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State, Flint Hills Reach Agreement on Royalty Oil Purchase


February 10, 2004
Tuesday - 1:10 am

Governor Frank Murkowski announced Monday that the State of Alaska has reached agreement with Flint Hills Resources on the sale of North Slope royalty oil for use in the North Pole refinery Flint Hills is buying from Williams. The contract allows Flint Hills to purchase up to 77,000 barrels per day for up to 10 years.

Murkowski said he was particularly pleased that the state's efforts in the negotiations have resulted in significantly more revenue to the state, as well as benefits to the Alaskan consumer.

"We negotiated hard to get the maximum return for the people of Alaska," Murkowski said. "This includes a 30-cent-per-barrel premium over the normal royalty-in-value sale price, up from 15 cents in the most recent long-term contract with Williams. We also reached agreement on gas and jet fuel price parity between Fairbanks and Anchorage, which will be good for the average consumer. This is an excellent contract with Flint Hills, it allows the sale of Williams' properties to proceed, and is good for Alaskans."

Flint Hills agreed to maintain a wholesale truck rack posted price of gasoline in Fairbanks (on an annualized basis) not to exceed that of Anchorage. For jet fuel parity, Flint Hills has agreed to charge the same or a lower price in Fairbanks as would be charged in Anchorage. Flint Hills has also agreed to work with Fairbanks International Airport to promote it as a fueling stop for cargo carriers between Asia and Europe, as well as to evaluate and possibly upgrade FAI's fuel distribution system.

Flint Hills will conduct necessary engineering studies and install equipment to process low sulfur, clean fuels in Alaska. In addition to fighting air pollution, this will mean construction jobs for the Fairbanks area.

Flint Hills has agreed to assume the rights and obligations of Williams under its rail agreement with the Alaska Railroad, and will undertake Williams' obligations in a Memorandum of Agreement with the Government Hill Community Council in Anchorage, to remove three fuel storage tanks from Ocean Dock Road.

The Alaska Royalty Oil and Gas Development Board will meet on February 17, 2004 to review the contract, after which the contract will go to the Legislature for its review and concurrence



Source of News Release:

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