Slashnuts
7 년 전
Delek And Green Plains Announce Joint Venture
Delek Logistics and Green Plains Partners Announce Formation of Logistics Joint Venture
Joint venture signs agreement with an affiliate of American Midstream for $138.5 million acquisition
BRENTWOOD, Tenn. and OMAHA, Neb., Feb. 20, 2018 (GLOBE NEWSWIRE) -- Delek Logistics Partners, LP (NYSE:DKL) ("Delek Logistics") and Green Plains Partners LP (NASDAQ:GPP) today announced the companies have formed DKGP Energy Terminals LLC, ("DKGP") a 50/50 joint venture engaging in the light products terminalling business.
DKGP signed a membership interest purchase agreement to acquire two light products terminals from an affiliate of American Midstream Partners, L.P. These light products terminals are located in Caddo Mills, Texas and North Little Rock, Arkansas. The total purchase price for these assets is $138.5 million in cash. Subject to customary closing conditions and regulatory approvals, this transaction is expected to close in the first half of 2018.
DKGP will consist of the assets purchased from an affiliate of American Midstream and assets contributed by Delek Logistics, with a total value of approximately $162.5 million. Taking into consideration the combination of the assets, synergies and future growth, the joint venture is expected to generate an annualized earnings before interest, taxes, depreciation and amortization ("EBITDA") of approximately $19.2 million in 2019. Immediately prior to the closing of the acquisition by the joint venture of the two terminals from American Midstream, Delek Logistics will contribute to the joint venture its North Little Rock, Arkansas terminal with throughput capacity of 17,100 barrels per day and its Greenville tank farm located in Caddo Mills, Texas with approximately 330,000 barrels of aggregate shell capacity, which will be valued at approximately $24.0 million, along with approximately $57.25 million in cash. Green Plains Partners will contribute approximately $81.25 million in cash to DKGP. The DKGP board will oversee the newly formed joint venture and will appoint an affiliate of Delek Logistics as the operator with day-to-day operational responsibilities for the four terminals.
Uzi Yemin, Chairman and Chief Executive Officer of Delek Logistics' general partner, remarked: "We are excited to partner with Green Plains Partners for its potential ethanol volumes, logistics expertise and industry knowledge as the domestic markets expand blending, and look forward to the future of this joint venture. This is a great opportunity as it fits our strategy to grow through assets in markets that we are very familiar with, and by contributing our complementary existing logistics assets in east Texas and Little Rock, Arkansas, we expect to create additional synergies within the joint venture. In addition to serving third party customers, it should be well positioned to provide additional logistics support to Delek US' Tyler, Texas and El Dorado, Arkansas refineries. Our financial flexibility should give us the ability to finance this investment under our revolving credit facility, while we continue to look for opportunities for future growth."
"This transaction helps us start achieving our goal of diversifying Green Plains Partners revenue and income streams," said Todd Becker, President and Chief Executive Officer at Green Plains Partners. "We believe this joint venture with Delek Logistics creates significant value for both our partnership unitholders and Green Plains Inc. shareholders. We anticipate that this new joint venture will be immediately accretive to earnings and we look forward to building on our relationship with Delek Logistics."
In February 2017, Green Plains Partners and Delek Renewables LLC formed NLR Energy Logistics LLC, a 50/50 joint venture to build an ethanol unit train terminal in the Little Rock, Arkansas area with capacity to unload 110-car unit trains and provide approximately 100,000 barrels of storage. NLR Energy Logistics expects to begin operating the terminal before the end of the first quarter of 2018. NLR Energy Logistics LLC will remain a separate entity from DKGP as described above.
Acquired Asset Summary
The Caddo Mills, Texas terminal can be supplied by a connection with the Explorer Pipeline and by truck and consists of approximately 770,000 barrels of light product storage capacity, five truck loading lanes and ethanol blending capability. Total throughput capacity is approximately 28,000 barrels per day. This terminal is located adjacent to Delek Logistics' Greenville tank farm.
