Irving makes its claim to oil

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MAINETODAY

Wednesday, April 05, 2006

Irving makes its claim to oil

By COLIN HICKEY
Staff Writer

2006 Blethen Maine Newspapers Inc.

So whose heating oil is it anyway?

That is the question, with an estimated value nearing a million dollars, that a judge in U.S. Bankruptcy Court in Bangor is expected to decide this month.

Irving Oil Terminals Inc. and more than a dozen school systems, municipalities, businesses and nonprofit groups in central Maine have a stake in the decision.

Those parties are all involved in a lawsuit, filed by Irving Oil, that centers on the remaining petroleum assets of P.P.C.O.M. Inc., the now defunct Oakland oil dealer that, according to Irving Oil, is $17 million in debt to creditors, including more than $11 million to Irving Oil.

"I think it is important to note that P.P.C.O.M. has essentially broken its promises here," Irving Oil spokeswoman Michelle Firmbach said.

P.P.C.O.M. stored its heating oil in a leased tank at the Kennebec River Development Park in Winslow. At one point last month, Irving Oil said the tank held 435,000 gallons of heating oil -- the last of P.P.C.O.M.'s petroleum holdings, according to the company. With current prices for heating oil well over $2 per gallon, those 435,000 gallons are worth at least $870,000.

"This (lawsuit) allows the bankruptcy court to resolve the Winslow tank issue," Firmbach said.

Irving Oil argues that it has priority rights over every other creditor in regard to the heating oil, with the exception of TD Banknorth, one of P.P.C.O.M.'s other creditors

Those other parties include Oakland-based School Administrative District 47, one of many school systems, municipalities, organizations and businesses that prepaid for fuel from P.P.C.O.M. but have not received all they purchased.

In the case of SAD 47, 92,500 gallons was still outstanding last month, an amount that translates into more than $200,000 in fuel costs at current market prices.

Waterville City Administrator Michael J. Roy last month said P.P.C.O.M. had yet to deliver about $130,000 in gasoline and diesel to the city.

Along with schools and communities, the list of prepaid P.P.C.O.M. customers named in the lawsuit includes Bob's Cash Fuel in Madison, Augusta Fuel Co., Kennebec Sanitary District, Alfond Youth Center in Waterville and the Kennebec River Development Park LLC.

Kennebec River Development Park is a corporation owned by essentially the same people who run Marden's Surplus and Salvage.

Paul LePage, Marden's general manager, as well as Waterville's mayor, said the development park has not received about 17,000 gallons in prepaid heating oil.

LePage, however, said he does not expect the park or any of the other prepaid customers of P.P.C.O.M. to prevail in bankruptcy court.

"I don't think anybody is going to get anything," he said. "I think it is a done deal. I think it is time to swallow hard and move on."

Irving Oil currently has control of the heating oil in the Winslow storage tank with the stipulation that any deliveries must go only to "municipal prepaid customers," according to court documents.

Firmbach said that in the last couple of weeks Irving Oil has delivered heating oil from the tank to 18 former P.P.C.O.M. prepaid customers, including the town of Oakland, Waterville Public Schools and Alfond Youth Center.

Irving Oil has not yet charged for those deliveries but plans to do so if the bankruptcy court judge rules that the heating oil rightfully belongs to the company.

Quenton Clark, superintendent in School Administrative District 58, said his system, which is out 19,000 gallons of prepaid heating oil, decided initially to have no dealings with Irving Oil.

But Clark said the price Irving Oil offered, assuming the bankruptcy court rules in its favor, for the heating oil was too good to refuse.

"We are going to (take deliveries) mostly because of price they've offered is cheaper than we can get anywhere else," he said. "We won't take the full amount (we prepaid for), and we won't do business with Irving next year. We will never do business with Irving again."