Tuesday, April 14, 2009

the Enlightenment

April 15th, 2009
The Enlightenment
“The light is on, but nobody’s home.” “His elevator doesn’t go all the way to the top floor.” “His mind is sharper than the leading edge of a bowling ball.” “Two bricks shy of a load.” I could go on and on about this, but until I went to the Rotary meeting in vermillion last week to listen to Preston Phillips, it never dawned on me that those phrases would ever apply to me. I mean I’m not the brightest person in the world, but when it comes to Hyperion I thought I was really on top of it. NOT! (Now you have to read the rest of the article.)
I went to the Rotary meeting in Vermillion on the 7th. Preston Phillips was speaking and I wanted to hear what he had to say, plus maybe butt in and ask a question or two. However, I was told by the President of the Rotary that only members can ask questions and I was merely a guest. I came away from the meeting with more questions. After Preston was finished he took questions from the floor. It isn’t what he said that caught my attention; it was what he didn’t say. You decide for yourselves whether or not what I interpreted his answers to mean actually mean. Then ask yourself is this for real?
Question #1. Where is the oil coming from? Preston said “ they would be building their own pipeline coming from Canada and that it would take 4 to 5 years for the pipeline to be finished; just about the same time the refinery is finished.” Has Hyperion started the application process for a pipeline and we don’t know about it yet? I have been reading industry documents for almost as long as this project has been on the table around here and I have never seen where Hyperion is going to put in a pipeline. Just recently I was looking at a map of Canada and the United States and it showed every pipeline and proposed pipeline on this map, and there was not a word about Hyperion. As far as I know, one does not just wake up one morning and say – “Hey I think I’ll start building a pipeline to Elk Point.” This is a time consuming process. Look how long Keystone has been in the works. Is this another fantasy for Hyperion? I’m really getting confused here.
Question #2. Is Hyperion going to have stores, restaurants, entertainment centers, and other facilities available for the temporary workers? How about the families? Preston’s response was that they will have a dormitory facility for some of the transient workers, but they typically do not travel with their families. Some of these workers will be living in trailers and RV’s. Normally the schedule they will be working is a 14 days on and 7 days off schedule. These will be 12 hour days. Hyperion does not plan to have entertainment facilities, restaurants or other facilities for the workers. They will rely on the local economy for that. Hyperion will have law enforcement available for their areas that should be adequate and they will be asking the area communities for assistance from time to time. I interpret this to mean that what the workers do on their own time is not Hyperion’s responsibility. They are going to utilize the facilities in the surrounding areas and this will bring income to the communities. Nothing was said about assistance for a disaster such as a refinery fire. How many fire departments in this area have HAZMAT (Hazardous material) equipment to fight a refinery fire? I think that the fire crews must, by federal law in order to fight such a fire, be certified to fight that type fire. Who is going to buy the equipment? Who is going to ensure that all the volunteer fighters are HAZMAT qualified? Who is going to pay for this? How long does it take to get trained? We can who this one to death folks.
There will be 35,000 temporary 1 year jobs and 14,000 permanent jobs associated with the refinery. This information is straight out of the Steufen report over a year ago. Over how long of a period is he talking about? Are we talking 5 years, 10 years, or 20 years? It certainly isn’t something that is going to suddenly happen. Can you imagine the chaos around here if we are suddenly inundated by 35,000 people? Let’s get real folks. Can’t you see what is happening here? He is playing the numbers game, and they just don’t match. Other than the 1800 jobs mentioned in the application, this is so farfetched it is beyond goofy.
Now here is where the light bulb goes on. After the meeting I went up to Preston and asked him why Hyperion won’t just come out and say this is where the refinery is going to be built. Why do they keep saying we are just a finalist in the selection? He had this incredulous look on his face and said “Because the clean air permit has not been approved.” so I said “you mean if the permit isn’t approved you will pull up and leave town?” “That’s it.” Right On!
Hyperion is not only going to build a 200 megawatt power station and a refinery but is going to put in their own pipeline and a 4500 person housing facility and they are going to do this in 4 years. (When you wish upon a star)
This is why they took out options on the land for 4 years. They KNEW this process was going to take this long. They KNEW, and they are sitting back there saying “look at them dummies.” Well I’m here to tell you folks, the fat man hasn’t started singing yet. (Doug sings Bass)

