Can an oil refiner double fuel production and cut greenhouse gas emissions at the same time?
The task is so daunting that no U.S. refiner has even attempted it. But Jeff Morris is proposing to do exactly that with the two Southern California refineries his company bought last year.
Morris is chief executive of Alon USA Energy Inc., which purchased Paramount Petroleum Corp. and Edgington Oil Co. for a combined $460 million. The twin deals included small refineries in Paramount and Long Beach, which make mostly asphalt and have been combined to operate as one plant.
"We may . . . become the lowest-emission refinery in California, and if we are, logic would say probably the lowest in the United States," Morris said in an interview. A preliminary engineering review indicates that the refinery's overhaul could double fuel output while reducing by at least 7% the production of carbon dioxide and other greenhouse gases, which contribute to global warming.
Alon's project is one of just a handful of proposals aimed at boosting gasoline and diesel output in California, where fuel production falls short of demand and the environmental standards are the toughest in the nation.
The state's supply gap has widened steadily in recent years because, despite rising fuel consumption, most California refiners have limited their investments to satisfying environmental mandates or projects that increase profit but not production.
With supply so strained, even moderate production gains can help ease prices -- either by reducing the need for expensive imports or diluting the effect when production falters at another refinery. For that reason, state energy officials generally look favorably on expansion projects like the one proposed by Alon.
Such expansions, however, almost always yield more greenhouse gases and more pollution for the surrounding communities. So environmentalists are skeptical about Alon's emission-reduction claims.
"We're being met with a mixture of intrigue and incredulousness," said Morris, who has outlined the company's plans in meetings with the mayors of Long Beach and Paramount, the refinery's immediate neighbors, and others.
But Alon's proposal isn't just unusual; it's also highly pragmatic, given the intense scrutiny of any refinery project by regulators, politicians, environmentalists and community groups. Dallas-based Alon needs permits and agency approvals to proceed. And speed is important, too -- every month the expansion project is delayed means lost profit in California's lucrative fuel market.
