Local refineries looking to expand and increase their capacity
to refine crude oil might soon find the permitting process easier,
due to legislation passed Wednesday afternoon in the U.S. House of
Representatives.

The legislation – the Refinery Permit Process Schedule Act of
2006 – establishes updated regulatory guidelines for companies
looking to expand refining capacity and hike the nation’s domestic
ability to refine crude oil. It passed by a 238-179 vote and will
now go before the Senate for approval.

On the local level, the measure would impact American Refining
Group and United Refining Co. in Warren, and could also provide a
boost to local economies – potentially adding to a mini-boom in the
number of oil and gas wells drilled across McKean County and the
region.

“In a tight energy market such as we have now, the only way to
lower the price is to increase the available supply,” U.S. Rep.
John Peterson, R-Pa., said. “But in the case of oil, that’s not
enough. We also need refineries to turn that crude product into a
usable good. But, because of the permitting process, we haven’t
been able to build a new facility in this country in more than 30
years.”

While some refineries have expanded during the past decades, no
new refinery has been built in the U.S. since 1976. In that time,
however, unstable regulatory regimes have forced several to close.
Currently, there are 148 operating refineries in the U.S. – down
from 324 in 1981.

“This inability to create new refining capacity has put a
tremendous strain on the market and contributed to the rise in
gasoline and fuel oil prices,” Peterson said. “And though not a
silver bullet, simplifying and streamlining the federal permitting
process would encourage new refineries to be built and current
refineries to expand.”

Locally, ARG has built a new $3 million Isomerization Unit at
its refinery, which helped upgrade the company’s low octane light
straight gasoline blending component to a higher octane material.
Meanwhile, United Refining announced earlier this year that it was
undergoing a $450 million expansion, which included putting in a
coker. United officials said the expansion would increase its
output and payroll.

ARG President and Chief Operating Officer Harvey Golubock called
the legislation “long overdue.”

“This bill will go a long way toward eliminating overly
burdensome administrative processes that don’t add value to the
project or protect the environment,” Golubock said, adding it took
more than a year to permit a minor addition to the ARG
refinery.

“Bureaucratic roadblocks, couple with a NIMBY (not in my
backyard) mindset have made it all but impossible to expand
refining capacity in this country, resulting in increased imports
of finished products and contributing to the outflow of dollars and
a negative trade balance – which adversely affects all
Americans.”

Officials said the loss of refining facilities around the
country has had the effect of tightening the current energy market
to its limits. The total capacity at operating refineries – which
tend to churn out product 24 hours a day – is roughly 17 million
barrels a day, while total domestic demand averages nearly 21
million barrels a day.

The growing gap is met by an increasing amount of refined
products being imported from foreign sources with nearly all
proceeds returned to the countries or origin, including in Africa,
Eastern Asia and the Middle East.

The legislation would also direct President Bush to appoint a
federal coordinator to manage the multi-agency permitting process
among federal, state and local officials, helping to eliminate
delays for new or expanded gasoline, biofuel or
distillate-processing facilities and give the Environmental
Protection Agency priority in the coordination of permitting
schedules, preserving the strict environmental standards that must
be met for the facilities to be developed.

Officials also said the bill directs the president to recommend
at least three closed military bases for suitable sites for
potential new refineries, one of which must be designated for
biofuel refining.

Peterson has been pushing for ending the long-standing
moratorium on drilling in the Outer Continental Shelf.

“There will come a day in the not-so-distant future when
alternative energies will supplant oil and contribute to a cleaner,
healthier and more efficient future,” Peterson said. “Until then,
we need reasonably priced energy to run our economy and provide an
adequate standard of living right now.”

There was no word on when the Senate would take up the bill for
a vote.

A call seeking comment to Larry Loughlin of United Refining late
Wednesday afternoon was not immediately returned.