The North Little Rock, Arkansas terminal is supplied by both the Enterprise and Magellan pipelines, rail and truck. It consists of approximately 550,000 barrels of storage capacity, eight truck loading lanes and ethanol blending capabilities. Total throughput capacity is approximately 45,000 barrels per day. Logistics capabilities at this location also include the capability to unload ethanol unit trains. This terminal is located adjacent to Delek Logistics' existing North Little Rock terminal.
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Slashnuts
7 년 전
GPRE Reports Q4 and 2017 Results...
Green Plains Reports Fourth Quarter and Full Year 2017 Financial Results
Results for the Fourth Quarter of 2017
Net income of $46.6 million, or $0.99 per diluted share
Recognized a total tax benefit of $63.9 million, $52.8 million of which was due to a revaluation of deferred tax liabilities under new U.S. corporate tax laws
Excluding the revaluation of deferred tax liabilities, net loss of $6.2 million, or $(0.16) per diluted share
Record ethanol production of 340.8 million gallons
EBITDA of $36.1 million
Results for the Full Year of 2017
Net income of $61.1 million, or $1.47 per diluted share
Excluding the impact of debt refinancing costs, R&D tax credits and revaluation of deferred tax liabilities, net loss of $33.6 million, or $(0.86) per diluted share
Produced 1.3 billion gallons of ethanol, a 9.5% increase over 2016
EBITDA of $154.4 million
OMAHA, Neb., Feb. 07, 2018 (GLOBE NEWSWIRE) -- Green Plains Inc. (NASDAQ:GPRE) today announced financial results for the fourth quarter of 2017. Net income attributable to the company was $46.6 million, or $0.99 per diluted share, for the fourth quarter of 2017 compared with net income of $18.7 million, or $0.47 per diluted share, for the same period in 2016. The company recorded a tax benefit of $63.9 million inclusive of a revaluation of deferred tax liabilities under the new U.S. corporate tax laws. Revenues were $921.0 million for the fourth quarter of 2017 compared with $932.1 million for the same period last year.
"Our non-ethanol segments reported strong performance in 2017 with $155 million of EBITDA," commented Todd Becker, president and chief executive officer. "Our Food and Ingredients segment led the way with approximately $50 million of EBITDA, which was more than double what we reported last year, highlighting the success of our diversification strategy. This growth was driven by a full year of results from Fleischmann's Vinegar and the expansion of Green Plains Cattle. We expect an even stronger 2018 from these segments. We also had a strong quarter and finish to the year by the Ag and Energy segment, led by our merchant activities in natural gas."
Green Plains produced a record 340.8 million gallons of ethanol during the fourth quarter of 2017, compared with 334.2 million gallons for the same period in 2016. The consolidated ethanol crush margin was $26.8 million, or $0.08 per gallon, for the fourth quarter of 2017, compared with $81.6 million, or $0.24 per gallon, for the same period in 2016. The consolidated ethanol crush margin is the ethanol production segment's operating income before depreciation and amortization, which includes corn oil production, plus intercompany storage, transportation and other fees, net of related expenses.
"Ethanol margins were weak in the fourth quarter as growth in export demand started to take hold and industry stocks remained high," Becker added. "As a result, we have lowered our ethanol production rate in the first quarter. We believe margins will show improvement as we move into the second quarter, led by robust global demand and stronger domestic demand compared to last year. We believe the U.S. will export record volumes again in 2018 as countries around the world continue to take advantage of the economic benefits of ethanol and blend more into their finished gasoline. The margins for U.S. blenders are the best we have seen since 2014 as wholesale ethanol prices continue to average 40 cents to 50 cents lower than wholesale gasoline with no cheaper competing source of octane."
