Texas Coastal Management Program: Technical Papers

[From the U.S. Government Printing Office, www.gpo.gov]

13448

COASTAL ZONE
INFORMATION CENTER

Texas
Coastal
Management
TD Program
195
.P4
C373
1978

Texas Coastal Management Program
Technical Paper No. 19

A CASE STUDY OF PETROCHEMICAL

FACILITY SITING:

THE CORPUS CHRISTI PETROCHEMICAL COMPANY

U.S. DEPARTMENT OF COMMERCE NOAA
COASTAL SERVICES CENTER
2234 SOUTH HOBSON AVENUE
CHARLESTON, SC 29405-2413

The General Land Office of Texas
Bob Armstrong, Commissioner

Property Of CSC Library

RPC, Inc.
Austin, Texas

August 1978

SEP 10 1997

This is one of a series of technical Papers, which cover a variety of
topics. For information concerning other technical papers in this series,

or to order more copies of this paper, contact:

Elizabeth Christian Wilds
RPC, Inc.
1705 Guadalupe
Austin, Texas 78701

This paper was prepared under contract with the General Land Office of Texas,
Coastal Management Program. The report was partially funded through financial
assistance provided by the Coastal Zone Management Act of 1972, administered
by the Office of Coastal Zone Management. U.S. Department of Commerce.

FOREWORD

This technical paper is one of four papers which provide additional
information relevant to the study entitled Siting Industrial Facilities
on the Texas Coast. Many individuals assisted in the production of these
technical papers. Public officials, private citizens, and industrial
representatives provided invaluable assistance.
The principal-in-charge was Ron Luke. Project managers were Leah
Pagan and Frank Sturzl. The prinicpal research was conducted by Leah
Pagan with assistance from Chet Allerhand and Barbara Haefeli. The
technical editor was Nancy Grona. Production assistance was provided
by Kyle Pierce and Lori Snyder. J"
Bob Armstrong, Commissioner
General Land Office of Texas

TABLE OF CONTENTS

Page
1. Introduction . . . . . . . . . . . . . . . . . . . . 1
2. History of the Company . . . . . . . . . . . . ... . . . . . . 3
3. Management Structure of the Company . . . . . . . . . . . . . 5
4. The Facility . . . . . . . . . . . . . . . . . . . . . . . . 7
5. General Petrochemical Siting Requirements and Constraints . . 11
6. The CCPC Siting Process . . . . . . . . . . . . . . . . . . . 13
7. The CCPC Permitting Process . . . . . . . . . . . . . . . . . 19
State Permits . . . . . . . . . . . . . . . . . . . . . . . 20
Federal Permits and Requirements . . . . . . . . . . . . . 21
Permits for Associated Operations . . . . . . . . . . . . . 24
8. Opposition to the CCPC Facility . . . . . . . . . . . . . . . 27
9. Local Impacts of the CCPC Facility . . . . . . . . . . . . . . 29
Environmental Impacts . . . . . . . . . . . . . . . . . . . 29
Economic Impacts . . . . . . . . . . . . . . . . . . . . . 30
Social Impacts . . . . . . . . . . . . . . . . . . . . . . 31
10. Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

LIST OF MAPS

Page

1. Texas Lower Coast Area . . . . . . . . . . . . . . . . . . . . 8

2. Corpus Christi Area . . . . . . . . . . . . . . . . . . . . . 9

3. Corpus Christi Petrochemical Company Site and Surrounding Area 16

LIST OF FIGURES

Page

1. Future Permitting of Associated Operations . . . . . . . . . . 25

1. INTRODUCTION

In March 1977, the Corpus Christi Petrochemical Company (CCPC)
began site preparation for a plant designed to manufacture 1.2 billion
pounds of ethylene per year, as well as ancillary chemicals. Official
ground-breaking ceremonies were held three months later, in June, and
construction continues at the present time. CCPC is a joint venture
of the subsidiaries of the Champlin Petroleum Company (37.5%), ICI
United States (37.5%), and Soltex Polymer Corporation (25%). CCPC and
its new plant represent a number of trends in the petrochemical industry
today. These include:
1. The diversification of related industries into the petrochemical
sector

2. The use of liquid feedstocks, namely naphtha and gas oil, in
the production of ethylene
3. The investment of a substantial amount of capital in the construction
of a large plant facility
Although representative of numerous innovations in the petrochem-
ical industry, CCPC joined the many firms which have chosen to locate
on the Texas Gulf coast. In fact, by volume, the Texas Gulf coast has
the greatest concentration of chemical plants in the United States,
producing more than 40 percent of every basic petrochemical, 80 percent
of the synthetic rubber, and 60 percent of the nation's sulfur (White-
horn, 1973). There are 58 petrochemical plants operational at the
present time in the Texas coastal area. At least 10 additional plants
are currently proposed or under construction in this area.
It is important to clarify the usage of the term "petrochemicals"
in this study. Usually the term refers to those chemicals derived or
isolated from petroleum or natural gas. According to Whitehorn, both
first-line raw materials and monomers, as well as polymers and plastics,
are sometimes included under the rubric of petrochemicals (1973).
Generally, though, "petrochemical" is not used to refer to fuel or
energy products such as gasoline, natural gas, and kerosene. While
the manufacture of numerous consumer goods such as drugs, fertilizers,
and synthetic fibers depends heavily on petrochemicals, these end products
themselves are not generally thought of as petrochemicals. In this
study, the term is used to include raw materials, monomers, polymers,
and plastics, but not fuel, energy, or end products.

The plant being constructed by CCPC will produce ethylene as its
major product. Ethylene is by far the most commonly produced petro-
chemical and leads all other petrochemicals in dollar value of sales.
It is part of the class of petrochemicals known as olefins, which also
includes butadiene (a diolefin), propylene, and various butylenes.
As in the case of the CCPC plant, the production of ethylene is often
accompanied by the production of these other olefins.

The Gulf coast produces approximately 60 percent of the nation's
olefins, according to the 1974-75 Houston Gulf Coast Chemical Directo
The development of this particular industry on the Texas coast
to the area's production and refining of oil and gas. Historically,
ethylene plants have used liquefied petroleum gas (LP gas) as feedstock.
However', shortages of natural gas liquids have encouraged the industry
to turn to such feedstocks as naphtha and distillate fuels, which are
produced from crude oil. While only about five percent of the current
United States petroleum demand is used as feedstock for the petrochem-
ical industry, there is a growing shortage of traditional feedstocks
(Whitehorn, 1973).

