Spokane Journal of Business

Shell dumps INW pumps

About 45 stations shift to Exxon, ConocoPhillips after company pulls out

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Shell dumps  INW pumps
-—Staff photo by Linn Parish
Gas stations, such as Rich's Gas & Deli in Spokane Valley, have draped temporary signs over the Shell logo.

Shell Gas left the Spokane-Coeur d'Alene market in January, and dozens of gas stations are transitioning mainly to the Exxon or ConocoPhillips brands, say Inland Northwest gas station owners and suppliers.

Some of them have new signage already. Many have temporary signs draped over the Shell logo.

Bob Beal, owner of Spokane-based R&B Systems Inc., which owns or supplies six convenience-store gas stations here that formerly carried Shell gas, says, "If you include Northern Idaho, you're probably up to 45 stations that will be changing that Shell had in this entire region. When it's all said and done, it's going to be close to 50-50 (Exxon-Conoco). It might slant slightly to Exxon."

Whitley Fuel LLC, of Okanogan, Wash., with a major fuel distribution center warehouse in Spokane, owns five gas stations in the region that carried Shell gas, and it supplies fuel to another 20 formerly Shell-branded stations in Eastern Washington and North Idaho. Whitley Fuel part owner Brian Whitley says 22 of the 25 stations will now carry the Exxon brand, and three will become Mobil stations.

The station transitions are at various stages, but most will be complete in the next few weeks.

Attempts to reach a representative from Shell Oil Products U.S. were unsuccessful. Whitley says, however, that Shell withdrew from its terminals in Spokane, which supplied northeast Washington and North Idaho, and in Moses Lake for economic reasons.

"Shell was at an economic disadvantage," explains Whitley. "Their refinery is in Anacortes, (Wash.), and they had to ship product to Portland, barge from Portland to Pasco and then by pipeline to Spokane."

In contrast, ExxonMobil and ConocoPhillips both have refineries in Billings, Mont., that feed into Spokane via pipeline, industry representatives here say.

Shell's departure created an opportunity for Exxon and ConocoPhillips to gain much larger market share in Spokane and Coeur d'Alene. Prior to this transition, Exxon listed 15 sites in the Spokane-Coeur d'Alene area, Whitley says, and now that number will grow to about 35.

"Most major oil company contracts go under 10-year increments," he says. "It (the transition) allowed these operators to renew under Exxon."

Some other highly visible gas stations in the region, such as 32 stations under the Cenex Energy brand, also get their refined fuel supplies from Montana, says Mike Frame, with CHS Inc., the Minnesota-based energy, grains, and foods company that owns the Cenex Energy brand. In 2008, CHS bought Zip Trip convenience stores in the region, which today total 26 Cenex ZipTrips. It also supplies to six Cenex sites in Spokane and North Idaho such as Co-op Supply Inc. in Coeur d'Alene, says Frame, CHS' director of sales for branded refined fuels and lubricants for Cenex.

"For the majority of our supplies, we have a refinery in lower Montana and that refinery feeds the majority of the volume of the refined fuels for the Eastern Washington and Northern Idaho market," Frame says.

Overall, the trend is that most of the refiners are supplying retail stations directly around where they have refineries, he adds. "There is a pipeline that goes directly from Billings called the Yellowstone Pipeline that feeds the Spokane area. The majority of the retail gas stations in the Spokane area are fed off of the Yellowstone Pipeline that are branded Cenex, Exxon, and ConocoPhillips," he says.

R&B Systems distributes fuel to its stations here and also is a wholesale supplier to stations in Western Washington. Beal says five of the six stations he deals with here will brand with ConocoPhillips or 76, including three on the North Side and two in Spokane Valley. Another former Shell downtown will become an Exxon.

Today, 76 is owned by ConocoPhillips, and gas stations will sometimes be branded 76, for example, if a Conoco station already is located nearby, industry representatives explain. Both ConocoPhillips and Exxon own facilities here for fuel distribution, Beal says, which allow more competitiveness. "Chevron and Shell don't," he says.

As far as changing the gas stations' signs and image under ConocoPhillips, Beal says R&B Systems is only about half way through the process, primarily because of the weather and short notice from Shell. By the end of March to early April, "they'll look a lot sharper," he says.

Dave Nagra, a representative of the Nagra family, which owns 15 gas stations in Spokane and North Idaho that carried Shell previously, says the Shell signs for the Evergreen Gas and Grocery station in Spokane Valley, for example, are now covered with the business's name but new Exxon signs will go up soon. "Hopefully by the end of the month," Nagra says.

He says the change didn't cause any substantial out-of-pocket costs.

With the transition, Whitley says, most major oil companies, such as Exxon, offer incentives to station owners to help cut the cost of changing brands. The process involves coordinating with a contractor to change the image of the business.

Whitley also says that Exxon can offer more competitive prices because of its source from Montana.

"Exxon and Mobil have a strong supply because the Billings refinery allows them to offer a very competitive price," says Whitley. "Exxon has a strong marketing campaign called Clean about its fuel to educate the consumer. Another thing we're excited about is Exxon has an Exxon MasterCard that offers a 15-cent discount per gallon on their gasoline purchases. It also has up to a 2 percent rebate on all those purchases. It's going make a huge savings for the consumer."

Frame says CHS supplies fuel directly to the stores it owns here, and it also provides gasoline to other stations with the Cenex flagship under cooperatives or individually owned regionally.

"We have a good market penetration," he says about the Cenex and Zip Trip stores in the Spokane and North Idaho region.

Treva Lind
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