Community Is Torn Over Expansion of Oil Refinery

Now BP, the British oil giant, owns the century-old Standard refinery, the largest inland oil refinery in the United States. And Mr. Kozel, who still lives in northwest Indiana and is president of a citizens group called the Calumet Project, still worries that it will harm his health. He and other residents of the area are especially concerned now that the refinery is undergoing a large expansion to process more Canadian tar sands oil by 2013.

Across the Midwest, refineries like BP are expanding to process the tar sands oil — heavy, gooey oil mixed with sand in vast deposits that will be shipped via pipeline from Alberta. Tar sands oil is expected to be a staple of this country’s energy future.

Opposition from citizen and environmental groups and citations from the federal Environmental Protection Agency mean BP will now most likely have to install cutting-edge pollution-control equipment that BP officials and environmental lawyers say will make the BP facility a model for other refineries.

Environmental groups are pushing BP, and the two are close to agreement on a consent decree designed to limit the effect of the refinery expansion. But even as environmentalists take on the oil giant, they are finding that they must also make their case to local residents, who want jobs more than they worry about new pollution, Mr. Kozel and other local leaders said.

In the face of a slow economy, BP’s expansion is creating jobs on the southern rim of Lake Michigan, an area full of heavy industry and home to some of the worst air quality in the United States. The project will create about 5,000 construction positions, the company said, and 80 to 100 permanent jobs.

Chicago politicians and advocates for the Great Lakes raised a huge outcry in 2007 when Indiana officials granted BP a new permit that would allow it to release significantly increased amounts of ammonia and suspended solids, or sludge, into Lake Michigan as part of the expansion. The controversy eventually died down after BP promised not to exceed the limits of its previous permit.

Scott Dean, a BP spokesman, said he was confident that the company would not increase discharges into the lake.

Even so, the water permit that drew the ire of then-Mayor Richard M. Daley and then-Representative Rahm Emanuel remains in place. Environmentalists are calling for a legally binding commitment that BP will not exceed the prior limit.

Concerns about the discharges into the lake are but one issue for environmentalists as the $3.8 billion expansion moves toward completion in two years. Because tar sands are much heavier and contain more sulfur than conventional oil, they must be diluted with a volatile natural gas product to make them sufficiently liquid to be shipped. Once they arrive at Whiting, these toxic compounds need to be removed and disposed of during refining.

Environmental groups appealed the air permit that Indiana granted BP in 2008, saying it omitted expected increases in emissions, particularly from flaring, the burning off of toxic gases that shoots flames into the sky. The E.P.A. agreed and in 2009 ordered the state to redo the permit.

Now Indiana authorities, the E.P.A. and environmental groups are negotiating a consent decree governing BP’s air emissions, which include volatile organic compounds, particulate matter, sulfur dioxide, benzene, lead and other pollutants linked to higher rates of cancer, respiratory disease or other ailments.

In its permit application, BP said the expansion would actually reduce its total air emissions, since the company was installing modern technology across the refinery and shutting down some old equipment.

In the challenge filed with the Indiana Department of Environmental Management, environmental and citizens groups essentially accused BP of making calculations designed to misrepresent the effect of the refinery expansion. The environmental groups argued that BP’s calculations did not include increased flaring or new procedures needed to process tar sands oil, while at the same time the company took credit for reduced emissions from equipment that had been shut down years ago.

While the details of the consent decree are confidential until negotiations are completed, probably by the end of the year, Mr. Dean said BP had committed to limit flaring and to make other changes in its original plans. The company will also install innovative pollution-control devices that have not been used by refineries before.

Environmental group leaders not directly involved in the negotiations said the consent decree would most likely mean greater protections than would otherwise have happened. Still, some worry about the health impact on local residents.

The Calumet Project and the Global Community Monitor, an advocacy group based in California, filed their own appeal of the state air permit, asserting that it violates federal “environmental justice” protections because neighbors of the refinery are predominantly low-income and include a high percentage of minorities.

Denny Larson, the Global Community Monitor executive director, said the group was in discussions with the BP plant manager, trying to persuade the company to place air monitors around the refinery perimeter that will transmit air-quality information to the Internet in real time and alert residents of any problems.

“If you’re having frequent toxic releases and you don’t even have a program to monitor what’s crossing the fence line into your community, that’s certainly an environmental justice issue,” Mr. Larson said.

The company’s critics also point to risks in transporting more tar sands in and out of the area. A January report by the Pipeline Safety Trust, a federally financed nonprofit watchdog group set up after a fatal 1999 pipeline explosion in Bellingham, Wash., and environmental groups said pipelines carrying tar sands were more likely to spill than those carrying conventional oil, based on an analysis of spills from 2002 to 2010.

The report’s authors noted that tar sands were grittier and more corrosive than conventional oil and must be piped at higher temperatures and higher pressure.

More than 1,000 people were arrested in Washington in the past three weeks protesting a proposed pipeline called the Keystone XL from Alberta to the Gulf Coast. They fear that spills of tar sands might contaminate the enormous Ogallala Aquifer, which extends from South Dakota to West Texas.