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Parnell releases a North Pole refinery purchaser from liability
Alaska Gov. Sean Parnell has authorized the state to release any 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 March 3 letter to Flint Hills Resources, the owner of the refinery and a subsidiary of Koch Industries Inc., 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 and the State of Alaska owned the land on which the plant was located.
Closure announcement On Feb. 3 Flint Hills announced that it had decided to close the refinery— in explaining its closure decision, the company cited a dispute over ground contamination liability as compounding difficult market conditions for the plant. At this point there is no indication of whether another company is interested in buying the plant and continuing its operation.
The refinery processes some of the crude oil flowing down the trans-Alaska oil pipeline from the North Slope and primarily manufactures jet fuel for use at Anchorage International Airport, a major international air freight hub. The Alaska Railroad ships the fuel to Anchorage. Unused components of the crude oil, warmed from the refining process, are returned to the pipeline, where they help maintain the oil temperature in the line at acceptable levels in the southern portion of the pipeline route.
Flint Hills, although it has been actively taking steps to address the sulfolane contamination issue since discovering the problem, has argued that, as owners of the facility and the land at the time the contamination took place, Williams and the state should take responsibility for cleaning up the mess.
Email to legislators According to Parnell’s letter, Flint Hills has sent an email to state legislators and others, proposing how to deal with issues relating to the contamination. Those conditions include releasing Flint Hills from liability for the contamination, requiring a new buyer of the plant to take over that liability, and not holding Flint Hills responsible for any future spills that a buyer might encounter. Flint Hills said that the contamination liability would be reflected in the anticipated price of the refinery.
Flint Hills also proposed contributing up to $25 million to the cost of constructing a piped water system for the owners of sulfolane contaminated property around the refinery, and the imposition of an areawide ban on the use of groundwater in the refinery’s vicinity, Parnell’s letter says.
Creating a path In his letter Parnell said 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. Parnell also said that a recent court decision had concluded that Flint Hills should have known about the contamination in 2004 and could, therefore, have taken earlier remedial action.
Parnell made several other comments relating to Flint Hills’ proposal, including comments that the contamination plume at North Pole continues to spread; that a remediation feasibility study has not yet been completed; and that a piped water system may not be acceptable to North Pole residents and would involve significant cost to the state or local government. Parnell also commented that he understands that, under federal law, Flint Hills remains liable for the contamination.
—Alan Bailey
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