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Rusk County oil refinery plans stall but still alive

By Peggy Jones pljones@news-journal.com
Feb. 21, 2013 at 10 p.m.

Plans for a refinery to be built in western Rusk County have been jettisoned by the group that's been working on the project for more than a year.

However, a different group is working to obtain financing for a refinery to be built in the same area near New London, a spokesman said.

Ken Williams, owner of Gregg County Refinery and principal agent for the group that was pushing the original development plan, confirmed Thursday the effort had ended. The plan called for utilizing the long-idled Longview Refinery on Premiere Road as a terminal and portions of the refinery equipment being dismantled and used at the new site.

The 30,000-barrel-a-day facility was to be financed mainly with $182 million in low-interest Hurricane Ike bonds channeled through the Angelina-Neches River Authority. The total project was estimated to cost more than $300 million.

But the effort stalled in late 2012 after the group failed to meet deadlines to receive the tax-exempt bonds.

Since then, a new ownership group has been formed, said consultant Duane Gordy, a spokesman for the group that has taken the working name of Rusk County Refinery. Tulsa oilman Coleman Ferguson is the principal agent, he said.

"When we didn't get the Hurricane Ike bonds, it changed the funding mechanism," said Gordy, who also was involved in the original effort.

"We still want to work with the Angelina-Neches River Authority, and we are still looking at the same location."

Angelina-Neches River Authority Executive Director Kelley Holcomb confirmed the agency's interest in helping to secure tax-exempt private activity bonds for a refinery in Rusk County.

"We are loosely engaged," Holcomb said. "Some aspects of a refinery project dealing with the environment - air quality issues, for example - could qualify to be tax-exempt. Others might be low-interest."

The land selected for the refinery, but never purchased, is a little more than a mile southeast of the intersection of Texas 42 and Texas 323, Gordy said.

Rusk County tax records show 150 acres eyed for the project were owned by Near Bore Resources. The Texas Railroad Commission in April 2011 issued a final order against the owners of Near Bore Resources regarding environmental issues arising from groundwater contamination.

"That was part of the problem," Gordy said. "We weren't going to buy that liability. That was up to the owners."

But he said the new ownership group still favors the property because certain aspects of the land "would save us millions in construction costs."

New owners want to locate the refinery within the Angelina-Neches River Authority jurisdiction, Gordy said.

"If we were to move north, we would be in the Sabine River Authority, and that group did not show any interest in the project," he said.

In addition to environmental cleanup costs associated with the chosen Rusk County site, Gregg County Refinery faced environmental cleanup issues at the mothballed Longview Refinery site. Public records show a history of claims by federal and state environmental agencies against the site dating back at least to the early 1990s.

Williams has argued because the contamination dates back decades, former owners including Gregg County, the City of Longview and Pine Tree ISD have liability for cleanup.

"Gregg County Refinery is isolated to the 35 acres at Premiere Road," Williams said Thursday. "It has nothing to do with anything going on in Rusk County."

Gordy said the new ownership venture is larger than the original.

"The current plans are bigger than the old. We're up to $210 million now. But things of that size don't happen fast. I would be surprised to see anything on the ground before 2014."

Rusk County officials voiced a "better late than never" attitude to the stalled plans.

"We're still hoping it happens," Rusk County Judge Joel Hale said earlier this week. It would be great for Rusk County, Kilgore College and West Rusk CCSD, for jobs and our economy."

Original estimates envisioned 400 construction-phase jobs and about 85 permanent positions at the refinery.

West Rusk County Consolidated ISD Superintendent Tommy Alexander said he, too, remains hopeful. The school district stands to realize a substantial increase in tax revenue should a refinery be built in the district.

"I think some things are going on probably below the water level right now, but I'm not privy to any of that and don't know anyone who is," Alexander said. "I still think there's a real possibility it will happen. I'm very hopeful - very, very hopeful - but it's kind of a waiting game on our end."



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