Pennsylvania legislature considers adding more rail infrastructure to support biofuels expansion
November 30, 2007
In Pennsylvania, the state legislature is considering a bill to provide support for more rail infrastructure to move biofuels more effectively to consumers and fleets. Rail improvements are considered essential for safety, cost and road maintenance reasons.
However, in the last budget cycle the state received $91 million in requests for its $20 million earmarked for rail infrastructure improvement.
Biofuels Digest Indexâ„¢ gains 1.06 percent as ethanol stocks soar; Pacific Ethanol up 41 percent in wake of VeraSun, US BioEnergy merger
November 30, 2007
The Biofuels Digest Indexâ„¢, a basket of public biofuel stocks, rose 1.06 percent yesterday, buoyed by news of the VeraSun (VSE) merger with US BioEnergy (USBE). VeraSun (VSE) was up 3.10 percent to close at $10.97, while US BioEnergy (USBE) rose 4.86 percent to finish at $8.42 after rising throughout the week.
Pacific Ethanol (PEIX), which would be the industry’s next consolidation candidate owing to its low stock price, rose 41.15 percent to close at $6.62, and Aventine (AVR) rose 5.59 percent to close at $9.26. Winners led losers 2 to 1 for the day as small caps general gained on the news, led by Xethanol (XNL), up 20 percent to $0.36 on the news.
VeraSun Energy and US BioEnergy announce merger: form world’s largest ethanol producer
November 29, 2007
VeraSun Energy (VSE) and US BioEnergy Corp. (USBE) today announced they have entered into a definitive merger agreement. The merger is expected to close during the first quarter of 2008, pending approvals.
The deal, in which USBE shareholders will receive approximately $680 million of VeraSun stock, will create the world’s largest ethanol producer, with a planned capacity of 1.6 billion gallons by the end of 2008, based on scheduled plant openings.
“We’ll be publishing a detailed note tomorrow with our thoughts on the deal,” said Pavel Molchanov, analyst for Raymond James, “but certainly this is one of the most bullish datapoints we’ve seen in the ethanol space this year. Although the transaction multiples are not high, VSE is making its second big bet (following the ASAlliances deal in the summer) on the ethanol market’s rebound. The combined company will rival ADM when it comes to production capacity, reaching market share of about 15% by year-end 2008.
“This won’t turn around investor perceptions of the ethanol space, said Molchanov, “but it’s one of the few drivers we’ve seen that could begin to do that.”
The combined companies will benefit from economies of scale in operations and finance, and bring access to VeraSun’s advanced investments and technologies to US BioEnergy’s shareholders.
VeraSun CEO Donald L. Endres will remain CEO of the combined company, and US BioEnergy CEO Gordon Ommen will serve as chairman following the closing of the merger. VeraSun Senior Vice President and Chief Financial Officer Danny C. Herron will become president of the combined company.
The combined entity will retain the VeraSun name and trade under VeraSun’s existing NYSE ticker symbol, VSE.
Today in Biofuels: 20 billion gallon biofuel mandate still in US Energy Bill as deal nears; $300 million investment in Brazil; Asian water crisis looms
November 29, 2007
Top Story:
In Washington, details continued to emerge regarding the imminent Energy Bill. According to reports, the proposed legislation would mandate the use of 20.5 billion gallons of biofuels by 2015, including 15 billion gallons of conventional ethanol from corn, and one billion gallons of biodiesel. The bill’s language would require the use of “advanced biofuels”, meaning primarily cellulosic ethanol, commencing in 2013 increasing to 21 billion gallons by 2022. There were conflicting reports regarding the mid-range (2015-1016) targets for cellulosic ethanol, but in the 3 billion to 5.5 billion gallon range.
Producer News:
In Kansas, Ethanex Energy will acquire the 26 Mgy Midwest Renewable Energy corn ethanol plant. The base price for the existing plant is $50 million, with a formula for a total price of $220 which includes the financing of the completion of the plant’s expansion to 111 Mgy.
