Tuesday, September 14, 2010

Bogged Down

Last December 2009, Enerkem Corporation (subsidiary of Canada-based Enerkem, Inc.) was awarded $50.0 million by the Department of Energy to build a waste-to-biofuel facility in Pontotock, Mississippi. The facility is expected to process 300 tons of woody biomax from an existing municipal waste site operated by the Three Rivers Solid Waste Management Authority. Enerkem expects to be able to produce 10 million gallons per year.

Enerkem got quite a bit of local political support because the promised to create over 130 new jobs at the facility. Our recent calls to the company receive no response, so we have no confirmation on jobs specifically created by this particular DOE grant or the project in general. Since design and construction is not expected to be completed for another two years, we do not expect large numbers of jobs at this early stage anyway.

Enerkem uses a gasification and catalytic synthesis technology platform that it has developed over the last several years. The company claims its process can convert one ton of raw material into 95 gallons of cellulosic ethanol. The Enerkem process runs on a variety of feed-stocks such as municipal solid waste, construction scrap, demolition wood, treated wood, agriculture waste and forest residue.

A plant using the same approach as is planned for the Pontotock location is already under construction in the province of Alberta. The Canada plant is projected to process 100,000 tons of municipal waste per year. That equates to approximately 10 million gallons of biofuel each year. The current schedule calls for completion of construction in 2011.

My question is why it takes the same company using the same process technology three years to design and construct a biofuel plant in the U.S. and a little over one year in Canada.
It appears that they are the same size plants. Is there something that different about Canadian municipal waste? Or is the U.S. government bureaucracy simply that confining such that the project takes nearly three times as long to design and build by having government involvement through the DOE grant?

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

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