Hyperion exploring federal financing
Johnson, Thune confirm they've met with company
By Dave Dreeszen Journal business editorcopyright Sioux City Journal 2008 | Posted: Wednesday, April 23, 2008
WASHINGTON -- Representatives from Dallas-based Hyperion Resources approached both South Dakota senators in recent weeks in an effort to secure federally backed loans to finance the proposed oil refinery and power plant in Union County.
U.S. Sen. Tim Johnson, D-S.D., said he met recently with representatives from the company, which is proposing to build a $10 billion oil refinery near Elk Point, S.D., about its plans.
"They came to me a couple weeks ago and I balked at the $10 billion," Johnson said, referring to the energy center's estimated price tag. "Then they went to see Sen. (John) Thune."
Johnson's comments came at a Capitol Hill meeting with a group of about 70 tri-state business and government leaders. The Siouxland Chamber of Commerce ranked the Hyperion project as one of its top six priority issues during its two-day lobbying Washington trip, which kicked off Tuesday.
Johnson spokeswoman Julianne Fisher said Hyperion representatives came to the senator's Washington office to inquire about various financing options. The refinery likely would not qualify for any federal program in which the government guarantees the loan, she said.
"Nothing we see right now would work with what they're looking at," Fisher said.
Andi Fouberg, a spokeswoman for Thune, confirmed the Republican senator met with Hyperion representatives recently, but did not know if the subject of guaranteed loans came up.
Hyperion spokesman Eric Williams did not return calls from the Journal seeking comment, but said in an e-mail sent late Tuesday that the company is "looking at all its financing options." Williams did not respond to specific questions about the two meetings.
The energy firm's interest in federal loan guarantee programs came as news to some local supporters of the project, though they viewed it as a positive development.
"To me, it's encouraging because they think the vote is going to pass on June 3rd and they also believe the permitting will work its way through," said Darrell Jesse, a Dakota Dunes attorney and Hyperion backer.
Ed Cable, a spokesman for Save Union County, a local anti-refinery group, said he was not surprised by Hyperion's interest in government-backed loans. "We've researched all of the programs that are available and none would apply as far as we're concerned," he said.
Union County voters will decide June 3 whether to ratify or reject the county commission's decision last month to rezone 3,292 acres of agriculture land Hyperion controls into a new classification, Planned Energy Center Development. Hyperion officials have said they will go elsewhere if a majority of voters don't want its "green" energy center.
Dennis Melstad, president of Dakota Dunes Development Corp., noted that if the referendum passes, the company still would need to obtain a series of state and federal environmental permits.
"They cannot do any kind of financing, whether it's equity or debt, without all their permits in place," he said.
Melstad and Jesse pitched the proposed energy center at meetings Tuesday with Johnson and three other members of the tri-state congressional delegation -- Iowa 5th District Rep. Steve King and Nebraska Sens. Chuck Hagel and Ben Nelson.
King, Hagel and Nelson all voiced support for the proposed 400,000-barrel-per-day refinery, which would use advanced technology to turn heavy crude from Alberta, Canada, into low-sulfur gas, diesel and jet fuel.
"I think you've got a great start on it," King told the delegation. "It is fantastic for our country, and it's outstanding for our region."
Nelson, who described Hyperion's idea as "excellent," said that with all the trouble oil firms have had locating refineries in some southern and western states, "I've been saying, 'Why not come to the Midwest?'"
Nelson noted that much of the U.S. refinery capacity is located along the Gulf Coast. Powerful tropical storms, such as Hurricane Katrina, have the potential to put many out of commission for extended periods, resulting in fuel shortages and corresponding higher prices.
"If we have this capacity spread out across the country, I think the chances of being able to control some of the costs associated with gasoline increases at the pump will be helped," Nelson said.
Melstad and Jesse asked lawmakers for any help they could provide in helping Hyperion's project move through the permitting process in a timely manner. They're scheduled to repeat that request in a series of meetings with other members of the tri-state congressional delegation today, including Thune.
Neither Thune nor Johnson has taken a position on the refinery and both say they support giving Union County residents the right to be heard on the issue.
Pro-Hyperion forces trumpet what they describe as once-in-a-lifetime economic benefits. The energy center would produce an estimated annual impact of $14 billion and add $1.2 billion in new wealth each year. It would also create a huge financial windfall for the state, county and local school district, adding $50 million annually in state sales tax receipts and $2 billion more in local property tax valuation.
Opponents claim the refinery would foul the environment, adversely change their rural way of life and create added costs for local taxpayers.
U.S. Sen. Tim Johnson, D-S.D., said he met recently with representatives from the company, which is proposing to build a $10 billion oil refinery near Elk Point, S.D., about its plans.
