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    Siemens Energy & Automation, Inc. and the U.S. National Corn-to-Ethanol Research Center (NCERC) today announced a partnership to speed the growth of alternative fuel technology. The 10-year agreement between the center and Siemens represents transfers of equipment, software and on-site simulation training. The NCERC facilitates the commercialization of new technologies for producing ethanol more effectively and plays a key role in the Bio-Fuels Industry for Workforce Training to assist in the growing need for qualified personnel to operate and manage bio-fuel refineries across the country. Business Wire - June 29, 2007.

    A paper published in the latest issue of the Journal of the American Ceramic Society proposes a new method of producing hydrogen for portable fuel cells that can work steadily for 10-20 times the length of equivalently sized Lithium-ion batteries. Zhen-Yan Deng, lead author, found that modified aluminum powder can be used to react with water to produce hydrogen at room temperature and under normal atmospheric pressure. The result is a cost-efficient method for powering fuel cells that can be used in portable applications and hybrid vehicles. More soon. Blackwell Publishing - June 29, 2007.

    An NGO called Grains publishes a report that highlights some of the potentially negative effects associated with the global biofuels sector. The findings are a bit one-sided because based uniquely on negative news stories. Moreover, the report does not show much of a long-term vision on the world's energy crisis, climate change, North-South relations, and the unique role biofuels can play in addressing these issues. Grain - June 29, 2007.

    Researchers at the Universidad de Tarapacá in Arica plan to grow Jatropha curcas in the arid north of Chile. The trial in the desert, is carried out to test the drought-tolerance of the biodiesel crop, and to see whether it can utilize the desert's scarce water resources which contain high amounts of salt minerals and boron, lethal to other crops. Santiago Times - June 28, 2007.

    India and Thailand sign a Memorandum of Understanding (MoU) that envisages cooperation through joint research and development and exchange of information in areas of renewable sources of energy like, biogas, solar-thermal, small hydro, wind and biomass energy. Daily India - June 28, 2007.

    Portucel - Empresa Produtora de Pasta e Papel SA said it plans to install biomass plants with an expected production capacity of 200,000 megawatt hours per year at its paper factories in Setubal and Cacia. The European Commission gave the green light for state aid totaling €46.5 million, contributing to Portucel's plans to extend and modernise its plants. Forbes - June 28, 2007.

    Petro-Canada and GreenField Ethanol have inked a long-term deal that makes Petro-Canada the exclusive purchaser of all ethanol produced at GreenField Ethanol's new facility in Varennes, Quebec. The ethanol will be blended with gasoline destined for Petro-Canada retail sites in the Greater Montreal Area. Petro-Canada - June 27, 2007.

    According to a study by the Korean Energy Economics Institute, biodiesel produced in Korea will become cheaper than light crude oil from 2011 onwards (678 won/liter versus 717.2 won/liter). The study "Prospects on the Economic Feasibility of Biodiesel and Improving the Support System", advises to keep biodiesel tax-free until 2010, after which it can compete with oil. Dong-A Ilbo - June 27, 2007.

    Kreido Biofuels announced today that it has entered into a marketing and distribution agreement with Eco-Energy, an energy and chemical marketing and trading company. Eco-Energy will purchase Kreido Biofuels’ biodiesel output from Wilmington, North Carolina, and Argo, Illinois, for a minimum of 3 years at current commercial market prices, as well as provide Kreido transportation and logistics services. Business Wire - June 27, 2007.

    Beijing Tiandi Riyue Biomass Technology Corp. Ltd. has started construction on its new fuel ethanol project in the county of Naiman in Inner Mongolia Autonomous Region's Chifeng City, the company's president told Interfax today. Interfax China - June 26, 2007.

    W2 Energy Inc. announces it will begin development of biobutanol from biomass. The biofuel will be manufactured from syngas derived from non-food biomass and waste products using the company's plasma reactor system. Market Wire - June 26, 2007.

    Finland based Metso Corporation, a global engineering firm has received an order worth €60 million to supply two biomass-fired power boilers to Portugal's EDP Producao - Bioeléctrica, S.A. The first boiler (83 MWth) will be installed at Celbi’s Figueira da Foz pulp mill and the second boiler (35 MWth) at Caima’s pulp mill near the city of Constância. Both power plants will mainly use biomass, like eucalyptus bark and forest residues, as fuel to produce together approximately 40 MWe electricity to the national grid. Both boilers utilize bubbling fluidized bed technology. Metso Corporation - June 26, 2007.

