Posts Tagged ‘ethanol’
Verenium Corporation (Nasdaq: VRNM) a developer of next-generation cellulosic ethanol from biomass and high-performance specialty enzymes, reported a net second quarter loss for the period ending June 30 of $28.9 million on declining revenue and higher operating expenses.
Slightly more than $8.9 million of the total loss was attributed by Verenium to its “non-controlling interest in consolidated entities,” so the net loss on the part of the Cambridge, MA, company was $19.9 million. That was an increase of nearly 30 percent over the comparable period in 2008.
Despite the losses as the company’s joint venture with BP, called Vercipia Biofuels, gets underway and as it gears up to eventual commercial biofuel production, Carols Riva, president and CEO, told analysts that Verenium continues to make “significant progress on many fronts.”
He said the company has continued its aggressive expense management initiatives to control operating expenses and to conserve cash,. Verenium also amended financial covenants related to its 8 percent convertible notes to eliminate some of their “onerous restrictions.” Riva says that will simplify its financial structure and give the company financial flexibility.
Riva said that despite significant challenges that the ethanol industry has endured over the past three years, government support for biofuels ”remains strong as our government leaders realize that an overdependence on imported oil remains a critical weakness in our economy.“
The $300 million Vercipia 50/50 venture was selected in June to proceed with due diligence on a Department of Energy loan guarantee for Venerenium’s first commercial project in Highlands County, FL. That project is scheduled to break ground in 2010.
Riva says the guarantee “could extend the project debt covering up to 80 percent of eligible costs.”
The company is also making progress on the “optimization phase” at its demonstration plant in Jennings, LA, and has operated the plant on sugarcane bagasse and energy cane.
Riva says that Verenium remains optimistic that the markets for its products “will stabilize and improve as economic activity recovers.” He acknowledged that softening market conditions have affected revenues, which declined 11 percent to 16.3 million during the quarter. The revenue deline was mainly on the enzyme side of the business, regarding a change in “revenue recognition,” and the discontinuation of two product lines.
BP is also forging aheead on another biofuels front with the announcement earlier this week that it has entered a $10 million joint venture with Martek Biosciences Coporation to develop microbial oil for biofuels. BP and Martek said they will work together to develop a “step-change technology for the conversion of sugars into biodiesel.
Under the terms of the multi-year agreement they said they want to establish “proof of concept” for large-scale, cost-effective microbial biodiesal production through fermentation. The sugar-to-biodiesel plan converts sugars derived from biomass into lipids using unique fermentation mico-organisms. The lipids are then converted into fuelmolecules through chemcial or thermocatalytic processes.
We’ll end the week on a high note with items from here on the left coast and one from the “other” Washington.
A new joint venture announced yesterday, called S4 Energy Solutions LLC, will develop, operate and market plasma gasification facilities for renewable energy generation from waste byproducts.
The joint venture “is expected to process waste from the country’s increasingly segmented commercial and industrial waste streams to produce a range of renewable energy and environmentally beneficial fuels and industrial products as well as to generate electricity,” the companies said in a joint press release.
The initial focus for S4 will be to process medical and other segregated commercial and industrial waste streams. Future commercialization plans could include the processing of municipal solid waste once the technology has been demonstrated to be economical and scalable for such use.
“We see waste as a resource to be recovered, and this joint venture with the PEM system will help Waste Management’s commercial and industrial customers maximize high energy value waste streams to generate valuable renewable energy products based on their unique environmental and logistical considerations,” said Joe Vaillancourt, managing director at Waste Management.
Under the plasma gasification process, waste materials are fed into a closed chamber where they are superheated to temperatures of between 10,000 and 20,000 degrees Fahrenheit using an electricity-conducting gas called plasma. The intense heat of the PEM™ rearranges the molecular structure of the waste, transforming organic (carbon-based) materials into an ultra-clean, synthesis gas (syngas).
The syngas could be converted to transportation fuels such as ethanol and diesel, industrial products like hydrogen and methanol or used as a substitute for natural gas for heating or electricity generation.
Alternative energy company Saline Green Project this week chose Marshall, MO, as the site for a commercial-scale cellulosic ethanol bio-refinery facility, producing renewable fuels, chemical products and electricity.
