Inner BG

Whatcom County Council split on Cherry Point crude oil trans-shipments ban

The Bellingham Herald | ROBERT MITTENDORF | June 03, 2020

Whatcom County Council members approved a six-month ban Tuesday, June 2, on filing, accepting or processing new applications for most new or expanded facilities for shipping unrefined fossil fuels that won’t be processed or used at the Cherry Point industrial zone.

It’s the ninth such interim measure since September 2016 as the county Planning Commission works to revamp a comprehensive plan that regulates the types of industry and manufacturing facilities in the region west of Ferndale.

That area is home to oil refineries and related petrochemical operations, and many county officials hope that the region will attract renewable-energy firms and similar sustainable businesses.

Read the full piece from The Bellingham Herald here.

ACTION ALERT: Tell the County Council You Oppose the 9th Consecutive Cherry Point Moratorium

Dear Coalition Members:

We need your help. The Whatcom County Council recently voted to introduce its ninth consecutive, six-month Cherry Point Fossil Fuel Moratorium.

Whatcom Councilmember Kathy Kershner, who voted against introduction of the ninth Cherry Point fossil fuel moratorium, said during debate that “… the ban is bad for business, particularly as the local economy is reeling from the new coronavirus pandemic, the loss of a proposed biofuel plant and the recent announcement that the Alcoa Intalco Works aluminum smelter will close soon.

The Whatcom County Council will vote on the Cherry Point moratorium on Tuesday, June 2nd at its 6:00 p.m. virtual Council meeting. Please see the links below for more details on how to join the zoom Council meeting, register to testify, and submit public comment. Also please see emails below to submit written comment.

In the meantime, we hope you and your families are well and healthy. Stay safe.

Public Hearing Notice
(Virtual Public Hearing)

Tuesday, June 2nd 6:00pm

http://www.whatcomcounty.us/3415/Virtual-Council-Public-Hearings

http://www.co.whatcom.wa.us/DocumentCenter/View/29107/Public-Notices?bidId=

Zoom Instructions:

http://www.whatcomcounty.us/DocumentCenter/View/47537/Instructions-for-Joining-Virtual-Council-Public-Hearing-WEB-OR-MOBILE-APP

Email Addresses for comment:

Whatcom County Executive: [email protected]

Whatcom County Council:

[email protected] – General

[email protected]

[email protected]

[email protected]

[email protected]

[email protected]

[email protected]

[email protected]

Bellingham Herald: Whatcom will consider another temporary limit on fuel shipments from Cherry Point

Bellingham Herald | BY ROBERT MITTENDORF | MAY 20, 2020

Whatcom County Council members will consider another temporary ban on shipment of unrefined fossil fuels from the oil refineries at the Cherry Point industrial area west of Ferndale.

Council members Tyler Byrd, Ben Elenbaas and Kathy Kershner voted against a measure to consider the extension, which passed 4-3 on Tuesday, May 19, 2020.

Consideration of another temporary ban will be at the council’s next meeting on June 2, 2020.

It would be the ninth such action since a short-term emergency ordinance was first enacted in 2016.

Council member Kathy Kershner said the ban is bad for business, particularly as the local economy is reeling from the new coronavirus pandemic, the loss of a proposed biofuel plant and the recent announcement that the Alcoa Intalco Works aluminum smelter will close soon.

Council member Ben Elenbaas, who works at the BP Cherry Point Refinery, said the measure doesn’t meet the criteria for limits on council action that aren’t related to responding to the pandemic.

“It sends the message that we’re not really interested in a smooth transition to a clean-fuel economy because we’d rather just crush the businesses that are there,” he said.

According to the measure, a continued moratorium is needed as county officials work toward updating a comprehensive plan for industry in the region.

It prevents new or expanded operations in the Cherry Point Urban Growth Area and the shipment of unrefined fossil fuels through its terminal.

An updated draft of the proposed amendments has been sent to the Planning Commission and to Planning and Development Services for review.

County counsel Karen Frakes said the Planning Commission has nearly finished its review.

It allows existing refineries to continue operating with certain limits but prohibits new fossil fuel refineries and restricts refinery expansion.

