Flint Hills Resources explores options for North Pole refinery
Originally published Monday, May 12, 2008 at 1:09 p.m.
Updated Tuesday, May 13, 2008 at 12:30 a.m.
Flint Hills Resources is considering selling or reshaping its North Pole refinery operations and Alaska shipping terminals.
Company President Brad Razook wrote in an e-mail to employees in Alaska on Monday that the Kansas-based company will explore three options — selling the plant, “reconfiguring” the site and expanding operations to increase volume and reduce operating costs.
“Our goal is to find the highest and best use of these assets by the end of the year,” he wrote.
Razook’s e-mail indicated changes may be “needed” at the 30-year-old refinery, which relies heavily on oil as a feedstock — unlike many other refineries in the United States, which can rely largely on natural gas.
The North Pole plant has a refining capacity of about 220,000 barrels of crude per day, according to Flint Hills, which reports employing about 175 people in Alaska.
Flint Hills has product terminals in Fairbanks and Anchorage. It produces gasoline, heating oil, diesel, gas oil and asphalt, but about 60 percent of its finished products are sold as jet fuel.
The Monday announcement leaves unclear what the option of reconfiguring the refinery would mean. Flint Hills Resources Alaska spokesman Jeff Cook confirmed the company’s plans and declined to provide details on its options.
“We’ve got a process, and as we move along this process we’ll have more to say then,” he said.
Word that the company is reassessing options at the refinery concerned elected officials from the Fairbanks area. Sen. Gene Therriault, R-North Pole, noted high energy costs experienced by residents and businesses are surely also being felt at the refinery.
Therriault said he worried it could be becoming increasingly difficult for a private-sector owner to keep the plant profitable.
“No matter what, I don’t think it is to the benefit of Interior consumers to see the operation go out of business,” Therriault said.
Cook declined to discuss the refinery’s recent annual profits.
Borough Mayor Jim Whitaker said the refinery is a major industrial component in the area’s economy.
“We have to take it seriously,” Whitaker said. “The downside to us would be that this would be a smaller employer, or an employer not at all. ... The negative impact on the community cannot be overstated.”
The refinery was first built as a small plant, one capable of processing 25,000 barrels a day. Its owner, Earth Resources, expanded capacity in 1980 before selling most of its stock to MAPCO, which expanded the plant again before selling to Williams Company in 1998, according to Flint Hills.
Aside from the $147 million North Pole plant, Flint Hills has refineries in Minnesota and Texas and chemical businesses in Illinois, Michigan and Texas, according to the company’s Web site. It bought the North Pole operation from Williams in 2004.
North Pole refineries supply fuel to Eielson Air Force Base and other local buyers and also ship refined petroleum products to Anchorage by rail for distribution there and along the Alaska coastline and to the Far East, the company reported on its Web site. The Anchorage terminal can store more than 700,000 barrels and is connected to the port of Anchorage by pipeline.
Flint Hills is also the third-largest single taxpayer in the borough, behind the owners of the trans-Alaska oil pipeline and the Fort Knox gold mine. It is a major philanthropic player, having donated $150,000 to the University of Alaska Museum of the North through a partnership with the school and $95,000 for an endowment scholarship at the University of Alaska Fairbanks for needs-based tuition grants, undergraduate research and training equipment for an emergency services program, according to the company.
Contact staff writer Christopher Eshleman at 459-7582.
Community Discussion
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Interstate price gouging ??
......did somebody get a 3AM knock on the door from the FBI ??
Are we entering a new era of Corporate Transparency ?
...is this a new trend in an economy shaped like a Klein Bottle ??
....psssst! the sound of ethylene-gas.
poly-pipe will make Alaska into a giant hi-efficiency molecular-transport mechanism,
CO2 goes one direction, and methane goes another, LPG goes over here, and gas-hydrate gets pumped like soft-serve icecream way over there, and potable water gets percolated everywhere, geothermal water gets piped to town, and micro-hydro power goes all around, syngas goes to market, and gold placer slurry comes home... "round & 'round we go!!
