Flint Hills Resources last month announced it would close the refinery and lay off 81 employees. Costs from the cleanup of sulfolane, a liquid used in refining oil, were a primary reason, according to the company. The company also cited a competitive disadvantage from the high cost of crude oil drawn from the trans-Alaska pipeline and the high costs of energy because of a lack of access to natural gas.
Parnell in a letter Monday to Flint Hills Resources said the state will hold the company liable for the cleanup of sulfolane contamination but will not hold a refinery buyer liable.
Flint Hills CEO Brad Razook replied to Parnell by letter Tuesday, the Fairbanks Daily News-Miner reported. The state position will doom a sale, Razook said.
“I am now in the position of having to tell the buyer that it appears the state of Alaska has no interest in seeing this refinery operate in the future without extracting unreasonable concessions from Flint Hills,” Razook wrote.
State standards for sulfolane release are too low, he said. The standards make it difficult to distinguish between new and old spills, he said, and Flint Hills would be liable for future spills.
“While I understand that you believe releasing a potential new buyer from the existing liabilities clears the path for a sale, the liability problem is actually exacerbated for Flint Hills,” he wrote. “It would be unrealistic to expect us to transfer the refinery to another party and potentially be responsible for cleaning up that party’s spills as well.”
Flint Hills has appealed the spill standard and is awaiting an initial decision due this month on whether the appeal will be heard.
Parnell’s spokeswoman Sharon Leighow in a statement repeated the governor’s claim that he had cleared a path for a refinery buyer.
“The governor encourages interested parties to contact the Attorney General’s Office to discuss a prospective purchaser agreement in which they would not be held liable for previous environmental contamination at Flint Hills,” she said.
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