The seemingly rash sell-off of company owned retail gasoline stations that I previously reported here continues. While the previous article I featured focused on ExxonMobil with a nod to the other major oil companies, the article I am featuring below focuses on ConocoPhillips; the parent corporation of the popular “Union 76″ branded retail stations here in the greater Los Angeles area.
I find it interesting that this article and many other articles on the subject to not mention what portion, if any of the environmental liability the parent company, in this case ConocoPhillips, will retain after the sale is performed. Particularly here in the greater Los Angeles area, the environmental liability at many of these stations can be a significant factor in the transaction.
ConocoPhillips will sell its company-owned filling stations
By BRETT CLANTON Houston Chronicle Copyright 2008
Aug. 27, 2008, 12:47PM
ConocoPhillips will sell its 600 remaining U.S. gas stations under a $800 million deal announced today that is the latest example of a major oil company exiting the troubled retail fuel station business.
PetroSun Fuel, a privately held Seattle firm, has agreed to buy the properties through a newly formed affiliate called Pacific Convenience & Fuel LLC.
The deal will make PetroSun, now with roughly 120 properties on the West Coast, one of the nation’s largest independent petroleum and convenience store operators.
Included in the transaction are company-owned and company-operated stores under the ConocoPhillips, Phillips 66 and 76 brands. Those brands will not disappear, but will have a more distant relationship with their former parent.
Once the deal is closed, ConocoPhillips will act solely as a wholesale fuel supplier to the sites, as well as to independently owned stores that are not part of the deal, said Terry Hunt, a spokeswoman for the Houston-based oil company.
She called the arrangement a “more sustainable business model.”
The deal comes as retail gas stations are struggling to turn a profit amid higher fuel costs and rising credit card fees. It also arrives as other oil majors including Exxon Mobil and BP are unloading U.S. stores.
Sam Hirbod, CEO of PetroSun, said in an interview that his company sees opportunity in all the churning.
“We are very much interested in participating in the consolidation that’s happening in the retail gas station sector,” he said, adding that his company is working on two other deals that could add up to 200 more stores by next year.
At the ConocoPhillips stores, PetroSun aims to offset rising costs by upgrading properties with better in-store products and services. That includes the addition of fresh deli sandwiches and salads, healthier snacks and even financial services, Hirbod said.
Most 600 stores incuded in the deal are in urban areas on the West Coast, with others in Denver, Col; Alberquerque, N.M. and Salt Lake City, he said. A Dallas store is the only Texas site.
In Houston, ConocoPhillips sells fuel through Phillips 66 and Conoco brand stations, but none of those is affected by the deal.
ConocoPhillips, the nation’s third-largest oil company and second-largest refiner, announced in December 2006 it would sell its remaining gas stations.
The announcement today ends that effort.
“This transaction is designed to strengthen our branded wholesale business model and grow market share,” Clayton Reasor, president of ConocoPhillips’ U.S. marketing division, said in a statement today. “We have worked with PetroSun before and believe that they will continue to enhance our brands and provide excellent service to our retail customers.”
brett.clanton@chron.com
The Wharton School of Business published an article last month in their Finance and Investment section on the state of the Commercial Mortgage Industry that I found to be a good read:
Published: July 23, 2008 in Knowledge@Wharton
With so much media and federal regulatory attention focused on the global credit crunch, especially the securitization of massive pools of home loans, there has been little notice of what’s been happening with the market for commercial-mortgage backed securities, a younger cousin in the structured finance family.
“It’s pretty much gone,” says Wharton real estate professor Todd Sinai, speaking about the current state of CMBS issuance. “The liquidity crunch is across the board.”
The market for CMBS — packages of pooled loans backed by mortgages on office buildings, industrial properties, malls and other retail centers, and apartment buildings — has been ravaged by market conditions since last fall. In the first six months of 2007, 39 deals totaling $137 billion were brought to market and successfully sold, from the highest rated (triple-A) bonds down to the riskier, higher-yielding and lower-rated classes of bonds called B-pieces. Through mid-July 2008, only nine deals totaling $12.1 billion have been completed, a drop in issuance of more than 90%. No CMBS deal has been completed since a $1.27 billion offering from Banc of America Securities on June 19. There are currently no CMBS deals on the market.