Gee-whiz do ya think Flinty-Hills will someday be a 21stCentury petrochemical plant?
Wanna buy a Klystron for Cracking??
..or a Vortex-Tube for gas-processing?
Time to wake up and smell the coffee!!
expanding operations to increase volume and reduce operating costs
Why wouldnt this make the most sense
Hey crazy dude where do you get the 48 inch diameter pipe fuser?
They are posturing for yet more price gouging and are in-bed with GVEA. That is one reason why all of the energy cost is so high.
Jeff Cook .... well it is no wonder they won't release profit data ... it is staggering but let's blame the oil companies instead .. lol. Their profit margins are more than all of their other operations combined!
We should have inexpensive energy in Fairbanks but never will because of GVEA's "other interests" and the absolutely brain dead leadership.
Why doesn't the State buy it? It could be the start to solving the energy crisis in the State.
Jeff Cook is a blatant liar!
Sent:4/16/2008 5:04PM
From:Jeff.Cook@fhr.com
To:powell@fairbanksgas.com
Subject:Sale of Flint Hills Refinery
I want to state clearly and emphatically that the Flint Hills Resources North Pole refinery is not for sale at this time. Shell executives have not toured the refinery and they are not scheduled to tour the refinery. Please immediately correct this mis-information on your Fairbanksgas.com website.
Thank you.
Jeff Cook, Director External Affairs
Flint Hills Resources Alaska, LLC
Dear Fairbanksgas,
Mr. Cook's letter was sent to you nearly a month ago.
In today's business world, things can change rather quickly.
If you don't know how to tell time or read a calendar, how can you expect readers to attach any credibility to your statements in your website.
Or, did you hope to slip that one by unnoticed?
>In today's business world, things can change rather quickly.
That's true, but a deal like that would take a year just to examine potential suitors, pick one, and work out the basics, PRIOR to singing any agreement - Which is when the rest of us usually hear about it in the newspaper. I think the TRUTH is, Flint Hills started this process late last year. Jeff was telling a half truth by saying it was not for sale at this time. Which was technically correct, they may have only been examining the potential for a sale - giving him the benefit of the doubt. That being said, a GOOD 'spokesman' would have not replied to FNG with that letter.
I would prefer to see the Flint Hills refinery in North Pole in private ownership, BUT the State of Alaska has the financial capacity and can acquire the technical capability to process the State's Royalty-In-Kind oil for the benefit of ALL ALASKAN'S at an affordable cost for in state use.
The State of Alaska owns the rail road, has a profitable Housing Finance Corporation, operates the State ferry system, a substantial investment banking organization, as well as investments in the hydroelectric dams and Healy Clean Coal power generation plant.
The State of Alaska has an excellent credit rating and can issue bonds that can be tax exempt, that may not be available to private corporations. However, I believe in paying with cash and not burdening future generations with obligation bonds where ever possible.
The creation and retention of jobs is critical function of state government. The Public ownership of the Flint Hills refinery can have many positive benefits for ALASKANS that private ownership may not be willing to make.
Correction - Fairbanksgas, not FNG.
>poly-pipe will make Alaska into a giant hi-efficiency molecular-transport mechanism
Dude, you should take your meds BEFORE writing in. Usually you have some interesting ideas, and we could no doubt turn Alaska into one giant farming, mining & refining metropolis. But I don't think anyone wants to see Fairbanks turn into a Houston Texas of the 21st Century. THAT would be a true disaster, one eclipsed only by that of Iraq.
I would like to know how some of you got your information.
James seems to know quite a bit about a partnership between FHR & GVEA and FHR's profit margin, and mrderik has proof they've been trying to sell for over a year.
Come on people. I'm just as frustrated over energy and fuel costs as anyone else but I'm not going to throw out comments about companies like this when I don't know what's really happening.
If you have proof these statements are true, please provide it so the rest of us can make an informed decission and not make opinions based on yours.
Take that 6 Billion and use it to buy Flint Hills. I always believed the state should have purchased the refinery when it was sold to Flint Hills.
Since oil has control of the world, it should no longer be controlled by private company’s, and share holders.
