Sept. 26, 2008
Vol. 38, No. 435

Contact:  Melinda Carl, Public Affairs, (302) 739-9902

          DNREC Issues Conciliation Order Requiring Premcor to Take Corrective Actions
        at its Propane Frozen Earth Storage System at the Valero Refinery in Delaware City

Department of Natural Resources and Environmental Control Secretary John A. Hughes has issued a Conciliation Order to The Premcor Refining Group Inc. for alleged air violations at its propane frozen earth storage system in the Delaware City Refinery.

Premcor’s frozen earth storage system is an existing underground cavern that has been used to store up to 500,000 barrels of chilled liquid propane, and has been operated continuously at the refinery since 1966. The Premcor Refining Group Inc. owner and operator of the refinery and a wholly owned subsidiary of Valero Energy Corporation, acquired the refinery in 2004.

A design flaw in the frozen earth storage system has caused it to leak propane through the surrounding soils to the atmosphere.  Estimated annual releases of volatile organic compounds (VOCs) are 200 to 350 tons based on the initial emissions measurement results after DNREC discovered the leaks while auditing records in 2007 and observing the leaks through its infrared camera at the site. Two subsequent measurements were below the initial range and results for a fourth measurement taken this month are pending.

The Conciliation Order resolves all civil and administrative violations or noncompliance associated with Premcor’s operation of the frozen earth storage unit from the time it purchased the Delaware City Refinery in 2004 until the date of the order. The order sets forth actions to minimize, and ultimately, cease emissions of propane, propylene and other VOCs from the frozen earth storage system.

Secretary Hughes noted that Premcor’s requirements under the order, including closure of the frozen earth storage system, are important for compliance and are intended to achieve improvements in the state’s air quality as well as to protect the health, safety and welfare of the people and natural resources of the State of Delaware.

“We must take this action now to ensure that these propane releases do not increase and cause even more environmental impact or become an imminent threat to public health and safety,” said Secretary Hughes. “In an era of heightened concern about energy supply and cost, we expect these actions to lead to adequate supply and stable costs for propane users in Delaware. It appears this unique facility may not have been operating properly for some time and I appreciate Valero’s commitment and investment for a long-term solution.”

Requirements of the order include:

·         Premcor will pay the state $1.2 million, which includes a penalty and a supplemental environmental project of $950,000.  The supplemental environmental project funds will be administered by DNREC to assist Delaware residents, government agencies, schools, non-profits or other entities with energy efficiency measures not otherwise provided by other state and federal programs. 

·         Premcor agrees to close the frozen earth storage system, provide alternative storage capacity and improve existing handling equipment for propane and butane.

·         By no later than Sept. 1, 2009, Premcor will submit a decommissioning plan to DNREC for review and approval that addresses emptying and closing the frozen earth storage system. The decommissioning plan includes monitoring of potential fugitive emissions and potential ground water contamination and emptying the system no later than Dec. 15, 2010.

·         By no later than May 1, 2010, Premcor will provide for alternative storage capacity. DNREC will ensure any alternative storage capacity does not cause air pollution and will be a significant improvement over existing operations.

·         The order has provisions for stipulated penalties for missed deadlines. 

·       The new alternative storage facilities will comply with best engineering practices.

·         Premcor will modify its Risk Management Plan as necessary.

The order is available for review on DNREC’s web site at: www.dnrec.delaware.gov