"They came to me a couple weeks ago and I balked at the $10 billion," Johnson said, referring to the energy center's estimated price tag. "Then they went to see Sen. (John) Thune."
Johnson's comments came at a Capitol Hill meeting with a group of about 70 tri-state business and government leaders. The Siouxland Chamber of Commerce ranked the Hyperion project as one of its top six priority issues during its two-day lobbying Washington trip, which kicked off Tuesday.
Johnson spokeswoman Julianne Fisher said Hyperion representatives came to the senator's Washington office to inquire about various financing options. The refinery likely would not qualify for any federal program in which the government guarantees the loan, she said.
"Nothing we see right now would work with what they're looking at," Fisher said.
Andi Fouberg, a spokeswoman for Thune, confirmed the Republican senator met with Hyperion representatives recently, but did not know if the subject of guaranteed loans came up.
Hyperion spokesman Eric Williams did not return calls from the Journal seeking comment, but said in an e-mail sent late Tuesday that the company is "looking at all its financing options." Williams did not respond to specific questions about the two meetings.
The energy firm's interest in federal loan guarantee programs came as news to some local supporters of the project, though they viewed it as a positive development.
"To me, it's encouraging because they think the vote is going to pass on June 3rd and they also believe the permitting will work its way through," said Darrell Jesse, a Dakota Dunes attorney and Hyperion backer.
Ed Cable, a spokesman for Save Union County, a local anti-refinery group, said he was not surprised by Hyperion's interest in government-backed loans. "We've researched all of the programs that are available and none would apply as far as we're concerned," he said.
Union County voters will decide June 3 whether to ratify or reject the county commission's decision last month to rezone 3,292 acres of agriculture land Hyperion controls into a new classification, Planned Energy Center Development. Hyperion officials have said they will go elsewhere if a majority of voters don't want its "green" energy center.
Dennis Melstad, president of Dakota Dunes Development Corp., noted that if the referendum passes, the company still would need to obtain a series of state and federal environmental permits.
"They cannot do any kind of financing, whether it's equity or debt, without all their permits in place," he said.
Melstad and Jesse pitched the proposed energy center at meetings Tuesday with Johnson and three other members of the tri-state congressional delegation -- Iowa 5th District Rep. Steve King and Nebraska Sens. Chuck Hagel and Ben Nelson.
King, Hagel and Nelson all voiced support for the proposed 400,000-barrel-per-day refinery, which would use advanced technology to turn heavy crude from Alberta, Canada, into low-sulfur gas, diesel and jet fuel.
"I think you've got a great start on it," King told the delegation. "It is fantastic for our country, and it's outstanding for our region."
Nelson, who described Hyperion's idea as "excellent," said that with all the trouble oil firms have had locating refineries in some southern and western states, "I've been saying, 'Why not come to the Midwest?'"
Nelson noted that much of the U.S. refinery capacity is located along the Gulf Coast. Powerful tropical storms, such as Hurricane Katrina, have the potential to put many out of commission for extended periods, resulting in fuel shortages and corresponding higher prices.
"If we have this capacity spread out across the country, I think the chances of being able to control some of the costs associated with gasoline increases at the pump will be helped," Nelson said.
Melstad and Jesse asked lawmakers for any help they could provide in helping Hyperion's project move through the permitting process in a timely manner. They're scheduled to repeat that request in a series of meetings with other members of the tri-state congressional delegation today, including Thune.
Neither Thune nor Johnson has taken a position on the refinery and both say they support giving Union County residents the right to be heard on the issue.
Pro-Hyperion forces trumpet what they describe as once-in-a-lifetime economic benefits. The energy center would produce an estimated annual impact of $14 billion and add $1.2 billion in new wealth each year. It would also create a huge financial windfall for the state, county and local school district, adding $50 million annually in state sales tax receipts and $2 billion more in local property tax valuation.
Opponents claim the refinery would foul the environment, adversely change their rural way of life and create added costs for local taxpayers.
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AnnieO wrote on May 10, 2008 9:27 AM:
Thorgood wrote on Apr 27, 2008 10:07 PM:
geography wrote on Apr 27, 2008 9:47 AM:
rmiller wrote on Apr 26, 2008 5:17 PM:
Based on Energy department numbers if the Hyperion refinery was at capacity today, they could replace 20 percent of the oil imported into this country. Reducing tight oil supplies by that much could prick the speculative bubble driving up oil prices.
On the other side, I DO wonder if Hyperion has the technical expertise to build this plant and run it. "
Thorgood wrote on Apr 26, 2008 12:23 AM: