Murphy Oil Seeking Nearly 700% Wisconsin Refinery Capacity Expansion - The Coming Texification Of The Upper Midwest
by John Laumer, Philadelphia 
on 09.15.07
Who could forget the BP Lake Michigan discharge controversy. Looks like Alberta Tar Sands extracted crude oil will be refined in the Lake Superior watershed as well.
"Arkansas-based Murphy Oil Corp. has been meeting with environmental regulators from the State of Wisconsin and the federal government to find out what permits it would need to launch its own $6 billion refinery expansion in the lakeside city of Superior. City officials claim the upgrade would boost refinery capacity from 35,000 barrels a day to 235,000."
The Lake Michigan discharge permit controversy involving BP played out for a few months this summer, after which:- "BP said in August that it still intends to move ahead with its refinery expansion, but it will not take advantage of its new permit and will continue to operate under the provisions of its existing permit."
"City of Superior officials are thrilled about the prospects of a project that could create 300 to 400 on-site, permanent jobs that would send economic waves throughout the region in additional jobs piggybacked on those created directly by the oil company."
Here's the thing. If Lake Michigan is the emerald of the Great Lakes, Superior is the Hope Diamond. And Canada owns half that gem. The convenience of expanding a refinery that happens to be located on the Alberta pipeline is a cost-benefit, and prevents another site from being built. Handy, also, is a small city that would be grateful for a few hundred well-paying jobs. But.. the big picture is missing, so far, from the public discourse on this and related proposals. Chicago area politicians see part of it. Maybe Wisconsin or Minnesota area politicians will too.
"Addressing a group of Great Lakes conservationists at a gathering in Chicago last week, U.S. Rep. Rahm Emanuel (D-Ill.) said lessons can be learned from the BP controversy. He said that 10 years ago, things would have gone BP's way. No more. "There is an alternative and a different consciousness," he said. "That's our Grand Canyon. That's our Yellowstone National Park," Emanuel said, pointing east toward Lake Michigan. "You touch it, you'd better know what the hell you are doing.""
It's no coincidence that both the Chicago area BP refinery and the Superior Wisconsin Murphy refinery are planning massive expansions to work with Alberta Tar Sands extracted crude oil.
These plans are simply stunning in light of the fact that no major US refinery expansions have occurred in decades, a condition that, at times, has left the US with no more than a few weeks worth of gasoline and increased the amplitude of price swings when shortages occur, for whatever reason.
The lack of buffer in refinery capacity creates a certain vulnerability, viewed from the "homeland security" mindset, with the repeated annual threat of hurricanes taking out Gulf Coast infrastructure, with rebels brazenly attacking pipelines of the US' second largest oil supplier, Mexico, with over 13% of refined fuels being imported from offshore refineries, and with Venezula having passed its oil production peak in 1970.
So what does all this mean? Yeah, we know, the US needs more refining capacity almost as much as it needs dramatically better fuel efficiency standards. What we're driving at with this question is a higher level of thinking and public discourse about sustainable development.
What future space for fuel infrastructure and environmental quality is the US headed toward?
Look over this pipeline map from Enbridge and we'll comment a bit.
Any existing refinery on the Alberta pipeline routes is a candidate for future expansions. New ones could come as well. Environmental permits and public involvement will play a huge role in determining when where and how these expansions occur (as amply demonstrated by the BP Whiting case). The Chicago vs BP discussions are therefore hugely important as precedent for public involvement.
Chicago and Superior are just the beginning. Looking over the biggest existing US refineries, obvious candidates for expansion in Illinois include: Blue Island, Lemont, Wood River, Joliet, and Robinson.
There are two sites in Saint Paul Minnesota ("Prairie Home Expansion"). Note that these are in the Mississippi watershed.
Michigan has a refinery in Detroit (of course). Great Lakes watershed for certain.
There's a whole pile of them in Oklahoma.
And we already covered Whiting Indiana.
Of all these candidate sites, only three would discharge treated wastewater directly into one of the Great Lakes: Superior WI and Whiting (BP) Indiana, in the Chicago area, and Detroit MI.
Considering all the vulnerabilities mentioned, the long term scenario we are looking at is the Texification of the Midwest. Keep in mind that refineries don't produce just fuel. Polyethylene can be made from naphtha, a refinery byproduct. In other words, the Alberta oil stream has the potential to turn the Midwest in a hotbed of fuel production and petrochemical manufacturing, with all the commensurate air quality, public health, water use, and energy consumption issues that go with it.
Inquiring minds want to know: which US candidate sites among those listed will have the easiest time getting air permits modified; and, which metro areas will suffer most from air quality degradation. We recommend this excellent presentation by Micheal Koerber if you want to explore these questions on your own. But here's a hint on the air quality impact.
This also means that Midwestern state governors and their respective US Congressional delegations need to take seriously the recent changes to national ambient air quality standards and pollution control standards for refineries. They need to start working together on election platforms. Because air pollution and water pollution both do not respect political boundaries. General MacArthur style greeting: Canada, we're back!
