By Alejandro Bodipo-Memba, Detroit Free Press
Dec. 6–Tank 21 is the only thing left standing in the 90-acre dirt field where a profitable oil refinery once served as the economic heartbeat of the mid-Michigan city of Alma.
The empty storage tank, which can hold 4 million gallons of gasoline, was one of about 60 others that stored a variety of petroleum products produced there for decades.
The Alma refinery, which pumped 55,000 barrels of crude oil a day, was closed in November 1999 and demolished in 2003 by its owner, Ultramar Diamond Shamrock (UDS) of San Antonio, because the company didn’t believe it would ever be profitable enough again to keep open.
With the shutdown, as many as 300 jobs vanished, and the city’s economy fell on hard times. The void left by the closing still smarts with many in the city, in light of the current energy crisis.
“This refinery was never unprofitable,” said Donald Schurr, president of Greater Gratiot Development Inc., a Gratiot County non profit economic development organization. “It just didn’t fit into the scheme of things for a given number of companies.”
Michigan’s energy crisis, which has been in full bloom for three months, is a microcosm of how vulnerable America’s energy infrastructure has become.
After the loss of 15 percent of the nation’s crude oil infrastructure due to the destruction wrought by hurricanes Katrina and Rita, it was made clear that concentrating the nation’s refinery and pipeline systems in one geographic area has positioned petroleum markets to be susceptible to major swings in prices.
The result has been higher retail energy prices, a decline in sales of fuel-thirsty trucks and SUVs and the continuing decline of manufacturing economies of Midwest states.
With pump prices hovering between $2 and $3 a gallon for much of the year, consumers in Alma and elsewhere are clamoring for relief.
A survey shows that some Americans are calling for the building of new oil refineries to increase the production of oil and to help lower prices, even if it means building the structures in their own neighborhoods.
A telephone survey of 1,000 Americans conducted by Sacred Heart University Polling Institute in Fairfield, Conn., in October found that nearly 80 percent “strongly or somewhat support” building oil refineries throughout the country as needed. Meanwhile, 68 percent are in favor of drilling for oil in places such as Alaska, Utah and Colorado.
“Given the continuation of high gas prices and the outlook for more of the same (not to mention higher home heating costs this winter), it is not surprising that a growing number of Americans feel that their quality of life is being negatively impacted,” said John Gerlich , associate professor in the Economics and Finance Department at Sacred Heart and co author of the study.
“And it may very well get worse in the next six months.”
If you want to know what’s happening in Alma, lunchtime at the Main Café is where you want to be.
A bout 10 blocks down the road from the old refinery grounds, the diner has served meals since the 1920s. It’s where city officials and laborers can mix over coffee and hearty sandwiches.
It is also the place where news and rumors about plant closings and layoffs travel fastest.
Since the closing of the refinery, many of the patrons have been buzzing about rising gas prices and what things might be like if oil still was processed up the street.
It was bad enough that the city of 9,800 lost its largest employer, taxpayer and water customer. But with the loss of 300 jobs, many say, Alma lost its identity.
“Our whole image as a town has been going through a change,” Aeric Ripley, Alma’s assistant city manager, said between bites of a sandwich. “Now that much of the manufacturing has left, we’re trying to figure out what we are now.”
The sign over the door at 178 E. Superior Road reads “Refinery Office.” But only memories of days gone by remain.
Across the street, the 90 acres that held the refinery is now home to huge piles of crushed industrial concrete and Tank 21.
The man responsible for cleaning up the area is Rick Draper, site director for TPI Petroleum Inc., a unit of Valero Energy Corp., the owner of what’s left of the Alma plant.
A third-generation Michigan oilman, Draper has an office that is home to an archive of old photos and documents showing the growth of Alma and the oil industry throughout the 20th Century.
Resigned that Alma will never be like it once was, Draper chalks up the refinery’s closing as a purely a business decision that in hindsight probably wasn’t the best one.
“I don’t know what Ultramar Diamond Shamrock’s position was on the matter, but within a number of months of selling I know they wished they hadn’t,” said Draper, who has worked in Alma’s oil industry for 27 years.
Alma, he said, “was always a profitable plant. There were some years it was marginal, but it was not a plant that wasn’t making money.”
Three months after the Alma refinery shut down, oil prices began an uninterrupted, 5-year rise from $29 per barrel to about $70.
If UDS had kept Alma open, many believe the company would have made a lot of money, Alma’s economy would be booming and Michigan consumers would have a steady source of petroleum, which might help lower retail prices.
That irony isn’t lost on Alma residents.
“It didn’t make much sense to shut the refinery when there was such demand for oil,” said Nancy Roehrs, the city clerk for nearby St. Louis, as she stood in line to pay for her lunch at the Main Café last week. “We need to produce more gas and more refineries.”
To be sure, not everyone believes building more refining capacity would be a good thing.
Environmentalists for years have push ed for increased fuel efficiency standards for cars and trucks, a greater commitment to conservation on a national level and more spending on research of alternative fuels.
Many point to the vast majority of the nation’s energy infrastructure being in the hurricane-susceptible gulf coast region as a reason for the volatility in petroleum prices. But they also admit that higher energy prices have been creating a shift in public opinion that is trending away from the mantra Not In My Back Yard.
“If you talk to people in general terms, they do want to see more stable supplies of oil,” said James Clift, policy director for the Michigan Environmental Council. “Given the recent spike in prices, I’m not surprised you would see some change in general attitude about building new refineries.”
Michigan has only one oil refinery left.
The Marathon Petroleum Co. LLC facility in Detroit processes about 74,000 barrels of oil a day. The Ohio unit of Houston-based Marathon Oil Corp. plans to expand its capacity to 100,000 barrels by the end of this year.
The last refinery built in America was completed in Garyville, La., in 1976. At that time there were about 315 functioning oil refineries in the country.
Today there are 132 facilities left with the ability to refine nearly 16.77 million barrels of crude oil a day. U.S. consumption of petroleum is 20 million, 42-gallon barrels a day.
In March, the U. S. Environmental Protection Agency granted the State of Arizona a license to issue a building permit to build a new oil refinery. Arizona Clean Fuels LLC has been trying to build a refinery about 100 miles west of Phoenix since 1998. Assuming the project is completed, the new refinery would open in 2009 at a cost of about $2.5 billion.
In the interim, U.S. consumption of petroleum is projected to increase sharply over the next half decade and it isn’t clear that building a new refinery would meet the rising demand.
OIL REFINERIES BY THE NUMBERS
–16: Active refineries in Michigan in 1952.
–1: Active refineries in Michigan today.
–$2.5 — $5 in billions: Estimated start-up cost of building a new U.S. refinery.
–100,000 barrels a day: Amount of crude oil refined in Michigan (estimated by the end of 2005).
–42: Number of gallons of gasoline in a barrel of crude oil.
–4.79 billion gallons: Projected sales of gasoline in Michigan for 2005.
–85 percent: Percentage of all motor fuel consumed in Michigan that is imported into the state.
Source: Michigan Public Service Commission and Detroit Free Press research
—–
To see more of the Detroit Free Press, or to subscribe to the newspaper, go to http://www.freep.com
Copyright (c) 2005, Detroit Free Press
Distributed by Knight Ridder/Tribune Business News.
For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail [email protected].
VLO, MRO,
Comments