Who Are the Next Biofuels IPOs?

John Davis

On the heels of their great story yesterday on the investment in algal-biodiesel players PetroAlgae and Solazyme (not to mention Joanna’s piece on Gevo preparing for a $150 million IPO), our friends over at Biofuels Digest have put together a list of the top 10 most likely next IPOs in the biofuels sector. The list includes many Domestic Fuel regulars, such as Solazyme, REG and Imperium:

The biofuels companies coming forward are early-to-middle stage: their shared goal is expansion capital, and though they are seen by many as a value-add play for agriculture, or as a technology play, these are best understood as above-ground oil fields, and as a proxy for oil exploration. The difference: the risk for these ventures is less in the geology than in the biology. It is not a question of finding and extracting reserves, as much as growing and extracting them.

1. Solazyme. Already secured investment from Keating Capital, which expressly invests in companies within 18 months of an IPO event. Gaining revenues from military contracts. Has a raft of strategic partners that will prove attractive.

2. LS9. If Amyris goes well, LS9 might well follow at a suitable interval. Their demonstration facility in Florida is easily expandable to 11 Mgy, which would supply them with a revenue stream. Also has attractive strategic partners in the likes of Procter & Gamble. Has a magic bug that, like Amyris’, converts sugar to diesel – though based on e.coli rather than yeast and may have a wider range of near-term molecules – and thereby a story in chemicals – that it can produce.

3. Sapphire Energy.If Solazyme goes, and goes well, Sapphire could follow. They have a big capital raise for their vertically integrated company that intends to be an owner-operator of more than 1 billion gallons in capacity by 2025. The company has scant revenue, and is building out its demonstration plant, but when its operations in New Mexicom are complete, there may be reasons to turn to the public markets for more dollars.

4. REG. The Renewable Energy Group wanted to IPO a few years back, but withdrew. Since then, its been consolidating biodiesel assets at “popular prices”, and has a distribution arm. If biodiesel gets its story back with the US mandate taking hold, REG will likely need fresh equity to balance off any increasing debt and fund its expansion. Not for the near-term, but keep an eye out.Read More

Biodiesel, biofuels

NBB, Marketers Welcome Biodiesel Heating Bill Signing

John Davis

New York City Mayor Michael Bloomberg has made it official, signing a bill that will require all diesel heating oil in the city contain at least 2 percent biodiesel:

“The final bill before me today is Introductory Number 194-A … [which] will significantly reduce pollution, promote the use of alternative fuels, create new ‘green’ jobs and vastly improve air quality throughout the City.

“Promoting the use of cleaner burning heating fuels is one of fourteen air quality initiatives from PlaNYC 2030 and I am pleased to say that the legislation before me today will do just that. Introductory Number 194-A requires that by 2012, the sulfur content of Number 4 heating oils be limited to no more than 1,500 parts per million and all heating oils used in New York City contain at least two percent biodiesel.”

The move won the praise of the National Biodiesel Board and local biodiesel makers and marketers, Sprague Energy and METRO Terminals:

“New York City is already the nation’s largest municipal user of biodiesel. We applaud the Mayor and City Council for building on that legacy by adopting a universal biodiesel requirement that will further improve air quality in the city,” said Shelby Neal, NBB’s director of state governmental affairs. “I would especially like to thank Councilman Gennaro, who has been a tireless advocate for this and other important environmental issues. His vision for a cleaner burning, green, and sustainable heating fuel is being realized.”

“As one of New York’s original biodiesel and Bioheat suppliers, we know firsthand what a positive impact the fuels have on the lives of New Yorkers,” said Steven J. Levy, managing director of Sprague Energy. “This landmark legislation is another huge step in reducing air pollution in the city, yet just another building block in cleaning the air we breathe for healthier, longer lives.”

“More than 70 years ago, my grandmother started a heating oil business here because she thought coal represented the past,” said Paul Pullo, who owns METRO Terminals along with his brother, Gene. “With biodiesel, America’s only commercially available advanced biofuel, we will take our business into the next generation again.”

