(Adds quotes, detail about project)
By Kristen Hays
HOUSTON, Sept 9 (Reuters) - The first substantial oil-by-rail project at a California refinery won approval on Tuesday despite a last-minute push for more scrutiny by some environmental groups.
The facility at Alon USA Energy Inc’s shuttered Bakersfield refinery in Kern County, home to about 65 percent of California’s heavy oil output, will push crude offloading capacity to as high as 150,000 barrels per day (bpd) from the current 13,000 bpd.
The Kern County Board of Supervisors approved the $100 million project after a lengthy environmental review. Alon Chief Executive Officer Paul Eisman told the board the project could start up by the third quarter next year.
“Now go put our people to work,” board Chairman Leticia Perez said.
The refinery, which has been operating as a terminal, will receive crude in railcars that meet the latest safety standards with thicker hulls and reinforced valves.
Some residents and environmental groups including Earthjustice and the Sierra Club opposed the project, citing dangers of crude trains and “plumes of toxic smoke” emitting from the plant.
Other residents, unions and economic development leaders want the refinery and rail project jobs and are satisfied with planned safety measures.
“That plant’s been a fixture in this town since way before I was born. Alon is ready to put it back to work at full capacity,” local contractor Sam Ackerman said.
The company can ship railed-in crude Alon doesn’t process to other refiners via pipeline. Credit Suisse said in a note to investors this week that the project could add $7 per share in value to shareholders.
Alon’s facility will be the second oil-by-rail terminal in Bakersfield, where pipeline company Plains All American will start up a 70,000 bpd project in October.
Both seek to increase California refiners’ access to booming inland U.S. and Canadian output, which is cheaper than imports that make up more than half of all crude processed in the state. Other refiners trying to do the same have faced delays as well as opposition in light of a string of fiery crude train crashes elsewhere in the last year.
The Alon project at the 70,000 bpd Bakersfield plant also includes upgrades to several units at the refinery to enable processing of light crude, including output from Texas and North Dakota’s Bakken shale, as well as equipment to offload undiluted Canadian bitumen.
The plant is already built to process California’s heavy crude, 65 percent of which is produced in Kern County.
The project’s approval comes nearly two years after the company shut down the plant because it was unprofitable. Alon said reopening the refinery will bring 100 jobs as well as 30 more for the rail operation. (Reporting By Kristen Hays; Editing by Ken Wills)