Unocal, Williams sign license agreement for cleaner burning gasoline formulations
El Segundo, Calif., and Tulsa, Okla., June 5, 2001 -- Unocal Corporation (NYSE: UCL) and a unit of Williams (NYSE: WMB) have signed a non-exclusive licensing agreement giving Williams the right to produce and blend cleaner burning gasolines using formulations patented by Unocal.
Effective May 1, 2001, the licensing agreement allows Williams to use Unocal's five patents for Williams fuel production from its 180,000 barrel-per-day refinery in Memphis, Tenn., certain blending facilities throughout Williams' extensive terminal system, and its imported volumes of reformulated gasoline. Terms of the licensing agreement were not disclosed.
"With the numerous 'boutique' blends of gasoline in the marketplace today, having this licensing agreement enables us to maximize flexibility within our gasoline pool, agilely change our production slate, and cost-effectively blend reformulated gasolines to better meet our customers' needs," said, Nelson Christian, director of operations and technical services, Williams refining and marketing operations.
In addition, Williams' ethanol business benefits from the Unocal agreement as the company plans to continue using ethanol as one of the major components in its reformulated gasoline blends. "The licensing agreement will allow Williams to better leverage our numerous petroleum production streams and blending assets with our ethanol business," said Jim Redding, director of marketing and logistics, Williams Bio-Energy. "This agreement demonstrates Williams' continued commitment to supply cleaner burning fuels to the marketplace." Williams Bio-Energy is the second largest producer and marketer of ethanol in the United States.
The licensing agreement with Williams is the fifth such contract issued by Unocal since the company unveiled its uniform licensing program in late March. Last month, Unocal signed licensing agreements for its cleaner burning gasoline patents with CITGO Petroleum Corporation, Tesoro Petroleum Corporation and two other unnamed companies.
Unocal's licensing schedule specifies a range of between 1.2 and 3.4 cents per gallon for volumes that fall under the Unocal patents. The licensee's rate per gallon is reduced as more utilization occurs.
"Our licenses enable refiners, blenders and importers to cost-effectively maximize their supplies of cleaner burning gasolines," said Charles R. Williamson, Unocal chief executive officer. "Companies are not likely to utilize the Unocal patents for all of their RFG volumes. As such, the licenses should add only a fraction of a cent per gallon to the industry's cost structure for its nationwide RFG production."
About RFG and Unocal's Patents
Under the Federal Clean Air Act, reformulated gasoline (RFG) is now required in many parts of the United States and comprises about one-third of all gasoline sold. It was originally required in nine severe ozone non-attainment areas beginning in 1995. Since then, other areas have opted into the program. Today, RFG or other very low vapor pressure gasolines are sold in more than 20 states.
Unocal applied for its initial patent for RFG in December 1990, after completing extensive research into the emission characteristics of various gasoline formulations. The company received its first patent ('393') in 1994. Between 1997 and 2000, Unocal received four additional patents for cleaner burning gasolines that were an outgrowth of the original research.
Williams, through its subsidiaries, connects businesses to energy, delivering innovative, reliable products and services. Williams information is available at www.williams.com.
About Unocal Corporation
Unocal is one of the world's leading independent natural gas and crude oil exploration and production companies. The company's principal operations are located in North America (Gulf of Mexico region, Alaska and Canada) and in Asia (Thailand, Myanmar, Indonesia, and Bangladesh). The company is also pursuing exploration programs in West Africa and Brazil.
Additional information about Unocal's patents for cleaner burning gasoline formulations is available on the company's web site, and in its 2000 Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission, which can also be accessed from the company's web site.
Portions of this document may constitute "forward-looking statements" as defined by federal law. Although the companies believe any such statements are based on reasonable assumptions, there is no assurance that actual outcomes will not be materially different. Any such statements are made in reliance on the "safe harbor" protections provided under the Private Securities Litigation Reform Act of 1995. Additional information about issues that could lead to material changes in performance is contained in the companies' annual reports filed with the Securities and Exchange Commission.
Updated: June 2001