The CCPC plant's reliance on naphtha and gas oil as feedstock
affects both the size of the plant and the variety of its products.
The use of these feedstocks for ethylene production also increases the
production of propylene, butadiene, and benzene. CCPC reflects the
trend toward the construction of large, integrated complexes which
produce a variety of products, rather than just ethylene.

However, the cost of these larger plants is relatively high. This
cost, coupled with the importance of a steady supply of feedstocks,
has led a number of petrochemical companies to consider joint ventures
in the construction of new ethylene plants.

In the CCPC case, though, it was Champlin Petroleum Company that
initiated the partnership. In general, joint ventures are attractive
to both petrochemical firms and oil companies because the former can
provide expertise in construction and operation of a plant and often
a market for primary chemicals, such as ethylene, while the latter can
provide feedstocks and needed capital. Certainly both types of firms
are drawn to the increasing profitability of petrochemical production.
(Unfortunately, the exact figures on profitability of petrochemical
activities cannot be obtained since these particular activities of
companies are included with other chemical and nonchemical activities
in Department of Commerce figures. At the present time, though, a
return of 10 to 15 percent is expected, according to a CCPC official.)

The Corpus Christi Petrochemical Company reflects all these various
trends. It is a joint venture of oil and chemical companies. The facility
will be large, and the capital investment significant. Liquid feedstock
will be used in the production of ethylene, propylene, benzene, but-
ad.iene, and various butylenes.

2. HISTORY OF THE COMPANY

According to Mr. Richard J. Carlton, CCPC facilities project director
and a Champlin employee, Champlin Petroleum Company, headquartered in
Fort Worth, decided in 1973 to diversify into petrochemicals. Champlin,
which was once a subsidiary of Celanese and is now a subsidiary of Union
Pacific Corporation, was preparing at that time to significantly expand
its Corpus Christi refining facility, and thus could provide feedstocks
to a petrochemical plant. Chemical EnVneerina (1976) states that Champlin
hoped "to avoid seasonal fluctuations in production rates by sending
excess products to the ethylene plant. And the company . . . (saw) more
profit in the chemical markets."

Champlin investigated several joint venture possibilities after
initial feasibility studies confirmed such a project was viable. In
1975, Champlin representatives visited Imperial Chemical Industries
Limited of the United Kingdom (ICI), the parent company of ICI United
States. Champlin also approached Solvay and Cie S.A. of Brussels, Belgium,
the parent company of the U.S. firm, Soltex Polymer. Both parent companies
have extensive experience in petrochemical production and end product
manufacture.

Solvay and Cie has 100 subsidiaries in 15 countries and has been
involved in the production, processing, and marketing of petrochemicals.
Imperial Chemical Industries (ICI) has been heavily involved in the
manufacture of chemicals, plastics, pharmaceuticals, and fibers as well
as oil and gas exploration and production. In addition, ICI was one
of the pioneers in the area of production of ethylene from liquid feedstocks,
such as naphtha. Chemical Age's 1975 list of the largest worldwide
chemical companies places as third largest and Solvay and Cie as
the nineteenth largest (Chem. Systems, Inc., 1976).
ICI United States, which operates a facility at Baytown, and Soltex
Polymer, which operates one at Deer Park, both have or plan to have
a demand for ethylene or propylene. They, then, will be two of the
primary buyers of CCPC products, while Champlin will supply the feedstocks.
The three companies agreed to pursue the joint venture approach
to a large olefins complex in late 1975. During 1976 a feasibility
study was conducted, and the drafting of necessary partnership legal
documents commenced. While the contents of the feasibility study are
considered proprietary information by officials of CCPC, they generally
addressed the financial feasibility and management structure of the

venture (Carlton, 1977; Fleming, 1977). During this same period a
variety of other studies directed at siting the facility were done
internally (Fleming, 1977).

The three companies signed formal partnership papers on November 15,
1976. To advance the project as rapidly as possible, the original appli-
cation for a construction permit to the Texas Air Control Board was
made by Champlin. It was not until spring of 1977 that the name on
the permit application was changed to Corpus Christi Petrochemical
Company. The partners' agreement to use an operational ICI plant as
a model, ICI's experience in construction of large integrated plants,
and engineering studies done in 1976 allowed construction to begin early
in the spring of 1977.

3. MANAGEMENT STRUCTURE OF THE COMPANY

All of the principals of CCPC are presently on loan from the three
companies involved in the joint venture. For instance, Richard Carlton,
the facilities project director, is a Champlin employee who formerly
worked at Champlin's corporate headquarters in Fort Worth and at the
Champlin refinery in Corpus Christi; Alstair Fleming, the deputy facilities
project director, is an ICI employee and has been involved in the construc-
tion of a number of ICI facilities. In fact, many of the engineers
and technical advisors are from a recently completed ICI facility in.
England. Champlin has also furnished engineers for the project team.
Soltex Polymer Corporation has provided an advisor/consultant and has
several other employees involved in the project.
Company policies are implemented through the executive committee.
This committee prepares items for submission to the policy panel, and
it is also composed of one representative from each of the parent com-
panies.
In a June 1977 edition of the Corpus Christi Caller-Times, which
contained numerous articles on the UPC project, the name_s_o_f@the members
of two other CCPC committees are given. These committees, the legal
committee and the financial committee, are "a functional part of the
organization" (Carlton, 1978).
The project team is primarily responsible for the construction
of the plant. This team was involved in the original planning of the
project and has played the major role in the permitting process. The
facilities project director and the deputy facilities project director
lead this team and are assisted by advisor consultants, managers (tech-
nical, construction, operations, and logistics), and engineers (pipe-
lines, instrument, process, scheduling, process, and project).
The office of general manager, who heads the operations team, is
presently vacant. He and the operations team will play an important
role when the plant becomes operational in early 1980. The marketing
team, which is currently negotiating sales of products, will continue
this effort after construction of the plant is completed.
Thus, it is primarily the project director and the deputy project
director who report to the executive committee at the present time.
They are authorized to make large expenditures and manage the project.
The facilities project director is officed in Houston at the main CCPC

COASTAL ZONE
INFORMATION CENTER 5

office, and the deputy director is officed in Corpus Christi at the
construction site.

