Koch Industries Ordered to Spend $44M in Refinery Upgrades

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By James Burgess for Oilprice.com

Koch Industries’ Kansas-based Flint Hills Resources (FHR) will invest $300 million in a Minnesota refinery to improve energy efficiency and clean fuels production, after being fined by authorities for violating emissions limits in Texas and ordered to foot the bill for $44 million in upgrades.

The company will invest $300 million in two projects to boost efficiency and production at its Pine Bend Refinery, the largest oil refinery in Minnesota, as another Koch refinery in Texas is fined $350,000 by the US Department of Justice and the Environmental Protection Agency (EPA).

Earlier this week, the DOJ fined a chemical plant in Port Arthur, Texas, controlled by Koch Industries $350,000 for emissions violations, ordering the company to spend more than $44 million on the necessary upgrades.

According to the Justice Department, the plant, owned by Flint Hills, has violated EPA regulations to limit emissions from leaking equipment and improperly operated flaring equipment, released excess amounts of benzene and other harmful substances.

In Minnesota, the Koch-controlled oil refinery is said to be responsible for 2% of the state’s total greenhouse gas emissions—an amount equal to 3.5 million tons of carbon dioxide annually.

The oil refinery has a capacity of 320,000 barrels (51,000 m3) per day, and the cash injection would go towards a combined heat and power (CHP) system that reduces energy use while generating enough electricity to cover roughly half the refinery’s needs.

The CHP system will use natural gas and a heat recovery process to produce up to about 50 Mw of electricity. The system will also use air-cooled condenser technology, which will save 400,000 gpd of water compared with traditional water-based cooling systems.

The $300 million investment will also be used to implementation of a new process for removing sulfur and nitrogen from gasoline and converting it to fertilizer, helping the company meet federal low-sulfur standards for gasoline scheduled to take effect in 2017.

The projects are slated to begin in 2015, assuming final approval from management and the Minnesota Pollution Control Agency.

This is the second major investment in the refinery towards cleaner fuels production. In 2006, the refinery undertook a $350 million project to produce diesel fuel containing lower levels of sulfur.

This article was originally published on Oilprice.com.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Commodities , Technology , US Markets

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