Gulf Ethanol Announces Duel Fuel Strategy

Gulf Ethanol Announces Duel Fuel Strategy

HOUSTON–(BUSINESS WIRE)–Gulf Ethanol Corporation (OTC:GFET) announced today that it will pursue a dual biofuel development strategy focused on processing feedstocks for ethanol in the U.S. and manufacturing biodiesel in Central America. Ethanol has become the dominant alternative transportation fuel in the United States. Gulf will focus on its technology for efficiently processing non-food feedstocks for ethanol manufacturers here. By contrast, Central America has ample feedstocks, such as palm oil, for the production of biodiesel. In these markets Gulf expects to manufacture biodiesel.

“Alternative energy is developing with a strong regional focus,” noted JT Cloud, Gulf’s President. “In Europe it is solar and biodiesel, in Brazil it is ethanol, in the U.S. it has been wind and ethanol. We are tailoring our technology to fit the feedstocks of the regions where we expect to develop operations,” he explained.

Certain parts of the world are already experiencing the impact of advanced clean energy. In Brazil biofuels, mostly ethanol, are now mainstream; in Germany photovoltaic is proliferating. Examples of recent investment impetus include British Airways (London: BAY.L) recent investment in New Energy through its pension fund; General Electric’s (NYSE: GE) announcement that it is doubling its renewable energy investments to $1.5 billion. About $20 billion per year is currently invested in clean energy technologies.

About Gulf Ethanol Corporation

Gulf Ethanol (OTC:GFET) is an alternative energy company focused on the development of cellulosic ethanol technologies with a particular emphasis on Texas and the Gulf Coast. The Company is focused on the procurement and development of cellulosic ethanol technologies. For more information please visit our homepage at: www.GulfEthanolCorp.com.

Coskata CEO explains how to get to $1 a gallon ethanol

April 7, 2008 1:48 PM PDT
Coskata CEO explains how to get to $1 a gallon ethanol
Posted by Michael Kanellos

Source: Green Tech Blog

Nearly every cellulosic ethanol company claims it will be able to produce fuel at $1 or less a gallon in a few years. William Roe, CEO of Coskata, in a meeting on Monday explained how his Warrenville, Ill., company will do it.

It’s one of the more interesting processes out there, because it combines both biological (i.e., microbes) and thermochemical (heat and chemicals) processing. Menlo Park, Calif.-based ZeaChem is also taking a mixed approach, but it combines thermochemical and biological processes in a different manner. Most other companies are using primarily chemical or biological processes. We don’t know who will win, but the mixed approach on paper does seem to have advantages.

Here are the highlights from the meeting with Roe:

• First, the company can use a wide variety of feedstocks for making fuel: wood chips, weeds and non-food crops like miscanthus, human waste, and carbon-heavy garbage (such as tires). Biomass, ideally easy-to-grow crops that don’t require much water, will likely be the primary feedstock. The ability to exploit various feedstocks reduces exposure to crop failures or shortages. Coskata, which has received an investment from General Motors, also makes fuel from the lignin in biomass. Some companies making ethanol from strictly biological processes can’t use lignin to make fuel.

“You can imagine biorefineries in every single state. This is an enormously efficient process,” Roe said. “We don’t need ‘eurekas’ anymore. We think it comes down to execution.”

Conceivably, Coskata could even produce fuel from the carbon monoxide from steel mills. If you could capture all of the carbon monoxide that comes out of mills worldwide, you could make 50 billion gallons of fuel a year, or close to a third of the U.S. annual consumption of fuel.

• Handling all of these different feedstocks is actually a little simpler than it looks from the outside. The first stage in Coskata’s process revolves around converting the feedstocks into synthetic gases. The different feedstocks can be segregated and processed differently. Waste can be converted to gas with plasma technology, for instance, while plant matter can be gasified with less energy-intensive methods. This allows the company to optimize on different gasification processes. It also reduces variability in processing.

“There’s actually a lot of innovation going on in gasification,” Roe said.

