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The Hyperion project: An 'invisible' refinery?

By Dave Dreeszen Journal business editor | Posted: Sunday, May 18, 2008
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A softball team practices in the shadow of the Chevron oil refinery in El Segundo, Calif., May 7. (Staff photo by Tim Hynds)

EL SEGUNDO, Calif. -- The early afternoon sunlight glistened off the Pacific Ocean as white-crested waves crashed onto a wide, sandy beach here.

A half dozen surfers, face down on their colorful boards, paddled out to sea. Bicyclists, joggers and a mother pushing a stroller passed by on a paved trail along the oceanfront.

Up a steep hill from the beach, vehicles sped by on a four-lane boulevard hugging the coastline. The winding road, Vista Del Mar, also forms the western boundary of the Chevron USA oil refinery, a dominant fixture in the Santa Monica Bay area for nearly a century.

"People are surprised when they come and see a facility of this size in this setting,'' said Rod Spackman, public affairs manager for the sprawling Chevron complex, wedged between two prosperous beach communities -- El Segundo and Manhattan Beach -- and just south of Los Angeles International Airport, or LAX.

Covering 1 1/2 square miles, or nearly one quarter of El Segundo, the 260,000-barrel-day refinery, the largest on the West Coast, supplies nearly 20 percent of the gasoline for traffic-congested southern California.

Beset by various environmental troubles during its long history, the refinery today touts itself as one of the world's cleanest. Since the early 1990s, it claims to have cut emissions in half using the latest pollution control equipment.

Dallas, Texas-based Hyperion Resources singles out the Chevron complex as the closest domestic comparison to the $10 billion, so-called "green'' refinery and power plant it promises to build in Union County, S.D. Though Hyperion's proposed refinery, which faces a June 3 referendum, would be nearly twice as large, it would use similar processes and technologies.

'El Stinko' a thing of the past

Lifelong El Segundo resident Lee Clements, 53, remembers the days when the smell wafting from the Chevron plant was overpowering. Fires, explosions and routine flaring -- a safety measure for burning waste gas -- were also more commonplace.

The strong odors emitting from the refinery, as well as an adjacent sewage treatment plant, long saddled El Segundo with a pair of unflattering names -- "Smell Segundo,'' and "El Stinko'' -- monikers to which residents of "Sewer City,'' err, Sioux City, could easily relate.

"As a kid, I can remember riding the school bus and everybody holding their noses,'' said lifelong El Segundo resident Lee Clements, 53.

Now, most local residents say there are few, if any, problems associated with living or working in the shadow of the refinery.

"Today, as I drive down El Segunda Bouelvard, it doesn't smell," Clements said.

Clements, who runs a local home maintenance and repair business, spoke after finishing a lunchtime game of tennis with local dentist Alec Ferradas. They played at the city's largest recreation park, home to a Little League field named for George Brett, Major League Baseball Hall of Famer and El Segundo native.

From the park, along the beach and many other vantage points in town, the refinery's tall towers, massive storage tanks and seemingly endless maze of pipes and valves are hard to miss. But up close, the visual impact is minimized by large sloped berms surrounding most of the perimeter.

The earthen berms, which Chevron planted with palm trees, flowers and other drought-resistant vegetation, not only shield the plant from outsiders, but also serve as a noise barrier and, in the event of an accident, protection against spills or explosions.

"Their job is to make the refinery as invisible to us as possible -- to not have it intrude on our daily lives, whether we live here, work here or both,'' El Segundo Mayor Kelly McDowell said.

On Sepulveda Boulevard, the major thoroughfare through town, thousands of motorists pass the eastern side of the refinery each day without noticing it's there. Ample commercial development front the other side of the street, from a lush golf course and driving range to an upscale shopping mall and high-rise office buildings.

North of the refinery lies El Segundo's historic downtown district, home to a variety of shops, restaurants and nightspots. All of the city's K-12 school buildings and at least two preschools are blocks away from the Chevron site.

Single-family homes, duplexes and condos, many with values in excess of $1 million, line the entire length of a a four-lane boulevard along the refinery's southern boundary.

A good neighbor?

Critics aren't impressed with the scenic setting or testimonials from local leaders.

Of the six refineries it tracks in the South Bay region, the Coalition for a Safe Environment considers El Segundo's the worst of the bunch, said Jesse Marquez, executive director of the group, based in nearby Wilmington. That conclusion is based primarily on a comparison of emissions figures refiners are required by state law to report, he said. Marquez rattled off a list of pollutants the refineries emit, which he said put residents at greater risk of developing major health problems.

"No matter which refinery it is, or where it's located, it's not a good neighbor,'' said Marquez, as he stood on the El Segundo beach on a cool evening, as the sun sett over the ocean.

Other community leaders say their experience with Chevron proves otherwise.

