Aventine Renewable Energy receives thumbs-up but no stock upgrade in analyst review
June 30, 2008
In lllinois, Aventine Renewable Energy received a favorable report, but no upgrade, from Raymond James analyst Pavel Molchanov.
Molchanov wrote: “While the near-term outlook for the industry remains choppy, the demand picture looks increasingly bright, with widespread adoption of E10, higher blends on the horizon, and rising penetration of E85; thus, the longer-term outlook for the ethanol industry is not nearly as negative as the charts may indicate…It is important to note that physical (cash) corn prices are trading $0.50/bushel below CBOT prices…Aventine’s active hedging strategy, alongside its higher co-product pricing, places its operating model in a more favorable position - realizing cash margins of ~$0.30/gallon under current market conditions…the remainder of 2008 will most likely be lumpy in terms of the marketplace being able to efficiently absorb the significant amount of capacity coming online.”
“For Aventine,” he added, “with the auction-rate securities situation resolved, the company is on track to open up its two new plants, Aurora West (Nebraska) and Mount Vernon (Indiana), during 1Q09, bringing its total nameplate capacity to 433 MMgy, approximately double current levels.”
Aventine reported sales of 211 million gallons for the first quarter, up 20% over 2007 and is on track to achieve an ethanol marketing capacity of 1.2 Bgy by the end of 2008.
Raymond James analyst Pavel Molchanov commented: “Aventine posted operating earnings of $0.26 per diluted share in 1Q08, well above our estimate of $0.01 and consensus of $0.08. The company has reached the halfway mark on the construction of its two new ethanol facilities - Aurora West (Nebraska) and Mount Vernon (Indiana) - scheduled to be brought online during 1Q09. Despite the sharp rise in corn prices during the quarter, the company’s active hedging strategy tempered the pressure on its crush spread ($0.60/gal vs. the benchmark average of $0.55). Additionally, the overall commodity boom has led to higher co-product pricing (41% of corn cost), providing another hedge against the current elevated corn price environment. While only slightly increasing our gross margin assumption by 0.5% for 2008, we are significantly raising our EPS estimates (shown below), showing the power of operating leverage.”
National Algae Association Appoints Biofuels Expert Will Thurmond to Serve as Chairman of Research and Development
June 30, 2008
(BIOFUELS NEWSWIRE June 30, 2008 The Woodlands, TX) The National Algae Association announced a new Research and Development collaborative to accelerate the commercialization of algae to produce multiple fuels: biodiesel, ethanol, jet fuel, hydrogen and biomass for power generation.
For the new Research and Development collaborative, the National Algae Association (NAA) has appointed Will Thurmond, a leading global biofuels expert, Biofuels Digest columnist, and author of the landmark 685 page study Biodiesel 2020, to serve as Chairman of Research and Development. Mr. Thurmond will coordinate and facilitate an R&D roundtable for the innovation and commercialization of biofuels for the National Algae Association.
Barry Cohen, founder of the National Algae Association said “we are delighted to announce Will Thurmond, a well-known expert in the field of biofuels, will help lead the NAA to achieve its goal of the commercialization of algae for renewable energy.”
For this initiative, Thurmond remarks “the United States presently faces a major challenge in realizing its renewable fuels targets. The U.S. can not produce enough soy and corn to reach its ambitious 36 billion gallon a year targets by the year 2022. The key question is, how do we get there from here, given current feedstock supply constraints and prices in soy and corn?” said Mr. Thurmond
“Algae is unique among renewable energy feedstocks, since it can be used to create multiple fuels. For example, algae can be used to create biodiesel, ethanol, jet fuel, hydrogen, and biomass for power generation,” said Thurmond. “Compared to soy, which only produces 50 gallons of oil per acre for biodiesel; or corn which can produce up to 400 gallons of ethanol per acre, algae can produce up to 20,000 gallons of biodiesel or ethanol per acre,” according to research from Thurmond’s Biodiesel 2020 study, the National Renewable Energy Laboratory, and the US Department of Energy.
“One key problem is soy and corn may only achieve one or two harvests a year. Algae can be harvested up to 3 times per week,” said Thurmond. “No other feedstock can produce the volume of biomass and serve as many applications for renewable energy as algae-based biomass for transport fuels and power generation. Plus, algae is a non-food, renewable energy source that can be used to produce both environmentally and economically sustainable fuels.”
