Refineries help power state’s economic engine
by Tara Nelson


It would be hard to imagine Washington state without petroleum manufacturing. With generous benefits, one of the best safety ratings in the manufacturing sector, and wages twice that of Skagit and Whatcom county averages, refinery jobs can be competitive and highly sought. Many refining companies, however, are concerned about an aging workforce in Washington, particularly in Whatcom County, that could leave them scrambling to find replacements. Meanwhile, programs like Bellingham Technical College’s process technology program (PTEC) are actively seeking recruits in partnership with petroleum refining companies to train the next generation of workers.

A notable industry
Washington’s five major oil refineries – Tesoro and Shell Puget Sound refineries in Anacortes, British Petroleum at Cherry Point, ConocoPhillip’s refinery in Ferndale and U.S. Oil refinery in Tacoma – make for one of Washington’s largest employment sectors. Together, those companies produced more than 20,000 direct and indirect jobs and nearly $1 billion in personal income for residents of Washington state in 2003.
A 2004 study by the Washington Research Council (WRC) found those five refineries paid 1,725 direct employees an average of $80,000 in annual income, based on figures from a 2003 Washington Refiners survey conducted by WRC. According to state Employment Security Department (ESD) figures, that is twice the state average for all jobs in 2002, which was $38,244.
The report found even greater disparities between refining wages and total average wages in Whatcom and Skagit counties, which was $28,283 in Whatcom County and $28,662 in Skagit County. The average wage of those four regional refineries was, by comparison, $75,861.
Kathleen Pennington, community relations manager at ConocoPhillip’s Ferndale refinery, for example, said that with some overtime, a full-time employee with two or more years of experience can make as much as $80,000 average annual income. A maintenance worker who works full-time with little or no overtime, can make as much as $65,000 average annual income.
“We have very competitive wages and benefits,” she said.
Additionally, those direct jobs help create and support additional and supporting industries such as transportation (i.e. barges pipelines, trucks and rail), contract laborers, painters, electricians, industrial welders, as well as more specialized contractors, general administration workers and retailers such as gasoline stations and bulk stations.
Using the PC-based regional economic analysis system IMPLAN, if 100 jobs are added to the petroleum industry in the U.S. would have a total employment impact of 328 jobs, giving it a multiplier of 3.28.
“Multipliers are a way of summarizing the ripple effects,” said Hart Hodges, a professor of economics at Western Washington University and director of the university’s Center for Economic and Business Research (CEBR). “So if you add 100 jobs at refineries in this region, those people get a salary, spend it in the region, and the business activities that surround those new employees result in a certain amount of spending that is revenue for other businesses. That additional revenue and income gets rippled through and other businesses create jobs as a result of those 100 refinery jobs. Some additional jobs will be in obvious business service areas, some in machine repair, transportation, retail and health care.”
If you really get into it, there’ll be 100 direct jobs, then indirect jobs in those various support industries, and then induced jobs in the regional economy.”
And what are induced jobs? Just imagine ripples farther away, Hodges said.
“The multiplier basically tells you there is more impact and more spending associated with a refinery job than a job at Macy’s,” he said.
ConocoPhillip’s Ferndale refinery, for example, has approximately 300 full-time employees and 200 contractors who are employed at any given time. Pennington said those contractors often include companies such as Anvil Corp., Timec, VECO engineering, Western Refinery Services, Haskell Services and Birch Equipment, to name a few. During a turn-around, or scheduled equipment maintenance and improvements, that number can increase to as many as 1,200 additional contract employees, she said.
Shell’s Puget Sound refinery approximately 400 employees and employs as many as 200 contractors at any given time, said Susan Krienan, the plant’s general manager.
BP’s Cherry Point refinery, meanwhile, has approximately 650 direct employees and 300 contractors who are employed at any given time, said BP Cherry Point spokesperson Mike Abendhoff.
“If you take the 650 jobs here and then multiply them [by the industry multiplier], that’s a huge number of jobs that are created,” he said. “You talk about an economic engine and BP and Conoco and Shell are big cylinders in those engines.”
For that reason, Hodges said measuring economic contributions of petroleum manufacturing can sometime be difficult because their growth can be hidden.
“Refinery jobs in this area, aren’t people just working at BP and ConocoPhillips, you got to think about Matrix services, VECO consulting and Anvil consulting, because those industries exist to support refineries here. When the refineries do their turnarounds and their maintenance, they bring on contract workers from those organizations,” he said. “So how to measure their growth can be tricky.”
Contractors are used for everything from maintenance for daily repairs, to specialized tank cleaning, temporary administration help, building scaffolds, and maintaining and repairing electrical systems, he said.
Abendhoff added that while some contractors are tailored specifically toward refinery work, many are generally trained.
“For example, there are some unique nuances to the refinery electrical systems than your home electrical systems,” he said. “In general, though, the basic concepts are the same but the environment that you’re in is just a little bit different.”
Petroleum manufacturers were also among the leading taxpayers in the state. In 2003, those companies paid more than $53.3 million in business and occupation taxes, $36.1 million in sales and use taxes, $12.8 million in property taxes, and $2.3 million in regulatory fees.

