Just a few years after the biggest investment in state history, BP is eyeing another massive project at the former Standard Oil Refinery on Lake Michigan, and also is cutting back on the flaring that at times sends towers of flames shooting above the Whiting skyline.
BP Whiting Refinery management has asked for corporate approval to build a new hydrotreater unit, which uses hydrogen to remove unwanted chemicals like sulfur, nitrogen, oxygen, and halides from gasoline. If approved, the multiyear project would create hundreds of construction jobs, refinery manager Don Porter said.
“It would cost several hundred million dollars,” he said. “It’s big. They’re not cheap to build.”
BP just installed a “modern world-scale hydrotreater” to scrub more sulfur and nitrogen out of the gas it refines in Whiting as part of its $4.2 billion modernization project, which was completed in late 2013. But the London-based oil giant is considering the additional investment to meet a new U.S. Environmental Protection Agency mandate to ensure that gasoline has less than 10 parts per million of sulfur.
“The industry is doing this across the board,” Porter said. “We’re hoping to get approval in the next year. Then it would take three or four years to get that built.”
Other refineries have looked at similar capital projects to comply with the looming EPA requirement, which aims to reduce emissions, GasBuddy.com senior petroleum analyst Greg Laskoski said. Sulfur content in gas must be lowered from 30 parts per million to 10 parts per million when the federal regulation goes into effect next year.
Oil companies can get sulfur credits for the first few years, and the goal is to have the new hydrotreater up and running by 2020, when credits will be harder to come by, Porter said.
Water, air to get more protection
As part of a 2012 agreement with the U.S. Environmental Protection Agency, BP also has installed a new Dissolved Nitrogen Flotation unit in its wastewater treatment plant to remove dissolved organics in the wastewater. An issue emerged while the refinery tried to get the new unit up and running, resulting in a discharge of five times the allowed limit of total suspended solids of industrial waste last week.
The EPA agreement mandates BP spend $400 million on state-of-the-art pollution controls, including new flare gas recovery systems that will reduce the flaring that often lights up the sky over Lake Michigan. The pilot lights at the top of flare stacks will still burn, but they’ll only spit towers of fire if there’s a major issue with refinery operations.
The new flare gas recovery systems will trap and recycle the gases that would otherwise be flared atop the stacks, which, as any Whiting resident knows, can look dramatic, especially at night. They should be in place by year’s end, Porter said.
“We try not to flare. Besides the environmental impact, I tell people that’s $50 a barrel crude burning in that flame,” Porter said. “It’s pretty expensive. It’s also part of being a good neighbor and a good community member.”
Energy giant looks north
From 2008 to 2013, BP invested $4.2 billion — a private sector record in Indiana — to modernize the Whiting Refinery to make it more environmentally friendly and enable it to convert more heavy crude oil from the oil sands region in Canada and the Dakotas. The refinery, which gets oil by pipeline, went from being able to process about 20 percent heavy crude to about 85 percent.
It was part of BP’s “Northern Tier” strategy to refine more crude oil from the north, where production has ballooned. BP refineries in Toledo, Ohio, and Cherry Point, Washington, underwent similar conversions.
The 430,000 barrel-a-day refinery in Whiting is BP’s largest and the biggest in the Midwest, shipping gas to seven states. Pipelines still bring sweet crude oil from West Texas and the Gulf of Mexico, but most of the crude oil being refined in Whiting now comes from Canada.
“That’s been an ongoing trend for the past several years,” Gasbuddy.com’s Laskoski said. “Companies are accessing the crudes that are best to work with and most affordable.’”
BP energizes local economy
Investments like the multiyear modernization project demonstrate “that BP considers Northwest Indiana a priority and plans to continue to be an important economic anchor in the Region,” said Micah Pollak, an assistant professor of economics at Indiana University Northwest.
“It can be difficult to identify the exact economic impact of one particular firm or plant; however, the BP Whiting Refinery is clearly a major positive economic force in Northwest Indiana,” Pollak said.
Local union construction workers pocketed $1.7 billion in wages during the modernization project, which propped up the Northwest Indiana economy during the Great Recession. The refinery accounts for nearly 5 percent of the manufacturing jobs in Northwest Indiana and they pay extremely well, about 40 percent better than the national average, Pollak said.
The BP Whiting Refinery employs 1,850 workers who make an average of $70,000 a year, which is about 70 percent higher than the average wage of all Northwest Indiana workers. Hundreds of union trade workers also are often engaged in projects at the refinery.
Based on the industry averages, the BP Whiting Refinery contributes more than $130 million in worker earnings to the Region each year, or 1.3 percent of all earnings by all workers in Northwest Indiana, according to Pollak.
“In addition to those directly employed by BP, there are a significant number of outside contractors that work in the refinery,” he said. “Most of these workers live and spend money in Northwest Indiana and their income translates into jobs for workers in other sectors.”