JUNEAU -

Flint Hills will decommission its North Pole refinery this year, leaving 81 employees without a job come November 1st.

"We have 126 employees statewide, now we'll retain 35 employees to run the terminal and do our ground water remediation here in the North Pole area, and we'll have 10 employees that we'll retain at our terminal in Anchorage," said Flint Hills External Affairs Manager Jeff Cook.

The company blames high energy costs, tough economic conditions and the cost of ground water remediation for a spill it says was caused by a previous owner.

"Initially we were shocked, (we) had no idea that this was coming, had no idea that the refinery was actually this close to actually saying you know, let's pull the plug, let's shut down," said North Pole Mayor Bryce Ward.

In a press release issued Tuesday, North Pole officials said Flint Hills spent $8 million on upgrades to the water and utility system to ensure residents have clean water.  Ward and his predecessor, former mayor turned state Representative Doug Isaacson, blamed heavy-handed state regulations on the refinery's demise.

"I hope the Governor sees that, through this, and changes directions, and forces his departments to change directions, and start looking at healthy Alaskans (who) require healthy jobs," said the freshman Republican lawmaker.

Governor Sean Parnell says market conditions, specifically the price of oil, caused Flint Hills to shutter its refinery operations, but it was ultimately a combination of factors.

"I think to put one reason out there as being the reason, is not being accurate or truthful, based upon what I heard from the company," Parnell told reporters Wednesday.

A Fairbanks Economic Development Corporation survey estimated the refinery is responsible for creating 1600 direct or indirect jobs in North Pole, with an average salary of $60,000 per year.

"It has huge negative impacts for North Pole. It has big negative impacts for Fairbanks," said CEO Jim Dodson with FEDC.