By Dirk Lammers
The Dallas-based company looking to build a $10 billion oil refinery in southeastern South Dakota has billed it as a "green refinery," but there's little consensus on what that means.
On its Web site, Hyperion Resources describes the proposed Hyperion Energy Center as a "state-of-the-art" refinery and gasification power plant that "will rank among the cleanest, most environmentally friendly in the world."
But a refinery choosing to process oil extracted from the Canadian tar sands can't truly be "green," according to Denny Larson, a California-based environmental advocate working to clean up U.S. oil refineries.
Unlike the light, sweet crude that refiners import from the Middle East, oil extracted from the Alberta tar sands is a dirty, bottom-of-the-barrel substance with numerous toxic compounds, and those contaminants have to be removed and dumped into the environment during the complex process of making gasoline, he said.
"If you wanted to build a cleaner, greener refinery, you'd start with a cleaner crude stock," said Larson, executive director of Global Community Monitor.
Over the past two weeks, The Associated Press made multiple requests through a Hyperion spokesman to interview to a company executive for this story.
No company executives made themselves available, but spokesman Eric Williams sent an e-mail Friday afternoon addressing some of the environmental topics in AP's interview requests.
Williams said the Hyperion Energy Center will produce ultra-low sulfur transportation fuels and will have the lowest overall emissions for the amount of fuel produced.
"Unlike most refineries, the Hyperion Energy Center will not use a catalytic, or 'cat' cracker," he said in his e-mail. "Cat crackers tend to have substantial emissions, including fine particle emissions."
Hyperion also will use a relatively new process called indirect alkylation, which avoids the use of sulfuric acid and hydrofluoric acid, he added.
Company executives and state officials say the 400,000-barrel-a-day oil refinery north of Elk Point is needed to help the U.S. reduce its dependence on overseas oil. It would become the first new site for a U.S. oil refinery in more than 30 years.
The Union County Commission will consider Hyperion's request to turn the 3,800-acre site into a planned development district during a public hearing Monday evening in Elk Point. In January, county planning commissioners voted to recommend that the county commission approve the change.
According to a 613-page air quality permit application the company filed with the South Dakota Department of Environment and Natural Resources, the center each year would emit nearly 2,000 tons of carbon monoxide, 773 tons of nitrogen oxides, more than 1,000 tons of particulate matter, 863 tons of sulfur dioxide and 473 tons of volatile organic compounds.
Larson called those estimates "optimistic and unrealistic," saying they only apply to routine operations and don't account for fugitive emissions and pollutants emitted during shut downs, start ups, upsets, malfunctions and emergency situations.
"What's in the permit is the tip of the iceberg," Larson said. "And what's underneath that iceberg is a huge amount of emissions that's not being accounted for."
Williams said Hyperion will place numerous monitoring devices throughout the facility to immediately detect small leaks and the company will also install monitors at the fence line.
Hyperion's onsite storage tanks will be more advanced and environmentally friendly than those at other U.S. refineries, Williams said, using floating roofs with sealed rings to ensure no leakage.
"We will have monitors and a vapor recovery system that will capture gaseous hydrocarbons and place them back in the system where they belong," he said in his e-mail.
Alex Cuclis, a research scientist with the Houston Advanced Research Center, estimates actual emissions from oil refineries can be three to 10 times higher than what companies report.
Cuclis, who worked for a Shell refinery for nearly 15 years and wrote his thesis on the concept of "green refineries," said newer emissions testing procedures are more accurate than current methods, but there's little incentive for refineries to use such tools.
Methods such as differential absorption light detection and ranging or solar occultation flux would put companies at a competitive disadvantage because regulating agencies would require sites to fix their problems, he said.
"There are people who are very attached to the emissions estimating techniques as being gospel and then there's another cadre of people who think they're garbage," Cuclis said. "It's kind of an internal fight, but they've been around for 20 years now and so trying to overcome that is a tremendous issue."
Gov. Mike Rounds, a proponent of the Hyperion Energy Center, said the refinery's emissions need to be looked at in perspective.
He said DENR provided him with the Environmental Protection Agency's 2002 inventory of air pollution emissions for both Union County and Minnehaha County, and it shows that emissions in Union County - even with the Hyperion Energy Center - would be about a third of the emissions in Minnehaha County.
"I think everybody pretty much agrees that air quality in Minnehaha County is pretty good," the governor said.
