The impending closure of one of Hawaii’s two oil refineries is bolstering calls from energy experts and state officials to diversify Hawaii’s energy sources and wean the state off of its near total dependence on imported oil.
Advocates of both renewable energy and natural gas are calling Tesoro’s Tuesday announcement that it is shuttering its Kapolei facility a wake-up call to move faster to introduce alternative energy sources.
Jeff Kissel, CEO of Hawaii Gas, said the development underscores the need to bring liquefied natural gas to Hawaii.
“It absolutely supports the argument to diversify our fuel sources, and liquified natural gas is one of them,” said Kissel. “It’s what our company has been saying for four years now.”
The closure will leave Hawaii with only one refinery, Chevron, which has the capacity to produce about 54,000 barrels of refined fuel per day. Tesoro, which employs about 240 people and is the state’s largest refinery, has a capacity of 94,000 barrels per day. The refineries produce fuel oil for electricity generation, gasoline and marine and jet fuel. Hawaii also imports oil that is already refined.
The closure will not impact gas or electricity prices for Hawaii residents under normal circumstances, said Fereidun Fesharaki, an international oil consultant and a senior fellow at the East-West Center. But it will make Hawaii more vulnerable to price fluctuations in the international oil market, he said.
“There are plenty of products around and supply and prices will be unaffected,” he told Civil Beat by email. “However, if there is a global crisis, then Hawaii is more vulnerable then anywhere else in the mainland.”
Tesoro announced about a year ago that it was leaving the Hawaii market and looking for a buyer for its refinery. But Tesoro was unable to unload it.
“After going through a very diligent effort to meet with potentially interested parties, we didn’t receive any credible bids,” said Lance Tanaka, a spokesman for Tesoro. The company is looking to turn the refinery into a distribution facility.
Tanaka wouldn’t comment on the reason for closing the facility other than to say that the refinery was no longer in line with the company’s top priorities. But both refineries have struggled for years, according to past news reports.
And Fesharaki said that the combination of Hawaii’s renewable energy goals and new environmental regulations makes it untenable for refiners to survive in Hawaii in the long-term. He said it was important for Hawaii to move forward on LNG.
“If the refinery is not there to produce fuel oil, the only realistic option is either using expensive diesel fuel or LNG. Renewable options are much more long-term goals and only people who speak from passion not logic believe that in the next few years there is any other option,” he said in an email. “These changes are before us within three to five years and pontificating for a dream which may come true in 2030s and 2040s does serious harm to the people of Hawaii and to Hawaiian economy and competitiveness. We have no choice but to go to LNG: It is cheaper, less polluting and home grown.”
The Hawaii Clean Energy Initiative mandates the state switch to renewables for 40 percent of its energy needs and reduce electricity consumption by 30 percent by 2030. Gov. Neil Abercrombie also signaled last year that he was pushing the state to begin importing LNG to provide relief to ratepayers who pay three times the national average for electricity.
The Abercrombie administration, as well as members of Hawaii’s congressional delegation to Washington D.C, said Tesoro’s closure underscored the urgency of moving quickly to meet the state’s clean energy goals.
“We are in a time of transition in terms of our energy mix and people that have been observing Hawaii’s energy portfolio have for years expected this moment to happen,” Sen. Brian Schatz told Civil Beat. “And this is why we need to continue the Hawaii Clean Energy Initiative, while maintaining firm baseload power.”
Sen. Mazie Hirono also said that Hawaii needs to move toward energy independence.
“While Hawaii is the most energy dependent state in the nation, we are not a dependent people,” she said in a statement. “We must continue to find more ways to support research and development of renewable and alternative energy sources.”
DISCUSSION: *What energy sources would you like to see being tapped in Hawaii?
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