So far, tragedy hasn’t turned political

Every member of Congress who initially responded to the Apr. 20 fire and explosion at the Deepwater Horizon in the Gulf of Mexico, first and foremost, expressed concern for the victims and their families. Several called for an aggressive and thorough investigation. Only a few said that the event called into question additional oil and gas leasing on the US Outer Continental Shelf.

“Our thoughts and prayers are with the families whose loved ones are injured or missing. We share our deepest sympathies with everyone along the Gulf Coast – friends, families, and co-workers – who has been affected by this devastating event,” US Sen. Mary L. Landrieu (D-La.) said on Apr. 21. “I am confident that our communities will pull together to ensure these workers and their families receive the care and support they will need in the days and months ahead.

“I have spoken to senior officials with BP and the Coast Guard who have assured me that all available resources are being dedicated to locate workers who are missing, care for the injured, and mitigate the incident’s impact on the environment,” she continued. “Our first priority must be to account for the missing workers and to get the fire and rig under control to prevent further injury and damage.”

“I was dismayed to learn that the Deepwater Horizon rig has now sunk into 6,000 feet of water in the Gulf of Mexico,” US Sen. Lisa Murkowski (R-Alas.), the Energy and Natural Resources Committee’s ranking minority member, said on Apr. 22. “We do not yet know how this development will affect the marine environment, but I understand all emergency spill response units in the Gulf have been mobilized. My thoughts and prayers remain with the missing rig workers and their loved ones. They are our first priority.”

"My thoughts and prayers are with the loved ones of those who were injured and those still missing as a result of this explosion in the Gulf of Mexico. I commend the members of the U.S. Coast Guard and other emergency personnel who responded to this disaster," US House Natural Resources Committee Chairman Nick J. Rahall (D-W.Va.) said the same day.

"This incident is a grim reminder of the risks involved in developing public energy resources off America's shores,” added US Rep. Jim Costa (D-Calif.), who chairs the committee’s Energy and Mineral Resources Subcommittee. “My heart is with the families of the workers who were injured or are missing."

Three US Senate Democrats went further after expressing similar sentiments. The accident underscores the need to abandon what New Jersey’s two senators, Robert Menendez and Frank R. Lautenberg, consider a rush to expand coastline drilling. “Big Oil has perpetuated a dangerous myth that coastline oil drilling is a completely safe endeavor, but accidents like this are a sober reminder just how far that is from the truth. The fact is that 509 oil rig fires have broken out in the Gulf of Mexico since 2006,” they said in an Apr. 22 joint statement.

“This particular disaster is leaking 336,000 gal of oil a day along the coast of Louisiana, and the Coast Guard cannot protect the coastline until the fire is out. The bottom line is that when you drill for oil, there is always a risk that not only puts lives on the line, but a risk that puts miles of coastline and the economy on the line as well,” Menendez and Lautenberg maintained.

US Sen. Bill Nelson (Fla.) also said on Apr. 23 that finding 11 missing rig workers and containing any crude oil spilled as a result of the accident were the first priorities. He also said that tougher questions need to be asked. “I think we need to look back over 10 years or so to see if the record denies the industry’s claims about safety and technology,” he said.

Nelson said that he has asked US Interior Secretary Ken Salazar to investigate and then provide a comprehensive report on all US drilling accidents over at least the last decade. He also wants a congressional investigation by the Senate Commerce Committee on which he serves and which oversees two agencies with key roles in oil spill cases, the US Coast Guard and the National Oceanic and Atmospheric Administration.

O’Malley returns to US refining

The Apr. 8 announcement that Valero Energy Corp. would sell its closed Delaware City refining assets to PBF Energy Partners LP for $220 million marks the return of Thomas D. O’Malley to the US downstream.

O’Malley previously chaired Premcor Inc., which operated 4 refineries with an approximately 800,000 bbl/day throughput capacity, until its 2005 sale to Valero. Before taking over Clark Oil Inc. and turning it into Premcor, he made Tosco Inc. the largest US independent refiner-marketer until its sale to Phillips Petroleum Co. in 2001 for $25 billion.

Since selling Premcor (including the 210,000 b/d Delaware City refinery which he now is buying back) to Valero, O’Malley hasn’t been idle. He started PBF’s parent, Petroplus Holdings AG, with several other former Premcor officers. It has become Europe’s largest downstream independent with 6 plants in Britain, Germany, Belgium, and France.

Its purchase of the Delaware City refinery came more than 2 years it formed PBF with Blackstone Group and First Reserve on Mar. 8, 2008, to pursue US refinery acquisitions. Jean-Paul Vettier, Petroplus’s chief executive, called the acquisition “an exciting opportunity” which “represents a profitable entry point.” Valero, which decided to permanently close the plant in November after it couldn’t find a buyer, began to talk to PBF with the support of Delaware Gov. Jack Markell in early 2010.

This won’t be the first time that a company run by O’Malley has taken over a refinery that someone else doesn’t consider profitable. Tosco’s single biggest acquisition, when he was in charge, was the 238,000 b/d Linden, NJ, refinery in 2001 from ExxonMobil Corp., which decided to reduce its US downstream holdings. Given refining and marketing’s current low profitability compared to exploration and production, Petroplus and PBF could expand their US presence further.