Wawa Port of Wilmington Deal

Published in CSP Daily News

Retailer partners with Magellen Midstream, Chevron for fuel storage, supply

WILMINGTON, Del. -- Wawa Inc. and its partners unveiled giant fuel-storage tanks at the Port of Wilmington, Del., on Monday, an indicator of the convenience store chain's growth in the regional gasoline market, reported The News Journal. Wawa is leasing 11 new tanks and two older ones from Magellan Midstream Partners LP, which transports refined products through terminals in 22 states; 10 of the tanks at the port are for storing gasoline and three are designated for ethanol storage. Collectively, they will store more than one million barrels of fuel, said the report.

Wawa [image-nocss] is working with Chevron to import most of the gasoline, already refined, from Wales in the United Kingdom, the report added. Wawa pulls its trucks up to the site, and workers blend the gasoline and ethanol as they load the trucks, creating E10.

The retailer has 262 c-stores that offer fuel, spread across Delaware, Maryland, Pennsylvania, New Jersey and Virginia. The chain has 34 gas stations in Delaware, employing 1,021 people, that will be served immediately by the tanks at the port; 60 stores are being supplied by the tanks initially, Howard Stoeckel, president and CEO of Wawa, told the newspaper.

"This initiative provides extra storage to supplement Wawa's current access to fuel for our gas stores. This additional capacity expands Wawa ability to secure fuel supply for our stores and continue providing fuel to our customers at the best possible price," the company also said in a statement provided to CSP Daily News.Prior to using Magellan, Wawa supplied its stations from various oil refiners, such as Sunoco and Valero, which both have refineries in Delaware, and also piped in gasoline from outside the area. But officials with the chain told the paper that sales have grown so much that they need a more predictable supply.

Wawa will continue to use sources other than Chevron, but "this is what we call the hub of our distribution network," Jim Bluebello, vice president for supply chain for Wawa, told the News Journal. "The only way you can be profitable in a business is if you can control your supply."

Bluebello said Wawa needed to create the blends to satisfy federal laws. Wawa has an option to fill 20% of the gasoline capacity in the tanks from suppliers other than San Ramon, Calif.-based Chevron, said the report.

Tulsa, Okla.-based Magellan purchased the facility at the port in 2005 and already had the capability to store and distribute heating oil, ultra-low-sulfur diesel, heavy fuel oil and marine diesel oil. About two months ago, it loaded up its first truck of gasoline for Wawa.

Magellanprovided CSP Daily News with details ofthe Wilmington expansion project: $72 million project (approximately $10 million of which was for ethanol infrastructure). 11 new storage tanks. 1.2 million barrels (1 barrel = 42 gallons) of additional gasoline and ethanol storage. New storage includes 178,000 barrels (7.5 million gallons) of ethanol storage. Other tanks can be easily converted from gasoline to ethanol storage. State-of-the-art truck loading rack. New dock facility. Total of 34 tanks at the terminal: 2.84 million barrels of storage. Capable of distributing gasoline, ethanol, ultra-low-sulfur diesel, heating oil, heavy fuel oil and marine diesel oil. 18 Magellan employees in Wilmington. Senator Tom Carper (D-Del.), who was on hand for a ceremony, told the paper that the facility will help bring revenue into the port and help the broader economy.