Cellulosic sugars company signs its second $100M deal of 2013

Source: Tiffany Stecker, E&E reporter • Posted: Friday, January 18, 2013

Sweetwater Energy has signed a 15-year, $100 million deal with Front Range Energy in Windsor, Colo., to convert the latter’s corn ethanol facility to make fuel from crop residues, grasses and wood.

Based in Rochester, N.Y., Sweetwater uses enzymes to produce cellulosic sugars, the building blocks of ethanol that come from agricultural and forest waste, fast-growing energy crops, and other fibrous material that can be broken down to make cellulosic biofuel.

“Supplementing our corn with this sugar allows us to displace some of the volatility of the corn market, with the goal of moving a higher and higher percentage of our production to cellulosic,” Dan Sanders Jr., vice president of Front Range Energy, said in a statement.

This is the second deal in two weeks for Sweetwater, which made a similar 16-year agreement with Ace Ethanol in Wisconsin on Jan 4.

During the initial phase, Sweetwater will process about 100 tons of cellulosic material per day to make 60 to 65 tons of sugars. This will produce up to 3.6 million gallons of ethanol per year.

Sweetwater will begin by replacing about 7 percent of the corn and alter the amount of cellulosic sugars as the partnership evolves.

“$100 million is a conservative revenue forecast for the length of the contract,” said Arunas Chesonis, chairman and CEO of Sweetwater. The deal allows flexibility for change over 15 years, Chesonis said, in case either party seeks other options.

Corn-sourced refiners begin to switch over

“If they get into higher-range fuels or chemicals, they’re not locked into having to make ethanol,” he said.

The most likely feedstocks for Front Range’s plant will be energy sorghum, switchgrass, corn stover or wheat straw, depending on the price and availability at the time, Chesonis said. The sources will be purchased from sites up to 40 miles away, he added.

Cellulosic fuels are considered to be more sustainable than first-generation corn ethanol, mainly because they come from waste products or low-input grasses and do not compete with food crops.

Front Range Energy and Ace Ethanol are two of several ethanol refineries that decided to convert from making corn ethanol to producing other types of biofuels. To date, 10 ethanol plants have begun or are planning to produce biobutanol, an advanced biofuel made from corn. Green Plains Renewable Energy is building a side project on its ethanol plant in Shenandoah, Iowa, to produce algae-based fuels, in a partnership with BioProcess Algae.

Last month, the U.S. Patent and Trademark Office issued a patent for Sweetwater’s pretreatment method to extract sugars from cellulosic feedstocks.

The federal renewable fuels standard calls for the United States to produce 16 billion gallons of cellulosic fuels by 2022, but the industry has yet to make enough cellulosic gallons to sell commercially.