Kenai refinery: strong roots in Alaska

Business News

Kenai Refinery Photo

The year was 1969; a gallon of gas was only 35 cents, and months after the world saw a man walk on the moon, Tesoro began operations at its first refinery on the majestic Kenai Peninsula, Alaska.

The $14 million refinery took more than a year to build and began operations with only 17 employees to process 17,000 barrels per day of crude oil from the Cook Inlet and Kenai Peninsula. Later, it became the first to refine Alaska North Slope crude.

When the refinery opened, it struggled to turn a profit. How to get crude to the refinery and finished products to market cost-effectively hadn’t been figured out yet. The refinery also faced competition from Standard Oil Company, the only other refinery in Alaska at the time. Eventually, prices for refined products increased, pipelines simplified logistics, and the refinery was making money.

In 1979, when the company was struggling financially, the refinery was one of the only profitable assets, providing fuel for the growing Alaska market. A decade after it was built, the refinery invested triple its original price tag in upgrades, confident that the remote location and ready raw materials in Alaska oil fields would make it profitable. And it did.

Today, the refinery can process 68,000 barrels per day and is the only major gasoline refinery in Alaska, supplying most of the gasoline in the state as well as jet fuel, diesel, propane, butane and asphalt. The 225 employees include many multi-generational families who have worked at the refinery during its almost 50-year history. Operations Superintendent Pete Goggia encouraged his daughter Lindsay Jester to apply for a position at the refinery, where he’s worked for 29 years.

“As long as I can remember, he’s worked here, and I experienced the positive benefits for our family,” said Jester. “He brought me on a tour of the lab. I liked what I saw and became a summer intern in 2011,” said Jester, who’s now a laboratory technician. “It’s such a family- friendly atmosphere. I love being able to run into dad at work. When people find out I’m Pete’s daughter, it’s nice – a way to relate to people in his unit.”

Goggia worked his way from entry level operations through all areas of the refinery to advance to superintendent. The strong culture, and commitment to each other and the environment, is why he’s stayed there so long.

“As a refinery employee, we take a lot of pride in caring for the environment. This is our playground as well. We enjoy Alaska - recreational opportunities, fishing, the outdoors,” Goggia said. “There are a lot of opportunities to give back. We’ve all grown up in these communities and look to help in any way that we can.”

More than a third of Alaska’s jobs are tied to the oil and gas industry, according to the Alaska Oil and Gas Association, and the refinery makes a big impact on the local economy. “The Kenai refinery is one of the anchors of the economy in the community,” said former State Senator John Torgerson, who’s lived in Alaska since before the refinery was built. “Oil companies have come and gone, but the Kenai refinery has constantly produced. As the need grew, so did the refinery.”

“We’ve bolstered the economy,” said Cameron Hunt, refinery general manager. “In 50 years, we’ve never had a reduction in force, never any layoffs. We have a great track record at Kenai as a reliable source producing the fuels that Alaskans, Alaska businesses and our state and federal government need.”

The community reciprocates the refinery’s support. “It’s appreciated like nowhere else that I’ve worked,” Hunt said. “It’s something special. It’s a small community of 10,000 to 15,000 people. Everybody knows somebody who worked here. Relationships are really strong, and we participate richly in the community.”

“A great bunch of Alaskans have run the refinery,” Torgerson added. “Whenever I go to local events, I always see refinery employees there supporting the community and volunteering. They are a big part of the community, a big part of the Kenai Peninsula.”

The refinery’s biggest challenges have been from the location itself. Alaska is the largest state with the fourth-smallest population, and battles harsh weather and a remote locale. This has driven the refinery to be even more diligent in keeping its operations up and running. “We have vast distances between our communities, and the ability to travel between populations is critical,” Hunt said. “We supply the fuel to get Alaskans where they need to go, connecting communities and families, and supporting life-critical services like police, fire and hospitals. Being a reliable supplier of fuel is critical, and we take that responsibility very seriously at the refinery.”

Safety first

  • API Tier 1 and Tier 2 Process Safety performance better than industry first quartile average for more than nine years.</li />
  • As of August 2018, only one OSHA recordable employee injury.

Economic impact

    • In 2017, operations contributed $5 million in taxes and $700,000 in grants and scholarships to Alaska.
    • Grants supported more than 77 charities including the Challenger Learning Center, Caring for the Kenai, the Kenai Peninsula Borough’s 911 Operation Center, the Kenai Boys and Girls Club, the Alaska Sea Life Center, and STEM education programs.

Flare Gas Recovery System reduces flares by 50 percent

  • Last April, the refinery installed a new $44 million Flare Gas Recovery System that takes suction from the refinery flare headers and returns the gas to the fuel system, reducing gas flares and emissions.
  • The complex, three-year project required hundreds of hours of analysis, training, monitoring, and a task force of environmental experts, representatives from multiple refineries, and a Kenai-based stakeholder team.
  • Flare emissions were reduced 50 percent, well below EPA requirements.

Clean gasoline ahead of EPA standards

  • In 1993, the refinery began producing clean gasoline, meeting EPA’s 2007 standards a decade early. In 2005, a $45 million low-sulfur unit was installed to produce ultra-low sulfur diesel, which is now used by most of the state.