Sinai believes there is little interest in the CMBS packages because they include both very secure and very risky bonds at a time when the market for the riskier elements is practically non-existent. Like their residential mortgage cousins, the CMBS are packaged in tranches, or layers, to offer protection for some buyers and higher yields for others. Without a market for the high-risk, high-yield layers, the overall package can’t sell. What’s more, Sinai says, for those deals sold so far this year, prices have been based on very few transactions, further distorting the market that had been steadily growing and stabilizing during the past decade. Due to the inactivity, “You don’t even really know where the market is,” Sinai adds. “All of the CMBS issued this year [were underwritten] in 2007, and only got unloaded this year.”
CMBS prices have plummeted, while yields, as measured in basis points over swap rates, have skyrocketed. As the CMBS market expanded, investors drove up prices for 10-year triple-A rated bonds. In their headiest days, in the three years leading up to summer 2007, those bonds were yielding consistent and reliable returns for CMBS investors, according to data from Commercial Real Estate Direct, an online news and information service based in Newtown, Pa. But these same securities are quoted today at prices that market watchers say are severely out of proportion to their value. These prices, or “spreads,” are the difference between the swap rate on a bond and the yield on a government bond of the same maturity, representing the risk associated with the investment. The lower the number, the better the price (and the tighter the spread).
Contagion, Plus
Joseph Gyourko, chairman of Wharton’s real estate department and director of the Samuel Zell and Robert Lurie Real Estate Center, says the CMBS market “took a huge hit around the same time as the credit crunch last August,” and the data bears that out. Blue-chip CMBS went from 26 basis points over swaps in July 2007 to about 70 basis points in September. Spreads eclipsed the 100 basis points threshold in late November and ballooned to their widest point in March 2008.
“Some of it was contagion from subprime,” Gyourko says. “The blowup in the housing market affected the commercial market, mostly for not very good reasons.
This was posted last week and the sampling was presumably performed a couple of weeks ago, but I am posting it to illustrate that public focus on these issues is increasing.
U.S. EPA to sample indoor air at Oakland homes, businesses near former plating shop
Release date: 07/23/2008
Contact Information: Wendy Chavez, 415/947-4248, chavez.wendy@epa.gov
High levels of VOCs found underground in Oakland
(San Francisco, Calif. — 07/23/08) – On Friday, the U.S. Environmental Protection Agency will begin testing the air inside several nearby homes, an adjacent business, and a day care center near the former Lane Metal Finishers site, where high levels of volatile organic compounds were found underground in Oakland, Calif.
Department of Toxic Substances Control scientists discovered elevated levels of VOCs in five samples taken at eight feet below the surface of the former metal plating site located at 30th Street & San Pablo Avenue. DTSC contacted the EPA to sample the indoor air to see if contaminants in the soil have migrated and are accumulating in nearby homes and businesses.
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“Because of the unknowns below the surface of the rest of the site, the EPA will sample the indoor air as a precautionary measure,” said Bret Moxley, the EPA’s on-scene coordinator. “The EPA and DTSC are working together to make sure that VOCs are not accumulating indoors, and if needed, will take the necessary steps until the situation is remedied.”
The underground samples showed very high levels of VOCs, particularly trichloroethylene (TCE), cis-dichloroethene, trans dichloroethene and vinyl chloride in the soil vapor. Soil vapor is in the spaces between the grains of sand or soil underground. Soil vapor can move through soil, but does not move as easily through clay and silt as it does in sandy soil. This site does have several clay layers in the soil which may have reduced the migration of the soil vapors.
Once under a home or other building, it is possible for vapors to come up through cracks in foundations and accumulate inside. If indoor VOC levels are high enough, it can create a health hazard for residents, especially children and pregnant women.
Soil, soil vapor and groundwater contamination at the Lane Metals facility is most likely the result of solvents used as degreasers during plating operations on the site dating back to the 1950s. The solvents are not uncommon at plating shop sites. DTSC has been overseeing the investigation of the site since June 2007.
This article was Published by the Los Angeles Times today and is interesting considering the controversy surrounding perchlorate in soil and groundwater here in California. The Santa Ana Regional Water Quality Control Board and water supply agencies in San Bernardino and Riverside Counties have an especially heightened state of awareness about perchlorate due to their involvement with the 160-acre site in the Rialto-Colton groundwater basin.
By John Johnson Jr., Los Angeles Times Staff Writer
August 6, 2008
New soil chemistry tests by NASA’s Phoenix Mars lander have unexpectedly uncovered evidence of perchlorate, a highly reactive salt found naturally on Earth and used in a variety of products, including fertilizer, fireworks and rocket fuel, scientists said Tuesday.
