BP Ends Plan for Biofuel Plant

By REUTERS  • Posted: Friday, October 26, 2012

WASHINGTON (Reuters) — BP said Thursday that it had canceled plans to build a plant in Florida to turn tough grasses such as sorghum and cane into cellulosic biofuel, the second big oil company this year to back out of plans to produce “next generation” ethanol from nonfood crops.

Once seen as a promising alternative to the use of corn and other crops to make fuel, cellulosic biofuel has become a political problem as companies struggle to produce commercial quantities and comply with a government mandate.

Congress originally mandated that by 2012, 500 million gallons of cellulosic ethanol be blended into fuel by refineries. But because little of the fuel is produced, the Environmental Protection Agency lowered the mandate to 8.65 million gallons for 2012.

The oil industry’s lobby group has sued the government over the mandate, and Republicans in Congress have said the law should be changed.

BP said it now planned to focus on research and development as well as licensing of its biofuels technology, instead of building the 36 million-gallon plant, the value of which was not disclosed.

“Given the large and growing portfolio of investment opportunities available to BP globally, we believe it is in the best interest of our shareholders to redeploy the considerable capital required to build this facility into other more attractive projects,” Geoff Morrell, the company’s vice president for communications, said in a statement.

In April, Royal Dutch Shell and Iogen scrapped plans for a commercial-scale plant in Canada to make ethanol from straw and plant waste.