According to a report in The Sedalia Democrat the company has had an interest in opening a plant in Marshall for more than a year. Frank Imo, Saline Green CEO, said that local support for the project was encouraging and was a big factor in making the project possible.
Saline Green will provide start-up funds for the project, and will seek investors as it nears completion.
Saline Green spokesman Donte Tamprateep was quoted as saying that his company has been working with a group of scientists who helped develop the technology required to efficiently convert cellulosic biomass to its simple sugar state.
Cellulosic ethanol is a biofuel produced from wood, grasses and inedible plant parts. Tamprateep said the biggest challenge the company faced was finding a way to break down cellulose in a cost-effective manner.
The company apparently has hooked up with Pure Energy Corporation, which has invested more than $30 million over the last 15 years in an effort to develop the next generation of cellulosic ethanol technology.
“The Saline Green Project will serve as both a world-class sustainable energy production facility and also a showcase of cutting edge technology in the cellulosic ethanol, chemical and green electricity fields,” said Irshad Ahmed, president and CEO of New Jersey-based Pure Energy.
So why Marshall? One reason becomes apparent by looking at a map. The town of more than 12,000 is located in the middle of the country with excellent access to road and rail routes. From a supply chain distribution viewpoint, it’s a good choice.
Late yesterday Pacific Ethanol Inc., the West Coast’s largest ethanol producer, announced that several of its producing subsidiaries in California, Oregon and Idaho filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code.
PEIX joins a growing roster of at least 10 other ethanol producers that have gone belly up recently, victims of the poor economy and poor conditions in the ethanol market.
Verenium Corp., which develops next-generation cellulosic ethanol and high performance specialty enzymes, reported a “strong start” for the year, with a dramatic improvement in the net bottom line.
While the Cambridge, MA company posted a net first quarter loss of $286,000 that was a huge improvement compared to its first quarter 2008 loss of $23.1 million.
The story was not quite the same regarding its operating losses – revenue minus operating expenses – because they continue to mount. Its operating loss increased 7 percent over the last year’s first quarter to $18.4 million.
Verenium says it has made significant progress so far this year, especially in the biofuels segment of its business. Earlier this year it entered into a 50-50 joint venture with BP to develop, own and operate cellulosic ethanol facilities using non-food feedstocks with a total commitment of $45 million in funding and assets from the two partners.
It also identified Highlands County, FL as the location for a first commercial-scale cellulosic ethanol facility. This facility will be developed as part of the joint venture with BP and is expected to provide the region with approximately 140 full-time jobs once commercial operations begin. The project was awarded a $7.0 million grant as part of Florida’s “Farm to Fuel” initiative. The joint venture also submitted a loan guarantee application to the Department of Energy during the quarter.
Also in the first quarter, Verenium began the “optimization phase” of its 1.4 million gallon/year demonstration-scale plant in Jennings, LA. In a corporate move, it consolidated its R&D organization to include the Jennings pilot plant and demonstration-scale biofuels facilities under Greg Powers, EVP of Research and Development.
Verenium has also appointed James E. Levine, an energy banking and finance executive from Goldman Sachs, as EVP/CFO to support efforts to rebuild its capital structure and secure financing for commercial projects.
During the quarter it implemented “aggressive expense management initiatives” to decrease operating expenses. Operating expenses in the first quarter increased slightly, however, by $321,000, to $32.7 million.
On the balance sheet, Verenium reported that its cash position – including cash, cash equivalents and short-term investments – had more than doubled since Dec. 31 to $15.8 million.
Carlos A. Riva, president and CEO, commented in the company’s financial release: “As we look toward commercial operations, we continue to be very encouraged by the political climate and support for alternative energy and, specifically, biofuels.”
A U.S. bankruptcy court in Texas last Friday approved the sale of Panda Ethanol’s main plant in Hereford, Texas – Hereford Biofuels – for $25 million in credit to senior lenders led by Societe Generale.
That amounts to about 12 percent of the original construction and outfitting cost.
Hereford Biofuels is one of four subsidiaries of Panda Ethanol that filed for Chapter 11 bankruptcy in January. It was the lead entity constructing the $200 million, 100-mgy plant that was close to completion.
Societe Generale has not disclosed its plans for the plant. It is resolving disputes with Lurgi, the general contractor, and two lenders, Banco Bilboa and Greenstone regarding construction and funding issues.