Revenues attributable to the company were $3.6 billion for the year ended Dec. 31, 2017, compared with $3.4 billion for the same period in 2016. Net income attributable to the company for the year ended Dec. 31, 2017, was $61.1 million, or $1.47 per diluted share, compared with net income of $10.7 million, or $0.28 per diluted share, for the same period in 2016. Excluding the impact of the debt refinancing costs and R&D tax credits, reported in the third quarter of 2017, and revaluation of deferred tax liabilities in the fourth quarter of 2017, net loss attributable to the company was $33.6 million for 2017, or $(0.86) per diluted share.
"We continue to focus on improving the business through operational efficiency and diversification of earnings," said Becker. "Looking forward, we will focus our growth capital in the Food and Ingredients segment and downstream terminal business through our investment and ownership in Green Plains Partners. Our new export terminal in Beaumont, Texas loaded its first export shipment in December and has since loaded eight more vessels originated almost exclusively from our own ethanol production. We expect to offer our interest in Beaumont to the partnership in the next 120 days and believe this terminal will be a key asset that handles the growing export demand for U.S. ethanol. At the same time, domestic ethanol demand should be positively impacted by expanding blends as there are now more than 1,300 stations across 29 states selling E15 and increasing every day."
Full Year Highlights
In March 2017, Green Plains Cattle purchased a 30,000-head cattle feeding operation located approximately 20 miles from Green Plains' Hereford, Texas ethanol facility.
On April 28, 2017, Green Plains Cattle amended its senior secured asset-based revolving credit facility to finance the expanded working capital requirements for its cattle feeding operations. The amendment increased the maximum commitment from $100 million to $200 million until July 31, 2017, when it was increased again to $300 million. The maturity date was extended from Oct. 31, 2017, to April 30, 2020.
On May 16, 2017, Green Plains Cattle completed the acquisition of two cattle feeding operations from Cargill Cattle Feeders, LLC for approximately $37.2 million, excluding working capital. The transaction, supported by a long-term supply agreement with Cargill Meat Solutions, included feed yards located in Leoti, Kan. and Eckley, Colo. and added capacity of 155,000 head to the company's operations.
During the second quarter, Green Plains entered into privately negotiated agreements with holders, on behalf of certain beneficial owners, of the company's 3.25% Convertible Senior Notes due 2018. Under these agreements, the company exchanged approximately 2.8 million shares of its common stock and $8.5 million in cash for approximately $56.3 million in aggregate principal amount of the 2018 notes. The company incurred a non-cash charge of $1.3 million, before taxes, related to the debt extinguishment.
On July 28, 2017, Green Plains' wholly owned subsidiary, Green Plains Trade, amended its senior secured asset-based revolving credit agreement to reduce the interest rate spreads, increase inventory advance rates and expand eligible inventory locations and commodities. The amendment increased the maximum commitment from $150 million to $300 million and extended the maturity date from Nov. 26, 2019, to July 28, 2022.
On Aug. 29, 2017, Green Plains entered into a $500 million term loan agreement, which matures on Aug. 29, 2023, to refinance $405 million of existing debt. The term loan is guaranteed by the company and most of its subsidiaries and secured by substantially all of the company's assets, including its 17 ethanol production facilities, vinegar production facilities and a second priority lien on the assets secured under the revolving credit facilities at Green Plains Trade, Green Plains Cattle and Green Plains Grain.
On Sept. 11, 2017, John Neppl joined the company as chief financial officer of Green Plains and Green Plains Partners, replacing Jerry Peters, who retired. Mr. Peters continues as a member of the board of directors of Green Plains Holdings LLC, the general partner of Green Plains Partners. Mr. Neppl most recently served as chief financial officer of The Gavilon Group, LLC and brings extensive experience in commodity processing and trading businesses.
On Oct. 27, 2017, Green Plains Partners upsized its revolving credit facility by $40.0 million, from $155.0 million to $195.0 million, accessing a portion of the $100.0 million accordion in place on the facility.