The finding has surprised scientists evaluating results from Phoenix, but they denied that the presence of large amounts of the salt would render Mars uninhabitable.
“It might even be a positive” indicator for habitability, said Peter Smith, principal investigator on the Phoenix mission.
On Earth, perchlorate is found most abundantly in the surface soils of Chile’s Atacama Desert, which coincidentally has long served as a Martian stand-in for researchers trying to understand conditions on the Red Planet.
The 600-mile-long strip of land in Chile is about 50 times drier than Death Valley. Even so, it is not uninhabited. Microbes flourish there, and some life forms even feed on the perchlorate in the soil.
“This is an important piece in the puzzle” surrounding Mars and its ability to sustain life, Smith said at a media briefing in Tucson, where much of the Phoenix research is based at the University of Arizona. “In itself, it’s neither good nor bad for life,” he said.
Perchlorate was first detected several weeks ago with Phoenix’s onboard wet chemistry lab, which mixes water from Earth with Martian soils.
The scientific team held back the information while researchers tried to confirm the finding with a second onboard instrument, known as the thermal and evolved-gas analyzer, which can heat the soil up to 1,800 degrees Fahrenheit to determine its exact chemical composition.
Those tests remain incomplete, but NASA decided to publicize the perchlorate discovery Tuesday after word spread that the agency was hiding evidence that Mars was hostile to life.
The scientists Tuesday denied that they were being secretive, saying they simply wanted to consult with other scientists before publicizing the data.
Researchers said they were initially startled by the size of the chemical signal. Because it was so large, they at first discounted it, thinking the instrument had developed a problem.
Some scientists thought the device might even be picking up contamination from the rocket engines that carried Phoenix across 200 million miles of space from Earth to the vast, rolling northern plains of Mars.
But on Tuesday, the scientists tended to discount contamination because the craft’s descent engines use hydrazine, not chlorine. Also, no perchlorate was found when Phoenix calibrated the wet chemistry lab after its landing May 25 on the Red Planet.
The wet chemistry lab is a set of four beakers into which water is injected to mix with the soil. A collection of 26 sensors then samples the mixture to analyze its contents.
Because perchlorate is so soluble in water, it is rarely found in surface soils on Earth. Even though Phoenix is sitting atop a vast underground sheet of hard-as-concrete ice, it hasn’t rained on Mars in billions of years.
As well as confirming the wet chemistry finding with the TEGA instrument, the scientists are trying to understand the mechanism that could deposit such large amounts of perchlorate on the surface.
The only other chemistry done on Mars was by the twin Viking landers in the 1970s. They found possible evidence of peroxide, a very different compound.
Because Phoenix is stationary, it won’t be possible to determine how widespread these varieties of soils are. That must wait for the giant Mars Science Lab, scheduled for launch in 2009.
john.johnson@latimes.com
This was reported in the Sunday July 27, 2008 edition of the LA Times:
Does your new dream home come with dangerous hidden extras — like a seeping oil well in the backyard or a former meth lab in the bedroom?
By Diane Wedner, Los Angeles Times Staff Writer
July 27, 2008
It’s in the tank. Up in smoke. Biting the dust.
The real estate market?
No. The toxic substances in the water, air and dirt enveloping many Southern California properties. With leaky oil wells in backyards, solid-waste landfills near homes and abandoned meth labs in residential areas, it’s a wonder Southland residents aren’t neon.
“California . . . has thousands of waste sites that were contaminated either by industrial, agricultural or past military uses,” said Angela Blanchette, a spokeswoman for the California Environmental Protection Agency’s Department of Toxic Substances Control.
“Some towns don’t have much to worry about,” said Ralph Kephart, president of Long Beach-based GeoAssurance Inc. and an expert in mapping natural and environmental hazards statewide. “But some towns have been abandoned because of toxic spills.”
So when thinking about purchasing that perfect house near a onetime military base, dry cleaner or property that’s been empty for a while, experts advise paying a private company $50 to $150 for a detailed environmental hazards report or searching for free online information about the neighborhood from government agencies. Unknown environmental hazards are not included in the blizzard of paperwork buyers read at the close of escrow, so consumers bear the burden of uncovering the potential presence of noxious substances themselves. And there are plenty.
