Pine Bend

"Koch Industries, the central holding company, institutionalized this drive to expand. The company created a new team of top executives called the business development board, whose sole job was to look for other companies to buy. This group was essentially a reincarnation of the central development group that Brad Hall had overseen in the late 1990s, but it was restructured in a way that made it larger, more influential, and capable of closing deals that were larger by an order of magnitude than anything Koch had done before. The new development group rivaled any deal-making entity on Wall Street. The team had a steady river of cash to work with thanks to the steady flow of money generated at Pine Bend and other assets. The team also made use of Koch Industries’ nearly pristine credit rating,I which made it cheap and easy to get big loans. Even this new strategy—to push for growth and limit risk with a corporate veil—rested on a deeper, more important idea. This idea was the centerpiece of Koch’s new game plan, which relied on one competitive advantage more than any other: Koch’s superior information."

"Oil arrived at the refinery by pipeline, and it was stored in giant, white tanks. This crude oil was then moved into the giant “boiler” units, which were giant furnaces that heated the oil to around 700 degrees Fahrenheit. Running the boilers is a dangerous and vital job. When a young man named Lowell Payton was hired at the Pine Bend refinery, he noticed that there was a tall, thick wall around the boiler. He asked what that wall was for, and he remembers his boss telling him: “That’s so if the boiler blows up, your body won’t be found fifty miles away.” After the oil is heated up, it undergoes a series of chemical reactions that seem to border on alchemy. Oil looks like nothing more than shiny black goo, but it contains a remarkably diverse set of chemicals. The heat unwinds the chemical chains that kept these riches together and breaks free a rainbow of compounds like gasoline, butane, kerosene, propane, diesel fuel, and an almost countless array of petrochemicals that are used to make everything from clothing to lip balm and plastic building material. This chemical unwinding happens inside the most visible part of an oil refinery: the giant towers. The towers are called fractionators because they break the crude oil into fractions, or its component parts. The heated crude oil is pumped into the bottom of the towers, where it is vaporized. The oil vapors float up through the fractionating tower like smoke through a chimney. Along the way, the different components of oil are captured on a series of trays inside the tower. One tray separates out kerosene, another gasoline, and so on. Vaporized crude oil is like the apocryphal buffalo that the Plains Indians used to hunt: every piece is used, nothing is left to waste. One of the biggest skills for oil refining is figuring out how to squeeze every possible drop of every possible petrochemical out of the crude without wasting anything to evaporation."

"Koch Industries, the central holding company, institutionalized this drive to expand. The company created a new team of top executives called the business development board, whose sole job was to look for other companies to buy. This group was essentially a reincarnation of the central development group that Brad Hall had overseen in the late 1990s, but it was restructured in a way that made it larger, more influential, and capable of closing deals that were larger by an order of magnitude than anything Koch had done before. The new development group rivaled any deal-making entity on Wall Street. The team had a steady river of cash to work with thanks to the steady flow of money generated at Pine Bend and other assets. The team also made use of Koch Industries’ nearly pristine credit rating,I which made it cheap and easy to get big loans. Even this new strategy—to push for growth and limit risk with a corporate veil—rested on a deeper, more important idea. This idea was the centerpiece of Koch’s new game plan, which relied on one competitive advantage more than any other: Koch’s superior information."