On Nov. 16, 2017, Green Plains Cattle amended its senior secured asset-based revolving credit facility with a group of lenders led by Bank of the West and ING Capital LLC. The amendment increased the revolving commitment under the credit facility from $300 million to $425 million with an additional $75.0 million available accordion feature.
In December 2017, the company's joint venture with Jefferson Gulf Coast Energy Partners, JGP Energy Partners, completed Phase I of its intermodal export and import fuels terminal in Beaumont, Texas and loaded multiple vessels with ethanol bound for international destinations. Green Plains plans to offer its 50% interest in the joint venture to the partnership during the first half of 2018.
In December 2017, Syngenta and Green Plains jointly announced a partnership to expand the use of Enogen corn as a portion of the feedstock across Green Plains' 1.5-billion-gallon ethanol production platform.
During the year, the company repurchased 394,677 shares of common stock for approximately $6.7 million.
Results of Operations
Consolidated revenues decreased $11.1 million for the three months ended Dec. 31, 2017, compared with the same period in 2016. Revenues were impacted by lower average realized prices for ethanol, partially offset by an increase in revenues related to the cattle feedlot acquisitions during the first and second quarters of 2017.
Operating income decreased $48.6 million for the three months ended Dec. 31, 2017, compared with the same period last year primarily due to lower ethanol margins.
An income tax benefit of $63.9 million was recorded in the fourth quarter of 2017, including a $52.8 million benefit related to the revaluation of deferred tax liabilities under the new U.S. corporate tax laws.
http://investor.gpreinc.com/releasedetail.cfm?ReleaseID=1056783
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Slashnuts
8 년 전
Green Plains Acquires Fleischmann's Vinegar Company
Strategic Acquisition Broadens Company's Position in Food & Feed Ingredients
$250 million acquisition of the world's largest manufacturer and marketer of food-grade industrial vinegar
Adjacent business addition with significant growth opportunities
Acquisition is immediately accretive to earnings and will leverage Green Plains' supply chain and production platform
OMAHA, Neb., Oct. 03, 2016 (GLOBE NEWSWIRE) -- Green Plains Inc. (NASDAQ:GPRE) today announced that it has acquired SCI Ingredients Holdings, Inc. (SCI) and its wholly owned operating subsidiary Fleischmann's Vinegar Company, Inc., the world's largest manufacturer and marketer of food-grade industrial vinegar for $250 million, subject to certain post-closing adjustments. Green Plains entered into a definitive stock purchase agreement with the selling shareholders of SCI and is financing the transaction with $135 million of debt with the balance paid from cash on hand. A group of lenders led by Maranon Capital, L.P. provided a $130 million term loan and a $15 million revolving line of credit for this business unit.
"This strategic acquisition of Fleischmann's Vinegar Company brings a new adjacent business that adds a consistent, growing earnings stream and expands our focus on the food and feed ingredients industry," said Todd Becker, president and chief executive officer of Green Plains. "Our long term strategy is centered around growing our company to take advantage of the rising global demand for energy and food products. The Fleischmann's Vinegar portfolio of products is well positioned beyond food ingredients, ranging from antimicrobials, animal feeds, herbicides and disinfectants to name a few."
"As we approach scale as one of the largest ethanol producers in the world, we have the engine of a significant commodity-processing entity that can generate substantial cash flow, allowing us to enhance the food and feed ingredients side of our business," added Becker. "The Fleischmann's Vinegar acquisition will lead to further supply chain opportunities within Green Plains, as its largest production cost is food-grade ethanol. We will use our commodity and risk management expertise to expand our opportunities into consumer and industrial-based ethanol products."
