From: Dina Cappiello, Houston Chronicle
Published January 28, 2005 12:00 AM

ConocoPhillips Agrees to Clean-Air Settlement

Jan. 28—Houston-based ConocoPhillips, the largest petroleum refiner in the United States, agreed Thursday to spend $525 million to reduce harmful, smog-forming emissions at nine refineries, including two in Texas, and to pay a $4.5 million fine to settle federal charges that it violated air pollution laws.





The settlement, filed in U.S. District Court for the Southern District of Texas, is just shy of the largest, reached earlier with Motiva, which required that company to invest $550 million. The Environmental Protection Agency and the Justice Department began investigating oil refineries in 2000.





The settlement is the largest, in terms of the amount of oil the company refines, since the U.S. Environmental Protection Agency and U.S. Department of Justice began investigating the nation's oil refineries in 2000.





Federal officials said Thursday that with this agreement, which covers refineries in seven states, more than 50 percent of the nation's refining capacity is in compliance with environmental regulations.





"Today's announcement covers 10 percent of the nation's refining capacity," said Tom Sansonetti, the assistant attorney general for environment and national resources. But "while this is the largest refinery settlement in and of itself, we are now over 50 percent nationwide."





Nearly 30 percent of the estimated 47,000 tons of pollution reductions that will occur after the company installs new technology will be at its two Texas refineries, in Borger, a small town in the Panhandle, and Sweeny, about 65 miles southwest of Houston.





Pollution controls at these facilities will cut down on flaring and other sources of sulfur dioxide, nitrogen oxides and the fine particles that make up soot, said Lara Dilley, a ConocoPhillips spokeswoman.





In a statement issued Thursday, the company said that it entered into the agreement voluntarily and that the investment will cut emissions of sulfur dioxide and nitrogen oxides at the nine plants by 65 percent.





The Borger refinery, acquired in 1927, will cut emissions of sulfur dioxide and nitrogen oxides by 11,179 tons during the next decade. The Sweeny plant — built in 1947 — will reduce those two pollutants by 3,045 tons during the same time period.





"I spent years calling the state about their continuous flaring," said Sharron Stewart, a Brazoria County environmental activist, referring to the burning off of chemicals that causes flames at the end of some stacks. In 2003, the Sweeny refinery ranked in the Top 12 in the Houston area for the amount of pollution coming from accidental releases.





"They got away with it for years," she said. "I think it is good news for the county."





Tim Moss, Sweeny's city manager, said every bit counts. Brazoria County does not meet federal standards for ground-level ozone, the main ingredient in smog, and nitrogen oxides are one of the main culprits. The townspeople are doing their part, he said.





"Down here we are part of the non-attainment counties with Houston. We have to have a different type of inspection sticker, we have to have cleaner burning gasoline, so I think everybody would say a cleaner environment is a better environment," Moss said.





Locals in Borger, a town of 15,000 about 50 miles north of Amarillo, expressed shock Thursday at the sum of the fine and what the company will spend on environmental controls. A woman who answered the City Hall phone, could only say, "Dad-gum!" when she heard the total of $525 million.





Meryl Barnett, the mayor pro-tem of Borger, a town with an annual budget of $11 million, said he was surprised at some of the charges, adding that the refinery — which employs many people in the area — has tried to reduce its emissions.





"That's a lot of money," Barnett said. "I'm really a bit surprised. They are working all the time to stop emissions. They are monitored very closely."





The company, which has 22,000 employees worldwide, including 4,300 in Houston, 900 in Sweeny and 750 in Borger, issued the following statement via e-mail Thursday:





"ConocoPhillips is committed to achieving these significant reductions in conjunction with its ongoing business plans. These actions will improve environmental performance and support continued safe and reliable operations of the refineries."





Dilley said the company's three other refineries in the United States were the subject of a similar settlement in 2001.





But some environmentalists questioned whether all conditions of the settlement will be met.





A report released in June from the EPA inspector general said there has been inadequate oversight of company compliance with the decrees.





The Texas Commission on Environmental Quality is in negotiations of its own with the company over environmental violations, which is why it did not join with the federal government as did New Jersey, Washington, Louisiana, Pennsylvania and Illinois. Those states will get a share of the fine, and split an additional $10 million, provided by the company.





"They missed part of the penalty," Sansonetti said of Texas' decision. "Other places, such as the state of New Jersey, are going to get things such as sophisticated emergency response vehicles, fire engines, money to change out old, inefficient wood-burning stoves."





The announcement came a day after the company reported profits of $2.4 billion in the fourth quarter and $8.1 billion for all of last year.





The company's stock closed up 51 cents Thursday, at $91 a share.





ABOUT THE FIRM





The settlement reached Thursday between ConocoPhillips and the federal government covers nine of the company's dozen U.S. refineries. Here are some statistics on the company, from 2003:





—U.S. refineries: 12





—Foreign refineries: Six in five countries





—Crude processing ability, U.S.: 2.2 million barrels per day





—Crude processing ability, foreign: 442,000 barrels per day





—Refining and marketing assets: $26.1 billion





—Refining and marketing employees: 13,579





Source: ConocoPhillips





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