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BP oil refinery waste piles up on Southeast Side

Petroleum coke a dusty eyesore and a high-sulfur, high-carbon risk

By Michael Hawthorne, Chicago Tribune reporter

9:33 AM EDT, October 18, 2013

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Just south of the Chicago Skyway bridge, a dusty byproduct of the Canadian oil boom is piling up in huge black mountains along the Calumet River.

More is on the way. A lot more.

By the end of the year, the oil giant BP is expected to complete work on new equipment that will more than triple the amount of petroleum coke produced by its Whiting refinery on Lake Michigan. The project will turn the sprawling Indiana plant into the world's second-largest source of petroleum coke, also known as petcoke, and Chicago into one of the biggest repositories of the high-sulfur, high-carbon waste.

BP this week confirmed that all of its petcoke is shipped a few miles across the state border to sites in the East Side and South Deering neighborhoods. Residents say black clouds of dust blow off uncovered piles of petcoke and coal in the area so frequently that people are forced to keep their children inside with the windows closed.

"You can't have a picnic outside because you are going to get a mouthful of black dust," said Lilly Martin, whose backyard deck on Mackinaw Avenue offers a view of one of the coke piles a few blocks away. "It's so bad we have to power-wash the house every week to wash it off."

In response to complaints from neighborhood groups, the U.S. Environmental Protection Agency and the office of Illinois Attorney General Lisa Madigan are investigating. The Illinois EPA said it is reviewing permits for the storage piles "to determine if they are appropriate to each facility's current activities and if special conditions are needed to address site-specific concerns."

If the piles were at the Whiting refinery, BP would be obligated to enclose them under the terms of its Clean Air Act permit and a federal legal settlement. But the storage sites in Chicago aren't required to comply with the same stringent air pollution regulations, which are intended to reduce hazards from lung-damaging particulate matter.

The amount of petcoke generated by Whiting and other U.S. refineries has steadily increased during the past decade as the industry processes more Canadian oil that is thicker and dirtier than many other grades.

BP will produce more than 2.2 million tons of petcoke a year at Whiting, up from about 700,000 tons before the refinery was overhauled to process oil from the tar sands region of Alberta.

Pumping crude oil through a coker is one of the first steps in the refining process. Exposing it to intense heat draws out lighter oil that is further processed into gasoline and other fuels, leaving petroleum coke as a spongy residual concentrated with carbon, sulfur and heavy metals.

Most petcoke is shipped overseas and used as industrial fuel. Because petcoke emits more smog-forming sulfur dioxide and heat-trapping carbon dioxide than coal, U.S. regulations tightly control the amount that can be burned without elaborate pollution controls.

About five days' worth of petcoke can be stored at the Whiting refinery, BP said in an email response to questions. Under the company's federal permit and consent decree with the U.S. EPA, the waste is surrounded by 40-foot walls; an enclosed conveyor and loading system is equipped with wind screens and water sprayers to keep dust down.

"BP Whiting is complying with its permit regarding coke handling at the refinery," said Scott Dean, a company spokesman.

Such elaborate storage is temporary, though, and Dean said it is up to the companies that operate off-site storage terminals to comply with applicable environmental laws.

All of the petcoke from Whiting eventually is sent by train, truck or barge to sites on Chicago's Southeast Side owned by KCBX Terminals. The company is controlled by Charles and David Koch, wealthy conservative industrialists who back groups that challenge the science behind climate change and oppose many environmental regulations.

Last year, KCBX bought the larger of the two sites — between 108th and 111th streets on the east side of the Calumet River — from a subsidiary of Detroit-based DTE Energy. As part of the deal, the company obtained exclusive rights to store petcoke from the nearby BP refinery. The other storage site is across the river just south of 100th Street.

During warmer months, KCBX uses water cannons to spray down piles of petcoke and coal on the properties, records show. Paul Baltzer, a spokesman for Koch Companies Public Sector LLC, said the company is spending more than $10 million to upgrade its facilities, "including improvements to our dust suppression capabilities."

