BP shelves plan to build cellulosic ethanol plant

Source: Amanda Peterka, E&E reporter • Posted: Friday, October 26, 2012

BP PLC has canceled its plans to build a 36-million-gallon cellulosic ethanol plant in Florida.

BP, which has been one of several oil giants pursuing cellulosic ventures, will instead focus its biofuels efforts on research and development and licensing its technology, the company said in a statement today.

“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,” said Geoff Morrell, vice president of communications.

At the plant in Highlands County, Fla., BP had planned to make ethanol out of perennial energy grasses that can produce more fuel than corn and can be grown on marginal land. BP originally announced its plans to build the plant in 2008, shortly after Congress put in place a renewable fuel standard to further the development of traditional and advanced biofuels.

BP said it would continue to work in the cellulosic biofuels sphere. The company continues to operate a research facility in San Diego and a demonstration plant in Jennings, La., both of which it acquired in 2010 under a $98.3 million deal with enzyme company Verenium Corp.

BP is also working with DuPont Co. in a joint venture to commercialize isobutanol, a drop-in biofuel.

Brooke Coleman, executive director of the Advanced Ethanol Council, cautioned against reading too much into today’s announcement, saying it didn’t come as much of a surprise because BP has recently been scaling back some of its biofuels investments. He said there were several other companies moving “full speed ahead” with their cellulosic biofuel plans.

This year, INEOS Bio is expected to begin production at a waste-to-ethanol plant in Florida, while KiOR Inc. is expected to produce fuel from biomass at a plant in Mississippi.

Coleman, whose group represents several companies working in the sphere, said he expected some push-back from biofuels critics after today’s announcement. Oil industry groups have recently sued U.S. EPA over its cellulosic biofuel requirements in the renewable fuel standard, calling them unrealistic given the low levels of U.S. commercial production so far.

“Our opponents have used everything they can to discredit the industry,” Coleman said, “so no doubt they will try to make hay out of the fact that BP has canceled their plans to build this plant.”