Biodiesel

“Man Caves” To Roll On Up In Propane Trucks

Joanna Schroeder

One of the longest running and top rated Do-It-Yourself (DIY) shows on cable TV, “Man Caves,” will soon be rolling on up to transform a room or garage into a man’s dream room in a ROUSH liquid propane-powered E-350. The show, which airs on DIY Network, is in its seventh season and features a virtual rolling hardware store replete with construction materials in a truck.

“We are looking forward to having a ‘Man Caves’-size rolling tool box for the biggest season yet of ‘Man Caves.’ This thing is functional and just amazing,” said an enthusiastic Cameron, co-host of the show, upon seeing the new propane-powered van for the first time.

Thanks to Knapheide and Sortimo, there are a variety of organizational systems which allow the hosts, licensed contractor Jason Cameron and former NFL great Tony “The Goose” Siragusa, to quickly and efficiently complete any project at hand. The Knapheide Utility Vehicle will be mounted on the back of the ROUSH propane E-350 and will include a number of Sortimo S-, M-, and T-BOXXES to organize the tools and small parts it carries, many with adjustable shelves and dividers. The cargo area has retention poles to hold large parts and sheet material, as well as a bed slide to assist in loading heavy equipment or parts. This allows the “Man Caves” crew to be most efficient from the truck to the work site.

“Jack Roush has cars racing on TV nearly every weekend, but this will mark the first time that a ROUSH liquid propane-powered van will have a starring role on television,” said Joe Thompson, executive vice-president and general manager of ROUSH. “ ‘Man Caves’ is a program that has a very dedicated audience and it’s going to be exciting to have a ROUSH vehicle play a role in the space transformations they have planned for this season.”

Chris Weiss, Knapheide vice-president of engineering concluded, “Building the ‘Man Caves’ work van is a perfect opportunity to show off the organizational capabilities of the ROUSH/Knapheide Utility Vehicle. Our partnership with ROUSH helps us provide efficient work solutions for our contractor customers with the advantage of using green technology like liquid propane.”

Fleet, News, Propane

ACE Elects New Board Members

Cindy Zimmerman

The American Coalition for Ethanol (ACE) has elected three new members to its Board of Directors, expanding grassroots and independent ethanol representation to the national advocacy association.

ACEThe new members are: David Kolsrud of Mid-Missouri Energy in Malta Bend, Mo.; Dave Sovereign representing Golden Grain Energy in Mason City, Iowa; and John Skelley, General Manager of Pinal Energy in Maricopa, Arizona.

Five other Board members were re-elected:
• Lars Herseth, representing Herseth Ranch of Houghton, SD – who currently serves as president of ACE
• Owen Jones, representing 4 Seasons Cooperative of Britton, SD – currently serves as treasurer for ACE
• Duane Kristensen, representing Chief Ethanol of Hastings, NE
• Randy Knecht, representing CHS Inc., of Houghton, SD
• Scott Parsley of Madison, SD representing East River Electric Cooperative

“Now more than ever it is important to have a strong grassroots base of support for ethanol, and our Board of Directors helps ACE give these grassroots advocates a voice,” said Brian Jennings, Executive Vice President of ACE.

ACE, Ethanol, Ethanol News

Range Fuels Makes Cellulosic Methanol

Cindy Zimmerman

Colorado-based Range Fuels reports the successful production of cellulosic methanol using non-food biomass at a Georgia biofuels plant in the first phase of an operation to ultimately produce next generation ethanol.

Range FuelsAccording to a Range Fuels’ press release, this first phase uses heat, pressure, and steam to convert woody biomass and grasses into a synthesis gas composed of hydrogen and carbon monoxide. The syngas is then passed over a proprietary catalyst to produce mixed alcohols that are separated and processed to yield a variety of low-carbon biofuels.

“We are ecstatic to be producing cellulosic methanol from our Soperton Plant, and are on track to begin production of cellulosic ethanol in the third quarter of this year,” said David Aldous, Range Fuels’ President and CEO. The cellulosic methanol produced from Phase 1 will be used to produce biodiesel for transportation fuel markets. It may also be used in heating applications, as a fuel additive in gasoline-powered motor vehicles, or to power fuel cells.

