IEF Exclusive: Despite high emotions, tar sands refinery near Iowa border far from realized

Pristine Elk Point, SD is the site of a cross-state dispute over an oil refinery that may not be built for years, if at all. (Photo: The City of Elk Point, SD.)

By Jim Malewitz

Elk Point was never in the spotlight before. But for three years, this quiet South Dakota town of just 750 families and a handful of restaurants has become the focal point in a dispute over a proposed 400,000 barrel-a-day tar sands oil refinery.

It would be the first tar sands plant built the United States since 1976.

Proposed by Dallas-based Hyperion LLC, the refinery has spurred an ideological clash between those hoping to add jobs to a still stagnant economy and those concerned about the health of the near pristine environment of this town, just 15 miles Southwest of Sioux City, and its nearby national parks and recreation areas.

Tar sands is an extra dark, heavy oil that researchers like Scott Spak, at the University of Iowa Center for Global and Regional Environmental Research, call “absolutely filthy.” Hyperion has said the refinery will use new technology that will limit emissions.

Disagreements over the proposal haven’t been confined to Elk Point or surrounding Union County, where 58 percent of voters approved a zoning ordinance that set aside 3,292 acres of land for the Hyperion refinery. Bickering over the refinery has crept across the border into Iowa and into the rhetoric of lawmakers, and was heightened by the recent midterm elections.

But a review of documents on Hyperion’s permitting process show that the refinery likely won’t be built for years, if at all. Since announcing Elk Point as a finalist for the refinery in June 2007, Hyperion has received just one of seven major permits required for its operation, and even that permit is tenuous.

“I see this as a long, drawn-out process,” said Richard Leopold, former director of the Iowa Department of natural resources, who left in August for a job with the U.S. Fish and Wildlife service.

South Dakota issue creeps into Iowa

In July 2010, Leopold sent a letter to the South Dakota Department of Environment and Natural Resources and the Environmental Projection agency requesting that the  state require Hyperion to submit an Environmental Impact Statement, which would detail the refinery’s future effects on air and water quality and native species of South Dakota and Iowa.

Richard Leopold

That letter brought the Hyperion issue into Iowa’s political discourse, leading Iowa House Minority leader Ken Paulson, R-Hiawatha, to ask Gov. Chet Culver to order Leopold to “stand down and stop preventing new jobs for Iowans.”

Culver and Terry Branstad traded jabs over the issue during their election campaigns. At a town hall meeting in Ames, Branstad accused the DNR of working against the state’s economic interests, while a spokesman for Culver accused his opponent of disregarding the health of the environment.

U.S. Rep. Steve King, whose district includes the border with South Dakota, told the Iowa Independent that there is not proof that the refinery would have a negative impact on the environment.

Searching for proof of “greenness”

Spak would like to see some proof too – that the refinery “will rank among the cleanest, most environmentally-friendly in the world,” as Hyperion touts on its website.

But while Leopold dismisses a “green” oil refinery as oxymoronic “like jumbo shrimp,” Spak, an expert on the Clean Air Act and Clean Water Act, said that it is possible that Hyperion’s new technology could trump today’s best technology. “But we have to see it.”

“Without an environmental impact statement, we don’t know how this will be different,” Spak said.

Hyperion has never built an oil refinery. And as it slogs through the permitting process, scientists and policy analysts would like to see information that could help understand what effect the refinery would have on the environment.

To Spak, even the paperwork Hyperion submitted to get its lone permit– an air quality permit issued in August 2008 – doesn’t answer many of his questions. The data only predicted the effect of emissions on visibility and air quality for average days and did not model outcomes in worst case scenarios.

Scott Spak

Spak said Hyperion’s methodology would not have passed muster in other states but South Dakota, a state inexperienced in such matters, is the ultimate arbiter in this case.

“Every state is responsible for choosing exactly how to evaluate new large emissions sources that affect air and water quality, but South Dakota does not have the history and established protocols for evaluating these permit applications that states like Iowa and Wisconsin do,” he said.

The Environmental Protection Agency also took issue Hyperion’s paperwork, as detailed in a letter it sent to the South Dakota DENR in November of 2008. The DENR rejected the criticism and still granted Hyperion the permit.

But time’s passage now threatens no nullify the permit, which requires Hyperion to start building next February – something the company is not prepared to do. Hyperion has filed a pending application with the state Department of Energy and Natural Resources to extend the deadline. If denied, the company would have to start the process again from scratch, said Kyrik Rombaugh, natural resources engineer at the DENR.

Further complicating the process, Hyperion now must now submit more data to show compliance with new federal greenhouse gas emission standards that will take effect on January 2, 2011, he said.

“[Hyperion’s] timing is off,” said Spak. “This is something they don’t have experience with because nobody has obtained permits for this kind of plant in the U.S. under today’s environmental regulations.”

Eric Williams, spokesman for Hyperion, called questions about timeline mere “speculation,” and said the company still plans on breaking ground in the later half of 2011 and becoming operational by 2015.

“We laid out a methodical approach to obtaining the necessary permits, and continue to proceed according to our plan,” he wrote in an email.

Williams did not address more specific questions on Hyperion’s timeline, and the South Dakota DENR doesn’t have that information either.

“We can’t really act without the paperwork,” said Kim Smith, its spokesperson.

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