Blue Island refinery to close, cut 297 jobs Shutdowns, suits plagued troubled site

By Lola Smallwood and Rummana Hussain Tribune Staff Writers January 18, 2001

Activists hoped the lawsuits, safety violations and shutdowns by state and federal environmental officials would force improvements at the Premcor Blue Island Refinery to benefit workers and the surrounding community.

But Wednesday's announcement that the plant would close and 297 workers would lose their jobs by the end of the month poses a different kind of threat: an economic downturn that few can afford.

"Our contention was that [Premcor] needed to fix problems at the plant because it needed to be safe," said Joan Silke, president of the Blue Island Good Neighbor Committee, which had fought for improvements since 1992. "Unfortunately, they took the position this morning to no longer run the plant.

"Our hearts go out to the workers and their families because our fight was with the corporate decisions, not the workforce. But I would rather see 297 workers alive than 297 dead employees, because everyone was at risk."

Workers said the closing was a blow to them and the community.

"Hey, I sympathize with people. I wouldn't want to breathe that stuff, either," said Joe Glowaski of Beecher. "But instead of having 300 people who pay taxes, now you have 300 people collecting unemployment."

Worker Daniel Grossheider of Tinley Park said, "I don't think it's really sunk in yet. Some of us figured the plant would be sold—not closed. Now we're looking for jobs."

During a news conference in Chicago, Premcor officials said the closing was based strictly on economic factors, particularly the high cost of upgrading the plant to meet government mandates for cleaner-burning gasoline.

"For the sake of our employees and the local business community, we wish a different conclusion could be reached," said William C. Rusnack, CEO of Premcor Refining Group. "However, given the economic factors I have mentioned, continuing to refine oil at Blue Island does not make business sense for Premcor."

The announcement comes on the heels of several corporate closings in the Chicago area, including the nearby Robbins incinerator, which laid off 80 full-time workers and shut its plant after two years of operation in November. Also, Schaumburg-based Motorola Inc. plans to lay off 2,500 workers in Harvard by the end of the year.

About 30 employees affected by the Premcor closing live in Blue Island, while most of the rest live throughout the south and southwest suburbs.

Because the plant was in an unincorporated area outside Blue Island, the municipality did not receive tax revenue, but Blue Island School Districts 218 and 130 each got roughly $500,000 in tax revenue a year.

The abrupt closing of the plant ends the tumultuous relationship between Premcor, formally known as Clark Oil, and the community. The situation came to a head last summer when a faulty valve at the plant caused the release of more than 23 tons of chemical-laden dust across the city.

Shortly afterward, two class-action and three civil lawsuits were filed on behalf of local residents who said the plant has caused them emotional and financial harm. Also, the U.S. Environmental Protection Agency and the Illinois attorney general's office have each filed lawsuits against the company since 1997, accusing it of long-standing non-compliance with regulations.

Premcor officials said federal mandates to produce low-sulfur fuel required an estimated $40 million in upgrades to the facility, built in 1945. Plant officials said the site did not generate "a return sufficient" to justify such an investment.

Instead, the St. Louis-based company will invest in its remaining three plants, in Downstate Hartford and in Ohio and Texas.

The plant will stop refining crude oil on Jan. 27 and close its doors for good on Jan. 31. An adjacent tank farm, where processed gasoline is stored, will remain open.

Rusnack said several parties have shown interest in buying the refinery site, but no formal offers have been made, making him "unhopeful" that a shutdown could be avoided.

It's unclear how or even if shutting down the 80,000-barrel-a-day operation would affect oil supplies or prices in the Chicago area.

Rusnack said petroleum prices are determined by several factors, such as inventory and the price of crude oil, gasoline and feedstock blended into gasoline.

The Hartford refinery, he said, would honor any contractual agreements with Chicago-area facilities that Premcor supplies, including Clark gasoline stations, its primary customer in the area.

"All pricing on existing contracts moves as the market moves. They are not fixed under any circumstance," Rusnack said. "It's a very complex system, and you can't look at any one factor and predict what might happen tomorrow."

Blue Island Mayor David Peloquin said the closing would allow the city to move beyond Premcor's problems to finding a safe and profitable operator for the plant.

"Whenever you lose around 300 jobs in an area, it's not good for the economy, but we have to look at what the future holds. We have an opportunity to take that land and make it as productive as possible and as quick as possible. We can't let the closing deter [us] from making the plant profitable."

Peloquin said the city plans to meet with state and county officials to discuss what funds would be available to clean and revamp the site for future industrial use.

There also may be discussions with nearby Robbins about collaborating on finding an industrial tenant to occupy both the shuttered incinerator site and refinery plant, which face each other at Kedzie Avenue and 131st Street.

Local environmentalists said the closing validated their position that Premcor could not afford to operate the plant safely.

State and federal regulators will monitor the plant closing, said Matthew J. Dunn, environmental enforcement chief for the Illinois attorney general's office.

http://chicagotribune.com/news/metro/chicago/article/0,2669,ART-49309,FF.html

-- Martin Thompson (mthom1927@aol.com), January 19, 2001