Homer Alaska - Business -

Because of recent changes in federal environmental regulations, Tesoro has begun producing an ultra-low-sulfur grade of highway and off-road diesel fuel that meets U.S. Environmental Protection Agency standards.

"We are going to be producing a lot more sulfur now that we have the new sulfur-stripping unit," Knudson said.

The amount of sulfur produced by the plant varies with the grade crude oil being processed, but in general the daily average during 2007 was about 8.5 tons a day.

Tesoro has sold the sulfur to AIMM Technologies Inc., a Texas-based oilfield services company that opened a Kenai office in 2006. Vice President Jeff Deese said Monday that AIMM had purchased 22,000 tons or more from Tesoro and is shipping the crushed sulfur south to Homer. Each bag weighs 1.5 metric tons, or abotu 3,300 pounds, he said.

Homer's 30-acre landfill that forms the northeastern side of the harbor has a large fenced-in concrete pad perfect for the operation, Deese said.

"Anchorage has no deep-water dock. Seward does, but Homer had more facilities to accommodate what we are doing. It was just a better option for us," he said.

In Homer, AIMM sells the product to International Commodities Export Corp., a Canada-based company that is the largest mover of sulfur in the world.

"The Chinese are the world's leading importer of fertilizer for agricultural needs," he noted. "That is what its intention is."

The business deal was in the works for several years, Deese said, awaiting the right market conditions. Today, he said, the world market price of sulfur is at an all-time high.

According to Knudson, sulfur is particularly useful as fertilizer in basic soils.

"Unfortunately, in Alaska we have acidic soils, otherwise there would be a high demand here," he said.

Alaska has no ready market for the sulfur, hence the necessity to ship it Outside, Knudson said. Sulfur isn't the only refinery byproduct Tesoro must ship beyond Alaska.

About a third of every barrel of oil its heaviest components can't be refined any further at Nikiski. Some of it is sold as bunker fuel for ships, and some goes to fuel electrical generating plants. The vast quantity is shipped Outside to other refineries where it can be turned into other products, Knudson said.

Hal Spence is a reporter for the Peninsula Clarion.