An oil refinery operating outside of Fairbanks announced Tuesday it will be shutting down and laying off more than 80 people.
Flint Hills Resources Alaska said it will stop processing crude oil its North Pole refinery by November 1. Gasoline refining will stop by early May, and the facility will stop producing jet fuel and other products by June.
"Then we’ll start decommissioning the refinery … We have to cease production and put the plant to bed,” said Jeff Cook, the company’s regional director of external affairs.
Out of 126 employees in Alaska, Cook said 35 would remain at the Fairbanks terminal to distribute local fuels and continue groundwater cleanup operations. An additional 10 employees will operate out of the Anchorage terminal. In all, 81 employees will be laid off by Nov. 1.
The once-productive refinery at its peak employed 175 people and refined hundreds of thousands of barrels of crude oil a day. Layoffs in 2010 and 2012 reduced staff to current levels and capacity to just 85,000 barrels a day, Cook said.
“We've done everything we can to make this economically viable,” Cook said. “It hasn't been for lack of talent or lack of effort.”
Cook said the costs associated with the groundwater cleanup efforts are a major reason the company is shuttering the refinery. He said the previous owner of the refinery, Williams, operated the facility on land owned by the State of Alaska. Flint Hills then bought the land and refinery in 2004. The company has been tasked with cleanup of sulfolane, an industrial solvent, from soil and groundwater.
“We've been faced with all the costs for spills that happened during the time of Williams’ ownership of the refinery, and state ownership of the land,” Cook said. “It’s been in the tens of millions of dollars, and along with the economic challenges of refining in Alaska, (it’s) caused us to make this decision.”
A spokesman for the state Department of Environmental Conservation said Tuesday that a comment was forthcoming.
Interior Rep. Doug Isaacson (R-North Pole/Eielson), the former mayor of North Pole, said he's livid about the closure.
“What it means is, we lose 81 high-paying jobs, that created 10 more in the community, that will affect our businesses, that will affect our properties, just on and on and on, throughout the state,” he said.
“The negative impacts of this closure will be felt across our state," Parnell said in a statement issued by his office Tuesday evening.
Sen. Mark Begich (D-Alaska) said that the closure could cause a trickle-down effect that will impact businesses like shipping, as a local source of jet fuel disappears, and the Alaska Railroad, which moves product from Flint Hills south, as many as 30 cars a day, five days a week.
“In this situation, it's the private sector making a decision,” Begich said in a phone interview Tuesday. “We have to do everything we can to be sure those who have jobs, those families, have opportunities.”
Flint Hills is a subsidiary of Koch Industries, the second-largest privately held company in the country. Cook said all employees losing their job will be able to apply for other positions with Flint Hill or within Koch Industries, “and if they find a match the company will provide relocation for them,” Cook said.