In addition to those mentioned above, there are a number of other
persons actively involved in the CCPC project. Several law firms have
been employed as legal consultants, including Vinson & Elkins of Houston
and Brown, Maroney, Rose, Baker and Barber of Austin. Both have rep-
resented CCPC at various permitting hearings. CCPC has employed Engineering
Science, Inc. of Austin as environmental consultants. The engineering
design was done by the New York firm of Stone and Webster, and Brown
and Root is constructing the facility.
It should be noted here that Chemical EngineLroin describes two
t P
major drawbacks to joint ventures (19/6). Une of _se is the problem
of management. Since joint ventures are usually hybrids, the management
seldom answers to a single authority. Although CCPC officials denied
any such problems, it is true that the project directors still report
to their former employers and plan to return to them after construction
of the plant (Carlton, 1977; Fleming, 1977).

The other major drawback to creation of these hybrid firms, according
to Chemical Engineering, is the possibility of government antitrust
int7e-rvention. The article quotes Alfred F. Dougherty, formerly the
director of the Federal Trade Commission's Bureau of Competition:

The Federal Trade Commission is concerned about the seeming
propensity of major firms in these two industries (oil and
chemicals) to get together; but each joint venture has to
be measured on its merits.

4. THE FACILITY

The CCPC plant under construction in Corpus Christi is modeled
after an ICI, Ltd. facility in England. While the Corpus Christi plant
will have certain unique features, the partial duplication of the plant
reduced the amount of time needed to design the facility. The estimated
cost of the entire complex is approximately $600 million, and the plant
will be capable of manufacturing 1.2 billion pounds per year of ethylene
and other ancillary petrochemicals. Maps 1 and 2 show the location
of the CCPC plant.

The plant is being constructed on a 1,200-acre tract of land 4.5
miles east of Robstown, abutting State Highway 44 (Agnes Street) and
continued between Farm-to-Market Road 24 (Violet Street) and McKenzie
Road. The facility is outside of the Corpus Christi city limits but
within its extraterritorial jurisdiction (ETJ). The plant site is
outside of the Corpus Christi Industrial Zone in an area not currently
used by major industries. Specifics about this site and the factors
leading to its choice will be discussed later in the study.
In addition to the facility in which the chemicals are actually
produced, CCPC plans to build a number of support facilities on the
site. These include necessary utility systems, a water treatment and
disposal unit, a solid waste disposal system, and storage tanks. Pipe-
lines will be run to the Champlin refinery and the port area for the
transfer of feedstocks and byproducts. Pipelines to the Houston area
will be constructed to move the ethylene and propylene to this market,
and salt domes will be used as storage sites for the petrochemicals.

Map 1

TEXAS LOWER COAST AREA

BEEVILLE

oc
is

CORPUS CHRISTI PASS
PETROCHEMICAL PORTLAND
COMPANY ROBSTOWN
66SPINS
ONSISTI

ALICA

NUECES

KLEBERG
KINGSVILLE

KENEDY

00 0 0 .0 go so 4@ so

Source: Texas Official Highway Travel Map.

Map 2

CORPUS CHRISTI AREA

3T
SAN PATRIC10

1704
Sol
0 8
2716 4
1694 "T 37, 11?
16119 Ty

2292 Ch..b.,
.1
CORPUS CHRISTI C-..,.
44
C-P.. Chrletl as,
TT Ak m
NUECES ING

-43 Zee I Al,
SW

-2414@-

1 .5 0 1 2 3 4 5.1,

Source: Texas official Highway Travel map. EXIBTINO MAIO. IN..T.IAI AIIIIA
CONI've CHRISTI PaTmeemmmWAL
COMPOWN INITIAL WT9 O9V9LOPMtMT

5. GENERAL PETROCHEMICAL SITING REQUIREMENTS AND CONSTRAINTS

A number of sources provide general discussions of the siting require-
ments of a petrochemical complex. The requirements and constraints
generally considered fall into the following broad categories:
1. Availability of raw materials
2. Proximity to markets
3. Availability of land, water, and utilities
4. Availability of labor and general labor climate
5. Adequate transportation networks
6. Legal requirements and taxes
7. Housing availability and local living conditions
There are at least four distinct levels of decisions involved in
the siting of a petrochemical facility, and each level involves different
considerations. The major siting decisions involve selection of a country,
selection of a state (in the U.S.), selection of an area, and selection
of a specific site. While the latter two decisions are the primary
concern of this study, the former two should be discussed briefly.
The growing number of foreign companies entering the United States
petrochemical market is based largely on the proximity to markets and,
to some extent, on the availability of raw materials. The United States
manufactures and consumes great quantities of petrochemicals, and the
U.S. petrochemical market continues to expand. The heavy taxes levied
in European countries, the expanding U.S. markets, and the generally
stable political climate have combined to make the U.S. increasingly
attractive to foreign firms. Within the U.S., Texas has been and con-
tinues to be the site of a high percentage of the nation's petrochemical
facilities. Texas has abundant raw materials, expanding markets, adequate
supplies of labor, transportation facilities, water, and utilities;
a favorable tax structure; and a favorable economic, labor, and living
environment. In addition, in many areas local authorities and citizens
support industrial expansion.
Of course, few areas offer all of the conditions listed above.
For instance, the upper Texas coast in and around Beaumont has a higher
percentage of unionized labor which is seen by some firms as a siting
constraint. Other areas do not have adequate port facilities. The
lower coast in and around Brownsville is somewhat removed from both
raw materials and markets of the petrochemical industry. Location of

petrochemical plants in this area would involve high transportation
costs at the present time, and there are few pipeline networks in this
area (Allen, 1977).

The Houston area, which has long been the site of numerous petro-
chemical plants, now has little available land. In addition, the presence
of extensive industrial development in this area may tend to inhibit
future development as the result of federally mandated clean air and
water requirements. The federal offset policies require that for any
new or expanded industrial facility to be constructed in a nonattainment
area - that is, an area where the air quality is below the national
standard - more than equivalent offsetting.emission reductions must
be obtained from existing facilities in that area. Thus, federal "offset"
policies do encourage industries to locate plants where emission offset@
is available. For instance, in a relatively nonindustrial area it may
be difficult, if not impossible, for a company to purchase or acquire
the necessary offset emissions.

