Engineering News

Detroit Refinery Construction to Hit Peak This Fall
June 23, 2011

After a lengthy delay, one of Michigan's biggest construction projects in recent years is expected to hit its peak of activity this fall, employing 1,300 workers in southwest Detroit.

Marathon Petroleum is about halfway through upgrading equipment at its Detroit refinery and expanding the facility, the only one in Michigan. Though the $2.2-billion project began three years ago, the work is slated to significantly ramp up in September or October.

The expansion will allow Marathon to process more Canadian oil sands, which will increase pollutants from the refinery from 2009 levels.

Marathon has promised to add 60 jobs and 75 contract positions after the project is completed in the second half of 2012. The company has 560 employees, including 160 contract workers, at the Detroit refinery. The expanded refinery also is expected to generate $230 million in additional city tax revenues during the next 20 years as well as an estimated $85 million in local and state taxes from wages and other spending.

Most important, the investment helps ensure that the 81-year-old refinery will remain open well into the future.

"This project takes us from being one of the slower antelopes to at least being in the middle of the pack," said Tracy Case, manager of Marathon's Michigan Refining Division.

But the massive investment is not without controversy. After the expansion, the refinery will be able to significantly increase the amount of heavy crude oil it processes. A key source of this heavy crude is the huge supply of oil sands in Canada. But environmentalists oppose tapping into the oil sands because they say it is the dirtiest source of oil.

Marathon also has not succeeded in hiring large numbers of Detroit residents, something it had agreed to do when it received the Detroit City Council's approval for $178 million in city tax breaks during a 23-year period.

Marathon, which is based in Findlay, Ohio, is investing billions in its Detroit refinery in order to significantly increase its profits. After the project is finished, the refinery will be able to process 80,000 more barrels of heavy crude oil a day into gasoline, diesel and asphalt. This heavy crude oil is less expensive than other forms of oil and provides other financial advantages.

"If Detroit were running today with the kind of differentials we're seeing (between Western Canadian select and Louisiana light sweet crude), its profitability would be extraordinary," Clarence Cazalot, Marathon Oil's CEO, told analysts in February.

The refinery also will be able to process 120,000 barrels of oil a day, up 13% from the current 106,000. That means more gasoline and other fuels for Michigan.

Case said the Canadian oil sands are a more stable and secure source of oil than imports from the Middle East. But Josh Mogerman, a spokesman for the Natural Resources Defense Council, said extracting this oil requires more energy and water than digging a well, and the refining process releases a lot more sulfur and heavy metals into the air.

Marathon's own data shows that total emissions of carbon monoxide, nitrogen oxides, sulfur dioxide and other pollutants at its Detroit refinery will increase from 1,265 tons in 2009 to 1,500 tons a year after the expansion project is finished. That's an increase of 235 tons a year, or 18.6%. But it is much lower than the 5,507 tons of emissions generated in 1999.

Despite the environmental concerns, the refinery expansion got the go-ahead from city and state officials, desperate for jobs in a city with far too few of them. Of the $2.2 billion, about half will be invested at the existing refinery and half in a new site adjacent to the facility that was once occupied by a steel company.

But so far, few of the new jobs have gone to Detroit residents. Of the 45 people hired so far for the 60 permanent jobs, 13, or 29%, live in Detroit. Marathon also had promised that 51% of the construction and other temporary workers hired for the expansion project would be Detroiters. The best it has been able to do so far is 42% in June 2009.

Rhonda Anderson, an environmental justice organizer for the Sierra Club, said many Detroit residents have applied for the jobs at Marathon and been turned down.

Marathon said it has struggled to hire more Detroiters because they account for only about 10% of the membership at the many trade unions that it works with. "We want to hire as many Detroit residents as we can," said Chris Fox, a Marathon spokeswoman.

Source: Detroit Free Press

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