Ultramar Diamond Shamrock to Buy Tosco's Avon Refinery
Albertson's Joins with Arco in Las Vegas
Los Angeles May Require Tobacco Permits
Flying J To Sell Salt Lake City Stations, Refinery

ULTRAMAR DIAMOND SHAMROCK TO BUY TOSCO'S AVON REFINERY

AVON, CA. — After a series of disputes with local governments, Tosco Corporation has agreed to sell its Avon refinery to Ultramar Diamond Shamrock Corporation.

The purchase price of approximately $800 million for the refinery includes $650 million cash at closing plus up to $150 million in the next eight years, depending on the profits made at the site.

The deal includes also crude oil and hydrocarbon inventories associated with the refinery as well as the refinery itself.

With the purchase, UDS will operate two refineries in California: the Avon refinery which primarily serves the Northern California area and UDS’ existing refinery in Wilmington which serves Southern California. The company also operates four other refineries in the U.S.

UDS plans to invest in the Avon refinery, looking to increase the facility’s output by 60% to 168,000 barrels per day to supply the West Coast market.

Tosco Chairman Tom O’Malley, said, "We are very pleased to be selling Avon to an experienced refiner who already operates facilities in California. We expect Ultramar Diamond Shamrock will be taking over wholesale fuel sales that have previously been supplied from the Avon Refinery."

Tosco officials say they will "record a modest profit" on the sale. Proceeds will be used primarily to reduce Tosco’s long-term debt.

Completion of the sale is subject to traditional regulatory approvals. The deal is expected to close by the end of the year.

ARCO JOINS WITH ALBERTSON'S IN LAS VEGAS

LAS VEGAS, NV. — Arco and Albertson’s have launched a new consumer loyalty program for Albertson’s grocery store customers, offering drivers who make purchases at the grocery stores discounts at Arco service stations.

The loyalty program was initially tested in the Bakersfield, CA., area in March 2000. The expansion into Las Vegas began in August.

Under the program, called "Gas Rewards," when food shoppers at 30 Albertson’s grocery stores in the Las Vegas area purchase selected grocery products they also receive discounts to buy gasoline at 33 area Arco gasoline stations.

More than 700 selected grocery items are included in the initial program, offering discounts ranging from 2 to 20 cents off a gallon of gasoline, up to a ten gallon purchase. The more Gas Reward items a shopper buys, the greater the discount they can earn.

After making a purchase at Albertson’s, all of the cents-off discounts are added together and printed on a voucher. Customers buying Arco gasoline use the PayQuick Island Cashier to enter their voucher number, which is electronically verified against Albertson’s records. The savings per gallon are shown on the customers’ gasoline receipt.

Gas Rewards items can be combined when purchased to earn shoppers a total discount as high as the posted street price.

"Customer response to this program has been very favorable," stated Chris Noble, the West Coast Retail Business Unit Leader for Arco. "We are not only seeing our long-time customers participating in the program, but also new customers are using the rewards to buy Arco gas."

LOS ANGELES MAY REQUIRE TOBACCO PERMITS

LOS ANGELES, CA. — The Los Angeles City Council has given preliminary approval to a new ordinance that would force all retailers to get a permit to sell tobacco.

Under the program, sponsored by L.A. City Attorney James Hahn, all tobacco retailers would be forced to obtain a tobacco permit annually from the city. At the launch of the program, the tobacco permit would be free of charge to existing retailers.

Any retailer who was discovered selling tobacco to a minor would be subject to penalties, including losing their permit for a year.

In addition to requiring new permits, the ordinance would also ban the use of self-service tobacco displays in the city of Los Angeles.

The new tobacco program would also create two teams of investigators to run underage sting operations and to investigate any violations of the city’s ordinances. Hahn said that stings would "attempt to buy cigarettes at stores in about 1,000 spot checks" a year.

FLYING J TO SELL SALT LAKE CITY STATIONS, REFINERY

DENVER, CO. — Inland Resources Inc., based here, has announced that it plans to purchase Flying J’s refinery in North Salt Lake, UT. The refinery is currently operating at a 25,000 barrel per day capacity.

The company also plans to purchase nine Flying J gasoline stations located in the greater Salt Lake City area and in Idaho as well as oil and gas reserves owned by Flying J in the Uinta Basin in Utah.

Total value of the deal is approximately $64 million. Inland Resources has agreed to pay Flying J $50 million in cash and $7.8 million in stock as well as assume $5.8 million of the company's debt.

The deal is expected to close during the third quarter.

Originally published in the August 2000 issue of O&A Marketing News.
Copyright 2000 by KAL Publications Inc.