Murphy Oil doubles its ethanol capacity

By Kris Bevill | August 27, 2010
Posted Sept. 17, 2010

Murphy Oil USA, a subsidiary of Murphy Oil Corp., has purchased the shuttered ethanol plant near Hereford, Texas, formerly owned by Panda Ethanol Inc. The 105 MMgy Panda Hereford Ethanol LP plant was 90 percent complete before construction was halted last year when the company filed for bankruptcy. Murphy Oil Corp. treasurer Mindy West said the company plans to increase the plant's capacity to 115 MMgy after necessary retrofits are complete.

"We have a little ways to go before it's up and ready to run, but we hope to have it fully operational in the first quarter of next year," she said, adding that only minor modifications are needed to make the plant functional. "It's mostly just electrical and instrumentation work, some paving has to take place, and then of course we have to hire and train a work force."

When Panda Ethanol began constructing the facility several years ago, it planned to use cow manure from nearby stockyards to power the plant and claimed it would be one of the largest biomass-fired ethanol plants in the U.S. The possibility of utilizing manure as an energy source for the plant still exists, West said, but Murphy Oil does not intend to run the facility in that fashion, "at least at the start."

The purchase of the Hereford facility doubles Murphy's ethanol production capacity. Last October, the company bought its first ethanol plant, a former VeraSun Energy Corp. plant in Hankinson, N.D., for $92 million. The 120 MMgy plant supplies Murphy Oil with 25 percent of its ethanol needs, according to West. With the addition of the Hereford plant, the company will now be able to fill approximately half of its ethanol requirements with in-house supply.

West was unable to disclose the purchase price for the facility, which was acquired last year by Panda Ethanol's lead creditor, Societe Generale, for $25 million in credit following the company's bankruptcy filing.