BP 2009 Annual Report Download - page 51

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BP Annual Report and Accounts 2009
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The US refineries of BP Products North America Inc (BP Products) are
subject to a consent decree with the EPA to resolve alleged violations of
the CAA and implementation of the decree’s requirements continues. A
2009 amendment to the decree resolves remaining alleged air violations
at the Texas City refinery through the payment of a $12 million civil fine, a
$6 million supplemental environmental project and enhanced CAA
compliance measures estimated to cost approximately $150 million. The
fine has been paid and BP Products is implementing the other provisions.
For further disclosures relating to Texas City refinery, please see Legal
proceedings on pages 99-100.
Various environmental groups and the EPA have challenged
certain aspects of the operating permit issued by the Indiana Department
of Environmental Management (IDEM) for our upgrades to the Whiting
refinery. In response to these challenges, IDEM has reviewed the
permits and responded formally to the EPA. The EPA either through
IDEM or directly can cause the permit to be modified, reissued or in
extremis terminated or revoked. BP is in discussions with the EPA and
IDEM over these issues and clean air act violations at the Whiting, Toledo,
Carson and Cherry Point refineries. Settlement negotiations continue in
an effort to resolve these matters.
European Union
BP’s operations in the EU are subject to a number of current and
proposed regulatory requirements that affect our operations and
profitability. These include:
• The EU Climate Action and Renewable Energy Package and the
Emissions Trading Scheme (ETS) Directive (see Greenhouse gas
regulation above).
• The EU European Integrated Pollution Prevention and Control (IPPC)
Directive imposes a unified environmental permit requirement on our
major European sites including refineries and chemical facilities and
requires assessments and some upgrades to our facilities. A
proposed Industrial Emission Directive would replace the IPPC
Directive. It would merge several existing industrial emission
directives, impose tighter emission standards for large combustion
plants and be more prescriptive as to the Best Available Techniques
(BAT) to be used to achieve emission limits. This may result in
requirements for further emission reductions at our EU sites.
• The EC Thematic Strategy on Air Pollution and the related work on
revisions to the Gothenburg Protocol and National Emissions Ceiling
Directive (NECD). This will establish national ceilings for emissions of
a variety of air pollutants in order to achieve EU-wide health and
environmental improvement targets. The EC is also considering the
use of a NOXand SO2trading scheme as a tool to achieve emission
reductions. This may result in requirements for further emission
reductions at our EU sites.
• The EU Regulation on ozone depleting substances (ODS), which
implements the Montreal Protocol on ODS was most recently revised
in 2009 requires BP to reduce the use of ozone depleting substances
(ODS) and phase out certain ODS substances. BP continues to
replace ODS in refrigerants and/or equipment, in the EU and
elsewhere, in accordance with the Protocol and related legislation.
Methyl bromide (an ODS) is a minor byproduct in the production by
our petrochemicals operations of purified terephthalic acid and the
progressive phase out of methyl bromide uses may result in future
pressure to reduce our emissions of methyl bromide.
• The EU Fuel Quality Directive affects our production and marketing of
fuels. Proposed changes to this directive would require BP to achieve
life cycle GHG emission reductions in fuels we sell and would also
facilitate the introduction of biofuels into gasoline and diesel.
• The EU Registration, Evaluation and Authorization of Chemicals
(REACH) legislation requires that we register chemical substances we
manufacture or import into the EU with a complete set of hazard and
risk data. Existing manufactured and imported substances were all
preregistered by 1 December 2008 and qualified for a timed phase-in
for full registration during the period 2010-2018. Crude oil and natural
gas are exempt from registration requirements, while fuels are
exempt from authorization but not registration. REACH affects our
refining, petrochemicals and other manufacturing operations.
• International marine fuel regulations under International Maritime
Organisation (IMO) and International Convention for the Prevention of
Pollution from Ships (Marpol) regimes impose stricter sulphur
emission restrictions on ships in EU ports and inland waterways and
the North and Baltic seas beginning in 2010 and with a stricter global
cap on marine sulphur emissions beginning in 2012. Further
reductions are to be phased in thereafter. These restrictions require
the use of compliant heavy fuel oil (HFO) or distillate, or the
installation of abatement technologies on ships. These regulations will
place additional costs on refineries producing marine fuel, including
costs to dispose of sulphur, as well as increased CO2emissions and
energy costs for additional refining.
• In the UK, significant health and safety legislation affecting BP
includes the Health and Safety at Work Act and regulations and the
Control of Major Accident Hazards Regulations.
Maritime regulations
BP Shipping’s operations are subject to extensive national and
international regulations governing liability, operations, training,
spill prevention and insurance. These include:
• In US waters, the Oil Pollution Act of 1990 (OPA 90) imposes liability
and spill prevention and planning requirements governing, amongst
others, tankers, barges and offshore facilities and mandates a levy
on oil imported and produced domestically to fund oil spill response.
Some states, including Alaska, Washington, Oregon and California,
impose additional liability for oil spills.
• Outside US territorial waters, BP Shipping tankers are subject to
international liability, spill response and preparedness regulations
under the UN’s International Maritime Organization, including the
International Convention on Civil Liability for Oil Pollution, the
International Convention for the Prevention of Pollution from Ships,
the International Convention on Oil Pollution, Preparedness,
Response and Co-operation and the International Convention
on Civil Liability for Bunker Oil Pollution Damage.
To meet its financial responsibility requirements, BP Shipping maintains
marine liability pollution insurance to a maximum limit of $1 billion for
each occurrence through mutual insurance associations (P&I Clubs) but
there can be no assurance that a spill will necessarily be adequately
covered by insurance or that liabilities will not exceed insurance
recoveries.