• Coskata has happy microbes. Once the syngas is produced, it is fed to microbes that convert it to liquid fuels. The microbes live in large colonies that collect on membranes. Fuel is produced when the gas passes through the membrane. Part of the company’s intellectual property revolves around coming up with a way to let the microbes live as colonies and form slimes. Yum. Some other companies swirl their microbes in water and keep them in perpetual motion. Letting them live in colonies allows more of the gas to be converted to fuel.

The company is experimenting with five microbes and is particularly fond of two.

• Less distillation. Microbes can create a fluid that contains a small percentage of alcohol or so by volume but can’t get it to 99 percent purity on their own. That’s why distilled spirits are stronger than beer.

Rather than fully distill the fluid, Coskata will distill to about 50 percent and then employ a membrane from Membrane Technology Research in Menlo Park to purify it the rest of the way. This cuts processing costs and energy. Coskata actually doesn’t need the membrane to get to $1 a gallon. “This is gravy,” Roe said.

• Coskata doesn’t want to make fuel. Unlike several other companies (such as Range Fuels and Imperium Renewables) Coskata doesn’t want to build and operate megaplants. It will set up demonstration plants and some moderate-sized production plants, but it primarily wants to earn revenue and profits as time goes on from licensing the technology to big companies. The company has talked to large forestry concerns, petroleum producers, and chemical manufacturers. The interesting part about this approach is that it leaves the onerous challenge of building billion-dollar plus facilities to those who have been doing it for decades. Start-ups just aren’t geared for that.

Soon, Coskata may make an announcement with another partner. Roe wouldn’t give us names, but Chevron has cut a number of development deals in this area recently, including one with Solazyme, which has come up with a way to ferment algae for biodiesel.

Coskata will have a formal coming-out party for its 40,000 gallons a year demonstration facility. Construction is already under way. Roe wouldn’t tell us what state it is in, but will announce it April 24 with the governor of the mystery state.

Coskata’s process and fuel is relatively clean, he added. Overall, it cuts greenhouse gas emissions by 90 percent, well-to-wheel (or stump-to-pump, if you prefer) compared with gas. It also uses less water than most ethanol processes, which rely on food crops.

To clarify, the $1 a gallon figure is how much the fuel will cost to produce. It includes the cost of the feedstock, the cost of the energy required to convert raw materials into fuel, and labor. It does not include paying off the capital of the facilities, taxes, retail mark-ups, or other expenses that can be added as the fuel wends its way through distribution. On the other hand, the $1 a gallon figure does not include subsidies, which lower the cost to consumers. (Ultimately, adding in all these factors can raise the price to around $1.50 a gallon, Zeachem CEO James Imbler estimated in a recent interview.)

Still, at $1 a gallon, that’s half the equivalent costs for gasoline, which is around $1.95 to $2.00 a gallon.

Verenium struggles in cellulosic ethanol quest

Verenium struggles in cellulosic ethanol quest
By Sarah Smith

Source: Ethanol Producer Magazine

Web exclusive posted April 3, 2008 at 2:45 p.m. CST

Successfully commercializing cellulosic ethanol technology has become a quest that many companies have tried – and failed at. For Massachusetts-based Verenium Corp., the difficulty of that quest started on page 37 of its 200-page annual regulatory filing to the U.S. Securities and Exchange Commission, and extended through the remainder of the report.

After noting it had raised $174 million from 2006 into 2007, Verenium reported a total of nearly $240 million in net losses for 2005, 2006 and 2007. The company, which needs $90 million to support continued cellulosic ethanol research, detailed accumulated debt of $437 million and looming cash deficits. It planned to generate additional working capital from a sale of $71 million in notes, corporate partnerships, grant funding and “incremental” product sales. “If we are unsuccessful in raising additional capital from any of these sources, we may need to defer, reduce or eliminate planned expenditures, restructure or significantly curtail our operations, file for bankruptcy or cease operations,” the statement said. The company didn’t return Ethanol Producer Magazine’s calls seeking further comment.

“We have experienced, and may continue to experience, significant delays or cost overruns related to our cellulosic ethanol plant construction projects,” the company said, referring to plans to develop a 1.4 MMgy demonstration plant. “We may not achieve any or all of our goals and, thus, we cannot provide assurances that we will ever be profitable or achieve significant revenues,” the company admitted in a March 17 filing. “Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis.” And the company acknowledged a “material weakness in internal controls” over its financial reporting.

