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California Oil Refiners Turn to Processing Dirtier, Cheaper Crude Oil

The state's refineries emit 19 to 33% more greenhouse gases per barrel of crude oil when stacked up against comparable gas-producing regions.

By Ngoc Nguyen, New America Media/InsideClimate News

Mar 28, 2012
(Page 2 of 2 )
ConocoPhillips oil refinery in Rodeo, Calif.

Karras, the study's author, emphasized that California's tough environmental laws aren't solely responsible for the rise in refinery emissions, because other states in his study have adopted similar laws over the years.  What sets California apart, he said, is the way its refineries go about removing the sulfur.

California's refineries generally choose to remove the sulfur earlier in the process, or further "upstream," which expends more energy and emits more CO2 than if it were removed further "downstream" in the process.  According to the study, facilities on the East Coast, Midwest and Gulf Coast have a greater capacity to remove sulfur downstream compared with California plants.

California refineries are also trying to squeeze out more products of value—not just gasoline, but diesel and jet fuel—from the dirtier crude, and that requires more energy and emits more CO2.

Schaefer, who directs the Environmental Integrity Project, says the "game ... is to get more out of each barrel" of crude.

"In a nutshell, the refinery is determined to get the very most out of each barrel, and if it’s dirtier crude, that's more work," he said.

State at a Crossroads

Diane Bailey, a scientist with the Natural Resources Defense Council, says the trend toward dirtier crude in California is alarming, because once facilities are upgraded to process the heavier stuff, it won't be easy for them to switch to other forms of crude.

"Refineries make choices on which crude feedstock to use, and that locks them in for a decade or two. It's a long term investment," she said. "Crude feedstock affects carbon footprint—these refineries have tremendous control over carbon budget."

California's biggest stick to deter the oil industry's move to dirtier crude—including the controversial Canadian tar sands oil—may be its Low Carbon Fuel Standard, a little known component of A.B. 32. While earlier laws focused on making sure that cars were more fuel-efficient or that the gasoline they burned was cleaner, the standard is a first-ever attempt to consider—and reduce—the entire carbon footprint of motor fuels.

The standard has two key parts: a biofuels policy that requires that gasoline be blended with renewable fuels to lower carbon intensity and a "high carbon intensity crude oil" program that creates incentives for refineries to process cleaner forms of crude.

"The LCFS prevents refineries in California from getting increasingly dirtier by utilizing dirtier domestic and foreign sources of crude oil," said Simon Mui, a scientist with the Natural Resources Defense Council. "The standards say oil companies must clean up, either by reducing the carbon intensity of their crude oils or offsetting those emissions in California. This approach effectively creates more value for lower carbon, less polluting crude oils."

The standard doesn't outright ban dirtier crudes, said Clegern, the California Air Resources Board spokesman. Instead, refineries must ensure that their crude oil mix meets a "California average" that will be adjusted each year. Clegern said the standard uses a life cycle approach to evaluate the carbon intensity of 250 crude oils that had previously been lumped together, so the state can track overall emissions from extraction to combustion.

The low-carbon fuels rule is fiercely opposed by petroleum refiners and out-of-state ethanol makers, who have sued to stop it. In December, a federal judge in Fresno issued an injunction to halt enforcement of the standard, saying it discriminates against out-of-state fuel sources and interferes with interstate commerce. The Air Resources Board has appealed the ruling, seeking a stay to the injunction. A decision by the Ninth Circuit Court of Appeals in San Francisco is pending.

Tupper Hull, a spokesman for the Western States Petroleum Association, said the new standard would actually increase the world’s greenhouse gas emissions, because crude oil producers "will be put in a position of shuffling crude around the globe to meet California’s standard." The Western States Petroleum Association was not a party in the lawsuit.

"We had consistently argued that CARB's efforts to differentiate crude in terms of carbon intensity was a bad policy that would cause adverse implications, and not result in reductions in emissions," Hull said.

Instead of preventing heavier crude from unconventional sources from being extracted and processed, he said the crude will just be shipped to other countries to be processed and then shipped to gasoline consumers around the world, in effect boosting greenhouse gas emissions.

But the industry, like everyone else, can only speculate about what will happen when the Low Carbon Fuel Standard takes root.

Mui, the Natural Resources Defense Council scientist, says he's optimistic it can stanch the trend toward dirtier crude in California, because it sets an industry-specific performance standard, similar to the fuel economy standards that helped the auto industry improve its fuel efficiency over time.

"Would the car companies be improving fuel economy if there weren't standards in place?" he said.  "The answer is no, you need standards. For oil companies, what the LCFS is doing is changing the signal to not invest in dirtier stuff, and to make it more attractive to invest in cleaner fuels."

This story was reported and written by Ngoc Nguyen at New America Media in collaboration with editors at InsideClimate News.

ucs-report-oil-refinery-CO2-performanceINSIDECLIMATENEWS.pdf2.88 MB
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