Sunoco to spend big to control pollution
Philadelphia Business Journal - by Jeremy Feiler Staff Writer
Sunoco Inc. is spending more each year in order to meet new federal pollution laws.
The Philadelphia-based company, the nation's No. 3 oil refiner, expects pollution-reduction expenses to more than double to $115 million next year alone and plans to spend between $300 million and $400 million between this year and 2006.
Analysts and environmentalists say Sunoco has worked steadily during the last decade to reduce pollution. That said, a mixed record leaves it facing more than half-a-million dollars in fines and conflicts with agencies such as the Environmental Protection Agency.
Sunoco is scheduled to meet with the EPA in April or May over allegations that it violated part of the Clean Air Act. Carolyn Green, Sunoco's vice president of health, environment and safety, said the EPA wants Sunoco and other oil refiners to install expensive pollution controls when they upgrade their plants.
"We don't think we violated those provisions (of the Clean Air Act)," Green said. "We're willing to talk about what we might do to reduce emissions from our refineries even more, but the EPA has been unwilling to talk in those terms."
EPA officials couldn't be reached for comment.
"When we're talking about the improvements we've made in the environment, especially in the last year, we've reduced our impact as a company at the same time we introduced five new chemical plants and (more than 500) service stations," Green said.
Sunoco's current environmental report doesn't come out until its annual meeting on May 2.
The refiner remains the only oil company, and the first Fortune 500 company, that in 1993 signed the Coalition for Environmentally Responsible Economies Principles, a voluntary environmental code of conduct.
It's also a member of the Business Environmental Leadership Council and has "acknowledged the human role in creating climate change," according to a fall Sierra Club Magazine article, "Pick Your Poison: An Environmentalist's Guide to Gasoline."
According to that piece, two of Sunoco's refineries ranked among the top 15 percent in terms of pollution-control and other measures of those evaluated.
"(Chairman and CEO John) Drosdick is definitely steering the company in the right direction," said Fadel Gheit, senior energy analyst at Fahnstock & Co. "He doesn't want to open a front that would obviously be harmful to profitability, the company's image, shareholder value. They make environmental safeguards key to the company's business strategy."
This year could determine whether the EPA will issue rules to limit the levels of benzene and other toxins in gasoline. Any tightening of the rules is likely to affect Sunoco.
In addition, Sunoco has a sizable investment in methyl tertiary butyl ether, or MTBE, an additive used in gasoline to reduce air pollution. Several states in Sunoco's territory have banned MTBE and Congress is considering legislation that could prohibit, phase out or regulate MTBE's use.
Sunoco has invested $54 million in a Texas venture since the early 1990s that produces MTBE.
It is considering alternative uses for the facility if MTBE is banned. Federal laws forced refiners to use MTBE during the early 1990s.
Meantime, Sunoco is dealing with four fines, or potential fines, related to pollution.
The company's chemical subsidiary recently agreed to pay a $450,000 civil penalty to settle violations of certain Clean Air Act regulations at an Ohio facility.
In late December, Sunoco received EPA notices related to its Philadelphia, Marcus Hook and Toledo, Ohio, refineries. Sunoco said it doesn't believe it violated any EPA requirements.
Separately, Sunoco will pay a $28,000 civil penalty and undertake environmental projects in an agreement with Pennsylvania regulators to settle violations at the Marcus Hook refinery.
The company also anticipates an EPA penalty that will exceed $100,000 for a cracked pipe that leaked 190,000 gallons of oil into the John Heinz Wildlife Refuge near Philadelphia two years ago. Sunoco long ago completed cleanup activities there.
Jeremy Feiler can be reached at jfeiler@bizjournals.com.
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