FULTON, N.Y. — When Sunoco closed this week on the acquisition of a bankrupt ethanol plant for pennies on the dollar, it became just the latest oil refiner to step into the alternative-fuels market.
Traditional refiners under pressure to reduce emissions are finding new avenues to meet evolving environmental standards, and finding big bargains along the way.
Sunoco made its initial bid just weeks after Valero Energy Corp., the nation’s largest independent oil refiner, became an ethanol- plant owner the same way.
“You are going to see this become a trend … especially with the government wanting to go green,” said Daniel Flynn, who follows the renewable-fuels industry for Chicago-based Alaron Trading. “There are a lot of these ethanol plants hanging by a hair. This could be the perfect time for the big companies to step in.”
In April, San Antonio-based Valero bought seven large ethanol plants in the Midwest from bankrupt VeraSun Energy Corp., the nation’s second-largest producer of ethanol, for $477 million. Sunoco snapped up the $200 million Northeast Biofuels plant in upstate New York for $8.5 million.
Over the past couple of years, Marathon Oil Corp. has acquired large stakes in ethanol plants in Illinois and Ohio, each with more than a million gallons in annual capacity.
Philadelphia-based Sunoco will spend as much as $20 million to refurbish the plant and get it to its full 100-million-gallons-a-year production capacity by early next year.
The Fulton plant will supply nearly 25 percent of the ethanol Sunoco needs to meet renewable-fuels standards.