In Illinois, Ag Energy Resources has cleared all regulatory and financial hurdles and is set to begin construction of its 7 Mgy corn ethanol plant. Financial backing for the plant came from People’s National Bank in Benton and a $4.6 million loan from the USDA.
In Pennsylvania, Falls township gave the green light to American Biofuel’s 115 Mgy corn ethanol plant. The $200 million plant will be constructed on a 72-acre property that was formerly home to US Steel.
International News:
In Brazil, Comanche Clean Energy will invest $300 million in ethanol and biodiesel production in the state of Maranhao. The ethanol plant will have a capacity of 79 Mgy, while the biodiesel operation has a planned capacity of 38 Mgy. Last year, Comanche acquired two ethanol plants in Sao Paulo state and a biodiesel facility in Bahia for $150 million.
In England, Pursuit Dynamics will commence production of a new product next year that, in tests, have increased ethanol yields up to 3.3 gallons per bushel. Current optimal yield are in the 2.8 gallon per bushel range. This could push production in the US over 500 gallons per acre and result in up to a 15 percent decrease in ethanol prices.
In the Philippines, PNOC Alternative Fuels Corporation chairman Renato S. Velasco said that he expected that at least 700,000 hectares of jatropha would be planted in the country, noting that it had been identified as an ideal cultivation locale by the FAO. He said the bulk of cultivation would be in Mindanao. Using a yield of 300 gallons per acre, the potential capacity represented by his forecast is 455 million gallons of biodiesel. The Chairman stressed that jatropha would be grown only in currently unused land and that no food production land would be switched to fuel.
In Malaysia, New Britain Palm Oil will be listed on the London Stock Exchange in a US$100 million flotation. The owner of New Britain Palm Oil, Kulim, said that between New Britain and Guadalcanal Plains Palm Oil it has more than 30,000 hectares of mature oil palm trees. It also said that its biodiesel plant in Tanjung Langsat in Johor, would be ready for testing by the end of 2007.
Research News:
Acta stated its belief that a hydrogen fueled transport system is ten years away, not 20 to 30 years. The company made its pronouncement after inking a development project deal with an unnamed Asian carmaker. Acta produces hydrogen from on-board catalysts that use ammonia or ethanol and can work with the existing fuel infrastructure.
Argus Media, a leading source for energy price information, is launching a price service for palm oil biodiesel in Singapore, Malaysia and Indonesia. The service will provide daily FOB price information, as well as trading information including bids and offers for EN14214 (European compliant) biodiesel.
Policy and Policymakers:
A report released by the Asian Development Bank outlined a looming crisis in Asian water supply. The report blamed neglect of wastewater management practices for the crisis, and said that the rising popularity of biofuels would make the situation worse unless Asian nations addressed their water usage practices.
Consumer and Fleet News:
The first biodiesel fuel station has opened in Connecticut. Gov. M. Jodi Rell was on hand for the opening at Berkshire Country Store in West Cornwall. The fuel had previously only been available in Connecticut at private pumps for government and commercial fleets.
Financial News:
The Biofuels Digest Indexâ„¢, a basket of public biofuels stocks, rose 0.99 points yesterday to close at 103.37, as rising prices for pure-play ethanol stocks offset mixed results from large cap agribusiness. Among large caps, Archer-Daniels-Midland (ADM) led the sector, up 0.76 percent to $35.97. Pacific Ethanol was up 1.08 percent to $4.64 despite a downgrade to “Sell” by Goldman Sachs, with VeraSun Energy (VSE) up 4.93 percent to $10.64 leading among ethanol pure-plays. AMong small caps, Xethanol (XNL) was down 21.05 percent to $0.30 while GreenShift (GSHF.OB) rose 10 percent to close at $0.33.
US Energy Bill to mandate 20.5 billion gallons of ethanol by 2015; includes biodiesel mandate for first time
November 29, 2007
In Washington, details continued to emerge regarding the imminent Energy Bill. According to reports, the proposed legislation would mandate the use of 20.5 billion gallons of biofuels by 2015, including 15 billion gallons of conventional ethanol from corn, and one billion gallons of biodiesel.