Given these general constraints in other Texas coastal areas, it
is not surprising that the middle coastal area is the site of increased
industrial activity. This area generally has adequate water, labor,
land, and utilities. Feedstock is available, and the transportation
of the petrochemical products to the major markets is not overly ex-
pensive nor difficult. In fact, there is a petrochemical pipeline
extending from the Victoria area to the major markets of the Houston
and the Beaumont areas. Permits at the local level and air quality
permits at the state and federal levels are obtainable due mainly to
the generally good air and water quality as compared to the upper coast.
The widespread pro-development attitude of local officials and citizens
also makes this area attractive to industry.

While much of the Texas middle and lower coastal area has retained
a largely agricultural, tourist, or fishing economy, some areas have
experienced extensive industrialization. Corpus Christi is one such
area. Industrial development adjacent to the Corpus Christi port facility
has been particularly extensive; there is now little suitable land
available in that area. Though Central Power and Light Company has
sufficient electrical utility capabilities to allow for industrial
expansion, the area has a limited supply of fresh water. However, the
city is currently involved in the proposed construction of a dam (Choke
Canyon Dam) in Live Oak County. This project should supply the Corpus
Christi area with sufficient fresh water for future expansion; however,
the dam will not be operational for some time.

6. THE CCPC SITING PROCESS

From the beginning of the CCPC project, Champlin Petroleum Company
preferred the Texas Gulf coast. When the issue of a refinery tax was
raised in Texas in 1976 and 1977, CCPC did temporarily investigate the
possibility of siting in Louisiana, but refocused on Texas when the
policy was not enacted (Carlton, 1977). A number of Texas coastal sites
were considered, including sites along the upper Houston ship channel,
a site near the Deer Park plant of Soltex Polymer, and one near the
Baytown plant of ICI United States. These sites would have placed the
plant near the major petrochemical market, an increasingly important
consideration. Although proximity to raw materials certainly brought
petrochemical industries to Texas, the access to product markets, or
"downstream consuming units," is currently an equal, if not more im-
portant, factor in the siting decision (Fleming, 1977). Major constraints
to locating the CCPC facility in the above areas were the possibility
of permitting problems and availability of land and cost of land at
certain sites (Carlton, 1977).

One note should be added here to clarify the discussion on proximity
to market which was presented earlier. While it is true that Corpus
Christi is not currently a major market for ethylene and its associated
chemicals, there does exist a major petrochemical pipeline network which
extends up the coast from Victoria. In addition, CCPC plans to build
its own pipelines from Corpus Christi to the Houston area. It is also
possible that pipelines could hook into the Victoria-Houston system.
It is a common practice in the petrochemical industry to "swap" pipe-
lined products. In effect, this means that CCPC or another plant can
introduce a given amount of ethylene into their end of the pipeline
system, and a firm upline may buy this amount immediately. Thus, though
the Corpus Christi site will not place the plant at the "heart" of the
market, transportation of products to the market is not difficult.

The facilities project director stated there were four major reasons
for selection of Corpus Christi over the other areas (Carlton, 1977):

1. Ability to obtain necessary permits at the local, state, and
federal levels
2. Availability of land
3. Port facilities
4. Proximity to raw materials

This officials also stated that the company considered quality of life
factors in their decisions. Not only were such factors as housing avail-
ability and cost of living considered, but other less tangible factors
were also considered. To quote a CCPC official: "You want to look
around for a place where people want to live" (Carlton, 1977).

However, certainly the most important factor in the siting of the
facility in Corpus Christi was Champlin's location in this area. In
fact, in 1974, Champlin had purchased 500 acres near its refinery and
the port and hoped to use this for the plant site. For several reasons
this acreage proved unsuitable. Similarly, the director of the Corpus
Christi Industrial Commission reported that local officials did not
have to "sell" the area to the company as is often the case in industrial
siting (Allen, 1977).

While the proximity of the Champlin refinery was certainly an
important consideration, the company's enthusiastic support of the area
was also based on relative ease of permitting as compared to other Texas
areas. The Corpus Christi area is an EPA nonattainment air quality
region as is most of the coast of Texas. Champlin officials felt they
could obtain the necessary permits to locate in the Corpus Christi area
(Hutchinson, 1978). Champlin anticipated greater problems in permitting
a plant in or near the Houston area, which is a major petrochemical
market. Thus, Corpus Christi provided both the possibility of permitting
of the facility and relative proximity to petrochemical markets. According
to a Champlin Company official, the need to purchase offset emissions
from the Champlin refinery was not an issue since the EPA's interpretive
ruling of the emission offset policy was not published until after the
Corpus Christi site had been chosen (Hutchinson, 1978). However, as
discussed later, EPA's ruling has resulted in the provision of offset
emissions by the Champlin refinery to the CCPC facility.

After the partners agreed to site the plant in the Corpus Christi
area, a somewhat different set of factors was used to determine the
specific site. According to Fleming, deputy facilities project director,
all of the following factors, among others, were considered:

1. Access to raw materials (feedstocks)
2. Explicitness of permitting
3. Safety
4. Land availability and cost
5. Soil characteristics
6. Access to wastewater disposal streams or ditches
7. Subsidence and runoff patterns
8. Character of surrounding area
9. Availability of utilities

By gradually eliminating various areas, the present site was chosen.

One particularly attractive parcel of land was eliminated as a
site for a rather interesting reason. This site was rejected by one
of the partners due to the potential safety hazard posed by its proximity

