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Hart Analysts Says Hyperion Refinery not Viable – He is wrong

Home Forums Refining Community Refinery News Hart Analysts Says Hyperion Refinery not Viable – He is wrong

This topic contains 3 replies, has 1 voice, and was last updated by  Charles Randall 10 years, 8 months ago.

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  • #2144

    basil parmesan

    Analyst says Hyperion refinery isn’t viable
    Company disputes assessment of S.D. project
    Written by
    Cody Winchester
    The proposed Hyperion oil refinery in Union County is economically unfeasible, given current and projected market conditions, according to a research memo written by a longstanding energy analyst and commissioned by an environmental activist.
    Hyperion disagreed with the findings.
    Terry Higgins, executive director of global refining and special projects at Hart Energy Consulting, wrote in the April 26 memo that the $10 billion Hyperion refinery “may not represent a viable refinery expansion project based on projected market economics and supply/demand requirements.”
    As evidence, Higgins pointed to a surplus of refining capacity in the U.S., slumping demand for refined products and an assumed end to a discount on heavy crude that five years ago might have made a Midwestern refinery a lucrative venture.
    “There is little requirement for additional domestic production refining capacity to balance demand,” he wrote.
    On the policy level, Higgins wrote, strengthened fuel economy standards and renewable fuels mandates established in 2007 will weaken demand for refined products generally, not just in the Midwest.
    “It doesn’t make sense to build a refinery anywhere in the United States,” he said in an interview this week.
    Higgins’ research note is the latest salvo in the long war to build the Hyperion refinery complex, which would process 400,000 barrels of heavy Canadian crude a day into gasoline, ultralow-sulfur diesel and jet fuel.
    First proposed in 2007, the project received an air quality permit from the state in 2009 that is being challenged in court by the Sierra Club and other groups. The state Board of Minerals and Environment will rule next month on an amended version of the permit.
    The board also will rule on the company’s request to extend its construction start date. From there, the case returns to circuit court.
    The Higgins memo was commissioned by Kenny Bruno, campaign coordinator for Corporate Ethics International, an advocacy clearinghouse that includes the Tar Sand Oil Campaign, which is “dedicated to stopping the expansion of Alberta’s Tar Sands,” according to its website. Among its members is the Sierra Club, which is suing to block Hyperion’s air quality permit.
    Opponents are fighting the refinery mainly on environmental grounds, but in recent months they have touted a pessimistic economic outlook for the refining industry as further reason the state should shelve the project.
    Jim Heisinger, chairman of the Living River Group of the Sierra Club, said commissioning the memo was “not part of the (Sierra Club’s) legal strategy, as far as I know.”
    “This report reveals that Hyperion’s trouble raising money for this highly speculative venture might have more to do with the questionable business prospects of the refinery than today’s economic conditions,” he said.
    Hyperion spokesman Eric Williams rejected the substance of the memo, which was provided to the Argus Leader by the Sierra Club. In an emailed statement, Williams said the findings “aren’t surprising for a 3-page memo bought and paid for by a former Greenpeace activist.”
    Williams said Higgins’ analysis relies on sleight-of-hand in tallying refinery demand for the midcontinent district, which has “historically been short by 800,000 to 1 million barrels a day of refined product.”
    “For example,” he wrote, “(the memo) says ‘The aggregate Gulf and Midcontinent regions have surplus gasoline, diesel and jet fuel product which is exported.’ Well of course, because the Gulf is where the U.S. has historically refined fuel. That’s like saying, ‘Combined, South Dakota and Vermont have a surplus of maple syrup production.’ ”
    Williams also disputed Higgins’ claim that Midwestern markets “can be supplied more efficiently by these Gulf refineries than capacity in South Dakota.” In fact, Williams said, it would be cheaper to refine Canadian heavy crude into fuel at a Midwestern refinery for local sale, rather than shipping the oil to the Gulf for refining, then shipping the fuel back up north.
    Higgins was the technical director at the National Petrochemical and Refiners Association (NPRA) for 14 years, and last year he received a lifetime achievement award from the trade group.
    Higgins’ company, Hart Energy Consulting, counts among its clients some of the industry’s power hitters, including BP, ConocoPhillips and ExxonMobil.
    NPRA spokesman David Egner confirmed Higgins’ tenure but declined to comment on his analysis. An oil markets analyst for the federal Energy Information Administration also declined to comment, saying it would be improper.
    Reach Cody Winchester at 331-2320.

  • #4952

    Charles Randall

    Here is Update Article on Hyperion with comments @ non-viability by former NPRA Terry Higgins. (see prior Hyperion 5/25/08;  5/2/08 & other Refining news post) Looks like Terry has sold out his 14 year NPRA creditability for this Hart viewpoint (bunch liberal funded/leaning anti-fossil consultants….as Argusleader folks point out).

    BTW  “ArgusLeader” is not same company as Argus Petcoke Report guys so dont get them confused! But Cody/Argusleader guys seem be right side this issue & point out all left leaning reasons/source for Hart/Terry’s viewpoints.