    Canada's New Government is investing more than $416,000 in three southern Alberta projects to help the emerging biofuels industry. The communities of Lethbridge, Drumheller and Coalhurst will benefit from the projects. Through the Biofuels Opportunities for Producers Initiative (BOPI), the three firms will receive funding to prepare feasibility studies and business plans to study the suitability of biofuels production according to location and needs in the industry. MarketWire - June 26, 2007.

    U.S. Energy Secretary Samuel Bodman is expected to announce today that Michigan State and other universities have been selected to share $375 million in federal funding to develop new bioenergy centers for research on cellulosic ethanol and biomass plants. More info soon. Detroit Free Press - June 26, 2007.

    A Kerala based NGO has won an Ashden Award for installing biogas plants in the state to convert organic waste into a clean and renewable source of energy at the household level. Former US vice president Al Gore gave away the award - cash prize of 30,000 pounds - to Biotech chief A. Saji at a ceremony in London on Friday. New Kerala - June 25, 2007.

    AltraBiofuels, a California-based producer of renewable biofuels, announced that it has secured an additional US$165.5 million of debt financing for the construction and completion of two plants located in Coshocton, Ohio and Cloverdale, Indiana. The Coshocton plant's capacity is anticipated to reach 60million gallons/year while the Cloverdale plant is expected to reach 100 million gallons/year. Business Wire - June 23, 2007.

    Brazil and the Dominican Republic have inked a biofuel cooperation agreement aimed at alleviating poverty and creating economic opportunity. The agreement initially focuses on the production of biodiesel in the Dominican Republic. Dominican Today - June 21, 2007.

    Malaysian company Ecofuture Bhd makes renewable products from palm oil residues such as empty fruit bunches and fibers (more here). It expects the revenue contribution of these products to grow by 10% this year, due to growing overseas demand, says executive chairman Jang Lim Kuang. 95% of the group's export earnings come from these products which include natural oil palm fibre strands and biodegradable mulching and soil erosion geotextile mats. Bernama - June 20, 2007.

    Argent Energy, a British producer of waste-oil based biodiesel, announced its intention to seek a listing on London's AIM via a placing of new and existing ordinary shares with institutional investors. Argent plans to use the proceeds to construct the first phase of its proposed 150,000 tonnes (170 million litres) plant at Ellesmere Port, near Chester, and to develop further plans for a 75,000 tonnes (85 million litres) plant in New Zealand. Argent Energy - June 20, 2007.

    The first conference of the European Biomass Co-firing Network will be held in Budapest, Hungary, from 2 to 4 July 2007. The purpose of the conference is to bring together scientists, engineers and members of public institutions to present the current state-of-the-art on biomass co-firing. Participants will also discuss future trends and directions in order to promote awareness of this technology as a sustainable energy supply, which could decrease the dependency on fossil fuels and guarantee a decentralised source of energy in Europe. The conference is supported by the EU-funded NETBIOCOF (Integrated European Network for Biomass Co-firing) project. NetBioCof - June 19, 2007.

    Green Energy Resources predicts US$50 per ton biomass woodchip prices within the next twelve months. The current US price level is between $25-32 per ton. Demand caused by the 25-30 new power plants planned in New England by 2010 does not include industry, institutions, universities, hospitals or conversions from natural gas, or cellulostic ethanol. Procurement of woodchips will be based on the delivery capacity of suppliers not local prices for the first time in history. Green Energy has been positioning in New England with rail and port locations to meet the anticipated sector expansion. MarketWire - June 19, 2007.

    In the first major initiative in the US to build a grassroots communications network for the advancement of biofuels adoption, a new national association called The American Biofuels Council (ABC) has been formed. American Biofuels Council - June 19, 2007.

    The Novi Sad-based Jerković Group, in partnership with the Austrian Christof Group, are to invest about €48 million (US$64.3m) in a biodiesel plant in Serbia. Property Xpress - June 19, 2007.

    Biodiesel producer D1 Oils, known for its vast jatropha plantations in Africa and Asia, is to invest CNY 500 to 700 million (€48.9-68.4 / US$65.5-91.7) to build a refinery in Guangxi Zhuang autonomous region, in what is expected to be the first biodiesel plant in the country using jatropha oil as a feedstock. South China Morning Post - June 18, 2007.

    After Brazil announced a record sugar crop for this year, with a decline in both ethanol and sugar prices as a result, India too is now preparing for a bumper harvest, a senior economist with the International Sugar Organization said. Raw sugar prices could fall further towards 8 cents per lb in coming months, after their 30% drop so far this year. Converting the global surplus, estimated to be 4 million tonnes, into ethanol may offer a way out of the downward trend. Economic Times India - June 18, 2007.