to airport flight patterns (Allen, 1977). While this land was not
within an area generally considered as potentially unsafe due to pat-
terns, one partner, based on experience overseas, preferred to locate
the plant elsewhere. ,
As can be seen from Map 3, the site for the CCPC plant is not
adjacent to the port area. In fact, the CCPC site is approximately
five miles from the port area and its major facilities. The unusual
choice of this landlocked site was made feasible by plans to pipe feed-
stock from the Champlin refinery and to buy 25 to 50 acres of dock space
along the harbor.
It should also be noted that the selected site is outside of the
city limits of Corpus Christi. Historically, the city of Corpus Christi
has promoted industrial development outside of the city limits. The
Corpus Christi Industrial Zone is an area along the port which is not
within the city limits. Industries in this area pay school taxes to
the Corpus Christi Independent School District and county taxes to
Nueces County, but they do not pay city taxes.
It is not only the private sector which has seen benefits from
this industrial zone. In a document entitled Choices Facing Corpu
Christi (1975), the Corpus Christi Goals CommiTsion states that this
unwritEen policy of nonannexation of industrial areas began in the
1930s. This document also discusses the various economic advantages
of this arrangement. Industries are more attracted to the area, and
the industries make a significant contribution to the economic life
of the city. The city does not pay the cost of providing municipal
services to the area. Although the city will sell gas and water to
industries, industries must bear the cost of bringing these services
to their sites. Nor are the industries offered special water or power
rates. In the case of CCPC, the facility will purchase treated water,
but not gas, from the city.
One city official in the planning department discussed the location
of industrial plants outside of the city as having a positive effect
on city management and staff requirements (Wenger, 1977). He based
his statement on the fact that city building codes were not enforced
in these facilities, thus reducing the cost of enforcement by the city.
However, the director of the Department of Inspection and Operation,
Mr. Bill Hennigs, pointed out that large industrial facilities within
city limits are also exempt from city building codes. He stated that
large facilities are covered under Occupational Safety and Health Admini-
stration (OSHA) requirements, and enforcement of city codes would result
in duplication of those enforced by OSHA.
Thus, the only generally acceptable reason given by Corpus Christi
officials and chamber of commerce members for the existence of an industrial
zone free of city taxes is that it provides an incentive for industries
to locate in the area. Yet CCPC officials stated that the effect of
this policy on the siting decision was small (Carlton, 1977; Fleming,
1977). Certainly, though given the size of the annual tax savings on
a large facility, each year it remains outside of the city's taxing

Map 3

CORPUS CHRISTI PETROCHEMICAL COMPANY
SITE AND SURROUNDING AREA

N U a C a 8

V 9 A Y

CORMS CHRISTI
PIETROCHRUICAL Co.
PLAW 81T9

S A X E T OIL F I E L D

1 44 1 1 1

.01
0
SPUR CHRISTI PI[TROCHRINICAL
TANT I PROpa QTV
C. P.O. NITIAL SITZ
gVSLOPMRWT

OCALII- I*- I.44V (Apples.)

Source: Texas Department of Water Resources.

jurisdiction represents a substantial capital gain for the firm. In
addition, this policy may play a greater role in the siting decisions
of smaller firms with smaller capital bases.
After the specific site area was chosen, local agents were hired
to purchase the acreage. The use of a purchasing agent helped to protect
the identity of the purchaser, since landowners will sometimes raise
their prices if a large company is interested. The retaining of local
agents also reflects the tendency of companies to hire local specialists,
including consultants and lawyers who are known and trusted in an area
or who know local and state officials.
The land surrounding the site purchased by CCPC is primarily agricultural,
although there is some residential development within two miles. The
site is within the taxing jurisdiction of the Tuloso-Midway and Calallen
School Districts. While CCPC owns 1,200 acres at the site, less than
a third of this will be used for the facility. It is likely that CCPC
may offer sites to other companies, particularly ones which would buy
CCPC's products.

7. THE CCPC PERMITTING PROCESS

The construction and operation of petrochemical process plants
require a variety of state and federal permits. In general, few Texas
cities require facilities to obtain natural resource-related permits
in order to build or operate within their jurisdiction. The environ-
mental affairs coordinator for Champlin, who played a major role in
the permitting of CCPC, reported that up to the present, direct contact
with city officials has been minimal (Hutchinson, 1978). Apparently,
staff of the Corpus Christi Industrial Commission have worked with city
officials in matters relevant to CCPC. At a later date, CCPC will work
directly with the city when purchasing pipeline right-of-way across
city property. In contrast to the few, if any, local permits required,
state and federal permits which CCPC needed to obtain were far more
numerous and complex. The following discussion focuses on these state
and federal permits.

The CCPC complex will ultimately include four separate operations:

1. The ethylene plant
2. Barge dock, storage tank farm, and tank car terminal
3. Pipeline distribution facilities
4. Salt dome storage facilities

The design of the latter three is not complete, and to this date CCPC
has applied only for the construction permits for the ethylene plant.
(Between completion of the study and publication, CCPC had applied for
and received a permit for the barge dock facility from the Texas Air
Control Board (TACB). Applications for permits for the pipeline and
salt dome facilities have also been submitted to TACB and the Corps
of Engineers.) Operating permits will not be applied for until the
plant is completed and operational. The permits that may be necessary
for the operation of the plant and the additional facilities will be
discussed briefly in this section, but the lack of design and technical
data makes specific discussion impossible.
There are a number of distinct categories into which permits fall.
In this study, two of the basic types of permits will be discussed in
depth. These are air quality permits and water quality permits. Within
each of these types, certain permits must be obtained from the state
while others are issued by federal agencies. The following discussion
divides the permits required for construction of the CCPC ethylene plant
into state and federal permits.

STATE PERMITS

AIR QUALITY

On October 13, 1976, Champlin Petroleum Company applied to the
Texas Air Control Board for a permit to allow construction of an ethylene
plant in Corpus Christi. The plant is in TACB Region 5, which extends
from Corpus Christi to Victoria and in which the ambient air quality
does not meet federal standards. The Texas Air Control Board, which
is empowered by the state to require permits of facilities that will
have air emissions, has historically tried to work with industry. This
is not to say that the TACB has compromised any standards; rather, the
TACB has provided advice to industry on how to achieve the lowest possible
emission rate by incorporating the best available control technology.
Historically, the TACB has not agreed with the Environmental Protection
Agency (EPA) on the need for reducing ozone pollution down to the level
of the federal standards or on the effectiveness of the hydrocarbon
emissions control policy. To quote the view of one official of a petro-
chemical company, "TACB has not rolled over and played dead to EPA."
Thus, generally TACB has worked with industries in the siting and per-
mitting of new plants.

On January 20, 1977, TACB issued Champlin Petroleum Company a permit
(#C-4682) for construction of the plant. The specific conditions primarily
involved monitoring and design requirements. A letter to TACB from
the Corpus Christi-Nueces County Department of Public Health and Welfare,
Public Health Division, after review of the application, expressed concern
over storage and the handling of spent caustic. One of the special
conditions of the CCPC permit was a requirement that CCPC forward more
detailed engineering data on spent caustic disposal (when it became
available) and that abatement equipment approved by the TACB executive
director be installed before operations.

