British Petroleum is acquiring a 50 percent stake in Tropical BioEnergia SA, a Brazilian company that's currently building a new ethanol plant in Edéia, Goias State, Brazil and planning a second plant. The new plant will have a capacity of 115 million gallons of ethanol a year from sugarcane. The combined investment in the two plants will be approximately $1 billion. Tropical BioEnergia SA is already a joint venture between Santelisa Vale and Maeda Group and the two original partners will each maintain a 25 percent stake in the company. BP is paying $60 million for its share.

The first refinery should start operations in the second half of this year and should hit full capacity in 2010. Supplies from the plants will be targeted at the domestic Brazilian market and could eventually be exported. The plants will both feature cogeneration capabilities using leftover materials after the sugar cane is crushed. The two plants are each expected to have 30MW of surplus electricity that they can sell in addition to the ethanol.

[Source: BP]

Production of ethanol in the United States is continuing to accelerate with production in the first quarter of 2008 up 37 percent over 2007 levels. The U.S. now has almost 150 ethanol plants, nearly double the number from five years ago, and they produced 1.9 billion gallons of alcohol in the first three months of this year for an annual pace of 7.6 billion gallons. Ethanol producers still have a long way to go to reach the 36 billion threshold required by the December 2007 Energy bill. They do of course have until 2022 to achieve that level by which time hopefully most of it should be coming from cellulosic sources instead of corn. In the meantime for those driving flex-fuel vehicles it's still tough to find E85 in most of the country. There are an estimated 1,200 E85 filling stations in the U.S. right now with the heaviest concentrations in the Midwest region. For now, most of the ethanol being produced is blended into gasoline at low concentrations to produce E10 which can be used in all cars and trucks (at least the ones that don't run on diesel)

[Source: Reuters]

As expected, VeraSun Energy and US BioEnergy, two large American ethanol producers, have become one. In fact, the just-merged company expects to be the largest producer of ethanol in the United States by the end of this year, producing 1.64 billion gallons of the car-liquor. The newly-formed company is called VeraSun Energy Corporation and holds claim to eleven functioning ethanol plants with five more in construction.

CEOs from both companies praised the merger, with Don Endres of VeraSun saying, "We look forward to realizing the synergies of our combined business, as we expect to reach 16 biorefineries and an operating capacity of more than 1.6 billion gallons by the end of 2008." Gordon Ommen from US BioEnergy adds, "This is a very exciting transaction that places us in the No. 1 position in the industry." Both men will remain with the company, Endres as CEO and Ommen as chairman.

Too bad the news didn't accompany an amazing announcement regarding cheap and abundant cellulosic ethanol.

[Source: VeraSun Energy Corporation]

I was checking out the blog of an old friend that I grew up with, who now lives on Prince Edward Island. PEI is an island province on the Atlantic coast of Canada, and apparently they are trying to cash in on the ethanol boom. An ethanol production plant is being proposed for construction in Georgetown, PEI. The leader of provincial Green party there, Sharon Labchuk, is ambivalent about having a local production plant. Her party's most recent national election platform is very supportive of biofuels and resolutions that came out of their most recent party convention go even farther. They propose having 20 percent biofuel content in Canada by 2020, not collecting sales taxes on the biofuel fraction of fuel sales and diverting federal GMO biotechnology research funds towards organic food production and efficient biofuel crop development. This sounds like they support ethanol and other biofuels. However, this week Ms Labchuk characterized ethanol production as a "huge hoax" and raised concerns about air and water pollution from the plant.

Based what's being said, it sounds more like the PEI Green party is suffering a case of NIMBY. They want to support biofuel production and use as long as that production takes place somewhere else. Admittedly, ethanol, particularly from corn is controversial, but for the moment it is the most viable biofuel in North America and the Green Party might want step back and decide what they really want.

[Source: ruk]