In New York, the closing of the Sunoco purchase of the former Northeastern Biofuels plant in Volney for $8.5 million, continues a trend whereby oil companies are moving into the ethanol production busines…on the cheap.
Earlier this year, Valero acquired seven ethanol plants in the Midwest from the bankruptcy of VeraSun Energy, for $477 million.
“We also view this as a first step into an area of possible growth for the company,” Sunoco spokesman Thomas Golembeski says of the recent Northeast Biofuels acquisition.
But industry analysts noted that acquisitions of first generation plants have focused on those plants that are grandfathered under the Energy Security and Independence Act from meeting tough proposed new standards on indirect land use change for corn ethanol.
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According to the Associated Press, the oil industry now controls 7 percent of the US ethanol supply. In addition to the first-generation ethanol acquisitions, which primarily cover each company’s required ethanol blending requirements, several other oil companies have been on the move.
BP is invested in D1 Oils Fuel Crops joint venture, an ethanol project in the UK with British Sugar, as an investor in Verenium, the US cellulosic ethanol pioneer, and in a biobutanol JV with DuPont. Marathon is invested in Mascoma, the cellulosic ethanol pioneer.
Total has invested in Gevo, which is developing biobutanol. Chevron has invested in Catchlight Energy with Weyerhaeuser, as well as a research partnership with Solazyme, the algal fuel pioneer, among other companies. Shell has invested in Codexis, the enzyme developer, as well as in Cellana, a JV for algal fuel development with HR Biopetroleum. Shell has also invested in Iogen, the Canadian cellulosic ethanol leader.
In addition, former oil company execs have switched over to top positions at advanced biofuels enterprises such as Sapphire Energy, LS9 and Aurora Biofuels.
Is it a trend? Rick Kment of DTN doesn’t think so. He told AP that “I don’t think they intentionally decided to sit back and then pick off troubled plants as they became available. It was a situation where the market changed, and since it changed it gave them an opportunity they didn’t have before. Now that they are available at discount, it can be profitable.”
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