re: Delaware Refinery -- from dirty, old and out of business to green, new and DE jobs

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PRI: NORMAL

FROM:

W

wade@nextfuels.com

DATE:

2010-01-19 01:28:13

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<RUo3MTg3TyNTWUdXWltJMTE4MjQ4MDA5@WadeRandlett>

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TO:

C

Christopher Putala <cputala@putalastrategies.com>

H

Hunter Biden <hbiden@senecaga.com>

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<DIV>Thanks, Chris, exactly right.</DIV>
<DIV> </DIV>
<DIV>Hunter, this could be one of the great public-private partnerships of all time if we do it right. There are two key components:</DIV>
<DIV> </DIV>
<DIV>1. Delaware's Economic Development Department needs to take 25% of the $100,000,000 they just got from Valero and loan it back to us to retrofit the old oil equipment and make it state of the art Green Diesel technology.</DIV>
<DIV> </DIV>
<DIV>2. We need to get it done in 2010 before the Recovery Act renewable energy tax incentives expire for projects like these.</DIV>
<DIV> </DIV>
<DIV>The rest is up to us to make it a profitable enterprise.<BR></DIV>
<DIV>I would expect DE to get its loan repaid within 12 months, though I'd certainly set expectations longer than that for safety's sake.</DIV>
<DIV> </DIV>
<DIV>At the minimum level of investment, we would be able to create 50-100 green tech jobs in the short term, and I would expect us to be able to hire back almost all of those jobs from the previous plant employees. I would also expect that 100% of the retrofit funds would be spent on advanced green tech manufacturing equipment made in the USA. We would be able to scale up to create as many new jobs as the refinery lost if we were able to find the public or private investment for that expansion, or, over time, fund it out of profits, which we would be eager to do. Again I would keep that private until we are absolutely certain that we can deliver on what we promise.</DIV>
<DIV> </DIV>
<DIV>For this project, we have reserved a 5.00% equity stake for our on-the-ground partners who manage local public affairs issues, and we would look to you for guidance on how to deploy that start-up equity.</DIV>
<DIV> </DIV>
<DIV>Last, my partners and I would work for free until the project is generating positive cash flow and paying down DE's upgrade investment, so there's no risk of it looking like a public subsidy of executives who get upside but no downside.<BR></DIV>
<DIV>Let me know what you think and let's do a call shortly if you're interested in pursuing the opportunity.</DIV>
<DIV> </DIV>
<DIV>Best,<BR>/w <BR>-------------------------------<BR>Wade Randlett</DIV>
<DIV>Co-founder</DIV>
<DIV>NextFuels, Inc.<BR>381 Bush Street<BR>Suite 300<BR>San Francisco, CA 94104<BR>415-397-3767<BR>415-397-3768 fax<BR></DIV></FONT>
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<DIV>----------------------- <B>Original Message</B> -----------------------</DIV>
<DIV> </DIV>
<DIV><B>From:</B> chris putala <A href="mailto:cputala@putalastrategies.com"><FONT color=#0000ff><cputala@putalastrategies.com></FONT></A></DIV>
<DIV><B>To:</B> Hunter Biden <A href="mailto:hbiden@senecaga.com"><FONT color=#0000ff><hbiden@senecaga.com>,</FONT></A> Wade Randlett <A href="mailto:wade@randlett.com"><FONT color=#0000ff><wade@randlett.com></FONT></A></DIV>
<DIV><B>Cc:</B> </DIV>
<DIV><B>Date:</B> Mon, 18 Jan 2010 19:27:17 -0500</DIV>
<DIV><B>Subject: <U>Delaware Refinery -- from dirty, old and out of business to green, new and DE jobs</U></B></DIV>
<DIV> </DIV></DIV><FONT face="Calibri, Verdana, Helvetica, Arial"><SPAN style="FONT-SIZE: 11pt">Hunter --<BR><BR>Per our conversation of a few weeks ago, Wade has been working through the technical and business cases on retrofitting and repurposing the Delaware refinery to handle biodiesel.<BR><BR>Technical case seems good — the most experienced retrofit company, Triton, thinks it possible and economic; the new equipment necessary is made by Honeywell in Illinois (how many DE-IL connections do we need!), not rocket science.<BR><BR>Business case also promising, but, and I am oversimplifying, there probably needs to be some seed money ($25m?) and this needs to happen in 2010 for tax reasons. Interestingly, Valero has already paid at least $100m to DE state econ development board — so there may be a DE gov funding source.<BR><BR>Bottom line, I think you and Wade should talk about the details, but sounds like a potentially interesting project that could pay real benefits to Delaware. <BR><BR>Best to you both,<BR><BR>cp<BR></SPAN></FONT><FONT color=#0000ff><FONT face="Times New Roman"><SPAN style="FONT-SIZE: 12pt"><B><BR>Chris Putala<BR></B>Principal<BR></SPAN></FONT><SPAN style="FONT-SIZE: 12pt"><FONT face="Century Gothic">PUTALASTRATEGIES<BR></FONT><FONT face="Times New Roman"> p: 202.210.9200<BR> f: 202.315.2640<BR> <I><A href="cputala@putalastrategies.com">cputala@putalastrategies.com</A><BR></I></FONT></SPAN></FONT><FONT face="Calibri, Verdana, Helvetica, Arial"><SPAN style="FONT-SIZE: 11pt"><BR><BR></SPAN></FONT></BODY></HTML>

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