Governor says Kansas firm negotiating with Williams

Posted: Tuesday, August 05, 2003

FAIRBANKS (AP) The state is negotiating with a potential buyer of state royalty oil for use at the Williams refinery in North Pole, Gov. Frank Murkowski said.

Flint Hills Resources of Wichita, Kan., is negotiating with Williams to purchase its refinery and other assets in Alaska, Murkowski announced Monday.

''We have decided to enter into negotiations under the assumption there (will be) a contractual agreement very shortly,'' Murkowski said. ''They have been negotiating for some time and the assumption is that this sale is likely to go to a contractual commitment.''

Murkowski said he expected to see the two sides reach a deal toward the end of the year, if not sooner.

Representatives of both Flint Hills and Williams declined to comment. Williams spokesman Jeff Cook wouldn't say whether talks with Flint Hills have moved any further than they had with previous potential buyers.

''I can tell you there are other interested parties,'' he told the Fairbanks Daily News-Miner.

Flint Hills already produces a combined 600,000 barrels of crude oil a day at its refineries in Pine Bend, Minn., and Corpus Christi, Texas. It markets and produces fuels and other petrochemical commodities. In Canada its businesses include Calgary-based crude oil marketing, trading, transportation and storage activities.

The company employs about 2,000 people and is a wholly owned subsidiary of industry giant Koch Industries, also based in Wichita.

Facing billions in debt, Williams has been trying to sell all its Alaska properties, which include the North Pole refinery, two oil terminals, 29 Williams Express stores and a 3 percent interest in the trans-Alaska oil pipeline, for the past year. The refinery employs roughly 150 people, while about 25 more work for Williams Alaska in Anchorage. Statewide, the Williams convenience stores employ about 300 people.

Last week in Anchorage, Murkowski met with representatives of Flint Hills and Williams, as well as Tesoro and pterosaur, to discuss the royalty oil contract for the refinery, which currently delivers about 70,000 barrels per day of state oil.

Murkowski said the new contract would include a number of requests and demands from the state, the most significant being a requirement that the wholesale prices of jet fuel and gasoline be the same in Alaska's two largest cities.

Murkowski said he hopes to decrease the retail gas price disparity between Anchorage and Fairbanks gas is often considerably cheaper in Anchorage by fixing it on the wholesale end.

The contract would include a set price as well as a per-barrel amount paid to the state, Murkowski said, but he wouldn't offer specific numbers. He said most other monetary terms of the deal would be similar to those of the current state contract with Williams.

Other terms of the prospective agreement require that Flint Hills ship products via the Alaska Railroad, commit to increasing Alaska hire and make improvements to the refinery and tank farm in the Port of Anchorage.

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