Value added
Hodges said that part of the reason for this high jobs multiplier is because the refining industry’s extraordinary capital intensive nature, as compared to another industry such as retail.
“In retail, all someone’s done has brought a product in from somewhere else and sold it,” he said. “Whereas, refineries need a tremendous amount of maintenance, supplies and various inputs in the production process, plus the wages are higher; so the wages that are being paid out get spent in the retail side, which could also create and maintain jobs.”
ConocoPhillips’ Pennington agreed.
“The capital investment is really part of the significant impact that refineries have on their communities,” she said. “That is, you don’t just build a refinery and then you’re done. You’re constantly adding, maintaining, modifying to tweak your process and continue to try to get more from what you have available.”
Hodges added that the CEBR is currently working on a notable industries study that finds that petroleum manufacturing jobs stand out in terms of employee wages and benefits to the local economy.
Hodges, however, said he didn’t understand how, when he polled local chamber of commerce organizers about notable Whatcom County industries, many individuals consistently failed to mention petroleum refining.
“People didn’t remember to list that industry as important in the region,” he said. “When you say, ‘Well, what about refineries?’ They say, ‘Oh, yeah, put those in.’ But it’s not automatic. For some reason, it’s not on people’s radar. Either people think there’s something bad about oil or they’re mad about gas prices, but it’s not automatic. But when you think about 650 workers at BP and 300 from Conoco just in Whatcom County, you’re talking about two of the top 25 employers in terms of size. And when you add in VECO, Anvil and Matrix, combined, it’s the biggest industry sector in Whatcom County, but people don’t automatically think about that.”

An aging workforce
As many refineries’ current employees are reaching retirement age, the industry is looking for new feet to fill old shoes.
A 2006 study by CEBR found that between 1995 and 2005, the number of Whatcom County residents between the ages of 50 and 59 increased 80 percent according to 2000 Census figures. Meanwhile, the number of residents in other age brackets increased more slowly, and the number of residents between the ages of 30 and 39 decreased.
“We’ve actually lost 30-year-olds and gained a few 50-year-olds,” he said during an economic forum on May 4, which was sponsored by the Port of Bellingham and CEBR.
“And that’s partly because a lot of people are waking up at 30 and saying ‘Uh-oh, I need to go make money.”
Hodges, however, said he thinks many young adults don’t realize the types of jobs that are available in Whatcom and Skagit counties.
“People might think all the refinery jobs are blue collar, and some of them are, for sure. But there are some good paying jobs and some of the better paying jobs in the county are associated with the refineries. In terms of industry averages, they’re at the top.”
Pennington said 47 percent of the total workforce at the plant is 51 years or older and 42 percent of workers have 21 or more years of service. In addition, 81 percent of workers in the refinery’s maintenance department are 51 years or older, she said.
BP Cherry Point spokesman Mike Abendhoff said refinery officials there also noticed an emerging age gap.
“We looked internally at our workforce and then we looked at our investment plans and we saw a tremendous need to fill new jobs, not to mention, you take a look at our workforce today and you got pending retirements in four to six years,” he said.
Part of that is that succession planning, as well. Abendhoff said BP plans to hire another 20 to 30 people by the end of the 2006, which will bring them up to 700 employees. In the meantime, Abendhoff said one of the other challenges is trying to facilitate a knowledge transfer from experienced workers to new employees.
“There’s a lot of knowledge that isn’t in a manual,” he said. “So we’ve tried to bring in more hires and basically ‘staff-up’ ahead of time so newer workers can work with more experienced workers and learn from one another. And that’s not something you do in a month when someone says they’re going to retire. You do it over a period of two to three years.”
Susan Krienan, of Shell’s Puget Sound refinery, however, said their retirement projections within the next five years were closer to 30 percent.
“A 30 percent turnover in five years is not terribly concerning but we do work with Bellingham Technical College and high schools to encourage students to come into the refining fields,” she said. “So the demographics are there but it’s nothing alarming, and I think we’re in a situation where we can manage it.”
Additionally, she said she thinks that refinery jobs at their Anacortes plant were in high demand.
“We just advertised that we had eight or 10 operating positions and we got 320 applicants,” she said. “So I would say there is some perception that we are a good employer. There certainly is a thought in this area that people see us as a good place to work.”

