Matters of Public Interest
Government agencies rely upon Baker & O'Brien's extensive industry experience and technical expertise to analyze matters of public interest. Our consultants have assisted Federal, state, and local government agencies in evaluating diverse issues such as responsibility for Superfund remediation, pipeline right-of-way issues, and the valuation of industrial properties. Baker & O'Brien's independent and expert conclusions, with respect to the fair and equitable treatment of these issues, have been presented in public hearings and at trial.
- Chemical Plant Fair Market Valuations for Ad Valorem Tax Appeals
Developed fair market valuations for two major chemical plant installations on behalf of the local appraisal district. The engagement included valuation by discounted cash flow, depreciated replacement cost, and comparable sales approaches, as well as a critique of the petitioner's methodologies and assumptions.
Ad Valorem Taxes, Physical Asset Appraisal, Pricing
- Refinery Product Delivered Cost Data
Assisted a client with the historical analysis of refined product supply patterns and costs in the U.S., with a particular emphasis on delivered cost of supply for transportation fuels. Provided five years of delivered product volume and cost data (by calendar quarter), for all major gasoline and distillate grades, for 85 U.S. markets, as produced and transported from over 130 fuels refineries.
- Preliminary Refinery Value Assessment
Established a preliminary valuation assessment of a refinery for a local taxation district. Assessment was used in initial discussions with the taxpayer.
Ad Valorem Taxes
- Refining and Marketing Privatization
Assisted a state-owned integrated oil company in Central Europe in completing a strategic planning study for its downstream refining and marketing business. The study considered potential markets and pricing for crude oil and refined products. Opportunities to optimize the operation and logistics of the company's refining and marketing system were evaluated in view of maximizing the value of the assets prior to privatization.
LP/Planning Practice, Physical Asset Appraisal
- Plastics Recycling Feasibility Study
Evaluated a small German refinery for potential conversion to a plastics recycling plant. Assessed technology, retrofit requirements, operating costs, and logistics. Presented economics, capital investment plan, and likely subsidy requirements to the board of directors.
Operations/Maintenance, Project Feasibility
- Independent Planning Consultant
In the early 1990s, a major oil company agreed to purchase a former Soviet block country’s refining and marketing assets. Additionally, there was an agreement to build a state-of-the-art grassroots refinery. Until the streaming of the grassroots refinery later in the decade, the oil company operated the existing refining assets on behalf of the national office of privatization. The role of the independent consultant was to ensure that the operation was not “optimized” at the expense of the country’s taxpayers. Participated in the preparation of monthly operating plans with the operating company and presentations to the national office of privatization over a two-year period.
LP/Planning Practice, Pricing
- Privatization of Olefins Plant
Evaluated an olefins plant for competitiveness in operating costs, yields, feed supply, and product marketing. Identified and documented strengths and weaknesses and presented the key initiatives, which would be needed to ensure a successful transaction. Estimated the fair market value.
Operations/Maintenance, Physical Asset Appraisal, Product Quality
- Bitumen Valuation Study
Developed a methodology using a marker crude oil to value bitumen at the production site. Methodology addressed differences in qualities (sulfur, acid number) and refining yields. Transportation costs from the valuation hub to the production site were developed. Blending methodologies were evaluated to develop bitumen blends for comparison to the marker crude oil.
Crude Oil Valuation, Pricing, Product Quality
- Evaluation of Refinery Operating Procedures
Acted as independent advisor in a dispute between a refinery and the Environmental Protection Agency following a period of excess emissions.
Industry Practice/Standard of Care, Operations/Maintenance
- Refinery Valuations
Prepared annual property values for several major refineries amounting to several billion dollars. Assisted with discovery, inspected each of the plants, and analyzed refinery operations and profitability. Assisted in negotiating settlements. Testified in public hearings before appeals boards.
Ad Valorem Taxes, Expert Witness/Testimony
- Fair Market Valuation of Refinery for Ad Valorem Tax
Fair market valuation of a major US Gulf Coast refinery for the local appraisal district. Provided a critique of the valuation methodology used by the refinery as basis for lawsuit seeking reduced ad valorem taxes.
Ad Valorem Taxes, Pricing
- Historical Refinery Waste Generation
Provided expert report on the probable types and amounts of wastes produced by a refinery during its 50-plus year operating life. Study was part of litigation involving assignment of responsibility for an EPA superfund site.
