Flint Hills plans Alaska refinery closure

Flint Hills Resources Alaska LLC (FHRA), a wholly owned subsidiary of Koch Industries Inc., Wichita, Kan., plans to cease crude oil processing at its 85,000-b/d North Pole refinery near Fairbanks, Alas., by June.

The refinery’s extraction unit will be shut down on May 1, ending gasoline production, while crude unit No. 2 will be shuttered no later than June 1, ending production of jet fuel and all other refined products, the company said.

The refinery’s closure stems from the enormous amount of money and resources FHRA has had to spend addressing soil and groundwater contamination that was caused when the plant and the land beneath it was under previous ownership by Williams Cos. Inc., Tulsa, and the state of Alaska, respectively, according to Mike Brose, FHRA vice-president and refinery manager.

“So far, neither Williams nor the state of Alaska have accepted any responsibility for the cleanup,” Brose said. “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.”

Despite the refinery’s shutdown, FHRA will continue to meet its regulatory commitments to operate the groundwater remediation system to actively remove sulfolane from the onsite aquifer, Brose said.

Regarding petroleum-product supply to the local market, FHRA said it will continue marketing fuels from other suppliers through its terminals in Anchorage and Fairbanks, including the North Pole Terminal and associated tank farm, which has 720,000 bbl, or about 30 million gal, of product storage.

Products from other sources will be able to come into the terminal by truck or rail for distribution to regional markets, according to the company.

But “FHRA will entertain offers for the assets associated with the refinery as an ongoing enterprise or as a terminal/marketing operation,” Brose said.

FHRA acquired the North Pole refinery and its associated terminals in Fairbanks and Anchorage in 2004 (OGJ Online, Dec. 20, 2004).

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