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Jet fuel a no-go at Flint Hills

Posted: June 6, 2011 - 8:47am

Flint Hills Resources will not restart a third crude oil processing unit at its refinery at North Pole, near Fairbanks, this summer, a company spokesman said May 25.

This will make air carriers operating through Anchorage’s international airport more dependent on jet fuel imported through the Port of Anchorage.

State officials familiar with the fuel situation, speaking on background, said air carriers appear able to import jet fuel at prices more competitive than they would pay to Flint Hills for fuel made at its refiner near Fairbanks.

Ted Stevens International Airport in Anchorage is one of the world’s busiest air cargo transit airports, with most North America-Asia and many Asia-Europe cargo flights stopping in Anchorage to take on fuel. In a typical year airlines purchase about 800 million gallons of jet fuel in Anchorage.

Flint Hills spokesman Jeff Cook said the process unit will not be restarted but that the company will continue to operate two crude oil processing units which make gasoline and diesel mainly for local markets in Interior Alaska, as well as some jet fuel that will still be shipped to Anchorage.

The refinery ships fuel by rail from the refinery to the Anchorage airport, a distance of about 400 miles.

Cook said the company cannot provide details of its operations but a state official, speaking on background, said the third process unit is designed to make jet fuel and provided the bulk of the refinery’s output of that product.

In the past Flint Hills has supplied as much as 60 percent of jet fuel purchased by air carriers at Anchorage’s airport, when the refinery operated all three units year-round. Operation of the third processing unit was curtailed when the economic recession hit in 2009, causing Asia-U.S. air cargo traffic to be curtailed. Flint Hills restarted the unit last summer and but shut it down again in the fall.

Tesoro has been able to make up for some of the drop in jet fuel supply from Flint Hill from its refinery near Kenai, a state official familiar with the situation said on background, but that refinery is the state’s main supplier of gasoline and any increase in jet fuel output is likely to affect gasoline production levels.

Anchorage airport manager John Parrott said air cargo traffic has now generally returned to 2008 levels, but with Flint Hills out of the picture as a supplier, air carriers have turned increasingly to imports of jet fuel through the Port of Anchorage.

An airline consortium that operates bulk fuel storage facilities at the airport is now planning to build new tanks, expanding storage capacity from 20 million gallons to 36 million gallons, Parrot said.

The Alaska Industrial Development and Export Authority, a state agency, said it is working on a plan with fuel importers to build additional fuel storage capacity at Anchorage’s port.

The Alaska Railroad Corp. has been adversely affected by the reduction in jet fuel shipments from North Pole to Anchorage by Flint Hills. Transporting fuel is a major part of the railroad’s freight business, railroad marketing vice president Steve Silverstein said.

This has been partly offset by Flint Hills’ purchases of ultra-low sulfur diesel fuel from Tesoro, and shipment of that fuel north by rail, Silverstein said.

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