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 December 03, 2013
Beleaguered Texas town struggles with Keystone XL

 PORT ARTHUR, Texas -- For Eddie Brown, 54, a former refinery worker and now owner of the Kutz 4 Kingz Barber Shop in Port Arthur, enough is enough.

"My mom died of cancer," he said. "My son had breathing issues. I have a lot of friends and relatives who have a lot of breathing problems. There's a lot of people with cancer in this area."

So when he heard about the proposed Keystone XL pipeline bringing another 830,000 barrels of heavy oil into his beleaguered town, he was against it.

"Sooner or later I think safety and health should trump the commercial side," he said.

Port Arthur is an oil town like no other in the United States. It was born out of the Spindletop discovery on Jan. 10, 1901, that transformed Texas from a cow state to a world energy producer almost overnight.

But just over a century later, this energy hub is a busted, dilapidated city of 53,000.

From one end of town to the other, derelict buildings and empty lots stand as silent monuments to the city's misfortune.

Standing proud and powerful amid the ruins is the multi-billion-dollar oil industry with its glittering array of stacks and crackers. Where once refinery workers crowded in and out of the plants with each new shift dispersing into the surrounding neighbourhoods, the flow now is more like a trickle. Modernization has mechanized these plants draining away jobs. Now most jobs are for skilled engineers, many of whom are contracted from outside the community to fulfil temporary tasks such as maintenance and breakdowns. Port Arthur itself has become incidental.

Corporate contributions to the community are relatively small. Motiva, which reportedly rakes in billions in profits each year, has given about $1 million a year to Port Arthur and surrounding communities, according to the company.

The town has three oil refineries, four petrochemical factories, a petroleum coke processor and an incinerator designed to destroy such dangerous materials as the country's stockpile of chemical weapons. It's the largest concentration of petroleum plants in the country --- a sort of Dolby surround-sound energy and pollution system.

All of this is built on a bayou protected by a huge levee that is meant to keep the Gulf of Mexico from sweeping it all away. With increasingly intense weather systems battering the Gulf Coast and blamed on climate change, every time a hurricane threatens, the whole town holds its breath.

Not lost on people like Brown is the fact that the city at the other end of the Keystone pipe, Fort McMurray, has some of the same fears about impacts on respiratory health.

It is one of the first things that Hilton Kelley, 53, a Port Arthur native and co-chair of the Regional Health Equity Council, mentioned when he explained his opposition to Keystone XL.

"We have enough emissions in this community and (with Keystone) we believe the emissions are going to increase," Kelley said. "Keystone is bringing very dirty oil with a high sulfur content (up to 10 times higher than conventional crudes) and there is going to be a serious increase in sulfur dioxide that is being dumped into the air. That's our chief concern."

Oilsands bitumen is a difficult substance to upgrade and refine largely because of its high quantity of sediment. Kelley worries this will cause increased refinery shutdowns resulting in higher than normal toxic emissions.

Pitted against him are the refineries. Valero, which owns the second largest refinery in Port Arthur, has for years campaigned in Washington for Keystone's approval.

"We think this pipeline should have been approved years ago," Valero executive director Bill Day said in a telephone interview from his office in Austin, Texas --- 380 kilometres northwest of Port Arthur.

He said Keystone offers the cheapest way to transport heavy oilsands crude to replace a diminishing supply of oil from Venezuela and Mexico.

Another attraction is that Canadian bitumen offers bigger profit margins than lighter crude, he said, negating the argument put out by oilsands companies and the Canadian government that access to sea ports means oilsands bitumen will fetch the higher world price. Not a chance, said Day.

"The attraction for heavy crude is that it typically sells for a discount and a relatively steep discount in some cases to benchmark grades of crude oil or light crude oil," he said. "So if you can get a cheaper grade of crude oil and you have the equipment to process it, it makes sense to do it that way."

The Petroleum Economist has reported that on the Gulf Coast heavy oil refineries have captured about 70 per cent higher profits than the average refiner --- $17 a barrel versus $10.

Valero refines up to 325,000 barrels a day. Keystone oil would only replace current production and not add to it. So there shouldn't be any increased pollution or jobs, he said.

Port Arthur refines about twice the Keystone capacity with ample supplies from offshore wells in the Gulf, Mexico, the Middle East, and increased U.S. fracking production.

What will happen to all that extra capacity is anybody's guess. It can't be exported because the U.S. forbids the export of crude oil without a commerce department permit, which is rarely awarded. Refined products, however, can be exported. Day said Valero exports eight per cent of gasoline and 18 per cent of distillates company-wide.

Oilsands companies hope their oil will serve as a new supply source for Texas refineries that will replace foreign oil. As the Canadian government spends $24 million promoting the contentious Keystone XL in the U.S., its major selling point is that Alberta bitumen will reduce reliance on foreign oil. But Day and other executives emphasize that the Canadian crude will still have to compete with existing suppliers. It's the age-old question of price and profit.

"Basically we use whatever source or feedstock is the most commercially viable at the time," said Destin Singleton, spokesperson for the Motiva Port Arthur Refinery. Owned by Shell and Saudi Aramco, it is the largest refinery in North America having recently doubled its capacity to more than 600,000 barrels per day. (A week after the $10-billion expansion opened its valves it was shut down for months because of the leakage of corrosive agents.)

Whether or not the cross-border pipeline is approved will have no effect on Motiva, she said.

"There's a lot of connections to existing pipelines as well as the ability to import with vessels," Singleton continued. "Obviously it would be great to be able to have a new source (Keystone), but it would compete with the other sources as well."

The tremendous oil wealth that comes out of Port Arthur and the surrounding community has earned it the moniker the Golden Triangle. But for many residents the region is better named the Cancer Belt.

Over the years, the state of Texas, like Alberta, has allowed the oil industry a high degree of self-monitoring. Various studies have found significantly higher cancer rates in Port Arthur than in places with comparable social, economic and demographic factors. But the research is spotty. No long-term epidemiology studies have been done and any link to the oil industry is, as usual, circumstantial.

Caught in the middle of the Keystone controversy is a divided town. The city council supports it, but its members declined to even respond to requests for interviews. "Most people that worked in that industry are for (Keystone)," Brown said. "But pretty much most people who don't are pretty much against it."

For Kelley this stands as an improvement. When he first started picketing the refineries 10 years ago demanding they reduce their emissions, he basically stood alone. "They didn't approve of what I was doing," he said, referring to Port Arthur citizens in general.

His work ultimately shamed the companies into reducing their emissions and won him an environmental prize from the White House. The air now is cleaner, but there are still considerable emissions, according to the U.S. Toxic Release Inventory. Even on a clear day the odour of petroleum is as constant as the scratchy feeling at the back of your throat.

Brown said he left the refinery because of a bad back and only his barbershop keeps him in Port Arthur. Yet the more he talks the more you realize the lure of this bayou town runs deeper.

"I love Port Arthur and I'm doing whatever I can do personally to improve the situation," he said. "But people are leaving. You have to really be a diehard Port Arthuran to stay."