On June 3, 2008 Union County, S.D., population 13,745, held a referendum on whether to approve the county commission’s decision to rezone 3,292 acres of agriculture land now controlled, via options, by Hyperion Resources, Inc. Hyperion plans on using an area north of Elk Point, S.D. as the site for the first new oil refinery in the United States since 1976.

The Hyperion Oil Refinery, at an anticipated cost of approximately $10 billion is one the largest planned construction projects in the United States. The facility would process 400,000 barrels of oil a day, making it one of the largest refineries in the country and increasing U.S. refining capacity by approximately two percent. The facility would form a link in the 435,000 bpd Transcanada Pipeline “Keystone Project” being constructed from Alberta to Patoka, IL and Cushing, OK.

From a local standpoint, the refinery would bring with it innumerable positives and negatives. It would require 10,000 workers during peaked construction periods and about 1800 full time employees to operate. The refinery is anticipated to have a footprint of approximately 2000 acres. The remaining land is being purchased by Hyperion as a buffer zone. It would use 12 million gallons of water per day for cooling from the nearby Missouri River.

More than anything however, approval of rezoning and construction of the refinery is likely to change the “sleepy nature” of one part of small town America.

Refineries in America

The last refinery built in the United States was completed in 1976. In 1981, there were 324 refineries in the U.S. processing about 18.6 million barrels of oil per day. Today there are only 149 refineries processing 17.3 million barrels. U.S. oil consumption is about 20.7 million barrels per day.

Even with 20 million bpd being consumed, an additional 400k bpd would have a surprisingly large impact. In recent years refining capacity has been running mostly full out. Refineries require a significant amount of periodic down-time in order to be run properly. Utilization Rates max out at about 90% uptime. Fewer refineries operating at higher efficiency capacity makes the United States more vulnerable to interruptions. One major reason for the increase in gas prices is lack of spare refining capacity.

The referedum and the refinery received little national press or coverage in the blogosphere. As such, I thought I’d try and explain a few things. Not so much about the refinery issue itself. I don’t have a dog in that fight and I don’t really know much about it. But I do want to try and convey what I know about the area.

Siouxland

I grew up in Sioux City, IA, which is approximately 25 miles from Elk Point. Union County is a part of the Sioux City metropolitan area (Siouxland). The south edge abuts Sioux City proper. There are approximately 143,000 people in Siouxland. Siouxland is comprised of three states separated by the junction of two rivers. The Missouri River separates Nebraska from Iowa and South Dakota. The Big Sioux River separates Iowa from South Dakota. As a result, the primary metro area consists of Sioux City, IA (pop. 85,000), South Sioux City, NE (pop. 25,000) and North Sioux City, SD (pop. 2,300).

This is a very big story in Union County, but also in Sioux City. The Hyperion Project was the Sioux City Journal’s Newsmaker of the Year in Sioux City in 2007. That the construction of the refinery would have a massive positive impact on the economy of Sioux City is not in doubt. I suspect that even the opponents of the refinery willingly acknowledge this.

But the negative effects of the refinery will not be felt in Sioux City. They will be born by the more rural residents of Union County. People who, often for generations, have farmed and lived in the small surrounding communities.

Union County

Union County is geographically large, covering 467 sq. miles. The population is extremely spread out, and there are only 12 people per square mile. Around half of the population of Union County lives in five towns:

Alcester: pop. 880
Beresford: pop. 2006
Elk Point: pop. 1714
Jefferson: pop. 586
North Sioux City: pop. 2288

North Sioux City

Probably 20% of the population of Union County lives in North Sioux City and the immediately surrounding unincorporated areas. North Sioux City is essentially a part of Sioux City proper, separated by a small river and located in a different state. North Sioux City is one of the true success stories of the American federalist system of government. It really only exists as a way for Iowans to seek vice and avoid taxes.

You can’t trust everything you read on the internet. But, the wikipedia entry on North Sioux City’s “Major Businesses” is actually quite accurate: “North Sioux City is the former home of Gateway, Inc.’s most well known computer facility. In addition, there are several casinos.”

• Taxes: South Dakota has no personal income tax and no corporate income tax. I guess that the best thing you could say about this, as far as the residents of Sioux City are concerned, is that when the incompetent management of Gateway computers ran the company into the ground, they had a minimum effect on the Sioux City tax base.

• Casinos: Basically small bars that have keno and video poker.

• Fireworks: The sale and use of fireworks are illegal in Iowa. In South Dakota, residents may purchase fireworks from June 27 to July 5. It is however legal to sell fireworks to non-residents the entire year.

• Alcohol:If South Dakota follows through with recent legislation to lower their drinking age to 18, North Sioux City will officially be the place where Sioux Citians get their gambling, fireworks and alcohol.

But again, its not the residents of the largely “urban” southern part of the county whose way of life will be changed should the Hyperion oil refinery be constructed. The largest impact will be felt by the residents in and around Elk Point.

Elk Point

Elk Point is 25 miles from Sioux City.

Take a gander at this Wikipedia photo of Main Street, Elk Point, S.D. From the Valley Bank sign, we can see that it is 6:30 pm. There are no cars driving on Main Street, which is good because there are no stop lights or stop signs. There are fifteen cars parked on Main Street. Thirteen of them are American made sedans. The only foreign car in site is a VW Bug. The biggest sign on Main Street is, probably, the American Legion hall. One of the few businesses on the street is a year-round Christmas shop.

This is small town America, and they are about to hold a referendum on their future.

