Flint Hills Resources Alaska, Announces It Will Begin Idling Its No. 1 Crude Unit
NORTH POLE, Alaska — Flint Hills Resources Alaska, operator of a North Pole Refinery, announced today that it will begin the process of idling its No. 1 crude unit due to challenging economics and rising crude prices. Flint Hills will continue operating its remaining No. 2 crude unit to produce jet fuel, gasoline, asphalt and some specialty fuels for Alaska markets while continuing to meet all its contractual commitments. The refinery previously idled its No. 3 crude unit.
The reduction in capacity will require the refinery to reduce its workforce by approximately 35-40 individuals over the next five months.
“This is the most difficult decision we have had to make in operating this refinery,” said Mike Brose, vice president of Alaska operations and manager of the Flint Hills refinery. “We value our employees very much; they are all dedicated professionals who have worked very hard to help us compete in what is an extremely difficult economic climate.”
The affected employees will have an opportunity to apply for other positions within the company. Employees who do not receive other positions in the company will receive severance packages. Flint Hills Resources will also provide placement support for employees seeking job opportunities outside the company.
The current economics of refining is challenging for refineries across the world. Over the last several years 16 refineries in North America and Europe have shut down. Because of the isolated location of the Flint Hills Resources Refinery and the dependence on one source of crude oil, Flint Hills faces greater economic challenges than many other refineries.
“The North Pole refinery was designed to use crude oil as a source of energy to power operations, which is a considerable disadvantage” added Brose. “Crude oil prices and Alaska North Slope Crude prices in particular are very high and are expected to remain that way for the foreseeable future. In addition, the calculations associated with the Quality Bank place our refinery in a disadvantaged position. We need to solve these two problems in order to survive, and a single crude unit configuration gives us the best platform to work on these problems.”
Flint Hills Resources, LLC, through its subsidiaries, is a leading refining and chemicals company. It markets products such as gasoline, diesel, jet fuel, ethanol, olefins, polymers and intermediate chemicals as well as base oils and asphalt. Flint Hills Resources purchased the North Pole Refinery on April 1, 2004. Currently, there are 171 employees in Alaska, including 151 at the refinery and 20 additional employees at the Port of Anchorage terminal. The company, based in Wichita, Kan., has expanded its operations through capital projects and acquisitions worth more than $5.3 billion since 2002. With about 3,600 employees, Flint Hills Resources strives to create value for customers and society. www.fhr.com
Posted: April 10, 2012