Hyperion Says It May Apply For New Air Permit

Rather than ask for extension, a Texas company is considering filing a new application for a state air permit that would allow it to begin constructing a proposed $10 billion oil refinery, company officials said Friday.

Hyperion Refining was facing a Friday deadline to start construction on the facility, which would process 400,000 barrels of Canadian tar sands crude oil each day into low-sulfur gasoline, diesel, jet fuel and liquid petroleum gas. If constructed, the 3,300-acre tract of farmland north of Elk Point would become the first new U.S. site for an oil refinery since 1976.

Hyperion Vice President Preston Phillips said the company made the decision after discussions with the South Dakota Department of Environment and Natural Resources and Attorney General's office.

"While there are advantages and disadvantages to both approaches, the state officials expressed a clear preference that we come in with a new permit." Phillips said in a statement.

The state Board of Minerals and Environment originally issued an air quality permit in August 2009, and it was challenged by the Sierra Club and local groups Save Union County and Citizens Opposed to Oil Pollution.

Ed Cable, of Save Union County, said Hyperion had until 5 p.m. Friday to begin construction or ask for an extension or the air permit would expire.

"That really leaves them with no other option but to file a brand new application," Cable said Friday. "So this is not like they're being magnanimous. They don't have any other choice."

Hyperion had thousands of acres of options in Union County secured for the refinery, but the company failed to extend them on Sept. 30. Company officials said in October that they were still talking to landowners, but it's latest statement didn't address land issues.

Cable said he hasn't heard about any recent contact between the company and landowners.

The original air permit called for construction to begin by Feb. 20, 2011, but company officials said the project was delayed because the recession caused problems in securing financing. The board issued a revised permit in September that reflected updated national air quality standards and new pollution-control technology and gave Hyperion until March 15 to start construction.

Phillips said that if it applies for a new permit, the company wouldn't be starting over but building on existing baseline data, engineering and other work.

The South Dakota Supreme Court's recent decision upholding the previous permit puts Hyperion and anyone else wanting to permit a large, complex project in a stronger position, he added.

The Hyperion Energy Center would include a power plant that produces electricity for the refinery. It would convert a byproduct of the refinery process - solid petroleum coke - into gas that would be burned to produce electricity.  Hyperion contends that the refinery would be a clean, modern plant that would use the most advanced, commercially feasible emissions control technology.

Company officials have said that efforts to secure financing are progressing, but they have not provided details.