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Oil Refinery Expansions Face Opposition

September 19, 2007 at 6:30 PM EDT

ELIZABETH BRACKETT, NewsHour Correspondent: The Marathon oil refinery in Detroit wants to expand its capacity by 15 percent, but getting permission to grow refineries hasn’t been easy.

The company went right to the public with two open houses to get support, touting the hundreds of jobs, construction and expansion would bring to an area with high unemployment. At a public hearing in Detroit, the company emphasized how the proposed $1.2 billion expansion plan using crude oil from Canada’s tar sands oil field would benefit the area.

Scott Maddox is a project manager.

SCOTT MADDOX, Marathon Petroleum: Being able to run crude from nearby Canada will allow us to avoid supply interruptions that can occur when shipping crude oil halfway around the world. This will allow us to provide a more stable supply of fuels for Michigan and the surrounding area.

ELIZABETH BRACKETT: But the fear of added pollution, both in the air and in the water, worried many Detroit-area residents.

LUCILLE CAMPBELL, Detroit-Area Resident: I have a list of the chemicals that Marathon spews out and what cancers it causes. People are dying. People are sick. Yes, you know, we want you to have — we want to have jobs and all these kinds of things, but we need for it to be done right. As far as I’m concerned, Marathon can go someplace else.

Difficulty of expanding refineries

ELIZABETH BRACKETT: With its high sulfur content, Canadian crude is dirtier to process, but the nation's fourth-largest oil company did not ask for any higher pollution limits. It also pledged to buy offsets from other companies and to spend $50 million for water treatment and $260 million on air pollution control technology.

Jeff Bruestle is the project's environmental coordinator.

JEFF BRUESTLE, Marathon Petroleum: In addition to the air pollution controls that we've mentioned, the refinery plans to voluntarily install a network of air quality monitors.

ELIZABETH BRACKETT: The battle in Detroit is just one example of how hard it is to build or expand refineries in the U.S. these days. The industry claims there hasn't been a new refinery built here in 31 years. David Sykuta is the executive director of the Illinois Petroleum Council.

DAVID SYKUTA, Executive Director, Illinois Petroleum Council: Refineries are kind of the ultimate NIMBY, "not in my backyard." People love what they make, don't like to live near them. In fact, they're kind of beyond NIMBY. We call them BANANAs now, "build absolutely nothing anywhere near anything." That's kind of how people feel when it comes to energy. Even though they want a gas station like this within two blocks, by God, the price better be cheap. So we have a disconnect with reality on that in our country.

Problems for Indiana facility

ELIZABETH BRACKETT: Twelve refineries in the U.S. have been expanded since 1995, but when BP tried to expand their facility in Whiting, Indiana, this summer, it ran into huge problems. BP also wants to refine more Canadian crude, which it says would help reduce U.S. reliance on Middle Eastern oil.

BP Vice Chairman Stephen Elbert.

STEPHEN ELBERT, Vice Chairman, BP America: This expansion is really important, we believe, for the nation and for the Midwest and for us. This country really needs a secure, stable supply of energy. The fields that we've relied on in the past in the West, some in the Gulf, are beginning to run out. We're beginning to import more and more oil from offshore, from foreign countries. And it's a national priority for the country to have a more secure and a more stable supply of crude oil.

ELIZABETH BRACKETT: Unlike Marathon, BP said it needed higher limits on ammonia and other pollutants it discharges into Lake Michigan. It got the go-ahead from both the state of Indiana and the EPA. BP said it would seldom need to use the upper limits of its pollution permits and would not compromise water quality.

The refining process would continue to take in and discharge 150 million gallons of Lake Michigan water daily. That water is treated in an 11-step process that removes the majority of its toxic pollutants before the water is return to the lake, says plant superintendent Joseph Morrison.

JOSEPH MORRISON, BP Employee: I'm taking a sample of the water that's flowing from the process out into Lake Michigan right now.

ELIZABETH BRACKETT: Is this as clean as the water in Lake Michigan is now?

