FAIRBANKS—While the state has agreed to pay up to $585,000 for preliminary engineering and design to expand a water utility near the shuttered North Pole refinery, it remains locked in a three-way court fight with the past and present refinery owners over spilled sulfolane.
The state blames the companies for the sulfolane pollution situation, while the companies blame each other and the state, alleging a failure of regulatory oversight during the time when the other company ran the refinery.
The state owned the land under the facility for most of its early history, when it was operated by Williams Alaska Petroleum Co. About 300 homes have been receiving temporary supplies of drinking water from Flint Hills, which bought the refinery in 2004 from Williams.
Flint Hills closed the refinery in May, citing the unknown expense of the sulfolane situation and continued high operating costs as major factors. It continues to operate as a fuel terminal, shipping in petroleum on the railroad.
Flint Hills has lost one case against Williams in Fairbanks Superior Court, with a ruling that the statute of limitations had expired before it acted. A second case features the two companies and the state and includes some of the same conflicting claims about apportioning blame.
Williams argued in court that during almost all the time that it owned the refinery, the state owned the land—as well as the groundwater — and "never once notified, much less intimated" that sulfolane was a regulated contaminant. Williams says there was no evidence when it sold the refinery in 2004 that sulfolane had moved off the property and that Flint Hills and the state failed to act in a responsible fashion after reports surfaced in the years that followed.
$1.7 million study for expansion
In one small step toward a potential settlement, the state, as well as Flint Hills and Williams Alaska Petroleum, each agreed to pay one-third the cost of a utility expansion study, estimated to total $1.7 million, the attorney general's office said.
The announcement Friday on the expansion study doesn't address construction costs and ultimate liability for sulfolane cleanup, which could run to hundreds of millions of dollars—or not.
One reason the exact cost is unknown is that the Department of Environmental Conservation is reviewing what an acceptable level of sulfolane pollution should be. Commissioner Larry Hartig of the Department of Environmental Conservation ordered a new report in April. He said the record did not contain sufficient analysis to justify the cleanup standard set by DEC of 14 parts per billion.
DEC has said that 14 parts per billion is about the same as 14 drops from an eyedropper in an Olympic-sized swimming pool. Flint Hills sought a level of 362 parts per billion, which is higher than what was found beneath nearly all of the hundreds of homes within a few miles of the refinery.
Any decision to expand a water utility system may hinge in part on whether the acceptable level of sulfolane is 14 parts per billion, 362 parts per billion or somewhere in between.
The underground plume of sulfolane now covers an area about three miles long and two-and-a-half miles wide, DEC says.
The solvent entered the groundwater by a combination of leaks and spills, the most prominent of which involved corroded pipes in a sump drain and a leaky liner under a 1.25-acre wastewater lagoon, according to a consultant hired by Flint Hills.
Sulfolane is a water-soluble solvent that was used in the making of gasoline. Williams made greater use of the chemical than did Flint Hills.
The most sensational claim about the leaky lagoon is that during the time when Williams Alaska Petroleum Co. owned the refinery, a supervisor fired a high-powered rifle at a piece of the plastic liner that floated to the surface in the lagoon. The employees referred to these bubbles as "belugas."
"Somebody nicknamed them that because they looked liked whales breaching the water," a former employee said in a 2012 deposition for Flint Hills, filed in one of the two lawsuits underway in Alaska courts.
"Belugas are where a gas, probably methane, has pushed up the liner above the liquid surface," Ben Britten said in the deposition. "So it's just a big, round bubble of liner sticking above the water level."
Consultant Geoega of Boulder, Colo., said that in documents from 1986 to 2005, there were repeated reports of sightings of "whales" in the lagoons where wastewater and drain water was treated.
"The existence of these bubbles may indicate liner integrity issues," the report said. "The factual record also indicates that the Lagoon B liner was abused during the Williams era."
Flint Hills has cited the gunshot as well as the transfer of "thousands of gallons of sulfolane waste" into the lagoon as evidence of negligence by Williams.
At one time, Williams had a gun club and shooting range on the west side of the refinery property, the report said.
"Employees going to the gun club would walk by Lagoon B and on at least one occasion in the Williams era, an employee who was reportedly a marksman shot at and struck a 'whale' in the liner using a high-powered rifle," it said.
Lagoon B, covering 220 feet by 240 feet, was a "large source of sulfolane," the report said, with several reports of tears and holes in the liner. The anecdotal evidence points to high levels of the chemical in wastewater going back before 1990, Geomega said.
Britten said that he once saw a superintendent of operations for Williams, fire a Colt Sauer .458-Magnum at one of the whales. He said this was before a second lagoon was built in 1987.
"It's basically an elephant gun," Britten said in his deposition, adding that the superintendent hit the "beluga" as he was "an extremely good marksman."
"To put it bluntly," Flint Hills said in court, "Lagoon B leaked like a sieve when Williams owned the refinery, and sometimes contained the equivalent of thousands of gallons of sulfolane.
In 2012, soil tests beneath the lagoon showed that sulfolane remained in the soil long after the lagoon had been drained and the sludge removed.
"The soil and groundwater data from Lagoon B, combined with its operational history, demonstrate that legacy sulfolane releases from the Williams era continue to discharge sulfolane to groundwater in the area of Lagoon B. This suggests that there is a mechanism for ongoing releases to groundwater from Williams' operation at other areas of the site."
Sump drain corrosion
In addition to the leaky lagoon, the report for Flint Hills cites a major problem with sump drains where corrosion went unchecked for years. That was a significant source of sulfolane pollution, the report said.
The consultants said Lagoon B and a sump system produced the highest contamination levels, with readings of nearly 100,000 parts per billion in groundwater near the lagoon in 2005 and 32,000 parts per billion near the sump, a low spot at which liquid was collected when the refinery equipment had to be drained, cleaned and inspected.
The study says that "high sulfolane-laden wastewater" was discharged to the sump and reached the groundwater. In 1997, an inspection of the sump showed corrosion that was serious enough that the sump kept filling with groundwater because of holes in the piping.
"Because of the substantial corrosion and failure of the sump found during the 1997 inspection, it is likely that this condition existed during previous" occasions when the refinery pipes were drained, the consultants said.
The sump was coated with polyurethane in 1997, but that lining had already started to fail by the next year, the report said. The sump was supposed to have been checked every month or less, "to monitor the onset of deterioration, but there are no records indicating that such action was taken."
A 1999 inspection led to a recommendation that the coating be redone in 2000, but the next inspection listed in the records took place in 2009.
In 1988, the refinery told the Environmental Protection Agency it would hydrostatically test the oily water sewer system every three years, "but there is no evidence to indicate that this commitment to EPA in 1988 was fulfilled."
In 2009, the sump was found to have serious problems again, as the coating had failed and the drain lines had flunked a hydrostatic test.
Flint Hills estimated that while Williams owned the refinery, the sump leaked 12,911 gallons, while the leakage from 2004 to 2009, under Flint Hills, was estimated at 10,616 gallons.
"There is no indication that the underground drain system was ever tested in the Williams era and it appears that in the Williams era it was determined that underground drains to sumps could not be tested," the consultant said.