OIL AND GAS:

Imminent shutdown of Pa. refineries alarms bipartisan group of lawmakers

While Keystone XL and Solyndra continue to propel partisan passions on Capitol Hill, mid-Atlantic lawmakers on both sides of the aisle yesterday warned that Congress could be powerless to prevent skyrocketing gas prices and job losses if three major refineries in their region lapse into shutdown.

Members of the Pennsylvania and Delaware delegations sounded their alarms over three beleaguered Keystone State plants that account for more than half of the Northeast's refining capacity, according to the Energy Department. But though both parties might agree that permanently losing those refineries would hobble the slowly rebounding economy, the fight to stop their shuttering risks opening a rift between refiners and the union that represents much of their workforce.

"This isn't just about Pennsylvania -- this is about the United States of America," United Steel Workers International Vice President Gary Beevers said yesterday at a Capitol Hill rally to save the refineries that drew multiple GOP and Democratic lawmakers. "I can't believe someone can walk away from three refineries, saying 'there's no problem there.'"

The steelworkers' political clout, evidenced by their political action committee (PAC) with more than $3 million on hand for this year's election, comes with a bright green streak that was not immediately apparent at yesterday's bipartisan rally. Sen. Bob Casey (D-Pa.) and Rep. Pat Meehan (R-Pa.) joined union leaders in citing the national security impact of a gasoline supply loss and employment as they called for hearings in their respective chambers on the refinery losses.

But as the steelworkers link arms with lawmakers looking to protect the workers and output at Pennsylvania's three endangered petroleum plants -- now-closed Trainer, now-idled Marcus Hook and imminently-idled Philadelphia -- its pro-environment stance is not going unnoticed by the refining industry.

"These companies didn't take any pleasure in shutting refineries down," American Fuel & Petrochemical Manufacturers President Charles Drevna, whose trade group represents the two operators currently seeking buyers for the refineries, said in an interview.

But Drevna deemed it "a little bit ironic" to see protests from "the politicians -- especially the ones who voted for legislative proposals that would have forced [refineries] out of business earlier."

"These are the same politicians who voted for cap-and-trade legislation" on climate change, he said. "This is the same union that supported cap-and-trade legislation."

The steelworkers, who sent the entirety of their PAC donations for the past two election cycles to Democrats, did not flinch from a politically volatile message in their presentation. After the rally yesterday, workers were set to stage "pink slip"-themed protests in front of the Washington offices of the Pennsylvania refineries' two owners, ConocoPhilips and Sunoco.

Before Casey took the stage, Dennis Stephano, president of the union's chapter at the Trainer refinery, lamented that refiners are not federally regulated in the same fashion as utilities. "Those CEOs need to have their rear ends down here," he told fellow workers. "Electronic companies can't shut down the electric grid."

The pipeline factor

In a December report on the Northeastern refinery losses, the Energy Information Administration predicted a roller-coaster ride for gas prices as mid-2012 looms as a likely timeframe for all three plants to go offline.

"Timing differences between refinery closures and infrastructure reconfigurations or additions could result in spot shortages with price spikes for different fuels in different locations," the Energy Department's statistical arm noted.

The Colonial pipeline that takes up to 2.5 million daily barrels of fuel from the Gulf Coast to the Northeast is weighing a capacity increase, EIA added, but even that move "will still be insufficient to make up the entire lost production volume."

Stephano, of the steelworkers, yesterday urged lawmakers to debate the value of new pipelines that could ship gas to the East Coast. But stopgap plans to get more domestic crude to the Pennsylvania plants "are not February or March of 2012 kind of episodes," AFPM chief Drevna said. "These things are going to take some time. I urge the politicians to take a long, hard look at their contribution."

As of yesterday, however, climbing oil and gas prices were largely driving debate over a pipeline that would not affect the looming supply crunch in the Northeast. Keystone XL, connecting the Canadian oil sands with Gulf refineries, still could see a Senate vote this week if the GOP prevails and remains tied to a troubled House transportation bill that Republican leaders punted yesterday (see related story).

The steelworkers' support for a White House rejection of that XL link opened a schism with some of its pro-pipeline brethren last month, as the Laborers' International Union of North America quit a partnership founded by the steelworkers and other unions to help push for climate change legislation (E&ENews PM, Jan. 20).

What can Congress do?

Whether the lawmakers concerned over the refineries are able to influence their fate remains an open question. Sunoco and ConocoPhilips have said that the Marcus Hook and Trainer refineries could move into permanent shutdown if buyers do not materialize by next month, and the Philadelphia plant is facing a July doomsday.

Casey, the centrist Democrat facing a tough re-election battle, said that he hopes to see both refinery companies "provide more information to the workforce and the public" about their efforts to sell the plants. "They need to be making every effort," he added.

Yet even as Casey acknowledged that a legislative fix is likely out of reach -- though he "would be willing to listen to ideas" -- fellow lawmakers focused on the urgency of the plight facing Northeastern drivers and the refinery workers.

"We're frankly running out of options," Rep. John Carney (D-Del.) said.

House Homeland Security Chairman Peter King (R-N.Y.) has endorsed the idea of Meehan's Counterterrorism and Intelligence Subcommittee holding a hearing on the refinery shutdowns.

"These Northeast refineries and others like them are of strategic importance, and we need to know what the stoppage of their vital energy products might mean for our ability to recover from a terror attack or natural disaster, especially considering that high-risk cities such as New York and Washington are nearby," King said in a statement.

Casey sent a similar hearing request to Senate Energy and Natural Resources Chairman Jeff Bingaman (D-N.M.) last week, but the upper chamber committee has yet to commit to looking at the issue.

"Right now, on the eve of a recess, it's hard to say whether we will be planning a hearing on the topic," energy panel spokesman Bill Wicker said via email.