Columbia Pacific Bio Refinery

Columbia Pacific Bio Refinery, pictured here in November 2011, has been sold to a Northeast petroleum company. The original purpose of the plant was to produce ethanol, but recently it has been used to export crude oil.

Longview contractor JH Kelly will sell its Clatskanie-area ethanol plant to a publicly traded Northeast petroleum company for about $95 million, the new owner said Monday.

Kelly, which built the plant for Cascade Grain, had been trying to unload the plant for years after taking ownership during 2009 bankruptcy proceedings. It had invested millions making it a workable facility and has been exporting crude oil from the Port Westward site since November.

Kelly officials, however, declined to say whether the sale would recoup the company’s losses or turn a profit.

The sale of Columbia River Bio-Refinery at Port Westward would give Waltham, Mass.-based Global Partners LP and opportunity for the company to expand its petroleum and distribution network to the West Coast. In a press release, Global Partners said it has one of the nation’s largest networks for moving petroleum products from Canada and the Midwest to the East Coast.

Officials from Global declined to directly speak about the pending sale. The facility now employs about 50 people, according to Kelly officials. There is no word from Global whether it intends to increase or reduce operations at the 44-acre plant or if ethanol production is in its plans.

The purchase is expected to be completed by the end of March.

The deal includes a rail loading and unloading facility, 200,000 barrels of storage capacity, a deepwater marine terminal, a 1,200-foot dock, and the largest ethanol plant on the West Coast, Global Partners said in a news release.

“This transaction ... enables Global to supply cost-competitive crude and ethanol to refiners and customers on the West Coast,” Eric Slifka, Global’s president and chief executive, said in a statement. “From our origination hub in the Bakken region of North Dakota, we will now have destination assets on both coasts.”

Selling the plant was JH Kelly’s plan all along, said Mark Fleischauer, senior vice president of JH Kelly. Numerous suitors had approached Kelly about the facility over the last couple years, he added. The deal with Global had been in the works since last summer.

Fleischauer declined to say whether the company was able to recoup its investment following the sale.

After Kelly built the plant, Cascade Grain never managed to produce usable ethanol and went bankrupt when the market for the gasoline additive declined. Kelly bought the plant for $15 million in December 2009. It paid $4 million in cash as the only bidder at the bankruptcy auction, and the remaining $11 million came from a $33 million construction lien Kelly had placed on the facility.

The Longview company invested at least $20 million in the facility to overcome the operational issues that Cascade Grain faced in 2008-09. However, Kelly never started ethanol production due to the high prices of corn, the main raw material used in production, and plummeting ethanol prices.

Last November, Kelly started using the site to export crude oil to capitalize on the oil boom in the Midwest. Increased drilling in the shale formations in North Dakota, Montana and Texas are behind the boost in output, which has pushed total domestic production to its highest level since 1997, according to U.S. Energy Department.

The ethanol and crude oil are imported to the site by rail, then shipped out on ocean-going barges along the Columbia River to refineries on the West Coast and Asian markets.

Kelly’s plant is located on property leased from the Port of St. Helens. Monday, port Executive Patrick Trapp said the plant’s new focus seems to be profitable, adding that there have “four or five” shipments of oil since November.

“We had a pretty good relationship with Columbia Pacific Bio-Refinery,” Trapp said. “I anticipate that same relationship will be cultivated with Global. We’re hoping for the best.”

Clatskanie Mayor Diane Pohl said the sale wasn’t a surprise, but said she hopes the new owners will continue to provide jobs for the rural community.

“We’re enjoying the family-wage jobs and hope this new company is just as gracious as JH Kelly,” Pohl said. “Columbia County certainly needs that shot in the arm.”

source: tdn

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