But in letters to the Illinois EPA, the company said "it is not feasible" to cover the piles because "stockpile locations and usage patterns are constantly changing."

"KCBX puts a priority on regulatory compliance and managing operations in a manner that protects the health and safety of employees, the community, and the environment," Baltzer said in a statement.

Another Koch company owns a site in Detroit that earlier this year became a towering repository of petcoke from a nearby Marathon Petroleum refinery. In August, Mayor Dave Bing ordered the piles removed in response to community complaints.

Other Koch companies sell petcoke for use as industrial fuel, often in countries with more lenient environmental laws. The largest independent petcoke marketer in the U.S., Oxbow Corp., is owned by William Koch, brother of Charles and David.

China is by far the largest buyer of American petroleum coke exports, which increased to 26 million barrels last year from 2.1 million barrels in 2007, according to federal records. Much of the coke is burned in coal-fired power plants and contributes to the country's air pollution problems.

Faced with increased competition from low-cost natural gas, several U.S. power plants are adding refinery waste to their fuel mix or testing whether it could be a less expensive alternative to coal. At least 13 percent of the 3.9 million tons of petcoke burned by power plants last year came from companies owned by the Koch Brothers, according to industry records compiled by the federal Energy Information Administration.

Petcoke is about 25 percent cheaper than coal. "It's priced to move," said Kerry Satterthwaite, a senior analyst at Roskill Information Services, a commodities analysis company based in London.

But it must be mixed with coal because it doesn't burn as easily. And questions remain about whether power plants can burn larger amounts without violating anti-pollution rules.

A website that tracks cargo ship movements shows that one power plant that has accepted shipments from the KCBX sites in Chicago is the TES Filer City Station, across Lake Michigan near Manistee, Mich. In 2008, the U.S. EPA fined the plant's owner for violating its air pollution permit by burning too much petcoke.

Lorne Stockman, who recently published a study on petcoke for the environmental advocacy group Oil Change International, said the surge of refinery waste is a largely unrecognized challenge to President Barack Obama's plans to reduce greenhouse gases linked to climate change.

Transporting more Canadian tar sands through the proposed Keystone XL pipeline would create even more waste at U.S. refineries, Stockman said.

"It's cheap and attractive to industry, especially in China, Mexico and India," he said. "But it's horrible for the planet."

In Chicago, there have been uncovered piles of coal and petcoke along the Calumet River for years, a legacy of the now-shuttered steel mills, coke plants and blast furnaces that once dominated the area.

Community activists say dust problems have worsened since the storage terminals began acquiring more petcoke, though the specific source of the black grime seen on many houses is unclear.

Besides the two KCBX terminals, a third petcoke storage site on the river is owned by the Beemsterboer family, who in 2011 lost a bid to sell state pollution credits to a New York-based company that wanted to build a new power plant in the neighborhood. The plant would have burned a combination of coal and petcoke.

Air pollution already is a chronic problem in the neighborhood. A monitor at Washington High School routinely registers the state's highest levels of the toxic metals chromium and cadmium, as well as sulfates, which can trigger asthma attacks and increase the risk of heart disease.

Neighborhood groups want Illinois to adopt regulations similar to those in place in California, which requires piles of petcoke, coal and other raw materials to be enclosed or covered.

A handful of neighborhood representatives met last month with KCBX officials, who refused to include an attorney from the Natural Resources Defense Council, a national environmental group that has been assisting local activists.

Peggy Salazar of the Southeast Environmental Task Force noted that city officials have long promoted the area as showcase for green projects. A few blocks north of the petcoke piles, the city has given significant support to a developer who wants to turn the former U.S. Steel South Works site into a mecca for energy-efficient housing and businesses.

"How is our neighborhood ever going to recover and attract jobs if these black clouds of dust keep blowing?" said Salazar. "We shouldn't have to live with this every day."

mhawthorne@tribune.com

Twitter @scribeguy