The sale of the Hereford subsidiary under Section 363 of the U.S. Bankruptcy Code and the outstanding funding and construction issues, which are in arbitration, make the future of Panda uncertain. It was not a part of the Chapter 11 bankruptcy filing. But in March Panda decided to deregister as a public company with the Securities and Exchange Commission, suspending its obligations to file various financial reports with the SEC.
Darol Lindloff, Panda’s CEO, said at that time the company’s board determined that “going dark is in the best interest of the company and its stockholders.”
Panda announced financing to build the plant in August 2006. The plan called for the plant to go up on 380 acres north of Hereford. The operation envisioned turning more than 1 billion pounds of cattle manure from feedlots and dairies each year into fuel for the boilers supplying steam to the plant.
The next best bid for the plant was $15 million in cash from Ethanol Europe.
Two years after Gov. Schwarzenegger issued an executive order requiring low carbon fuel standards, the California Air Resources Board (ARB) voted Thursday by an overwhelming margin to adopt a regulation implementing the governor’s initiative.
It calls for a 10 percent reduction of greenhouse gas emissions from California’s transportation fuels by 2020.
This appears to give a big boost to alternative fuel production and distribution in the state. Regulators said they expect the new generation of fuels to come from the development of technology that uses algae, wood, agricultural waste such as straw, common invasive weeds such as switchgrass, and even from municipal solid waste.
ARB, a department of the California Environmental Protection Agency, says the new reg is aimed at “diversifying the variety of fuels used for transportation,” and will boost the market for alternative-fuel vehicles and achieve 16 million metric tons of greenhouse gas emission reductions by 2020. (ARB by the way is also commonly referred to as CARB, but since the agency refers to itself as ARB that’s what we’ll use.)
“The new standard means we can begin to break our century-old dependence on petroleum and provide California with greater energy security” said ARB Chairman Mary D. Nichols.
ARB’s analyses say that to produce the more than 1.5 billion gallons of the biofuels needed, more than 25 new biofuel facilities will have to be built and will create more than 3,000 new jobs, mostly in the state’s rural areas.
The regulation requires providers, refiners, importers and blenders to ensure that the fuels they provide for the California market meet an average declining standard of ‘carbon intensity.’ This is established by determining the sum of greenhouse gas emissions associated with the production, transportation and consumption of a fuel, also referred to as the fuel pathway.
“Economic mechanisms will allow the market to choose the most cost-effective clean fuels (those with the lowest carbon intensity) giving California consumers the widest variety of fuel options,” the agency says.
Seeking to enhance private sector and federal investment into alternative fuel production and distribution, California is also providing funding to assist in the early development and deployment of the most promising low-carbon fuels. The Alternative and Renewable Fuel and Vehicle Technology Program, managed by the California Energy Commission, will provide approximately $120 million dollars per year over seven years to deploy the cleanest fuels and vehicles.
That comes to $840 million, a very decent chunk of change.
Arnold issued the executive order requiring the low carbon fuel standard (LCFS) in early 2007. The standard does not become binding until Jan. 1, 2011.
Early reaction to the regulation was a little mixed, especially from ethanol producers concerned with ARB’s controversial calculations surrounding the emission impact of its ‘indirect land use change’ on sugar and corn ethanol.
The Brazilian Sugarcane Industry Association (UNICA) said sugarcane ethanol “passed a critical test” when ARB passed the LCFS. While UNICA “continues to provide evidence that sugarcane ethanol’s carbon intensity is even lower than initially calculated” by ARB, the decision “means sugarcane ethanol will be in greater demand in California in the years to come.
“The verifiable 90 percent greenhouse gas reduction delivered by sugarcane ethanol provides a source of low carbon fuel that achieves the goals of California’s ambitious regulation, with room to spare,” said UNICA President & CEO Marcos Jank following the vote in Sacramento.
“We congratulate California for leading the world in encouraging low carbon fuels. But any realistic evaluation of carbon emissions from sugarcane farming in Brazil must reflect the strict policies being implemented and action already taken to phase out sugarcane burning, increase mechanical harvesting and expand cogeneration output,” said Joel Velasco, UNICA’s chief representative in North America.
Velasco says that with CARB determined to push forward with indirect land use calculations, the best available data and research should be considered before rushing to conclusions. “Indirect land use changes must accurately represent the dynamics of Brazilian agriculture today. We are confident that a data driven analysis will conclude that indirect land use change from sugarcane cultivation in Brazil is marginal at best,” he added.