The bill’s language would require the use of “advanced biofuels”, meaning primarily cellulosic ethanol, commencing in 2013 increasing to 21 billion gallons by 2022.
There were conflicting reports regarding the mid-range (2015-1016) targets for cellulosic ethanol, but in the 3 billion to 5.5 billion gallon range.
Ethanex Energy to acquire 26 Mgy Midwest Renewable Energy ethanol plant in Kansas; capacity to expand to 111 Mgy
November 29, 2007
In Kansas, Ethanex Energy will acquire the 26 Mgy Midwest Renewable Energy corn ethanol plant. The base price for the existing plant is $50 million, with a formula for a total price of $220 million, which includes the financing of the completion of the plant’s expansion to 111 Mgy.
Ag Energy Resources ready for construction on 7 Mgy corn ethanol plant
November 29, 2007
In Illinois, Ag Energy Resources has cleared all regulatory and financial hurdles and is set to begin construction of its 7 Mgy corn ethanol plant. Financial backing for the plant came from People’s National Bank in Benton and a $4.6 million loan from the USDA.
Illinois ranks second among US states in corn ethanol production (the Oil Independence Report can be downloaded by clicking here), and the state is expecting a bumper crop of corn this year.
A University of Illinois crop expert predicts corn yields of 180 bushels an acre, and the U.S. Department of Agriculture is projecting a 2.34 billion bushel harvest for the state when figures are finalized.
American Biofuels gets go-ahead for 115 Mgy corn ethanol plant in Falls, PA
November 29, 2007
In Pennsylvania, Falls township gave the green light to American Biofuel’s 115 Mgy corn ethanol plant. The $200 million plant will be constructed on a 72-acre property that was formerly home to US Steel.
Gov. Rendell recemtly reintroduced the Pennsylvania energy plan to a joint session of the state legislature. The centerpiece is a $850 million Energy Independence Fund, funded by a bond issue. $500 million would be invested in clean-energy projects such as biofuel plants and solar and advanced coal technologies, and $100 million granted to Pennsylvania firms expanding clean-energy production.
Additional money was proposed to partly reimburse homeowners and small businesses for installation of solar panels, energy-efficient air-conditioners, refrigerators, and smart electricity meters. The bond would be paid off with a new energy utility tax.
The Pennsylvania plan sets a 1 billion gallon per year production target for 2017.
Comanche Clean Energy to invest $300 million in Brazilian ethanol and biodiesel
November 29, 2007
In Brazil, Comanche Clean Energy will invest $300 million in ethanol and biodiesel production in the state of Maranhao. The ethanol plant will have a capacity of 79 Mgy, while the biodiesel operation has a planned capacity of 38 Mgy. Last year, Comanche acquired two ethanol plants in Sao Paulo state and a biodiesel facility in Bahia for $150 million.
The Brazilian government has targeted reaching a B5 biodiesel blend level by 2013. Brazil has set a B2 blending mandate effective in January 2008, and the director general at the National Petroleum, Natural Gas and Biofuel Agency (ANP), said that he expected that there would be enough biodiesel to cover more than twice the amount mandated.
Pursuit Dynamics says new product increases corn ethanol yields up 20 percent, to 3.3 gallons per bushel
November 29, 2007
Pursuit Dynamics, in England, will commence production of a new product next year that, in tests, have increased ethanol yields up to 3.3 gallons per bushel. Current optimal yield are in the 2.8 gallon per bushel range. This could push production in the US over 500 gallons per acre and result in up to a 15 percent decrease in ethanol prices.
The technology is the latest in a series of advancements in corn yields. An infrared device was introduced earlier this year used at 21 US ethanol plants that can improve productivity by up to eight percent.
Corn ethanol yields have increased from 2.2 gallons per bushel in recent years, and corn productivity has increased to nearly 156 bushels per acre, up from 125 in baselines used for studies of corn ethanol yield.
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