Elk Point Refinery – The First New Greenfield Refinery, USA

The Elk Point refinery will be the first new greenfield refinery to be built in the US in more than thirty years. New refineries cost about $25,000 a barrel a day capacity, whereas refinery expansions cost only $16,000 a barrel a day capacity, making this a brave project.

ACCEPTED BY RESIDENTS

The project (which has been planned since August 2005 under the Gorilla Project codename) has now reached the stage at which Union County, South Dakota residents voted by 58% to 42% to allow the 3,300 acres of former farmland just north of Elk Point to become the site for this oil mega-project. Hyperion will try to obtain options on land around the site for 20 square miles (18,000–20,000 acres) to form a buffer and security zone.

The new refinery is being built by Hyperion Resources of Texas, which expects to make an investment of about $10 billion for the project to be realised. There has been contention from the environmental lobby in the state, centred mostly in rural areas, but support from urban areas in June’s vote allowed for an industrial installation to be built on the agricultural land.

The next stage in the approval process is an air-quality permit from the South Dakota Department of Environment and Natural Resources. The refinery is expected to require about 12 million gallons a day of coolant water, probably from the Missouri River, and this may also be a contentious point in a largely agricultural state.

PROJECT

The project is situated in Union County, about 60 miles south of Sioux Falls, and is expected to create 1,800 permanent jobs when complete. The construction is expected to begin in 2010 and the four-year building period will create a further 4,500 jobs.

The refinery will be known as the Hyperion Energy Center and will have the potential to process about 400,000 barrels of Canadian crude oil a day (obtained from the oil sands of Alberta). Hyperion has pointed out that this will help the US to reduce its dependence on overseas crude oil.

The crude oil is expected to be transported to the refinery by pipeline but details have yet to be confirmed. However it is known that the new TransCanada pipeline will be only 30 miles from Union county and will be able to carry 435,000 barrels a day of crude oil.

GREEN REFINERY

The refinery has been put forward as a green refinery project as it will use the latest clean process technology (including a hydrocracker) and produce ultra-low sulphur diesel (the majority product), jet fuel and petrol. Finished fuel products will be sent out by truck, rail or pipeline.

Hyperion will power its new refinery with a cleaner energy technology called integrated gasification combined-cycle, or IGCC. This process will use petroleum coke, which is a refining by-product similar to coal, as a fuel feedstock.

IGCC turns the coke into a gas prior to burning, which makes it easier to capture carbon dioxide.