Fleischmann's Vinegar is an all-natural specialty ingredients company serving a range of markets and end-use applications, including: food and beverage ingredients, antimicrobials, bio-herbicides and cleaning products across the food, beverage, agricultural, industrial and wholesale markets. Fleischmann's Vinegar offers a broad portfolio of products that serve to embed the company as a critical component of its customers' end products. Fleischmann's Vinegar is the world's largest manufacturer and marketer of food-grade industrial vinegar. Headquartered in Cerritos, California, the company has 112 employees and operates seven manufacturing facilities located in Alabama, California, Illinois, Maryland, Missouri, New York and Washington. The company also utilizes four distribution warehouses located in Oregon, California, Texas and Quebec, Canada.
"I am pleased to welcome Ken Simril, president and CEO of Fleischmann's Vinegar Company, the management group and all of the employees to the Green Plains team," continued Becker. "Under Ken's leadership, Fleischmann's Vinegar has achieved incredible innovation and growth over the last 10 years, focused on adapting its production capabilities to current on-trend consumer needs such as organic, non-GMO, beverages and varietals. Ken will lead our overall global food ingredient growth strategy as we continue to develop areas adjacent to our supply chain. The current management team will continue operating Fleischmann's Vinegar as a standalone business, utilizing their many years of industry and management experience."
XMS Capital Partners acted as financial advisor and Husch Blackwell LLP acted as legal advisor to Green Plains Inc. BMO Capital Markets acted as financial advisor and Goodwin Procter LLP acted as legal advisor to Stone Canyon Industries, LLC and the selling shareholders of SCI
http://investor.gpreinc.com/releasedetail.cfm?ReleaseID=991903
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Slashnuts
8 년 전
Green Plains Completes Abengoa Ethanol Plant Acquisition
OMAHA, Neb., Sept. 26, 2016 (GLOBE NEWSWIRE) -- Green Plains Inc. (NASDAQ:GPRE) today announced that it completed the previously announced acquisition of three ethanol plants located in Madison, Ill., Mount Vernon, Ind. and York, Neb. for approximately $237 million in cash plus certain working capital adjustments from Abengoa Bioenergy. The company immediately sold the ethanol storage assets to Green Plains Partners LP (NASDAQ:GPP) for $90 million. All three plants are currently operational and will add 236 million gallons per year of ethanol production capacity.
"In the past 12 months, we have expanded our ethanol production capacity by approximately 50 percent. Adding the Illinois and Indiana locations provide us with a bigger and more diverse geographic footprint," said Todd Becker, president and chief executive officer at Green Plains. "With nearly 1.5 billion gallons of production capacity, we are moving meaningful volumes across the agricultural and energy supply chains, further positioning us to serve both domestic and international markets efficiently and effectively."
Husch Blackwell LLP acted as legal advisor to Green Plains in connection with the transaction. Carl Marks Advisors acted as financial advisors and DLA Piper acted as legal advisors to Abengoa Bioenergy.
About Green Plains
Green Plains Inc. (NASDAQ:GPRE) is a diversified commodity-processing business with operations related to ethanol, distillers grains and corn oil production; grain handling and storage; a cattle feedlot; and commodity marketing and distribution services. The company is the second largest consolidated owner of ethanol production facilities in the world, with 17 dry mill plants, producing nearly 1.5 billion gallons of ethanol at full capacity. Green Plains owns a 62.5% limited partner interest and a 2.0% general partner interest in Green Plains Partners LP (NASDAQ:GPP), a fee-based Delaware limited partnership that provides fuel storage and transportation services by owning, operating, developing and acquiring ethanol and fuel storage tanks, terminals, transportation assets and other related assets and businesses
http://investor.gpreinc.com/releasedetail.cfm?ReleaseID=990865
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Slashnuts
8 년 전
Green Plains Acquires Three Abengoa Plants
OMAHA, Neb., Aug. 22, 2016 (GLOBE NEWSWIRE) -- Green Plains Inc. (NASDAQ:GPRE) today announced that it was the successful bidder on three ethanol plants for sale by Abengoa Bioenergy conducted under the provisions of the U.S. Bankruptcy Code. The company will purchase the Madison, Ill., Mount Vernon, Ind. and York, Neb. ethanol facilities, with combined annual production capacity of 236 million gallons per year, for approximately $237 million in cash, plus certain working capital adjustments.
