Monday, March 1, 2010

To option or not to option, that is the question

<$BlogMetaData$>March 3rd, 2010

To option or not to option, that is the question:

If you have been following my column closely, you will see that the refinery is in a predicament. I think it was in my last article that I mentioned Governor Rounds said he was told by the developer that it would be shovels in the ground in 2012. I even got a letter from the governor confirming this date and he said in the letter that the developer was Hyperion. Now - -Hyperion’s options run out on August 31, 2010 so that means that Hyperion has a problem. If they contact all the people that have optioned their land and ask them to re-option again what do you suppose their answer will be. What would your answer be now that you know what is proposed to be built on the land. I think the proverbial answer is - - they have Hyperion over the oil barrel.

Here is an idea that hasn’t been broached for awhile. We all know that Hyperion is brokering the deal for the refinery and they hold the options. They can’t get investors because the big guys want in and if the big guys wait till the options run out, they can come in and buy this and not have to pay Hyperion a finder’s fee. Instead of paying $20,000 an acre to Hyperion they can buy it outright for let’s say $10,000 an acre and still come out ahead. Does that make sense to you? I’ll bet it does to Hyperion.

I know that if I were in that situation I would be asking Randy Golden prices. ‘Sure Al, for $50,000.00 an acre I’ll option this to you’. You see, before some of the people weren’t sure what was coming, but now they do and they would be crazy not to ask for the moon. Now, Hyperion either has to buy the land or let it go. Let’s all hope they let it go back. Course if Hyperion gets backed into a corner they will just up and auction it off, because they can’t find a buyer. I think the average going price for land in this area is around $7200. So Hyperion still comes out, but if they need help to find buyers, I’m sure they would get plenty of help. Oh what a shame. This certainly is a dilemma isn’t it?

Hyperion is really starting to feel between a rock and a hard place. I wouldn’t doubt that we might even see ‘Big Al’ himself up here talking to folks. After all he has a vested interest to protect and the governor is right there with him. Just to be on the safe side, let me give you some facts to back this all up.

An article appeared recently in the Wall Street Journal. In the article, Chevron is quoted as telling employees they are going to cut jobs because production is down. Chevron stopped supplying gas and oil to over 1000 independent owned stations. Conoco Phillips is facing the same issue. Exxon Mobil is also reporting losses. Valero shut down a 220,000 b/d operation in Delaware.

Now in the midst of all this is the United States ambassador to Canada speaking in Toronto saying the U.S. needs tar sands oil. He said ‘if we’re looking for long term safe and secure sources of energy, Canada and therefore the oil sands need to be a part of it.’ This guy needs to talk to Obama cause if the President intends to cut back on carbon emissions, tar sands are the first to go.

There is an environmental group called ForestEthics that is getting large corporations in the United States to boycott any company that uses tar sands and more are on the books. Whole Foods Markets Ltd., and Bed Bath and Beyond have started the boycott. They have told fuel suppliers they will not used them if they try to sell tars sands processed gasoline. Hurray!

Here is another bill in the state legislature you might want to follow. HB 1153 repeals the requirement that the railroad obtain authority from the Governor or the Transportation Commission before the railroad may exercise the power of eminent domain. What the heck is going on out there in Pierre? Last week it was the townships and this week it is eminent domain. Somebody forgot to tell the legislature that this ain’t gonna happen. Good thing our representatives aren’t sponsoring these whacky bills. Do you think they will vote against this when it comes to the full floor of the legislature? They will if you tell them to.

Trivia Question: Why did Huddleston contributed $5,000 to John Thune’s PAC back in January of 2006? There is a long chain between South Dakota and Huddleston. Back in January of 2006 Huddleston contributed $5,000 to Thune’s (Heartland Values PAC campaign). No link says Thune..right!

Here is an interesting happening with the commissioners. The SD DOT held a bid letting for replacing a bridge and culvert in Prairie Township and the commissioners voted 4-1 to approve the contract. This bridge is in Prairie Township, and they don’t even want it replaced because it is a ‘bridge to nowhere’. Nobody lives on the road and it is hardly ever used. But they voted to do it anyway. The county’s portion of the bill is 20% of $247,000. This - for a bridge they don’t even want. This is another reason I’m running for commissioner.


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