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Coffeyville brings in experts, assists FEMA; class action suits filed; insurance adequate, says company
Coffeyville Resources has brought in a team of experts to assist with the clean-up and remediation of Coffeyville. The city manager was quoted by The Coffeyville Journal as saying that a fourth of the community’s some 11,000 residents were impacted by the July 1 flood.
The company said its team includes globally-recognized, EPA-certified experts whose experience helped Gulf Coast refineries deal with the disastrous effects of Hurricane Katrina. The team, which is already on the ground and working in the community, includes The O’Brien’s Group, who will manage the overall process, including containment and recovery. In addition, United States Environmental Services, LLC (USES) is providing the operations support, and the Center for Toxicology and Environmental Health (CTEH) will oversee sampling, analysis, and reporting for the operation.
“We deeply care about the health and well being of the citizens of Coffeyville, as well as our own employees, many of whom live in this community,” said Chris Swanberg, Coffeyville Resources vice president of environmental, health and safety. “The companies we’ve hired are among the best in the world. They are directing the recovery operation occurring outside of our refinery.”
The company had already established a toll-free call center where residents could file their claims; it fielded more than 500 calls within a few days of opening. In addition, the claims office will be assisting victims with online filing for FEMA individual assistance.
The company has been immersed in efforts to deal with the flood’s aftermath, and no assessments as to when the plants may come back online were forthcoming last week. “No time table is in place yet,” said Steven Eames, company spokesman, on July 10. “The nitrogen fertilizer plant was generally on higher land and likely could resume operations first.”
Coffeyville CEO Jack Lipinski was quoted in The Coffeyville Journal as saying the company had invested $300 million in the facility this year and that it was not going to walk away. “The refinery was shut down at very, very short notice,” said Lipinski, adding that it normally takes 24 hours at best to shut it down. “We had seven,” he said.
Allegations are now that some 71,000 gallons of crude oil from the refinery mixed with the flood waters, not the 42,000 reported earlier (GM July 9, p. 1). Flood water samples found fecal coliform bacteria at more than 130 times the standard rate, according to the U.S. Environmental Protection Agency, which put out a warning to residents July 6.
Tempers were reported to be heated at a Town Hall meeting July 5, where over 1,000 locals turned out to hear what was being done about the flood.
In the meantime, at least two class action suits have already been filed against Coffeyville Resources and related companies. Danny Dunham v. Coffeyville Resources, filed in U.S. District Court, seeks damages in excess of $75,000 for each class member, and claims that over 200 properties were destroyed by “uncontrolled waterborne poisons.” It was filed by the Wichita firm of Hutton & Hutton. Another class action, Western Plains Alliance LLC v. Coffeyville Resources, was brought in the District Court of Montgomery County. Western Plains is the owner of the local Jump Start convenience store. Robert Sullivan, senior partner of Polsinelli Shalton Flanigan Suelthaus PC, a Midwest-based firm with 300 attorneys, is a Coffeyville native. The suit was brought in conjunction with Scovel, Emert, Heasty & Chubb of Independence, Kan. It also seeks claims of more than $75,000 per class member.
Coffeyville has some $1.25 billion of insurance, according to local reports. Eames told Green Markets that the company has adequate insurance, but that it cannot divulge details of its coverage. June SEC filings indicate the company has a pollution legal liability aggregate limit of $50.0 million, subject to a $1.0 million self-insured retention. This policy covers cleanup costs resulting from pre-existing or new pollution conditions and bodily injury and property damage resulting from pollution conditions. It also includes a $25.0 million business interruption sub-limit, subject to a ten-day waiting period. In addition, it has a financial assurance policy that provides a $4.0 million limit per pollution incident and an $8.0 million aggregate policy limit related specifically to closed RCRA units at the Coffeyville refinery and the Phillipsburg terminal. The filing said that each of these policies contains substantial exclusions, and as such, the company cannot guarantee that it will have coverage for all or any particular liabilities. Note this section does not indicate if this is the extent of the insurance, so the $1.25 billion could be correct.
The owners of Coffeyville Resources (Goldman Sachs and the Kelso Funds) have been seeking to sell $375 million in stock in the company under the name CVR Energy Inc. (GM Archives). The New York Stock Exchange approved the listing June 28, according to a recent SEC filing. As for the status or future of the IPO, Eames told Green Markets that “right now management is focused entirely on recovering our refinery and nitrogen fertilizer plant operations Beyond that, we are in an SEC mandated quiet period, so I cannot comment on the IPO.”
CHS, LOL explore options for Agriliance retail agronomy operations
Land O’Lakes Inc. and CHS Inc. announced on July 11 that they are exploring strategic alternatives, including repositioning, for the retail agronomy business of Agriliance LLC. Land O’Lakes and CHS are joint venture owners of Agriliance, with each holding a 50 percent interest in the company.
