State will file lawsuit to sort out Flint Hills spill liabilities

State will file lawsuit to sort out Flint Hills spill liabilities

Source: Alaska Journal of Commerce, February 28, 2014
Posted on: http://envfpn.advisen.com

The State of Alaska will file suit against Flint Hills Resources and Williams Cos., in an effort to sort out liability issues connected with a large underground spill of sulfolane, a chemical used in refining, at the refinery at North Pole, near Fairbanks, Alaska Attorney General Michael Geraghty said in a statement.

“Flint Hills Resources was litigating its claims against Williams to allocate responsibility for the contamination but the trial court has ruled that the case is time-barred,” or beyond its statute of limitations, Geraghty said in the statement.

“The state has been in the process of preparing a complaint to determine ultimate responsibility amongst the potentially responsible parties for the situation at the refinery and we expect to file that within the next 30 days.”

The spill has contaminated drinking water in about 300 wells owned by local homeowners, said Kristin Ryan, spill response director in Alaska’s Department of Environmental Conservation.

Jeff Cook, spokesman for Flint Hills, said the company is providing bottled drinking water to the residents who are affected, and that this will continue until a long-term solution for providing safe water is found.

Flint Hills Resources cited ongoing costs over the sulfolane pollution when announcing Feb. 4 it would end all refining operations by June 1. The move is expected to cost about 80 employees their jobs.

Cook said the spill occurred when the refinery was owned and operated by Williams Cos., of Tulsa, Okla., and that Williams shares the liability as a former owner.

Cook also said the state owned and leased the land at the time to Williams, which makes the state at least partly liable.

Ryan of the DEC said Flint Hills is a responsible party because it now owns the refinery and contaminated property.

The spill is also continuing to spread onto lands adjacent to the refinery property and contaminating residential water wells, and this is happening under Flint Hills’ ownership, she said.

Cook said Flint Hills has spent about $70 million so far on environmental remediation and supplying drinking water to local residents, but that $50 million of this came from an insurance policy that had been purchased by Williams at the time the refinery was sold.

Ryan said there is no estimate of what it would cost to clean up the sulfolane or even if it can be removed from the soil. One of the technical challenges in that sulfolane adheres to water, which is possibly why it is spreading through underground aquifers in the area, which has a high water table.

“We know that is has now spread in a plume at least three miles by two miles,” Ryan said.

The effects of sulfolane of human health are not well known and the chemical is not considered a hazardous chemical, she said. Still, the state environmental agency is being cautious about possible effects.

Ryan’s agency has asked Flint Hills to prepare a feasibility study for a cleanup but she acknowledge it may not be technically or economically feasible to remove the sulfolane.

Lawsuits filed by Flint Hills against Williams in 2010 and 2012 were voided when a state judge ruled the company had waited too long, and had exceeded a three-year statute of limitations.

To sort these issues out, the state itself will file a suit, Geraghty said.

Flint Hills announced earlier this year that it would close the refinery, which has operated since 1977, due to deteriorating economic conditions. The plant produces mainly jet fuel and gasoline that is shipped by rail to Anchorage, and Flint Hills is a major supplier to air carriers operating from Anchorage’s international airport.

In recent years the air carriers have been importing bulk jet fuel from overseas themselves, undercutting Flint Hills’ market share.

The refinery takes crude oil from the Trans-Alaska Pipeline System, which is nearby, and purchases state-owned royalty oil.

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