“When the commercialization of algae arrives in the next 2-3 years, it will be a major game-changer in the first and second generation biofuels markets. Algae will provide much-needed competition, innovation and supply-side support for national renewable energy targets.” said Thurmond. “Algae is already playing a leading role in supporting the US government’s goals to achieve energy independence, energy security, and national security, as seen in algae-based projects at DARPA, NREL, and Sandia Labs.”
NAA Founder and Executive Director Barry Cohen notes “for our next National Algae Association conference in July, Mr. Thurmond will lead the NAA’s Research and Development committee to establish a much-needed collaborative dialogue between researchers, algae producers, investors, policy makers and biofuels producers. This R&D effort will support the National Algae Association’s goal to accelerate the commercialization of algae markets for biofuels and renewable energy,” said Mr. Cohen.
The National Algae Association will host its 2nd major industry conference in The Woodlands, Texas on July 17, 2008.
For more information contact:
National Algae Association
4747 Research Forest Drive, Suite 180
The Woodlands, Texas 77381
Tel 936-321-1125
info@nationalalgaeassociation.com
www.nationalalgaeassociation.com
Wisconsin cites United Ethanol for 178 permit violations; EPA action, fines loom
June 30, 2008
In Wisconsin, the state Department of Natural Resources cited United Ethanol for violations of 178 items out of 371 in its permit, resulting in the ethanol producer being named a “high-priority violation”. The plant says that it is working closely with the DNR to resolve the items where it is out of compliance. However, the designation means that the plant has 270 days to come into compliance or the case may be referred to the US Environmental Agency, ad be exposed to fines of between $10,000 and $25,000 per days as well as resident lawsuits.
Wisconsin background
North Prairie Productions said in a letter to shareholders that it is abandoning its 45 Mgy, $42 million biodiesel plant project for the Evansville area, citing high feedstock prices.
The US Energy Department most recently awarded $114 million in grants to cellulosic ethanol projects in Missouri, Oregon, Colorado and Wisconsin. The demonstration projects were proposed by ICM, for a plant in in St. Joseph, Missouri; Lignol Innovations, for a plant in Commerce City, Colorado; Pacific Ethanol, for a plant in Boardman, Oregon; and Stora Enso North America for a plant in Wisconsin Rapids, Wisconsin. Pacific Ethanol received $24.32 million, while the others received $30 million.Last February, the Department of Energy awarded $385 million to six cellulosic ethanol projects. They were Abengoa Bioenergy Biomass of Kansas, for a facility in Colwich, Kansas; ALICO Inc., for a facility in LaBelle, Florida; BlueFire Ethanol, for a facility located in Corona, California; POET, for their “project liberty†facility in Emmetsburg, Iowa; Iogen Biorefinery Partners, for a facility in Idaho Falls, Idaho; and Range Fuels, for a facility in Soperton, Georgia.
Gov. Jim Doyle said that the state will award $150 million over 10 years from the Wisconsin Energy Independence Fund, to encourage energy efficiency and renewable energy. The governor called for the state to generate 25 percent of its power and fuels from renewables by 2025.
Biofuels Digest redesigned, expanded; new columns, Interview section, expanded Biofuels Digest Index
June 30, 2008
Biofuels Digest has undergone a redesign and expansion of the biofuelsdigest.com website.
New sections include: the addition of two new columns from American Biofuels Council executive director Sean O’Hanlon, and Biodiesel 2020 author Will Thurmond; a new Interview section featuring research pioneers, top executives and policymakers; plus an expanded Biofuels Digest Index now including international stocks like Cosan, Mission Biofuels and Tiger Ethanol, including stock prices and charts.
95 Mgy Südzucker ethanol plant opens in Germany; largest in Europe
June 30, 2008
In Germany, a 95 Mgy Südzucker ethanol plant, the largest in Europe, commenced production in Zeitz. The plant uses sugar beet syrup as a feedstock, and will also produce its own biogas that will power special burners that eliminate all aromatic compounds associated with the production process.
Cropenergies announced the purchase of Ryssen Alcools from Sudzucker and said that it would increase ethanol production by nearly 30 Mgy in France. The company said that it will produce a total of 185 Mgy in 2008/09.
Thai Oil delays 48 Mgy cassava ethanol plant on feedstock cost rises; continues with 9 Mgy joint venture project
June 30, 2008
Thai Oil has delayed its $152 million, 48 Mgy cassdava ethanol plant, citing high feedstock prices. However, the state oil company’s $44 million, 9 Mgy Mae Sot project, a joint venture with Padaeng Industry and Petro Green, is on schedule to open in late 2009. Thai Oil said that it would study the potential to use molasses as a feedstock in the larger project, and also would recommence development if cassava prices dropped sufficiently.
