Going backwards: building an oil refinery in South Dakota

 

In South Dakota, politicians and business leaders are cheering a massive oil refinery planned for the state's southeast corner. If built, it will be the first oil refinery constructed in the United States in more than 30 years.

There are, of course, good reasons why oil refineries aren't being built anymore. In South Dakota, however the fossil fuel industries are supported with frontier-era zeal. South Dakota Gov. Mike Rounds appears uninterested in reducing carbon footprints. Instead, he wants the world to use more coal, more corn ethanol and more crude oil.

The proposed refinery certainly entices Gov. Rounds and others with some appealing economic and employment numbers.

Refinery developers -- organized as Hyperion Resources -- have purchased and rezoned some 3,900 acres of farmland in Union County. The refinery complex will cost about $10 billion to build, and some 10,000 laborers will work on its construction.  If it becomes operational, the facility, to be called Hyperion Energy Center, will require about 1,800 employees and process up to 400,000 barrels of gasoline and diesel fuel each day.

It has also been estimated that the refinery will have a yearly impact of $13.7 billion on the state's economy. Refinery-related tax revenue potential will also be considerable, including at least $50 million during construction, and annual, ongoing sales taxes associated with the refinery will exceed $50 million.

Surprisingly, little is known about Hyperion. It appears the Dallas-based company consists of a small cadre of Texans, including a man named Albert Huddleston who funneled considerable money into the 2004 Swift Boat campaign that crudely distorted the military service of presidential candidate John Kerry. Huddleston, Hyperion's CEO, is a friend of President George Bush, and he's married to the grand-daughter of Texas oil billionaire H.L. Hunt.

Hyperion Energy has never owned or operated an oil refinery. Hyperion's principals do have some experience in the oil industry, but the company's portfolio appears to be confined to real estate and oil and gas leases, and the building, buying, and selling of landfills. Incidentally, the company has been shopping for federal loans to help finance the refinery project.

Refinery opponents have engaged in a spirited campaign, but they're making little headway. They've failed to sway South Dakota and Union County officials, and 58 percent of the county's voters endorsed the refinery in a recent referendum.

Much of the opposition is focused on air pollution, traffic, noise and other problems that will occur near the refinery.  Another worrisome issue is that the refinery will use 10-12 million gallons of water from the Missouri River aquifer each day.

Largely overlooked in the discussion has been the source and type of crude oil -- Canadian tar sands -- to be refined at the Hyperion facility. Canadian tar sands are probably the dirtiest source of oil on earth, and mining tar sands has created what might be the most polluted area in North America. Tar sands development in northeast Alberta has devastated 180 square miles of boreal forest. The process uses prodigious amounts of fresh water, and much of the water ends up so toxic it kills any wildlife that touches it. Millions of gallons of this poisoned water are now impounded in hundreds of toxic lakes and ponds.

Tar sands oil is low-grade crude that requires heavy refining. Producing a single barrel of tar sands oil releases three times more greenhouse gas than producing a similar quantity of conventional oil.

So, Hyperion's existence will encourage tar sands development, and vice versa.  It's not just an oil refinery that South Dakota officials are embracing. It's tar sands mining and the fossil fuels industry.

Hyperion claims its refinery will be a "green" facility, minimizing pollution.  There is understandable skepticism about this, especially considering the type of crude that will be refined and Hyperion's vague descriptions about the technologies it will use.

At a time when we should be de-emphasizing fossil fuels, the substantial private and public capital necessary to develop both Hyperion's refinery and the apparatus –including new pipelines- feeding that refinery with dirty crude oil pushes us in the wrong direction.  Why provide fossil fuel entrepreneurs with the means to keep us addicted to oil?  A $10 billion dollar investment helps do that.  Permitting an oil refinery to proceed to actual construction is a step backwards for South Dakota, and for the United States.

Peter Carrels is a contributor to Writers on the Range, a service of High Country News (hcn.org). He is a journalist in Aberdeen, South Dakota.

Thank you!
rebecca heisinger
rebecca heisinger
Aug 21, 2008 12:46 PM
My husband and I, both Aberdeen S.D. natives, have recently seen articles by you in our local Park City, UT paper. Not only are we thankful to be kept up-to-date with what is going on in South Dakota, we are appreciative of your honest journalism. Keep up the good work.
South Dakota folks ARE fighting back effectively and getting help
Denny Larson
Denny Larson
Sep 01, 2008 09:20 AM
Dear Peter,
Thanks for your article, but to update you, Union County folks are making headway to slow and eventually stop the backwards plan of building a new oil refinery. While you're right that 58% of the whole County voted for a land use change that would allow the refinery, potential neighbors in every precinct nearest the refinery voted against it - except for one where there was a tie! The land use change approved was done illegally and is being challenged in court because the County Commission made 15 changes to the zoning proposal at the last minute without proper notice. That is what was voted on and will be overturned. A team of national experts has been assembled to support Save Union County and fight all the myriad of permits the refinery would need.
People can help by contacting Save Union County at http://www.saveunioncounty.com/ - see also www.gcmonitor.org
oil refinery
jack aalbers
jack aalbers
Jul 04, 2010 09:02 AM
Just read an article on BP in all the toxic chemicals that were released at their texas refinery. Does SD really need this kind of thing going on here. These refineries could care less what happens to the environment. Its just about making money. Our governor just doesn't think anymore.
You just don't get it!
Jerry Hayden
Jerry Hayden
Sep 16, 2008 12:31 PM
I'm continually amazed by the hypocrisy of your way of thinking. Unless you can prove that you don't drive a fossil fuel burning vehicle, don't live in a house built from materials that were cut down and moved with fossil fuel burning equipment, don't use electrical appliances or a fossil fuel burning furnace, don't eat food that was grown by farmers using fossil fuel burning tractors or wear clothing that was not made from a factory using fossil fuels, you have no right to criticize the oil industry or the building of a new refinery to supply your own lust for the easy life. The fact of the matter is that the world runs on oil. It's a resource that is a natural by product of the earth. There is no world oil shortage and there never will be. I live just a handfull of miles from the proposed building site and I applaud the Hyperion group for leading the way in the only responsible avenue for the U.S. to take, and that's build more refineries!
REPLY TO JERRY
Kristy
Kristy
Nov 30, 2008 10:36 PM
Mr Hayden,

While I can understand your point about the hypocrisy of our current way of living, I think that whether there is a possible oil shortage or not,there are a number of other issuses related to the use of fossil fuels. Namely greenhouse gasses and overall increased pollution and harm to our other natural resources, air, water, land, animals, etc... I do not think that any of us are specifically criticizing the oil industry, but the current oil dependent way of life you so specifically outlined. We have the technology to build cleaner, more efficient products, but the patents are held and not being used by companies like GM which holds the patent for the battery that made the EV1 electric car possible. Without the release of the technologies that will allow us to be more oil independent, we can't even begin to discuss any form of energy independence.
A Crude Reality....
Danielle
Danielle
Dec 11, 2008 08:49 PM
CANADIAN oil is extremely different than SAUDI ARABIAN oil. Tar sands are the dirtiest of the dirty and cost three times more to convert into oil than conventional oil, like in Saudi Arabia , which is found is pools underground. The process that will be used to dig up the tar sands is much like strip mining, which strips the soil of nutrients as it is processed, and when they're done with the sand, it will be completely useless. So unless you're an idiot, you do not want tar sands used.