Erecting Barriers, Driving Refining Overseas

By May 21, 2008Energy

In his conversation yesterday with bloggers (cited below), Chevron Vice Chairman Peter Robertson mentioned the difficulty the company was having in getting permits for a refinery upgrade in California. He was referring to the Richmond Refinery in the San Francisco Bay area. More Robertson (our transcription):

It’s not an enormous modification. We have a modification to that refinery that’s actually going to reduce the C02 emissions. It’s going to allow us to run a broader range of crudes, so it should reduce costs to the refinery and eventually reduce gasoline prices. But, we can’t get a permit to expand the darn thing, and as I say, we’re into the fourth year of trying to do that. And it’s not because we’re obstinate. It’s just because there’s lots of folks with a lot of interests that aren’t aligned with ours.

He added that the American public and gasoline users might have some interests of their own.

As for the Reliance Energy refinery being built in India, it’s a greenfield refinery, i.e., one being built from the ground up rather than the expansion-on-current-site approach that has ruled in the United States for the last three decades or so (because of regulations, NIMBY opposition and the generally low margins on the refinery business). Here’s an update on the Indian project from Reuters:

News of the start-up is in line with previous reports suggesting Reliance would start the plant late in the second quarter or early in the third quarter, well ahead of its official December target, bringing earlier relief to oil markets that continue to rally on fears of tight supplies.

Together with Reliance’s existing 660,000-bpd refinery, the new unit will make the Jamnagar complex in western Gujarat state, the world’s biggest with a capacity of 1.24 million bpd. Chevron Corp holds a 5 percent stake in the unit that is building the second plant, Reliance Petroleum.

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