Training the new generation
Statistics on an aging refinery workforce are causing concern among other refinery officials, Pennington said. In response, ConocoPhillips and British Petroleum in Ferndale, and Tesoro and Shell refineries in Anacortes, partnered with Bellingham Technical College in 2004 to develop PTEC, a process and control technology program that can turn out students with enough manufacturing experience for entry-level refinery jobs.
The program includes basic instruction on monitoring and controlling process equipment such as pumps, compressors, heat exchangers, distillation columns, boilers and furnaces; troubleshooting and problem solving; and safety and quality testing. The proximity to the refineries is also convenient, as Abendhoff said the program has had nearly 100 percent job placement with refineries offering a variety of internships, tours and job-shadowing programs.
Satpal Sidhu, dean of the college’s trades and engineering programs, said while he thinks the program has been a success, he would like to see more people enroll. Currently, there are 60 enrollment slots available, but only 23 students are enrolled in the program. Sidhu said he thinks part of the problem is a lack of knowledge about refining careers.
“There are a lot of misgivings,” Sidhu said. “These are the best kept secrets in our county. Where else can you get a job with two years of schooling and be able to make close to $100,000?”
Those refineries were instrumental in getting the program started, Sidhu said. ConocoPhillips offered a $100,000 cash donation, and BP initially made a $25,000 donation to that program and continues to support it on an ongoing basis.
“We saw that our workforce was aging and we needed to come up with a resource plan for the near future,” Pennington said.

Good neighbors
The refineries physical plants can appear imposing figures on the local skyline, but community groups have found the people within those plants to be far less imposing, even when there are tough issues on the table.
Alan Friedlob, a member of the Birch Bay Steering Committee’s shoreline enhancement subcommittee, a citizen group in Birch Bay, said he thought the relationship between Birch Bay residents and BP has been generally positive.
In June of 2005, the BP Cherry Point Refinery received the Association of Washington Business Community Service Award for its salmon habitat restoration efforts on Terrell Creek. The creek, which is located south of Blaine, was once a flourishing habitat for chum, coho and steelhead but state agencies found that, in some areas, dissolved oxygen levels were extremely low as a result of logging, farming activities and crowding by non-native plant species. Earlier that year, BP employees, along with Nooksack Salmon Enhancement Association (NSEA) volunteers, helped remove non-native grasses such as reed canary grass that had a choking effect on the stream. They also introduced thousands of chum salmon eggs into the stream and introduced woody debris to create pools, offering protection to juvenile fish.
“The issue is not that BP acts as a good corporate citizen,” Friedlob said. “It’s what happens if expansion conflicts with such efforts.” Friedlob said he is somewhat concerned about future expansions conflicting with efforts to preserve and restore environmentally sensitive areas such as Terrell Creek.
“For example, the cogen plant is being built within the confines of the refinery. Had BP sought to expand, and acquire additional land for this venture, the outcome may have been different with a strong NIMBY (not in my backyard) response. With development of this large power plant, citizen monitoring of air and water discharge, and noise pollution will be critical.”
Most recently, in 2005, BP donated $100,000 to Whatcom Land Trust toward the purchase of three five-acre parcels near Birch Bay State Park to complete a 180-acre conservation buffer designed to protect one of the largest heronries on the West Coast.
The other area refineries have done their part to enhance their community as well.
Shell Puget Sound Refinery announced in April that the refinery received ISO 14001 environmental management standard certification. This international standard certification places the refinery in the top tier for environmental management practices of industrial facilities around the world.
In addittion to a four-hour training session on environmental awareness, all employees and contractors participated in a new annual refinery-wide clean-up day that included not only the 800-acre facility, but also nearby roads and highways.
At Tesoro, one environmental initiative at the Anacortes refinery is the EAGLES program – Environmental Awareness Group Learning Environmental Solutions. As the company Web site describes, this group of employee volunteers sponsors and coordinates a wide range of programs benefiting the environment, including roadside litter cleanup, Earth Day commemorations, and ongoing communications on environmental topics to other plant employees.
ConocoPhillips is likewise involved in commmunity initiatives, including the city of Ferndale’s ConocoPhillips Sports Complex. The complex includes paths that wind through enhanced wetland areas.
Birch Bay Steering Committee chair Kathy Berg gives another example of community participation: BP representatives were involved in the steering committee’s efforts to form a community sub-area plan.
“We were very appreciative with BP as we were going through the process of developing a community plan,” she said. “(They) had a presence at the table, they own property in what we call the Terrell Creek neighborhood and they’ve worked very hard apparently with NSEA to restore Terrell Creek.”
When asked how BP and environmental groups have managed to put their differences aside on some issues to work together on others, Abendhoff said it’s been difficult but rewarding.
“It’s definitely a challenge,” he said. “Our position has always been open transparent and accessible, if an environmental group has a concern about our business we like to invite them to the table so we can at least talk with them – and we may not agree on everything.
“But if we don’t agree, we’ll at least be upfront with them. We’ve got huge investments here and until communities and the U.S. decides that our products don’t need to be here, it’s our job to produce products and try to have the least amount of environmental impact as possible. Our environmental footprint will never go away but at least we can try to minimize it.”
Berg agreed, adding that although the committee and refinery officials do not always agree, they appreciate their availability to the community.
“Sometimes we agree to disagree,” she said. “A lot of us, for example, didn’t necessarily agree with their position on the cogen plant, but at least we had someone to talk to and we appreciated their participation.”
In other circumstances, Berg said BP has been responsive to community members who have concerns or are bothered by noise of some of the refinery’s operations. “As a community, we have a good relationship with them.”