Bad News for the ARR

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Bad News for the ARR

Postby riffian » Wed Feb 12, 2014 11:56 am

Flint Hills Refinery, ARR's largest customer, to close:

http://www.alaskajournal.com/Alaska-Jou ... l-in-flux/
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Re: Bad News for the ARR

Postby jogden » Fri Feb 14, 2014 1:44 am

Since this was announced, it has been interesting to listen to the conversations at work. Some guys are saying this is the beginning of the end of the railroad, although I tend to think that is a bit dramatic.

Flint Hills may be closing the refinery, but in talking with some guys at Flint Hills yesterday, I learned that they are keeping their Anchorage operations open and plan to receive fuel in Anchorage by barge, and then ship it north. So instead of shipping fuel from North Pole to Anchorage, the railroad will be shipping it the other way, to Fairbanks. There will be less of it for sure, but Flint Hills plans to continue shipping petroleum products with the railroad.

Additionally, if they really do shut the refinery down completely, I wonder if someone else would be interested in buying it. Tesoro has talked on and off about building a refinery in Alaska, and maybe an available one might get their attention again. A major thing to resolve would be who is responsible for the mess in the ground below the refinery, but if a potential buyer did not have to worry about liability and cleanup for someone else's mess, they might consider buying the refinery. It is a pretty big asset to just sit vacant and unused.

Yes, this is bad news for the railroad, but it is a long way from being the end of the railroad! The railroad will adapt, the marketing department may have to work harder to find new customers, and money will be even tighter, but the railroad is not going anywhere!
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Re: Bad News for the ARR

Postby jogden » Thu Mar 06, 2014 4:29 am

The latest I have heard about this is that Flint Hills Resources has received an offer to from someone to buy the refinery in North Pole, contingent on the state not holding the potential buyer responsible for environmental clean up, the way they have with Flint Hills. If that is true and a sale actually goes through, then the railroad may see similar business as they have up to this point with Flint Hills being out there.
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