BP, EPA reach deal on Canada crude at U.S. refinery

Wed May 23, 2012 6:18pm EDT
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By Erwin Seba

HOUSTON (Reuters) - BP Plc on Wednesday said it will spend $400 million to install pollution controls at its giant Whiting, Indiana refinery, to allow it to process heavy crude oil from Canada, in a deal with U.S. and state regulators.

The consent decree reached with the U.S. Justice Department and Environmental Protection Agency also requires London-based BP to pay $8 million to resolve prior alleged clean-air violations at its 405,000-barrels-per-day plant, the sixth-largest U.S. refinery.

The deal, announced by the government and confirmed by BP, ends years of opposition that might have left BP unable to use $4 billion worth of new processing units being installed at Whiting that will allow it to run Canadian tar sands crude as early as 2013. BP has set plans to use Canadian crudes for more than 85 percent of the refinery's daily needs.

To boost profits, U.S. Midwest refiners are looking to retrofit plants to process plentiful supplies of Canadian heavy oil, which is cheaper but also has a higher content of pollutants that cause acid rain, smog and haze.

As part of the settlement, BP will install an estimated $400 million of pollution-control equipment at the refinery while finishing a crude slate expansion project.

"We look forward to completion of the modernization project, which will improve the refinery's efficiency and competitiveness while continuing to reduce emissions," said Whiting refinery manager Nick Spencer in a statement.

The agreement between BP and EPA will set a precedent for refiners seeking to upgrade their refineries to run tar sands crude in the future, environmental groups said.

"Generally, pollution control is supposed to be based on the best available technology, so this will be a benchmark," said Eric Schaeffer of the Environmental Integrity Project, a former enforcement official at the EPA.   Continued...