Daily Biofuels Summary for November 12: Gitmo converts to biodiesel as congressional support for ethanol mandates wanes

Top Story:

The Wall Street Journal editorialized on flagging support for ethanol mandates and subsidies. The editorial noted with approval Texas Senator John Cornyn’s comment that his efforts — to block a conference to resolve differences between the Senate and House energy bills — were having the desired effect. The Texas Senator opposes new oil taxes in the House bill.

Sen. John Thune of South Dakota said “There’s a real urgency. We’ve seen plants that are under construction being stopped. We’ve seen plants that have ceased operating because margins are too thin.”

The ethanol industry will produce as much as 7.5 billion gallons in 2007 but the current mandate calls for only 4.6 billion gallons to be blended with gasoline. Oil companies make lower profits on blended fuels, and reluctance to blend has been blamed for the plummet in ethanol prices.
Producer News:

In Idaho, Washington Group International announced it has been awarded procurement, construction, commissioning, and start-up service contracts by E85 for three 110 Mgy ethanol plants in Wahoo, Neb., Red Oak, Iowa and Council Bluffs, Iowa. Work on the Wahoo plant has already started, and the two Iowa plants will commence construction before the end of the year. Total project cost of $750 million has been reported by E85.

In Illinois, construction was halted at the North Prairie Productions biodiesel plant owing to high soybean oil prices. The company is planning a strategic review before potentially resuming construction efforts.

Pacific Ethanol (PEIX) reported net sales up 93 percent to $118 million for the third quarter, but the company recorded a loss of $3.8 million, or 7 cents per share, because of high corn prices and low ethanol prices. The company’s shares fell 93 cents — or 11.9 percent — to a 52-week low of $6.89 on Friday.

International News:

In Australia, Jatoil has launched a $10 million public company flotation this week. Jatoil will grow jatropha in Asia and sell low-cost jatropha oil to Asian biodiesel producers, ultimately expanding to Europe. The company will offer 50 million shares at 20c to add $10 million to its working capital.

In Mauritius, Mission Agro Energy will increase its stake in Mission Biofuels India to 90 percent, from 70 percent, after buying out Indian Agribusiness Systems. The company, a subsidiary of Mission Biofuels, procures and produces jatropha oil.

In India, Chhattisgarh Renewable Energy Development Authority and the state-owned oil major Indian Oil Corp. Ltd have established a joint venture to produce jatropha. The JV will invest $127 million in production. Indian Oil will hold 74 percent and the Chhattisgarh authority will own the remainder.

In India, auto manufacturers warn that they are not ready for the transition to E10. The head of R&D at Maruti Suzuki said that their vehicles are E5 compatible but will need minor adjustments. Hyundai Motor India said none of their cars are E10-compatible, and said they needed the government to allow a transition period to make engine changes. The Society of Indian Automobile Manufacturers said that they did not oppose ethanol blending, but need a uniform, stable policy throughout the country.

Research News:

In Washington, the FDA approved bulk trials of a new corn seed from Syngenta which contains the corn amylase enzyme, after positive results from pilot trials. The Anglo-Swiss group company said that it has developed a means of growing the enzyme directly in the corn seeds, removing the need to ship enzymes to ethanol plants and introduce them into the conversion process. The company says its expects to have the seed ready for the 2009 growing season.

Policy and Policymakers:

In Australia, the ruling Coalition Government, facing a tough re-election challenge, announced that it would introduce a $5 million motorist education program on ethanol, and extend a program until 2009 which provides ethanol conversion grants of up to $20,000 to service stations.

Consumer and Fleet News:

In Cuba, the United States Naval Base at Guantanamo Bay will convert to a biodiesel blend. The base, which is cut off from contact with Cuba, has to maintain a landfill which takes in 18,00 gallons per year of waste cooking oil. The Navy purchased a biodiesel processor and is producing its own biodiesel which is blended with petrol for the base’s vehicle fleet.

In Nevada, Green Flight International has scheduled the first B100-powered transcontinental jet flight. The company’s BioJet, a retired Czech L-29 military aircraft, will fly from an undisclosed location in California to Florida.

Financial News:

The Biofuels Digest Indexâ„¢, a basket of public biofuel stocks, fell 0.95 percent Friday to close at 107.08 as broad market jitters spilled over to biofuels and Pacific Ethanol lost nearly 12 percent in share value after reporting its 3rd quarter results. Among diversified agribusiness, The Andersons (ANDE) fell 4.05 percent to close at $50.98. Gainers and losers were even for the day as mid caps VeraSun Energy (VSE) and Aventine Renewables (AVR) were both up more than 3 percent on rising ethanol prices.

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