By Ridge Hammond.
In San Luis Obispo County, Phillips 66 is seeking a new supply route in order to sustain a refinery and protect the jobs and livelihoods of their 200 employees. A recent unreliability of a steady supply of crude oil has the facility at 50% of its normal operation – leading to the need for a more flexible and diverse supply chain for crude oil.
The facility in Nipomo, California has been in operation for nearly 60 years and employs around 200 full-time employees – a significant number of which are unionized. These “head-of-household” jobs provide steady, above median income in an area where non-government employment tends to be concentrated in the lower paying service sector.
Unpredictability of the oil market, production bottlenecks by suppliers, and changes in the reliability of pipeline infrastructure in California have made operations at the Phillips 66 refinery in Nipomo difficult and sometimes impossible. To bring production back up to full capacity, Phillips 66 has proposed a total of 6,900 feet of new track made up of several rail sidings ALL within existing refinery property. This will be the new off-loading facility for the inbound crude. Rail transport provides much needed flexibility to receive crude from other North American oil supplies.
The oil-by-rail proposal is by far the best option for Phillips 66 and San Luis Obispo communities. Alternatives that Phillips 66 chose not to pursue include receiving oil via tanker trucks, which would be the least desirable option. Compared to receiving oil via tanker trucks on roadways, oil-by-train is far more regulated, efficient, and has a far less significant environmental impact. A proposed maximum 5 trains per week would eliminate the potential need for 195 trucks per day! The opposition amazingly seems to ignore this issue.
During a time when a project to expand in-house production should be overwhelmingly welcomed by a community seeking additional employment opportunities and revenues for schools, public safety, and normal government operations, a determined opposition based on an “anti-fossil fuels” agenda has sought to rally public support to oppose the project. Such projects stimulate additional secondary employment opportunities and the Phillips 66 project is no exception. The Phillips 66 proposal would add an estimated additional $600,000 in property tax to County government agencies and 150 potential construction jobs. It will also allow the refinery to operate once again at full capacity and ensure the long-term viability of continued operation of a facility that generates over $29 million in economic activity for adjacent cities and the County of San Luis Obispo.
The opposition has been leading a campaign widely circulating a great deal of misinformation regarding safety of transport of crude oil. In an era of instantaneous communication, the impact of this campaign has served to unduly alarm many people in the surrounding communities and along the rail lines leading to the refinery. Union Pacific has an exemplary safety record in California. Its track maintenance and safety programs are models for the railroad industry though this factor is completely ignored by opponents of the project. The opposition has muddled the issue by linking this project to the hazards of transporting by rail though there are already 2-3 oil trains per week that run through San Luis Obispo County and have been safely bringing oil from the San Ardo fields to refineries in Los Angeles County since the early 1980s. If this project comes to fruition, San Luis Obispo County will actually begin to profit from this route.
Ridge lives in San Luis Obispo. He worked for several years in transportation involving Sales and Marketing positions with Union Pacific and American President Lines, and recently retired as Captain from SkyWest Airlines.