Daily Biofuels News Digest for November 16: 100 billion gallon gas shortage and $300 oil in view, Greenpeace blockades Indonesian palm oil tanker

Top Story:

The International Energy Agency released a report projecting a severe energy supply shortage by no later than 2015. The report warned that increasing energy demand in India and China would result in an oil shortage of up to 7 million barrels of oil per day. Global annual consumption of 85 billion barrels, is expected to reach 118 billion barrels by 2030.  Matthew Simmons, a Houston oil and gas investment banker, told the Associated Press that the price of crude oil is likely to reach $300 a barrel. Oil prices reached a record $98.62 per barrel last week.

Producer News:

In Kansas, Kansas Department of Health and Environment Secretary Rod Bremby approved construction of Dial Energy’s 124 Mgy corn ethanol plant in Dodge City.

DuPont announced that it is planning three additional equity investments in biofuels facilities. The company said that it projects biofuel revenues to reach $1.2 billion by 2012. The company, which holds a 10 percent stake in a UK ethanol plant in partnership with BP and British Sugar, said it is negotiating with BP on new investment.

In New York, Metro Terminals was granted $10.86 million in tax-exempt bond financing and tax benefits in support of its Metro Biofuels biodiesel project. The company will construct two biodiesel plants in Brooklyn that will produce biodiesel and heating fuel.

International News:

In Australia, a report from the auditor-general on the Federal Government’s Regional Partnerships program concluded that political pressure was applied in fast-tracking the Gunnedah Grains to Ethanol project. The project received more than $1 million in Federal support but has never been built. The member of parliament for the district is John Anderson, former deputy prime minister, who made contacts with officials in support of the project.

In China, the China Grand Forestry Resources Group will acquire Yunnan Shenyu New Energy, a research and development company that is prominent for its work on the jatropha curcus tree. The transaction is valued at $822 million in cash and securities. Yunnan Shenyu New Energy is currently constructing a jatropha plantation, crushing facility and a 30 Mgy biodiesel plant.

In the UK, Ecotec is creating biodiesel from chocolate factory waste production. Ecotec management said that a pound of chocolate contains enough oil to power a car for 1.5 miles. The biodiesel producer first separates the oil from the other chocolate ingredients, and then processes the oil into biodiesel at a production cost of $1.20 per gallon, or 60 percent less than the market price for soybean oil.

In Indonesia, Greenpeace’s Rainbow Warrior blocked a 33,000 tonne load of palm oil from leaving the port of Dumai. The Rainbow Warrior was positioned by its crew so close to the oil tanker that the tug boats cant move it from the dock area. The cargo of palm oil is headed for  India, and Greenpeace is using the exercise to highlight the impact of deforestation on the peat lands of Riau province in Indonesia. Greenpeace believes that the peatland forest store 14.6 billion tonnes of carbon that would be released to the atmosphere if the forest are cleared for oil palm.

Research News:

The U.S. Department of Agriculture reduced its forecast for the Minnesota corn crop to 1.185 billion bushels, owing to wind damage. The projected crop, after the adjustment, will be the second-highest in state history.

Policy and Policymakers:

The Midwest Governors Association signed a series of agreements regarding biofuels and climate change. The state governors pledged to create state targets for greenhouse gas reductions with a cap-and-trade system to reach those targets. The governors also pledged that 50 percent of fuel consumed in the Midwest by 2025 would come from Midwest-produced biofuels, and that 33 percent of Midwestern gas stations would offer E85 by 2030.  The governors also agreed to produce 30 percent of electricity from renewables, increase support for wind farms, and to establish a reservoir to hold CO2 emissions from coal-burning utilities.

Consumer and Fleet News:

In Minnesota, Minneapolis Metro Transit debuted 19 hybrid electric-diesel buses, and promoted the new buses by offering free rides on one bus through the end of the year.  The diesel-electric buses reduce emissions by 90 percent, and will produce 22 percent gain in mileage than current Minneapolis buses. The buses will run on a soy-based biodiesel blend. Metro Transit expects to increase the diesel-electric fleet to 150 buses by 2012.

Financial News:

The Biofuels Digest Index™, a basket of public biofuel stocks, fell 2.07 percent yesterday to close at 106.61. Losers led gainers 6 to 1. Among midcaps, Pacific Ethanol (PEIX) fell 5.66 percent to close at $5.83, having lost half its market value since late August. Intrepid Technology & Resources (IESV.OB)  led small caps, gaining 3.33 percent to reach $0.031, while Xethanol (XNL) fell 8.51 percent to finish at $0.43.

Verenium filed a $150 million shelf offer with the SEC in support of a new equity raise. The company says that it plans to sell 3 million shares at $50 to raise $150 million, although it did not announce a date for the offer.   Verenium is a research and development company working on cellulosic ethanol technologies, formed last year by a merger of Celunol and Diversa. The company recorded $49 million in revenues in 2006.

In the Netherlands, Avantium, a research and development company spun off from Royal Dutch Shell in 2000, has cancelled its IPO owing to adverse market conditions. Avantium provides R&D services to companies such as BP, Royal Dutch Shell, Sasol, and Pfizer, including research on next-generation biofuels.

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