Thailand background
State oil company PTT said that it would launch biohydrogenated diesel (BHD), after tests showed that it could safely be blended at B10 concentrations with existing Thai diesel vehicles and machinery. Tests were conducted with Toyota, which said that BHD produced less pollution and extended engine life compared to conventional biodiesel.
The government announced that a biofuels incentive package that reduces the excise tax on E85. The government said that the incentives, combined with the launch of E85 at 50 stations controlled by state oil firms, would result in a savings of $3.3 billion in oil imports.
Earlier this spring, Thai PM Samak Sundaravej said the World Bank and the United Nations are criticizing biofuels exporting nations for driving up food prices, but not saying a word about the role of oil exporting nations in driving up both food and energy costs. “Let me ask the World Bank whether they used to ask oil exporting countries before pointing their fingers and blaming us that we have to use rice fields to grow biofuel crops. They have unreasonably continued to inflate oil prices even though the oil supply is not running out yet.” Oil prices, which are up more than 150 percent since 2005, are estimated to have three times more impact on food prices than increases in grain prices.
The Thai Agriculture and Cooperatives Ministry is promoting sugarcane production for ethanol in a the cadmium-contaminated Mae Sot district of Tak, where food crops have been banned for health safety reasons. The Mae Sot Clean Energy plant, a joint venture between Padaeng Industry, Thai Oil and Petrogreen, will be completed in 2008 to produce sugarcane ethanol in the district.
Earlier this month, Thai Energy Minister Piyasvasti Amranand said that biofuels sales would increase in 2008 to $469 million from $157 million in 2007. He said that the cost of oil imports have fallen 10% as a result of biofuel usage and a stronger currency, adding that gasoline would be replaced by E10 and E20 blends by 2012.
Thai biofuel demand has increased more than 100 percent for 2007; the spur in biofuels sales comes not only from the introduction on E20, but also the implementation of a B2 mandate. Demand is so brisk that major oil traders may be required to establish mandatory strategic reserves of ethanol and biodiesel in addition to conventional fossil fuels.
Biofuel distributor Bangchak said that it had voluntarily set up a reserve of 790,000 gallons of ethanol and 378,000 gallons of biodiesel.
To coordinate these disparate developments, the Thai government announced the establishment of a new, national biofuels organization, which will include members of the government, industry, and private citizens. The Energy Ministry began coordination talks with the Commerce and Agriculture ministries, as well as representatives of universities, farmers, car makers and oil retailers. A 21-member panel will supervise policy while a 13-member panel will supervise management of biofuels development from field to wheels. $3 million in palm oil taxes will be used to support the committees.
Today in Biofuels Opinion: “Lavishing federal subsidies on a food-based fuel…is insane and morally bankrupt.”
June 30, 2008
An editorial in the Salt Lake City Tribune: “Lavishing federal subsidies on a food-based fuel that accounts for 20 percent of the rise in world food prices, harms the environment, and takes nearly as much energy from oil as it yields in clean fuel is, on its face, insane and morally bankrupt. Get rid of them.”
From a new pro-ethanol website, foodpricetruth.org: “Did you know: The biggest reason food costs more today is fuel prices. USDA Secretary Schafer recently stated: “Higher oil prices affect much more than just the cost of driving; they are actually one of the major factors behind higher food costs.” Did you know: The USDA and the White House Council of Economic Advisors have stated that increased corn demand is only responsible for “3 percent of the more than 40 percent increase we have seen in world food prices this year.”
Petrotec launches 30 Mgy waste oil biodiesel plant in Germany
June 30, 2008
In Germany, Petrotec launched a $36 million, 30 Mgy watse oil biodiesel plant in Emden. The plant uses an identical production process to Petrotec’s existing plant in Borken. The company said that prices for waste oils are 50 percent lower in current markets than rapeseed (canola) oil.
Algae fuel potential from sunlight, dark-feeding surveyed in conference report
June 30, 2008
A high-value survey of the global yield potential for algae, including an in-depth investigation of the higher-yield potential for growing algae using sugar instead of sunlight, was presented by Dr. Ulrich Steiner at the Biotech Summit. The presentation includes solar calculations around the world, and detailed analysis of photosynthesis and oil conversion efficiencies. A link to the presentation is here.
