Better with AGE

Dallas man has turned S.A. refinery into a success since 1991
By Greg Jefferson
San Antonio Express-News, July 10, 2002

Roaming dogs and disrepair greeted Al Gonzalez on his first visit to the refinery on South Presa he was looking to buy in 1991.

"When I opened the door, I almost fell over," said Gonzalez, owner and CEO of AGE Refining Inc. in San Antonio. "This place was just such an eyesore."

But with a shot at a contract to supply the government with jet fuel -and no other business prospects - he quickly cobbled together a deal to buy the plant from Howell Corp. of Houston, which had closed the refinery months earlier.

Since then, Gonzalez, a 65-year-old Dallas resident, has cleaned up the property, spent more than $5 million on upgrades and equipment, and brought the work force up to about 100 people.

He's seeking approval from the Texas Natural Resource Conservation Commission to expand the facility's refining capacity from about 10,000 barrels per day to 14,000. This year, Gonzalez expects AGE to book sales totaling $125 million, about what the company did last year.

Gonzalez's refinery is tiny compared to those operated by San Antonio refining giants Valero Energy and Tesoro Petroleum. But those companies don't operate inside the city limits, as Gonzalez does.

AGE's colors are green, black and white "because it's the color of money," Gonzalez said. But in the firm's startup period, he saw precious little of that.

He bought the refinery at a time when he almost literally had nothing to lose. His real estate and construction ventures in Dallas had flamed out with the collapse of the real estate market. "Instead of five phone lines, I had one," he said. "I was living on credit cards. We were broke."

In fact, he'd had to accept money from his administrative assistant for a plane ticket to Houston to do the deal with Howell Corp.

But after lucking into a silent partner from Mexico and completing the acquisition, he soon began pumping out jet fuel, which remains a strong part of AGE's business.

In February, the company won a one-year, $31.7 million contract to supply JP8 jet fuel to San Antonio's Randolph and Lackland Air Force bases and Laughlin AFB in Del Rio. It followed up in March by securing a two-year, $7.1 million pact to supply jet fuel to the Air Force and NASA, according to the U.S. Defense Department.

But the firm also manufactures and sells diesel fuel and solvents.

San Antonio's VIA Metropolitan Transit is one of AGE's newer customers. The company began supplying diesel fuel to the public transportation agency in early 2001, after securing an exclusive, one-year contract worth $4.8 million. It won a $3.9 million extension that runs through next January, according to VIA spokeswoman Priscilla Ingle.

"That was a neat deal," Gonzalez said, because of the opportunity for a locally based refiner to supply the city's public transit fleet.

AGE has more than 125 customers in San Antonio, Dallas and Houston, and around South Texas.

The refiner has benefited mightily from its designation as a small business operating in a Historically Underutilized Business zone, or HUBzone. Its administrative office is at 1131 E. Commerce downtown, in a high unemployment area near Sunset Station.

The certification helped Gonzalez win the VIA contract, as well as its first major Defense Energy Support Center contract for jet fuel in early 2001.

"(AGE's) growth is there because of the two large contracts the company won about a year and a half ago," said Patricia Tovar of the city's Economic Development Department. Tovar helped the firm certify with the U.S. Small Business Administration as a HUBZone company.

But the company's recent successes follow at least two severe blows in its 10-year history.

One was a major fire in 1995 that shut down the plant for about 30 days and prompted the refiner's then-bankers to advise seeking bankruptcy protection - a move Gonzalez declined. He rebuilt with a low-interest, $1.2 million loan from the SBA, paying off the balance in 21/2 years.

Meanwhile, in 1997, a group of managers bolted to start their own company, leaving Gonzalez stranded.

"I sat right here and cried and cried and cried," he said. "They left me in a real lurch."

He temporarily moved to San Antonio while bringing new managers up to speed.

But Gonzalez, a former Dallas city councilman, soon resumed his commutes between San Antonio and Dallas. He estimates that he now spends about 60 percent of his time in the Alamo City - considerably less than when he was rebuilding his management ranks after the 1997 defections.

In fact, he's clearing the way for his eventual exit. He said he's gradually handing over operational control to his managers, though his family will retain ownership of the company.

In December, "I started looking at the numbers," Gonzalez said. "I looked at the turnover rate. I looked at the production rates. And I said, 'These guys are ready."