ConocoPhillips to Sell Off A Large Part of Its Downstream Assets
EPA Delays SPCC Regulations, Citing "Many Problems"
BP To Clean Up MTBE at Orange County Stations
SolvOne Signs Marketing Alliance with Veeder-Root
Man Killed During Fight Over Whose Turn It Was to Fill Up

CONOCOPHILLIPS TO SELL OFF A LARGE PART OF ITS DOWNSTREAM ASSETS

HOUSTON, TX. — ConocoPhillips let the world know that they were planning to sell off a large portion of their downstream business when they announced to stockholders in January that they would take a $1.3 billion charge. The company said the $1.3 billion would represent items against the sale of a large part of its retail petroleum stations.

The company said it would close a "substantial" number of its branded service stations. The deal would impact both company-operated and independent stations and include all of the company’s brands: Conoco, Phillips 66, Union 76, and Circle K.

The $1.3 billion was earmarked for costs involved in the sale such as the difference between the book value of the assets and their market value. Analysts believe that ConocoPhillips may sell as many as 2,000 of its 2,500 stations nationwide. The company said that it planned to pull out of specific markets entirely but wouldn’t specify which markets it would be leaving.

Speculation inside the company has ranged from a belief that ConocoPhillips will be selling their entire Circle K division to selling all of their assets outside the Southwest.

ConocoPhillips has made no specific statement about their plans for the future. The company has simply stated said it was looking to sell stations as part of a long-term strategy to focus on the upstream energy market.

CEO Jim Mulva had announced at the end of last year that ConocoPhillips planned to spend 75% of its capital budget toward growing the company’s upstream business in order to increase its profitability. He stated that the company’s 2003 goal was to expand its upstream business from 57% to 65% of its total assets.

EPA DELAYS SPCC REGULATIONS, CITING "MANY PROBLEMS"

WASHINGTON, D.C. — As many marketers are struggling to come into compliance with the regulation, the Environmental Protection Agency has announced that it will formally delay its Spill Prevention Control and Countermeasure (SPCC) regulations compliance by at least one year.

EPA officials acknowledged in the delay that there are "many problems" with the rule that was published in July 2002.

Under the original deadline structure, marketers would have been required to have a revised SPCC plan by February 17 and have the plan fully implemented by August 18.

The delay may have been brought about by a lawsuit filed by the Petroleum Marketers Association of America against the EPA. That suit, filed in November, charged that the EPA did not perform its regulatory flexibility analysis as required by the Small Business Regulatory Enforcement Fairness Act (SBREFA). The SBREFA requires an agency to consider the economic impact of a rule on small entities and consider alternative measures that would lessen the impact.

When the EPA issued the rule, it certified "in-house" that the SPCC rule would not have a significant impact on small entities without performing a study on the issue.

The PMAA found that "the revised rule will cost marketers tens of thousands of dollars per bulk plant. The revised rule requires the installation of additional lighting, fencing, and secondary containment systems at the loading rack and in loading areas, as well as mandating the use of sophisticated forms of integrity testing." It estimated that the required containment systems could cost over $50,000 per bulk plant.

"There is no doubt that this rule, if it goes forward, would close thousands of bulk plants across the country," said PMAA President Dan Gilligan. "EPA’s certification that this rule has no significant impact is woefully inaccurate. We believe this rule will cost PMAA members more than $300 million."

Western marketers who had been working at their facilities in the Fall to try and come into compliance with the SPCC regulations agreed with the PMAA, saying it was costing them substantial amounts of money to try and meet the new EPA standards.

Despite the delay in the regulations, the PMAA says it will still go forward with its lawsuit, noting that it still believes the EPA needs to conduct its SBREFA analysis and find alternative measures to lessen the impact on marketers.

BP TO CLEAN UP MTBE AT ORANGE COUNTY STATIONS

SANTA ANA, CA. — BP has agreed to clean up 122 gasoline stations, settling a dispute with officials in Southern California ’s Orange County.

County officials had claimed that the stations, operating under the Arco brand, are contaminated by MTBE which could migrate into the area's drinking water system. Approximately 50% of the drinking water in the area comes from deep water wells.

BP agreed to clean up the sites at a cost of approximately $35 million. They also agreed to pay $5 million in court costs and fund an outside consultant to monitor the cleanup for an additional $3 million.

Arco spokesman Paul Langland predicted that the company may have to excavate at approximately 64 of the area service stations to clean up the problem. He predicted that the cleanup process would close the affected stations for up to six weeks.

Orange County officials said they went after the Arco stations because inspectors "noticed a large number of violations at Arco stations." The settlement comes after four years of negotiations between the major oil company and the county.

Similar lawsuits are currently pending against Thrifty Oil and Shell in Orange County. San Diego County has filed a similar lawsuit to the Orange County case against Arco.

SOLVONE SIGNS MARKETING ALLIANCE WITH VEEDER-ROOT

SACRAMENTO, CA. — SolvOne has signed an agreement with Veeder-Root to create a regional marketing alliance. Under the terms of the deal, Veeder-Root will be offering a SolvOne maintenance option with their compliance packages.

"We have the ability now of offering an all-encompassing compliance monitoring service including annual monitoring and certification," explained Joe McKuskie, director of strategic alliances for SolvOne. "The customer is demanding this. They’re demanding the one call to take care of it."

Marketers and station owners will be given the option of signing up with the SolvOne maintenance plan when they sign up for Veeder-Root’s equipment monitoring service. If they sign up for the plan, they will have the ability to call SolvOne to get problems at their station repaired.

"It’s a good situation for Veeder-Root and SolvOne because we’re using existing businesses," said McKuskie. "We’re using their powerful network that they’ve built over the years. The customer can still get local contractors and their local support group. The end user is still getting what he wants. The local support guy isn’t getting any competition. The manufacturer is still getting what he wants with the compliance closed loop."

The partnership deal, which was signed in December and became operational in January, includes California "and the surrounding region," according to McKuskie. "Through our participants this can go nation-wide."

He added that the customers "see the synergies between the two companies. I hate to use that word but it’s the right word here. Maintenance and compliance are coming together and it’s exciting."

MAN KILLED DURING FIGHT OVER WHOSE TURN IT WAS TO FILL UP

BELLFLOWER, CA. — One man was killed and a second man was wounded in a dispute over a dispenser at a Chevron station here.

According to local police reports, two men pulled into the Chevron station in the 8500 block of Artesia Blvd. here at 9:45 p.m. on January 17. They began arguing with three men in a second car about whose turn it was to fill up their car at a dispenser island.

The dispute turned deadly when one man in the second car opened fire with a handgun. Both men in the first car were shot and one of them was mortally wounded.

Originally published in the February 2003 issue of O&A Marketing News.
Copyright 2003 by KAL Publications Inc.