S. Dakota OKs permit for new refinery construction

HOUSTON Fri Aug 21, 2009 5:06am IST

HOUSTON Aug 20 (Reuters) - The South Dakota Board of Minerals and Environment on Thursday granted Dallas-based Hyperion LLC a permit to build a 400,000-barrel-per-day (bpd) refinery, which would be the first new refinery built in the United States since 1976, the company said in a statement.

Opponents to the plant have up to 30 days to decide on an appeal through state courts in South Dakota, according to a report on the Rapid City Journal website.

Hyperion plans an ambitious $10-billion project that includes the refinery and a natural-gas fired power plant to be located in southeast South Dakota, near the state's borders with Nebraska and Iowa.

Analysts have said the chances for the refinery's construction are slim as U.S. demand for motor fuels is expected to never again reach 2007 levels because of pending pollution reduction legislation. As much as 2 million barrels of refining capacity may not be needed in the next decade.

Hyperion plans to break ground on the project in 2011 with completion scheduled for 2015, the company said. The refinery will be configured to refine Canadian crude oil into ultra-clean gasoline and diesel.

According to the permit application, the refinery will use hydrocrackers to make fuels from crude oil. Hydrocrackers can be configured to make more diesel than fluidic catalytic cracking units, which primarily make gasoline.

Diesel fuel markets, especially in Asia, are seen by U.S. refiners as where they will find growing demand for the products after the global economic downturn ends. (Reporting by Erwin Seba; Editing by Christian Wiessner)

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