It also encourages the development of renewable energy facilities and sustainable businesses in the face of climate change.

The future of industry at Cherry Point was a key issue in this year’s races for Whatcom County Council and for county executive.

The Cherry Point industrial zone west of Ferndale is a 7,000-acre tract that’s home to two oil refineries, an aluminum smelter and some of the area’s highest-paying jobs.

Calloway: Cherry Point plan is risky for Whatcom County and our region

This week, Lance Calloway, Northern District Manager, with the Associated General Contractors of Washington, authored the below commentary in AGC of Washington’s newsletter:

Cherry Point plan is risky for Whatcom County and our region  

Nothing is more important to the overall well being of a community than access to economic opportunity. For Whatcom County, there is perhaps no more crucial engine for that opportunity than Cherry Point and the businesses that call it home. This now more important than ever as we recover from the COVID 19 crisis.

The recent announcement that the Intalco Aluminum Smelter is closing costing 700 jobs is a harsh reminder we need a regulatory environment that helps large industrial employers compete but also that we need to work with our elected officials to create a regulatory environment that sends a strong message encouraging innovative forward thinking industrial employers to Whatcom County and the region.

We need to work closely with our elected leaders to create a regulatory scheme that has the proper protections for the public, workers and environment but also actively encourages existing businesses to thrive and attracts future employers to industrially zoned areas like Cherry Point.

More than 10,000 people look to Cherry Point businesses to support their families with good-paying jobs and benefits. The companies based in the industrial zone pay $200 million in taxes each year – vital funds that keep our most important public services functioning. And employees and organizations alike give back to the region via thousands of hours of voluntarism and more than $1 million in philanthropic giving.

As we address damage done to our economy by the COVID 19 crisis we must work together across the political and ideological spectrum – to help our economy evolve to a future embracing green industries. We cannot, however, afford to lose sight of the role that’s played by the companies currently located at Cherry Point. They play a critical role restoring the family wage jobs that have been lost due to the pandemic.

Whatcom County has a significant number of contractors and other companies who directly and indirectly depend on the Cherry Point businesses to be able to provide their employees their livelihood. For example, the contractors work keeps the refineries at Cherry Point running safely while also continually improving and reducing emissions impacting our environment. There are approximately 700-750 construction workers who call the Cherry Point refineries their permanent office, as they have long term maintenance contracts enabling them to earn a great living wage.  During the major maintenance turnarounds there can be as many as an additional 3000-3500 construction workers who work two to three months on major projects, with a substantial percentage living in Whatcom County.

Unfortunately, for the last four years prior to COVID 19 the Whatcom County Council has attempted to push through a new onerous regulatory framework for Cherry Point. These changes had questionable value to the public, workers and the environment prior to the pandemic and make even less sense in a the post COVID 19 economy. These changes if enacted would likely cost us jobs, tax revenue, and investment in all sectors – including renewable energy. The Whatcom County Planning Commission in it review has also pointed out many flaws that would harm the refineries at Cherry Point.

Also right before COVID 19 crisis a renewable diesel project in Whatcom County was abruptly cancelled, and one has to wonder what – if any effect – the uncertain regulatory environment at both the state and local levels had on the decision to cancel the project. The cancellation of the nearly ONE-BILLION dollar project eliminated the opportunity for an estimated 650-700 construction workers to build an environmentally friendly project over a period of two years. In talking with a local contractor, this cancellation cost them and two other contractors nearly $500 Million.

Again, if we had concerns about the proposed changes to Cherry Point regulations before now those concerns are magnified many times over.

It’s clear that the new plan would devastate refineries. The added review requirements would make it next to impossible for these facilities to invest in modernization or expansion, making it more difficult for these otherwise state-of-the-art facilities to keep pace with competition outside our area.

Also, from an environmental standpoint, since renewable energy companies at Cherry Point will also have to reckon with the same impediments to investment that traditional refiners will. On the whole, this misguided regulatory move will increase emissions rather than improving the environment.

The impacts of this proposal reach beyond the energy sector, and beyond Cherry Point at large. In considering these changes, Whatcom County officials are sending a clear and unwelcoming message to any and all companies that might otherwise look to invest in Whatcom or Washington state generally. Growing a business requires a measure of policy certainty and stability. The Whatcom County Council’s proposed changes for Cherry Point undermines that stability by making it harder to invest and expand.

