Tuesday, January 12, 2010

Bio-Bonanza

One of the biggest winners in the Department of Energy (DOE) renewable fuels and chemicals grant award bonanza in December 2009, was BioEnergy International, LLC (private) based in Quincy, Massachusetts. The company is a self-described science and technology developer of next-generation biorefineries for the production of bio-based chemicals and fuels. The company claims to have a proprietary biocatalyst technology that can be used effectively with renewable feedstocks.

BioEnergy is receiving $50.0 million from the DOE, to which the company must match with its own $89.6 million. The monies will be used on a project to produce succinic acid form sorghum at a plant in Lake Providence, Louisiana.

We often forget that petroleum is used for many more products than your gas at the pump or power plant fuel. Succinic acid or “spirit of amber” is colorless and odorless, but it is combustible and corrosive and capable of causing burns when not handled properly. It is a component of the citric acid cycle and is used in food additives and dietary supplements as well as in pharmaceutical products as a starting material for active pharmaceutical ingredients. It is also used in clothing fibers, surfactants, detergents and fragrances. The current worldwide use of succinic acid is around 20,000 to 30,000 tons per year, with annual increases running about 10% per year.

With its project BioEnergy wants to decouple succinic acid from the petroleum complex and reduce the total energy requirement for production. They hope to put their patented microorganisms to work in a proprietary process to get as much succinic acid from a pound of sorghum sugar as from an entire barrel of crude oil.

BioEnergy is not the first to try “bio-succinic acid.” Royal DSM of The Netherlands and Roquette Freres (private) of France formed a joint venture two years ago to commercialize a fermentation-based process to produce biorenewable succinic acid from glucose and carbon dioxide. The French Industrial Innovation Agency anted in $132 million to fund their project. They duo had promised a commercially viable plant by the end of 2009, but a launch is apparently still pending.

Interestingly, Roquette licensed technology from Rice University in Houston, Texas for its process. The technology - patented by two professors from Rice - relies on genetically engineered E. coli to produce high quantities of succinic acid via a fermentation process. This process is actually carbon negative as three-quarters of a molecule of carbon dioxide is used by the E. coli for each molecule of succinic acid they produce.

It is interesting that what appears to be an exceptionally elegant technology - at least in terms of environmental benefits - is developed in the U.S. but passed over by U.S. producers. Furthermore, it appears U.S.-based developers are at least two years behind competitors in other countries.

Apparently, we have the brain power to develop ourselves out of a political vulnerability and economic dependence - but not the gumption.


Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

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