Archive for February 8th, 2009

Agriculture Secretary in Talks to Raise Ethanol Blend

Posted on February 8, 2009. Filed under: Advanced Biofuel, Blender's Tax Credit, Field-to-Pump | Tags: , , , , |

Agriculture Secretary in Talks to Raise Ethanol Blend

Bloomberg Press

February 6, 2009

By Tina Seeley

The Agriculture Department is in discussions with the Environmental Protection Agency about raising the amount of ethanol blended into the U.S. gasoline supply, U.S. Agriculture Secretary Tom Vilsack said.

About 21 percent of the U.S. capacity for ethanol production is idle, according to ethanol-maker Archer Daniels Midland Co. VeraSun Energy Corp., the second-largest U.S. ethanol maker, filed for Chapter 11 bankruptcy protection in October as an industrywide expansion of production facilities outpaced demand.

“I do think it’s important for us to look for strategies to make sure the infrastructure of the ethanol industry is preserved, because it is a key component to this new energy future the president’s laid out,” Vilsack, a former Democratic governor of Iowa, said today in an interview with Bloomberg News in Washington.

Ethanol demand has fallen as gasoline use dropped since last summer. By increasing the blend, demand for ethanol will be boosted even as gasoline use falls. The U.S. recession exacerbated an ethanol supply glut as demand for transportation fuels dropped.

Ethanol futures prices in Chicago touched a five-week low this week. Denatured ethanol for March delivery rose 4.5 cents, or 2.9 percent, yesterday to $1.597 a gallon on the Chicago Board of Trade. Futures have fallen 23 percent in the past year.

“We have been talking to folks at EPA, as they look at the blend-rate issue,” Vilsack said. “That may be one way in the short term to create new opportunities.”

The EPA in November said it would require gasoline to contain a 10.2 percent blend of biofuels this year.

Vilsack said the discussions so far haven’t included “specific numbers. We’ve just begun the conversation.”

High Priority

“This is a very high priority for the ethanol industry so it would be a welcome development if they could secure a higher blend rate,” Mark McMinimy, an analyst with Stanford Group Co. in Washington, said in a telephone interview.

“I’m not sure how much difference it could make to profits margins in the short term,” he said.

Ethanol producers have faced declining margins from a competitive market, coupled with low oil prices and relatively high prices for corn, used to make ethanol, said McMinimy.

“That dynamic has to be changed,” he said.

Gasoline futures prices have dropped 43 percent in the last year on the New York Mercantile Exchange. Gasoline demand during the past four weeks was 2.4 percent below the same period last year.

Poet LLC, the largest ethanol producer, said yesterday it may buy shuttered distilleries owned by VeraSun.

No Change

Vilsack also dismissed the idea of changing the congressionally mandated renewable fuels standard, which requires 11.1 billion gallons of biofuels such as ethanol to be used in the U.S. this year.

“I don’t think we should be changing anything until we absolutely have to,” Vilsack. “We’ve laid the markers down there and I think we have to work hard to meet it.”

To contact the reporter on this story: Tina Seeley in Washington at tseeley@bloomberg.net.

About Renergie

Renergie was formed by Ms. Meaghan M. Donovan on March 22, 2006 for the purpose of raising capital to develop, construct, own and operate a network of ten ethanol plants in the parishes of the State of Louisiana which were devastated by hurricanes Katrina and Rita.  Each ethanol plant will have a production capacity of five million gallons per year (5 MGY) of fuel-grade ethanol.  Renergie’s “field-to-pump” strategy is to produce non-corn ethanol locally and directly market non-corn ethanol locally. On February 26, 2008, Renergie was one of 8 recipients, selected from 139 grant applicants, to share $12.5 million from the Florida Department of Environmental Protection’s Renewable Energy Technologies Grants Program.  Renergie received $1,500,483 (partial funding) in grant money to design and build Florida’s first ethanol plant capable of producing fuel-grade ethanol solely from sweet sorghum juice. On  April 2, 2008, Enterprise Florida, Inc., the state’s economic development organization, selected Renergie as one of Florida’s most innovative technology companies in the alternative energy sector.  On January 20, 2009, Florida Energy & Climate Commission amended RET Grant Agreement S0386 to increase Renergie’s funding from $1,500,483 to $2,500,000. By blending fuel-grade ethanol with gasoline at the gas station pump, Renergie will offer the consumer a fuel that is renewable, more economical, cleaner, and more efficient than unleaded gasoline.  Moreover, the Renergie project will mark the first time that Louisiana farmers will share in the profits realized from the sale of value-added products made from their crops.

