California Environmental Quality Act. Presented to: AFPM 2016 Annual Meeting March 15, 2016 By Thomas R. Hogan, P.E. Gavin Hoch, Ramboll Environ

Transcription

1 California Environmental Quality Act Presented to: AFPM March 15, 2016 By Thomas R. Hogan, P.E. Gavin Hoch, Ramboll Environ

2 Who Are These People AM Page 2

3 Multiple Choices Test audience for preview of this CEQA presentation Not a photo at all, live feed of the last three rows of this room A group of people listening to a presentation that is all Greek to them None of the above AM Page 3

4 Turner, Mason & Company Privately held established 1971 Dallas, Texas headquarters with an associate in Tyler, TX Provides engineering and management consulting services focused on the downstream segment of the oil industry with a growing practice in midstream and upstream Areas of expertise relevant to this topic include: fuels regulations, and supply/demand/pricing forecast in semi-annual Crude and Refined Product Outlook AM Page 4

5 Ramboll Environ ENVIRON (Est. 1982), Ramboll (Est. 1945) merged in 2015 Approximately 13,000 employees in nearly 300 offices worldwide Full services design, engineering, planning and environmental consultancy Areas of expertise relevant to this topic include: air quality, greenhouse gas and public safety evaluations AM Page 5

6 Presentation Outline California Refining Status California Crude Oil Supply IMO Marine Fuel Oil Sulfur Reduction California Environmental Quality Act (CEQA) (Gavin Hoch) Implications for Refiners Conclusions AM Page 6

7 California is a Special Place Largest state gasoline demand Restrictive product specifications California generally does not receive petroleum products or crude oil from U.S. sources to the east. No pipelines, long distances for trucking Limited marine supply due to Jones Act and movements that must go through the Panama Canal AM Page 7

8 Complexity for Refinery Groups Complexity is generally a measure of the capital invested to upgrade crude oil Some units that increase complexity Hydrocrackers Cokers FCCU Hydrogen Manufacturing Alkylation AM Page 8

9 Selected California Refineries Fuels Refineries MBPD Crude FCCU HDC Coker Chevron El Segundo Richmond Phillips 66 Carson/Wilmington Rodeo/Santa Maria ExxonMobil/PBF Torrance Shell Martinez Tesoro Carson/Wilmington Golden Eagle Valero Benicia Wilmington AM Page 9

10 Upgrading Capacity for Selected Refinery Groups 1 Location Crude Capacity FCCU MBPD Hydrocracker Coker California 1, PADD I 1, PADD II 4,080 1, PADD III 9,700 3,136 1,087 1,572 Percent on Crude Capacity Total California 36% 25% 22% 83% PADD I 37% 3% 2% 42% PADD II 32% 8% 14% 54% PADD III 32% 11% 16% 59% 1 Based on 2014 O&GJ, Worldwide Refining Survey and 2014 EIA, Number and Capacity of Petroleum Refineries table AM Page 10

11 Changing California Crude Slate Even as U.S. crude has increased dramatically, California crude production is decreasing ANS crude oil production, a west coast staple, has been steadily declining for years California has limited ways to receive other domestic crude oil AM Page 11

12 California Crude Production, MBPD 1,200 1, AM Page 12

13 US Crude Oil Production, MBPD 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 AM Page 13

14 California plus Alaskan Crude Production, MBPD 3,500 3,000 2,500 2,000 1,500 1, AM Page 14

15 Percentage of Imported Crude Oil 1 80% CALIFORNIA US 70% 60% 50% 40% 30% 20% 10% 0% Based on EIA Data and California Energy Commission data. AM Page 15

16 Foreign Crude Oil imports into California 1 Dec to Nov Country MBPD Percentage Saudi Arabia Ecuador Columbia Kuwait Iraq Brazil Angola Canada Russia Other Total Based on EIA Data AM Page 16

17 Selected Foreign Crude Oil imports into California By Company 1 - Dec to Nov. 2015, MBPD Company Location Saudi Arabia Ecuador Columbia Kuwait Iraq Chevron El Segundo Richmond Phillips 66 Los Angeles San Francisco 19 2 Tesoro Golden Eagle Carson Shell Martinez 25 7 Valero Benecia Wilmington Based on EIA Data AM Page 17

18 Reduce Fuel Oil Sulfur Heavy marine fuel oil sulfur must be reduced from 3.5 wt% to 0.5 wt% in 2020/2025. Not many California refineries impacted (perhaps Chevron Richmond) Capital investment solution coker or residual hydrotreating Example of product changes that require investment AM Page 18

19 Project Environmental Review in California Required for most projects under California Environmental Quality Act (CEQA) California statute enacted in 1970 Supplements National Environmental Protection Act Primary goals include environmental protection and improved planning Conducted using CEQA Guidelines AM Page 19

20 CEQA Guidelines Assist public agencies to interpret statute and implement CEQA review process Assist stakeholders to understand and participate in process AM Page 20

21 Main Elements of CEQA Review Process Projects and activities requiring review Participants & roles Levels of review Determination of potential impacts Evaluation of mitigation measures and alternatives AM Page 21

22 CEQA Triggers CEQA review required for projects or activities that: Require discretionary approval; Result in direct physical change(s) to environment; or Result in foreseeable indirect change(s) to environment AM Page 22

23 Participant Roles Project applicant Lead agency Responsible agencies Other stakeholders Trade and environmental organizations Local community AM Page 23

24 Levels of CEQA Review Exemptions No environmental review required Initial study No potentially significant impacts Negative Declaration Potentially significant impacts Mitigated Negative Declaration Environmental Impact Report Anticipated potentially significant impacts AM Page 24

25 Determination of Project Impacts Evaluation of 18 environmental factors e.g., air quality, energy, public safety Comparison of project impacts to Thresholds of Significance Criteria set by authority agencies, or Criteria in Appendix G of CEQA Guidelines AM Page 25

26 Evaluation of Mitigation Measures and Alternatives CEQA requires mitigation of potentially significant impacts and evaluation of project alternatives Decision-making body has authority regarding project approval Litigation can have profound effect on CEQA process AM Page 26

27 Refiner Implications Examples Chevron Richmond refinery Proposed 2005, approved 2008, suspended 2009, re-approved modified project in 2014, estimated completion 2018 Additional processing limits, e.g. hydrogen plant not allowed to run at new capacity Valero crude unloading facility Currently denied approval by Benicia planning commission AM Page 27

28 Refiner Implications General Considerations CEQA can result in review of seemingly unrelated refining activities CEQA requires many specialties Legal Community relations Traffic, noise, emissions monitoring, etc. Project economics must assume a lengthy approval timeline AM Page 28

29 Conclusions CEQA implications must be considered before any project is approved. Assemble a CEQA team early in the project approval process Community relations in general and especially during the approval process for a project are critical Expect input from NGOs AM Page 29

30 Who Are These People AM Page 30

31 Answers Wrong You heard the presentation, obviously it wasn t rehearsed Wrong But thanks to the person that looked to see who was in the last 3 rows Correct a group of Americans in Athens, listening to a sermon in Greek AM Page 31

32 Presenters Thomas R. Hogan, P.E. Senior Vice President 2100 Ross Avenue, Suite 2920 Dallas, Texas / (voice) 214/ (fax) Gavin Hoch 201 California Street, Suite 1200 San Francisco, CA (415) AM Page 32