Murphy Oil Enters Biofuel Business
Murphy Oil (NYSE:MUR), has entered the biofuel business with its acquisition last week of a brand new refinery of corn-based ethanol in Hankinson, N.D., formerly owned by VeraSun, the once high-flying ethanol producer that went bankrupt last year.
The El Dorado, Ark.-based oil company paid VeraSun’s bank creditors $92 million for the refinery. Murphy says it will invest $15 million in working capital in the plant, which only began operating a little more than a year ago. It has an annual production capacity of 110 million gallons a year.
As reported by GER here or here , amidst the ethanol bust, opportunities are abound, largely supported by government mandated blending requirements, which Murphy Oil CEO David Wood said are what motivated the purchase:
We are adding this capability to supplement our growing North American fuels business. It also marks our initial entry into the manufacture of bio-fuels. Given the current ethanol mandates and our subsequent blending needs, having more of a presence in the supply chain better balances our business.
Those are the mandates that likely motivated oil refiner Valero Energy‘s (NYSE: VLO) acquisition of six former VeraSun plants earlier this year.
