Tuesday, September 28, 2010

Regular, Unleaded or Landfill

Recently, we follow up with representatives of INEOS New Planet BioEnergy, LLC which was awarded a $50 million by the U.S. Department of Energy to produce ethanol and electricity from wood and vegetative residue and demolition materials through a combination of biomass gasification and fermentation processes.

New Planet Energy, LLC is bringing local business know-how to the joint venture. Its partner INEOS, a U.K.-based manufacturer of petrochemicals, specialty chemicals and oil products. INEOS operates in thirteen countries around the world and views the investment in renewable fuels as a logical extension of its fossil-fuel based products.

The plan is to produce as much as 8 million gallons of ethanol and 2 megawatts of electricity per year beginning in 2012. The partnership must match the grant with another $50 million from internal sources.

The partnership has made quite a bit of progress. The construction began this summer on a commercial-scale plant in Indian River County in Florida. A facility located near the Indian River landfill and once operated by Ocean Spray has been chosen for the plant.

The ethanol plant is now expected to be operational by late 2011 and begin production in early 2012. Expectations for employment creation has increased from the original count of 120 construction jobs over the next two years and between 40 and 50 full-time jobs once the plant is in operation. As many as 185 people will be put to work during the construction period and another 65 will be needed for permanent operations.

Besides job creation, INEOS management claims its plant will reduce waste going to landfills, relies on non-food feedstock for its ethanol output, and proves agriculture and municipal waste - two sustainable, consistent feedstock sources - are economically viable energy sources.

An anaerobic fermentation step is central to the INEOS Bio process, which will be used in the plant. The bacteria will convert gases from a variety of biomass, including forestry, agriculture, construction and municipal waste. INEOS believes its process gives waste owners flexibility to locate a plant anywhere a feedstock is available. They are also confident the process will allow a mix of feedstock, giving operators the flexibility to source the least cost sources.

INEOS has patented its bacteria - bacteria smart enough to convert carbon monoxide and hydrogen gases to ethanol. The company maintains its bacterial approach is advantageous over other chemical catalysts that require high temperatures and pressures that add to production costs.

INEOS has floated some debt, but its common stock is privately held. The Company claims billions in revenue, but is apparently in no rush to deal with equity investors. The U.S. capital markets will require considerable improvement before investors are treated to an initial public offering from New Planet.


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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