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Chevron pays a high price for refinery

Submitted by News Desk on Wed, 08/13/2008 - 10:00pm
By Daniel Weintraub
Article Launched: 08/14/2008 12:37:32 AM PDT

RICHMOND - From the corner of Standard Avenue and Main Street at the big Chevron oil refinery in this gritty city by the bay, the pipes seem to stretch forever in every direction. Carrying crude oil, gasoline and everything in between, they snake for miles through the refinery - 8,000 miles, almost three trips across the United States. That's how massive this place is.

Every third car driving on Northern California roads is powered by gas from Chevron's plant. Almost every quart of motor oil sold on the West Coast has ingredients from here.

The scale of the refinery is a testament to our oil-driven society.

And a controversy over a planned modernization of the facility reflects our love-hate relationship with the stuff.

Even before prices at the pump rose above $4 per gallon, it was becoming fashionable to sneer at oil, the oil industry and everything connected to it. But few of those doing the sneering travel exclusively by bike or on foot. And until we're all doing that, or we figure out some other way to power our cars, we are going to need gasoline.

And if we need gas, we are going to need oil and oil refineries.

Chevron's refinery has been here on the shores of San Pablo Bay for more than 100 years. A century ago it was making kerosene for lamps, and the invention of the electric light bulb almost killed it. Then came the car, and the internal combustion engine. The refinery has not been short of customers since. The refinery's current infrastructure does not quite date to the days when the first Rockefellers would come out from the East to inspect their holding, which was then part of Standard Oil. But it is pretty creaky. Some of it was built in the 1930s and 1940s. Much of it goes back to the 1960s and 1970s. It is inefficient and prone to problems. It needs updating.

Typically, a major company's plan to invest $1 billion or so to modernize its facility would be good news. But not when it's an oil company.

Although the official capacity will remain the same, the refinery probably will produce at least a bit more gasoline once it's been updated, because it will have less downtime and more productive hours. And more of the gasoline it produces will be suitable for the California market because the upgraded equipment will better accommodate the state's special standard for formulating gas.

The new equipment will also allow the refinery to burn the dirtier crude that is becoming an industry standard as supplies of the purest oil begin to dwindle. That's of special concern to the neighbors because refining dirtier crude means more contaminants must be removed, and that increases the chances of pollution, particularly sulfur, will be released to the atmosphere.

But the company says it still will not be able to refine the truly "heavy" crude that opponents fear would be an environmental disaster. And the new power plants, furnaces and a hydrogen plant the company will build are supposed to be cleaner than the ones they replace.

After four years of review, the City Council voted narrowly last month to grant the company the permits it needed to proceed. But not before extracting a price.

In a side deal, Chevron agreed to pay the city $61 million over 10 years. Some of the money will go for environmental programs and to produce alternative energy. Some of it will go for law enforcement, health and social programs that have nothing to do with oil but will make at least some residents of the town feel better about the company.

That's the company's price of doing business in an urban area. And indirectly, it's the price we all will pay for continuing to enjoy our mobile, oil-fueled lifestyles.

Daniel Weintraub is a columnist for The Sacramento Bee (e-mail: