Flint Hills Resources, which produces half the gasoline sold in Minnesota, plans to spend $400 million to upgrade its 57-year-old Pine Bend Refinery in Rosemount, the company's largest investment there in at least a decade.
The project, requiring more than 500 additional construction workers starting in 2014, aims to boost efficiency without increasing the refinery's size, so that more barrels of crude oil can be processed each day, the company told the Star Tribune.
The Pine Bend Refinery, built in 1955 and greatly expanded over the decades, is the nation's 14th-largest, with a nameplate capacity of 320,000 barrels of oil per day. It has operated at 82 percent to 90 percent of capacity over the past five years, according to the U.S. Energy Department.
"This is a continuation of our efforts to make sure that this is a safe, clean, reliable refinery that is able to meet demand," Jake Reint, Flint Hills' director of public affairs, said in an interview.
It also is the latest sign that oil-related employment is taking off in Minnesota. Crude oil pipeline projects proposed recently by Enbridge Energy promise hundreds of additional construction jobs to northern Minnesota in the next few years.
"There will be a lot of folks getting fed for the next two or three years out there," said Harry Melander, president of the Minnesota Building and Construction Trades Council, referring to the Pine Bend Refinery project.
Reint said the refinery upgrade isn't directly related to the oil booms in North Dakota and Canada, from which the refinery gets its crude. North Dakota this year became the nation's No. 2 oil-producing state behind Texas, and in September pumped 728,494 barrels per day, a new record.
"There is no doubt that having access to a stable crude oil supply is vital," he said. "We are geographically blessed as a state to have access to that."
The upgrade project, which could take five years, will replace three less-efficient heaters and improve cooling towers used in crude oil refining, Reint said. The heaters will have best-available pollution control technology to reduce emissions of nitrogen oxide and sulfur dioxide, the latest step in a multiyear effort that has reduced air pollutants by 70 percent, Reint said.
The boost in refinery output after the upgrade will increase the refinery's greenhouse gas emissions, however, and Flint Hills will request a modification in its state air permit for such releases, Reint said. The project requires approval from the state Pollution Control Agency and final authorization from Flint Hills' management, he added.
The last Pine Bend Refinery project even close to this size was a $350 million upgrade completed in 2006 to allow production of ultra-low-sulfur diesel fuels and better conversion of diesel fuel to gasoline.
About 950 people are employed directly by the refinery, and 400 to 2,000 contractors can be there at any time working on $200 million to $300 million in maintenance and smaller upgrade projects each year. Reint said the planned upgrade project will come on top of those efforts, boosting the current 500-contractor workforce above 1,000.
Melander, of the construction trades council, an umbrella group for unions, said the refinery has consistently been one of the top building trades employers in the metro area. It requires a range of skilled workers, including electricians, pipefitters, mechanical workers, boilermakers, carpenters, ironworkers and laborers, he said.
Other, smaller projects also are ramping up at the refinery. A pair of giant coker drums used in fuel extraction arrived recently at Flint Hills and will be installed beginning next year. Meanwhile, Flint Hills plans to install two large tanks and railcar loading equipment to store and ship propylene, a petrochemical used in making plastics.
Rosemount Mayor Bill Droste, who had been briefed on the upgrade, said he has seen steady reductions in emissions, odors and flaring of gas from the refinery over the years.
"When you are improving efficiency, productivity and creating jobs, those are good things," Droste said.
Flint Hills Resources, which also has refineries in Alaska and Texas, is a unit of Koch Industries, based in Wichita, Kan., the nation's second-largest private company with an estimated $115 billion in annual revenue and 67,000 employees, according to Forbes.
Koch is a global conglomerate whose other interests include biofuel, cattle, fertilizer, minerals, paper, pipelines and textiles. Brothers Charles Koch, CEO, and David Koch, executive vice president, own most of the company, and are tied for fourth place on the Forbes 400 list of richest Americans, worth a reported $31 billion each.
David Shaffer • 612-673-7090 @ShafferStrib