Port Mac fuel storage caught in Flint Hills fallout

Flint Hills Resources’ announcement that it would close its refinery at North Pole has focused attention on a state loan for a new bulk fuels facility at Port MacKenzie that will begin construction this year.

When the refinery announcement was made Feb. 4, State Reps. Doug Isaacson and Tammie Wilson, two Republican state legislators from North Pole, were quick to criticize the loan by the Alaska Industrial Development and Export Authority to a fuel storage facility they say could lead to imports of fuel, to the disadvantage of in-state refineries.

Officials from AIDEA and Central Alaska Energy, the company planning the project, said the criticism is unfair.

“Our business plan is centered on Ultra Low Sulfur fuel, which Flint Hills does not produce,” said Mark Smith, CEO of Central Alaska Energy. “The economic reality leading to the closure of the refinery has nothing to do with Central Alaska Energy’s terminal project.”

AIDEA spokesman Karsten Rodvik agreed: “There is no relationship between our loan to Central Alaska Energy and the announcement from Flint Hills.”

The fuel terminal at Port MacKenzie, which will have a capacity of 6 million gallons, is a critical piece of infrastructure for the port there, which is owned by the Matanuska-Susitna Borough, Rodvik said.

“It will provide alternative fuel storage and distribution infrastructure for refined fuel products,” at the port.

It is small, however, compared with the bulk fuel storage capacity at the Port of Anchorage and Ted Stevens International Airport, which totals 56 million gallons.

The loan for Central Alaska Energy, approved last summer, was for $13.9 million. Both loans were made under AIDEA’s long-established Business Loan Participation program, where commercial banks originate the loan and bring it to the authority to become a partner, taking part of the loan.

Interest rates on AIDEA loans are typically at the market rate.

Northrim Bank originated the loan for the Fairbanks LNG storage plant. First National Bank Alaska originated the loan for Central Alaska.

Rodvik said infrastructure, including fuel terminals, has long been a core part of AIDEA’s economic development strategy.

“An example is that AIDEA owns a fuel terminal that is part of the DeLong Mountain Transportation System, which supports the Red Dog Mine,” Rodvik said.

Fairbanks itself benefited from a recent AIDEA loan for energy storage facilities, he said.

“Just a few weeks ago the AIDEA board approved a $20 million loan for a five million-gallon capacity liquefied natural gas storage and distribution facility in Fairbanks,” Rodvik said.

Central Alaska Energy is an affiliate company with Vitus Marine, which markets fuel in Western Alaska. Smith said Vitus will use the new Port MacKenzie plant to store fuel, and that it would be available to others as well.

As Flint Hills closes the refinery and switches to a new role of marketing fuels in the Interior, the company will be able to also use Central Alaska Energy facility for storage of its fuels.

02/13/2014 - 12:48pm