Environmental, Industry Practice/Standard of Care, Operations/Maintenance
- Ion-Exchange Resin Plant
Performed market study and competitive analysis of an ion-exchange resin plant on behalf of a major government agency bank. Study evaluated the financing of an ion-exchange resin manufacturer in the context of possible sale of the plant.
- Crude Oil Marketing Study
Assisted the U.S. General Accounting Office in evaluating the potential for marketing of Naval Reserve crude (Elk Hills) in markets east of the Rockies. Work included evaluation of breakeven refining values, assessment of yield and contaminant penalties, and analysis of the potential for supplying this crude to the Gulf Coast market.
Crude Oil Valuation, Pricing, Product Quality
- Bitumen Valuation
Reviewed historical supply and demand of high TAN crude oil to the U.S. Gulf Coast refineries and addressed future trends which would impact a TAN discount. Estimated a TAN discount using two methodologies: Market based approach and Return on Capital investment approach. Calculated the impact on bitumen value as a result of asphaltenes content. Calculated the value added by a diluent recovery unit in a Canadian Oil Sands upgrader.
PRISM Data or Analysis, Crude Oil Valuation, Pricing, Product Quality
- Cogeneration Plant Property Tax Dispute
Assisted municipality in developing preliminary value estimates for cogeneration facility under appeal. Work focused primarily on income approach values based on various forward pricing scenarios.
Ad Valorem Taxes
- Wholesale Trade Practices
Assisted a South American national oil company in reviewing trade practices for the wholesale marketing of petroleum products. Advised the client on wholesale price formation and marketing practices in free markets.
- Alberta Bitumen Valuation Study
Evaluated various approaches to valuing Canadian Oil Sands bitumen blends (DilBit). Approaches for valuation at a Hardisty, Alberta basis included: differential to a marker crude oil, refinery return on investment, parity to Mexican Maya and other approaches, including statistical regression. Evaluated approaches and potential marker crude oils and provided recommendations to client.
PRISM Data or Analysis, Crude Oil Valuation, Pricing
- Refinery Sulfur Study
Quantified the cost impact for Canadian refiners to comply with a 10 ppm average gasoline sulfur specification to comply with the U.S. Tier 3 gasoline regulation.
PRISM Data or Analysis, Environmental
- Alaska Refinery Evaluation
Assisted our client in evaluating the profitability of one of the refineries in Alaska. The evaluation provided inputs that were instrumental to the client in its ongoing discussions with a refiner regarding a long-term crude oil supply contract.
Commercial Terms Review
- Bitumen Valuation Dispute
Initial meeting with attorneys to provide B&OB background on previous bitumen valuation studies.
- Refinery Feasibility and Economics Study
Conducted an economic feasibility study for a proposed refinery in Central America. The study evaluated indigenous crude oil supply and imported crude oil, as well as expected product netback prices compared to the status quo of imports.
Pricing, Project Feasibility
- New Refinery Fatal Flaw Analysis
Provided an initial assessment to a local government body regarding the development of a 20,000 B/D refinery in North America. Interviewed the project team and reviewed project documents and identified potential concerns for the project progressing as envisioned. Prepared a written report of the key findings and concerns.
- Amortization Study
Prepared amortization studies for an oil and gas production facility in a non-conforming land use. Inspected onshore processing facilities and an offshore production platform to evaluate condition and determine facilities in use. Studied historical and projected cash flows using estimated production declines. Considered capital and operating expenses, as well as future development and abandonment plans. Provided economic scenarios in reports, presented findings in a public hearing, and assisted in settlement negotiations.
Commercial Terms Review, EPC-related, Expert Witness/Testimony, Offshore, Operations/Maintenance, Physical Asset Appraisal, Project Feasibility
- Appraisal Services
Provided appraisal services for industrial properties. The three standard methods of valuation used were: cost, income, and market approaches.
- Clean Fuels Studies
Modeled petroleum refinery operations to determine the impact of proposed ultra-low sulfur gasoline (ULSG) and diesel (ULSD) specifications on manufacturing costs. Provided reports to industry trade associations and government agencies.
PRISM Data or Analysis, Environmental, Product Quality
- Refinery Valuation
Provided expert witness testimony and reports regarding the fair market value of a multiple refineries in New Jersey over multiple years.
Ad Valorem Taxes, Physical Asset Appraisal