State, Flint Hills reach settlement

TIM BRADNER

For Petroleum News

State environmental regulators have reached a settlement agreement with Flint Hills Resources over sulfolane contamination at the company’s now-closed refinery at North Pole.

Under the agreement Flint Hills will pay $80 million toward construction of a $100 million piped water system. Alaska has agreed to pay the remaining $20 million because the state, as landowner at the site, shares some of the liability, said Kristin Ryan, director of Alaska’s Division of Spill Prevention and Response.

Flint Hills discovered sulfolane in water wells at homes near the refinery in 2009 after homeowners complained, Ryan said.

Flint Hills immediately began supplying bottled water to about 200 homes where water wells are affected, she said.

Litigation meanwhile continues with Williams Cos., which owned and operated the refinery prior to Flint Hills’ purchase of the plant, Ryan said. Most of the sulfolane contamination occurred while Williams owned the refinery, she said.

Williams does not acknowledge liability for the pollution, contending that was transferred to Flint Hills when the refinery was sold. A state court trial in the case against Williams begins in May.

Flint Hill closed the refinery two years ago for commercial reasons and is now removing plant facilities. Petro Star now operates the only refinery in Interior Alaska. It makes diesel and jet fuel but not gasoline, which was made by Flint Hills when its plant operated.

The issue that complicated the settlement negotiations was uncertainty over the long-term adverse human health effects of low-dose exposure to sulfolane, Ryan said. “The short-term effects are known but we do not understand long-term effects,” she said.

Because of that uncertainty the state and the company were unable to agree on a cleanup level for pollution at the plant site and nearby lands. The issue is still unresolved. The state has contracted with the National Toxicology Program, an independent scientific research unit at the Center for Disease Control, but final reports are not due for some time.

“Once we have that report we will set a cleanup level,” Ryan said, which may play into the lawsuit with Williams. Installation of the piped water system solves the short-term human health problem - construction will be complete by 2019 - but the sulfolane contamination is still in the ground, Ryan said.

Sulfolane is an industrial solvent commonly used in gasoline production at refineries. Ryan said the state believes much of the contamination resulted from a punctured liner under a waste disposal pond at the refinery.