Thursday, April 9, 2009

Clueless in Union County

April 8th, 2009
Clueless in Union County
Hyperion is really making me mad. Lately, every time I’m ready to write my article for the paper they do something stupid, and I have to start all over again. Here we are one (1) week before the public hearing and Hyperion comes to town and starts giving interviews to the Sioux City Journal and the Sioux Falls Argus Leader, saying some of the most ridiculous statements. Remember now, I’m not making this up, Preston Phillips is doing it all by his onzey.
Thom Gabrukiewicz wrote an analysis about Hyperion and the condition of the refining industry as a whole. The article in the Argus was titled “Analyst: Recession might halt Hyperion.” It went on for the rest of the article with quotations from many experts that believe this is a fantasy. The Argus is going on the premise that the slumping economy, the reduction of production of oil products, the glut of U.S. crude oil, and the reduction of consumption by the Americans doesn’t make an attractive environment for someone to invest in a company like Hyperion to be building a refinery when everyone else is scaling down or stopping construction altogether. He quoted specifically companies like Marathon (Corky Frank’s old company), Valero Energy Group, Chevron, Motiva Enterprises, Sunoco and ConocoPhillips. Analysts said continued instability in global markets - - even 10 years down the line could make it a hard sell for Hyperion to find investors. Tom Klolza, publisher and chief oil analyst for the Oil Price Information Service says “The most important pipeline is the money pipeline, and I don’t see that pipeline developing any funds for the Arizona project and the South Dakota project.” “Look, it doesn’t look fertile for any refinery construction in the U.S.” Kloza said, “Let’s put it this way – the prospects are very low.” Evidently he hasn’t talked to Preston Phillips and read Michelle Linck’s interview from the Sioux City Journal. Michelle asked Preston if he had the resources to begin construction. He responded “yes, we won’t be going into debt. Michelle then asked where the money was coming from. “As a private company, we don’t comment on that.” How does the economy affect your efforts to raise capital?”” This project and its timeline…we would not have to go out on the market for years and we’re confident the market will recover by then.”
The one part of reality here is that Mr. Phillips does admit that it is very crucial for Hyperion to obtain the Quality Air Permit. This process has been laborious and they have altered their plans. Original Construction was to start in 2011 with operation in 2014....NOT...citizens of Union County were originally told construction would start in 2009 with operation in 2014...now he tells one paper (the Argus Leader) 2014 and the Sioux City Journal 2015. You know, sometimes i think Preston just talks and doesn't pay attention to what he is saying. He has said so many things; one doesn't know what to believe anymore.
Back to the Argus Leader. Mr. Kloza remains skeptical. He is quoted again “say the economic malaise continues, the surplus is still going to grow. And you have two large (refinery) upgrades coming on line in late 2009. (Hyperion’s) got good intentions, but I’m skeptical.
Now I’m not a rocket scientist, but I do know that when there is a surplus of something, the price goes down, not up. In this case, there is a supply of over 356 million barrels of oil now and it is growing at a rapid rate. So fast, those refineries that are currently producing gas products are running at less than 70% of capacity. So how is this good for Hyperion? This is not a case of “if we build it, they will come.” That was the field of dreams, not field of oil.
Myth number 2. - - This one really is amazing. The last paragraph of the Argus’s story quotes Mr. Phillips saying that the project will create 35,000 jobs. Those are full time, year-long jobs, during construction and 14,000 permanent jobs when we’re in production. I can’t even comment on this one. Oh yes I can.
In Hyperion’s application to the county commissioners to rezone the Ag land to a planned development they specifically state that during the construction phase, there will be 4500 temporary jobs increasing to 10,000 for a 6 month period at the peak of construction. There will be 1800 permanent jobs when the facility goes into operation. You’ve heard these figures over and over for over a year, and now suddenly those figures are increased to 35,000 temporary and 14,000 permanent jobs. Who is kidding who here? I mean come on now, 35000 temporary and 14000 permanent jobs. If Hyperion can change figures like this, what can they do with the rest of the figures? What are we to believe here? Who are we to believe? Are they for real?
Cindy Schild, refining issues manager for API, says “From my perspective, plans that are already in place will go forward; they’ll just have to move at a potentially slower pace. Certainly, it’s been a challenge. But if the opportunity is right, if a new refinery can find financial backing and can overcome community unacceptance, then there’s plenty of reasons to believe new refineries can come online.”
Hell is going to freeze over when?