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State to sell oil to Flint Hills

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Posted: Sunday, April 7, 2013 12:04 am

JUNEAU — The Senate on Thursday approved a five-year deal to sell royalty oil to Flint Hills Resources’ North Pole Refinery.

The 20-member body unanimously approved the deal that the state and Flint Hills reached in late February, allowing the refinery to purchase as much as 30,000 barrels of oil per day from the state.

Sen. John Coghill, R-North Pole whose district includes the refinery, presented the bill on the floor, saying it provides moderate improvements over the old contract.

The five-year contract could be extended to 10 years if Flint Hills offers binding support for the North Slope gas project.

The price Flint Hills will pay under the contract relies on several factors, including the price of North Slope crude and pipeline tariffs, but some moderate cuts have been included.

Coghill also said Flint Hills is an important part of the North Pole community.

“One of the things we get in the Interior is the jobs, we get the fuel oil. I wish it was cheaper, but Flint Hills also contributes the leadership and jobs,” he said. “They are very active in the community.”

The contract now goes to the House for approval.

If it passes both bodies, the contract goes into place in 2014, replacing a 10-year contract due to expire then.

Not everyone has been thrilled with the contract, though. Some members of the Legislature have put forward the negotiation of the state’s royalty oil contract as a way to reduce energy costs in the Interior.

Sen. Bill Wielechowski, R-Anchorage, voted for the contract but before the vote that he wants to see the state attempt to work in some sort of energy relief elements to the bill.

“It’s our oil, and I think this is a very powerful way we can provide lower cost fuel to Alaskans,” he said.

Contact staff writer Matt Buxton at 459-7544 and follow him on Twitter: @FDNMpolitics.

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