 at a refinery, crude oil is vaporized under atmospheric pressure or a vacuum - and then gases with different molecular compositions condense at different temperatures, resulting in different products Source: US Energy Information Administration, Crude oil distillation and the definition of refinery capacity |
Refining crude oil is similar to making whiskey by distillation. A fluid is heated, and the gases condensed. In whiskey making, the alcohol boils before the water, so a distiller manages the temperature carefully to capture the condensed alcohol without too much water. In oil refining, crude oil is boiled (carefully...) and the vapors are then distilled into various products. The complex chemistry of the hydrocarbon liquids requires careful manipulation of pressure as well as temperature, plus the use of catalysts to break long-chain molecules into high-value gasoline/jet fuel and to minimize the residue of low-value bunker fuel/asphalt.
Virginia once had three small refineries processing crude oil, but all are now closed. Over half of the refineries in the United States have closed since 1982, and only 144 remained in 2012. In Petroleum Administration for Defense District 1 (PADD 1 is the East Coast from Maine-Florida, including West Virginia but excluding Ohio), the 27 refineries operating in 1982 declined to just 11 in 2012.1
Since 1990, the tiny Primary Energy Corporation refinery in Richmond closed, reducing capacity by 6,100 barrels/day. The last oil refinery operating in Virginia, at Yorktown, could supply central Virginia, Hampton Roads (including the US Navy), Washington DC, and Baltimore by barge and truck. It could even barge products to the Philadelphia/New York region, when justified by market conditions (such as the temporary shutdown of a refinery in that area for maintenance). The Yorktown facility could refine as much as 66,000 barrels a day of crude oil into products such as gasoline, diesel, home heating oil and propane, before it closed at the end of 2011.2
Standard Oil of Indiana built the Yorktown refinery in 1956, and the company was renamed AMOCO in 1985. The refinery has been known locally as the "AMOCO redfinery," even after AMOCO merged with British Petroleum in 1998, then Giant Industries purchased the refinery from BP in 2002, and Western Refining purchased Giant in 2007. In September, 2010, Western Refining closed the Yorktown refinery, but kept the oil storage and shipping facilities in operation.
In December, 2011, Western Refining announced the sale of the refinery, which had recently been connected to the Colonial Pipeline. The new owner, Plains All American Pipeline, disassembled and sold the idle refinery equipment. The refinery was converted into a terminal for storage/distribution of natural gas, biodiesel, crude oil, and refined petroleum products transported by ship, rail, truck, and pipeline.3
When in operation, crude oil was shipped to the refinery from a wide variety of foreign sources (including Canada, the North Sea, West Africa, South America and the Far East).4 The refinery relied upon foreign oil arriving by tankers/barges; no pipeline connected it to the crude oil in Texas/Louisiana, and shipments of US-produced crude from the Gulf of Mexico oil fields would have increased transportation expenses. The Jones Act requires use of US-flagged vessels for interstate shipments between American ports - and such vessels have substantially higher operating costs than tankers registered in foreign nations.