CHS and Land O’Lakes said they are currently in exclusive negotiations for the sale of The Agronomy Company of Canada, ProSource One, and Agriliance retail locations in the southern U.S. to a group that includes certain members of the Agriliance management team and financial backers. They have retained the Chicago office of BMO Capital Markets to assist them in this repositioning process.
Agriliance operates 149 company-owned retail locations, primarily in the southern U.S., and manages 30 retail locations in eastern Canada through The Agronomy Company of Canada. ProSource One, based in Memphis, Tenn., provides crop protection products, crop nutrients, seed, and services to the professional turf, vegetation management, ornamental, nursery, and Florida specialty agriculture markets.
The July 11 announcement came just weeks after CHS and Land O’Lakes unveiled plans to reposition the Agriliance crop nutrients and crop protection products businesses (GM June 25, p. 1). Under that effort, which is expected to be completed in September, Land O’Lakes will acquire the crop protection products operations and related technical and support services, and plans to align it closely with its existing CROPLAN GENETICS® seed business. CHS will acquire the wholesale crop nutrients business, which will be operated as part of its Ag Business segment.
Industry speculation was that one of the management members involved in the retail agronomy negotiations was George Thornton, Agriliance’s current CEO. Thornton announced in June that he was retiring in connection with the repositioning of Agriliance’s crop nutrients and crop protection products businesses. Agriliance said last week that it was not able to comment while it remains in the exploratory phase of this process.
At the time of the initial announcement in June, officials of the two companies said the repositioning efforts would align each business segment with the core competencies and strengths of each parent company, and would provide opportunities for cost reduction while enabling the more effective supply of crop inputs to members and customers. The newly announced efforts to reposition the retail agronomy business are also consistent with those goals, they said.
Agriliance employs approximately 2,200 people. Total annual company sales are $3.7 billion, including $1.1 billion of wholesale crop protection products, $1.6 billion of wholesale crop nutrients, $1.0 billion in retail sales, and $52 million in agronomy equipment sales.
H.J. Baker breaks ground on Tiger-Sul plant
Westport. Conn., and Calgary, Alberta-H.J. Baker & Bro. Inc. announced they are breaking ground on a new state-of-the-art Tiger-Sul facility in Stockton, Calif., the company’s third Tiger-Sul facility in North America. The new facility is being constructed at the company’s Stockton sulphur forming site, and will produce Tiger 90CRTM Sulphur and Tiger MicronutrientTM fertilizers. The company said the Stockton location allows it to use “existing land and operational efficiencies,” and also provides access to domestic markets in the Western U.S. and international markets through the port of Stockton. The new production facility will initially have one pastillation belt with room for expansion, and is expected to be fully operational in the second quarter of 2008. “We are very pleased to announce the expansion of the Tiger-Sul production into the California region,” said Christopher Smith, president and CEO. “The expansion of the Tiger-Sul network is part of our overall growth strategy to offer this outstanding line of fertilizers, including Tiger 90CRTM Sulphur and Tiger MicronutrientTM fertilizers, into the California and Global markets.” Tiger-Sul Products is a wholly-owned subsidiary of H.J. Baker & Bro., which is based in Westport, Conn.
Miss Phos reports problem with sulfuric acid plant
Pascagoula, Miss.-Mississippi Phosphates Corp. said July 6 that a component of one of the two sulfuric acid plants at its DAP facility in Pascagoula suffered a failure that will require extensive repairs. This work, which commenced July 6, will require shutting down the sulfuric acid plant for approximately 30 days. During the shutdown, DAP output at the Pascagoula plant could be limited to 1,000-2,000 st/d. Miss Phos may be able to produce more if it is able to source sulfuric acid elsewhere; however, that is not assured. Miss Phos DAP capacity with its two sulfuric acid plants is 750,000 st/y. The plant has the capacity to produce as much as 870,000 st/y if it buys additional acid.
UAP adds new facilities in Ohio and Washington
Greeley, Colo.-UAP Holding Corp. has recently added new facilities in Ohio and Washington. Another new facility in Alabama was recently reported (GM June 18, p. 10). The Attica, Ohio, facility includes 18,000 st of dry storage and 8,000 st of liquid. It is expected to be up and running in mid-August to early September. The Plymouth, Wash., facility includes 34,000 st of dry and 15,000 st of liquid and is already in operation. Both will serve a 75-100 miles radius. UAP said it spent approximately $4 million on these three new projects in the first quarter ending May 27, 2007.