"We continue to focus on making strategic investments in high quality assets as we expand our production footprint," said Todd Becker, president and chief executive officer at Green Plains. "The Madison and Mount Vernon plants will give us access to the Mississippi River, supporting our new export terminal planned in Beaumont, Texas. In addition, we will broaden our product offering globally with industrial alcohol production at the York plant. These acquisitions further our commitment to deliver long-term value for both Green Plains Inc. and Green Plains Partners shareholders."
Upon completion of the acquisitions, Green Plains will own and operate 17 dry mill ethanol facilities with combined production capacity of nearly 1.5 billion gallons per year.
The company's acquisition agreements are subject to review and approval by the U.S. Bankruptcy Court for the Eastern District of Missouri at a hearing currently scheduled for Aug. 29, 2016. The acquisitions are expected to be complete no later than Sept. 30, 2016, subject to regulatory approval and customary closing conditions, at which time the ethanol storage and transportation assets will be offered to Green Plains Partners.
http://investor.gpreinc.com/releasedetail.cfm?ReleaseID=985212
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Slashnuts
11 년 전
GPRE: Only Algae Project Awarded DOE Funding
BioProcess Algae Awarded $6.4 Million U.S. Department of Energy Grant to Develop Advanced Drop-in Biofuels for Military Jets and Ships
OMAHA, Neb., April 22, 2013 (GLOBE NEWSWIRE) -- BioProcess Algae LLC has been selected to receive a grant of up to $6.4 million from the U.S. Department of Energy (DOE), as part of an innovative pilot-scale biorefinery project related to production of hydrocarbon fuels meeting military specification. The project will use renewable carbon dioxide, lignocellulosic sugars and waste heat through BioProcess Algae's Grower HarvesterTM technology platform, co-located with the Green Plains Renewable Energy, Inc. (Nasdaq:GPRE) ethanol plant in Shenandoah, Iowa.
"BioProcess Algae was the only algae platform chosen to be a part of this project by the DOE," said Todd Becker, President and CEO of Green Plains. "This project will link our commercial scale platform for growing and harvesting algal biomass with technology partners for conversion into advanced biofuels. While this is a project for the development of drop-in biofuels, we continue to focus our technology for growing and harvesting algae for feed, food or fuel."
"We believe our Grower Harvester platform will be vital in the development of this project with the DOE," added Tim Burns, President and CEO of BioProcess Algae. "For this project, we will integrate low-cost autotrophic algal production, accelerated lipid production, and lipid conversion in an effort to develop a cost-effective advanced biofuel for military needs. This development is consistent with our current plans to build the next phase of Grower Harvester reactors in Shenandoah."
The project will demonstrate technologies to cost-effectively convert biomass into advanced drop-in biofuels and the recipient is required to contribute a minimum of 50% matching funds for the project.
About BioProcess Algae LLC
BioProcess Algae LLC is a joint venture among CLARCOR Inc. (NYSE:CLC), a global provider of filtration products, BioProcessH2O LLC, a wastewater purification technology company, and Green Plains Renewable Energy. BioProcess Algae was created to commercialize advanced photo-bioreactor technologies for growing and harvesting of algal biomass.
About Green Plains Renewable Energy, Inc.