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At the time of closure, the Yorktown facility was paying more property taxes than any other property in York County. Converting the refinery into a storage hub for petroleum and biodiesel products lowered York County tax revenue from the site from $4 million/year to $1.3 million/year, and eliminated about 200 jobs.5
The AMOCO refinery at Yorktown was also the first site in Virginia where industrial re-use was permitted for treated wastewater. The refinery's closure eliminated the prime customer for the effluent from the York River Treatment Plant of the Hampton Roads Sanitation District. The refinery was buying water treated to meet industrial standards for cooling equipment, at half the cost of water treated to meet standards for drinking. The sanitation district did not make a profit on the water sales, but did eliminate a portion of its nitrogen/phosphorous discharge into the Chesapeake Bay watershed.6 Shutting down the Yorktown refinery in 2010 matched business decisions by Sunoco, ConocoPhillips, and Hess in 2011 to close refineries in the Philadelphia area and one in the Virgin Islands. The refineries, like the one at Yorktown, were dependent upon foreign oil imported by tankers. There are no pipelines carrying crude oil from Texas/Louisiana to East Coast refineries on the Delaware River, and very limited pipeline capacity to ship crude from Canada/North Dakota to the East Coast. (The controversial expansion of the Keystone XL pipeline would carry crude from Canada to Illinois and Texas refineries, not to the East Coast.) Refineries on the East Coast have depended upon low-sulfur ("sweet") foreign oil, often with a relatively high percentage of hydrocarbon molecules that had a low molecular weight ("light" crude). Refineries on the East Coast and in the Virgin Islands could not access lower-cost North American crude oil without paying a hefty premium for shipping in US-flagged vessels - while starting in the 21st Century, demand for gasoline and other refined products was dropping due to fuel-efficient cars and economic recession. Refinery closures in the US began after the Federal government abandoned its crude oil allocation and price control system in 1981. At one point in 2011, the price for refinery-produced gasoline was lower than the cost of raw crude oil imported from Nigeria, limiting the economic value of refineries on the East Coast. Yorktown closed at the same time other companies considered shutting down 50% of total East Coast refining capacity. As described by Financial Times:7
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While the Yorktown refinery was disassembled and will serve just as a storage/redistribution facilty, other East Coast refineries survived the 2008-2011 recession intact and will shift to processing North American crude. The Marcus Hook, Pennsylvania refinery reopening was based on its ability to refine liquids produced from Marcellus Shale natural gas wells, replacing some of the expensive light crude imports from the North Sea. The Marcellus Shale liquids can move from western Pennsylvania to Marcus Hook at low cost, because flow was reversed in an old pipeline that once carried refined products away from the refinery to markets in western Pennsylvania.8
A large refinery in Delaware City, Delaware was partially reopened in 2011 after a two-year closure. That facility had the rare (on the East Coast) infrastructure to process "heavy" crude oil. The Delaware City facility will now refine crude oil from North Dakota and western Canada that is shipped by railroad cars. While shipping by rail (and perhaps in part via barge down the Hudson River) can cost an extra $22/barrel compared to transport in a pipeline, the cost of the North American crude is expected to stay more that $22/barrel cheaper than European oil.9
The price of Canadian "sour" (high percentage of sulfur) tar sands oil, and Bakken "sweet" (low-sulfur) crude extracted from the Williston Basin in North Dakota, is depressed because it is landlocked; there is limited pipeline capacity to distribute it. In 2012, Western Canadian Heavy crude was $37/barrel cheaper than European (Brent benchmark) crude, and $20/barrel cheaper than U.S. crude (West Texas Intermediate benchmark), while the Bakken crude oil was $17/barrel cheaper. Shipping that crude by rail to Delaware City is expensive, but still cost-effective.10
Trains will also transport already-refined oil products to Yorktown, bringing ethanol, biodiesel, and other products for later re-shipment via barge to various terminals on the East Coast. The storage and distribution hub at Yorktown will have the capacity to receive two unit trains, with 80-100 tanker cars/train, carrying 130,000 barrels per day. The oil trains will increase CSX traffic on the Peninsula, replacing some of the coal trains that once brought that fuel to the Yorktown Power Plant, adjacent to the old refinery site. Dominion Power plans to retire the two coal-fired units at the Yorktown Power Plant in 2015 (converting one to natural gas).11
In 2011, Western Refining built a 24,000 barrels/day, one-mile pipeline connection from the Colonial Pipeline (already supplying the US Navy's nearby Yorktown Fuel Terminal) to the old Yorktown refinery site. Transportation options for obtaining refined products for storage/distribution now include a pipeline, trains, trucks, and barges.12
Unlike the "saved" and restarted Delaware and Pennsylvania refineries, the Yorktown facility will never again process crude oil into higher-value products. However, the environmental impacts of the petrochemical activity remain. Two "landfarms" at the site were contaminated when petroleum sludge was dumped as waste, affecting groundwater in the Columbia Aquifer and the upper portion of the Yorktown Confining System aquifer. The Environmental Protection Agency (EPA) identified petroleum hydrocarbons such as benzene, toluene and xylene, polycyclic aromatic hydrocarbons (PAHs), phenols, and heavy metals such as arsenic, chromium, and cadmium. A Resource Conservation and Recovery Act (RCRA) corrective action plan has been completed to monitor groundwater contamination exceeding Maximum Contaminant Levels of 15 contaminants. According to EPA's RCRA Facility Investigation (RFI):13
The last proposal for building a new oil refinery in Virginia centered on Hampton Roads. The next proposal, if there is one, will also concentrate on that area, because the oil would have to be imported by tanker from foreign sources - or by pipeline from offshore platforms, if oil is discovered under the Outer Continental Shelf.