There is only one known protest to TACB over construction of the
plant. In a letter to this agency, Fred Burkhardt, Jr.,.an adjoining
landowner, objected to the odor and fumes from the facility and to the
deterioration of his property's value. In a reply letter to Mr. Burkhardt,
TACB reported a permit had been granted to the company three weeks before
Burkhardt's letter was received. To quote TACB's reply, "It is our opinion
that the impact upon existing air quality in the area will be minimal,"
but that if TACB discovered a violation of their rules and regulations
by this facility, "appropriate action will be initiated to insure compliance"
(TACB, March 7, 1977).

In February of 1977, Champlin requested that their permit be re-
issued in the name of Corpus Christi Petrochemical Company (Champlin,
February 9, 1977). As modifications in the design of the plant are
made, these must be submitted for review by TACB and incorporated into
the existing permit. The EPA's ruling on emission offset resulted in
CCPC filing a revised permit application, as will be discussed later.

Within 60 days after achieving normal operation, the company must file
for a TACB operating permit.

WATER QUALITY

The discharge of surface water requires a permit from both the
Texas Department of Water Resources (TDWR), formerly the Texas Water
Quality Board (TWQB), and from the Environmental Protection Agency.
An application was made by CCPC to TDWR on March 10, 1977 for a permit
to allow for the discharge of sanitary waste and vehicle and equipment
washdown waste water during the construction phase.

The permit was granted after a June 30, 1977 public hearing. Adja-
cent landowners, Fred and James Burkhardt, and their lawyer, Perry E.
Burkett, protested the discharge of waste into a ditch which crosses
their property (TWQB Document, July 18, 1977). TWQB overruled the
protests, citing the fact that the ditch already receives sewage. The
permit (#02075) was approved by the Texas Water Quality Board on August 11,
1977. This permit allows only for the discharge of treated domestic
wastewater from a package treatment plant into drainage ditches which
flow into Oso Creek.

FEDERAL PERMITS AND REQUIREMENTS

AIR QUALITY

On June 3, 1977, the administrator of the EPA ruled that CCPC was
in violation of certain parts of the Clean Air Act. Specifically, EPA
maintained that the TACB construction permit was invalid since CCPC
had not demonstrated that its air pollution emissions would be offset
by equivalent or greater emissions reduction in the same area. CCPC
was one of the first Texas companies to be held in violation by EPA.
However, this was probably more the result of the timing of the permit
application than of the specific project. CCPC argued that the company
had applied for its permit before December 21, and thus was not a new
source. EPA rejected this argument and a conference was held on June
29, 1977.

CCPC was well represented at the conference, as was EPA. The
179 page document, which contains the minutes of the conference, is
on file with EPA in Dallas. Obviously, it is not possible to recount
a full description of the conference, but the following material briefly
summarizes the minutes of this meeting.

The meeting began with EPA outlining its authority to apply its
offset policy to this project. EPA presented its findings of a dispersion

modeling study for particulate emissions which showed a great impact
on the surrounding area. Interestingly enough, EPA's modeling had been
based upon an incorrect plant location. This modeling error was indica-
tive of a number of instances where the EPA's technical information
appeared to be confused or inaccurate.
CCPC then presented the findings of its modeling which showed
minimum impact from the facility's emissions. CCPC argued that since
the actual plant site was located in a portion of an air quality region
which attained the federal standards for particulate matter, the facility
would satisfy the emissions offset requirements. While portions of
the region did not meet federal standards, CCPC contended that the
location of its facility would not impact these areas and, thus, would
not exacerbate federal standards. EPA agreed to take this information
under advisement. Throughout the meeting, TACB staff members partici-
pated in the discussion only when asked specific questions.
In summary, EPA agreed to reconstruct its modeling on particulate
matter emissions for the facility. EPA requested that CCPC furnish
further information on fugitive emissions of hydrocarbons (pumps, valves,
compressors, and flanges) and to estimate the quantity of hydrocarbons
which will be flared over a year. The EPA also requested CCPC to com-
plete a new TACB permit which showed revised hydrocarbon and particulate
matter emissions.

In late November 1977, EPA broke off emission offset negotiations
with all companies which had been held in violation (including CCPC)
and instructed them to go through the appropriate state agency in order
to obtain the necessary permits and to negotiate required offsets.
On January 9, 1978, the Texas Air Control Board, after receiving pre-
liminary approval from the Environmental Protection Agency, approved
a change in the state regulations which was modeled on the EPA's interpretive
ruling on emission offsets (Federal Register, December 21, 1976). The
TACB redrafted the permit for CCPC, incorporating those changes required
by EPA.
In June 1978, a hearing was conducted by the Texas Air Control
Board concerning a reduction of 246.6 tons of hydrocarbon emissions
from Champlin Petroleum Company's Corpus Christi refinery. This reduction
would offset the emissions resulting from the ethylene production and
barge loading facility to be constructed by the Corpus Christi Petro-
chemical Company pursuant to Texas Air Control Board permits C-4682A
and C-5633.
The emission reduction proposed by Champlin would result from (1)
removal of an existing 12,000 barrel per day (BPD) vacuum distillation
unit from operation and (2) dedication of an existing 300,000 barrel
gasoline storage tank exclusively to storage of *No. 2 fuel oil or any
fluid with a vapor pressure less than or equal to that of No.2 fuel
oil. Ceasing operations of the 12,000 BPD vacuum distillation unit
would eliminate at least 139 tons per year of hydrocarbon emissions

from the Champlin refinery. Dedication of the 300,000 barrel gasoline
storage tank to No. 2 fuel oil or any fluid with an equivalent or lower
vapor pressure would reduce hydrocarbon emissions by at least 107.6
tons per year.

Texas Air Control Board permits C-4682A and C-5633 limit emissions
from the CCPC ethylene production and barge loading facility to 188.7
tons per year. The total hydrocarbon emission reduction of 246.6 tons
per year offered by Champlin is significantly greater than the CCPC
emissions. This reduction represents reasonable progress toward attain-
ment of the national ambient air quality standards for photochemical
oxidants and will result in a positive net air quality benefit in Nueces
County, which presently exceeds the national ambient air quality standards
for photochemical oxidants. Champlin agreed to achieve the offered
246.6 tons per year hydrocarbon emission reduction before the date on
which the CCPC project commences operation, which is anticipated to
be no later than October 1, 1979.

