Thursday, June 05, 2008

First US refinery in 30 years

The US has not had a new refinery in 30 years. Some of this is due to regulation that biases incentives towards investment in old refineries, much of it is due to regulation and public resistance to refineries in general: NIMBY -- not in my backyard. Some of the reason the oil market does not work well is scarcity of refinery capacity in total, and scarcity of refinery capacity specific low quality oil.

It seems that the US could have a new refinery by 2014:
ELK POINT, S.D. — Voters in Union County on Tuesday approved rezoning for what would be the first new U.S. oil refinery in more than 30 years.

With all 13 precincts reporting, 3,932 voters, or 58 percent, endorsed their county commission's rezoning of almost 3,300 acres north of Elk Point for the $10 billion refinery while 2,855, or 42 percent, opposed it.
Most rural precincts strongly rejected the rezoning, but they didn't have the population numbers to overcome support in the county's largest towns.
Hyperion Resources had said it would leave Union County without a fight if voters rejected the rezoning.

Jason Quam of the group Citizens Opposed to Oil Pollution said late Tuesday his group will sit back and evaluate its next steps. "It's going to be a long road before anything's done on it," he said of the refinery.
Company executives said it would help the United States reduce its dependence on overseas oil. The refinery would process 400,000 barrels of thick Canadian crude a day.
Supporters cited economic development benefits from the refinery. Hyperion officials said the project would mean 1,800 permanent jobs and another 4,500 construction jobs over a four-year period.

Hyperion called it a "green refinery" and said it would produce ultra-low sulfur gasoline and diesel and be among the cleanest and most environmentally friendly in the world.
Critics of the proposal hit hard on the quality of life issue, saying an oil refinery would produce millions of pounds of toxins during its lifetime. They also said it seemed as if the state and local governments allied themselves with Hyperion and had not asked critical questions.

Plans called for construction to begin in 2010 and last about four years.
If you wonder what can be done to bring down the world old price this is one place to start; that is, by making more of the thick Canadian oil economically feasible to use.

Thanks to Carpe Diem for the pointer. See also CD's earlier post on the falling number of US refineries.



Blogger Josh said...


5:34 PM  

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