In the mid-1970's, the 175,000-250,000 barrel/day Hampton Roads Energy Company Refinery was proposed at Portsmouth, on the west bank of the Elizabeth River where the APM terminal is now located. Opposition to the environmental impacts, especially potential oil spills damaging oyster beds in the Elizabeth, Nansemond, and lower James River and wintering blue crabs in the lower Chesapeake Bay, delayed approval until changing business conditions killed the project.14
When the Corps or Engineers looked at alternatives to the proposed Hampton Roads Energy Company Refinery in the 1970's, it examined 67 sites and determined the best two were Portsmouth, Virginia and Eastport, Maine. Hampton Roads offers easy access for tankers to import crude oil, and for barges to carry refined products to various markets. One challenge at Portsmouth: a new refinery in the urbanized area would add various "criteria pollutants" regulated by the Clean Air Act, including sulfur and nitrogen oxides - and carbon dioxide, of course. To facilitate construction of the refinery, the Virginia Department of Transportation proposed to revise its asphalt paving process for as far as 140 miles away, to offset hydrocarbon emissions.15
Future oil might be transported to the Hampton Roads area not by tanker, but via subsea pipeline from offshore oil wells. If hydrocarbons are discovered in economic quantities under the Outer Continental Shelf off the coast of Virginia, the Town of Cape Charles and York County might seek to build refineries. However, Craney Island is another obvious candidate... assuming a new oil refinery is ever justified in Virginia.
The existing refineries on the Delaware River could process any oil produced from the Atlantic Coast Outer Continental Shelf, displacing imported oil. Those facilities are connected by an extensive pipeline network to customers in the New York area and western Pennsylvania/Ohio, and already have air and water quality permits. When Sunoco planned to close its 330,000 barrel/day refinery in Philadelphia in 2012, the Environmental Protection Agency adjusted its interpretation of the Clean Air Act regulations to facilitate continued operation without having to meet the tighter "new source review" standards.16
A more likely possibility is that Virginia could host a new biodiesel refinery or ethanol plant, rather than another petroleum refinery. President George W. Bush visited the Virginia BioDiesel plant in West Point, Virginia in 2005. Craney Island could be a crude oil storage site, receiving Outer Continental Shelf oil from subsea pipelines and barging it to existing refineries on the Delaware River - or the site of a new ethanol plant/biodiesel refinery in Virginia. Various companies have proposed an ethanol plant/biodiesel refinery south of Jordan Bridge, on the border of Portsmouth and Chesapeake cities, but none have been built.17
1. "U.S. Number of Operable Refineries as of January 1," US Energy Information Administration, June 22, 2012, http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=8_NA_8O0_NUS_C&f=A; "East Coast (PADD 1) Number of Operable Refineries as of January 1," US Energy Information Administration, June 22, 2012, http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=8_NA_8O0_R10_C&f=A (last checked December 24, 2012)
2. "Table 13. Refineries Permanently Shutdown By PAD District Between January 1, 1990 and January 1, 2012," Energy Information Administration, Refinery Capacity 2012, US Energy Information Administration, http://www.eia.gov/petroleum/refinerycapacity/table13.pdf (last checked December 24, 2012)
