Oil reserve site raises ire, Bush policy tested

By Tom Doggett

WASHINGTON (Reuters) - The Bush administration says it favors "environmentally friendly" energy development, but that policy is under attack in a Mississippi town where residents worry a planned emergency oil reserve may drain a river, destroy wetlands and harm Gulf of Mexico fishing areas.

There is fear the Energy Department's plan to carve out underground salt caverns in Richton, Mississippi, to hold some 160 million barrels of crude oil could be the worst environmental disaster to hit the state since Hurricane Katrina.

The government's decision to pick Richton as the fifth storage site in expanding the country's Strategic Petroleum Reserve was touted as a $4 billion economic boost for a state still suffering from being sideswiped by Katrina.

The Energy Department said the oil site will be constructed in an "environmentally friendly" manner, but many residents and environmental groups feel that is just government-speak.

"That's an absolute joke, there is nothing environmentally friendly about this project," said Steve Shepard, Gulf Coast director for the Sierra Club's Mississippi chapter. "They want to ram it down our throats."

The strategic reserve, created by Congress after the 1973-74 Arab oil embargo, is the largest stockpile of government-owned crude in the world. It now holds a record 701 million barrels of oil at four locations in Texas and Louisiana.

The Department of Energy is boosting the reserve to 1 billion barrels, as Congress mandated, by adding Richton and expanding two existing sites. Richton was chosen because it is less vulnerable to hurricanes but close to a major pipeline system and the Gulf of Mexico for easy oil deliveries.

But many locals are horrified the government may drain 50 million gallons of water a day from the Pascagoula River for five years to dissolve the salt in the caverns. The resulting brine is to be carried away in a pipeline -- which the Energy Department admits will probably leak many times -- and dumped into the Gulf of Mexico not far from the state's coastline.