Chevron schedules refinery outlays
Chevron Corp. plans to spend nearly $1 billion at two big California refineries to produce reformulated gasoline.
The new fuels will meet environmental standards required by federal Clean Air Act amendments and the California Air Resources Board.
About $370 million will be spent at the 229,000 b/cd Richmond refinery, near San Francisco, and $580 million at the 244,000 b/cd El Segundo refinery, near Los Angeles. Final permits are being sought for construction, which will be conducted during the next 3 years.
The projects show that preparing to produce environmentally improved gasoline will be very costly, said Bruce Frolich, vice-president of manufacturing for Chevron U.S.A. Products Co.
"We want consumers to recognize that these kinds of mandated investments-and the higher costs of making reformulated gasolines-will likely mean higher fuel prices."
Frolich pointed out that a National Petroleum Council study predicts in areas that must meet federal Clean Air Act requirements, gasoline costs will rise about 10?/gal in 1995 and another 3? by 2000 (OGJ, Sept. 13, p. 34). Cost increases for California, where even stricter rules apply, could be an added 8?/gal.
The NPC study, prepared at the request of the U.S. secretary of energy, said U.S. refinery investments for reformulated gasoline facilities and other environmental projects during 1991-2000 will reach $37 billion-$6 billion more than the current book value of today's refining industry. This likely will seriously strain all refiners, drive some out of business, and force others to consolidate their networks.
Chevron, for example, plans to sell refineries in Philadelphia and Fort Arthur partly due to mandated environmental investments at its other six refineries.
In addition to the two big environmental projects, Chevron approved a $290 million upgrade of the Richmond refinery's fluid catalytic cracking unit. The upgrade will employ new instrumentation and computer technology to boost yields of gasoline and jet fuel.
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