Algae background
- Seambiotic announced a partnership with US-based Inventure Chemical to construct its first commercial-scale algae biofuel plant. The plant will use high-oil yield algae strains developed over the past five years at the Seambiotics’ demonstration plant, adjacent to the Israeli Electric’s power station near Ashkelon. Inventure will contribute its proprietary process for manufacturing ethanol, biodiesel and other chemicals to the venture
- Algae biofuel company GreenFuel Technologies appointed Simon Upfill-Brown in June as CEO, who pronounced that “algae has come of age”. The company, which shut down a closely-watched pilot project with Arizona Public Service last year over cost concerns and algae blooms, reported that it is setting up a new project with APS and is designing projects to capture CO2 by co-locating with a range of manufacturing enterprises. The company said that it has abandoned glass tube and plastic bag photo bioreactors over cost concerns and will introduce a new set of designs for its closed production process.
- In Maryland, Algenol Biofuels announced an $850 million investment from Mexico’s BioFields, using the company’s technology to produce ethanol from micro-algae. The company uses a process developed by CEO Paul Woods in the 1980s to produce ethanol from algae cells, and the company says that its process bypasses the costly step of drying and pressing algae to extract oil for biodiesel.The company said that it plans to initially produce 100 Mgy of ethanol at its first plant using saltwater, in the Sonoran Desert of Mexico, and will increase production by 2012 to 1 billion gallons, with a projected yield of 6,000 gallons per acre. The company reported that it had received $70 million from undisclosed private investors in addition to the BioFields proceeds. BioFields said that it has already signed an off-take agreement with Pemex, the Mexican state oil company.• In California, algae startup Aurora BioFuels announced that has raised $20 million in series A financing from Oak Investment Partners, Noventi and Gabriel Venture Partners. Gabriel and Noventi has participated in a seed stage round. Aurora will use technology developed by Berkeley professor Tasios Melis for an open-pond algae production system, and will produce biodiesel from algae. The company says that its process reduces the cost of biodiesel production by half, compared to current methods.
- In Washington state, a group of entrepreneurs, scientists and corporate executives have formed the Algal Biomass Organization to accelerate the development and commercial application of algae biomass. The group will organize the second Algae Biomass Summit in Seattle on October 23-24
- “The jury is out on all [algae systems],” Sandia National Laboratory researcher Ron Pate told Popular Mechanics.
- In Washington state, algae start-up Bionavitas said that it will take up to four years to reach commercial levels of production,
but that its waste water treatment business is developing faster. - In Florida, PetroAlgae said that it hoped to reach its commercial production stage next year, as algae producers begin to differentiate over varying methods of getting past the algae “shade wall” and other issues in achieving commercial scale.
- New Zealand’s Aquaflow said that it has developed a scalable method for producing and harvesting algae in the wild, and envisioned expanding to a series of 1,000 acre facilities in the US and other countries.
- A research team from the University of Texas has developed a new blue-green algae (cyanobacteria) that secretes a soft cellulose, glucose and sucrose. The team told Science Daily that the microbe “could provide a significant portion of the nation’s transportation fuel if production can be scaled up.” The cyanobacteria is grown from sunlight and salty water at facilities on non-agricultural land. The team said that the
cellulose is a soft, gel-like type that is easy to break down, and that the microbes secrete the sugars and cellulose, making it possibly to continually harvest biofuels feedstock without destroying organisms and using powerful enzymes to extract sugars. - In Texas, US Sustainable Energy is awaiting lab results from a test of biocrude production using 20 pounds of algae as a feedstock. The company recently ran its initial test of 20 pounds of 5% oil-content algae feedstock with 40 percent water content, and resulted in an ignitable oil product.
Wall Street Journal analyzes McCain energy policy
June 30, 2008
The Wall Street Journal profiled the McCain energy policy, including his support for increased oil drilling except in the Arctic National Wildlife Refuge, and support for subsidies to nuclear and clean-coal technologies, but not for biofuels, solar or wind. The report also discusses his support for cap-and-trade emissions legislation, including the proposed McCain cap and trade bill of 2003, along with the Senator’s opposition to the recently failed Warner-Lieberman bill.
McCain background
The Washington Times provides a report on Senator John McCain’s energy plan, concluding that the plan discourages use of Canadian oil and will increases US demand for Middle Eastern oil. The carbon content of Canadian oil does not meet the low carbon standard that Senator McCain embraced, based on the California Low Carbon Standard introduced by Gov. Arnold Schwartzenegger.