The Texas Air Control Board found that the hydrocarbon emission
reduction offered by Champlin Petroleum Company complies with the applicable
state and federal laws and the policies of the Texas Air Control Board
regarding emission offsets in nonattainment areas. TACB thus issued
Board Order No. 78-6 to that effect.

Also, under the Federal Air Pollution Control Act, new steam generators
are subject to new source performance standards (NSPS) and an EPA inquiry.
This inquiry requires the new source company to provide an environmental
impact statement and assessment. The CCPC facility will contain four
generators or boilers. A preliminary environmental study was done by
a private firm. CCPC requested EPA to determine if these boilers were
subject to NSPS. In April of 1977, EPA ruled that the boilers were
not subject to these standards, since they would burn pyrolysis fuel
oil. EPA ruled that this type of fuel oil is a nonfossil fuel, and
only fossil fuel boilers are subject to NSPS. However, since CCPC might
burn some amount of fossil fuel, the company was required to report
quarterly that 100 percent fossil fuel was not burned in a unit, thus
eliminating the need to continually monitor the units.

WATER QUALITY

The Federal Water Pollution Control Act requires that, in order
to discharge into navigable water, a National Pollution Discharge Elim-
ination System (NPDES) permit must be obtained. At the present time,
EPA administers the NPDES permit, although it may delegate its authority
to TDWR in the future. CCPC has applied for an NPDES permit in order
to discharge effluent into the inner harbor of Corpus Christi and expects
to receive a permit by late 1978 (Hutchinson, 1978).

OTHER PERMITS

There are a number of other federal permits for which CCPC will
ultimately apply during the construction phase of this plant. They
will apply to the National Flood Insurance Program for floodplain in-
surance for facilities within the 100 year floodplain, and to the Corps
of Engineers (COE) for a permit to construct a wastewater effluent
structure below mean high tide. The latter permit will allow for con-
struction of a pipeline for the discharge of effluent into the Corpus
Christi inner harbor. Permits of this type are required if a pipeline
will intrude into a channel below the mean high tide. CCPC will probably
also request that COE make a site visit to ensure that the site is not
within a wetlands jurisidiction area. Section 404 of the Federal Water
Pollution Control Act gives the Corps jurisdiction in this determina-
tion. It is unlikely that the site will be defined as a wetlands juris-
diction area.

PERMITS FOR ASSOCIATED OPERATIONS

As previously mentioned, the proposed plans for the CCPC facility
actually involve four separate operations. One of these, the ethylene
processing plant, and its necessary permits is discussed above. Another-
operation is the barge dock. The Corps of Engineers (COE) has issued
CCPC permits for the barge dock and related operations in compliance
with Section 10 and Section 404 of the Federal Water Pollution Control
Act. The barge loading facility has also been permitted by the Texas
Air Control Board. To date, no permit application has been submitted
by CCPC to the Texas Department of Water Resources.

Permits which may be applied for relating to the pipeline distribution
and the salt dome storage facilities are indicated in Table 1. To datei
CCPC has applied for the site-injection well permit for the salt dome
storage facilities. This application is being processed. The remainder
of the permits may be required, depending on the specific design and
technical information associated with these operations.

Table I

FUTURE PERMITTING OF ASSOCIATED OPERATIONS

Level of Permit
Operation And Applicable Regulations Agen

Pipeline Distribution Federal: Section 10 permit and Corps of
Facilities Section 404 permit are required if Engineers
pipelines cross rivers

State: Easements for pipelines General
over state property - submerged Land
lands Office

Salt Dome Storage Federal: Section 10 permit and Corps of
Facilities Section 404 permit are required Engineers
if facilities are in wetland areas

S ta te: Site-injection well permit TDWR

State: Approval of dikes or TDWR
levees constructed

State: Permit to operate surface Texas
brine pits Railroad
Commission

State: Construction and operating TACB
permits for sources of air
contaminants

8. OPPOSITION TO THE CCPC FACILITY

There has been little vocal opposition to the siting of the CCPC
plant in the Corpus Christi area. Two adjacent landowners did protest
the location of the plant to TACB and TDWR, as discussed in the section
on state permits. While this is the only known instance of organized
opposition to the project, some citizens did raise the broader question
of the desirability of further industrial growth.

Located as it is on the Gulf of Mexico and with its proximity to
the Padre Island National Seashore, Corpus Christi enjoys a favorable
tourist climate. In fact, the city's voters recently passed a bond
issue to allow for the construction of a convention center and expanded
tourist facilities. At the present time, the tourist industry contributes
significantly to the local economy, and there is every reason to believe
this trend will continue.

Some citizens did question the effect of further industrial develop-
ment on the tourist industry. These individuals pointed to the effects
of industrial plants on the environment. Since these facilities tend
to be increasingly mechanized and to be located outside the city limits,
they felt tourism offered greater economic advantages to the community
as a whole. However,, these issues were raised in private discussions,
in relation to general industrial development rather than to this specific
facility.

9. LOCAL IMPACTS OF THE CCPC FACILITY

There are a variety of impacts, both positive and negative, which
could occur as the result of construction and operation of a large petro-
chemical complex. This discussion will consider only the more obvious
impacts; detailed analysis of impacts is beyond the scope of this study.
The discussion will focus on the CCPC facility and specifically the
ethylene plant, because technical and location information are not available
on the other proposed operations (i.e., the tank farms, barge docks,
pipelines, etc.). It should be stressed that the siting of a similar
plant in another community might raise an entirely different set of
impact issues. A small rural community would certainly be affected
differently by such a facility than would be a large metropolitan area
such as Corpus Christi. With a population of over 280,000 in the metro-
politan area and long-term experience with industrial development,
Corpus Christi has knowledge of and some control over the possible effects
of such a facility.

ENVIRONMENTAL IMPACTS

There are two obvious environmental impacts which may result from
the operation of the CCPC ethylene plant - the possibility of changes
in the air and water quality in the area. Certainly, petrochemical
processing plants have negatively affected the air and water quality
of some communities in the past. Recent legislation has, however, been
toward minimizing the destruction of air and water quality. As dis-
cussed in other sections of this study, the EPA has the power to enforce
federal air and water quality standards, and state agencies have the
power to require industries to meet even more stringent air and water
quality standards.