"The public's perception of these places is they are polluters and their interest is in profit and they'll do whatever at all costs,'' El Segundo Fire Chief Kevin Smith said. "My perspective is different. I know that plant manager. There's nobody on this planet that wants things to be safe, wants there to not be releases, wants there not to be breakdowns, more than those people...''

As part of its commitment to the community, Chevron requires its plant manager to live in El Segundo, assistant city manager Bill Crowe. Most of the other plant's top executives also reside there or in neighboring Manhattan Beach.

As fire chief, Smith serves on Chevron's 19-member community advisory panel, which includes residents from both El Sequndo and Manhattan Beach. Dave Wachtfogel, a committee member who lives five blocks from the refinery, credits Chevron with keeping them informed about developments at the plant, listening to their concerns, and responding to any complaints or problems.

After recent overnight discharge of black soot, for instance, the company immediately papered windshields of more than 1,700 parked vehicles in town with coupons for free car washes, he noted.

Multiple violations lead to changes

But like most of the rest of the industry, the El Segundo refinery has had multiple violations of state and federal environmental laws, paying tens of millions of dollars in penalties over the years.

The most notable incident came in 1988, when it was discovered as much as 252 million gallons of oil had seeped beneath the plant into non-drinkable groundwater, the largest such spill at the time. A 20-year, government-ordered plan to cleanup the hydrocarbon plume continues to this day.

In the aftermath of the spill, the Chevron refinery became the first to adopt a standard of double bottoms for its pale green storage tanks. The tank farm contains more than 150 vessels with diameters greater than 30 feet, holding a total of 12.5 million barrels. The largest tank stands 64 feet tall and measures 260 feet in width.

As an additional groundwater protection, the refinery moved above ground all of its more than 1,000 miles of pipelines. A "sleeving'' process also was adopted, in which one pipe is inserted into another.

In 2000, Chevron agreed to pay a record $7 million to settle claims that it violated the Clean Air Act at its offshore loading terminal on Manhattan Beach. As part of the settlement, the company spent $500,000 to install leakless values and double-sealed pumps.

Asked about its past environmental troubles, Spackman refers to them as "legacy issues'' from the way refiners "conducted their business at the turn of the century.'' Standard Oil Co. fired up the El Segundo refinery in 1911, when a smaller plant produced kerosene for lamps.

Still, some residents insist the El Segundo refinery routinely discharges pollutants at night, which Spakman denies.

"There are no visible emissions from the refinery, in terms of any pollutants being released,'' Spackman said, as he steered a Toyota Prius around some of the 23 miles of paved roads inside the Chevron fenceline. "All of that white smoke you see coming off of that cooling tower over there is steam.''

During the driving tour of the facility, Spackman stopped next to the larger of the refinery's two initial distillation units, a towering metropolis of chrome and steel. Through a boiling process akin to making whiskey in an old-fashioned still, the atmospheric distillation towers separate out the lighter, more valuable fuels from the heavier products. About half of a barrel comes out as a useable material, while the rest, a gas-oil mixture similar to household 3-in-1 oil, must go through additional processing.

One of the largest conversion units, known as the Fluidized Catalytic Cracking Unit, or "cat cracker,'' rearranges the longer chain molecules of heavier products. With a catalyst that resembles fine white talcum powder, it can produce 20 gallons of gasoline per second, enough fuel to fill the tanks of more than 100,000 cars.

As the tour continued, Spackman stopped at another catalytic cracker, which Chevron dubs the Isomax. A series of reactors, along with high heat and pressure, transform heavier products into diesel or jet fuel. The refinery supplies roughly 40 percent of the jet fuel used at nearby LAX.

The low-sulfer gasoline and diesel made at the refinery is reformulated to meet California' stringent standards for clean-burning fuel sold at the pump. Because California has the dirtiest air in the country, its air quality rules are the nation's most strict, exceeding federal standards. That's forced Chevron and other refiners to racket down their emissions.

From 2000 to 2006, the El Segundo refinery cut its criteria pollutants more than half, according to an analysis of data reported online by the South Coast Air Quality Management District. That includes a reduction in carbon monoxide from 2,041 tons to 765 tons.

Flare emissions from plant startups and shutdowns and equipment malfunctions also have been reduced dramatically since a 2002 project. Chevron also is in the midst of a $130 million upgrade to further minimize safety flares, which eliminates excess pressure building, turning hydrocarbon vapors into harmless water vapor and carbon dioxide.

Despite the upgrades, some local environmentalists remain unconvinced Chevron, or any other refinery for that matter, has totally cleaned up its act.

Coalition for a Safe Environment's Marquez points to research showing the six South Bay refineries as the third largest source of air pollution in southern California. That puts residents at increased risk of developing various respiratory disorders and forms of cancer, he said.

