PBF sent multiple oil shipments to other refineries in 2014
PBF Energy now says it sent multiple shipments of crude oil from the Delaware City refinery to third-party destinations in 2014.
Refinery officials previously claimed only one shipment was sent to a refinery other than Paulsboro, New Jersey, the lone destination authorized in a 2013 order issued by then-DNREC Secretary Collin O’Mara.
A story published over the weekend in The News Journal detailed how the state chose not to sanction PBF for what it thought at the time was one shipment of crude to a Philadelphia refinery in 2013.
Environmentalists have pointed to DNREC’s unwillingness to fine the company over the “one time” shipment as the most recent example of the Markell administration’s dismantling of the Coastal Zone Act, the state’s landmark environmental zoning law.
Now, just days after The News Journal story, DNREC and the Delaware Department of Justice released a letter they received from the refinery last week in which the company admits to having made at least two shipments – each involving multiple barges.
In the letter received by DNREC on Thursday and DOJ on Friday, the refinery also reaffirmed its claim that it did nothing wrong and has the legal right to continue shipping oil to third parties in the future.
“The shipment of crude oil from the refinery to locations other than Paulsboro Refinery is not prohibited by any applicable regulatory or permit-based standard,” wrote John Deemer, the refinery’s health, safety and environmental manager.
In an interview for the story published over the weekend, refinery officials offered multiple scenarios as possible reasons for why they approved what they called at the time a single shipment of crude oil to Philadelphia in 2013. But those officials could not recall precisely why it occurred or where it went.
"Following the Dec. 16, 2016 meeting with the News Journal reporters," a refinery spokeswoman wrote in an email Tuesday, "we collected further information regarding DCR crude shipments and determined that refinery personnel had made an oversight in its prior statement regarding the number of barge shipments to other facilities -- there had been 2 commercial actions in 2014 involving crude oil shipments to destinations other than Paulsboro, which each involved several crude oil barge transfers, and there have been none since then.
"Once we identified this additional information, we provided the updated information to DNREC and the Attorney General’s office."
The spokeswoman offered no explanation for how the officials had initially gotten the year of the shipment wrong.
The refinery’s position runs counter to interpretations of O’Mara’s order by the Delaware Department of Justice and the former DNREC secretary himself.
When asked last week about the one shipment previously acknowledged by the refinery, O’Mara – who now runs the National Wildlife Federation – said he believes his order was clear.
“The intent of the language was to limit the barge shipments between Delaware City and Paulsboro,” he said. “Any kind of bulk transfer outside of that would be inconsistent with the order.”
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Current DNREC Secretary David Small chose not to issue any sanctions against the refinery last year after learning the company had ignored his predecessor’s order by sending a barge of crude oil to the Philadelphia Energy Solutions Refinery on the Schuylkill River.
That shipment only became known after a whistleblower at PES Refinery tipped off a deputy attorney general in Delaware.
Attorney General Matt Denn’s office strongly encouraged Small to confront PBF Energy about the shipment in late 2015.
At the time, officials with the Delaware City Refining Co. described the incident as a “one time event” due to “an unanticipated logistical irregularity.”
“DNREC is satisfied with DCRC’s explanation,” Assistant Secretary Kara Coats told Denn’s office in December 2015. “As such, DNREC has determined that no additional action is warranted.”
Gov. Jack Markell last week also described the shipment as a “one time event.” A spokesman later said the administration is confident DNREC is “dealing with the issue properly.”
Yet more than a year after assuring state officials there was only one shipment, the refinery now says that statement was not true.
In his letter, Deemer told DNREC a recent review found what initially had been reported as a “one time shipment” in 2013 was actually “a batch of barge transfers” in early 2014.
“Because these shipments were associated with the same commercial matter, they had been characterized internally for certain purposes under a single event,” he explained in the letter.
The review also turned up a second “commercial matter” in which multiple barges loaded with crude oil were sent to refineries other than Paulsboro during the fall of 2014.
The letter does not say where the oil barges ended up or how many were sent during either incident.
It remains to be seen whether the refinery’s letter will spur Small or the DOJ to take enforcement action against the company.
“DNREC is reviewing the contents” of the letter, agency spokesman Michael Globetti said via email. “Given that it will be a pending matter, we will not comment further at this time.”
A spokesman for DOJ also declined to comment, except to say the agency is reviewing the letter to "determine what additional information or action may be required."
“This is our worst fear realized,” activist Amy Roe said. “You have to ask what a secretary’s order really means. The refinery says it’s meaningless and what DNREC has done up until now has only affirmed that. So now what do they do?”
The refinery’s disclosure is the latest twist in a saga that has been playing out since 2013.
At that time, PBF had just completed a $100 million rail yard that enabled Delaware City to receive low-cost oil via train from North Dakota and Canada and sought the state’s permission to share that supply with Paulsboro, which has limited train access.
Bulk shipments of such crude oil are barred within a 275,000-acre area bordering the state’s shoreline under Delaware’s Coastal Zone Act.
Passed in 1971, the act also banned new heavy industry and changes to plants that were in existence at that time, including the Delaware City Refinery.
DNREC did not require the refinery to seek a Coastal Zone permit for either its new oil-by-rail facilities or its planned shipments to Paulsboro. State regulators did require PBF Energy to seek an air-quality permit for pollution-capturing equipment at its pier in Delaware City for the Paulsboro shipments.
O’Mara issued an order and accompanying permit that allowed refinery owner PBF Energy to ship up to 45,000 barrels of oil each day from Delaware City to its sister refinery on the Delaware River near Paulsboro.
His order also sought to limit those exports to Paulsboro alone.
“A change in these factors or the use of the facility may result in a different determination,” the order stated. “As such, the applicant should request a Coastal Zone status decision if future physical or operational changes are intended or implemented.”
Since being confronted over the whistleblower’s tip, refinery officials have argued that while the order mentions Paulsboro, the actual permit makes no reference to final destinations. They claim that distinction gives them the right ship crude anywhere and at any time.
Without an official enforcement action, the dispute remains unresolved.
The refinery’s oil-by-rail and oil-by-barge shipments have since slowed but environmentalists have questioned what the state will do if those market forces change and another shipment outside of Paulsboro is discovered.
“I’d like to give them the benefit of the doubt that they will do their jobs,” Roe said. “But I wonder.”
The refinery’s revelation could come at an inopportune time for PBF Energy.
The company is seeking a permit under the state’s Coastal Zone Act that would allow Delaware City Refining Co. to bring in 420,000 gallons of denatured ethanol by train each day before shipping it off by barge to refineries along the East Coast.
Small is expected to issue a ruling on that request by Dec. 28.
Environmentalists are urging DNREC to take decisive action against the refinery based on the new information that came to light last week.
"It's not surprising that this has happened," said Ken Kristl, who directs the Environmental and Natural Resources Law Clinic at Widener University. "But I think it underscores the need for DNREC to take its responsibility under the Coastal Zone Act seriously and enforce the secretary's order. I also would suggest they take this into consideration in connection with the refinery's pending application."
Contact business reporter Scott Goss at (302) 324-2281, sgoss@delawareonline.com or on Twitter @ScottGossDel.