    I fail to see how anyone could think US Refining capacity is long since only existing refineries have been expanded (no new ones since 1975) and demand is balanced to short (during peak periods where no surplus makeup capacity exist). South Dakota like another 39 states in US have ~ no to little refining plants and are totally dependent on P/L shipments from West Coast/Gulf Coast where 7 states provide 75% US refining capacity. No one seems concerned that potential security issues from Power Crisis or Hurricanes repeating damage to these few coastal based state producers. (Repeat gasoline supply shortages of PNW power crisis/Arizona Pipeline rupture/Katrina Gulf Coast damage/Irene East Coast damage).

    This perspective depends on liberal belief that ETOH forced addition will grow to 20% by 2025, which is already unable to make 7-10% level due corn crop drought/floods, lack enough government subsidy (will get worse to get US budget balanced) and growing concern over food famine/car carburetor damage issues/conflict with goal higher MPG. Also depends on ability of Environmentalist to kill off Canadian Tar Sands Crude supplies coming to US (they seem be ok with them going to China, ect for processing – which they would if blocked).

    And also depends on US Exec branch & California state push use EPA get Cap-and-Trade limits in place for Climate Change (updated name for Global Warming since its dead issue in public eyes) – all of which is/was driven by Koyota Treaty / Global Warming Environmental regulations. Koyota is almost sure bet to not be renewed in 2012 since all 18 signature countries failed to meet any lower level targets and never stood chance meeting harsh 2025 goals even with exempted power segments.
     Additionally countries like Japan are now joining US stating any new agreement cannot exempt developing countries who are now current world leaders in pollutions – China, India & Russia. The past US non-Koyota / Blue Skies position – did make its environmental goals; but now will depend who is in white house 2012, but Cap-n-trade failed Congress approval, so Obama will have win State Governors Court challenges to EPA’s current attempts.

  • #4693

    Charles Randall

    [ Refinery Foe’s take case SDakota Supreme Court Mar 07, 2012

    Opponents of the proposed Hyperion oil refinery in Union County are taking their case to the South Dakota Supreme Court.

    Save Union County, the Sierra Club and Citizens Opposed to Oil Pollution are appealing a Feb. 9 decision by Hughes County Circuit Court Judge Mark Barnett, which upheld the Prevention of Serious Deterioration air-quality permit for Hyperion Resources 400,000-barrel-per-day refinery, according to court paperwork filed this week.

    The issues that we raised are the ones we feel the circuit court did not adequately address, said Ed Cable of Save Union County, the groups spokesman. We tried to reduce the number of items the court has to consider.

    Sometime this week, Hyperion also will appeal one aspect of the permit it has challenged in the past C whether the limit on carbon monoxide emissions from the refinerys large process heaters is technically achievable C company spokesman Eric Williams wrote in an email.

    For the opponents appeal, the court will review two issues:

    Whether the Board of Minerals and the Environment has standing to order an environmental impact statement and whether they should have for Hyperion.

    Whether the board erred in granting Hyperion an 18-month construction extension, since the original deadline passed in February 2011. The company was granted a construction extension requiring it to break ground by March 2013.

    Since the appeal is from a final order, the court must hear the case. If it were an interlocutory appeal C filed during the pendency of the case that is not final, as defined by Greg Sattizahn, counsel to the Unified Judicial System C then the court could have declined to hear it.

    The appellants first brief is due April 16. Hyperion has 45 days to submit its brief, and the appellants can file a brief in reply. Then a hearing will be scheduled, Sattizahn said.

    Because the two sides can file briefs early or request extensions, its unclear when the court might hear the case.

    Williams said Hyperion would not begin construction while the Supreme Court has the case.

    While one could make an argument that we technically could start construction then, we will not begin construction during that time, he wrote. We do expect this process to be concluded in a timely manner.

    Whatever the outcome, Cable said, a Supreme Court decision is not the final word. There are many other avenues (to pursue), he said.

  • #4692

    Charles Randall

    Here is update on yet another stall by environmentalist on the Hyperion Refinery (& Coker) for S Dakota. This is not the 6th year this grassroots refinery has been going for a permit that EPA had no problems with, the local & state residence are in favor of and region desperatly needs to supply local markets SDakota is another one of the 39 states that have little to no refining plants currently.

    The plant has won its case court after court trial & is not at State Court Supreme level – Hyperion is one of two new grassroots refineries that have been deadlocked by environmentalist since 2006 where everyone but liberal extreme environmentalist have continued deadlocks that have prevented US from building ANY new plants since 1975. The average age of US refineries stand at 65-80 years with some like BP Lima & Whiting at +100 years old – the youngest is MAP Garyville which turns 37 this year.

    This type of obstrucitonist needs to be put down hard & should become target of “Frivolous Lawsuit” and these groups fined enough to make them think twice about future efforts. Otherwise its slot machine where eventually Major (like COP, XOM or BP) has pay off $MM in “Green Mail” to go forward – they currently have no downside. It is part of continuing effort by these groups to eleminate fossil fuels at the expense of the US taxpayer and expose entire US transportation system to risk & Europe level $9/gal cost to justify uneconomic alternatives.

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