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Refinery Looks To Reduce Royalty Costs

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Jamey Kirk

Tom Irwin, the Department of Natural Resources Commissioner, said that he would be willing to consider crude oil price breaks for Alaska's largest refinery. Irwin however said that he would be unwilling to negotiate until the owner of the North Pole Refinery, Flint Hills Resources, provides financial information requested by state officials.

Last month the company said it was reevaluating the refinery that produces more than half the jet fuel consumed in Anchorage. According to an email sent by Flint Hills President Brad Razook to the plant's employees, the plant could be reconfigured, upgraded or declared a "fail" and sold.

Irwin and Kevin Banks, the Director of the Division of Oil and Gas, toured the refinery in March. It was on the tour that the two heard a request to lower the price the refinery pays for state royalty oil. Banks said the company is telling state officials that recent fiscal gains have been meager.

Irwin said he sympathizes with the role the refinery plays as well as the jobs it supplies, however he said he requires the financial information that he has requested before he can make his decision.

Irwin however is only one step in the process, as a change in royalty terms would have to be approved by the Legislature.

The refinery has the ability to process 220,000 barrels per day, and can create gasoline, jet fuel, heating oil diesel and asphalt, all valuable commodities in local and international markets.

Almost 60-percent of the refinery's production is allotted for aviation markets.

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