Marathon acquires Interior fuel assets
Marathon Petroleum Corp. has purchased the site of the now-demolished North Pole oil refinery formerly owned by Flint Hills Resources.
Marathon Alaska spokesman Casey Sullivan confirmed the refining and fuel transportation company purchased the 233-acre industrial site, which it now uses for fuel storage, in a deal that closed July 1.
Sullivan wrote via email that owning the Interior Alaska fuel storage terminal will help the company optimize its operations across the state.
“We are excited about the opportunities that this will bring for the company and for the community alike,” he said. “We believe this facility is a natural extension of our long-standing operations in Alaska and will enhance our ability to efficiently and reliably serve customers in the Interior and strengthen the integration from our Nikiski refinery to our customers.”
Marathon had been leasing the 285,000-barrel North Pole terminal to store fuels it imports or produces at its Nikiski refinery on the Kenai Peninsula and then ships north on the Alaska Railroad for eventual distribution to Interior customers.
The company took over the state’s largest oil refinery in Nikiski — long operated by Tesoro Corp. — late last year after finalizing a $23 billion deal to buy Andeavor, which ran the refinery briefly after purchasing Tesoro in 2017.
In late 2015, Tesoro purchased a 580,000-barrel capacity fuel terminal in Anchorage and a 22,500-barrel jet fuel storage facility at the Fairbanks International Airport as well as wholesale fuel contracts in the state from Flint Hills; all that is now owned by Marathon.
Flint Hills Resources closed its North Pole oil refinery — the site of historic soil and groundwater contamination — in May 2014 citing in part the high operating costs in the state. It began demolishing the oil refining facilities in December 2016 but kept the fuel storage terminal.
The Flint Hills refinery was a primary supplier of jet fuel to Eielson Air Force Base.
Fairbanks North Star Borough property records indicate that the former refinery-turned fuel terminal parcel has an assessed value of $24 million, down from $35.8 million in 2017 due to a decline in the value of on-site facilities. The land value has held steady at $2.5 million, according to borough records.
Marathon also took ownership of the former ConocoPhillips LNG plant in Nikiski when it purchased Andeavor. The company is seeking approval from the Federal Energy Regulatory Commission to use the idled plant to import LNG that could be used to fuel part of the operations at its nearby refinery.
Sullivan said Marathon has not ruled out selling imported LNG that has been regasified into the Southcentral market, but the company is focused on getting the requisite federal permits for importing LNG at this point.
Elwood Brehmer can be reached at [email protected].