Refiner Valero to obtain seven VeraSun plants
March 18, 2009
The Associated Press reports that Valero Energy will buy seven ethanol plants from VeraSun Energy for $477 million, the largest biofuel buyout in terms of production capacity. VeraSun, the country''s second largest ethanol producer, filed for Chapter 11-bankruptcy protection late last year. Valero won an auction for the assets in court. It will seek approval at a Delaware bankruptcy hearing planned for Wednesday. The sale is expected to close in April. Valero would become the first traditional refiner to cross over into ethanol production if the deal is approved. The sale could give other major energy companies a benchmark price for the assets of ethanol producers now under tremendous financial strain. Valero will acquire plants in Aurora, S.D.; Charles City, Fort Dodge, and Hartley, Iowa; Welcome, Minn.; Albion, Neb.; and a development site in Reynolds, Ind. With tighter national renewable fuel standards on the way, industry analysts believed it was just a matter of time before traditional refiners like Valero stepped into ethanol production. The nation''s renewable fuel standard ensures demand for ethanol by calling for 11.1 billion gallons of renewable fuel to be blended into gasoline this year, with that number climbing to 36 billion gallons by 2022. VeraSun Energy Corp. owns 16 biorefineries with the total capacity to produce 1.4 billion gallons of ethanol annually, or about 13 percent of the country''s total capacity. Valero has said previously that it would group the plants under a subsidiary, Valero Renewable Fuels, and use the VeraSun staff already in place.