Green and Envied

Scott Zaremba grew up in the fuel business. As president and CEO of Zarco 66, the petroleum company his father founded in 1968, Zaremba is battle-tested in the trenches and has the scars to prove it. But what motivates this savvy industry veteran every day is the opportunity to push the boundaries of creativity and innovation, and the quest to create something truly special.

Last month, Zaremba completed his opus with the unveiling of Green Energy Gateway, an alternative fuels station in Lawrence, Kan. The first project of its kind in the U.S., Zarco 66’s new store, its ninth overall, is a marvel of innovative design and state-of-the-art technology. It does more than simply provide a venue for the distribution of eco-friendly alternative fuels like ethanol and biodiesel—it’s sure to serve as a model for how to cost-efficiently renovate an existing site using a “build green” blueprint.

“I have been interested in renewable fuels for years, but never had access to the products,” Zaremba said. “But over the last five years many new ethanol plants have sprouted throughout the Midwest. At first, some of those were hundreds of miles away, so it wasn’t cost-effective. Now, there are a variety of local fuels available giving us all sorts of quick and easy access to a variety of new fuels.”

Developed in partnership with the Kansas Department of Health and the federal EPA, Zarco 66’s Green Energy Gateway has already won the EPA’s Blue Skyways Award for clean design. The site not only extensively utilized recycled materials in its construction, but it’s also designed to harness both wind and solar power for its own energy needs.

Going Green
No slight to Zarco’s branded fuel partner, ConocoPhillips, Zaremba said the market didn’t need another traditional gas station. What the market needed was a reason to get excited. As fate would have it, about two years ago, a lot across the street from one of his existing stations—an older model gas station he had been trying to acquire for several years—became available. He quickly seized the opportunity.

“As we made this purchase, gas prices started shooting up, so we began exploring what we could do differently with a good piece of real estate that went beyond just branding it and selling the same product we were selling everywhere else,” Zaremba said. “The one need that was not being met was alternative fuels. I have always been extremely environmentally conscious, but once this idea hit me, I knew it was time to take the commitment to the next level.”

Though there were still many unanswered questions—chiefly, “Are customers ready for this gas station concept?”—the company pushed on without hesitation. The key for doing this right, Zaremba surmised, was offering multiple fuel blends to attract a wider range of customers. “We knew customers were, and still are, a little skittish about what they put in their vehicles,” he said. “So the solution was to have a blend for pretty much everybody.”

The store offers a low-level E10 blend (10% ethanol, 90% gasoline), which is commonplace at many stations across the country. For customers with flexible fuel vehicles (FFVs) requiring higher ethanol blends, E20 and E30 are available, along with E-85, which is used solely in E85 capable FFV’s.

Being in the nation’s heartland, gasoline is only half the demand at Zarco. There is a thriving diesel business to be had as well. With diesel prices soaring faster than gasoline, the trucking industry craves low-cost biodiesels. Green Energy Gateway offers five blends of biodiesels (B2, B5, B10, B20 and B100) for on- and off-road vehicles.

“It takes something dramatic to get customers to change or try something new,” Zaremba said. “With fuel prices going up and adversely affecting their daily cost of living, that was the dramatic push they needed to seek a low-cost alternative.”

Retail Focus
No detail was left unexamined during the exploratory phase. The pumps, so crucial to blending the fuels, were developed in partnership with Dresser Wayne. In fact, it was Zaremba who approached Dresser Wayne with a blueprint of what he needed to bring his dream station to life.

In addition to blending renewable fuels, the interactive pumps serve as a tutorial for intrigued customers by playing short videos explaining what alternative fuels are and the numerous benefits they offer. On-site kiosks allow customers to navigate the database at their discretion.

As a result, the popular pumps have emerged as source of income. “Automotive companies, new car dealers and local businesses are interested in advertising with us because we have a whole new concept that is appealing to consumers,” Zaremba said. “This gives me another revenue stream to grow the business.”

The site also required new underground storage tanks to house the fuels and a proprietary monitoring system developed by Zarco to keep an eye on tank levels.

The station features five pumps with a total of 10 fueling positions. Four are for earth-friendly ethanol blends and six are for biodiesel, four of which are for on-road customers and two for off-road vehicles like tractors and other farming equipment.

While all of the blends meet different needs, they have one thing in common: a cheaper price. “It’s a simple concept, really,” Zaremba said. “The higher the ethanol rating, the cheaper the price.”

For example, earlier this month, E10 was retailing in Lawrence for an average of $3.89. E20 was about 5 cents lower and E30 rang up at about 10 cents less. E85 was the most cost-effective at just $3.11.

Since the lot is on the smaller side, it doesn’t have the space for a full-service convenience store. Instead, Zaremba opted to add a drive-up coffee program housed in a small kiosk offered by Omaha, Neb.-based Scooter’s Coffeehouse Inc. The unit is set to open in early September.

Like the fuel program, Scooter’s will offer a progressive point-of-sale system (being developed by Dresser Wayne), allowing customers to place orders at fuel dispensers and drive up to the kiosk to receive the order. In addition to coffee, espresso and cappuccino, the menu features frozen drinks, sandwiches and pastries.

Looking Forward
While he is extremely optimistic about the future of the Green Energy Gateway concept, Zaremba admitted he still has a long way to go. “We’re at about 70% of what I anticipated, but people are starting to really come around,” he said. “This was never intended to be a quick fix, but rather a dramatic shift in customers’ buying habits, so I’m not surprised the numbers are a little off. In a year, my guess is that we will have exceeded our projections.”

One thing Zarco has on its side is the groundswell of support from lawmakers and environmentalists, though it didn’t start out that way. Interestingly, when Zaremba began the permitting process for the station, despite presenting an environmentally sound concept, he got a chilly reception from the powers that be in Kansas.

“I went to a meeting to present my idea and (officials at the state level) thought I was there for a handout and no one wanted to get involved,” Zaremba said. “I had to convince them that I didn’t want a thing from them—that I was starting this on my own and that I intended to finish it on my own. Once the state understood what we were doing, they got behind me quickly.”

And the support for the concept keeps growing. In July, Congress introduced the Open Fuel Standard Act. The bipartisan bill, authored by Joe Lieberman (I-Conn.), Sam Brownback (R-Kan.) and Ken Salazar (D-Colo.), calls for large percentages of new vehicles to be equipped to use alternative fuels.

Half of new automobiles by 2012 would have to roll off the assembly line as flex fuel vehicles able to operate on gasoline, ethanol and methanol or operate on biodiesel. By 2015, it would be 80%.

Capitalizing on this momentum, Zarco is looking to expand the Green Energy Gateway brand into a franchise concept. “There is no simple answer for meeting the country’s growing energy needs, but we feel we have a brand that is doing its small part to lessen the demand for fossil fuels,” Zaremba said. “It’s not the answer, but it is part of the equation, and we’re positioning the company to be a leader others can look up to.” 

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