City officials drilling into recommended oil regulations

By Gabriel Tynes

oilweb

More than five months after the Mobile City Council considered a resolution to freeze the approval process for above-ground petroleum storage tanks in certain industrial zones, the Mobile Planning Commission is expected to review the results of a report subsequently completed by an ad-hoc advisory committee.

The committee’s report, which does not enjoy the unanimous support of all its members, advises that new storage tanks in flood-prone areas around the Mobile River should receive a greater degree of scrutiny and urges the city to adopt more stringent standards for their permitting.

The council created the committee not long after the oil industry pushed forward other high-profile local developments that ran afoul of some members of the community.

Notably, projects by subsidiaries of Plains All American Pipeline to pump crude oil beneath the watershed of the city’s primary drinking water supply en route to a refinery across the state line, plus a related project to reroute a separate pipeline in a historic neighborhood north of downtown.

In the past three years, there have also been preliminary plans by other companies for another pipeline under the Mobile River, along with additional storage tanks along its banks and a rail transfer facility behind the GM&O building.

Among a host of other recommendations, the committee’s report suggests implementing capacity limitations in areas that happen to be within sight of the city’s skyline, including the highly industrialized, deep-water port.

The city is still under a 180-day resolution that sends any storage tank applications directly to the City Council rather than their usual course through the planning department, but eventually officials must decide how to accommodate an industry that is producing domestic crude oil at a rate not seen since the late 1980s — a rate only projected to increase.

“Energy independence is critical to the safety and security of the United States,” committee members Gary Cowles and Rick Geist wrote in a rebuttal to the report. “We request the council ‘NOT’ restrict petroleum tank terminal development, which could slow the progress of our country’s energy independence.”

Cowles, a Mobile engineer and industry representative in other developments, was appointed to the committee by Mayor Sandy Stimpson, who has also expressed reservations about how new regulations could affect his goal for a more “business friendly” city by the year 2020.

Currently, Plains has a capacity of more than five million barrels at two facilities in the Mobile area. ARC Terminals has the capacity for around 2.5 million barrels of petroleum at three separate locations in the Mobile area and had plans to build 1.7 million more. Hunt Refining Company has a “tank farm” with the capacity of 1.2 million barrels on the Mobile River.

American Tank And Vessel is proposing another rail transfer facility on the former site of International Paper, where heavy crude from hundreds of rail cars will be offloaded daily and stored in 32 new above-ground storage tanks holding approximately 2.4 million barrels.

That site sandwiched between a public school and an existing single-family residential area and the “environmentally sensitive” Hog Bayou, which is part of the Mobile Delta.

Plains’ spokesman Jon Gray said the company had not taken an official position on the report, but was compelled to point out that the petroleum industry is responsible for “a significant amount of money coming into the state docks” adding, “half of their portage is petroleum based product.”

Gray said Plains and other companies are currently working on an economic impact study that may be offered to the planning commission or City Council as it considers new regulations.

“The bottom line is in one year alone, this company invested $130 million in two different projects that may not have been realized” with further regulations, he said.

Committee member Sam St. John wrote that economic impacts should be taken with caveats.

“This industry produces no product and the crude oil is not used in our State, City or County therefore the main impact is from wages and property taxes,” he wrote. “One of the applicants has already asked for tax abatements for 10 years. Payroll for the ARC project is expected to be $1.5 million with 30 new jobs and possibly up to 30 more in the future. Additional Port of Mobile revenue would be generated from these projects resulting in enhanced job opportunities as well as, sales and service growth through direct and indirect associated support companies.”

But Cowles noted that liquid terminals are already “one of the most heavily regulated industries in the country,” asserting that locally, the approval process “works” and “eliminates the need for the City Council to hear every controversial development case unless it is appealed.”

In addition to capacity considerations, the report also recommends that new applications for tank development:

• Demonstrate a significant and positive economic impact on the local economy.

• Minimize projects intended for “flow through” to remote destinations, rather than provide products consumed locally.

• Contribute to the aesthetic vision of the community.

• Have little environmental impact.

• Plan and design for a disaster scenario and have the appropriate response plan.

• Prioritize the protection of public health.

• Expand a buffer zone from 1,500 feet to more than 2,600 feet.

The Mobile Planning Commission has not indicated that it will discuss the recommendations at its next meeting June 5, but when a review is complete, it is expected to send the recommendations back to the City Council.