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The Associated Press March 17, 2011, 6:48PM ET

SD board sets July hearing on oil refinery permit

A state board decided Thursday to hold a July 25 hearing on a Texas company's request for revisions to its permit to build a $10 billion oil refinery in southeastern South Dakota.

Hyperion Resources has asked for some changes to air quality standards as outlined in its current permit. It also wants its deadline to begin construction to be extended from Feb. 20 of this year to Aug. 20, 2012.

The refinery to be built north of Elk Point would process 400,000 barrels of Canadian tar sands crude oil each day into low-sulfur gasoline, diesel, jet fuel and liquid petroleum gas. It would be the first new U.S. oil refinery built since 1976.

The project also would include building a power plant to provide electricity for the refinery. The power plant would run on a byproduct of the refining process, solid petroleum coke, which would be turned into gas and burned to produce electricity. Hyperion argues the refinery would be a clean, modern plant that would reduce the nation's dependence on oil from overseas.

Opponents contend the refinery would emit too much pollution and hurt the quality of life in the area.

State officials issued a draft air quality permit in February that would extend the deadline for starting construction and change some air quality standards.

The state Board of Minerals and Environment will consider those issues at the July hearing in Pierre. Public comments on the proposal can be submitted to the Department of Environment and Natural Resources until April 1.

Board member Lee McCahren said deadlines for filing motions and taking other steps before the hearing will be announced soon.

Along with changing the deadline for starting construction, the draft permit considers new ambient air quality standards for nitrogen oxide and sulfur dioxide; includes Hyperion's reconfiguration of its sulfur recovery plant to reduce emissions; and deals with greenhouse gas emissions that weren't included in the old permit.

The Sierra Club and local groups Save Union County and Citizens Opposed to Oil Pollution have filed a lawsuit in state court arguing the initial permit should be thrown out because it did not address some environmental issues.

Circuit Judge Mark Barnett of Pierre ruled last year that the company could reopen the state permitting process. He did not set a deadline for the board to complete its review of new evidence, which is limited to the construction deadline and certain emission standards.

The Board of Minerals and Environment also agreed Thursday to Hyperion's request to keep some information about the cost and energy efficiency of the proposed plant confidential. Opponents that are official parties in the case can review the information, but it can't be made public.

The release of economic and efficiency information about the plant would amount to giving trade secrets to Hyperion's competitors, Hyperion lawyer Amy Rickers said.

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