we try to market the facility to other refiners.”

The Valero site has rail access, a port and proximity to Del. 1 and the interstate highway system.

O’Mara said DNREC officials focused mainly on environmental concerns and safety during last week’s talks with Valero, but also emphasized the state’s interest in keeping the plant in operation.

“They said they were ready and willing to talk to anyone about alternatives for the property,” O’Mara said.

David Small, deputy secretary of Delaware’s Department of Natural Resources and Environmental Control, said state officials are still investigating rules covering shutdowns and abandonment of Coastal Zone permits. Loss of the permits could limit redevelopment efforts.

That happened in the case of Metachem Products.

In August 2002, DNREC revoked a Coastal Zone permit for nearby Metachem five months after the company’s owners declared bankruptcy and abandoned a badly contaminated property. Taxpayers have since paid $100 million for stabilization and cleanup work, with the final cost still to be determined.

In contrast, DNREC waited five years to rule that a Coastal Zone permit covering the Kaneka Chemical plastics plant, northeast of the refinery, had been abandoned. State officials said they took the step only after Kaneka’s parent company confirmed that it had “no interest” in resuming business in Delaware after shutting down in 2004.

Officials might have to consider a tolerant approach with Valero, if they want to protect the site’s industrial future.

Robert W. Burchell, a Rutgers University professor and director of the university’s Urban Planning and Policy Development Program, said big industrial sites typically don’t sell off the shelf.

“By the time these facilities are fully in place, they’re essentially custom-built to the prior tenant’s needs,” Burchell said. “The equipment has aged and there are all sorts of adaptations to the land and structures, and there’s no client for that down the road.”

While many forecasters now expect the recession to end next year, Burchell said, real recovery to healthy employment levels could take a decade or more, dimming hopes for quick resuscitation of idle plants.

“It’s very difficult, once you close down something like that, to find anything new, unless it’s an exact replacement,” Burchell said.

Other uses unlikely

Delaware City might be especially hard to convert to other uses.

The plant was built to refine heavy, high-sulfur crude oil, with many of its systems organized around the need to manage unusually hard-to-process crude oil and partially refined crudes. One major unit, a fluid coker, is the largest of only five in the nation, a huge and complex 50-year-old vessel likely to have few takers.

Other systems are almost new, however, including costly smokestack scrubbers switched on just three years ago to meet state and federal pollution-control mandates. Other big emission-control improvements were under way when the shutdown announcement came.

“Valero put $300 million to $400 million into the refinery in hopes that the state would at some point allow them to do an expansion of production, so they could start recouping some of the massive investments they made down there,” said William Coleman, a contract management supervisor at the plant.

The picture was equally cloudy at Sunoco’s Eagle Point Refinery, where plant officials described the plant shutdown as “indefinite.”

Company spokesman Thomas Golembeski said Sunoco is considering other uses for the property, including conversion to biofuels production.

“It would take a significant and sustained increase in demand for us to restart the facility” in its original role, Golembeski said.

Charles Murtaugh, a Westville, N.J., borough councilman, said local residents are watching progress on Sunoco’s Eagle Point shutdown with mounting concern as each week passes without signs of a replacement.

“Gloucester County has lost quite a few jobs in the last four or five months,” Murtaugh said. “Some of our taxpayers are losing their jobs. Everybody’s looking over their own shoulder to stay alive here.”

Delaware City’s 52-year refining legacy is likely to complicate any attempt to sell or redevelop the plant.

The refinery’s various owners have been investigating soil and groundwater contamination for decades under state and federal oversight. Serious groundwater pollution problems extend as much as 180 feet underground, and more than a mile south of the property.

Rep. John Kowalko, D-Newark South, said Delaware should focus on the contamination to protect its interests.

“One of the things that I’ve keyed on is cleanup costs,” Kowalko said. “We can discourage a piecemeal sale if we demand adequate cleanup. The cost of that may make it more doable to seek a replacement owner.”

Some of the site’s worst pollution problems remain the responsibility of Premcor and Motiva Enterprises, the refinery’s previous owners, however.

Schurr, in Michigan, said cleanup obligations complicated efforts to market the refinery in Alma.

“The problem here, primarily, is in the shallow water aquifer, and it’s actually going quite well,” Schurr said. “But up until this point, trying to do the cleanup and develop the core refinery property is something nobody wanted to tackle. There are dealings with the state and the EPA and a combination of things that just simply make it easier to go someplace else.”

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