Funds News

Kansas hit with oil spill, flooding

OVERLAND PARK, Kansas (Reuters) - Kansas officials said on Monday they were trying to contain damage from a significant oil refinery spill that occurred over the weekend as raging floodwaters wreaked havoc through the southeast part of the state.

A child holds a fishing rod in a flooded residential neighbourhood in Coffeyville, Kansas, July 2, 2007. More than 1,000 barrels of oil were estimated to have spilled from a 108,000 barrel-per-day refinery in Coffeyville, Kansas, according to refinery operator Coffeyville Resources. The spill contaminated the floodwaters, which had risen more than 30 feet, sweeping into homes and businesses and turning roads into rushing streams. REUTERS/Daniel Walker/Coffeyville Journal/Handout

The flood waters forced thousands of people from their homes in several communities, including some who were rescued by boat-borne emergency responders.

The situation was particularly daunting in the town of Coffeyville, Kansas, where Coffeyville Resources, a 108,000 barrel-per-day refinery, sustained a sizable spill as its facilities were swamped with waters that rose more than 30 feet.

The oil spill contaminated the floodwaters, sweeping dark, foul-smelling water into homes and businesses and turning roads into rushing streams. The spill also contaminated the Verdigris River, sparking fears about contamination of lakes downstream in Oklahoma, officials said.

“It is a serious issue. It’s in all the floodwater,” said Coffeyville city clerk Cindy Price. “It’s going to make the cleanup even harder.”

U.S. Environmental Protection Agency officials were meeting with state and local officials and refinery operators, but said they had not yet determined the amount of oil that escaped the plant, which has 2.7 million barrels of storage for crude oil and refined products.

The refinery was still largely underwater, complicating evaluations, said Coffeyville Resources spokeswoman Deborah Wood-Pope.

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Earlier the refinery said the spill amounted to at least 1,000 barrels, or about 40,000 gallons, but by Monday afternoon its officials said they did not have an accurate assessment.

News of the shutdown and spill sent wholesale gasoline prices in the lower Midwest up 14.5 cents per gallon.

The spill was first detected by the city at about 3:55 a.m. on Sunday, according Jeff Morris, city manager for Coffeyville, which has a population of about 11,400.

Some 2,500 of the town’s residents were evacuated from their homes because of the flooding, which was triggered by heavy rainfall late last week and into the weekend, including an elderly couple discovered early on Monday on the upper floor of their flooded home, Morris said.

Morris said the town was struggling to protect its water supply from the oil-contaminated floodwaters. If the flood did not recede soon and allow the town to start pumping water back into the river basin, “our whole system will be at risk for contamination,” Morris said.

The spill occurred as the company was attempting to shut down the plant and evacuate ahead of the flood. A pump at the refinery apparently continued to push oil into a main storage tank until it overflowed, a problem that went unnoticed for some time, Kansas Emergency Management agency spokeswoman Sharon Watson said.

“It resulted in a significant spill,” Watson said.

Coffeyville Resources is owned by CVR Energy Inc., a unit of Goldman Sachs and the Kelso Funds. CVR is expected to launch its initial public offering of stock on the New York Stock Exchange later this year.

Gov. Kathleen Sebelius has declared at least 18 Kansas counties disaster areas because of flooding since Friday.

Additional reporting by Edgar Ang, Robert Gibbons, Rebekah Kebede and Robert Campbell