Range Fuels plans to expand the capacity of the plant to 60 million gallons of cellulosic biofuels annually with construction to begin next summer. The Soperton, Georgia plant is permitted to produce 100 million gallons of ethanol and methanol each year.

biomass, Cellulosic, Ethanol, Ethanol News

Big Apple Could Use Big Breezes to Power City

John Davis

Besides being home to some politicians who are blow-hards at times, New York City could be in line to have some giant wind turbines to feed the area’s energy needs (much better use of windiness).

This New York Times article says that the long-term plan has been to put up huge wind turbines in the Atlantic Ocean off Long Island. But some offshore wind turbines could end up much closer to the Big Apple:

Within three years, the Port Authority of New York and New Jersey hopes to have five wind towers, each more than 280 feet tall, operating on the west side of New York Harbor. Nearby, the City of Bayonne, N.J., plans to install an equally large turbine to power a sewage-pumping station. Meanwhile, the Department of Veterans Affairs is considering placing wind turbines on or near its hospitals in Manhattan and Brooklyn.

New York, it turns out, is a windy city, well suited for turning stiff breezes into electricity. If open space were not so rare, the city might be a prime spot for harnessing the wind, said Bill Baroni, deputy executive director of the Port Authority.

“Anybody who’s ever stood out at the dock in Weehawken waiting for a ferry just knows it’s a very windy area,” Mr. Baroni said. “Apparently, it’s a pretty good place to put windmills.”

In 2008, Mayor Michael R. Bloomberg announced his plan to use wind power to help reduce the city’s dependence on power plants that run on fossil fuels. So far, there are no large-scale efforts to harness the wind in the city, only token projects like the small turbines on the roof of an apartment building in the Bronx and a wind-powered electronic billboard for Coca-Cola in Times Square.

The city’s Economic Development Corporation has been studying the feasibility of putting turbines atop buildings, including a warehouse at the Hunts Point Cooperative Market in the Bronx. But the high hopes rest on a partnership, with utility companies and the New York Power Authority, that has designs on building a wind farm on about 65,000 acres of the Atlantic floor. The New York consortium said at the end of June that it would apply for a 25-year lease on the site, with hopes of generating as much as 700 megawatts of power there by 2016.

In addition, a proposed shore-based project on the border of Bayonne and Jersey City of five turbines producing up to 7.5 megawatts — enough to run at least 2,000 homes — could be up and running by 2013.

Wind

Investments Spark Speculation on Algal-Biodiesel

John Davis

Recent multi-million dollar investments in algae-biofuel companies ($200 million IPO for PetroAlgae and $52 million to help commercialize Solazyme) is fueling some speculation of its own on how soon algae-based biofuels, in particular, biodiesel, might be available for consumers and when it would be commercially competitive.

This article from Biofuel Digest breaks down the “bears” and “bulls” views of these investments, as well as the Digest’s take on these developments:

A significant number of voices in the community continue to caution that algal biofuels are 10 years away, or likely to arrive at commercial scale only in the waning years of the existing Renewable Fuel Standard. However, we see increasing numbers of signs of commercial traction in the higher priced co-products area, such as nutraceuticals.

With the global market for algae nutraceuticals at 5000 tonnes per year and not showing immense growth signs, algal producers will need to establish new markets rather than simply aim to use technology to flood existing markets with low-cost product. The nature of that transitional set of end products?

Food-grade oil may be one path.

The other: well, let’s spell it out in three words. United States military.

The article goes on to point out the U.S. Navy or Air Force are working actively to have as much as half of their fuel come from renewable energy as early as 2016. The authors also did their history, making parallels to the British Navy’s conversion in the late 19th and early 20th centuries from coal to oil … and how that move helped put the Brits on top of the world’s navies at the time. It also led to the rise of the Anglo-Persian Oil Company, now known as BP.

algae, Biodiesel, biofuels

First Load of Illinois Plant’s REG Biodiesel Rolls Out

John Davis

Iowa-based Renewable Energy Group (REG) has held a grand re-opening of its Seneca, Illinois biodiesel plant after taking over the 60 million-gallon-a-year biodiesel and glycerin facility from Nova Biosource Fuels.