Rounds said the state will not cut corners when it comes to environmental regulation, and DENR will monitor Hyperion's emissions.
His administration has asked for an increase in DENR's 2009 operating budget so engineers can set up more monitoring stations to gather background data on air, surface water and ground water. Allowable air and water pollutant loadings will be placed in Hyperion's environmental permits, Rounds said.
"Once those have been issued, those permits become basically a contract guaranteeing Hyperion will not violate those pollutant loadings," he said.
Hyperion's air permit application also shows that the energy center would generate 19 million short tons - or 17.2 million metric tons - of carbon dioxide each year.
That would more than double the 13.7 million metric tons of carbon dioxide generated in 2004 across all of South Dakota, according to the latest EPA state numbers.
The Midwest Governors Association, which recently chose Rounds as its chairman, signed an agreement in November to work together to reduce energy consumption, focus more on renewable energy and limit greenhouse gas emissions.
Carbon dioxide is not currently regulated in the U.S., but the greenhouse gas is widely believed to contribute to global warming.
Rounds, noting that South Dakota signed onto the accord only as an observer state, said the Upper Midwest needs petroleum products and someone is going to refine the petroleum. The region has faced shortages recently and some of South Dakota's major terminals have been out of fuel for as much as 12 hours at a time, he said.
"The greenhouse gas emissions are naturally something that all of us are looking at," Rounds said. "The question is, do you have another refinery create the emissions. Do you turn down new business in one state because you can have the emissions come from another state?"
Rounds noted that Hyperion is designing the gasification power plant to be "carbon capture ready" and is studying methods to sequester and store the gas.
Dale Simbeck, a California-based consultant specializing in refining and gasification, said to truly call itself a "green refinery," a plant would have to be carbon neutral by capturing and storing all its greenhouse gases.
Refineries that produce ultra-clean transportation fuels instead of heavy oil products are considered "white refineries," he said, but researchers are still developing carbon capture and storage technologies that would allow companies to pump greenhouse gases underground or into the oceans.
Simbeck, vice president of technology for SFA Pacific Inc., said one example of a refinery that has used creative technology to reduce some of its greenhouse gas emissions comes from the Netherlands - and it involves real greenhouses.
Royal Dutch Shell's Pernis refinery near Rotterdam, Europe's largest, is reducing about 8 percent of its carbon dioxide emissions by diverting the gas to about 500 greenhouses, accelerating the growth of fresh fruit, vegetables and flowers.
Hyperion's plans call for an Integrated Gasification Combined Cycle power plant that would use delayed cokers to turn petroleum coke - a coal-like byproduct of the refining process - into hydrogen, steam and electricity to power the refinery.
Simbeck said gasifying coke provides many options, and companies could always buy coal to blend into the process.
"Coke and coal are very interchangeable from a gasification perspective," he said. "In fact, generally speaking, you kind of like to maybe have a little coal with the coke just to add more ash to the system to help handle the slide and the Canadian nickel that comes from the heavy oils."
Cuclis said delayed coking is a dirty process that can emit much coke dust and volatile organic compounds (VOCs).
It involves heating material to temperatures of around 900 degrees, which causes the big molecules to break up the smaller ones. To release the solid coke, companies must open up 100-feet-tall drums at least once a day to slice out the substance, he said.
"As that coke is falling, it will get all the coke dust, but also some other VOC pollutants as well," Cuclis said.
Cuclis said one question to ask Hyperion is why it's building a delayed coker instead of a fluidized flexicoker, which typically yields fewer emissions.
Hyperion says on its Web site that its facility will use Best Available Control Technology (BACT), a pollution control methodology it describes as "an ongoing, evolving progressive standard."
Larson said that term is misleading as it implies a company is using the latest technologies while the method really only deals with the feasibility and cost-effectiveness of the equipment. BACT has to be in use somewhere, Larson said, so it's not the latest stuff.
For instance, Larson said BACT allows the use of standard valves, while leakless bellows valves that can cut down on fugitive emissions have been available for some time.
"In fact, that doesn't mean state-of-the-art or greenest," he said. "It means what is widely and effectively used and judged to be cost-effective."
Rounds said he thinks the refinery project has merit, and he'd like to see it become a reality.
"I truly believe that this will provide opportunities for more people to work in South Dakota. I believe it means more families will stay in South Dakota," Rounds said. "I do not believe that you are going to see problems in terms of air quality."