Striking it rich

Striking it rich

If Baton Rouge’s Bill Rainey has done nothing else of note in his life, he will still be remembered as the team leader who cleaned up after the 1989 Exxon Valdez oil spill off the Alaskan coast.

Rainey spent 34 years with ExxonMobil, including stints managing its Baton Rouge refinery and the chemical plant next door, and he knows as much as anyone about the ups and downs of the local petrochemical industry over the past 25 years.

He says the refining and chemical industries followed roughly the same pattern during that period, facing tough times throughout the mid- to late 1980s before picking up in the late 1990s. Both dealt with fluctuations in the price of their most important raw materials, crude oil and natural gas, respectively, and both saw significant improvements in safety and efficiency while dealing with changing environmental regulations.

While there weren’t any major grassroots refinery expansions during the period, facilities were still able to increase capacity through ingenuity.

“When they designed the refineries, they made it easy to expand once new technology came around,” Rainey says.

Technology, such as the catalytic cracking units pioneered at Exxon’s Baton Rouge refinery, could take heavy oils and “crack” them into lighter molecules to increase the gasoline yield.

“The whole industry is so much more safe,” Rainey says, attributing the improvement in part to more computer control and a stronger focus on overall safety.

While energy prices were rising here, new chemical plants were opening in places like China, Russia and Singapore, he recalls. In those countries, natural gas could be obtained more cheaply, stringent environmental controls were lacking and the new plants had excess capacity. Foreign competitors could sell products, such as plastic, cheaper here than domestic companies. Unable to compete, Ethyl’s Baton Rouge plant, nearly all of Louisiana’s fertilizer producers and many other plants simply shut down.

But in the late 1990s, worldwide demand for chemical-based products began to catch up with supply. Now, there are local projects. For example, Shintech Louisiana is currently building a billion-dollar chemical plant in Iberville Parish, with another $900 million phase planned for late 2008 or early 2009.

Rainey says even when business was good, the number of workers declined because of improved efficiency. He estimates about 5,000 people worked at the ExxonMobil Baton Rouge refinery and the neighboring chemical plant in 1982, compared to roughly 3,000 today; about 12,000 worked there immediately after World War II.

Larry Wall, spokesman for Louisiana Mid-Continent Oil & Gas Association, says his industry has a history of volatility. In 1982, there was a glut of oil on the market. Saudi Arabia was flooding the market with cheap oil, hoping to push other nations and companies out of the market. When the bottom fell out in the mid-1980s, the industry lost a lot of workers, drilling rigs and infrastructure in Louisiana. Oil was as cheap as $10 a barrel during the 1990s.

Deepwater oil discoveries in the Gulf of Mexico in the 1990s encouraged the industry to rebuild that infrastructure, while exploding worldwide demand helped push the price of oil into the $70 per-barrel range in recent years. Marathon Oil’s $3.2 billion refinery expansion in Garyville is perhaps the most prominent local sign of the industry’s current profitability.

But before oil prices began to rise, the industry began its battle in 1988 with then-Gov. Buddy Roemer’s administration over a slew of environmental regulations issued monthly. “We didn’t oppose the changes, we opposed bad science,” Wall says.

Mike McDaniel, secretary of the Louisiana Department of Environmental Quality, was an assistant secretary under Roemer. While acknowledging the onerous costs environmental rules placed on local industries, he says the requirements mostly came from the federal government. It was up to the state to figure out how to implement them, and McDaniel says it was important to include industry in the discussions.

“If we’re going to do this, let’s do it right, get good science, good information and make good decisions,” McDaniel says, describing the approach to those meetings.

He says significant progress has been made.

Executive director of the Louisiana Environmental Action Network Marylee Orr agrees. In 1986, the first federal law giving the public the right to know what’s in its local environment was enacted. She says a 1988 report on the Capital Region showed 72.8 million pounds of toxic air emissions per year. The most recent report, which reflects 2005 emissions, shows 16 million pounds.

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