    After Brazil announced a record sugar crop for this year, with a decline in both ethanol and sugar prices as a result, India too is now preparing for a bumper harvest, a senior economist with the International Sugar Organization said. Raw sugar prices could fall further towards 8 cents per lb in coming months, after their 30% drop so far this year. Converting the global surplus, estimated to be 4 million tonnes, into ethanol may offer a way out of the downward trend. Economic Times India - June 18, 2007.

    A report from the US Department of Agriculture Foreign Agricultural Services (USDA FAS) estimates that the production of ethanol in China will reach 1.45 million tonnes (484 million gallons US) in 2007, up 12% from 1.3 million tonnes in 2006. Plans are to increase ethanol feedstocks from non-arable lands making the use of tuber crops such as cassava and sweet sorghum. USDA-FAS - June 17, 2007.

    The Iowa State University's Extension Bioeconomy Task Force carried out a round of discussions on the bioeconomy with citizens of the state. Results indicate most people see a bright future for the new economy, others are cautious and take on a distanced, more objective view. The potential for jobs and economic development were the most important opportunities identified by the panels. Iowa is the leading producer of corn based ethanol in the US. Iowa State University - June 16, 2007.

    Biofuel producer D1 Oils Plc, known for establishing large jatropha plantations on (degraded land) in Africa and Asia, said it was in advanced talks with an unnamed party regarding a strategic collaboration, sending its shares up 7 percent, after press reports linking it with BP. Firms like BP and other large petroleum companies are keen to secure a supply of biofuel to meet UK government regulations that 5 percent of automotive fuel must be made up of biofuels by 2010. Reuters UK - June 15, 2007.

    Jean Ziegler, a U.N. special rapporteur on the right to food, told a news briefing held on the sidelines of the U.N. Human Rights Council that "there is a great danger for the right to food by the development of biofuels". His comments contradict a report published earlier by a consortium of UN agencies, which said biofuels could boost the food security of the poor. Reuters - June 15, 2007.

    The county of Chicheng in China's Hebei Province recently signed a cooperative contract with the Australian investment and advisory firm Babcock & Brown to invest RMB480 million (€47.2/US$62.9 million) in a biomass power project, state media reported today. Interfax China - June 14, 2007.

    A new two-stroke ICE engine developed by NEVIS Engine Company Ltd. may nearly double fuel efficiency and lower emissions. Moreover, the engine's versatile design means it can be configured to be fuelled not only by gasoline but also by diesel, hydrogen and biofuels. PRWeb - June 14, 2007.

    Houston-based Gulf Ethanol Corp., announced it will develop sorghum as an alternative feedstock for the production of cellulosic ethanol. Scientists have developed drought tolerant, high-yield varieties of the crop that would grow well in the drier parts of the U.S. and reduce reliance on corn. Business Wire - June 14, 2007.

    Bulgaria's Rompetrol Rafinare is to start delivering Euro 4 grade diesel fuel with a 2% biodiesel content to its domestic market starting June 25, 2007. The same company recently started to distributing Super Ethanol E85 from its own brand and Dyneff brand filling stations in France. It is building a 2500 ton/month, €13.5/US$18 million biodiesel facility at its Petromidia refinery. BBJ - June 13, 2007.

    San Diego Gas & Electric (SDG&E), a utility serving 3.4 million customers, announced it has signed a supply contract with Envirepel Energy, Inc. for renewable biomass energy that will be online by October 2007. Bioenergy is part of a 300MW fraction of SDG&E's portfolio of renewable resources. San Diego Gas & Electric - June 13, 2007.

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Friday, June 29, 2007

D1 Oils and BP to establish global joint venture to plant jatropha

In an important step for the production of biofuels in the Global South, D1 Oils plc, the UK-based producer of biodiesel, announced [*.pdf] plans to establish a global Joint Venture with BP to create a world-wide Jatropha curcas plantation business: D1-BP Fuel Crops Limited. The humble shrub's oil ('crude jatropha oil' - CJO) is now on track to become a commodity that can be produced by countless farmers in the developing world.

Jatropha is an oilseed tree that grows in tropical and sub-tropical regions and produces high yields of inedible vegetable oil that can be used to produce high-quality biodiesel. Jatropha can grow on a wide range of land types, including non-arable, marginal and waste land. Jatropha does not compete with food crops for good agricultural land or result in the destruction of rainforest.