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Valero Bids for VeraSun Assets

Posted on February 8, 2009. Filed under: Blender's Tax Credit, Field-to-Pump | Tags: , , , , , |

Valero Bids for VeraSun Assets

The Wall Street Journal

February 6, 2009

By Lauren Etter

Oil-refiner Valero Energy Corp. on Friday entered an agreement to buy a group of ethanol plants for $280 million from ethanol producer VeraSun Energy Corp., subject to a bidding process in Verasun’s bankruptcy case.

This is the first foray into the ethanol business for Valero, one of the nation’s largest oil refiners.

VeraSun, Sioux Falls, S.D., filed for bankruptcy last year amid a volatile commodities market and falling ethanol prices. Now under bankruptcy protection, the company has put up most of its assets for sale to generate cash.

“Given current difficult industry conditions and continued constrained credit markets, we believe that commencing a sale process is in the best interest of company stakeholders,” said Don Endres, VeraSun’s chief executive officer in a statement.

Bill Day, director of media relations at Valero says the timing is right to get into the ethanol business partly because of the availability of distressed assets.

“It’s a good time for us to be able to buy assets at a reasonable price,” Mr. Day said in an interview. “We can make an offer that’s a good deal for our shareholders.”

VeraSun has signed an agreement with Valero, San Antonio, Tex., to sell five production facilities and a sixth under development. The facilities are located throughout South Dakota, Iowa, Minnesota and Indiana. The purchase agreement is worth about $280 million, plus the value of inventory and certain prepaid expenses, the companies said in a joint statement issued Friday.

Any sale of assets would still have to go through an auction where an open bidding process would allow other companies to make their own offers. But, Mr. Day said that “We’re hopeful we will be able close the deal” within the second quarter of the year.

Oil companies are ethanol’s biggest customers, and traditionally the two industries have remained disconnected. Ethanol companies tend to be sprinkled across Midwestern farm towns, while oil companies tend to be located near the coasts.

Also the two industries have had tortured relations in the past, with oil companies reluctantly using ethanol after energy legislation mandated its use. Under government mandates, oil companies are required to blend billions of gallons of the corn-based fuel into their gasoline supply each year.

If the sale goes through, Mr. Day said that the company would be picking up the assets at about 25% of the estimated replacement value of a new plant.

 

About Renergie

Renergie was formed by Ms. Meaghan M. Donovan on March 22, 2006 for the purpose of raising capital to develop, construct, own and operate a network of ten ethanol plants in the parishes of the State of Louisiana which were devastated by hurricanes Katrina and Rita.  Each ethanol plant will have a production capacity of five million gallons per year (5 MGY) of fuel-grade ethanol.  Renergie’s “field-to-pump” strategy is to produce non-corn ethanol locally and directly market non-corn ethanol locally. On February 26, 2008, Renergie was one of 8 recipients, selected from 139 grant applicants, to share $12.5 million from the Florida Department of Environmental Protection’s Renewable Energy Technologies Grants Program.  Renergie received $1,500,483 (partial funding) in grant money to design and build Florida’s first ethanol plant capable of producing fuel-grade ethanol solely from sweet sorghum juice. On  April 2, 2008, Enterprise Florida, Inc., the state’s economic development organization, selected Renergie as one of Florida’s most innovative technology companies in the alternative energy sector.  On January 20, 2009, Florida Energy & Climate Commission amended RET Grant Agreement S0386 to increase Renergie’s funding from $1,500,483 to $2,500,000. By blending fuel-grade ethanol with gasoline at the gas station pump, Renergie will offer the consumer a fuel that is renewable, more economical, cleaner, and more efficient than unleaded gasoline.  Moreover, the Renergie project will mark the first time that Louisiana farmers will share in the profits realized from the sale of value-added products made from their crops.

Read Full Post | Make a Comment ( None so far )

    About

    Renergie created “field-to-pump," a unique strategy to locally produce and market advanced biofuel (“non-corn fuel ethanol”) via a network of small advanced biofuel manufacturing facilities. The purpose of “field-to-pump” is to maximize rural development and job creation while minimizing feedstock supply risk and the burden on local water supplies.

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