RICHMOND -- A Contra Costa Superior Court judge has lifted an injunction on Chevron's refinery modernization project, paving the way for work to start as early as mid-2016, a company spokeswoman said Tuesday.

The planned improvements include safety upgrades to piping systems and a new and more efficient hydrogen plant that can process oil that has more sulfur -- increasingly common as the world's supply diminishes.

The ambitious $1 billion modernization project was first submitted to the city in 2006 but delayed after environmental groups sued the city and refinery in 2008, arguing that the project could increase pollution. A judge tossed the project's environmental impact report, halting work that had already started. The modernization was later scaled back and approved by the Richmond City Council last summer. To win approval from state and local officials, the refinery agreed to cap greenhouse emissions at current levels by limiting the amount of high-sulfur oil it can process. 

This February, the Bay Area Air Quality Management District issued a permit to Chevron based on updated plans, but the legal challenge remained. Now that it has been lifted, the refinery, one of seven the oil company has around the country, can begin the work, expected to last two years.

"These are two very important milestones that allow us to move ahead with our engineering, procurement and construction plans," said Leah Casey, a spokeswoman for the refinery. "We're very excited."

It will take the refinery another year to update engineering plans, hire construction teams and bid work to contract companies, Casey said.

Chevron will also pay the city $11 million this June, the first portion of the $90 million Environmental and Community Investment Agreement that will be paid over the next 10 years. The $11 million installment includes $8 million for a scholarship program that pays for every Richmond high school graduate to attend college and $3 million for green energy initiatives, such as a 2-megawatt photovoltaic solar farm, projects that promote electric vehicles and urban forestry programs.

The modernization is expected to create about 1,200 temporary construction jobs. A big focus of the project is replacing some of the 5,000 miles of pipe that zigzag through the facility, built in 1902 by Standard Oil.

As work moves forward, Chevron plans to replace 17 carbon steel piping circuits with chrome ones, which are more resistant to corrosion. Corroded pipe that had become as thin as a penny and sprung a leak was blamed for the August 2012 refinery fire that sent thousands to area hospitals with complaints of respiratory and other health problems.

The U.S. Chemical Safety Board later found that Chevron repeatedly failed over a 10-year period to replace corroded piping in the crude-oil processing unit and that the pipe rupture was caused by a sulfur corrosion resulting from low silicon content.

The modernization project also replaces three Chevron SuezMax ships with two cleaner-running vessels, although the vessels will still idle in the Port of Richmond while they offload crude.

Critics had said the improvements don't do nearly enough to reduce the region's and country's dependence on oil.

"The fundamental issues are still there," said Mike Parker, a member of the Richmond Progressive Alliance, a local organization that has long criticized Chevron over its environmental record. "The settlement didn't provide for a process to reduce emissions, and Chevron is still not paying its fair share in state or local taxes. It would be great if Chevron could become a good neighbor, but they're just doing what they have been forced to do."

Environmental groups and the RPA had pushed the refinery to "electrify" the dock, allowing ships bringing crude to Richmond to shut off engines as they transferred oil from the berths to the refinery. Other demands included doming storage tanks, replacing more piping and more investments in clean energy.

Mayor Tom Butt, a longtime critic of the refinery who opposed the modernization project when it was first proposed, said the $90 million would help both the city and local residents, including the city's Climate Reduction Plan.

"I'm just glad it's over with," Butt said Tuesday. "It's been a long process, and it's a shame it took so long. If both the City Council and Chevron had been smarter about it, we could have been here seven years ago."

Follow Karina Ioffee at Twitter.com/kioffee.

Reposted from Contra Costa Times.