Terra, Kemira jv gets commission approval in UK
Sioux City, Iowa-The UK Competition Commission on July 11 approved the joint venture planned by Kemira GrowHow Oyj and Terra Industries Inc. to combine the fertilizer and associated process chemicals businesses of both companies in the United Kingdom. The approval is conditional upon the divestment of certain process chemicals businesses – which account for less than 3 percent of sales of the planned joint venture – as well as upon amendment of certain terms in the agreements for supply of carbon dioxide at Ince. The planned joint venture is designed to secure a sustainable, long-term base for manufacturing fertilizer and process chemicals in the UK, the companies said. Both businesses produce ammonium nitrate, which is the main nitrogen fertilizer consumed in the UK. The joint venture will be owned 50/50 by Kemira GrowHow and Terra, and will include the site of Kemira GrowHow at Ince and of Terra on Teesside and Severnside. The annual turnover of the operations included in the joint venture exceeded 500 million euros in 2006. Through the joint venture, both companies said they expect to create significant cost and operational synergies that would enhance their ability to service and compete in increasingly challenging markets. “We are pleased with this conclusion, which will enable us to start this joint venture and continue to provide high quality products and services to the agricultural and industrial customers of both our companies,” said Heikki Sirviö, CEO of Kemira GrowHow. “We have worked closely with the Competition Commission and expect to satisfy their conditions soon so that we can start the joint venture,” added Mike Bennett, Terra president and CEO. “We continue to believe that the proposed joint venture represents the best way forward for our UK business and customers.
Hartung Brothers buys Winona terminal
Madison, Wisc.-Hartung Brothers Inc., based in Madison, Wisc., announced on July 3 that it has purchased the Winona, Minn., terminal from Support Terminals Operating Partnership LP. The terminal, located at mile 726 on the upper Mississippi River, includes six acres of land, eight storage tanks with a combined capacity of 57,000 tons, and rail and barge receiving facilities. “We are excited about adding this excellent facility to our distribution footprint,” said Dan Hartung, company president. “This acquisition will boost our combined liquid storage capacity to over 142,000 tons.” Terms of the deal were not disclosed. The company had been leasing three tanks at the Winona facility for the storage of UAN-28, 10-34-0, and ammonium thiosulfate. “This added capacity will allow us to better serve not only our current northwest Wisconsin customers, but allow us to expand into southeast Minnesota,” said Steve Sheline, vice president of sales and procurement. Hartung Brothers also operates Wisconsin terminals located in Arena, Kaukauna, Oshkosh, and Wisconsin Rapids, with a combined storage capacity of more than 85,000 tons. Construction was recently completed at its newest facility in Wisconsin Rapids. The company’s fertilizer product line includes ammonium thiosulfate, green hi-poly ammonium phosphate, green hi-poly liquid starter, liquid calcium nitrate, pop up starters, and UAN nitrogen solutions. Hartung Brothers also markets its own brand of fertilizer under the Harti-Gro label, and owns its own transportation company through subsidiary H & N Logistics LLC.
SaskPool sells Agricore Vancouver terminal
Regina, Sask.-Saskatchewan Wheat Pool has closed on the sale of Agricore United’s grain handling terminal in the Port of Vancouver to Alliance Grain Terminal, a consortium of Prairie grain handling companies formerly known as Terminal West. Financial terms of the transaction were not disclosed. The divestiture is in accordance with the October 2002 consent agreement with the Commissioner of Competition requiring AU to divest one of its grain handling terminals in the Port of Vancouver. The sale is not expected to materially impact the company’s results from continuing operations. The proceeds of the sale may be used for general corporate purposes. Pacific Elevators’ grain handling terminal, located in the Port of Vancouver, will be operated by AU and SaskPool, as the two companies integrate their operations. SaskPool will wholly-own and operate the Cascadia terminal and Pacific Elevator at the Vancouver port. AU became a wholly-owned subsidiary of SaskPool June 15, 2007.
Uranium trading leads to P industry speculation
New York-New trading on a uranium futures contract on the New York Mercantile Exchange in May has led to some speculation that the increased interest in the commodity might tempt phosphate producers to again consider uranium extraction from phosphate. Those industry executives surveyed did not appear too enthusiastic, citing failed attempts by the industry some twenty years ago in which it made little or no money off the similar initiatives. CF Holdings Inc. told Green Markets it is studying the possibility of installing uranium recovery capability at Plant City, though it noted that it is studying a number of opportunities throughout its operations on an ongoing basis. Earlier extraction facilities in Central Florida were removed in the 1990s when the market softened, and any new initiative would take a fair-sized investment with new technology, said CF. Agrium Inc. said its Manitoba rock would not be suitable for such, but that it might be a possibility for its Idaho operations. Potash Corp. of Saskatchewan Inc. is not seriously considering uranium extraction at this time, according to a company spokesman. Mosaic Co. also acknowledged the high cost of getting back into that business.