Today in Biofuels: High-profile biodiesel start up chooses Texas, California; US ethanol glut looms as production soars; Europe to hit 20 percent biofuel capacity wall

February 5, 2008

Top Story:

In California, notable start-up US BioDiesel, which raised $100 million last summer in a first round of financing, has chosen Seabrook, Texas and Stockton, California for its first 35 Mgy biodiesel plants. The Seabrook facility will open in this May alongside the Houston Ship Channel, while the second plant will be at the Port of Stockton. Lansing Trading Company and EDF man will provide feedstock, while EDF Man will provide glycerine offtake and biodiesel trading.Â Investors in US BioDiesel include venture fund U.S. Renewables Group, trading firm ED&F Man, a major international commodity trading company; private fund Ohana Holdings, an Omidyar Family investment fund, and soybean oil buyer.

Producer News:

In Illinois, 74 investors may lose up to $5 million in the Central Illinois Energy bankruptcy case. The CIE plant was proposed in 2001 at a cost of $40 million; construction was halted prior to completion when costs had reached $130 million and the company filed for Chapter 11 bankruptcy.

In Missouri, Bootheel Agri-Energy will return equity invested in the company to shareholders, with interest, after the project failed to obtain a required financing commitment by the expiration of the equity offering period. Plant management did not announce project cancellation, saying that SEC regulations did not permit them to comment fully on next steps for the venture.

In California, Tellurian Biodiesel, a maker and marketer of sustainable high-quality biodiesel, announced an agreement to acquire Superior Process Technologies from Baker Commodities. Baker Commodities invested in SPT in 2003 to develop technology for the conversion of rendered materials into biodiesel.

International News:

In India, Tata Chemicals will invest $12.7 million in a 3 Mgy sweet sorghum ethanol project in Nanded, Maharashtra. The facility, which will be constructed by Praj Industries, will open in 2010. Tata said that, if the plant is successful, the company would expand its operations and said that it is exploring jatropha cultivation five labs in Maharashtra and Gujarat.

In Indonesia, PT Perkebunan Nusantara and five other state oil and gas firms will develop a palm oil biodiesel plant in Medan, North Sumatra, with construction slated to be completed in 2009. Capacity was not disclosed. The investors will also supply palm oil from their plantation operations.

In Peru, Heaven Petroleum, a subsidiary of Hercon Combustibles, will invest $25 million in a 44 Mgy soy-based biodiesel plant in Lurin. The facility will be Peru’s first biodiesel plant. The plant’s capacity will replace the country’s Diesel 2 import needs. Completion date for the project was not announced.

In Malaysia, crude palm oil (CPO) hit a new record price of $1,071 per tonne after Indonesia announced increased export taxes in a move to reduce the pressure on domestic food prices. Indonesia also recently pegged its tax rate to the price of CPO on the Rotterdam exchange.

Research News:

In Europe, the Director of Biofuels Projects at TerÃ©os told Ethanol Statistics that Europe would not be able to produce more than 20 percent of its own fuel needs from biomass. Bernard Chaud said that the maximum biofuel production capacity of Europe is 30 million tonnes per year, including both first and second-generation biofuels. The European Commission has projected that Europe will cover 14 percent of its energy needs with biomass by 2020, but Chaud said 10 percent is more feasible.

The US Energy Information Administration said that US daily ethanol output reached a record 603 million gallons in November, up from 579 million in October. Plant capacity utilization increased to 104.7 percent due to price increases. U.S. ethanol reserves fell to 470 million gallons. Overall production capacity for the industry increased to 7.9 billion gallons.Â The EISA Act calls for 9 billion gallons of ethanol to be blended in calendar 2008. It is not expected that the spread between gasoline prices and the cost of ethanol, based on corn futures possibly reaching all-time records this spring, will encourage discretionary blending above the 9 billion mandate. With expected US capacity increasing to 13.3 billion gallons in 2008, there could be significant overcapacity in the system unless the spread between gasoline prices and ethanol prices encourages more discretionary blending.