Whatcom County is very fortunate to have Cherry Point to attract the family wage jobs we have recently lost. If this Whatcom County Councils continues with its proposal, the foundations of our regional economy are at risk. It is this uncertainty that concerns our business community as investors will look outside of Whatcom County to build the next production facility or plant bringing with it a trickle down impact on housing and other local businesses and schools depending on Cherry Point.

We are dealing with too much economic uncertainty we cannot control; we must increase certainty where we can. A positive regulatory scheme so businesses can thrive in our new normal is a great place to start.

Lance Calloway
Northern District Manager
Associated General Contractors of Washington

Bellingham Herald: Here’s how Intalco’s loss of 700 jobs will ripple through Whatcom County

The Bellingham Herald | April 23, 2020 | Dave Gallagher

The announced closure of the Alcoa’s Intalco Works aluminum smelter near Ferndale is expected to have a strong ripple effect in the Whatcom County economy beyond the 700 direct jobs lost.

Alcoa Corporation made the announcement on Wednesday, April 22, that it will close its Intalco Works smelter near Ferndale amid declining market conditions. The curtailment is expected to be complete by the end of July 2020.

“While our employees have worked diligently to improve the facility, the smelter is uncompetitive, and current market conditions have exacerbated the facility’s challenges,” said Alcoa President and CEO Roy Harvey in the news release. “This is difficult because of the impact on our employees, and we will ensure appropriate support as we work to safely curtail the facility.”

Ferndale Mayor Greg Hansen said news of the closure is simply heartbreaking.

“The smelter is part of the lifeblood of our community, and they have been putting food on the tables of Ferndale families for almost three generations. This closure will be a critical blow to our local economy in the midst of a difficult time,” Hansen said in an email. “We are Ferndale, we look after each other especially when things look the most grim. I know that I will do everything in my power to breathe life back into this facility and fight like hell for all of our Ferndale families that find themselves out of work.”

It is unclear whether this will become a permanent closure for the facility, which opened in 1966.

On Wednesday the company and the workers talked about the importance of closing the facility in the best possible condition for a potential restart down the road, said Glenn Farmer, business representative for the International Association of Machinists Local 2379 District 160.

Farmer said in an email, though, that it will be a tough road to get to a restart.

“There are a lot of folks out there in similar situation. Hopefully, some lessons will be learned. We need to watch out for each other, and reimagine a better future. Opportunities will come, we need to be ready,” Farmer said.

Legislators responded to the news by saying they will do what they can to save the facility. When Intalco was in danger of closing in the past due to difficulties including high energy prices, officials at the local, state and federal levels worked with the company that allowed the smelter to continue operating.

“The Intalco Works is critical to our national manufacturing infrastructure, to our local economy and to the working families of Whatcom County. We can’t let this curtailment become permanent,” said Washington State Sen. Doug Ericksen, R-Ferndale. “This is a matter of national significance, as we look to protect industries that are critical to our country’s industrial base and our national security. It is one of many challenges we will face as we rebuild our economy in the wake of the coronavirus shutdown… our battle is just beginning.”

State Rep. Sharon Shewmake, D-Ferndale, whose 42nd Legislative District includes the Intalco plant, said it was devastating news. She said in a text to The Bellingham Herald that she’ll be working with the county and the governor to see what can be done.

IMPACT ON ECONOMY

Western Washington University’s Center for Economic and Business Research estimates that closing the facility will eventually mean the loss of another 697 indirect jobs, bringing the total job loss to nearly 1,400 in Whatcom County.

Those indirect job losses will come not just from contract and maintenance work at the facility, but in other parts of Whatcom County because of the loss of wages being spent in the community, said Hart Hodges, co-director of the business research center.

This Intalco closure might be reminiscent of the closure of the Georgia-Pacific tissue mill in Bellingham around 20 years ago. Hodges noted there is a key difference in that the economy was in better shape 20 years ago for Bellingham to better handle the closure with gains in other industries.