3. "Western Refining selling Yorktown refinery," Newport News Daily Press, December 1, 2011, http://www.dailypress.com/news/york-county/dp-nws-york-refinery-sale-1201-20111201,0,834647.story (last checked December 2, 2011)
4. "Western Refining to Shut Down Virginia Plant After Profit Margins Narrow," Bloomberg reports, http://www.bloomberg.com/news/2010-08-05/western-to-shut-yorktown-virginia-oil-refinery-because-of-poor-margins.html (last checked December 23, 2012)
5. "Virginia's only oil refinery becoming storage facility," The Virginian-Pilot, December 23, 2012, http://hamptonroads.com/node/663129; "Western Refining suspending most operations at Yorktown plant," 13NEWS/WVEC.com television, http://www.wvec.com/news/local/Western-Refining-to-close-Yorktown-plant-100030339.html (last checked December 23, 2012)
6. "Water Reuse: Ensuring Wastewater Is Not Wasted Water," Hampton Roads Sanitation District, http://www.hrsd.com/firstreuseproject.htm (last checked December 23, 2012)
7. "Potential Impacts of Reductions in Refinery Activity on Northeast Petroleum Product Markets," U.S. Energy Information Administration, February 2012 (updated May 11, 2012), http://www.eia.gov/analysis/petroleum/nerefining/update/pdf/neprodmkts.pdf; "Energy: Refined out of existence," Financial Times, April 9, 2012, http://www.ft.com/intl/cms/s/0/256f583c-7a83-11e1-8ae6-00144feab49a.html (last checked December 24, 2012)
8. "Former Sunoco refinery in Marcus Hook will process Marcellus Shale products," Philadelphia Inquier, September 28, 2012, http://articles.philly.com/2012-09-28/business/34128480_1_ethane-sunoco-logistics-sunoco-s-marcus-hook (last checked December 23, 2012)
9. "PBF Energy bets big on crude-by-rail to feed ECoast ref," Trainorders.com, November 26, 2012, http://www.trainorders.com/discussion/read.php?2,2927408,nodelay=1; "Rail it on over to Albany – Moving Bakken East," RBN Energy LLC, May 14, 2012, http://www.rbnenergy.com/Rail-it-on-over-to-Albany-Moving-Bakken-East (last checked December 23, 2012)
10. "PBF to run more Bakken crude at Delaware City," Reuters, August 24, 2012, http://www.reuters.com/article/2012/08/24/us-refinery-operations-pbf-delcity-idUSBRE87N0UA20120824 (last checked December 25, 2012)
11. "New details reveal scope of expansion at former Yorktown refinery," Newport News Daily News, August 6, 2012, http://articles.dailypress.com/2012-08-06/news/dp-nws-york-yorktown-terminal-announcement-0807-20120806_1_yorktown-refinery-rail-plains; "Rail it on over to Albany – Moving Bakken East," RBN Energy LLC, May 14, 2012, http://www.rbnenergy.com/Rail-it-on-over-to-Albany-Moving-Bakken-East; "Integrated Resource Planning," Dominion Resources, https://www.dom.com/about/integrated-resource-planning.jsp (last checked December 25, 2012)
12. "Colonial Announces Expansion Of Virginia Line," Colonial Pipeline, October 31, 2011, http://www.colpipe.com/press_release/pr_111.asp (last checked December 25, 2012)
13. "Documentation Of Environmental Indicator Determination" for BP Yorktown Refinery, Environmental Protection Agency, February 5, 1999, http://www.epa.gov/reg3wcmd/ca/va/hhpdf/hh_vad050990357.pdf (last checked December 25, 2012)
14. "Oil vs. Oysters – Lessons for Environmental Regulation of Industrial Siting From the
Hampton Roads Refinery Controversy," Richard A. Liroff, Boston College Environmental Affairs Law Review, Volume 11 (Issue 4), 1984, pp.710-711, http://lawdigitalcommons.bc.edu/ealr/vol11/iss4/3 (last checked December 25, 2012)
15. "Oil vs. Oysters – Lessons for Environmental Regulation of Industrial Siting From the
Hampton Roads Refinery Controversy," pp.737-743
