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Flood might cost refiner $125 million
 
By Staff and Wire Reports
Published: 9/8/2007  2:48 AM
Last Modified: 9/8/2007  2:48 AM

Coffeyville Resources LLC says repairs to its refinery in Coffeyville, Kan., and cleanup from a July flood may cost as much as $125 million.

Repairs to oil-refining equipment cost $81 million, Coffeyville Resources said in a regulatory filing. Repairs at a fertilizer mill attached to the refinery cost $4 million, the filing said.

The refinery -- about 65 miles north of Tulsa -- was shut for more than seven weeks after the Verdigris River topped its banks July 1 and swamped the 101-year-old plant. Crude oil spilled from a storage tank, mixing with floodwater that destroyed 300 homes in Coffeyville.

Cleaning up the oil is expected to cost $7 million to $10 million, the company filing said. The cleanup will probably be finished by the end of December.

Payments to cover damage to homes and other neighboring properties may cost $25 million to $30 million, the company said.

Coffeyville Resources -- based in Sugar Land, Texas, and owned by Goldman Sachs Capital Partners and the buyout firm Kelso & Co. -- said it can't estimate how much it may be required to pay in environmental penalties.

Before the flood, the 101-year-old plant produced 2.1 million gallons of gasoline and 1.7 million gallons of diesel and similar fuels a day.

Goldman Sachs and Kelso plan to sell a 19 percent stake in Coffeyville Resources for as much as $375 million, according to the filing. The firms bought the refinery and fertilizer

mill in June 2005 from Pegasus Capital Advisors LP for $727 million.

In another matter, Coffeyville Resources said a disruption occurred Thursday at the refinery when a nitrogen fertilizer unit lost air, causing flaring -- the burning of chemicals into the air.

"We lost air products to our nitrogen fertilizer facility. That caused a ripple effect into the refinery," company spokesman Steve Eames told Bloomberg News in a telephone interview. "Everything is up and running."

Non-essential personnel were "briefly" evacuated, Eames said.

He declined to say if the disruption affected production.


The Tulsa World Business staff contributed to this report by Bloomberg News.

By Staff and Wire Reports

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