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A few days before today’s municipal election in Chicago, there was big news about the controversial piles of petroleum coke, or petcoke, owned by a Koch Industries subsidiary and stored on the city’s Southeast Side.
“KCBX to eliminate coal and petroleum coke piles,” said the headline on a Feb. 19 press release from the company. For almost two years, local residents have been complaining about black dust blowing off the piles and asking elected officials to ban or place a moratorium on petcoke in the city.
Mayor Rahm Emanuel and local Alderman John Pope have made strong statements opposing petcoke pollution. But residents are unhappy that the city has not done more to limit the operation, and that KCBX has asked for exceptions from city regulations.
The announcement would appear to mean that residents’ pleas have finally been heard and that city officials succeeded in taking action. However upon closer inspection, the headline-grabbing announcement largely just consists of the company saying it will comply with city regulations instituted a year ago.
It also raises questions about what exactly the company plans to do in Chicago, and whether elected officials will keep pressure on the company after today’s election.
To pile or not to pile
Residents have all along said they don’t want petcoke in their neighborhood, so they would be happy to see KCBX “eliminate” the piles as promised.
Last week the city of Chicago formally denied KCBX’s request for an extra 14 months to enclose the piles, meaning it would have to meet a June 2016 deadline for enclosure. KCBX spokesman Jake Reint said it is impossible for the company to complete the enclosure by that time.
So by June 2016, the KCBX facility will no longer function as a staging area for petcoke, and instead will only transfer petcoke directly from rail cars to barges or other shipping vessels. Reint said this will be a “temporary solution” while the company “figures out whether we can stay in business.”
“It’s a pretty dramatic change in our business at that site,” said Reint. “We’ll reduce some of our services including blending and things like that, so we won’t have the onsite staging that we can typically use to meet demand.”
If the company decides it is worth their while to build the enclosure, a project they peg at $120 million, that may still go forward and allow the company to again store petcoke in indoor piles.
“We’re still hopeful we could proceed with an enclosure project but first we have to know what business will remain to justify such an investment,” Reint said.
The decision will also depend, he said, on the outcome of proposed City Council legislation that could put limits on the total amount of petcoke that can be shipped through the site.
KCBX officials have long stressed that the facility is a “transloading” operation and not a storage site. But it will be a challenge to move large quantities of petcoke immediately from rail cars to barges, given all the market and logistical factors affecting when petcoke from a given refinery arrives and when the vessels picking it up are ready to go.
Since at least the fall there have been many uncovered barges holding petcoke sitting stationary in the Calumet River, and residents also complain of uncovered train cars with petcoke moving through the neighborhood. So even if petcoke is not piling up on the shore of the Calumet River, they fear it will be sitting uncovered in trains and barges, and still blowing into the neighborhood and the water.
“There could be greater through-put than before even,” said Anthony Prince, a local resident who is campaign manager for aldermanic candidate and anti-petcoke activist Olga Bautista. “We won’t know until it actually happens.”
Reint says KCBX has “no control over covering barges and rail cars – we’re a small player in the overall transloading and there are interstate commerce rules,” governing barges and trains. “And according to the air monitoring, there’s no reason to” cover those vehicles, he added.
North site closure
KCBX also announced last week that it will close one of its two facilities along the Calumet River.
The company has for more than a year been maintaining it will close its long-standing northern site, and “consolidate” it with the site farther south that it acquired two years ago. The impending consolidation was the reason the company gave in seeking an exception to city requirements that it cover conveyors; it said the northern site’s conveyors shouldn’t have to be covered since it is soon to close.
The city in December denied the request to not cover the conveyors. When asked what is new about the company’s recently-announced plans to close the north site, Reint said, “The timing on closing north had been uncertain. The city’s rules have made it necessary for us to move forward with closing it now.”
In other words, the Feb. 19 announcement basically consisted of agreeing – two months after the fact – to abide by the city’s mandate. Reint said petcoke should be removed from the northern site by this June, and the company has not decided yet what it will do with the property.
BP backs off
The day before the KCBX announcement, the Chicago Tribune reported that the BP oil refinery in nearby Whiting, Indiana will by mid-year stop sending petcoke to KCBX.
The refinery has been the main supplier of petcoke to KCBX, and in late 2013 it completed a massive expansion to process more Canadian tar sands oil, which produces more petcoke than conventional oil. The BP refinery is currently impacted by a nationwide labor strike, and Canadian tar sands production has become much less viable because of low oil prices.
“Based on a number of considerations, BP has made the business decision to store the majority of its petroleum coke produced by the Whiting Refinery at a facility outside of Illinois beginning in the second half of 2015,” said BP spokesman Scott Dean. “A final decision has not yet been made on where this material will be stored in the future.
“If necessary for business reasons, BP may consider using limited Illinois-based storage options on a short-term basis if those options are compliant with state and local regulations.”
Reint said KCBX “still plans to compete for BP’s business,” and that it has other refinery customers as well.
Locals say they are happy about the BP announcement, but they are worried petcoke from BP and other refineries will still make its way through the Southeast Side of Chicago. If petcoke from the Whiting refinery is stored in northwest Indiana by a different company, then that company might still ship it through the KCBX terminal.
The owners of Beemsterboer Slag Corp., a company which had stored petcoke along the Calumet River until the Illinois Attorney General shut it down, purchased the defunct State Line coal-fired power plant in Indiana just across the border from Chicago in 2013. Parts of the plant have already been demolished; locals shared video on Facebook of clouds of dust rising on the shores of Lake Michigan as the buildings imploded. State Line’s art deco brick generating station is gutted but still standing, about two miles from the KCBX site.
If petcoke from BP is sent to China, Brazil or other foreign destinations to power cement kilns or power plants, it would likely need to be sent down the Mississippi River to the Gulf of Mexico. The Calumet River would be the primary way to get there.
A political issue
Pope is facing six challengers, two of them leaders in the local fight against petcoke. He recently sent out a large mailer devoted to his efforts to limit petcoke.
Bautista has been perhaps the most outspoken local leader on the issue, and petcoke activists have made up the backbone of her campaign. Another city council candidate, Rich Martinez Jr., has also been heavily involved in the petcoke fight.
“These announcements were very politically convenient for Alderman Pope,” said Bautista. “But it’s not breaking news.”
Emanuel may be forced into a run-off if he doesn’t get more than 50 percent of the vote on February 24. His lead challenger, Jesus “Chuy” Garcia, has a strong base in the Southeast Side, which is home to many Mexican Americans and union members – both key constituencies for him.
Tom Shepherd, a leader of the Southeast Environmental Task Force, said he was pleased with KCBX’s announcement and the recent efforts of city officials.
“It’s not a total victory, but at least there won’t be huge piles,” he said. “We’re going to have to take a wait-and-see approach. There’s a tight aldermanic election and mayoral election, we have to be observant of that. But we’re grateful the city hung tough and came down hard on KCBX.”
Others are skeptical of how vigilant the city will remain.
“I think they’re stalling for time,” said Prince. “Once the election and the political heat is off, we don’t even know if they’re really going to keep their promises.”