The establishment of the 50:50 JV to undertake global planting of jatropha has the following aims and features:
  • An accelerated planting programme: a target to plant one million hectares over four years; in the first year of the JV's operation the pace of planting is likely to remain at the current 150,000 hectares per annum target; it is expected to increase thereafter up to a targeted rate of at least 350,000 hectares per annum by the fourth year.
  • More rapid deployment of higher yielding jatropha varieties: all of D1 oils' current plantations are based on uncultivated “wild seed” jatropha which yield around 1.7 tons/hectare, the JV will allow the deployment of elite E1 seeds with an estimated yield of 2.7 tonnes per hectare
  • Development of logistics strategy and a global supply chain
  • Initial contribution of parties: D1 planting to date and planting business, BP working capital of £31.75 million through equity in the JV; total JV funding requirement of approximately £80 million over five years
  • Plant science activities and intellectual property remain 100 per cent owned by D1
This major global business to plant jatropha as sustainable biodiesel feedstock now entails an endorsement by BP, one of the world's largest oil and gas companies. The D1 Oils planting strategy is based on: the potential to produce low-cost, volume supplies of inedible oil for biodiesel the use of marginal and waste land and land unsuitable for arable crops no competition with high biodiversity value rainforest significant job creation and value to local communities:
:: :: :: :: :: :: :: :: :: ::

Under the terms of the Joint Venture Agreement signed today D1 and BP will work together exclusively on the development of jatropha as a sustainable energy crop, including the planting of trees, harvesting jatropha grain, oil extraction and transport and logistics. Production of jatropha oil for refining into biodiesel is expected to begin in 2008.

D1 Oils Plant Science Limited, D1’s plant science business, will act as the exclusive supplier of selected, high yielding jatropha seeds and seedlings to the Joint Venture. The strategy sees it planting elite seed in greater quantities than D1’s stand alone plan.

With the conclusion of this transaction D1 will comprise, in its upstream business, its wholly owned plant science operations together with the IP in plant science, in addition to 50 per cent of a global planting joint venture with BP. In its downstream operations, the business will include, as it does now, its wholly owned interests in refining and trading.

Commenting on the announcement, Lord Oxburgh of Liverpool, Chairman of D1 Oils
plc said: "Biodiesel is a young industry, but is rapidly becoming an established part of the global renewable energy landscape. It is crucial that we develop supplies of alternative, inedible vegetable oils like jatropha that are not subject to the same demand pressures as food oils and that are grown on non-essential land. This partnership with BP strengthens D1’s strategy of delivering commercial volumes of jatropha oil at competitive prices, whilst truly supporting the communities in which we operate."

Elliott Mannis, Chief Executive Officer of D1 Oils plc, said: “This is a transforming event for D1. BP’s decision to join us in this new venture is a significant endorsement of our strategy to develop jatropha for the production of sustainable biodiesel. It shows we have come a long way. BP’s proven logistical, managerial and financial support will enable a significant enhancement and acceleration of the scope and pace of jatropha planting.”

Philip New, Head of BP Biofuels, said:
"As jatropha can be grown on land of lesser agricultural value with lower irrigation requirements than many plants, it is an excellent biodiesel feedstock. D1 Oils’ progress in identifying the most productive varieties of jatropha means that the joint venture will have access to seeds which can substantially increase jatropha oil production per hectare.”

Reasons for the Joint Venture and Strategy
BP plc has a market capitalisation of approximately £114.6 billion. The combination of both financial and industrial strength make it a partner with considerable credibility internationally to assist D1 in the next stages of its corporate development. It is proposed that the JV will be established between D1 and BP International, a subsidiary of BP plc. BP International, which is based in the UK, is engaged internationally in oil, petrochemicals and related financial activities.

The combination of BP’s strong brand and reputation, its major presence in downstream transportation fuel markets, its strong understanding of associated technical and regulatory issues and demand drivers, its access to governments, NGOs and other large organisations and its trading and logistics expertise, make it an attractive partner for D1.

It will also contribute to the development of a world leading player in jatropha. D1 Oils says the JV will have a beneficial impact on:

• Plantation management and Crude Jatropha Oil (“CJO”) production
• Plant science and seedling production
• The wider D1 group

Plantation management and CJO production
D1 has established a leading position globally in the commercialisation of jatropha as a biofuels crop. Jatropha can grow on a wide range of land types, including non-arable, marginal and waste land. It will not compete with food crops for good agricultural land or result in the destruction of rainforest. D1 is on track to deliver on the objectives for its Agronomy business as identified at the time of D1’s most recent placing in December 2006.

