By LYNN DOAN and ELIOT CAROOM
Flint Hills Resources will begin to permanently halt
operations in May at its North Pole refinery, Alaskas
largest by capacity, citing poor economics and
enormous costs for cleaning up soil and
The subsidiary of Koch Industries will take the extraction
unit at the refinery near Fairbanks out of service on May 1,
ending gasoline production, and shut the No. 2 crude unit by
June 1, ceasing the output of jet fuel and all other refined
products, the Wichita, Kansas-based company said. It will
continue to sell fuels at terminals in Anchorage and
The announcement follows the shutdown of the refinerys
No. 1 crude unit in early 2012 because of what Flint Hills
described at the time as challenging economics
and rising crude prices. Cleaning contaminated soil and
groundwater has further compounded costs, the company said.
Our company has spent an enormous amount of money and
resources addressing soil and groundwater
contamination, Mike Brose, manager of the North Pole refinery
, said in the
companys statement. With the already extremely
market conditions, the
added burden of excessive costs and uncertainties over future
cleanup responsibilities make continued refining
Spot Alaska North Slope crude prices have climbed 9.2% in the
past three years as oil production in the state declines.
Output has dropped every year since 2002 as the yield from
existing wells shrinks.
The sulfolane contamination at the refinery
occurred when Williams
Cos. owned the plant and the state of Alaska held the land
underneath it, Brose said. Flint Hills bought the complex and
terminals in Fairbanks and Anchorage in July 2004, the
companys website shows.
Neither Williams nor the State of Alaska have accepted
any responsibility for the cleanup, he said.
Ty Keltner, a spokesman for the Alaska Department of
Environmental Conservation, said the agency is preparing a
response to the companys announcement. Tom Droege, a
spokesman for Williams, didnt immediately respond to a
telephone request for comment.
The North Pole complex can run 226,500 bpd, data compiled by
Bloomberg show. BP, ConocoPhillips, Tesoro and Petro
Star also owned refineries in Alaska as of Jan. 1, 2013,
according to an Energy Information Administration report.
Flint Hills will sell refined products at the terminals in
Alaska using fuel shipped by rail or truck from refiners in
the state and other potential sources, Jake
Reint, a Koch spokesman, said by e-mail. The refinery has
720,000 bbl of tank storage capacity thats linked to
the companys North Pole terminal.
The company will entertain offers for the assets
associated with the refinery as an ongoing enterprise or as a
terminal/marketing operation, Brose said. The refinery
will keep 35 employees to
operate the North Pole site and 10 to work at the Port of
Anchorage terminal, according to the statement.