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The following article was posted on July 24th, 2013, in the New Times - Volume 27, Issue 52 [ Submit a Story ]
The following articles were printed from New Times [newtimesslo.com] - Volume 27, Issue 52

Santa Maria refinery seeks a railroad extension to cut crude costs, but will the savings be passed along to the consumer?

BY MATT FOUNTAIN


RAIL EXTENSION
Phillips 66, which operates the Santa Maria refinery in unincorporated South San Luis Obispo County, is preparing to ask the county to allow it to extend an existing rail line in order to bring in additional sources of crude oil.
PHOTO BY STEVE E. MILLER

In June, San Luis Obispo County residents began receiving vague phone calls from an East Coast-based company, which asked a long list of rather nebulous questions. At first, it seemed political; the pollsters asked for the residents’ opinion of each of the county supervisors, and were even unaware of the recent passing of District 4 Supervisor Paul Teixeira.

The surveyor asked how the residents felt about Diablo Canyon nuclear power plant, then about county open space. Finally, after about 10 minutes, questions turned to Phillips 66—formerly ConocoPhillips—which owns and operates the Santa Maria oil refinery in southern San Luis Obispo County on the Nipomo Mesa near Arroyo Grande.

Residents were asked what they thought of the company, and whether they would support an expansion of the facility.

The survey came just six months after Phillips 66 was granted a request by the county to ramp up its throughput—both crude oil moving in and refined oil transported out—by an additional 10 percent.

Now the company is going back to the county, asking it to approve an extension of an existing rail spur at the refinery, which would allow the company to directly ship in crude oil via railroad car. It would include approximately 1.3 miles of new rail—capable of accommodating a train 80 cars long—0.7 miles of above-ground pipeline, the construction of a restroom facility, and an unpaved emergency vehicle access road from the spur to Highway 1.

The project is expected to disturb about 49 acres; about half of that, however, would occur within the existing refinery property.

The county is currently working with an outside firm, SWCA Environmental Consultants, in drafting the environmental impact report necessary before it can grant Phillips 66 a coastal development permit.

Rich Johnson, spokesman for Phillips 66, told New Times via e-mail that the company did conduct the public opinion survey, and that the poll results were generally favorable of the company and its proposed rail spur expansion.

“Our plans for the rail project reflect our company’s commitment to operational excellence and safety while enhancing the competitiveness of the facility,” Johnson wrote. “Protecting our people, our environment, and our communities guides everything we do and those values will be applied to this project as well.”

Johnson said the new line will enable the company to deliver crude to the refinery from various new sources because its traditional supply of crude from California fields is declining. He didn’t identify those sources.

The project will create an estimated 30 to 50 temporary jobs during the nine months of construction and could add several new full-time operating positions once the project is completed, Johnson said.

Pending approval of all necessary state and local permits, construction would begin in mid-2014 with the rail spur fully operational in 2015.

Johnson said the company has been considering the project for about a year, though sources at the plant not permitted to speak to the press told New Times it’s an idea that’s been floated for years.

Johnson didn’t answer the rather naïve question of whether the new competitive sources of crude the project will make possible would allow the company to pass those savings along to the consumer.

But there may be at least one major benefit for local residents. As one component of the project, the county and the California Coastal Commission are also considering whether the company should provide public access from Highway 1 to their western property line, near the Oceano Dunes State Vehicular Recreation Area.

As the project is still in the drafting phase, there isn’t yet any indication of when it will go before the Coastal Commission for review.

Ahead of the EIR completion, however, county planners are holding a meeting for public input on the project, and what should be considered in the report, at 6 p.m. on July 29 at the Blacklake Golf Resort Banquet Room at 1490 Golf Course Lane in Nipomo.

Residents may submit topics to be covered in the EIR until Aug. 9.

 

News Editor Matt Fountain can be reached at mfountain@newtimesslo.com.