Via:: Milwaukee Journal-Sentinel Online, "Superior refinery weighs expansion" Image credit:: End of the Line, Wisconsin's Only Oil RefineryMilwaukee JS-Online
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Fantastic news! To decide which site to develop they should have an in-depth investigation into which area needs it the most.
These plans are simply stunning in light of the fact that no major US refinery expansions have occurred in decades
U. S. Operable Crude Oil Distillation Capacity (Thousand Barrels per Day)
March 1994 - 15,028
June 2007 - 17,448
That's a 16% increase.
=== author's response follows ===
I am missing your point. 16% over a dozen years spread over numerous refineries is small compared to cumulative demand growth over the same period. There have been no greenfield refinery additions that I know of. A bit of debottlenecking here and there and several Katrine rebuilds at most is what you are looking at. Moreover, demand growth continues apace.
I am missing your point. 16% over a dozen years spread over numerous refineries is small compared to cumulative demand growth over the same period.
First, I guess I was confused by your original assertion, which seemed to be a variant of the standard "no new refineries in 30 years" line that one often hears, which is possibly technically true, but not true in terms of refining capacity nor particularly relevant, since we can import refined products just as easily as we import crude products, and two of the largest sources of imports are right next door to the United States.
Second, a lot has changed the past few decades. Up until the very end of the 90s, prices were very low for petroleum products and there had been an especially major shakeout in the industry from the early 80s price collapse. Consequently, capacity utilization rates from that time period (around 70%) aren't even close to modern levels (around 90%, oftentimes more). So, there have been both capacity expansions and higher utilization rates which combine for greater output.
Third, your current claim that capacity expansion is being outpaced by demand expansion isn't true. From 1994 to 2006, demand for petroleum in the transportation sector increased 17% - only a percentage point different from the expansion in refinery capacity. There was even a drop in demand from 2005 to 2006.
Thanks for covering this important topic in Wisconsin. Check out more coverage at: http://www.cleanwisconsin.org/campaigns/MurphyOilExpansion/index.html
I don't see why an expansion is a big deal- it's bringing in jobs to our area. If you lived in the Duluth Superior area, I think you'd appreciate it like we do. Our area is known state-wide as a place with high unemployment rates. This expansion is going to bring in lots of opportunity.
=== author's response follows ====
There are always trade-offs with something of this scale. Some of them are invisible to or unfelt by the surrounding community. The point of the post was to encourage readers to see it in that larger context.
I am a candidate for the 73rd District of the Wisconsin State legislature. I support the expansion of the Murphy Oil refinery in Superior, Wisconsin. Further, I believe the State of Wisconsin should become the equity partner Murphy Oil seeks in order to bring the project to fruition. It would be a huge return on investment and bring our local economy into international accountability.
None of the product -- before or after refining -- will be shipped over our Great Lake of Superior. It's all pipeline. Water can be recycled. The project makes sense as long as our society is also invested in alternative energy sources like wind and solar. We need to build our future in an international context of responsible environmental stewardship and independence.
I look forward to further responses by your organization.
Great discussion. This spring, I had the opportunity to work at the Superior refinery. It was a well run facility, but because of its age many environmental issues are grandfathered in. The new site will be state of the art and offer the best protection. I personally am not for big oil, but I think the trade offs are acceptable.
After campaigning for the State Assembly and proposing this refinery as central to our local economy, I have come to the realization that this is also a national security issue. I believe that in order to move away from our dependence on oil from the Middle East, we need this refinery NOW more than ever.
A new refinery will also be a cleaner refinery than the one we currently have on the shores of our Great Lake. We can do this and keep Lake Superior safe and clean.
If elected, I propose the following timeline: I will open an office in downtown Superior and schedule a town hall meeting to discuss the process of meeting with Murphy Oil officals and the governor of Wisconsin. If the project does not begin there, I will go to Washington, DC, and meet with our Congressional delegation. I think we could then approach the various departments of our federal government to secure the funds to move forward and begin construction. If necessary, I will meet with the next President of the United States and again speak to this being a national security issue.
I am determined to make this a public process, and I believe we can make it happen soon. I hope I am elected so I can go to work on this very focused priority in my term as a legislator. I can provide the leadership our community needs because I am Independent of any financial gain or benefit. I want this project because it will benefit our area economically and secure a cleaner environment.
I am only asking for one term as legislator.
Seems this would be a great idea and if we bail out GM and other American Car companies it could help them return our investment in them?
I am suprised why no one is tieing the unions into why GM needs this bail out?
If i am a union worker they have withheld money from me to pay for my healthcare,where did it go?
why the push for more unions if this is what happens?
look GM built us jeeps and hummers to protect us? who would build our next hummer?
toyota? what if we are at war with them? KIA builds them?
Why can't we put a sur-charge on NON-AMERICAN auto's?
Buy American folks it helps in more ways than you can think
I think if we pass a GM loan bailout we should include the cardcheck ban and pass a drill offshore for american energy policy
why build more cars that do not use AMERICAN OIL?
Well, I didn't win the election, but I resolve to continue to discuss this possible investment because I think it is a good idea. I honestly believe our energy future is a national security issue. Our political leaders need to know and come to believe we need a new refinery in Superior. It takes time, but we can still get it done.