A large upgrade proposed at the Pine Bend Refinery could have economic ripple effects in Rosemount and neighboring communities.
The developer of Rosemount's first hotel in modern times says it didn't take long for news of a proposed $400 million upgrade at the Pine Bend Refinery to pop up in his e-mail.
The note -- a news release by Flint Hills Resources, which operates the refinery -- had been forwarded to David Harchanko by a lender he had contacted about financing his hotel project. The message underscored the need for the hotel because of the refinery's plan to bring in more than 500 temporary workers for the upgrade.
"The refinery project is definitely part of our proposal to our lenders," he said.
Harchanko, business operators in the Rosemount area and city officials say the potential economic effect of the refinery upgrade is difficult to calculate. But they agree that they welcome the prospect of it adding hundreds of new workers -- and customers -- to the community.
"The refinery is a very important account for us," said Curt Mages, vice president and co-manager of NYCO, Inc., an Inver Grove Heights business that specializes in insulating commercial and industrial equipment like tanks, piping and boilers.
Mages said his business typically has about 45 contract workers. "I'm predicting that would grow quite a bit because of this project," he said. He estimated that his contract workforce at the refinery could increase by 50 to 100 percent.
Another contractor, Rosemount-based VIC'S Crane & Heavy Haul, Inc., also believes the upgrade project could boost its business with Flint Hills. VIC'S supplies the refinery with a variety of cranes as well as the people to run them. President Conny Mahoney said that on average 15 to 25 of VIC's 85 employees are at the Flint Hills site.
"According to information that VIC'S and [Flint Hills] are putting together, this expansion project will possibly ramp up to twice the number of people and equipment we now supply," she said.
But industrial suppliers like NYCO and VIC'S aren't the only ones that see potential benefits from the Flint Hills project.
"It most certainly would have a positive impact," said Kim Zeigler, whose the Fireside Restaurant & Bar is about 5 miles from the refinery complex. In addition to walk-in business, the restaurant also has catered functions for Flint Hills, he said.
The refinery, built in 1955, already is by far Rosemount's largest employer. Its 1,000 workers account for about 20 percent of the city's privately employed workforce, according to figures from the Metropolitan Council.
Ongoing maintenance and improvement projects also provide hundreds of additional jobs for contractors like those at NYCP. Company spokesman Jake Reint said the $400 million upgrade would double the temporary workforce at the refinery to 1,000 and that the work would take place in a series of projects stretching out for about five years.
The proposed improvements would increase efficiency at the refinery, currently the country's 14th largest with a capacity of 320,000 barrels of oil per day.
The upgrades would increase greenhouse emissions, so Flint Hills has requested a modification to its state air permit for such releases.
The project also still needs to get final approval from Flint Hills' management and board, Reint said. If approved by the company and the state, the work would begin in 2014.
About half the refinery's fulltime employees live in Rosemount and such surrounding communities as Inver Grove Heights, Apple Valley, Eagan and Lakeville. Rosemount Mayor Bill Droste said he considers Flint Hills "a regional rather than a city economic engine."
Even so, Flint Hills' corporate presence in Rosemount is significant.
The refinery is Rosemount's largest property tax-paying entity, making up almost 13 percent of the community's property tax base, said City Administrator Dwight Johnson.
Droste notes that the refinery has several business-to-business relationships with other area firms, like NYCO and VIC'S.
Flint Hills also does business with Rosemount Clean Energies, according to Chief Operating Officer Rick Albrecht. Located directly across Hwy. 52 from the refinery, it purchases diesel fuel products that it reformulates for a variety of customers, including Yocum Oil Co., which formed Rosemount Clean Energies in 2011. Albrecht said he's not sure whether the refinery's planned upgrades would have much of an effect on the two firms' business relationship.
Droste said Flint Hills' presence figured into a market study done by the city that identified the need for a hotel. Harchanko's company, Apollo Development of Minnetonka, is developing the 70-room Country Inn and Suites with Savage-based KJ Walk, Inc.
Harchanko said he expects the hotel could wind up doing a lot of business with engineers and managers that would need temporary housing during the refinery project.
Susan Feyder • 952-746-3282