EPA and CENCO Resolve Outstanding Permitting Issues.

Business Editors

SANTA FE SPRINGS, Calif.--(BUSINESS WIRE)--Jan. 18, 2001

The U.S. EPA and CENCO Refining Co. today announced that they have reached an agreement with respect to outstanding air quality permitting issues associated with the resumption of refining and future operation of the CENCO Refinery.

The agreement resolves all issues the U.S. EPA had raised regarding 47 Permits to Construct previously issued by the South Coast Air Quality Management District. It will lead to the prompt beginning of construction CENCO wants to accomplish prior to reopening CENCO's 49,500 bbl per day refinery in Santa Fe Springs.

Resumption of refining operations will have a significant impact on the availability of fuels for customers in Southern California. CENCO will principally produce gasoline, diesel and jet fuel which will be sold almost exclusively in California.

Production at the refinery is scheduled to begin in the spring of 2002, in time to replace most of the gasoline supply which will be lost as a result of the elimination of MTBE from gasoline in 2003.

The agreement takes the form of a consent decree that has been lodged with the United States District Court in Los Angeles, and is subject to public notice and court approval.

As part of the settlement procedure, the EPA simultaneously filed a civil suit seeking a declaratory judgment to ensure that CENCO has, and will in the future, continue to be in compliance with the new source review (NSR) provisions of the Clean Air Act. No civil penalties will be paid under the agreement.

As part of the agreement, CENCO has agreed to install advanced emission control technology during the next eight years of operation at a cost of approximately $10 million.

CENCO's chief executive officer, J. Nelson Happy, stated: "This equipment will significantly reduce the emission of oxides of nitrogen and sulfur (NOx and SOx) throughout the life of the facility. With the installation of this equipment, on the basis of publicly available information, CENCO believes that it will be the cleanest refinery in the Los Angeles basin, and likely the nation."

The consent decree contains several commitments by CENCO to ensure ongoing compliance with NSR, including a series of projects that push NOx and SOx emission reduction technology.

According to CENCO's attorney, Robert Wyman, "The consent decree protects the public interest and clears the path for CENCO's future operation by assuring that the CENCO refinery is operating beyond the level of compliance required by the Clean Air Act."

The consent decree also provides that CENCO will advance the state-of-the-art in pollution prevention technology with projects such as the first installation of certain ultra low NOx burner technology in refinery fuel gas service; a demonstration of non-ammonia catalytic NOx and SOx reduction technology in refinery fuel gas service; and installation of selective catalytic reduction on the fluid catalytic cracking unit.

CENCO and EPA have also agreed that CENCO will implement, to the extent feasible, ultra low NOx emission levels below currently achieved levels to further advance burner technology.