Green Plains Renewable Energy, Inc. (Nasdaq:GPRE) is North America's fourth largest ethanol producer, which markets and distributes approximately one billion gallons of ethanol annually. Green Plains owns and operates grain storage assets in the corn belt and biofuel terminals in the southern U.S. Green Plains is a joint venture partner in BioProcess Algae LLC, which was formed to commercialize advanced photo-bioreactor technologies for growing and harvesting algal biomass.
http://investor.gpreinc.com/releasedetail.cfm?ReleaseID=758281
Slashnuts
11 년 전
Green Plains to Acquire Ethanol Plant in Atkinson, Nebraska
http://investor.gpreinc.com/releasedetail.cfm?ReleaseID=768570
OMAHA, Neb., June 3, 2013 (GLOBE NEWSWIRE) -- Green Plains Renewable Energy, Inc. (Nasdaq:GPRE) announces today that it has signed a purchase agreement to acquire the membership interests of Choice Ethanol Holdings, LLC, the entity that owns the former NEDAK Ethanol, LLC ethanol plant located in Atkinson, Neb. and an ethanol storage and loading facility located approximately 15 miles east of the plant. The dry-mill ethanol plant will add approximately 50 million gallons of operating capacity to Green Plains' current annual production capacity of 740 million gallons.
"The acquisition of the plant in Atkinson expands our ethanol production platform and aligns with our ongoing strategy of growing our business and enhancing long-term shareholder value," said Todd Becker, Green Plains' President and Chief Executive Officer. "The plant meets our disciplined acquisition criteria and we have a deep understanding of this technology, size and geographic area. We believe we can rapidly improve the overall performance of this plant."
The ethanol plant utilizes Delta-T processing technology. The ethanol storage facility holds approximately 24,000 barrels of ethanol and is located on the BNSF rail line. Green Plains plans to staff and re-start the plant within the next four weeks. Once the transaction closes, the Company plans to begin installing corn oil extraction technology, which should be completed in the fourth quarter of 2013. Completion of this transaction is subject to standard and customary closing conditions.
Carl Marks Advisory Group served as exclusive financial advisor to Choice Ethanol Holdings, LLC.
About Green Plains Renewable Energy, Inc.
Green Plains Renewable Energy, Inc. (Nasdaq:GPRE), which is North America's fourth largest ethanol producer, markets and distributes approximately one billion gallons of ethanol annually. Green Plains owns and operates grain storage assets in the corn belt and biofuel terminals in the southern U.S. Green Plains is a joint venture partner in BioProcess Algae LLC, which was formed to commercialize advanced photo-bioreactor technologies for growing and harvesting algal biomass.
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Slashnuts
12 년 전
RFA Requests Multi-Agency Investigation Of Oil Industry’s Discriminatory/Unlawful Conduct
http://renewablefuelsassociation.createsend1.com/t/y-l-juttuuy-kjhkhljij-o/
(March 19, 2013) WASHINGTON — In a letter sent today to the Environmental Protection Agency (EPA), the Federal Trade Commission (FTC), the Department of Energy (DoE) and the Department of Agriculture (USDA), the Renewable Fuels Association (RFA) requested a multi-agency investigation into “the oil industry’s highly discriminatory and unlawful conduct — conduct that is impeding the delivery of renewable fuels to the American marketplace.”
The focus of this letter is a recounting of recent events at Zarco 66, the first marketer in the United States to offer E15.
“The story of a Lawrence, Kansas, fuel station illustrates just how far Big Oil will go to obstruct congressional purposes in enacting the RFS, limit the availability of renewable fuels in the American marketplace, and, not coincidentally, bolster their campaign to repeal the RFS altogether. For many years, a ConocoPhillips franchisee, Zarco 66 Inc. (“Zarco 66”), offered E85 at its fueling station. One of the station’s fuel tanks contained “regular” gasoline and a second tank contained straight ethanol—a tank that might have otherwise been reserved for “premium” gasoline at a more antiquated station. Zarco 66 offered customers E85 by blending the appropriate mixture of gasoline and ethanol straight at the pump—using “blender” pumps that it obtained through a grant administered by the Department of Energy. Because only certain vehicles can use E85, the oil industry likely viewed this alternative fuel as a gimmick—one that posed no real threat to the industry’s monopoly. But shortly after Zarco 66 became the first fueling station in the nation to offer E15—a fuel that can be used in any light-duty vehicle manufactured over the last decade—the oil industry suddenly changed its tune. ConocoPhillips quickly threatened to terminate Zarco 66’s franchise agreement and charge Zarco 66 hundreds of thousands of dollars in penalties unless Zarco 66 started offering “premium” gasoline—gasoline that would replace the ethanol housed in one of Zarco 66’s fueling tanks, and a gasoline that is likely to result in far fewer sales than the ethanol blends that would be available if Zarco 66 maintained the current ethanol contents.