REG celebrated the occasion with a ribbon cutting ceremony and by selling the first load of REG-9000 biodiesel from the refinery to Meier Oil of Ashkum Illinois last Thursday.

The REG Seneca facility has three side-by-side 20 mgy biodiesel process units, a technical grade glycerin refining facility, raw material and finished product storage as well as rail car and truck unloading and loading with the potential for barge transportation that had been idled for more than a year. This re-opening put 38 plant workers back on the job.

REG now wholly-owns five biodiesel production businesses and markets biodiesel in 49 states.

Biodiesel

Oil Imports In July Highest in 18 Months

Joanna Schroeder

Foreign oil imports are up for the first time in 18 months according to the latest figures from the Energy Information Administration (EIA). The U.S. imported 65 percent of its oil, or 388 million barrels in July 2010, sending nearly $29.6 billion or $663,231 per minute to foreign countries. This is the highest number of barrels of oil imported in one month since January 2009.

T. Boone Pickens responded to the increase in oil imports in his monthly update and stated,” President Obama has pledged to eliminate Middle East oil dependence in 10 years, but the latest oil imports statistics show we’re not making much progress.  In July we imported 388 million barrels of oil, which is the highest total since President Obama took office in January 2009.”

He continued, It’s not hard to see that spending approximately $30 billion on oil month after month is hurting the economy. In fact, oil imports continue to make up more than half of the United States’ growing trade deficit.”

Pickens has repeatedly called for a comprehensive energy plan where natural gas plays a starring role, and is urging Congress to put energy back on the front burner when they return to D.C. in September.

Pickens is just one of dozens of organizations that have called for more effective energy policy but he is only one of few that focuses so heavily on natural gas as a replacement for liquid transportation fuels. Depending on what energy expert you believe, the country has either enough to last for hundreds of years, or for less than 20 years, if it is used as a primary fuel in the transportation sector.

Natural Gas, Oil

Cali Takes Step to Support Corn Ethanol Producers

Joanna Schroeder

The California Energy Commission (CEC) has announced that it has approved three ethanol producers and four ethanol plants under its Ethanol Producers Incentive Program (CEPIP). If and when the program actually begins, it will pay an incentive to corn ethanol producers who are producing more than 10 million gallons per year and operating in the state; yet today, only one plant is actually in production: Calgren Renewable Fuels LLC.

The purpose of the CEPIP is twofold; to increase the amount of biofuels produced in the state, and to move corn ethanol plants in the direction of reducing their environmental footprint as part of the Biorefinery Operational Enhancement Goal or BOEG obligations. To achieve these goals, the CEPIP was designed to provide economic assistance to ethanol facilities producing ethanol in California during difficult economic operating conditions. The life of the program is currently set at five years.

There are other states that have incentive programs but according to CEC spokesman Rob Schlichting in an article published in Ethanol Producer Magazine, California’s program is the only one that bases payments strictly on market conditions.

The payments are based on the crush spread CEC established would be 55 cents per gallon of ethanol. If the crush spread averages less than 55 cents per month than ethanol producers receive a payment of up to 25 cents per gallon with the total payment amount capped at $3 million. During months that the crush spread is greater than $1 per gallon, then producers will be required to pay back incentives at the rate of up to 20 cents per gallon of ethanol produced.

There are several ethanol plants currently idle in California due to financial difficulties and Schlichting noted that the program won’t be effective if you don’t have operational plants. He hopes that by getting the word out that producers have been accepted into the program investors will look more favorably on these plants.

Yet in true California ironic fashion, the program is indefinitely delayed due to the state’s financial mess. The program will not move forward until the state has a signed budget and other contractual issues are finalized, which could take months.

Ethanol, Ethanol News