Credit Suisse First Boston says oil companies looking to snap up small biofuels poducers

In New York, a director at Credit Suisse First Boston said that oil companies are looking at buying U.S. ethanol distilleries, and said that deals would occur in the next 18 months. Paul Ho, director of the company’s global energy group, did not disclose the names of specific companies, but said that “it may be easier for them to just have some of the ethanol assets themselves,” given the 36 billion gallons of ethanol required to be blended with gasoline by 2022 under the Renewable Fuel Standard.

In New York, attendees at the Biodiesel Finance & Investment Summit said that they expect numerous biodiesel plant closings, consolidations and mergers in the next 18 months as the industry copes with increased feedstock prices and tight capital supply. Experts predicted that companies such as Renewable Energy Group, which holds 27 percent of US biodiesel market share, will target biodiesel plants producing 20 – 30 Mgy that are too big for local markets but too small to achieve economies of scale.

Earth Biofuels was one of the first biodiesel companies to run into trouble. The company said recently that it has executed a settlement agreement with a group of creditors that would dismiss the group’s petition for involuntary bankruptcy.

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