Ethanol plant will use mounds of manure
Texas site is 'the Saudia Arabia of manure,' company CEO says

Updated: 5:19 p.m. ET Aug 2, 2006
NEW YORK - One company’s drive to locate domestic sources of energy is taking a turn into the barnyard.

Panda Ethanol Inc. has secured nearly $160 million in financing to build an ethanol plant that will be fired by mountains of manure in Hereford, a cattle town in the Texas panhandle.

“We’ve located a project in what I would call the Saudi Arabia of manure,” said Todd Carter, the company’s chief executive officer.

The plant will gasify 1 billion pounds of manure a year to make 100 million gallons of ethanol. The manure will save the plant nearly 365,000 barrels of oil equivalent per year. Panda hopes to get it running by late next year.

Companies are racing to build ethanol plants as the oil industry uses the fuel as a replacement for gasoline additive MTBE, a suspected carcinogen. Growing U.S. motor fuel demand means ethanol production will need to grow by about 1.5 billion gallons per year.

When it comes to harvesting manure, timing is important. “It can’t be too fresh and it can’t be too old,” said Carter.

Some environmentalists have questioned the green benefits of ethanol because some of the fuel’s refineries use electricity from plants fired by coal, the dirtiest fossil fuel.

But Carter’s “poop to pump” ethanol plant will fuel more than 90 percent of its own energy needs by heating up manure until it releases methane, which it will then burn to make steam to fuel the plant. The process destroys the methane, a greenhouse gas at least 20 times more potent than carbon dioxide.

Some environmentalists worry that runoff from farms that group large numbers of cattle together can pollute water supplies. But Carter said the plant will turn what already exists in the region into something useful. Ash from the process can be used to make cow bedding and cement, he said.

Panda hopes to soon build another plant using the same technology in Kansas. The company expects to become publicly traded by the fall.

Copyright 2006 Reuters Limited. All rights reserved. Republication or redistribution of Reuters content is expressly prohibited without the prior written consent of Reuters.

Analyst sees 'looming glut' in ethanol
Expected surge in capacity could hurt profits for industry

Updated: 11:20 a.m. ET Aug 1, 2006
NEW YORK - U.S. ethanol supplies will rise by more than 90 percent by the end of 2008, outstripping even the most aggressive forecasts by industry groups, Fimat Energy analyst Antoine Halff said in a report published on Monday.

"Surging capacity ... poses daunting challenges for the ethanol industry, including heightened competition for feedstock and the logistical headache and costs of shipping ethanol from the Midwest to the main gasoline markets," said Halff.

The huge increase in ethanol output is likely to crimp the profitability of the entire industry, which has attracted huge capital inflows this year, Halff noted.

Fimat expects 4.49 billion gallons per year of new ethanol production capacity to be constructed by the end of 2008, far more than the 2.43 billion gallons predicted by the Renewable Fuels Association, an industry lobby group.

The surge in capacity means that ethanol production will exceed the 2012 renewable fuel standards imposed by federal legislation by early 2008, leading to possibly severe downward pressure on ethanol prices in the Midwest.

Industry groups and farmer lobbies are already pushing for an increase in the ethanol mandate to avoid the coming crunch, but Halff suggests the solution to the problem will likely be the wider adoption of E85, a blend of 85 percent ethanol and 15 percent gasoline in the Midwest.

By the end of 2008, ethanol production capacity in the Midwest will be sufficient to replace 25 percent of Midwestern gasoline demand, Halff said.

Copyright 2006 Reuters Limited. All rights reserved. Republication or redistribution of Reuters content is expressly prohibited without the prior written consent of Reuters.

August 3, 2006


Biodiesel plant opens in Morristown


Integrity Biofuels has begun making diesel fuel from soybeans at a plant in Morristown about 25 miles southeast of Indianapolis. Integrity joins a biodiesel plant in Hammond and an ethanol plant in South Bend as the only biofuel plants operating in the state. However, at least 11 more ethanol plants and two more biodiesel plants are under construction or announced, representing more than $1 billion in investment. The state has committed to about $32 million in incentives.