Following several months of ongoing discussions with Frontier Oil and Refining Company (“Frontier”) and other manufacturers of phenol and acetone, The Plaza Group is pleased to announce today the transition of its phenol and acetone supply from the Frontier El Dorado refinery to at least two other producers under long-term marketing arrangements. Details on these arrangements will be announced soon.
This announcement was made in conjunction with Frontier’s decision to discontinue production of phenol and acetone in order to concentrate on the production of fuel products. This shutdown will take place at Frontier’s El Dorado, Kansas refinery, effective no later than April 2002. This announcement does not impact The Plaza Group’s exclusive marketing arrangement on toluene with Frontier from that same refinery.
The Plaza Group’s president, Randy Velarde, commented on the changes saying, “Over the past several months we have worked with Frontier toward a successful conclusion of phenol and acetone operations. We understand and respect their desire to produce greater amounts of fuel products, especially given the performance of this business in recent times. We look forward to a continued association with Frontier in the years ahead.”
“We also knew that this was a good time to seek alternate supply and in fact, had been contacted by other producers seeking our expertise. However, the bottom line was to insure that our loyal customers of these products would be able to continue to be served and grow with The Plaza Group for many years to come. We therefore identified and commenced discussions with producers of phenol and acetone that fit our profile of a producer that does not maintain a major marketing organization for these products. We are pleased that with the impending announcements, not only will this commitment to our customers be met but we will seek continued growth in these businesses. This seamless transition of supply will start early next year.” He goes on to say, “We also hope to work with Frontier for the disposition of their benzene in the future.”
Frontier’s decision was based on the demands of the respective markets which, at this time, indicate that the full production capacity of the El Dorado refinery would be better used to produce a greater amount of motor gasoline and other fuel components, which are Frontier’s primary businesses. The production of phenol and acetone currently comprises just over 1 percent of the refinery’s total capacity of products.
Because Frontier’s acetone and phenol production represents 2 percent or less of total U.S. production, the shutdown is not expected to have an impact on these markets. Current operating rates for these products is in the low 70 percent range due to significant new capacity brought on-line in the last few years.
Recent annual production numbers of the (to be) discontinued products include 110 million pounds of phenol, 67 million pounds of acetone, and 2 million pounds of alpha methyl styrene (AMS). All of the cumene produced on site was converted into derivatives in recent years.
The Plaza Group entered into its original supply agreement with Texaco Refining and Marketing, which previously owned the El Dorado facility, in 1994. In 1997, the facility became part of Equilon, a newly formed joint venture between Texaco Refining and Marketing Inc. and Shell Oil Products. Finally, in 1999, the refinery was purchased by Frontier. The Plaza Group has been the sole marketer of El Dorado’s chemical intermediates from 1994 to present.
Frontier, a Houston-based independent refining company, operates a 110,000 barrel-per-day refinery located in El Dorado, Kansas, and a 41,000 barrel-per-day refinery located in Cheyenne, Wyoming. Frontier markets its refined products principally along the eastern slope of the Rocky Mountains and in other neighboring plains states. Frontier’s common shares are listed on the New York Stock Exchange. For more information on Frontier, visit the company’s web site at www.frontieroil.com.