There appears to be little data to support a case for the destruc-
tion of water quality in the instance of CCPC. The plant is equipped
with its own water treatment facility, which should remove potentially
damaging compounds from effluent discharge, and as planned, the facility
will not discharge a significant amount of treated effluent, if any,
into the city's treatment system (HutQ@inson, 1978).

While the impact of the facility on water quality does not appear
to be a significant issue, the question of water availability is worthy
of discussion. The plant will purchase treated water from the city

of Corpus Christi, which could experience shortages in the future if
Choke Canyon Dam is not constructed. According to one concerned resident
of the area, industrial development of this type depletes the future
availability of water for residential use (Frishman, 1977). However,
should water shortages occur, the city's residential customers would
have priority over industrial customers.

The impact of CCPC on the air quality in the area is a more complex
question. The air quality in this region is below EPA standards, although
the problem is not severe.' The predominantly southeasterly winds tend
to disperse air emissions over primarily nonresidential areas, but the
enforcement of EPA offset is designed to ensure no further destruction
of the air quality in the area. Although CCPC has attempted to reduce
emissions from the plant to an acceptable level, there will be emissions.

Of course, CCPC is 'not the only source of industrial emissions.
There are numerous other facilities within five miles of the CCPC site;
however, EPA's focus on new facilities,has often led to tighter control
over these than over existing emission'sources.

ECONOMIC IMPACTS

There are a number of possible economic impacts which may result
from the location of the CCPC facility. Certainly, the plant will
provide jobs for a number of local residents. However, there will be
few long-term job opportunities. The construction of the plant may
provide up to 2,600 jobs for skilled and unskilled labor, but these
will be only temporary. The operation phase of the plant should provide
250 to 300 jobs, and some of these positions will probably be filled
by newcomers to the area. Without knowing the origin of residence and
the period of time of employment, the number of indirect jobs created
by the facility cannot be calculated. However, large petrochemical
complexes have generally resulted in numerous satellite industries
springing up. Thus, while the number of direct job opportunities may
be relatively small in number , a significant number of induced jobs
may be generated by the construction of the CCPC facility.

The location of the plant outside of the city limits has a number
of advantages and disadvantages 'Which have been discussed previously.
While the plant will not be taxed by the city, it will purchase water
from the city. The company is responsible for bearing the cost of ex-
tending this service to the site, but city-generated revenues from these
sourceswill be slight. In general, it is difficult to detect any
direct economic benefits to the city as a result of the plant's location.

The plant will be taxed by the county and two school districts
(parts of the plant site,lie within the boundaries of two districts).
Taxes paid by the company to the Tuloso-Midway and Calallen school
districts should significantly increase their revenues. At the same
time, it is doubtful,that the school districts' enrollments will increase

significantly because of the plant. In fact, it is likely that most
new residents will locate within the boundaries of the Corpus Christi
Independent School District, since this system serves most of the residents
in the area. Thus, while Tuloso-Midway and Calallen may receive the
tax revenues, Corpus Christi will probably receive most of the new students.
However, given the small number of new residents associated with this
plant, the number of new students should not dramatically affect the
Corpus Christi School District.

The increased traffic in the area will probably require the con-
struction of new roads and increased maintenance of others. Two of
the major roads adjacent to the site are state roads, but the remainder
are the county's responsibility. Although the construction of the plant
will. result in the need to expend funds on these roads, it is doubtful
that the impact on the county will be fiscally negative.

The possibility of industrial growth negatively affecting the
tourist industry in the area has been discussed previously. The altera-
tion of the physical environment would probably reduce its appeal to
tourists. Yet it is difficult to directly link this specific facility
to any decline in tourism. It is outside the normal tourist "beat,"
and it is only one plant out of many. Nevertheless, the cumulative
effect created by a number of similar facilities could significantly
impact the region.

SOCIAL IMPACTS

Given the population size and general characteristics of the Corpus
Christi area, it is doubtful that the plant will have far-reaching
social impacts on the community. The urban nature of the area and the
historical industrial development would suggest the area to be a highly
diversified community which is accustomed to industrial development.
However, the specific site chosen for the CCPC facility does raise
certain broad impact questions. Traditionally, industrial development
in Corpus Christi had clustered within the industrial zone near the
port. The location of this plant in what was basically an agricultural
and residential area may adversely affect the lives of nearby residents.
While the value of their land may ultimately rise, the character of
the neighborhood will change. There is certain to be increased traffic,
noise, and a certain amount of air pollution in the immediate area.
The location of this plant may have a significant impact on land use
patterns in the area by beginning a conversion to increased industrial
development.

10. SUMMARY

Corpus Christi Petrochemical Company is representative of the growing
trend for oil and chemical companies to diversify into the petrochemical
sector. The large size and capacity of the plant and its dependence
on liquid feedstock also make it illustrative of the future of the petro-
chemical industry. CCPC, like many other petrochemical plants, has
chosen to site near its raw materials and markets. This proximity,
the ability to obtain the necessary permits in some areas, and the generally
favorable business climate are probably the major incentives for a petro-
chemical facility to site in Texas. The factors which affect the choice
of one specific site over another are peculiar to some extent to each
specific facility.

In the case of CCPC, it is likely that the siting decisions were
significantly affected by the location of the parent companies' facilities.
The company could have chosen to locate either near its markets or near
its feedstock source. Its decision to pick the latter site was certainly
affected by Champlin's knowledge of and strong commitment to the Corpus
Christi area. The company's major goal was to get a piece of the bur-
geoning petrochemicals market. The increasing profitability of this
industry coupled with the relative lack of government regulation in
relation to product, particularly price of product, has made this industry
attractive to investors.

In general, though, the company appeared to make its decision on
criteria not unlike those that are used by any home buyer. It assessed
its particular needs and sought a location where it could obtain land
at a reasonable price. The facility required some amount of fresh water,
power, and accessibility to transportation systems. The company looked
for a site on which governmental agencies would allow it to build.
In other words, ease of acquiring permits was an important consideration.
Labor availability and construction and operating costs were also con-
siderations. The area was considered a nice place for employees to
live. Thus, while CCPC's siting requirements and decision-making process
were in certain ways unique, their general areas of concern are certainly
mirrored in the siting decisions of other petrochemical companies.

I
r

REFERENCES

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