Phillips 66 rail project – explosive risks far outweigh the benefits

March 24, 2014

OPINION By MESA REFINERY WATCH GROUP CHAIR PERSON LINDA REYNOLDS

In 1955, San Luis Obispo County approved a plan to bring crude oil to its Nipomo Mesa Santa Maria Refinery via pipeline. Over the years, the Nipomo refinery was operated by Conoco Phillips, without issue, under agreed-upon limitations and protections.

In 2012, Conoco Phillips spun off Phillips 66 as a separate company. On the cover of its very first annual report, that new company’s executives stated “We’re taking a classic in a new direction.” That direction has become painfully evident with the company’s proposed “rail terminal project” for the refinery in Nipomo, which, as far as its impact on SLO County, would be a dramatic transformation in Phillips’ business model and method of operation.

Their revamped corporate business model is to maximize profits by turning our nation’s rail lines into inherently unsafe “tank car pipelines” to take advantage of the new flood of lower-cost Canadian tar sands 1 and domestic fracked crude oils.

The scope of what Phillips intends:

And that’s the strategy Phillips intends to implement at their Nipomo refinery. Instead of bringing in crude by pipeline, they propose bringing in a half-billion gallons (488,000,000) of crude per year, via 20,800 rail tank cars. In addition, those cars may very well contain Bakken crude — the explosive crude that has destroyed lives, property and the environment in towns across the U.S. and Canada. Phillips has repeatedly refused to rule out the delivery of Bakken crude to its Nipomo refinery.

Plus, the crude would travel through SLO County via DOT-111 cars — tankers that federal officials have called “tragically flawed, causing potential damage and catastrophic loss of hazardous materials during derailments.”2

We suggest you view the devastating impact these trains have already had on communities. Go to this site – http://tinyurl.com/mmbotzu.

The mile-long trains would move from north to south through SLO County. Here are just some locations where citizens could almost reach out and touch the tank cars, and the approximate distances:

• The Fairgrounds in Paso Robles (500 feet).

• Paso Robles’ downtown City Park (500 feet).

• Templeton Park (1,000 feet).

• The Santa Margarita elementary school (500 feet).

• Cal Poly (across the street).

• SLO City Hall (2,000 feet).

• French Hospital (right next door).

• SLO County regional airport (3,000 feet).

• SLO’s Los Ranchos elementary school (in their backyard)

• Pismo Beach Premium Outlets (2,000 feet).

• Pismo Beach’s downtown restaurants (1,400 feet).

• Pismo Beach North Beach Campground (1,000 feet)

• Pismo Beach Monarch Butterfly Grove (across the street)

• Grover Beach’s busy junction of Highway 1 and Grand Ave. (right next door)

• Oceano Beach’s busy junction of Highway 1 and Pier Ave. (right next door)

• Arroyo Grande’s Lopez High School (1,300 feet)

We believe the vastly increased risks that this proposal brings to the citizens and businesses throughout SLO County and the Central Coast are unacceptable. The risks of massive explosions, fires, oil spills, and air, noise, odor and light pollution, enormously outweigh the benefits the plan bestows on an individual business entity — that is, Phillips 66. Any honest risk, benefit analysis would lead to that conclusion.

It’s not about “jobs,” it’s about implementing a crude-by-rail strategy:

Phillips is holding the specter of lost jobs (they employ 140 people) over the heads of the citizens and officials of SLO County, should the Nipomo rail terminal project be denied. Let’s look at the issues:

• Phillips has said they require the project because California crude oil sources to feed their pipeline have been in decline for more than 20 years, since 1987. This time-span was stated by Phillips at the February 24th South County Advisory Council meeting, so they’ve known about the decline for more than two decades.

• Yet, around 2009, Phillips applied for a 10 percent increase in production at their Nipomo refinery, all to be brought in via pipeline. So why, if they knew for two decades that there was a decline in their raw material, would they recently apply for an increase in production, specifically from pipeline sources?

• The reason — the entire “declining California crude” argument, accompanied by the potential loss of jobs, is a red herring. It’s designed to distract us from the real reason they have for bringing in crude oil by rail.

• In fact, while California crude oil production has declined somewhat as a source for their refinery, the amount of crude processed at Nipomo in 2012 was exactly the same as it was 10 years prior in 2003, and it all continued to come in via pipeline. In addition, applications now abound in SLO County for new crude oil drilling sites.

• The real reason for requesting a Nipomo RAIL terminal, is that Phillips “corporate” has changed their business model. And their executives have proudly called it their “crude-by-rail strategy 3.” Their desire is to take advantage of low-cost, high-profit, extremely volatile, fracked shale oil. And the only way to quickly implement it all is via “crude-by-rail.”

Our health and safety trumps Phillips’ new business model:

Phillips wants to introduce a “new normal” into SLO County. That new normal includes potential explosions, fires, pollution and health hazards that do not currently exist here.

If a company that had never conducted business in SLO County came to the supervisors and planning commissioners tomorrow, with the same new business model and associated risks, we’re certain it would be rejected. The safety and well-being of our citizens trumps the new direction in which Phillips intends to take us all. That’s why our planning commissioners must vote “no project.”

1 – http://www.mercurynews.com/ci_23366256/canadian-tar-sands-crude-heads-bay-area-refineries

2 – http://www.schumer.senate.gov/record.cfm?id=345384&

3 –Phillips 66 2012 Summary Annual Report; page 27