Phillips 66 says no Bakken crude oil planned for Nipomo Mesa refinery

Promise fails to assuage critics of proposal to extend rail line

clambert@thetribunenews.comApril 25, 2014 

The Phillips 66 refinery on the Nipomo Mesa.


In an effort to defuse concerns about potentially explosive crude oil shipments, Phillips 66 officials said this week that they would not accept any light crude oil from the Bakken region as part of a proposed rail project at the Nipomo Mesa refinery.

In a past interview, company officials said rail shipments to the refinery might include a small amount of oil from the Bakken field in North Dakota or Canada — a plan that raised alarm, as there’s concern that Bakken oil might be more volatile than other crudes.

The federal government is studying the characteristics of Bakken oil to determine the danger of moving crude by rail.

U.S. Department of Transportation officials told The Associated Press they have received only limited data on the characteristics of oil from the Bakken region of North Dakota and Montana despite requests made months ago.

In an interview Thursday, Jim Anderson, project manager for the rail spur proposal, said Phillips 66 has asked San Luis Obispo County planners to specify in the project’s revised draft environmental impact report that the refinery won’t take Bakken oil.

“We told the county to put it right in the project description that we will not receive Bakken crude,” Anderson said.

That move doesn’t satisfy project opponents, however, who are still concerned about any crude oil arriving or leaving the facility by rail. Other worries include air pollution, noise and odor impacts.

The plan

Phillips 66 has proposed adding 1.3 miles of new track to an existing rail spur, including five parallel tracks, as well as an unloading facility and on-site pipelines, for trains to deliver crude oil for processing.

The company anticipates unloading up to five trains a week with about 80 tank cars each, with a maximum of about 250 trains arriving each year.

The refinery, which has operated since 1955, currently receives crude oil by an underground pipeline and processes about 44,000 barrels of oil a day. It specializes in cheap, heavier crude oil from a variety of onshore and offshore sources, most in Santa Barbara County.

The crude oil is refined into gas oil and a flammable oil called naphtha, which is piped to the company’s oil refinery in Rodeo in Contra Costa County, where it is refined into gasoline, diesel fuel and jet fuel. The plant also produces petroleum coke and sulfur as byproducts in the refining process, which is sold and shipped out by rail car to be used in a variety of industrial processes.

Company officials said oil production in California is dropping, and bringing in crude oil by rail from other sources would allow them to offset any reduction in deliveries. In addition, some oil producers in Santa Barbara County have their own refineries, or are choosing to ship their oil to refiners in Kern or Los Angeles counties.

“Right now production in the state of California is declining,” said Dennis Nuss, a senior adviser for Phillips 66. “If we want to keep 200 jobs in this community, then we have to look at how to keep the refinery operational.”

If the project moves forward, heavier crude oil would come to the refinery from various regions across the U.S. and Canada, Nuss said.

Concerns unchanged

Some opponents said this week that their concerns remain despite any promises about the type of crude oil coming by rail into the county.

“Regardless of the type of oil, the trains coming through here are a bad idea,” said Martin Akel, a member of the Mesa Refinery Watch group and resident of Trilogy at Monarch Dunes. The community is located across Highway 1 from the refinery.

Group members say Phillips 66’s proposal would dramatically transform its business model locally by creating a new, high-intensity operation with 250 more oil-hauling trains traveling through the county and significantly increasing the potential for accidents.

“The bottom line — their claim of running out of crude to deliver by pipeline and the threat of lost jobs is a red herring,” the group wrote in a draft position paper. “The company simply wants to change the types of crude they refine in Nipomo, because they’re far more profitable.”

Many of the group members had submitted comments with their concerns on the original draft environmental impact report. County planners received about 800 comments on the draft EIR and decided to revise the document to include some of the questions they raised.

The draft EIR will be recirculated for public review, and a county Planning Commission meeting scheduled for this past Thursday was pushed back to December.


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