Obiwan the force told me when Flint Hills speaks, to flush their words down the toilet.
The state should buy the refinery, save us Alaskans!
I'd give up my dividend every year to own a share!
That's the problem though. Look at every other 'State owned' (meaning gov't controlled) oil company in the World. They are all having troubles now specifically becasue they sold fuel to 'the people' at cost and did not save / reinvest their billions into expansion, maintenance, labor training, resource development, etc. The City sold "our" utilities becasue they said it would be cheaper for the rate payers. Cha, as if. But there is a whopping big difference between running a sewer treatment plant and an oil refinery, not the least of which being the input cost. :-)
If you look at the chart on the fairbanksgas website you'll see the relative cost of fuel vs. barrel of oil. It doesn't take a math wizard to see that the refiners have not passed on all the cost of that increase to us (yet). You could rightfully argue they were ripping us off before, but we don't know what their processing cost is per gallon, so we really don't have any idea.
At the end of the day, we just have to understand that fuel is no longer DIRT CHEAP. We just traded one of our most precious and valuable resources for a bunch of cheap lcd tvs, and plastic swimming pools, not only that but we borrowed money to do it. Genius move America, what's next, a Constitutional Amendment to re-elect Bush for a third term?
We need a true change in this Country and drilling ANWR and forcing the oil companies to subsidize fuel prices is not a part of the solution. Not that we shouldn't do those things, but if we do it had better be for the sole purpose of developing Plan B, not more SUV's....
But I don't think anyone wants to see Fairbanks turn into a Houston Texas of the 21st Century....
===============================
Yeah, that would be kinda sucky, I agree.
Yet, there's also a big push to develop a big Fischer/Tropsch Coal to Liquids plant in the interior too...
..and if you've seen pictures of the SASOL CTL plants in South Africa you'd wanna barf at that too.
F/T-CTL is really groovy stuff if you make the machinery not so scary looking.
Yup, I think a very important part of industrial design is to ignore the 100% adherence to Cost/Benefit analysis in favor of making the process-plant part of an overall architecturally aesthetic and naturally integrated development that blends into the countryside.
Fortunately Fairbanks has TAPS, and that can be a very handy source for feedstock, and a waste hydrocarbon exhaust-pipe for a petrochemical-plant.. it blends back into the crude nicely.
For too many years TAPS has been just a big dumb pipe..
Actually, I think it's possible to build a big 300'wide ferrocement quonsett-hut roof over many miles of TAPS and we can keep all of the modern machinery processing equipment inside the roof.[plant trees on the roof too] This way TAPS could be reconfigured to be a multi-task operation running at 200% higher efficiency than it is doing now.
TAPS should ship different products in batches.
Taps is now shipping crude at 45% capacity..
..we should schedule the crude in between CNG, and NGL shipments.
[just like train-loads of different stuff]
This will be integrated with an advanced pigging process for tip-top maintenance.
Eventually when the oil gets depleted on the N-slope TAPS can be used to pump LRCWF southward, there's huge coal reserves up there too, and an integrated F/T-CTL facility built right on top of the pipeline would be a good looking tightly designed and highly efficient operation that will never run out of valuable feedstock for hundreds of years..
..ALL THAT CARBON AND NOT ENOUGH ATMOSPHERE.
Build an AAC-concrete plant near Livengood, lotsa limestone near there.
http://www.google.com/search?num=100&...
Everybody should throw away their horribly inefficient pistons-&-crankshafts.
http://www.youtube.com/watch?v=Nf-dNLSnl...
...oh, I suppose we could figure out how to ship BakedAlaska methane-hydrate-softserve down thru TAPS too.
Methane-hydrate stores gas 160x, compared to LNG at 600x.. but it's a heck of a lot cheaper to make and safer to store.. you can store it in bladder-bags offshore at 1200'depth in warm coastal waters with much less hazard than big-expensive LNG terminals..
BakedAlaska ocean transport is much-much cheaper too, just bladders on barges or in cheap old tankers, even ocean towed floating bladders.
.....flash/rumble
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