BP plan would pipe crude from Canada to state

Oil brought to Cherry Point over land would avoid maritime limits

By ROBERT McCLURE
P-I REPORTER
Seattle Post Intelligencer
March 10, 2006

COMMENT: Kinder Morgan/Terasen/Trans Mountain Pipelines is in the early stages of an expansion of the Trans Mountain system which brings oil from Alberta to the Vancouver area. A question has hung over that project - where would be the customer for this oil, since increased tanker traffic would face incredible public rage, and there is no oil pipeline to ship it to California. BP at Cherry Point is a perfect answer.

The news was bad for BP last week: Alaska Sen. Ted Stevens dropped his plan to allow more oil than ever to be brought in tankers to the docks of the company's refinery near Bellingham, the largest refinery on the West Coast.

But now it turns out that British Petroleum is working on another plan that could make all that moot: Piping in Canadian crude through the back door.

This would allow the company to go around limits that Washington Sen. Warren Magnuson put into place a generation ago to protect Puget Sound from potential damage from oil tankers. The reason: Magnuson limited only the amount of crude oil coming into Washington refineries by water. He didn't say anything about pipelines.

Relying more heavily on piped-in crude might also rid BP of an environmental group's lawsuit over the issue.

A BP team is examining whether the company's Cherry Point refinery or others in Indiana and Ohio might work best as a refining location for the crude from Alberta, said Bill Kidd, BP's external relations director for the Pacific Northwest.

"It's truly in the formative stages," Kidd said. "We'll be looking at making the decision about where and how much investment later this year."

Such a move would likely require a $1 billion outlay to retool the refinery to process the Albertan crude because it has about five times as much sulfur as the crude currently processed there, Kidd said.

It would probably take four years for such a retooling to win government approval and be put into place, he said.

Fred Felleman of Ocean Advocates, the group that sued BP, challenging its expansion of the dock at its Cherry Point refinery, said records he obtained from the Washington Ecology Department through the Public Disclosure Act suggest that the firm bears careful scrutiny.

The records show that at a meeting in October, BP officials said they "want to change over to run large (percentage) or all Canadian crude," according to an Ecology worker's notes. BP officials noted that supplies of Alaskan North Slope crude are declining.

"Right now looking at small project, replacement may be larger project," the meeting notes say.

Kidd, though, downplayed the idea that a switch to Albertan crude or an increase in production is inevitable.

For now, BP is asking for only a small production increase. The company wants to boost the amount of incoming crude from 205,000 barrels a day to 209,000 barrels a day, according to BP's application to Ecology to renew its wastewater disposal permit.

Liem Nguyen, the Ecology worker who is handling renewal of the permit, said he understood that BP wants to substitute the Canadian crude for about 30,000 barrels a day of its current production.

Felleman said transporting the oil by pipeline would reduce chances of a tanker causing a massive spill like the Exxon Valdez.

But, Felleman said, ultimately it would allow production increases that would cause more fuel to be transported through Puget Sound after refining -- and that could increase the risk of a smaller but still ruinous spill. Much of the outgoing fuel is hauled by tugboats toting massive barges filled with fuel.

A lot of that traffic heads south toward Oregon and California through the Olympic Coast National Marine Sanctuary, where tug-and-barge operators have showed the highest rate of violating orders by federal officials to avoid areas nearest the coast where a spill would be most problematic.

Hauling crude oil into Washington's inland waters has been controversial at least since the mid-1970s, when the Trans Alaska Pipeline was built.

Just three months after oil began to flow through the pipeline, Magnuson in 1977 slipped in an amendment to the Marine Mammal Protection Act.

It decreed that only the amount of crude oil needed for Washington's consumption could pass across refineries' loading docks.

Magnuson feared that massive supertankers would despoil Puget Sound or connected waterways.

Little was said about the restriction until Felleman's group filed suit in federal court in 2000, claiming that the expansion of the Cherry Point refinery dock amounted to a violation of Magnuson's amendment.

BP won at the trial court level but the 9th U.S. Circuit Court of Appeals found for the environmental group. It ordered the U.S. Army Corps of Engineers, which granted permission for BP to expand the dock, to perform an environmental study and reconsider its decision. The case is pending.

Stevens had been trying to overturn Magnuson's amendment in Congress. But last week he told the Senate he would no longer pursue that legislation.

P-I reporter Robert McClure can be reached at 206-448-8092 or robertmcclure@seattlepi.com.