Although hundreds of so-called brownfield sites are now cleaned up and put back to productive use, according to Blanchette, hundreds still are awaiting cleanup and redevelopment. As of mid-July, her department listed more than 2,000 toxic-waste sites statewide. These figures do not include all of the federal Superfund sites or those under other state jurisdictions.
There are nearly 24,000 oil wells in Los Angeles and Orange counties, many properly abandoned but many not, according to the state Department of Conservation. And in 2007, 83 methamphetamine labs in Los Angeles, Orange, Riverside, San Bernardino and Ventura counties were identified by the state and cleaned up — just the tip of the iceberg, experts say, because many labs go undetected.
Sounds pretty nasty. Guillermo Mata, 31, knows first-hand just how nasty. The construction equipment sales rep considered buying a bank-owned duplex in Long Beach two months ago, until he walked upstairs and realized he had stumbled into a former meth lab.
Signs of trouble
The home had been vacant for some time and had become a “total, disgusting wreck,” he said. Some foreclosed properties are targeted by meth producers as “fly-by-night meth labs,” said Corey Yep, senior policy analyst for the state’s toxic substances control department. They’re not known to the police but are discovered by agents or buyers walking through.
When Mata and his agent, Autumn Anderson, entered the top unit, they saw a hole in the ceiling, through which a crude vent had been installed. The walls were stained and the house stank, all telltale signs of meth production.
Even though the price was right — about $355,000 — Mata said it would have cost $100,000 to make the duplex habitable. “The last thing I wanted was a rental unit where kids would get sick,” Mata said.
Meth labs produce solvents, acids, phosphorous, iodine and metals, which can result in respiratory problems, skin and eye irritation, headaches, nausea, lung damage and body burns. They recently were among the biggest health threats to homeowners, according to Cal/EPA, but that danger has waned as production has moved to Mexico.
California passed legislation in 2006 requiring that owners of meth-contaminated homes clean them up. Local agencies oversee the work and give the owners written confirmation of the completed job, which can cost between $5,000 and $100,000, depending on the level of contamination, Yep said. Contractors hired for the cleanup should be trained in hazardous-waste remediation. The state Department of Consumer Affairs provides a list of licensed contractors.
Yep recommends that home buyers check with local law enforcement agencies to see if the property they’re considering is on a list of former meth labs, and ask neighbors about any activity on the block.
“Use your senses,” Yep said. “Look outside for dead patches in the grass,” where chemicals may have been dumped.
Like meth labs, oil wells may harbor hidden menaces, unknown to a buyer until trouble comes calling.
Although thousands of the region’s wells — dating to the 1920s or earlier when abandonment rules were nonexistent — are properly capped and pose no threats, many still are buried in homeowners’ backyards and require attention when leaking methane gas rises to the surface or the water becomes contaminated. Depending on the depth of the well and remediation involved, it can cost tens of thousands of dollars to fix.
Lee and Barbara Shoag, veteran real estate agents, purchased a home in 2004 in Long Beach, their primary sales territory and a city with a long history of oil wells. After paying architectural and city permit fees for a remodel, they were instructed to consult with the state’s Department of Oil and Gas, which concluded there was an idle buried well on the property that had to be properly capped before construction could commence.
The job, they were told, would require drilling down 3,200 feet, bringing in a cement truck, hauling in a 4-inch-thick water line and filling the well with cement to avoid methane gas leaks. The cost: $70,000.
The Shoags hired a geo-tech company to locate the well and drive stakes into the spot, Barbara said. However, the couple, not wanting to invest such a large sum in the cleanup, ditched the project, made some cosmetic fixes to the house and sold it as-is — after disclosing the existence of the oil well — to a buyer to whom they offered “a deal.”
“My husband got a lot of gray hair over this,” Barbara Shoag said.
Meth labs and oil wells are one thing. Leaking underground storage tanks and toxic landfills identified as Superfund sites and mandated by the government for cleanup are another. Superfund sites — there are 23 federal and at least 100 active state sites in Southern California — often are huge and can take years to clean up.
Homes near dumps
The so-called McColl site was a 22-acre waste disposal facility in Fullerton contaminated with oil-refinery acid sludge, among other toxins. In 1960, the western portion was covered so the Los Coyotes Country Club Golf Course could be built there. In 1968, a number of homes went up on the eastern side, one of which is less than 100 feet from the site. More than 6,700 people live within three miles of the area, according to the state’s toxic substances control department.