Economic boon

Crude oil, which put the town on the map, remains a dominant economic force. Today, the refinery employs about 1,100 full-time workers. In addition to an annual payroll valued at $126 million in 2006, it's estimated Chevron creates an additional eight jobs for every one job at the refinery. A number of refinery-related suppliers, vendors and spin-off firms operate nearby the Chevron site.

"This city has boomed because of that plant,'' said Dee Francis, a local business developer who has lived in El Segundo nearly all his life.

Most of the town's employees commute to work. El Segundo, which has an official population of around 16,000, swells to more than 85,000 people during the Monday through Friday work week, the mayor said.

In addition to its regular workforce, the refinery routinely brings in several hundred contract workers each year to perform special jobs, such as the installation of pollution control devices.

Hyperion critics worry that the temporary legion of construction workers needed to build the Union County refinery would lead to increased crime. El Segundo Police Chief David Cummings said he has not experienced problems with the out-of-town workers at the Chevron site. In fact, his officers seldom get called to the refinery. When they are, it's usually to stop tourists from taking unauthorized photos.

Beachfront homes

Like El Segundo, the more affluent Manhattan Beach, pop. around 33,000, also has grown and prospered over the years, according to local leaders. El Porto, a stretch of the beach known for its killer waves, is a prime tourist attraction, as is the Manhattan Beach pier, extending out into the ocean.

The city's prime beachfront properties, known as the "strand,'' generally sell for $500 to $1,000 per foot, according to local officials.

Carleen Delight, a local Realtor who lists in Manhattan Beach, said properties closest to the refinery generally don't sell as well as others. "It's not the most desirable thing to look at,'' she said.

Jeannette Andruss, a local TV news producer who moved to Manhattan Beach a few years ago with her physician husband, said the allure of living near the beach outweighs any misgivings about the refinery.

"I don't really notice it most days,'' Andruss said, as she stretched on the ground at the halfway point of a 3 1/2 mile run along the beach.

The refinery is just one of the environmental impacts facing South Bay residents on a daily basis. Jet traffic roars over El Segundo nearly continously. Depending on the weather, smog that hangs over downtown Los Angeles' skyline like a dark cloud.

Ferradas, an El Segundo dentist for 19 years, wonders about the long-term effects of breathing the air. "It's probably not five years, probably not 10 years,'' he said. "Maybe it shows up in 20 years.''

South Bay residents' biggest gripe, however, has nothing to do about emissions, odor, noise or the bright lights of the refinery.

"I can't understand why Chevron is right here and gas prices are 20 cents a gallon higher here than in Orange County,'' construction worker Scott McDowell said as he nursed a bottle of Bud Light from a barstool in the Bad Dog Ale House, a popular afterhours hangout for refinery workers. "It's not like they have to truck it very far.''

In El Segundo, where there's a Chevron station seemingly at every corner, the the cheapest blend was selling for just under $4 a gallon in early May,

Told about Hyperion's plans for Union County, Wachtfogel said it would be a "patriotic act'' if local voters approve the first new U.S. refinery in more than 30 years.

"There's plenty of oil around. There's very limited refining capacity,'' he said. " If we want to sustain ourselves as a nation, we're going to need an appropriate amount of reasonably priced energy.''





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Story Comments

Ill manners wrote on May 22, 2008 10:25 PM:

" Paul, I guess you know that from living in Elk Point? "

AnnieO wrote on May 22, 2008 7:30 PM:

" David Wachtfogel wrote on 10/04/07 in the South Bay Easy Reader, "We don't need partisan political organization...telling us who might best serve on our council..." In the 01/18/07 edition he wrote of a house in his town, "that house...is just plain butt-ugly and should have never been injected into the neighborhood..." and he dares tell us it is our patriotic duty to build a refinery. Apparently, Mr. Wachtfogel doesn't practice what he preaches. "

vote yes wrote on May 22, 2008 6:57 PM:

" I understand AnneO's points and am glad we live in a place that a little discord is welcome.

We will see what happens in a very short time, but I have a feeling we are going to have a nice little economic development in these parts.

I am truly sorry I have but one vote to give to the rezoning. "

Paul wrote on May 22, 2008 1:14 PM:

" Previously, Mark Avery submitted a letter to the Journal (also on the SUC website) asking people to be respectful. Apparently AnnieO has decided to disregard Mark's request. Sorry David Wachtfogel, most citizens of South Dakota do not treat people this way. "

AnnieO wrote on May 22, 2008 9:49 AM:

" To Vote Yes...dear did ya notice the orange windsock on the tower in the photo above? Honey, it ain't there for LAX, it's so folks'll know who is downwind of the contaminate du jour. Oh, Kansas wasn't going to get a gorilla, it was a 'femme fatale' called Nicole.
Vote No to a Bad ordinance "

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