Company planning SD refinery lets options expire

SIOUX FALLS, S.D. -- A company that planned to build a $10 billion oil refinery said Monday it has allowed land-purchase options to expire for thousands of acres of southeastern South Dakota farmland.

The move does not mean the project has been canceled, officials with Texas-based Hyperion Refinery said.

"We did not extend land options in Union County on Sept. 30, and we are evaluating our various options and opportunities," Hyperion spokesman Eric Williams said in a statement. "We appreciate the longstanding and continued support of the landowners in Union County and are continuing to dialogue with them."

The move comes just days before the South Dakota Supreme Court is scheduled to hear oral arguments in a case involving a state air quality permit for the refinery. The statement said Hyperion still plans to argue the case.

Williams declined further comment.

Union County Commission Chairman Doyle Karpen said Monday he was surprised by the report.

"I really don't understand why they would allow the land options to expire," he said. "I believe this lingered on longer than they anticipated."

Asked if he thought it meant the end of the project, Karpen said, "If it is, it is."

The proposed refinery north of Elk Point would process 400,000 barrels of Canadian tar sands crude oil each day into low-sulfur gasoline, diesel, jet fuel and liquid petroleum gas. It would be the first new U.S. oil refinery built since 1976.

The project would include a power plant that produces electricity for the refinery. It would use a byproduct of the refinery process, solid petroleum coke, which would be turned into gas and burned to produce electrical power.

Environmental groups have complained that the refinery would emit too much pollution and hurt the quality of life in the rural area. Hyperion contends the refinery would be a clean, modern plant that would use the most advanced, commercially feasible emission-control technology.