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?