Murphy Oil Eyes Shuttered Fuel Ethanol Plant in Hereford, Texas

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Researched by Industrial Info Resources (Sugar Land, Texas)--Murphy Oil Corporation (NYSE:MUR) (El Dorado, Arkansas) is said to be eyeing the purchase of the former Panda Energy's shuttered fuel ethanol plant in Hereford, Texas. Earlier this year, The Panda Group (Dallas, Texas) sold subsidiary Hereford Biofuels (Hereford, Texas) and the unfinished plant to creditors for $25 million. Panda put the plant up for sale and filed for voluntary Chapter 11 bankruptcy. For additional information, see January 27, 2010, article - Panda Ethanol Puts Hereford Plant Up For Sale and Files for Chapter 11 Bankruptcy. The sale price represents roughly 12% of the cost to construct the plant.

The struggling project has been under construction since September 2006. The company fired contractor Lurgi Incorporated (Memphis, Tennessee) in September 2008, stating that Panda had "lost confidence in Lurgi's ability to finish the facility due to continued construction delays."

The company had plans of finishing construction themselves by the end of February 2009 and put the Hereford facility, the company's largest asset, up for sale.

Murphy Oil would not comment on the deal, but has contacted Deaf Smith County Commissioners Court about the property tax reduction that remains in play for the facility. An official announcement about the company's plans is expected in the coming months.

The estimated $200 million plant has a nameplate production capacity of 100 million gallons per year and was going to utilize manure from the area's many feedlots to fuel the boilers.

Murphy Oil is following in the footsteps of other big oil companies looking to supply their own ethanol. In the first quarter of 2009, Valero Energy Corporation (NYSE:VLO) (San Antonio, Texas) purchased five operational plants directly from bankrupt VeraSun for a steal of a deal at $280 million. Sunoco Incorporated (NYSE:SUN) (Philadelphia, Pennsylvania) bought an unfinished plant in Fulton, New York, and Marathon Oil (NYSE:MRO) (Houston, Texas) is partner in a plant in Greenville, Ohio.

Industrial Info's Ethanol Database provides a comprehensive outline of all current development activities in the emerging alternative fuels market. This database covers 177 ethanol plants in operation and 530 plants under development. It also covers 145 operational biodiesel plants and 245 biodiesel plants under development.

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