Bush seeks refineries on old military bases

April 28, 2005
US President George W. Bush suggested building refineries on closed military bases and called for government agencies to simplify the permitting process for such construction in an Apr. 27 speech to the National Small Business Conference in Washington, DC.

Sam Fletcher
Senior Writer

HOUSTON, Apr. 27 -- US President George W. Bush suggested building refineries on closed military bases and called for government agencies to simplify the permitting process for such construction in an Apr. 27 speech to the National Small Business Conference in Washington, DC.

Other sources said the US Department of Energy is being ordered to step up discussions with communities near closed military bases to try to get refineries built.

Officials at the National Petrochemical and Refiners Association in Washington told OGJ Online this was the first they'd heard of using former military bases for that purpose.

"Increased US refining capacity, whether in the form of additional capacity at existing sites or through new grassroots refineries, would help increase the supply of domestically manufactured petroleum products," said Bob Slaughter, NPRA president.

The American Petroleum Institute also endorsed Bush's proposal to increase US refining capacity and imports of liquefied natural gas (LNG).

"It should be remembered that there are numerous and time-consuming requirements that must be met at all phases of the permitting and construction processes for refinery and LNG facilities," said Red Cavaney, API president. "Nevertheless, both of these proposals should be given serious consideration as part of any long-term proposal to help us meet the country's increasing energy demands in the future."

Gasoline prices
Bush prefaced his remarks about energy by saying he'd recently lunched with soldiers at Ft. Hood, Tex., who complained about high gasoline prices.

"The higher cost of gasoline is a problem that has been years in the making. To help in the near term, we'll continue to encourage oil-producing countries to maximize their production, to say to countries that have got some excess capacity, 'Get it on the market so you do not destroy the consumers that you rely upon to buy your energy,'" he said.

Meanwhile, Bush said, "It's time for America to start building again." He noted: "There have been no new oil refineries built in the US since 1976. And existing refineries are running at nearly full capacity. Our demand for gasoline grows, which means we're relying more on foreign imports of refined product."

To encourage expansion of existing refineries, Bush said the Environmental Protection Agency is simplifying its rules and regulations.

"I will direct federal agencies to work with states to encourage the building of new refineries—on closed military facilities, for example—and to simplify the permitting process for such construction," the president said.

NPRA's Slaughter said: "One key factor in weighing the economic attractiveness of any new investment in refining is the need to eliminate unnecessary uncertainty about timing and providing regulatory certainty. [New Source Review] reform and action to streamline the permitting process, while maintaining appropriate opportunities for public comment, should improve predictability of the regulatory process and help to encourage new investment."

The president also called on federal agencies to expedite reviews of the 32 proposed LNG receiving terminals in the US.

"Congress should make it clear to the Federal Energy Regulatory Commission its authority to choose sites for new terminals so we can expand our use of liquefied natural gas," he said.

Bush reiterated his support for oil and natural gas exploration in the Arctic National Wildlife Refuge of Alaska. Modern drilling technology makes it possible to drill on just 2,000 acres of the 19 million acres in the reserve, "with almost no impact on land or local wildlife," he said. "Developing this tiny section of ANWR could eventually yield up to a million barrels per day of oil. That's a million barrels less that we've depended on from foreign sources of energy."

Bush also favors construction of nuclear power plants in the US.

"One of the greatest obstacles we face to building new plants is regulatory uncertainty, which discourages new plant construction. Since the 1970s, more than 35 plants were stopped at various stages of planning and construction because of bureaucratic obstacles," he said. "We must provide greater certainty to those who risk capital if we want to expand a safe, clean source of energy that will make us less dependent on foreign sources of energy.

He said he has asked the Department of Energy "to work on changes to existing law that will reduce uncertainty in the nuclear plant licensing process and also provide federal risk insurance that will protect those building the first four new nuclear plants against delays that are beyond their control."

Noting that the US has the sixth-largest reserves of natural gas in the world, Bush promised, "We'll do more to develop this vital resource. That's why I signed into law a tax credit to encourage a new pipeline to bring Alaskan natural gas to the rest of the US."

Most of the energy proposals that Bush outlined were part of the national strategy he submitted to Congress in his first year in office. "And it has been stuck. And now it's time for the Congress to pass the legislation necessary for this country to become less dependent on foreign sources of energy," he said.

Contact Sam Fletcher at [email protected]