“I don’t see the same sort of offsetting gains right now in Ferndale — though the impact will really depend on how long it takes for the economy to reopen and to rebuild,” Hodges said in an email, referring to the current situation with the coronavirus pandemic.

WHAT LED TO THE CLOSURE?

Since the beginning of the year, aluminum prices have fallen more than 20%, down 45% from the highs in 2018. In the first quarter of 2020, the Intalco smelter lost $24 million.

Steve Emig, Intalco plant manager, said the employees have worked together to address numerous challenges in an attempt to make the site competitive in the global market.

“Unfortunately, we cannot control the larger market dynamics,” Emig said in the news release. “While this is a sad day, I remain proud of our Intalco team. We will work together during this difficult transition, focusing on safety and providing all available support to our employees.”

Farmer said the low aluminum prices was a big factor in the curtailment, which is a byproduct of the pandemic hitting the United States so hard.

“We have been monitoring the metal prices for a while and expected some kind of action. We were hoping for a partial curtailment to weather the storm, but it became obvious the gap was too great,” Farmer said in an email.

The Intalco aluminum smelter has 279,000 metric tons of nameplate operating capacity; 49,000 metric tons of production was curtailed earlier according to the news release.

The Alcoa Foundation will continue its annual giving, donating $200,000 to qualifying non-profit organizations in the local community in 2020.

The property that Intalco sits on is owned by Alcoa, according to the Whatcom County Treasurer’s Office. The company did sell the pier and some associated items including the aquatic lands lease to Petrogas in 2016 for $122 million.

An energy golden age, if we can maintain it

Newsday | Dan Eberhart | March 11

After spending much of its history as “energy helpless,” the United States today is experiencing an energy golden age. But amid record-setting production of both traditional and renewable resources, we still face challenges.

With the oil industry facing unprecedented market disruptions from the spread of the coronavirus, to a fierce national election that will largely determine if the energy sector will continue to grow or be hit with limitations on their license to operate, we need to start applying some “energy realism” to our plans for the future.

Because despite the extraordinarily strong hand that the United States has been dealt when it comes to energy, the efforts of a few misguided policymakers have proven more than sufficient to derail investment and stop progress in its tracks.

Americans can listen to progressive presidential hopefuls call to restrict fossil fuel activity on television daily, but to see the real-world effect of such efforts in action, look no further than Whatcom County in Washington state.

For years, Whatcom County’s economic center has been the Cherry Point Industrial Complex. The companies operating at Cherry Point support 10,000 jobs, pay around $200 million in state and local taxes, and invests millions more in the surrounding communities in the form of philanthropic giving, volunteer time and other direct contributions to causes like wetland resources and environmental sustainability.

Never content to let a good thing go undisturbed, local officials in Whatcom County are pushing for drastic changes to the permitting and approval process that has long effectively governed investment and expansion at Cherry Point.

The proposed changes are being justified by a majority of the County Council as environmental reforms — a common argument that has been regularly leveraged across the United States to stop development, expansion and investment. Whether it’s a pipeline in Northeast, a wind farm in the Midwest, or a transmission line in the Southwest, the country is littered with important projects that were abandoned due to misguided local policy — often with serious negative repercussions for those that call the communities home. (Just ask New Yorkers how they feel about a recent pipeline impasse that led to a temporary moratorium on new natural gas connections.)

In the case of Whatcom County, the changes proposed are particularly self-defeating. In placing new restrictions on the companies operating and investing at Cherry Point, the County Council is in effect implementing a de facto ban on expanding and improving, not just the huge refineries operating at the site but also on the renewable and green energy companies vying to produce clean energy at the site.

Stakeholders in Washington have warned for months that the changes proposed by the County Council threaten future growth at Cherry Point. And if anyone was tempted to dismiss their concerns as nothing but alarmist messaging, a recent announcement shows just how warranted those concerns were.

After years of work, the developers of a joint renewable biodiesel project proposed by Phillips 66 and Iowa-based Renewable Energyannounced in a press release that they would abandon their efforts to build a major facility at Cherry Point. The reason for the withdrawal? Lengthy permitting delays and uncertainty. While Whatcom’s years-long effort to make permanent this plan was not specifically cited as the main cause, the County Council’s efforts coupled with Washington state’s continuing war against fossil fuels couldn’t have helped.

