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Cellulosic highs and lows

Good news this week for three cellulosic ethanol process developers when the USDA announced loan guarantees for Coskata, Ineos and Enerkem. Ineos is planning a groundbreaking ceremony Feb. 9. BlueFire expects news soon on its pending application.
By Susanne Retka Schill | January 31, 2011

Good news this week for three cellulosic ethanol process developers when the USDA announced loan guarantees for Coskata, Ineos and Enerkem. Ineos is planning a groundbreaking ceremony Feb. 9. A fourth cellulosic ethanol developer, BlueFire, has an application pending and company spokesmen have said they are hopeful they will be approved soon.

On the other hand, it appears Range Fuels is struggling. We were able to confirm a number of employees have been laid off, but the company has not responded to recent attempts to confirm another report in the local press. The Soperton, Ga., plant started up producing methanol, and the report quoted an employee saying they would do a run of ethanol to satisfy DOE commitments, then shut down, while it raised additional capital. The report raised a lot of questions for us, which we haven’t gotten answered yet. And, more than once we’ve discovered that local news reports aren’t quite complete, or accurate.

This news brings to mind my visit to Iogen’s Ottawa facility late last summer. It seems cellulosic ethanol developers keep close tabs on each other’s announcements. The folks at Iogen were highly suspicious that some companies were making pronouncements based on single, pilot scale tests, and few were actually working out the kinks at demonstration scale under continuous operation. They were taking great pride in the fact their demonstration plant is now operating continuously.

Since hearing that comment, I’ve been wondering if working out the kinks of a larger-scale process is at the core of Range Fuels’ seemingly slow progress after being quick out of the starting blocks. Similarly, one wonders what’s behind Verenium’s sale of its cellulosic interests to its backer, BP. They were like many developers who seemed to be promising more than they were able to deliver. Of course, that business development may have nothing to do with the challenges of process fine tuning, and more to do with the ability to stay in the game if BP were ready to invest more. Shortly after my visit to Iogen, the company announced the retainer of financial advisors to plan how to maintain a 50 percent stake in the joint venture with Shell.

We often suspect that the multiplicity of company news releases on incremental steps by start-up companies is mostly intended to keep investors interested. More than once, when a company has landed a big investment, we suddenly get far fewer press releases. Quite often, we run into companies that deliberately stay under the radar, not wanting to announce their existence until they’ve got their process perfected. That certainly saves on the embarrassment of not meeting projected groundbreaking dates. One of the reasons we may have this current situation in spotty and uncertain news about cellulosic ethanol developments is because so many going after grants and loan guarantees had to go public when it might have been better not to.

The March issue has a story by EPM Associate Editor Kris Bevill about another one of the early starters, KL Energy. The momentum has picked up there since they began a partnership with Brazil’s big oil company, Petrobras. Indeed, it seems as though we’re seeing weekly announcements about the internationalization of advanced biofuel development. This slow motion horse race may be picking up speed.