An Arizona refinery company that spent seven years struggling for approval to build illustrates why the U.S. needs to change its rules for reviewing refineries, oil industry officials told senators in Washington on July 13.
Congress is considering bills designed to speed up permit approval. Many lawmakers say the U.S. must expand its capacity to stay competitive and keep up with demand.
Industry officials told the Senate Energy and Natural Resources Committee that the lengthy permitting process discourages companies from investing the time and money in refinery construction.
Case in point, they said, is the experience of Arizona Clean Fuels Yuma, which likely will build the first new refinery in the U.S. since 1976.
Arizona Clean Fuels first began working on a permit for a large refinery near the Arizona town of Mobile in 1998.
But in 2003, as it was ending its work on the permit application, the state determined Mobile was part of the area around Phoenix out of compliance with standards for ozone, the smog-forming pollutant.
The company agreed to move to Yuma, and the final permit issued in April 2005 — seven years after the company first began its work.
Public policy should not hinder business, committee told
“Public policy should help, not hinder, the efforts of any entrepreneur who assumes considerable risk in seeking to build a new refinery,” Bob Slaughter, president of the National Petrochemical & Refiners Association, told the committee.
Environmental and community groups have argued the U.S. does not need new rules for refineries. While the industry has not built new refineries, many have been expanded, they say.
But supporters of new refineries counter that the U.S. must reduce its dependence on foreign gasoline and other petroleum products by expanding the industry.
“I believe one of the most constructive things Congress could do to ease some of our energy woes would be to facilitate the construction of new refineries and the expansion of the capacity at existing facilities,” said Committee Chairman Pete Domenici, R-N.M.
Lawmakers introduced several refinery measures after hurricanes Katrina and Rita ravaged the Gulf of Mexico last year, saying the disasters exposed a dangerous vulnerability in the U.S. energy supply chain. Almost half of the U.S. refining capacity and more than a quarter of crude oil production is concentrated in the Gulf.
In addition, conflicts in other oil-producing nations and demand for oil in India, China and other developing nations have prompted a rush to develop domestic energy sources.
A House bill, passed in June, would require state and federal agencies to expedite the permit process.
It also would direct the president to pick three closed military bases where oil and biofuel refineries could be built.
But William Becker, who represents two national associations of clean air agencies, argued at the hearing that environmental permitting requirements have not held up refinery construction and the process should not be changed.
He said the bill could force new refineries in communities that don’t want them.
When complete, by about 2011, Arizona Clean Fuels’ refinery will be capable of processing 150,000 barrels per day at a location near Tacna, 40 miles east of Yuma. The refinery would be Arizona’s first.
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