It’s a real loss for the community — an unforced error that will cost jobs, tax revenue and investment. The withdrawal will also take a promising expansion of the county’s green energy sector out of commission — a troubling sign given the fact that the council’s new rules also make it harder for traditional refineries in the area to invest in advanced emissions reducing technology.

But as harmful as these effects may be, perhaps the greatest damage caused by Whatcom County’s proposal — and others like it nationwide — is in the message it sends to investors and developers. Steps like these show companies that Whatcom County — and other communities pursuing similarly misguided policies — isn’t a favorable place to do business. That much is clear. But through a broader lens, the dynamic in Washington state also serves as a case study for the type of action that can undermine and undo all the good things the nation’s energy sector has going for it today.

Ample resources and favorable federal policy matter a great deal, but as Whatcom County shows, local policy is a wildcard that can derail even the most powerful economic engine — a blueprint for failure that nobody wanted.

The future is still positive for the American energy sector. But as we move forward, investors and other stakeholders must account for the fact that a handful of county bureaucrats can stop it all on a dime.

Dan K. Eberhart is CEO of Canary, an independent oilfield services company in Denver. He wrote this for InsideSources.com.

Hepner: A cautionary tale unfolds in Whatcom County

Puget Sound Business Journal | March 17, 2020

In Northwest Washington the Cherry Point Industrial Zone is the epicenter of Whatcom County’s economy.

Cherry Point and Whatcom County is a cautionary tale we should all be aware of as local governments engage on energy issues and the use of our industrial lands.

Companies at Cherry Point in Whatcom County support more than 3,000 direct jobs — family-wage jobs that pay an average of $110,000 a year. Around 11 percent of all Whatcom County jobs depend on the operations at Cherry Point Industrial Zone. Cherry Point companies generate around $240 million in local tax revenue every year.

Matthew Hepner is the executive director of the Certified Electrical Workers of Washington.

Families in Whatcom County look to Cherry Point to earn a good living that helps them support their families, put down roots and be part of the community. The economic strength and stability provided by Cherry Point is something to support and cultivate. And in a favorable business and investment environment, the opportunities at Cherry Point can and should continue to grow well into the future.

Unfortunately, changes under consideration by the Whatcom County Council threaten not just to undermine future growth, but to endanger the existing jobs, revenue and output that Cherry Point provides.

The proposed changes by the Whatcom County Council governing expansion, investment and operations at Cherry Point are currently being pushed through the county council. And while thoughtful, periodic review of the policies under which Cherry Point industry operates is worthwhile, both the process and the substance surrounding these proposed changes are poised to inflict harm across Whatcom County and the region.

The root of the problem is the increased use of “Conditional Use Permits” in the revised plan. In a break with the well-established and effective regulatory framework currently in place, the new plan would require Cherry Point refineries to hold off on potential facility expansion and upgrades to wait on deliberation and judicial action and approval.

This is a major break from the permitting processes that typically govern such facilities — and it represents a huge disincentive for companies looking to expand in Whatcom County. The proposed revisions pose an uncertainty in both timing and approval prospects. Consequently, the proposed new regulations will make investment in Whatcom a much harder sell and have a regional ripple effect in the development of such projects.

This concept is inherently flawed and self-defeating. No governing body truly representing its constituency should set out to eliminate good-paying jobs and hundreds of millions in tax revenue.

The technical aspects of the changes are also confusing and complex. The language of the changes uses subjective criteria to determine approval or denial that is far from clear. This is a major problem, and a strong argument in favor of taking more time to understand the full impact of these changes before taking action.

The Whatcom County Planning Commission in its review of the county council’s proposed changes has listened to industry and made a good faith effort to rework the council’s proposed changes. As a result of the Planning Commission review, it’s become apparent that the county council is attempting to re-regulate very complex issues within an industry they don’t understand.

If enacted as written, the proposed changes will significantly erode the business climate in Whatcom County and the region. In seeking to replace a well-functioning, existing framework with an ill-conceived and flawed plan, the county council is sending a bad message to both businesses and would-be investors.