Growth Energy, a group comprised of U.S. ethanol producers, said meanwhile that ARB “voted to enact a standard that unfairly penalizes biofuels as compared to other fuels, including gasoline.”
General Wesley Clark, co-chairman of Growth Energy, said, “We’re disappointed with the board’s vote. This was a poor decision, based on shaky science, not only for California, but for the nation. It is unfair to selectively single out the indirect effects of one fuel pathway while ignoring the significant indirect effects of all other fuels, including petroleum. Today’s decision puts another road block in moving away from dependence on fossil fuels and stifles development of the emerging cellulosic industry.”
Growth Energy said ARB unfairly penalizes biofuels by adding the “indirect land use change” figure to the carbon intensity of biofuels.
It argued that applying indirect effects only to biofuels set an unequal standard since other fuels also have indirect greenhouse gas emissions effects. However, Growth Energy said it is “pleased the ARB has agreed to continue its study of indirect effects, including indirect land use change as well as the indirect effects of all other transportation fuels.”
“The inclusion of an indirect land use change penalty against ethanol is not based on universally accepted science, puts our industry at an unfair disadvantage and would likely lead to increased dependence on foreign oil and stall efforts to create a greener economy,” said Tom Buis, Growth Energy’s CEO. “We’re very supportive of a low carbon fuel standard because ethanol is a low carbon fuel. Corn ethanol can thrive if all fuel pathways are calculated on a level playing field.”
My admittedly unscientific and perhaps naïve reaction to the above is that this is huge: Finally there is a decision that gives all types of biofuel some real direction and impetus. Calculating the “indirect” impact of land use on fuel pathways strikes me as inherently inexact and will always be subject to interpretation and debate. The bar has to be set somewhere and ARB has done this.
To view the regulation, all 374 pages of it, click here.
Pearson, based in San Diego, is developing a network of renewable fuels filling stations in the state. In fact the company built the first E85 fuel station in California six years ago.
As usual, financial details of the deal were not disclosed. The companies only disclosed that under the terms of the agreement, the Cupertino-based AE Biofuels (stock ticker: AEBF) will supply Pearson with cellulosic ethanol “and other biofuels” for distribution through renewable fuels filling stations in California. They will also use available government programs to develop additional renewable fuels filling stations in the state.
Also, AE recently signed an agreement with Merrick & Company to commercially implement AE Biofuels’ “patent-pending enzyme based technology for the conversion of non-food biomass into ethanol and other materials through the design of new biofuels facilities or the conversion of existing biofuels facilities.”
Merrick, based in Golden, CO, is an $85 million provider of engineering and architectural design-build, procurement, construction management, and geospatial services.
Under this agreement, which also features no financial disclosures, AE and Merrick will “work to deploy AE’s next-generation biofuels technology to address the significant demand for cellulosic ethanol created by the revised Renewable Fuels Standard (RFS).”
The Energy Independence and Security Act of 2007 increased the RFS to 36 billion gallons of renewable fuels, the majority of which must be advanced biofuels, such as cellulosic ethanol.
Renew Energy could close Wisconsin plant
Ethanol producer Renew Energy LLC, which filed for Chapter 11 protection under the US Bankruptcy Code in late January, announced today that it will close or sell its 130 mgy ethanol plant in Jefferson, WI if a buyer cannot be found. The sale or closure will take effect between May 18 and May 31, the company said, and would likely result in the layoff of the plant’s entire workforce of 80.
The company is a Wisconsin limited liability company with five members, each holds a 20 percent interest in the company.
For its most recent fiscal year, Renew Energy generated revenue of about $184 million. As of the Jan. 30 bankruptcy filing, it had liabilities of more than $150 million (of which $37 million is unsecured trade debt). It retained William Blair & Company L.L.C. to assist in locating lenders for a DIP facility and in soliciting purchasers of the company’s assets. In the interim, the company had negotiated a temporary DIP facility in the amount of $2.5 million from West Pointe Bank.
BioEnergy Development goes with biomass
BioEnergy Development Company, based in Fishers, IN, said late Friday that it signed a letter of intent with an area utility company and secured land options for the development and construction of a biomass electric generation plant.
