Idled Oregon ethanol plant acquired by gas, natural gas company

By Holly Jessen | January 30, 2013

A publically traded wholesale gasoline distribution company has signed an agreement to acquire an idled 110 MMgy ethanol plant in Clatskanie, Ore.

On Jan. 28 Global Partners LP announced it would acquire 100 percent of the membership interests of the ethanol plant as well as an onsite rail transloading facility serviced by the BNSF Railway, 200,000 barrels of storage capacity, a deepwater marine terminal and a 1,200-foot dock. The $95 million transaction is expected to be completed by the end of the current quarter.

The Columbia Pacific Bio-Refinery was previously purchased by Cascade Kelly Holdings LLC, a subsidiary of JH Kelly Holdings LLC, one of the contractors that built the Delta-T designed plant. The former Cascade Grain Products ethanol plant was built for about $190 million and operated for about six months in 2008 before shutting down. The company filed for Chapter 11 bankruptcy in early 2009, which was later changed to a Chapter 7 bankruptcy.

JH Kelly made significant investments in improving the ethanol plant, including installing corn oil extraction, and developing the marine terminal, said Mark Fisler, managing director of Ocean Park Advisors, which worked with JH Kelly as a financial advisor and investment banker. Although the company had at one time intended to restart the ethanol plant, that didn’t come to fruition. However, the facility did begin transloading unit trains of crude oil in November. Ultimately, JH Kelly never intended to become a long-term participant in the ethanol industry, Fisler said, but was working to improve the property and find a buyer. “We are pleased to pass the stewardship of the Columbia Pacific Bio-Refinery to a premier company like Global,” said JH Kelly LLC President Mason Evans in a prepared statement. “They are an experienced operator of high integrity, and they will be a great addition to this region.”

Global is based in Waltham, Mass., and owns, controls or has access to a terminal network of refined petroleum products and renewable fuels and transports crude oil to the U.S. and Canada to the East Coast. The company also owns about 1,000 gas stations in nine Northeastern states and distributes natural gas. In addition to the acquisition of the Clatskanie ethanol plant and rail transloading facility, the company expects to close a pending acquisition of 60 percent interesting in Basin Transload LLC for approximately $80 million. Purchasing the Clatskanie facility will enable the company to supply cost-competitive crude oil and ethanol to its West Coast customers. “From our origination hub in the Bakken region of North Dakota, we will now have destination assets on both coasts,” said Eric Slifka, Global’s president and CEO, in a prepared statement.

Global’s Albany, New York, terminal is connected via Canadian Pacific railway to the Basin Transload location in Columbus, N.D. and the Clatskanie facility is linked via BNSF to the Basin Transload facility in Beulah, N.D.  This facility also creates a link between the Western Canadian Sedimentary Basin and Pacific refiners,” Slifka said. “With the pending closing of our Basin Transload acquisition this quarter, these new assets increase our capability to transport crude from the U.S. and Canadian mid-continent and extend our virtual pipeline to the West.”

This isn’t the only acquisition of an ethanol plant announced in the month of January. Guardian Energy Heron Lake LLC recently signed an agreement to acquire a 50 MMgy Minnesota ethanol plant, an idled Nebraska ethanol plant was purchased at auction by a company that intends to resell it and Scoular Co. announced that it had sold a portion of its ownership interest in Pratt Energy LLC to a new majority owner. 

The ethanol industry goes through cycles of both good margins and poor margins, Fisler said, adding that compressed margins tend to drive consolidation. “I see that continuing in the short term,” he said. “You will see other assets come available and trade hands.”