Today in Biofuels: Purdue study projects new ethanol glut; oil hits $100 and pushes palm oil to record; FTC approves VeraSun-US Bioenergy merger

Top Story:

A report from Purdue University projected corn prices in the mid-to-high $4 range for 2008-09, and an addition of 4.5 billion gallons in ethanol capacity in the United States. The combination of circumstances could create disastrous producer margins for US ethanol. The study by researcher Chris Hurt projected a slowdown of plant openings in the second half of 2008, with a final capacity for the year of 13.5 billion gallons.

Producer News:

In Washington DC, the US Federal Trade Commission gave antitrust approval to the merger of VeraSun Energy and US BioEnergy. In the proposed acquisition, US BioEnergy shareholders will receive 0.81 share of VeraSun common stock per US BioEnergy share.

In Texas, the state Commission on Environmental Quality granted an air permit for Panda Ethanol’s 115 Mgy ethanol plant in Sherman County. The facility will utilize cow manure in place of natural gas to power the plant.

In New York, Alternative Fuels put its biodiesel plant in Binghampton up for sale and announced that it will relocate to Pennsylvania. The company will receive a grant of $1 million from the Keystone State towards production of algae-based biodiesel. The company ceased production in November, citing high operational costs in New York and high feedstock prices. The 3.5 Mgy plant used soybean oil as a feedstock.

In Texas, Nova Biosource Fuels announced a $41 million senior secured credit facility with WestLB AG, including a $36 million construction loan and $5 million in working capital. The funds will be used to complete the company’s 60 Mgy biodiesel plant in Seneca, Illinois. The plant is scheduled to be complete by summer 2008.

International News:

Malaysian crude palm oil rose to an all-time high of $956 per tonne, tracking rises in oil and soybean prices. Oil reached a record $100 per barrel today.

In Colombia, the government announced that it will invest $342 million in three new sugarcane ethanol plants in partnership with USAID and the International Organization for Migration (IMO). The Etanol Caribe Colombiano project will be located in the Bolivar, Cordoba and Sucre regions. Total production capacity is 29 Mgy;  the ethanol will be sold in Colombia as well as exported.

In Brazil, Comanche Clean Energy will invest $14 million to increase production at its Simões Filho biodiesel plant in Bahia state.  The upgraded facility will have a capacity of 26 Mgy from cotton oil, waste oils, soy and sunflower oil feedstocks. $10 million of the invested funds will be used for land acquisition and $4 million for plant upgrades.

Research News:

UCLA researchers, working in tandem with Gevo, a new biofuels technology company, are developing microbes that produce isobutanol and other “higher” alcohols during the fermentation process. Butanol, unlike ethanol, is not corrosive to metals and plastics and has a similar energy density to gasoline.

A report by the National Venture Capital Association said that California, Massachusetts, Texas and Washington state have received the most clean tech venture capital funds in 2007. Washington state firms receiving funding in 2007 include plug-in vehicle technology start-up V2 Green; algae biodiesel startup Bionavita, a Snoqualmie company that makes biofuel out of algae; biofuel retailer Propel Biofuels; biodiesel producer Imperium Renewables; vegetable oil recycler General Biodiesel; and energy storage technologist EnerG2.

Policy and Policymakers:

In Kentucky, Henderson County has formed a Henderson Energy Advisory Team to develop policies and bring synfuels and biofuel companies to the county.

Consumer and Fleet News:

In North Carolina, the town of Cary has converted its 169 diesel vehicles to B20 biodiesel.

Financial News:

The Biofuels Digest Indexâ„¢ (BDI), a basket of public biofuels stocks, fell 2.21 percent to 131.27 to open the new year on a dismal note. Diversified agribusiness was off sharply, led by Archer Daniels Midland, which fell 2.52 percent to close at $45.26. Mid cap ethanol stocks had mixed fortunes, with Aventine Renewable Energy (AVR) the strongest performer, up 2.51 percent to $13.08. Among small caps, Texcom (TEXC.PK) rose 61.25 percent to $0.129 while Xethanol (XNL) was up 13.77 percent to $0.6826. Nova Biosource (NBF) announced a new $41 million senior debt finance facility but fell 8.28 percent on the news to $2.66.

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