Delaware City refinery wants permit to expand operations

PBF Energy wants to significantly increase the amount of biofuel being stored at and shipped from its Delaware City refinery.

The company plans to go from handling about 84,000 gallons of denatured ethanol per day on average to roughly 420,000 gallons – a five-fold increase.

All ethanol, a gasoline additive used to reduce greenhouse gas emissions, is currently shipped to the refinery from other states by barge. The flammable liquid is then blended with gasoline refined on site before the mixture is shipped to customers across the country.

But if changes, called the Ethanol Marketing Project, are approved by state regulators, ethanol also would be brought in by train. The expanded capacity would allow the refinery to act as depot that receives, stores and ships ethanol to other refineries along the East Coast – potentially cutting costs for those facilities that now pay to have ethanol shipped to them directly.

"The Ethanol Project will allow the refinery to optimize its logistics capabilities, which is critical in the context of the increasingly challenging economic conditions faced particularly by refineries in the northeastern U.S.," PBF Energy spokeswoman Lisa Lindsey said via email.

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PBF Energy says it hopes to begin work on the project in late 2016 and begin full production by the first quarter of 2017.

Construction work is expected to employ 20 to 25 workers, although no additional hiring is anticipated as a result of the expanded operations.

But first, the New Jersey-based company must seek permission from the same state agency that has repeatedly cited it for a string of air quality violations in recent months.

The Delaware City Refining Co. is currently facing up to $470,000 in fines related to dozens of incidents in which potentially toxic gases were released into the air between mid-2013 to early 2016.

Just last month, the Delaware Department of Natural Resources and Environmental Control notified the refinery of 18 new violations stemming from a plant shutdown that occurred during a January blizzard.

Those violations, however, are not expected play a factor in DNREC Secretary David Small’s decision on the refinery’s application for a permit under the Coastal Zone Act.

“There is no provision for considering compliance history when weighing a Coastal Zone Act permit application,” said Phil Cherry, director of DNREC’s Division of Energy and Climate.

“The Coastal Zone Act is more of a land-use statute than environmental one,” he added. “For us to withhold a permit because of infractions over the last few years probably would not hold up in court.”

Passed in 1971, the state’s Coastal Zone Act bars new heavy industry and bulk product facilities from being developed on a two-mile strip along the state’s 115 miles of coastline, both sides of the Chesapeake and Delaware Canal, and a ribbon around Delaware’s Inland Bays.

A grandfathering provision allows existing uses, such as the Delaware City Refinery, to continue operations, although new activities must go through a permitting process. By statute, that process considers six factors including the environmental and economic impact of the proposed use, aesthetics, impact on public lands and local land use policy.

PBF Energy filed its application for a Coastal Zone Act permit on Aug. 15 – the same day it received its most recent violation notice from DNREC.

According to that document, the Delaware Refining Co. is seeking permission to undertake a $7 million construction project that would allow the facility to expand its ethanol operations.

In addition to increasing the amount of ethanol brought into and out of the facility, the permit also would allow the refinery to use an existing tank to store another 6.4 million gallons – a 136-percent increase in capacity.

Despite the enhanced volume and new modes of transportation involved, PBF Energy has argued that the Ethanol Marketing Project is simply an extension of its existing ethanol operations and should not require an additional permit.

DNREC, however, says the movement of pure ethanol out of the facility – rather than a fuel blend – for sale to other parties constitutes a new use that requires state approval.

“We don’t see it quite the same way,” Cherry said.

PBF Energy also claims the project will result in a net reduction in air pollution at the refinery. The company plans to install systems designed to capture “volatile organic compounds” that might escape from its storage tanks, along with enhanced systems at its existing truck-loading facility.

The refinery likely will be required to seek an air quality permit for those systems, even if its Coastal Zone Act permit application is approved. That permit application could include consideration of past violations not factored into approval of its Coastal Zone Act permit.

It remains to be seen whether any community groups will voice an opinion on the refinery’s current application, which has yet to be scheduled for a public hearing.

Refinery officials did not respond to questions about the increase in truck or train traffic that would result from the expanded ethanol operations.

In recent years, the refinery has ramped up delivery of crude-oil by rail from North Dakota and Canada, which is now believed to top 8.8 million gallons per day. Train delays at rail crossings and reports of derailments and fires elsewhere have turned that issue into a local political and public safety concern.

"I think those shipments have probably decreased over the last year as the price of crude has fallen," said Seth Ross, a member of the Delaware Nature Society who served on the Delaware City refinery's citizens advisory panel until 2014. "So overall having ethanol shipped by train may not create any additional hazard because it essentially would be a wash."

Brenna Goggin, advocacy director for the Delaware Nature Society, said she does not anticipate the application facing much opposition.

“This project does not cause any concerns from our standpoint because it will result in an overall reduction of VOC emissions,” she said, adding that the refinery’s air quality violations and its Coastal Zone Act permit application are separate issues.

DNREC’s Cherry agreed.

“The kinds of violations we’ve seen at the refinery are not the result of willful neglect, but rather accidents that, unfortunately, can happen when you’re operating a refinery of that size,” he said.

The facility, which employs about 550 workers, repeatedly has been cited by DNREC this summer stemming from the release of numerous toxic chemicals in violation of its existing permit.

DNREC issued a single notice in May citing the refinery for 26 “flaring” incidents between mid-2013 and late 2015 that collectively released more than 100 tons of sulfur dioxide and other potentially harmful chemicals.

Another notice was issued in July citing the refinery for the release of another 3 tons of sulfur dioxide and nearly 16 tons of six other chemicals during two equipment leaks in late 2014 and early 2015.

A third notice – issued by DNREC on Aug. 15 – recorded a series of permit violations stemming from a near total power outage at the refinery that began during a Jan. 23 blizzard.

The shutdown resulted in the release of nearly 212,000 pounds of sulfur dioxide and 1,100 pounds of hydrogen sulfide. Both chemicals can be poisonous in high concentrations, leading to respiratory illness and even death.

Lindsey, the refinery spokeswoman, declined to discuss specifics about the violation notices received by the refinery.

“We can assure you our Delaware City team is dedicated to operating the refinery in an environmentally responsible manner and continuously reducing emissions from the plant,” she said.

Cherry said he expects a public hearing date on PBF Energy's permit application to be announced in the coming weeks.

Contact business reporter Scott Goss at (302) 324-2281, sgoss@delawareonline.com or on Twitter @ScottGossDel.