Low-Carbon Fuel Standards Would Kill At Least One Refinery Project

By September 4, 2009Energy, Global Warming

It’s been three decades since a brand new oil refinery has been built in the United States due to regulatory restrictions, the power of NIMBY-inspired litigation, and already low margins for the refinery business. New domestic capacity has been added to existing refineries through upgrades and expansions, but it’s more common for companies to build new refineries outside the United States.

The brightest prospect for a new refinery has been in South Dakota, where the Dallas-based Hyperion Energy Company plans to build a $10 billion facility in Union County between Sioux Falls, S.D., and Sioux City, Iowa. That’s a lot of investment and jobs. As the PrairieBiz magazine reports, “During construction alone, Hyperion would employ approximately 4,500 workers in the four years that it will take to build. At full production, 1,800 full-time jobs would be available at the plant.”

But all for naught if Congress enacts a low-carbon fuels standard. As we wrote earlier in the week, supporters of the standard claim an environmental imperative, but the proposal would make the U.S. even more dependent on Middle Eastern or Venezuelan oil. And as for the Hyperion project (earlier posts here), the Sioux City Journal reports, “Industry group: Low carbon proposal threatens Hyperion refinery“:

New environmental regulations for transportation fuels being considered in Congress would deal a “devastating” blow to U.S. projects like the proposed Hyperion Energy Center in Union County, according to a coalition of business groups.

Some majority Democrats back legislation that would lower carbon emissions in U.S. vehicles. The so-called Low-Carbon Fuel Standards, or LCFS, would unfairly penalize heavier, dirtier oil such as the crude from the Alberta, Canadian oil sands that Hyperion plans to process.

Last month, Hyperion secured a state air quality permit for its $10 billion refinery, which would process of 400,000 barrels per day.

“No permit in the world is going to save this project if LCFS is put in place,” said Chris Tucker, a spokesman for the Consumer Energy Alliance, a 125-member group that includes oil companies, retailers, trucking and transportation groups and business organizations like the U.S. Chamber of Commerce.

The Consumer Energy Alliance (which the NAM is a member of) has launched a new website on the low-carbon standards at SecureOurFuels.com, which includes a blog.

Good site. Good jobs.

Join the discussion 2 Comments

Leave a Reply