Privately held oil company taking over Shell refinery; regulatory hurdles possible

The Associated Press

Shell Oil Corp. is expected to turn over its Bakersfield refinery to a new company in mid-March, but the hand-over could still face regulatory obstacles.

Flying J Inc., which purchased the facility in February, must still receive a variance from the San Joaquin Valley Air Pollution Control District giving the firm until June 2006 to comply with emission rules, some of which take effect this June.

Shell did not make an effort to comply with the new requirements because it had slated to close the refinery in the fall. Shell considered the plant old and inefficient and said its Kern County crude oil fields were drying up.

The plant produces 2 percent of California’s gasoline and 6 percent of its diesel.

A hearing on the issue was set for March 9.

A one-year variance giving Flying J the time it needs to get the refinery in compliance would not be out of the ordinary, said Jon Adams, an air quality compliance manager for the air district.

Still, the company, whose officials aim to double gasoline production at the refinery, will be under pressure to keep the plant’s air emissions low even as it seeks greater output.

“Our regulations would allow the Bakersfield refinery to expand, but there would be very, very strict requirements,” said Dave Warner, the air district’s director of permit services.

The Ogden, Utah-based company wants to add two major processing units to nearly double the Bakersfield plant’s current gasoline output of 630,000 gallons a day and increase its daily production of 840,000 gallons of diesel.

Experts say such an expansion could take two years to complete.

“We know we have to comply with the rules, and we’re doing the engineering to ensure that we can,” said Fred Greener, executive vice president of Flying J subsidiary Big West Oil. “We’re certainly going to go ahead with our plans (to expand) as quick as we can get it done.”