“For franchisees like Zarco 66, the message that the oil industry is delivering is loud and clear: Stop selling renewable fuels, or face the consequences.”
There are several concrete examples of Big Oil running afoul of U.S. laws. For instance, in the Zarco 66 situation, the oil industry is enforcing the unlawful act of “tying” agreements which violate Section 1 of the Sherman Antitrust Act.
“Here, the oil industry is forcing fuel stations to purchase and carry a product that they otherwise do not wish to carry (premium gasoline) as a condition for purchasing and carrying the tying product (regular gasoline). Because franchisees are locked into franchise agreements (and such a lock-in effect is magnified when, as in the case of Zarco 66, the oil franchisor changes the terms of the relationship midstream), an oil franchisor holds appreciable economic power over the franchisee, which it is using to force franchisees to purchase premium fuel that they might not otherwise wish to carry. Moreover, because premium gasoline requires a separate tank that would otherwise hold the ethanol necessary to offer gasoline-ethanol blends (and the oil industry is well-aware that most fuel stations have only two tanks devoted to gasoline), the oil industry is effectively eliminating ethanol competition by tying the sale of premium to regular gasoline.
“In addition, the oil industry’s conduct is contrary to the Gasohol Competition Act of 1980. That legislation makes it unlawful to “unreasonably discriminate[] against or unreasonably limit[] the sale, resale, or transfer of gasohol or other synthetic motor fuel of equivalent usability.” 15 U.S.C. § 26a(a)(2). By enforcing a premium requirement to the exclusion of ethanol blends, the oil industry is unreasonably limiting the sale of E15,…
“Similarly, the oil industry’s actions violate the policies that underlie the Petroleum Marketing Practices Act. By forcing franchisees to purchase premium gasoline, franchisors are acting to preclude franchisees from ‘converting an existing tank or pump on the marketing premises of the franchisee for renewable fuel” in violation of that legislation. See 15 U.S.C. § 2807(b)(1)(B). What is more, the Act was intended to allow franchisees to sell “a renewable fuel in lieu of 1 . . . grade of gasoline.’ Id. § 2807(c). As a result, the oil industry is directly subverting this legislation by making it impossible for franchisees to offer gasoline-ethanol blends higher than E10, such as E85 and biodiesel.”
When Big Oil isn’t busy violating laws, it is busy mocking the intent of others, such as the Energy Policy Act of 2005 and expanded in the Energy Independence and Security Act of 2007 which details the requirements of the Renewable Fuel Standard (RFS). “The oil industry has claimed that it cannot meet these standards—in part, because few stations are offering E15 or greater gasoline. But the oil industry need only look in the mirror to determine why that is the case. It is the industry’s own behavior that is limiting E15’s availability. Like a child who breaks all of his pencils and then tells his parents he can’t do his homework, the oil industry should not be permitted to claim the RFS is not achievable when it is deliberately taking steps to stifle the introduction of E15.”
In closing, Bob Dinneen, RFA’s President and CEO, wrote, “Americans want choice at the pump. For all of these reasons, we respectfully request that each of you direct your agencies to investigate and put an end to the oil industry’s highly discriminatory and unlawful conduct—conduct that is impeding the delivery of renewable fuels to the American marketplace. Otherwise, Zarco 66 will simply represent the first casualty in the oil industry’s war against the marketing and delivery of cheaper, more sustainable renewable fuels.”
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