Valero to close on Albion ethanol plant this month, town waits

By Ryan C. Christiansen | April 14, 2009
Web exclusive posted April 15, 2009, at 4:25 p.m. CST

It may be the end of April before Texas-based petroleum refiner and marketer Valero Energy Corp. finalizes its acquisition of the VeraSun Energy Corp. ethanol plant in Albion, Neb., and another month before the ethanol plant is up and running again, but steam coming from the plant's stacks would be a welcome sight for members of this central Nebraska community. The ethanol plant might be up and running again before the Kids Ping Pong Drop promotion happens at the Boone County Raceway in Albion June 5 during the weekly stock car races.

"We want it humming," said Albion Mayor James Jarecki. "Everybody in the community is anxious to see it get goingand stay goingto retain jobs, retain revenue, and retain the tax base."

Earlier this month, Valero sealed the deal in acquiring seven other VeraSun properties from the bankrupt ethanol producer, including facilities in Aurora, S.D.; Albert City, Fort Dodge, Charles City, and Hartley, Iowa; and Welcome, Minn.; and a development site in Reynolds, Ind. Together, the plants have a 780 MMgy production capacity. They were purchased for the aggregate price of $477 million, representing approximately 30 percent of the plants' replacement cost. The purchase price excludes working capital and inventory currently estimated at approximately $75 million.

"We had five plants in the original bid and then we actually added two others, one of which was Albion," said Bill Day, director of media relations for Valero. "In the original bid, (for) those five plants, we had already received pre-approval from antitrust regulators to go ahead and buy those plants. We're in the process of getting Albion closed now and we expect that to be in a week or two. We expect that once we get the transaction closed, we can get that refinery up and running in about a month."

Albion's Mayor said personally, he is pleased that the plant was acquired by a petroleum refiner and marketer, which must acquire ethanol for blending. "If the federal government mandates 10 percent (ethanol) being mixedif [Valero] can own itthey probably have a competitive edge and so it can be a huge advantage, also. It would more-or-less be eliminating a wholesaler, in my eyes, and that would be good. It would make [the ethanol plant] competitive.

"It's still a win-win deal all the way around and it helps the farmer, too," Jarecki continued. "There are a lot of things that you can put in your town that really doesn't maybe help the ag community much; but this is one thing that does help."