Following complaints from residents about odors and health problems, local, state and federal agencies investigated the dump. They discovered that soil and groundwater there contained dangerous chemicals. After a federal cleanup that took 13 years, the job was completed in 1997. The agency continues to check the site and assess risks to human health.
Important as it is to many residents to know they live near once-teeming toxic-waste sites, there still are “some people who don’t want to know,” said Ken Thornburgh, an industrial hygienist, toxicologist and safety engineer with Westlake Village-based American Environmental Group. For sellers, “it impacts the value of your house, and there’s stigma that goes along with it.”
Although California sellers are required to know about and report to potential buyers the natural hazards — floods, fires and earthquakes — in their neighborhoods, they are not required to investigate or disclose environmental hazards of which they are not aware, said June Barlow, vice president and general counsel for the California Assn. of Realtors. That may include waste from an auto-body shop down the street 30 years ago or the corner mini-mall that was once a metal-polishing company.
CAR provides a booklet, available to clients from agents, describing potential environmental hazards, which the industry trade group recommends buyers and sellers read. There is a host of companies, such as Environmental Data Resources Inc., GeoAssurance Inc. and National Disclosure Authority, that will, for a fee, provide reports to individuals and businesses about the known contamination sources in a neighborhood. That information can help owners and buyers take measures to ensure their family’s safety.
“If you’ve got contaminated water tables, you can get a water filtration system,” said Farah Nourmand, chief legal officer for National Disclosure Authority. Or if a home is “near a landfill that is on a Superfund” list, shop elsewhere.
Once that house is found, there are other, less dramatic hazards to consider. Buyers of new, mobile, manufactured and recently remodeled homes are advised to check for formaldehyde, which may be found in cabinetry, building products and furniture. Home test kits are available for about $90, according to the state’s Air Resources Board.
Buyers of older homes should have professionals check for asbestos and lead-based paint, and all homes should be tested for the presence of radon, experts say.
Buyers who purchase properties on which oil wells or contaminants are discovered are advised to use one expert to inform them of the existence and extent of the problem and another to remove it. Get more than one bid for remediation.
“It’s best to find these things out before signing a purchase contract,” Long Beach agent Lee Shoag said. “Environmental reports are relatively cheap. It can cost a bundle in cleanup fees, lost equity and sometimes legal fees, however, if the hazards are discovered afterward.”
The Economic Development Agency (EDA) of the City of San Bernardino has been awarded $400,000 in grant funding from the United States Environmental Protection Agency (EPA) to develop an inventory of potential and actual Brownfields sites contaminated by hazardous substances and/or petroleum, to conduct environmental site assessments, and to support community outreach activities.
A Brownfields site is defined as an abandoned, idle, or under-used industrial or commercial facility where expansion or redevelopment is complicated by real or perceived environmental contamination. The goal of the EPA grant is to identify and address environmental contamination issues so that Brownfields properties can be readied for reuse and redevelopment. For the property to be eligible for remediation grant funding, there can be no financially viable responsible party connected to the
Brownfields site.
EDA is currently soliciting sites to include in this grant funded program, and is accepting public comment and site nominations for Brownfields sites within the grant’s predefined study area of the City until 4:00 p.m. Friday, September 12, 2008. The study area of the City is bounded on the North by 9th Street, on the West by Pepper Street, on the South by Mill Street, and on the East by Tippecanoe Avenue (see map).
A public meeting to present the work plan and receive public comment and site nominations is scheduled for Monday, July 28, 2008 from 6:00 p.m. to 7:30 p.m. in the Economic Development Agency Board Room.
Public Meeting:
Date: Monday, July 28, 2008
Time: 6:00 p.m. to 7:30 p.m.
Where: Economic Development Agency of the City of San Bernardino
EDA Board Room
201 North “E” St., Suite 301
San Bernardino, CA 92401
Another way to comment on the grant work plan and/or to nominate potential
Brownfields sites is to contact:
Kathleen Robles, Project Manager at:
Economic Development Agency of the City of San Bernardino
201 North “E” St., Suite 301
San Bernardino, CA 92401
Email: krobles@sbrda.org
Phone: 909-663-1044
Fax: 909-888-9413
www.sbrdaprojects.org/Brownfields
Comments/nominations are to be received by 4:00 p.m., Friday, September 12, 2008.
