Possible Williams buyer has tarnished environmental past

Posted: Friday, August 15, 2003

ANCHORAGE (AP) A Kansas company that Governor Murkowski says is interested in buying the Williams Alaska Petroleum oil refinery in North Pole has a record of major environmental violations in the Lower 48.

Officials with Koch Industries Inc. of Wichita say the company is now an industry leader in cutting pollution, making clean fuels and maintaining safe workplaces.

Some of the largest fines ever under U.S. environmental protection laws were imposed against the company from 1999 through 2001, according to documents from the Environmental Protection Agency and the Justice Department.

In the most recent case in April 2001, subsidiary Koch Petroleum Group pleaded guilty to covering up improper benzene emissions from its refinery at Corpus Christi, Texas. The company agreed to pay a $10 million criminal fine and spend another $10 million for community service projects.

In January 2000, Koch Industries agreed to pay $30 million to resolve lawsuits brought by U.S. and Texas authorities related to more than 300 pipeline oil spills. Those included a 100,000-gallon spill that caused a 12-mile oil slick on Nueces and Corpus Christi bays in Texas.

A Koch spokeswoman, Mary Beth Jarvis, said the big fines reflect Koch's decision to resolve an assortment of regulatory issues, many of which had lingered for many years.

''I sometimes jokingly call that our housecleaning period,'' Jarvis told the Anchorage Daily News. ''That was a very public and painful period. There are many things about how we addressed and worked through those past negatives that we're very proud of.''

Jarvis would not confirm whether Koch Industries is, in fact, interested in buying the Williams North Pole refinery.

The refinery has been for sale for more than a year as part of a campaign by Williams, based in Tulsa, Okla., to reduce debt by selling assets. Other Williams assets for sale include fuel tanks and loading equipment at the Port of Anchorage, plus a chain of gas and convenience stores around the state.

Earlier this month, Murkowski said that a Koch subsidiary, Flint Hills Resources of Wichita, is interested in the North Pole refinery. He also said Alaska officials are negotiating to sell Flint Hills 70,000 barrels a day of state-owned crude oil, known as royalty oil, that would supply almost all the refinery's needs.

The state already supplies much of the refinery's crude. The oil is drawn from the nearby trans-Alaska oil pipeline.

Koch is one of the country's largest privately held companies. Its enterprises include chemicals, refining, fertilizer, polyester production and cattle ranching.

It operates its refineries under the Flint Hills banner, including the Corpus Christi refinery complex and another plant at Rosemount, Minn., just south of Minneapolis-St. Paul.

Koch created the Flint Hills subsidiary last year as essentially a name change for Koch Petroleum Group, which was at the center of several government enforcement actions.

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