Refinery officials look to land rezoning; Quechans want open communication

A proposed oil refinery in the Tacna area could move one step closer to realization at the Yuma County Planning and Zoning Commission meeting Monday.

Arizona Clean Fuels chief executive officer Glenn McGinnis is scheduled to request a change in the land use designation of 1,363 acres east of Yuma from agriculture rural preservation to heavy industrial. The switch would make development of an oil refinery possible on open desert between Tacna and the Mohawk Valley.

The commission meeting begins at 5 p.m. at 2352 W. 26th St. and is open to the public.

The idea for the $3 billion, 150,000-barrel-a-day refinery was initially pitched more than a decade ago, and officials who have worked through years of siting, permitting and financing delays are now hoping to have the plant up and running by 2012.

The officials previously attempted to secure land usage rights near the Quechan Reservation, but decided to forgo the area after concern that historic tribal lands would be harmed.

The idea, however, that such concerns are now invalid because of the location change is incorrect, according to Tribal President Mike Jackson. He noted the new land area - bounded by Avenue 48E on the west, Avenue 50E on the east, Interstate 8 on the south and County 6th Street to the north - is just two miles from the previous location.

"We understand they want to move to a new location, and as a tribal nation we want to continue to participate in the new location process," Jackson said. "We'd like to be involved in the process from start to finish. We want them to go through the cultural and resource and environmental process like they did last time."

Arizona Clean Fuels media representative Ian Caskins said his company welcomes Quechan participation. The tribe's involvement since the project's inception spurred the relocation of the refinery and set the possible completion timetables back more than one year because of new siting and the requirement to reissue state air quality and other permits.

Thus far, however, neither group has extended the initial offer to increase communication, something Jackson says is the responsibility of Arizona Clean Fuels.

"They need to come and talk to us," Jackson said. "We think (the refinery) would be good for the area, but we want to make sure that none of our cultural properties are destroyed out there."

Jackson said the Quechans have not been contacted by Arizona Clean Fuels since the refinery site changed. He added that the tribe would "not likely" send a representative to Monday's planning and zoning meeting. Jackson said his tribe has requested communication but did not say if they directly contacted Arizona Clean Fuels.

Caskins said Arizona Clean Fuels has "engaged in significant outreach."

"(We're) cognizant and aware of all the different interests involved in this project," Caskins said, emphasizing Arizona Clean Fuels' past communications with the Quechans and others. "It's a great idea to sit down and further discuss potential concerns of anyone in the county that wants to communicate.

"We are very much open to speaking with the tribe. As far as cultural resources go, it is paramount that we examine this new site for areas of biological, cultural and historic resources. It's a very regulated process that must be met, and that's not just for Arizona. It's nationally regulated."

Caskins said Arizona Clean Fuels has completed portions of the examinations but has not yet completed detailed testing required by state and federal governments. Full testing is not a prerequisite of requesting or receiving land rezoning, and the commission's approval vote is only a recommendation to the county board of supervisors.

The refinery has received public support in the past and, if the land change designation is passed, is expected to begin construction in 2009. The local refinery, like a $10 billion, 400,000-barrel-a-day facility proposed in southeast South Dakota, would process thick, high-sulfur crude extracted from the Alberta oil sands of northern Canada into gasoline and diesel.

The oil for Yuma County's refinery would be shipped via cargo holds down the Pacific Ocean to a port off the Baja peninsula before being piped through Mexico into Arizona, a more cost-effective approach than routing it the width of the U.S. by rail.

That availability - Canadian Association of Petroleum Producers say oil sands production in western Canada has grown fourfold since 1990 - is said to ensure consistent supplies and allows an oil refinery in Yuma County to supply high-paying jobs likely to remain for decades.

Canada's yield topped 1.2 million barrels in 2007 and could grow to 3 million barrels a day by 2015. Industry officials estimate the Canadian oil sands could yield as much as 175 billion barrels of oil, which would make the country second only to Saudi Arabia in crude oil reserves.

And, despite recent expansion and upgrade approvals for a pair of U.S. refineries, experts say the sheer numbers guarantee Yuma County's facility would not be encroached upon. Despite major need, no new refineries have been built in the United States in more than 30 years largely because of extensive pollution and other environmental regulation. The difference in the regulation of new and current refineries are a main reason Marathon Oil Corp. and Chevron Corp. decided to update existing facilities as opposed to build anew.

Marathon's $1.9 billion expansion of its plant in southwest Detroit will allow it to process heavier Canadian crude and increase capacity to 115,000 barrels per day. Officials in Richmond, Calif., approved Chevron's July plan to upgrade equipment at its facility to allow refinement of a wider range of oil.

But neither plant would match the new technology that Arizona Clean Fuels says assures environment and air quality meets all federal and state requirements.

The company continues to negotiate with two potential major funders as it enters a design and engineering phase that will take a tremendous amount of investment capital. Even if the economics of the project make sense, Arizona Clean Fuels investors need to be in it for the long haul, Caskins said.

"There is money out there. However, most of the money out there is seeking short-term financial gain. We’ve gotten to the point where investors want to know what’s happening in the next quarter. A project like this, when you’re anywhere from five to eight years out, it becomes very difficult to gain investor approval."

Caskins said some existing facilities have not sought expansion because they don’t want to self-impose costly upgrades. Denny Larson, a California-based environmental advocate working to clean up U.S. oil refineries, said there is "no way around it that versus a cleaner slate of crude, you are going to produce more pollution. You just can’t get around that. So if you want a cleaner refinery, you would start with the cleanest crude stock you could get.’’

Arizona Clean Fuels Yuma says its refinery will emit far fewer pollutants than older refineries, as none has been built from the ground up using the latest technology.

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Matt Keller can be reached at mkeller@yumasun.com or 539-6847. The Associated Press contributed to this report.