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March 03, 2014 --- Vol. 20, No. 14March 2014

Parnell releases refinery purchaser from liability

Alaska Gov. Sean Parnell has authorized the state to release a future purchaser of the oil refinery at North Pole from responsibility for groundwater contamination by the chemical sulfolane that has in the past leaked from the plant. In a letter sent today to Flint Hills Resources, the owner of the refinery, the governor said that he has also asked the attorney general and the Alaska Department of Environmental Conservation to engage Flint Hills and Williams Alaska Petroleum Inc., to address environmental liability associated with the refinery. Flint Hills purchased the refinery from Williams in 2004 and has said that the ground contamination took place when Williams owned the plant.

On Feb. 3 Flint Hills, a subsidiary of Koch Industries Inc., that said that it was going to close the refinery by June 1 — in explaining its closure decision, the company the cited the long-standing dispute over ground contamination as compounding difficult market conditions for the plant. According to Parnell’s letter Flint Hills had proposed contributing to the cost of constructing a piped water system for owners of properties on contaminated land around the refinery but had also proposed transferring liability for the contamination from Flint Hills to a purchaser of the refinery, with the transfer of the liability being reflected in a reduced price for the facility.

In his letter Parnell responded that the state wishes to create a path for a new buyer of the refinery by not burdening the purchaser with the contamination liability. Parnell said that, although the contamination occurred in state land as a consequence of spills that happened when Williams owned the refinery, it is unlikely that Williams will accept full responsibility for the problem and that Flint Hills must have contractual agreements with Williams to address contamination claims.

—Alan Bailey

See story in March 9 issue, available online Friday, March 7 at 11 a.m. at www.PetroleumNews.com

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