JOSEPH MORRISON: Yes, this is as clean as the water that's coming into the process from Lake Michigan.

Pollutants in discharge water

ELIZABETH BRACKETT: But as clean as it looks, the discharge water does contain small amounts of 23 different toxic pollutants, including chromium, strontium, benzeprine, mercury, ammonia, and total suspended solids. The new permit raised the limits for ammonia by 54 percent and total suspended solids by 35 percent. That outraged many in neighboring Illinois.

The lake has been the target of massive cleanup efforts in recent years, and environmentalists complain that allowing any increase in pollution would be a step backwards.

MAX MULLER, Environment Illinois: There's been an enormous visceral reaction to BP's announcement or to the announcement of the permit that's going to allow BP to dump in the lake. It's unlike anything we've seen before in recent memory on an environmental issue. Illinoisans, it's like they've laid down the law, "Thou shall not dump in our lake."

ELIZABETH BRACKETT: Democratic Congressman Rahm Emanuel promised hearings.

REP. RAHM EMANUEL (D), Illinois: Lake Michigan, Superior, Huron, Erie is our Yosemite. That is our Grand Canyon. Maybe 15 years ago, you could have pulled this off. You can't do it today, and that we are not allowing 39 million Americans' daily drinking water facility, the largest body of fresh water in North America, 20 percent of the world's entire fresh water, be treated as their dumping ground.

ELIZABETH BRACKETT: Seventy thousand people signed a petition against any increase in the amount of pollutants discharged into the lake. A boycott of BP was threatened. Last month, BP backed down. It issued a statement saying, "Ongoing regional opposition to any increase in discharge permit limits for Lake Michigan creates an unacceptable level of business risk for this $3.8 billion investment. We will not make use of the higher discharge limits in our new permit."

Environmental groups and Illinois politicians declared victory.

SEN. DICK DURBIN (D), Illinois: This is a great day for Lake Michigan, for the city of Chicago, and for all the people who stood up and spoke out about the BP refinery in Whiting, Indiana. This is proof that, if enough people stand up and work together, it can really make a difference.

BP's variance

ELIZABETH BRACKETT: Just as the dust was settling from the fight over water quality standards, a new battle loomed. Indiana regulators granted BP a variance from air quality standards, relaxing rules that would have required BP to have a sharp drop in soot emissions from the refinery.

Lawyers from the city of Chicago, the state of Illinois, and environmental groups immediately swung into action, asking an Indiana environmental judge to overturn the ruling. Howard Learner leads one of those groups, the Environmental Law and Policy Center.

HOWARD LEARNER, Environmental Law and Policy Center: Well, I think there's a lot of concern about air quality, just as there is about water quality. And in terms of the air quality problems at BP, you're seeing the public get engaged, seeing groups like ours saying to the Indiana Department of Environmental Management, "You've approved a variance on the wrong terms that would allow BP to continue polluting in violation of the Clean Air Act. We deserve a cleaner and healthier environment. That variance should not have been granted." And we hope they take another look at that.

ELIZABETH BRACKETT: The public outrage directed against BP does indicate a shift in public opinion, says economist Lynne Kiesling. But she says that shift will have a price tag.

LYNNE KIESLING, Northwestern University: In this grand bargain that goes on between the value of environmental quality and the value of products and services that we consume, that to the extent that that balance shifts towards being willing to pay more to secure environmental value, that that will mean that more companies like BP and other petroleum refiners, as we ask them to incur those costs, that we will see the costs of the goods and services that we buy from them go up. So, again, we're seeing still that tradeoff.

ELIZABETH BRACKETT: A tradeoff many who live along the lake are willing to make.

LAKE MICHIGAN-AREA RESIDENT: I say clean water over cheap gas any day, any day.

ELIZABETH BRACKETT: Back in Detroit, Marathon is hoping its proactive measures will convince the public and the city council to let it expand the only refinery left in Michigan. Otherwise, it might look to expanding in Minnesota or Illinois.