A recent Sioux City Journal poll of 340 Union County registered voters revealed a to be expected geographical split regarding the oil refinery. It gives you an idea of how important and divisive this issue is when 86% of Union County residents say that they are “very likely” to voted in the June 3 referendum, while an additional 9 percent are “somewhat likely”.

From the Journal poll: “In unincorporated areas, 36 percent supported the refinery, and 41 percent opposed it. In incorporated areas, 55 percent said they were in favor and 23 percent opposed.

The most enthusiastic support came on the extreme southern and northern ends of the county. In the voter-rich Dakota Dunes area, just across the Big Sioux River from Sioux City, 60 percent support the project, and 17 percent oppose it, according to the poll.”

Proponents see the opportunity for significant economic growth. Opponents see air, water, and noise pollution; potential industrial disasters including explosions, leaks, and spills, reminiscent of the recent explosion at a similar-capacity Texas City Oil Refinery that caused the deaths of 15 workers and injured over 100. But they also see a changing way of life for the county. Here are a sampling of recent editorials in the local papers.

What Do the People Think?

Burdette Hanson, 84, who’s been farming since he was 17, says he has rebuffed offers on more than 1,000 acres of his family’s land, potentially disrupting the project. “I’m not for sale,” he declared over strawberry pie and iced tea at the home of friend Dale Harkness, who’s fighting the project with him. “You can’t buy happiness.”

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Dennis Hultgren, 79, of Akron, Iowa, is a retired farmer. He is a former chairman of the Union County Planning; Zoning Board and treasurer of his township in Union County for 28 years. “First, I must state that my family has owned our farm eight miles south of Alcester for 130 years. My farm is listed on the National Register of Historic Places. I have lived in this 1892 house since my birth in it 79 years ago. I am not an outsider meddling in the affairs of Union County. This Hyperion project is the most promising proposal ever planned for this county and for the state of South Dakota. It is the largest single proposal ($10 billion worth) on deck in the entire U.S. We need this and should welcome it, as most places would.”

“I have 10 adult grandchildren. Not one of them is working in this area. We cannot continue down the same old path.

Land is being acquired and added regularly to large farms, which are prospering. Small family farms never will come back. You cannot stop progress. We note that Hyperion will only use two percent of the farmland in Union County.”

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Richard W. Stene, 77, of rural Beresford, has worked as a real estate broker and auctioneer for more than 45 years and has been active in agriculture all his life. “The Hyperion oil refinery offers an opportunity to destroy much of what a lot of families in Union County and the surrounding area have spent a lifetime working to build.

My family has owned the farm I now live on since it received the Homestead Rights in 1873. A great deal of the farmland in Union County and the surrounding area was homesteaded. The homesteaders and their families suffered disease, drought and about every hardship you can imagine. Most of them immigrated here for religious freedom and to escape the oppression from which they were experiencing in their homeland. They built homes, schools, churches, farms and a lot of successful businesses. Let’s not allow a few Texans to ruin this.”

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Jim Cohrs Dakota Dunes, S.D. (Dakota Dunes is a gated community, located in Union County, but on the edge of Sioux City proper. This opinion would be representative of the people whose lives would be least affected by the refinery). “I understand, no one wants an oil refinery in their backyard, but it will always be someone’s backyard. Opponents have environmental concerns, as well they should, but they seem to believe Hyperion’s refinery will be designed, built and operated like they were 30 years ago. Not true. This plant must be built to today’s environmental standards. On Hyperion’s Web site, click on files and look at Open House Station Summaries. Listed are the permits and approvals which they must follow. Hyperion is raising the bar for the industry with their Best Available Control Technology to minimize emissions. Refinery emissions will be 80 percent lower than the average refinery in California, their power plant emissions will be 1/30th of the Port Neal plant, and water usage is 1/20th of 1 percent of the Missouri River flow. These are just a few of the facts.”

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Catherine Beem, Vermillion, S.D. (Vermillion, where the University of South Dakota is located, is not in Union County, but would only be about 15 miles from the refinery.) “It’s a way of life, we explain. The sunsets, the fishing, cicadas at night and deer at dawn. It might not look like much from the outside, but we like it, and it is ours.

Our humility should not allow us to be taken advantage of, and our hard work deserves to be rewarded with opportunities that bring real prosperity while maintaining our cherished way of life. When our political and business leaders sell our labor and our land to the Hyperions of the world in exchange for dangerous, backbreaking jobs and filthy fields and rivers, they insult us all. Will they be the workers breathing in toxic fumes? Or the citizens raising children in the shadow of grey air, unsafe water and loud industrial noise?”

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Glen Hanson, Elk Point. “I am 87 years old and won’t be here much longer. I can’t even have my funeral in my own church because of all the tension. What a way to have to leave this world.

I was born in and have been a member of the church all my life. And I will say that I hate trouble and tension; I like to be friendly. I will not let Hyperion push more than so far, and they have done that. Help stop Hyperion. The voters of Union County should vote “no” and save our land for future generations.”

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Kim Keiser, 33, is a Sioux Falls resident and a Union County property owner. “One thing has been striking throughout discussions of the proposed Hyperion oil refinery is that our leaders – city and county elected officials and Gov. Mike Rounds – have endorsed the project. Yet every day I read that the use of fossil fuels is out of favor (even as consumption is rising), alternative forms of energy are being developed, pollution from refineries increases carbon-dioxide emissions responsible for heat-producing greenhouse gases and more. Many cities throughout the country and other government leaders, scientists and community organizations are starting to embrace environmentally responsible living and sustainable energy practices. Yet South Dakota is entertaining the idea of building one of the largest and most toxic oil refineries in the country.”