(SitNews) Ketchikan, Alaska - Flint Hills Resources Alaska, LLC announced Tuesday that it would cease crude oil processing at its North Pole refinery in the next few months. The refinery employs more than 125 Alaskans between the Port of Anchorage and its North Pole operations. 

In a meeting with employees earlier Tuesday, the company said they expect about 35 employees to be retained for operation of the North Pole Terminal. The tank farm associated with the terminal has 720,000 barrels of product storage, which equates to approximately 30 million gallons of product. Product for distribution to local markets can come into the FHRA North Pole terminal by truck or rail. About 10 employees will also be retained at the Port of Anchorage terminal.

Mike Brose, the Vice President of FHRA and the refinery manager, stated "this has been a difficult decision made after a long, thorough and deliberative process. Our company has spent an enormous amount of money and resources addressing soil and groundwater contamination that was caused when Williams owned the refinery and the State of Alaska owned the land underneath it. So far, neither Williams nor the State of Alaska have accepted any responsibility for the cleanup. With the already extremely difficult refining market conditions, the added burden of excessive costs and uncertainties over future cleanup responsibilities make continued refining operations impossible."

Brose went on to comment that, "North Pole residents who live in the area affected by the groundwater contamination will continue to be protected from sulfolane exposure. Those residents are protected by alternative water sources provided by FHRA. We will also continue to meet our regulatory commitments to operate our groundwater remediation system to actively remove sulfolane from the aquifer on site." He also noted that, "FHRA will entertain offers for the assets associated with the refinery as an ongoing enterprise or as a terminal/marketing operation."

The company and the State have been at odds over who bears responsibility for cleaning up groundwater contamination which occurred on the site: Flint Hills, the State or the prior owner, Williams.

According to Flint Hills Resources, employees not retained for Alaska terminals services will be encouraged to apply for positions at other company facilities located throughout the lower 48 states. The company will provide relocation assistance to employees taking positions at other locations.

The extraction unit at the North Pole refinery will be shut down on May 1, 2014, ending gasoline production. Crude unit #2 will shut down shortly thereafter, depending on operational requirements, but no later than June 1, 2014. The closure of crude unit #2 will end production of jet fuel and all other refined products. The company will continue to market fuels through its terminals in Anchorage and Fairbanks. The supply for those terminals will come from another source.

In a prepared statement, Governor Sean Parnell said, “The negative impacts of this closure will be felt across our state, particularly by those in North Pole.” He said. “I am extremely concerned for those who will lose their jobs and the families that will be impacted. I have directed the Department of Labor and Workforce Development to be a resource for these Alaskans, helping them to find new opportunities in Alaska’s strong economy.”

Parnell said the department will work closely with the Flint Hills human resources staff, and schedule workshops for the affected workers. The department can provide workers with immediate job search assistance, information on unemployment insurance benefits, career assessments and counseling, interview training, and resume writing. Other services may include skills enhancement training and support services.

Alaska’s senior senator and the ranking member on the Senate Energy and Natural Resources Committee Lisa Murkowski said in a prepared statement, “This is a major blow to our state, particularly the economies of Fairbanks and North Pole as the refinery paid some of the highest wages in the region. My thoughts right now are with the families of the workers who will lose their jobs or will have to transfer out of the state. I have reached out to the Alyeska Pipeline Service Co. to ensure that the loss of the refinery won’t impact the integrity of the trans-Alaska pipeline. I am also concerned about the potential economic impact this decision will have on the Alaska Railroad and the Ted Stevens Anchorage International Airport,” Murkowski said. “Today’s announcement is yet another reminder of the importance of making sure Alaska has a competitive business environment.”

“[Tuesday's] announcement by Flint Hills is disappointing,” said Congressman Don Young. “At a time when we should be encouraging expanded production and value added manufacturing of the abundant energy resources our state and nation have been blessed with, we see companies like Flint Hills shuttering their operations due to deteriorating conditions caused by diminished supplies and onerous regulation. If this doesn’t open our eyes to the current environment in the energy sector, I don’t know what will.”

“Alaska is living on borrowed time unless we find ways to reverse our state’s steady decline in oil and gas production and again fill the pipeline,” Congressman Don Young said. “This process must begin at home and that’s why supporting policies on the state level that encourage development and opposing attempts by the federal government and the Obama Administration’s environmentalist friends to stifle development on the North Slope and in the Arctic offshore are so important. The consequences of not doing so spread far and wide, beyond the roughly 70 Flint Hills employees who will lose their jobs, beyond the impact to Eielson Air Force base’s fuel supply, or the tax implications this decision will have on local governments, but in our many other sectors that depend on the strength of industry.”

“This is a sad day for the entire Interior region and Alaska as a whole,” Delegation Chair Rep. Pete Higgins, R-Fairbanks, said. “We will be looking to the governor for his leadership in the coming days, which will hopefully address the Dept. of Environmental Conservation decisions that forced Flint Hills into making this announcement. This will have far-reaching impacts economically to the Interior. The news hit us hard and fast today, and we will be working with the governor and the DEC to alleviate the impact to the families and businesses affected by the shutdown.”

“I am very disappointed,” Senate Majority Leader John Coghill, R-North Pole, said. “It will have a huge negative impact on workers and our community and our state.”

“I am LIVID! This is terrible news for North Pole and for all of Alaska,” Rep. Doug Isaacson, R-North Pole, said. “In my opinion this was foreseeable and preventable. The domino effect of losing 81 refinery jobs means 800 jobs are affected.  The railroad that will lose substantial revenue and the communities that will hurt significantly.”

“More stringent regulations hit close to home,” Rep. Tammie Wilson, R-Fairbanks/North Pole, said. “Unrealistic expectations by the DEC played a major role in the closing. The ripple effect of this tragedy will be felt by the entire community. We must make sure we take care of all those effected.”

"I don't know how, but we need to fix this,” Senate Finance Co-Chair Pete Kelly, R-Fairbanks, said. “Fairbanks didn't accept high heating bills and we've got a trucking project on the way. We didn't accept what was happening with the military and we fixed that.  Healy Clean Coal. A gas line project. If we can turn those things around we can turn this around too.”    

“Fairbanksans and Interior Alaska know actions speak louder than words: The Koch Brothers are closing the refinery and tossing Alaska aside while choosing to invest hundreds of millions in political attacks. It shows how little they care about Alaska and Alaskans,” said Mike Wenstrup, Fairbanks resident and Chair of the Alaska Democratic Party.

The decision follows an April 2013 agreement between Alaska Department of Natural Resources and Flint Hills to provide royalty oil to the refinery for five years. DNR negotiated a deal with Flint Hill for 18,000 – 30,000 barrels of oil a day.

The refinery, which has been open for nearly 37 years, had a processing capacity of 85,000 barrels of oil per day, most of which was used for aviation fuel. The Koch Brothers’ firm Flint Hill Resources acquired the refinery in 2004.  Flint Hills Resources states that direct and indirect economic benefits from the refinery were $27 million annually.

Source of News: 

Flint Hills Resources Alaska, LLC
www.fhr.com

Office of the Governor
www.gov.state.ak.us

Alaska Democratic Party
www.alaska democrats.org

Alaska Legislature’s Interior Delegation
www.akleg.gov

 

SitNews ©2014
Stories In The News
Ketchikan, Alaska

Articles & photographs that appear in SitNews may be protected by copyright and may not be reprinted without written permission from and payment of any required fees to the proper sources.