The proposed plant BioEnergy Power LLC, will be located on a coal strip mine site in Clay County. The plant is expected to employ 25 to 30 full time workers upon completion.
The new plant will generate approximately 27 megawatts of electricity from wood waste that was previously provided to a paper plant in Terre Haute. The plant closed in 2007; subsequently, a Purdue University study funded by the Indiana Energy Department identified “green” energy production as the highest and best of use of wood wastes.
BioEnergy is in negotiations with a wood waste aggregator to supply the plant. Most wood waste for the plant will come from within a 100-mile radius of the proposed site. According to the U.S. Forest Service, the $17 billion per year Indiana hardwood industry has generated 1.2 million tons of annual waste for the past 25 years.
To qualify for green energy credits issued by the Environmental Protection Agency, and to be certified by the U.S. Department of Energy, this plant will use only wood waste and other renewable waste biomass in power generation. To further lower the plant’s carbon footprint, BioEnergy Development is in discussions with other companies to capture carbon dioxide for use in developing other types of energy.
BioEnergy Power LLC said it intends to complete the permitting process and begin construction by fall, 2009 complete construction by the end of 2010.
Bankruptcy court approves first $15 million in new financing for Aventine
Ethanol producer Aventine Renewable Energy, said a U.S. Bankruptcy Court gave interim approval to a debtor-in-possession financing package, thus permitting the company to access a first tranche of $15 million in financing, This will allow the company to move forward with payments to suppliers and employees, it said.
Aventine, based in Pekin, IL, filed to reorganize under Chapter 11 on April 7 to reorganize and restructure its debt with its bondholders. The DIP term sheet names Brigade Leveraged Capital Structures Fund, Ltd., Nomura Corporate Research & Asset Management, Inc., as the investment manager for and on behalf of certain lenders, Whitebox Hedged High Yield Partners, L.P., Pandora Select Partners, L.P. (as lenders), Aventine Renewable Energy, Inc., Aventine Renewable Energy – Mt Vernon, LLC, and Aventine Renewable Energy – Aurora West LLC on a joint and several basis as debtors in possession under Chapter 11.
A hearing is scheduled for May 5th on the total $30 million DIP package.
Buckeye generates 79 percent on energy needs from biomass
In its recently-released sustainability report for 2008 Buckeye Technologies, the Memphis manufacturer and marketer of specialty fibers and non-woven materials, says it has reduced its GHG emissions by 15 percent per ton of production since 2003 while generating 79 percent of its total energy needs from renewable biomass.
Buckeye’s first sustainability report also has information about the company’s social impacts, including safety, diversity, and contributions to communities where it operates.
Click here to view the report.
Call to action on building a sustainable future
A draft report from the National Science Board calls on the U.S. to “develop, clearly define, and lead a nationally coordinated research, development, demonstration, deployment, and education (RD3E) strategy to transform the U.S. energy system to a sustainable energy economy that is far less carbon-intensive.”
One of the key findings in the report says the level of federal support for sustainable energy research and development is inadequate to meet the scale and scope of the challenges for achieving sustainable energy solutions.
Another perhaps inconvenient finding is that the current energy economy “does not adequately value or reward the attributes of sustainable energy solutions relative to those for the use of non-sustainable energy.”
Dan Arvizu, co-chairman of the NSB’s Task Force on Sustainable Energy as well as head of the National Renewable Energy Laboratory (NREL) said that the measures recommended “can help to promote national security by increasing U.S. energy independence, ensure environmental stewardship by reducing energy and carbon intensity, and generate continued economic growth through innovation in energy technologies and increases in green jobs.”
The group called for the establishment of a Presidential Sustainable Energy Council to coordinate all federal activities in sustainable energy, boost R&D spending, develop stable policy, lead globally and bolster science and technology education.
The 25-member National Science Board is the policy-making body for the National Science Foundation and advises the President and Congress.
• The U.S. government must adopt a forward-looking, long-term, coordinated strategy for achieving a stable, sustainable, and clean energy future.
• The U.S. must substantially increase efforts in education and workforce development related to sustainable energy research and technology development and deployment.
• Limited international engagement and collaboration on sustainable energy solutions are inhibiting progress toward critical multilateral and bilateral actions.
• The U.S. Government should promote national public awareness of sustainable energy solutions, energy consumption, and energy efficiency.
Click this to view the report.