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ELK POINT, S.D.—Voters in this mostly agricultural corner of the Midwest have approved a proposal to build the first new U.S. oil refinery in more than 30 years.
Union County residents voted 58 percent to 42 percent Tuesday to endorse the rezoning of almost 3,300 acres of pristine farm land north of Elk Point for the oil refinery.
Texas-based Hyperion Resources requested the rezoning for the $10 billion refinery, billed as a potential step toward national energy independence. The proposal has been a contentious issue in the southeast corner of South Dakota, with supporters citing economic development benefits and opponents voicing environmental and quality-of-life concerns.
The ballot measure garnered solid support in the southern part of Union County. Most rural precincts strongly rejected the rezoning, but they didn't have the population to overcome support in the county's largest towns.
Preston Phillips, a Hyperion Resources project executive, said he was ecstatic with the outcome.
"We'll continue to work with everyone in the county," he said. "We want to be a good corporate citizen. We want to be a good corporate neighbor."
Despite the approval of the rezoning, Phillips said Elk Point is not the only site being considered and that the site selection process would continue. "Any big project like this has to have options," he said.
Hyperion's next big hurdle is a lengthy air quality permit application being reviewed by the South Dakota Department of Environment and Natural Resources.
"It's going to be a long road before anything's done on it," project opponent Jason Quam said of the refinery.
Besides the permits, he said he doubted Hyperion could secure the financing for the refinery.
Quam, of the group Citizens Against Oil Pollution, said his organization was evaluating its next move.
Elk Point Mayor Isabel Trobaugh said the refinery would bring needed jobs to the county and that she didn't think it would harm the environment.
She said she talked to the mayors of Ponca City, Okla., and El Dorado, Kan. -- which both have oil refineries -- and they assured her their communities had clean air and water.
Hyperion has said the project, about 60 miles south of Sioux Falls, would create 1,800 permanent jobs and another 4,500 construction jobs over a four-year period. Construction could begin in 2010.
The Hyperion Energy Center would process 400,000 barrels of thick Canadian crude oil a day, which company executives say would help the U.S. reduce its dependence on overseas oil. The company has said it will bring in the crude oil by pipeline but has announced no specific plans for that transportation link.
Hyperion billed the facility as a "green refinery" and said it would produce ultra-low sulfur gasoline and diesel and rank among the cleanest and most environmentally friendly oil refineries in the world.
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Delegates clashed during the second day of the three-day meeting over how much blame can be assigned to biofuels for the meteoric rise in food prices. The U.S. is an enthusiastic supporter of the robust and heavily subsidized biofuel industry, with plans to allocate about a quarter of its corn crop to the lucrative production of ethanol.
Agriculture Secretary Edward T. Schafer, leading the U.S. delegation, emerged from a series of side meetings and acknowledged that a struggle was underway to reach compromise language on the biofuels issue.
Drafts of a final summit declaration, circulating late Wednesday, reflected watered-down recommendations of "further studies" on biofuels, hardly viewed as a decisive position.
Finding consensus on biofuels, which are made from corn, sugar cane, palm oil and other foodstuffs, had been one of the goals outlined by United Nations Secretary General Ban Ki-moon in opening the summit here at the headquarters of the U.N.'s Food and Agriculture Organization, or FAO. Opponents and supporters diverge wildly on the pros and cons of biofuels and how harmful they may or may not be.
Schafer maintains that bumper U.S. crops provide plenty of corn for both eating and filling tanks. He says biofuels account for no more than 3% of the hike in prices of commodities, which in some cases have doubled in recent years.
Several U.N. agencies, relief groups and the International Monetary Fund, however, say as much as 30% of the increase could be blamed on biofuels.
"Even 1% represents hardship for 16 million people," said Madelon Meijer, agricultural policy advisor for the British aid agency Oxfam. "Three percent already plunges a lot more people into poverty."
Oxfam was one of several groups staging demonstrations outside the conference, with people dressed as corn carrying out symbolic tugs of war between the hungry and those needing fuel. Oxfam argues that the amount of grain required to produce enough ethanol to fill an SUV's tank could feed one person for a year.
Biofuels were once hailed as an alternative to dirty fossil fuels and a way to ease dependence on oil. But experts and others increasingly question the efficiency of biofuels and assert that ethanol production is usurping arable land that should be used for growing food crops or left as oxygen-enhancing forests, wetlands and natural habitats.
Another alternative, of the so-called second-generation biofuels, has emerged. These are fuels made from nonfood substances such as grasses. However, they have not been fully studied and prompt other concerns, such as whether they might become invasive weed-like species if cultivated near other crops.
"We are all reevaluating our policies and technologies . . . and hope to move as quickly to second-generation fuels as possible," Henrietta Fore, administrator of the U.S. Agency for International Development and a member of the delegation, said in a briefing with reporters.
At a closed-door session Wednesday, Schafer also cited second-generation fuels to deflect criticism over U.S. policy, said officials who were present.
"I didn't hear anyone say that demand for biofuels was . . . not part of the equation," said Hafez Ghanem, FAO assistant director-general. "People came up with different figures, of how much to blame this or that cause. We all do agree that we are not facing a transitive problem; this is a problem that will be here for a while."
American agricultural business groups contend biofuels are being unfairly targeted. A large portion of food price increases involve wheat and rice, which are not used for fuel, said Ron Litterer, who farms 1,500 acres of corn and soybeans in Greene, Iowa. Litterer, who is also president of the National Corn Growers Assn., said sufficient corn was being raised for food and fuel. "We've had record production," he said in a telephone interview from Iowa.
The shift to biofuels is only one cause of rocketing food prices. Other factors converging disastrously include high fuel costs, speculation, droughts and floods, and changing diets that spawn greater demand.
American officials are also using the summit to promote genetic engineering as a way to boost food production by increasing crop yields, creating drought-resistant strains and fighting diseases such as stem rust in wheat. But several European countries have banned the use of genetically modified foods.
U.S. officials said they would bypass the Europeans and work directly with developing nations that could benefit from the technology.
"We have a crisis of food availability and prices . . . and this is a tool we can turn to," said Fore, the USAID administrator. She called on opponents to "take a fresh look" at a time that "too many people are hungry."
wilkinson@latimes.com
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