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Refinery clears another hurdle

March 27, 2007

Arizona Clean Fuels can check off another item on its "to-do" list.

The company has received title to the property where it plans to build an oil refinery in eastern Yuma County.

Arizona Clean Fuels has purchased 1,460 acres from the Wellton-Mohawk Irrigation and Drainage District for a total of $14,681,100, the Yuma County Assessor's Office confirmed Tuesday.

The sale closely followed a transfer of the land Monday from the U.S. Bureau of Reclamation to WMIDD.

The land transfer was authorized in the Wellton-Mohawk Title Transfer Act, passed by Congress on June 20, 2000, and signed into law by President Bill Clinton.

The intent of the act was to transfer ownership to WMIDD of the land and facilities for the Gila Project, the irrigation system BOR built. Since completion in 1952, WMIDD has operated the irrigation system and repaid BOR for the development cost.

The act also authorized WMIDD to purchase additional acreage to control development and protect agriculture served by the district.

A portion of that land later was selected for the refinery site, and WMIDD agreed to sell it to Arizona Clean Fuels at the price the district had to pay for it.

"In January, I had predicted we would get the deed in the first quarter," said Charles Slocum, WMIDD manager. "We did it with just four days to spare."

The land acquired by Arizona Clean Fuels for the refinery is bounded by an irrigation canal to the north, Interstate 8 to the south, Avenue 46E to the east and approximately Avenue 44E to the west.

The land transfer "is yet another accomplishment of many," said Ian Calkins, spokesman for Arizona Clean Fuels. "There are a number of stages to the development. We can put this step behind us."

The proposed refinery would be situated in about the middle of the property at approximately Avenue 45E, Calkins said. The company sought extra property for a variety of potential future uses, such as housing for construction workers, ancillary industries and businesses and possible refinery expansion, he explained.

While the land transfer is a major step, the company has been working on several others as well, Calkins said. As achievements to date, he pointed to the company receiving its air quality permit from the Arizona Department of Environmental Quality, getting the approval from the Mexican secretary of energy for pipeline access across Mexico and reaching a memorandum of understanding with WestPac Pipeline to develop the crude oil pipeline.

The company also is in the final stages of initiating a contract with an equity partner to help provide financing for the estimated $3.5 billion refinery. And it is in advanced negotiations with Canada to supply crude oil, as well as contractors to build the refinery.

The plan is to ship the crude oil from Canada to Punta Colonet on the west coast of Mexico in Baja California, then transport it by pipeline to the refinery, Calkins explained.

Other remaining steps are obtaining contracts for buyers of the fuel the plant would produce, continuing to work on the plant's design and engineering, completing the permitting process for the pipeline both in Mexico and in Yuma County and going through the Yuma County zoning and building permit process.

"All parts of the project are moving forward in tandem," Calkins said. "We knew going into the project that there were a lot of things to achieve. We've tackled the things we could to keep the project moving forward.

"The pieces are finally falling into place," he said.

Calkins said he remains hopeful construction will start on the refinery in early 2008.

"We remain optimistic. We still anticipate starting up operation by late 2011."

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