If a business can’t bank on regulatory stability and certainty in a community, they are far less likely to place their bets there.


Matthew Hepner is the executive director of the Certified Electrical Workers of Washington — IBEW.

My Ferndale News: County Council’s Cherry Point Plan is Killing Growth in Whatcom County

Andrew Gamble, a Marine and Safety Operations Advisor to Petrogas as well an Energy Industry Representative on the Whatcom County Business and Commerce Advisory Committee, recently wrote an op-ed for My Ferndale News speaking out against the County Council’s proposed changes for Cherry Point and the devastating impact they’d have on the county.

The changes “would be among the most radical and sweeping regulatory revisions in decades,” Gamble wrote in the piece. “And while the Council may seek to portray their efforts as narrowly targeted and impacting only the refineries at Cherry Point, the fact of the matter is that this proposal’s impact would be felt far beyond one critical sector.”

Gamble also discusses the air of uncertainty for business investment in Whatcom created by their proposed changes and the eight times Council has passed interim moratoriums on new fossil fuel projects at Cherry Point in the last two years.

“My experience working for operators at Cherry Point who have made substantial investments in this community, has taught me that an uncertain regulatory environment causes unintended ripple effects with negative impacts. Take for example, the recent cancellation of a huge renewable diesel project at Cherry Point that, while maybe not a direct result of the proposed Cherry Point amendments, they absolutely add to the general regulatory uncertainty that has permeated Whatcom County over the last few years,” Gamble wrote.

Added Gamble, “The new plan will make it next to impossible for these companies – which employ thousands – to keep up with their competitors outside Whatcom County who don’t have to bear the burden of such radical requirements.

Cherry Point operators would have no reasonable expectation to receive permit approvals of permit applications even for improved environmental technologies that could make operations more efficient or competitively sustainable, and therefore there will be no future investments that lead to more jobs and higher tax revenues.

And against this backdrop, the notion of any new energy companies throwing their hat in Whatcom County’s ring is laughable. The new regulations would also apply to the renewable energy operations present at Cherry Point. They, too, would face rising costs, restricted investment, and non-existent growth and expansion if the revised plan moves forward. Hardly the most effective way to transition to a cleaner energy future.”

Click HERE to read the entire op-ed in My Ferndale News.

WHATCOM COUNTY STAKEHOLDERS FIGHT FOR CANCELED RENEWABLE DIESEL FACILITY

After over a year of planning, the Green Apple Renewable Fuels facility in Ferndale and 750 jobs were canceled. Legislators, laborers and environmentalists are now scrambling to pinpoint what went wrong and save the project.

The Green Apple Renewable Fuels facility was a partnership between Phillips 66, a company which owns a crude oil refinery in Ferndale in the Cherry Point industrial zone, and Renewable Energy Group (REG), a producer of biodiesel and renewable diesel.

The renewable diesel plant was to be built next to the existing Phillips 66 Refinery and produce about 250 million gallons of fuel made from animal fats and recycled cooking oils each year, said Tim Johnson, director of public governmental affairs for the Phillips 66 Refinery.

View full article in The Western Front.

REG: PHILLIPS 66 AND RENEWABLE ENERGY GROUP WITHDRAW RENEWABLE DIESEL PROJECT IN WASHINGTON STATE

HOUSTON, Texas and AMES, Iowa, Jan. 21, 2020 – Phillips 66 (NYSE: PSX) and Renewable Energy Group, Inc. (NASDAQ: REGI) are discontinuing their joint effort to construct a large-scale renewable diesel plant in Ferndale, Washington, the companies announced today.  

The project has been canceled due to permitting delays and uncertainties.

Originally announced in fall 2018, this 250 million gallon per year project would have resulted in the largest renewable diesel refinery on the West Coast.“While we believe the Ferndale Refinery is a strategic fit for this renewable diesel project, permitting uncertainties were leading to delays and higher costs,” said Robert Herman, Phillips 66 executive vice president of Refining. “Phillips 66 continues to progress its portfolio of renewable diesel projects and evaluate new opportunities to provide consumers with renewable fuels that comply with low-carbon fuel standards.”

View full article in REG.