The JV will adopt a business plan which the D1 Board believes significantly exceeds D1’s standalone plan in terms of scale and quality and that the involvement of BP with its competencies and resources will increase the likelihood of a successful implementation of the plan. The key features of the Joint Venture business plan are:

An accelerated planting programme.
The JV business plan is to target 1.0 million hectares of new commercial jatropha cultivation over the next four years compared to approximately 600,000 hectares on a standalone basis. In the first year of the JV the pace of planting is likely to remain at the current 150,000 hectares per annum target. However, the pace of planting is expected to increase thereafter up to a targeted rate of at least 350,000 hectares per annum by the fourth year.

A higher quality planting programme.
D1 has to date focused on contract farming and seed purchase agreements. These planting methods are less capital intensive and better reflect D1’s financial resources. The arrangements have facilitated the roll-out of D1’s vertically integrated jatropha based strategy but are limited by: the use of lower yielding wild seed; wide variations in land quality and agricultural techniques and the substantial number of partners spread across a wide geography.

The JV’s planting is intended to be much more strongly weighted towards managed plantations where the JV owns and/or controls the land and production, and towards local partners of significant scale and depth. This is a more capital intensive approach than has been hitherto used by D1 to expand the business, but will result in more reliable oil flow to the Joint Venture than some of D1’s existing contract farming and seed supply relationships.

Forming the JV will facilitate this strategy, partly because BP will help with the extra funding implied by the extra capital intensity, and partly because BP’s reputation and standing are likely to help attract high quality partners.

• More rapid deployment of higher yielding jatropha varieties.
All planting to date has been undertaken using uncultivated “wild seed” which D1 believes will yield 1.7 tonnes per hectare from mature, well managed plantations. The JV will focus on the deployment of elite E1 seeds, targeting yields of 2.7 tonnes per hectare as rapidly as is practicable and at a faster rate than under D1’s standalone business plan. In due course subsequent generations of proprietary seed with increased yields and / or improved characteristics will be utilised.

DOPSL, D1’s new plant breeding and seedling production company, remains outside the JV and will be an exclusive provider of elite planting material and will produce more elite seedlings than under the standalone plan. This is possible because the planting programme will be both larger, and will comprise a higher proportion of land where the commercial relationship is strong enough to merit the deployment of elite seed.

Furthermore, under the terms of the proposed arrangement, the increase of DOPSL’s production capability will be fully paid for by the JV, even though DOPSL itself remains a wholly-owned subsidiary of D1.

• Development of logistics strategy and a global supply chain.
As well as offering the opportunity for greater levels of planting and at higher yields, the formation of the JV will assist with establishing a full, vertically integrated supply chain taking harvested seeds through crushing and pre-processing, and then delivering CJO both to domestic and export customers. BP brings very considerable expertise in establishing and managing operations and supply chains on a global basis and the D1 Board believes that the Joint Venture will draw significant benefit from BP’s experience in this field.

• Use of BP network and brand.
BP has a strong presence and reputation in almost all of the countries where the JV will be operating. The JV will capitalise on this in its dealings with government and regulatory agencies, NGOs and current or potential partners. In addition to lending its name to the Joint Venture, BP plc has provided a royalty-free licence agreement allowing the JV to use the BP “helios” trademark on its communications materials.

• Enhanced funding for D1 and leverage for its shareholders.
The capital required by the JV is to increase the scope and pace of planting activities, focus on the deployment of elite seed, finance a significant increase in DOPSL’s production capacity, and develop an optimal logistics strategy. Of this BP will be responsible for funding the first £31.75m of working capital. These monies are expected to be drawn down over the next two years, thus providing a cash flow benefit to D1 relative to its standalone plan. Beyond this, D1 and BP will be jointly responsible for funding the Joint Venture on a basis pro rata to their shareholdings. The JV is also able to raise further funds in the debt capital markets.

Plant science and seedling production
D1’s plant science and seedling production business will be transferred into DOPSL, which will remain a wholly-owned subsidiary of D1. The formation of DOPSL establishes D1’s existing plant science and seedling production business as a discrete stand-alone entity with its own dedicated team. This will enable DOPSL to maintain its focus on research and development, and to provide the framework by which it can increasingly contribute to the D1 group. DOPSL’s production costs will be fully funded by the Joint Venture.

As at 23 June 2007, D1 had planted or obtained rights to offtake over approximately 172,000 hectares as summarised in the table below:

D1’s effective economic interest in the above planting after taking into account the interests of its partners is approximately 50 per cent.

Shares of D1 went up 10% today.


D1: Analyst presentation D1-BP Fuel Crops Limited [*.pdf]

Biopact: D1 Oils has planted over 156,000 hectares of jatropha - May 03, 2007


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