From: Jim Gransbery, Billings (Montana) Gazette
Published March 21, 2005 12:00 AM

Two Montana Oil Refineries Disagree With Proposed Ethanol Blend Bill

Offering consumers a motor fuel with a 10 percent ethanol blend is fine, but do not make it mandatory, executives at two local oil refineries say.


That is what representatives for ConocoPhillips and ExxonMobil will tell members of the Montana House Agriculture Committee on Tuesday during a hearing on a bill to make ethanol in gasoline mandatory in Montana.


The proposed law -- Senate Bill 293 -- would require gasoline sold in Montana to contain 10 percent denatured ethanol twelve months after it was certified that in-state ethanol production has reached 55 million gallons per year. The bill exempts gasoline at 91 octane or higher. Currently, no ethanol is produced in Montana.


"We see ethanol as part of the future," said Jay Churchill, manager of the Billings ConocoPhillips refinery. "We have concerns seeing a mandate as a solution to economic development.


"The market is competitive," he said. "A mandate would create a fuel island."


Minnesota and Iowa are large corn producing states and have the majority of the ethanol plants in the United States. Minnesota has had a mandatory 10 percent ethanol blend law for several years; Iowa does not.


Churchill said any ethanol plant should be subjected to a cost/benefit analysis just like any other business. He also doubts that Montana can produce enough corn to supply an ethanol plant.


Churchill said he did not know if he would be testifying in Helena on Tuesday. ConocoPhillips is represented both individually and through petroleum industry lobbyists at the Montana Legislature.


He said that ethanol should be part of a national energy solution that "efficiently delivers the product to the customer.


"That would be better than state by state mandate," he said.


Congressional efforts to pass a national energy bill over the past two years have stalled. Prospects for a national energy policy coming out of Congress this year is uncertain.


Bruce Brodie, manger of the ExxonMobil refinery in Lockwood, said the company does not oppose the use of ethanol blended fuels and in various cities where it is required to reduce pollution, it is provided.


"The company is absolutely opposed to mandates because they upset the free market mechanism and increase costs for consumers," he said.


Brodie said petroleum industry data for a three year period for Missoula, which requires the fuel during the winter months, show that, on average, consumers paid 3 cents a gallon more for the ethanol blend.


He also questioned whether ethanol plants are economically viable without heavy subsidization.


"If they were, banks would be loaning them money now," he said.


The CENEX refinery at Laurel blends ethanol with its gas for those who wish to sell it.


The blending is done at the rack, where tanker trucks fill up. The truck driver calculates how many gallons he needs for each load. The ethanol arrives at the refinery in tanker cars and comes from North and South Dakota ad Nebraska, according to a company spokeswoman.


CHS, Inc., owner of the CENEX refinery, is the country's largest farmer-owned co-operative.


According to Lani Jordan, the company's director of corporate communications, "CHS strongly supports renewable fuels as a means of adding value to the grain our producers raise and addressing our nation's energy needs.


"While we have supported federal legislation establishing incentives and targets to encourage renewable fuels production and use, we generally don't take positions on state legislation and have chosen to take no position on this bill," she said.


To see more of the Billings Gazette, or to subscribe to the newspaper, go to http://www.billingsgazette.com. Copyright (c) 2005, Billings Gazette, Mont. Distributed by Knight Ridder/Tribune Business News.


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