McGinnis relying on career in oil, need for refining capacity to make Tacna project reality Yuma
Sun Any story about Arizona Clean Fuels LLC (ACF) and its plans for an oil refinery near Tacna includes the fact that no new refinery has been built in the United States in 30 years. ACF chief executive officer Glenn McGinnis has been in the oil business long enough to have done design work on some of them, and he feels he and ACF can be the firm to build the next one. Since taking over as CEO in 2004, McGinnis, a soft-spoken Canadian, has worked to pave the way for the refinery, which hopes to sit on 1,450 acres near Avenue 45E. ACF made its biggest strides in receiving an air permit from the Arizona Department of Environmental Quality and has continued to work to secure financing, the necessary permits and public support to make the project happen. "It's just a lot of work," McGinnis said. McGinnis says he doesn't see any immovable obstacles standing in the way of the refinery, but if you talked to some others, they wouldn't agree. Clearly, the United States needs more refining capacity, but no firms in 30 years have been able to fill that void. And if ACF is going to be the first, they still have many hoops to jump through. A naturalized American citizen who was born in Toronto, McGinnis studied engineering in Canada and joined the oil industry originally designing refineries. He continued in the industry, moving up to building and managing refineries. "My background is in building refineries," he said. "I rebuilt one in Louisiana and have done other projects to either build or expand others." Dr. Peter Clark, a professor at the University of Alabama and oil and gas expert, said the United States is 25 years late in building refineries and should be building more now. He said using old refineries means more pollution and less efficiency. Regularly, refineries have to shut down for maintenance, which Clark said is manifested in higher prices at the pump because there is no excess capacity. This is where ACF hopes to fill the void, but this problem is not a new one and no other firm has been able to build a refinery. Clark said it can be done, but it is a matter of how much political power will be mustered against it. "It is literally a 'not in my backyard' problem." Local environmentalists have spoken out against the refinery being here, such as those in the group Yuma County Citizens for Clean Air. They say even if the refinery is the cleanest in the world, it will still mean smokestacks putting more carbon dioxide, sulfur dioxide, particulates and benzene into the air. After 36 years in the oil business, McGinnis says he knows what it takes to make a project like this work. Before joining ACF, he was the vice president and general manager of the Aruba refinery for El Paso Corporation. Prior to that, he was the vice president of operations for Aux Sable, a natural gas firm near Chicago. McGinnis says the deterrent to building more refining capacity in the United States has not been environmental but economic. He says that because of Arizona's location and the commitments ACF has received for the project, the $3.5 billion refinery can be profitable. "I'm talking about the straight return on the project," he said. Clark agrees, saying that refineries have very small margins that are actually hurt by high gas prices. But he said that a squeeze on refinery capacity in the U.S. and even worldwide has made this sort of project more viable. McGinnis said being able to move crude oil by ship from Canada to Mexico and then send it along a rail line to Tacna will be cheaper than having to ship finished product from the Middle East. He said what ACF can save on transport costs should help their gross margin. But this plan depends on being able to send a pipeline through Mexico and into the United States. While trying to secure the funding to do the project, McGinnis has been delivering presentations to possible investors across the country and even worldwide. He hopes to have financial commitments by March. Much of the explosion of growth in the east county has occurred after ACF made the decision in 2003 to move the planned refinery from Mobile in Maricopa County to Tacna. While eastern Yuma County is a remote location, McGinnis said, he isn't concerned about other projects that may be developing around it. He said having projects like Coyote Wash or the ethanol plant makes the area more attractive. "It's easier to attract good employees," he said. McGinnis, who lives in Sun Lakes in the Phoenix area, admits to the existence of obstacles in front of the project but never wavers in his belief it will happen. He said the people of east county support it and the state of Arizona has as well. "Yuma County has certainly been the right choice," he said. --- PUBLIC INPUT SCORECARD The Arizona Department of Environmental Quality has received numerous comments on the proposed Tacna oil refinery. Their current tally is 523 comments of support, 45 in opposition and two neutral to the plan, according to ADEQ. --- WHAT HAPPENS IN AN OIL REFINERY? Crude oil contains hydrocarbon molecules of many varying lengths. These different hydrocarbons, made up only of hydrogen and carbon atoms, can be used for all kinds of products, from gasoline to jet fuel to cleaning solvents. An oil refinery takes the crude oil and separates the hydrocarbons and then repackages them, so they can be used for those different products. In a process called fractional distillation, the crude oil is boiled until it vaporizes. Since the hydrocarbons have different boiling points, they can be separated when they condense. Once separated, the hydrocarbons still are not ready to be put into products people use. They must be chemically processed, treated to remove impurities and then blended. When these processes are completed, the final results are gasoline, jet fuel, diesel, motor oil and scores of other products. --- Jeffrey Gautreaux
can be reached at jgautreaux@yumasun.com or 539-6858.
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