Reznet

Elk Point Strikes Oil?

By Nancy Kelsey (story) and Breanna Roy (video)

ELK POINT, S.D.--After months of speculation about the purchase of farmland in Union County, Dallas-based Hyperion Resources announced that South Dakota is a finalist for a 400,000-barrel-a-day oil refinery that could create 1,800 jobs.

In a news conference here Wednesday, state development secretary Richard Benda and Hyperion project executive Preston Phillips touted the project as a first of its kind: a clean, environmentally friendly refinery. It would produce ethanol and biodiesel fuel.

The company has options to buy 5,000 acres, Phillips said. The process for setting zoning and other regulations will begin soon.

Rumors of what is called "Project Gorilla" started circulating with the offers for large land purchases in southeast South Dakota. Until Wednesday, the project has been largely shrouded in secrecy.

The planned oil refinery would be the nation's first in three decades.

South Dakota is among an unspecified number of finalists in different states as a site for the refinery, which will be announced early next year, Phillips said. South Dakota has much to offer a possible refinery, including proximity to rail, highways and water, he said. The site would be next to both the Missouri and Big Sioux rivers and would require 12 million gallons of water each day. Phillips said that water would likely come from the Missouri River.

Benda estimated that $8 billion would be spent on the project.

The state has not made a formal incentive offer. "We have not put a proposal on the table," Benda said.

Hyperion expects to create 4,500 construction jobs per year during the building of the refinery, in addition to $20- to $30-an-hour jobs after completion.

"There's no doubt that 2,000 jobs for the area is a good thing," said South Dakota House Rep. Margaret Gillespie, who represents Elk Point.

Still, she said, based on the information she heard at the news conference, she could not conclude whether the refinery would be good or bad for Union County.

The majority of the Gorilla Project calls have been to learn more about the project. Now, people are "digesting the information" and will likely call her throughout the week, Gillespie said. She said she is pleased that her constituents know what the project is. She said, though, that she can understand why the secrecy surrounding it was necessary.

Plans have been in the works for a TransCanada pipeline through South Dakota. As the Sioux Falls Argus Leader has reported, the pipeline is scheduled to be in place by 2009. Phillips said there is no specific relationship between the TransCanda pipeline plans and the proposed refinery. In fact, he said the refinery’s output would be great enough to warrant its own pipeline.

The refinery would sit on 2,000 acres of Union County land and Hyperion would also create a buffer zone for nearby residents, Phillips said.

"We want to be a good neighbor," he said. "We're committed to that fact."
More than 100 people gathered to hear the news in the basement meeting room of the Union County Courthouse, 30 miles north of Sioux City, Iowa. Many were residents of Union County who were not allowed to ask any questions as stipulated at the beginning of the press conference.

Jason Quam was told that only members of the news media could ask questions when he piped up during the question-and-answer period. Quam lives inside what was termed the buffer area, or land between the proposed refinery and the surrounding residential area.

He said Hyperion's real estate agents offered him $325,000 for his nine acres of non-farmland.

"They made me an offer that was fair market value," he said. It would be acceptable if he were making the choice to move, but he's not--Hyperion would either drive down his property value or Quam would have to move, he said.

Quam runs the www.elkpointgorilla.com blog that gives updates about the project.

Marie Eidem, a 40-year resident of Union County, on the other hand, has been satisfied with the negotiations on her farmland; she would not disclose the number of acres that she and her husband would sell. Until Wednesday, residents who had been negotiating options with Hyperion’s real estate agents did not know the fate of their land options.

Eidem said she is still content with her choice after hearing that the land would be part of a large-scale refinery project.

"We have not been mislead in any way," she said.

Nancy Kelsey, Little River Band of Ottawa Indians, is studying journalism at the University of Nebraska graduate school in Lincoln. She is a graduate of the Freedom Forum's American Indian Journalism Institute. She interned as a reporter at The Seattle Times last summer. Next summer she'll report for The Associated Press in Boston.