Executive Director of the Sierra Club
Posted: June 11, 2009 03:14 PM
Chevron's CEO, Dave O'Reilly, and I
debated for an hour last night at the Commonwealth Club. We got to
the bottom of some differences and found some common points -- but
didn't come to closure on some of the most important.
My bottom line is that O'Reilly is willing to head in the right
direction, with a decent set of policy tools, but far too slowly and
cautiously. If the world changes as fast as I believe it must -- his
company will need to change a lot faster than he's ready to admit -- or
else get much smaller.
Unsurprisingly, he thought the goals set in the pending House
Commerce Committee bill were too ambitious. I believe they were far too
cautious. I think we can cut 90 percent of our emissions (below today's
level) by 2050 -- he thought we could only do 20 to 25 percent. I
pointed out that just getting the rest of the country to use electricity
as efficiently as California does would do that much, without touching
sectors like transportation or renewables, and he relented and said,
"Well, if you can get efficiency done, we can go farther." (First point
We also agreed that the Commerce Committee bill gives far too much
away to coal companies and their utility allies. I'd prefer a straight
cap and auction as President Obama suggested. O'Reilly would prefer a
carbon tax -- and suggested starting at $20 per ton and going up, which
is a very serious offer. We discussed the idea that, since neither of us
likes the compromises that were inserted into the Commerce bill to
please coal, we might jointly lobby in the Senate to get rid of the
giveaways. He tentatively said "yes." (And it's captured on YouTube --
along with a slightly more contentious exchange.) Dave O'Reilly and me
together on Capitol Hill? Eyebrows would be raised.
If we were able to clarify our agreements and disagreements on how
fast America needs to phase out its use of oil and coal, we made little
progress on the issue of how to ensure that whatever oil we do produce,
is produced responsibly. O'Reilly was questioned strongly on Chevron's
record in places like Ecuador and Richmond, California, across the Bay.
I proposed that we resolve all of these issues by having the oil
industry voluntarily create a global trust, funded with ten percent of
oil industry profits for a decade, to clean up the environmental and
community devastation left behind around the world by the industry's
drilling and refining operations.
Going forward, the international major oil companies should take full
environmental responsibility for all of their operations, even ones
where they are in minority partnership with other companies or national
governments. Oil companies would no longer be able to hide behind the
argument that their activities were authorized by governments like those
of Nigeria and Myanmar, and that therefore they were not culpable for
environmental and human-rights abuses. O'Reilly didn't flat out reject
the idea but simply pointed out that the costs would probably be passed
on to oil consumers (true, and fair).
I closed by urging him to engage in similar forums and debates in
locations where Chevron has drilling and refining operations --
beginning in Richmond. He hedged on his own participation in such forums
-- so we'll have to see.
in tough fight to upgrade oldest refinery
Sat Jun 13, 2009 2:18am IST
* Part of wider push to refine oil containing more sulfur
* Chevron: 1,100 jobs at risk, permits easier elsewhere
By Braden Reddall
RICHMOND, Calif., June 12 (Reuters) - Far from Chevron Corp's (CVX.N:
Research) politically charged court battle in the Ecuadorean jungle,
the U.S. oil company faces a legal tussle in its own backyard over an
upgrade to its oldest refinery.
A judge ruled that the environmental impact report for the San Francisco
Bay refinery upgrade was inadequate, which was hailed by the
environmental campaigners who brought the case.
The expansion at the 107-year-old Richmond refinery, which will both
make it more efficient and more flexible, is part of a broader Chevron
drive to improve profit margins on refining.
But Chief Executive David O'Reilly expressed frustration this week at
the judge's decision, while also floating the possibility of the project
"We're in the middle of construction, so this is a very difficult issue
for us," O'Reilly told reporters after a debate on environmental issues
on Wednesday night in San Francisco.
"We haven't reached a final decision yet, but this is what I think is
wrong with California, where people are ... worried about the gasoline
price, and yet can't allow a project to be built after four years of
hearings and permits," he added.
Construction of the new hydrogen plant at Richmond, which started last
September and will allow it to process crude with higher sulfur content,
has not stopped so far. According to officials at the refinery, the
project employs 1,100 people on top of the 2,700 employees and 890
contractors who work there.
"My greatest concern is that we may stop the work and lay off 1,000 or
more people at a time when people need jobs," O'Reilly said.
That is a serious worry in the largely working-class area. As of April,
Richmond had 15.6 percent unemployment among its 54,100-strong
workforce, while nearly a fifth of the workers in neighboring San Pablo
were out of a job.
Will Rostov of Earthjustice said this week there was a good case for the
project permits to be withdrawn.
Chevron, based in San Ramon, California, is making similar uprades to
its other U.S. refineries, but O'Reilly said it had not encountered the
same sort of resistance elsewhere.
"Frankly we are having much more success getting permits in other places
than we are here in Richmond," he said.
While Chevron has not spelled out a specific business case for the
upgrades, there is a broader industry push to do so because the average
barrel of crude oil contains more sulfur.
Consequently, "sour" crude containing more sulfur has traded at an
average per-barrel discount of $3 to sweet crudes since 2000, Credit
Suisse analysts said in a report on Thursday.
The decision last week by Contra Costa County Judge Barbara Zuniga
hinged on the wording of the environmental impact report (EIR) and the
lack of specifics on crude oil measurements.
Plaintiffs worry the upgrade will lead to more pollution because the
refinery will process heavier crude oil. Chevron argues that the density
of the crude will not change, even if the sulfur does, while staying
within the permitted range.
As stated in the EIR: "It is reasonably foreseeable that Chevron would
run a crude slate similar to that which is currently processed at the
refinery - but in a mixture that has higher sulfur levels."
Zuniga said the words 'reasonably foreseeable' and 'similar' detracted
from the statement's certainty, and wanted more current figures on the
oil processed to determine whether or not that changed over time.
Industrial gas supplier Praxair Inc (PX.N:
Research) is building the hydrogen plant and would operate it. A
pipeline would run to nearby refineries owned by ConocoPhillips (COP.N:
Research) and Royal Dutch Shell Plc (RDSa.L:
Research) to deliver excess hydrogen, but Zuniga also said the EIR
did not properly account for its impact.
Zuniga's decision on whether or not to stop construction in the $1
billion project, which began last September, is now awaited. But no
further dates in the case have been set.
The case is "Communities for a Better Environment v City of Richmond" in
the Contra Costa County Superior Court of California, case no.
MSN08-1429. (Reporting by Braden Reddall; Editing Bernard Orr)