Pacific Ethanol suffers a bigger-than-expected loss

By Elizabeth Douglass, Los Angeles Times Staff Writer
April 1, 2008

Source: LA Times 

Pacific Ethanol Inc., a California biofuels darling that boasts political connections and an investment from Bill Gates, is short on cash and suffering from higher corn and plant construction costs, which threaten to derail the once-promising biofuels maker.

The Sacramento company on Monday posted record-high sales but a larger-than-expected $14.7-million loss in the fourth quarter, reflecting a financial squeeze that has clouded prospects for ethanol producers nationwide.

Pacific Ethanol reported the loss just days after it shored up its depleted coffers with a $40-million cash infusion from Lyles United, a company whose affiliates have provided construction services to Pacific Ethanol and had previously lent it funds.

The Lyles investment provided a bit of good news for the company and helped remedy several violations of Pacific Ethanol’s credit agreement with a group of lenders. The company recently postponed construction of its Imperial Valley ethanol plant, said it suffered from large construction cost overruns and admitted to having a “material weakness” in its financial controls — problems it says it has since fixed.

“Pacific Ethanol is probably having a harder time than other, larger peers,” said Eitan Bernstein, energy analyst at Friedman, Billings, Ramsey & Co., who doesn’t own shares in the company and rates the stock “underperform.”

The company operates ethanol plants in Madera, Calif., and Boardman, Ore., and has a major interest in an ethanol production plant in Windsor, Colo. Two others have yet to come on line; a plant in Burley, Idaho, is in the start-up process and a plant in Stockton is set to open this year.

Pacific Ethanol’s chairman and co-founder is Bill Jones, a second-generation farmer and cattle rancher who served more than a decade in the California Legislature and spent eight years as secretary of state.

Chief Executive Neil Koehler on Monday attributed the fourth-quarter loss primarily to sharply higher corn costs combined with lower prices for ethanol caused by industry overexpansion. Pacific Ethanol, like most other U.S. ethanol producers, makes its biofuel from corn.

For the three months ended Dec. 31, Pacific Ethanol’s gross margins — the difference between the cost of production and the selling price of the ethanol — plummeted to 1.3% from 14.6% in the final quarter of 2006. For the full year, the margin slipped to 7.1%, down from 2006′s margin of 11%.

The lower margins couldn’t cover the company’s debt and overhead expenses, Koehler said. The quarterly loss equaled 39 cents a share, well off average analyst expectations of a 17-cent loss, according to a survey by Thomson Financial. In the fourth quarter of 2006, the company lost $3.1 million, or 11 cents a share.

The margin crunch has taken a toll industrywide. Grain giant Cargill Inc. suspended plans for an ethanol plant near Topeka, Kan.; an ethanol producer in Illinois fell into bankruptcy protection; and VeraSun Energy Corp. scrapped plans for an ethanol plant in Reynolds, Ind. — a community that had hoped to call itself BioTown USA.

During the quarter, Pacific Ethanol also recorded special charges of $5.5 million, or 14 cents a share, reflecting financing fees from the suspended plant and a decrease in fair value of interest-rate hedges.

For the full year, Pacific Ethanol recorded a loss of $14.4 million, or 47 cents a share, compared with a loss of $142,000, or $2.50 a share, in 2006, when there were fewer shares outstanding.

Net sales for 2007 more than doubled to $462,000, reflecting record volumes of ethanol deliveries that were partly offset by lower sales prices. The firm sold 190.6 million gallons of ethanol last year, up 87% from 2006.

Shares of Pacific Ethanol fell 45 cents to $4.40 on Monday, a losing day for ethanol producers after the U.S. Agriculture Department released estimates showing that farmers intended to plant 8% less corn this year. The stock, which traded above $40 in 2006, sold as high as $17 last April.

“It’s a pretty levered business model,” Bernstein, who had expected a 20-cent loss for the quarter, said of the company’s situation. “The question is, how do we get confident and comfortable about earnings going forward?”

elizabeth.douglass @latimes.com