16. "Carlyle Group, Sunoco and politicians’ joint venture to rescue Philadelphia refinery," Washington Post, December 22, 2012, http://www.washingtonpost.com/business/economy/carlyle-group-sunoco-and-politicians-joint-venture-to-rescue-philadelphia-refinery/2012/12/21/b71aa998-4879-11e2-ad54-580638ede391_story.html (last checked December 27, 2012)
17. "Bush Visit Energizes Va. Town," Washington Post, May 17, 2005, http://www.washingtonpost.com/wp-dyn/content/article/2005/05/16/AR2005051601556.html; "Proposed ethanol refinery sparks intercity tension," The Virginian-Pilot, May 24, 2007, http://hamptonroads.com/node/271111; "Osage Bio: A good idea gone bad," Southeast Farm Press, April 10, 2012, http://southeastfarmpress.com/blog/osage-bio-good-idea-gone-bad (last checked December 25, 2012)
18. "Biodiesel plant fuels interest in alternative energy forms," Martinsville Bulletin, July 23, 2008, http://www.martinsvillebulletin.com/article.cfm?ID=14803; "Farmer growing canola to make biodiesel," The Dispatch (Davidson County, NC), May 28, 2008, ; "Red Birch Energy achieves independence," Virginia Business, March 27, 2009 , http://www.virginiabusiness.com/index.php/regions/article/red-birch-energy-achieves-independence/199650/; "Red Birch making biodiesel fuel," Martinsville Bulletin, November 3, 2008, http://www.martinsvillebulletin.com/article.cfm?ID=16435; "Biomass Energy Grant Program," Virginia Department of Mines, Minerals and Energy, http://www.dmme.virginia.gov/de/arra-public/SEPBiomass.shtml (last checked April 16, 2013)
19. "Community Biomass Business Plan Project: Biomass Initial Screening Report – Potential Sites In Southwest & Southside Va," Public Policy Virginia and New River-Highlands Resource Conservation & Development Council, 2011, http://www.conservationrealestate.org/wp-content/uploads/2013/03/ticr_2069_b_initial-screening-report-final-083011.pdf (last checked April 16, 2013)
20. "Ringgold company finds new use for tobacco: fuel," Lynchburg News and Advance, February 21, 2013, http://www.newsadvance.com/work_it_sova/news/article_bcafa104-7c8d-11e2-b573-001a4bcf6878.html; "Could tobacco fuel your car?," WSLS-TV, May 11, 2011, http://www.wsls.com/story/20820773/could-tobacco-fuel-your-car (last checked April 16, 2013)
21. "Grants boost Gretna biofuel project," Chatham Star Tribune, January 16, 2013, http://www.wpcva.com/news/article_486a062c-6013-11e2-b455-0019bb2963f4.html; "The Future of Biofuels in Virginia," Virginia Cooperative Extension, July 2009, http://www.ext.vt.edu/news/solutions/solutions2009/Articles/biofuels_in_virginia.html (last checked April 16, 2013)
22. "Governor Kaine Announces 30 New Jobs for Lee County," Commonwealth of Virginia - Governor's Office news release, December 11, 2007, http://www.tic.virginia.gov/pdfs/pressreleases/Governor's%20Press%20Releases/Lee-Synergy%20Biofuels.12-11-07.pdf (last checked April 16, 2013)
23. "Green and greasy: Brothers turn used grease into biofuels," Lynchburg News and Advance, April 15, 2013, http://www.newsadvance.com/work_it_lynchburg/news/article_99dc889e-a565-11e2-8942-0019bb30f31a.html; "Company Takes Biodiesel From Field to Fryer to Fuel," Voice of America, August 26, 2011, http://www.voanews.com/content/company-takes-biodiesel-from-field-to-fryer-to-fuel-128523078/144395.html (last checked April 16, 2013)
24. "Finishing Big Plant - $450,000 Abattoir and Refinery Soon to Operate," The Washington Post, November 1, 1909, p.3 and reprinted at "Capitol Refining: 1925," shorpy.com, http://www.shorpy.com/node/4310 (last checked February 22, 2013)
25. "Greased Lightning," Richmond Style Weekly, September 10, 2008, http://www.styleweekly.com/richmond/greased-lightning/Content?oid=1371947 (last checked February 22, 2013)