Policy and Policymakers:

In Texas, the state’s Emerging Technology Fund (ETF) awarded $4 million Texas A&M’s Texas AgriLife Research unit, and General Atomics, for research into algae based biofuels to support domestic and military fuel needs. The project will include the development of algae strains and methods for algae production.

Renewable Energy Group, together with U.S. Department of Labor at the biodiesel conference, announced a new national program to roll-out expanded training for “green collar” training for laboratory, maintenance and operations positions at ethanol and biodiesel plants. The two groups have partnered with Iowa Biofuels Training International (IBTI) in the program.

Consumer and Fleet News:

Orlando Mayor Richard Crotty said he would support a proposal to convert all Orange County diesel-powered fleet to B20. The Mayor had previously set a city goal of 20 percent reduction of petroleum usage by 2010. The Mayor was speaking at the National Biodiesel Conference, which is meeting this week in Orlando. Also at the Conference are public ride-and-drives featuringÂ a B20-powered 2008 Dodge Ram 3500 pickup truck, a B5-powered 2008 Jeep Grand Cherokee and a B5-powered 2009 VW Jetta TDI. Jay Leno’s B100-powered EcoJet car, custom designed by General Motors, and featuring a jet engine, was on display at the Conference but not demonstrated. The car generates 650 horsepower and has a top speed of 220 miles per hour.

Financial News:

The Biofuels Digest Indexâ„¢ (BDIU), a basket of public biofuels stocks, fell 2.81 percent yesterday to close at 124.85 after Archer Daniels Midland missed analyst expectations for its second quarter earnings, and ethanol stocks moved generally lower on reports from the Energy Information Administration suggested the growing risk of an ethanol glut. For the day, Archer Daniels Midland (ADM) fell 2.86 percent to close at $44.20 despite recording a record profit of $441 million, or 73 cents per share, for the quarter. Among mid caps, VeraSun Energy (VSE) fell 5.5 percent to close at $10.13, while among small caps Xethanol (XNL) fell 10.14 percent to close at $0.62. Overall, declines led advances 5 to 3.

European biodiesel industry slammed by soaring costs, loss of green group support, production glut, loss of tax breaks and US competition

The Wall Street Journal provides coverage of problems in the European biodiesel industry, including a production glut, soaring costs, loss of support from green groups over the use of Malaysian and In...

Thailand E85 tax incentive confusion has stymied flex-fuel car makers planning: ethanol glut looms as E85 takeoff delayed

In Thailand, observers say that the government needs to clarify the excise tax that will be imposed on E85, so that manufacturers can plan production volumes of flex-fuel cars, to avoid an ethanol glu...

High-profile startup US BioDiesel selects Seabrook, Texas for first 35 Mgy plant

In California, notable start-up US BioDiesel, which raised $100 million last summer in a first round of financing, has chosen Seabrook, Texas and Stockton, California for its first 35 Mgy biodiesel pl...

Purdue researcher says US will consume 12 billion gallons of ethanol, produce 13 billion in 2008; return of ethanol glut looms

A Purdue researcher said that the US will produce ethanol at 13 billion gallons a year in 2008, but that the US distribution system could only handle 12 billion gallons, which will cause a fall in pri...

Beacon Energy to acquire 12 Mgy biodiesel plant in Texas from Smithfield BioEnergy

In Texas, Beacon Energy will purchase the operating assets of Smithfield BioEnergy, including a 12 Mgy biodiesel plant in Cleburne. Beacon will finance the transaction via a private equity placement. ...

Western Australian sugar growers turn to ethanol as world sugar glut looms

In Australia, Ord River sugar growers are pressing the Western Australia government to support the Ord Stage 2 expansion project, which will provide more land for sugar and give the growers enough eco...

Written by Jim Lane · Filed Under The Daily Biofuel Summary