“The concept behind California’s Low-Carbon Fuel Standard,” McCain campaign spokesman Brian Rogers told the Times, “is to use less oil in our transportation sector. Canada joined in to this agreement self-imposing emissions standards on the extracting of their oil resources. Ultimately, an international cap and trade system will allow us to regularize the system by which countries offset and reduce their emissions, but in the short term we should look for a cleaner and more efficient way to extra to oil resources from the tar sands.”
In Missouri, Senator John McCain of Arizona outlined the centerpiece of his new energy policy by calling for the construction of 45 new nuclear reactors by 2030 and said he would earmark $2 billion for the development of clean coal technology. McCain said “Perhaps no advancement in energy technology could mean more to America than the clean burning of coal and the capture and storage of carbon emissions.” McCain expressed support for offshore drilling earlier this week.
Senator McCain said that he supports the ending of ethanol subsidies, would back a repeal of the ethanol tariff, and would support the inclusion of Brazil and India into a larger G8 group. McCain was quoted in Estato de Sao Paulo saying that he favors the removal of Russia from the G8.
McCain on policy: “The straightest, swiftest path to energy security is to produce more, use less, and find new sources of power. In the face of climate change and other serious challenges, energy conservation is no longer just a moral luxury or a personal virtue. Conservation serves a critical national goal. Over time, we must shift our entire energy economy toward a sustainable mix of new and cleaner power sources. Quite rightly, I believe, we confer a special status on some areas of our country that are best left undisturbed. When America set aside the Arctic National Wildlife Refuge, we called it a “refuge” for a reason. We have proven oil reserves of at least 21 billion barrels in the United States. But a broad federal moratorium stands in the way of energy exploration and production. And I believe it is time for the federal government to lift these restrictions and to put our own reserves to use.I believe it is time for the federal government to lift these restrictions and to put our own reserves to use. We can do this in ways that are consistent with sensible standards of environmental protection.”
Recently, Sen. McCain, who introduced the first proposed cap-and-trade bill in the Senate in 2003, said: “The facts of global warming demand our urgent attention, especially in Washington. Good stewardship, prudence, and simple common sense demand that we act to meet the challenge, and act quickly,” he said. “I will not shirk the mantle of leadership that the United States bears. I will not permit eight long years to pass without serious action on serious challenges. Those who want clean coal technology, more wind and solar, nuclear power, biomass and bio-fuels will have their opportunity through a new market that rewards those and other innovations in clean energy.” McCain was speaking at the Vestas Wind Technology plant in Portland, Oregon.
Earlier this year, Sen. McCain led a revolt of 24 Senate Republicans have asked the EPA to waive, or restructure, the Renewable Fuel Standard passed in December. In a statement, Sen. John McCain said that “This subsidized (ethanol) program, paid for by taxpayer dollars, has contributed to pain at the cash register, at the dining room table, and a devastating food crisis throughout the world.” The Senators said that waiving the ethanol mandate would encourage farmers to grow other crops, as opposed to growing corn for food markets.
John McCain’s environmental record and policies are profiled in an investors.com article. The article focuses on his conversion to environmentalism after the 2000 elections, and his sponsorship of cap-and-trade legislation in 2003, 2005 and 2007 with Senator Joe Lieberman. The current bill would limit emissions among commercial & industrial users to 2004 levels by 2012 and moved down steadily until 2050. McCain favors an auction of emission certificates in his cap-and-trade proposal.
McCain vs Obama comparison
A comparison of the Obama and McCain approach to renewable energy was published in the Wall Street Journal. Among highlights: McCain support for renewable energy investment, but record of limited support for mandates and incentives; McCain opposition to the Brazilian ethanol tariff; Obama’s $150 billion investment plan in alternative fuels; Obama support for a 25 percent mandate for alternative energy from electricity by 2025; McCain’s support of incentives for nuclear energy. Obama supports an 80 percent emissions reduction by 2050, while McCain targets 60 percent (based on 1990 levels).
The Miami Herald published a comparison of the climate change policies of the key remaining US Presidential candidates.
Emission caps: Obama, McCain
Higher fuel efficiency standards: Obama
Pro nuclear power: McCain
Mandates and inentives for ethanol: Obama
Hybrid car development: McCain, Obama
Ethanol tariff repeal: McCain
Polls
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