Murphy Oil continues to eye ethanol options

By Kris Bevill | July 15, 2010
Posted Aug. 4, 2010

Murphy Oil Corp. may be exiting the refining world, but its interests in ethanol remain strong, according to company treasurer Mindy West. In July, the company announced that it is leaving the oil refining industry and will sell its three U.S. refineries. In a statement announcing the decision, president and CEO David Wood said the company's upstream and retail businesses have demonstrated marked growth in the last several years and Murphy Oil will focus its operations on those two areas. According to West, ethanol is vital to Murphy Oil's retail gasoline business and will therefore remain a focus of the company.

"The ethanol really supports our retail market and we intend to keep our U.S. market, so it is not our intention to exit the ethanol business," she said.

Murphy Oil will continue to operate its sole 120 MMgy ethanol plant near Hankinson, N.D., which was purchased from VeraSun Energy Corp. creditors last October for just $92 million. Following the purchase, the former VeraSun plant was re-named Hankinson Renewable Energy LLC and has since been providing Murphy Oil with approximately one-quarter of its total retail ethanol requirements. West said the plant serves an important role in the company's retail network, but because the oil company still has to purchase three-quarters of its ethanol from outside sources, there's definitely room for growth. "We obviously have room to do more when the right opportunity comes along," she said. "We've made no secret about the fact that we might expand in that business."

Rumors of the company's potential purchase of the former Panda Ethanol Inc. plant near Hereford, Texas, will remain unconfirmed, however, until Murphy Oil is ready to publicly announce a purchase. The 105 MMgy Panda Hereford Ethanol LP plant was never fully operational, reportedly due to faulty construction, and the company filed for bankruptcy in January 2009. In April, a federal bankruptcy court approved the sale of the plant to its lead creditor, Societe Generale, for $25 million in credit. Regarding Murphy Oil's possible interest in the facility, West said "We look at a lot of opportunities," adding that further comment is not possible at this time.