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 WHITING, Ind. - The U.S. Environmental Protection Agency said Monday it backed some demands by environmental groups asking it to object to an air permit to BP's refinery expansion in Whiting, Indiana.
The agency's objection is the latest in a string of setbacks for BP's $3.8 billion planned expansion, which will allow the refinery to process more heavy crude, such as from Canadian oil sands. Although BP said it plans to continue with the construction, the air permit would be necessary to operate the refinery once the expansion is completed in 2012.
According to a legal briefing viewed by Dow Jones, the EPA objected because the agency didn't believe the permit adequately accounted for all the emissions that would come from the expansion and it didn't include the "best available technology and lowest achievable emissions rate for flares and other sources."
An EPA official said it expected that BP, through the Indiana Department of Environmental Management, would submit a revised permit application.
BP lawyers received a copy of the 24-page EPA objection Monday afternoon, which the company will review and discuss with the agency, BP Spokesman Scott Dean said.
The action does not mean the 410,000 barrel-per-day refinery project is scrapped, said an EPA official. Rather the agency has asked the state to revise the permit to address the objections raised by the groups in an August 2008 petition.
"It is not necessarily that the project is halted. It is more that the state needs to revise those permits to address those concerns," said Sam Portanova, a Chicago-based environmental engineer for EPA's Midwest region.
Groups, including the Natural Resources Defense Council, last year petitioned EPA to formally object to the state's modification of BP's operating permit for an expansion project to refine high-sulfur Canadian crude oil.
Upon further review, EPA agreed that the Indiana Department of Environmental Manager (IDEM) "did not adequately respond to public comment and that information on some of BP's emissions may have been omitted," the agency added.
Questions must be answered about flare emissions, residual emissions from vessel de-pressurization, increased emissions from coking and coke drum de-pressurization, fugitive emissions from reduced sulfur compounds and emission factors to account for higher-sulfur crude, it added.
Indiana has 90 days to submit a proposed permit to EPA.
The EPA administrator signed the action on the petition on October 16, an EPA official said.
The BP expansion plan, which would allow the refinery to process Canadian crude oil, will cost about $3.8 billion, according to some estimates.
The Whiting refinery is BP's biggest refining facility in the U.S., with the capacity to process 405,000 barrels of crude oil a day. The expansion project won't change how much crude oil it will process but will increase its ability to process Canadian tar-sands crude by 260,000 barrels. Following these upgrades, Dean said the refinery will have the ability to use 90% of its refining capacity to process heavy crude oil, from its current capacity of 20% to 30%. BP expects the expanded capacity to be online in 2012.
The EPA's objection comes in contrast to the U.S. State Department's approval earlier this year of a pipeline project to transport the Canadian oil-sand crude into the Midwest.
The EPA reviewed the air-permit application after a petition was submitted by environmental groups opposing the expansion, including the Environmental Law & Policy Center, Hoosier Environmental Council, Natural Resources Defense Council and the Sierra Club.
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