Sustainable Power signs deal to develop biocrude capacity in Europe

In Texas, Sustainable Power announced an agreement with Norway’s Pemco Energy and Spain’s L.Solé to engineer, procure and construct biocrude and power generation plants in Europe. SSTP Europe, a joint venture of Pemco and SSTP, will target the replacement of L. Solé biomass boiler systems which L. Solé installs and operates in Europe.

Last month, biocrude producer Sustainable Power announced a strategic alliance with Pemco, which manufactures and distributes oil and chemical-based products throughout Europe. Sustainable Power and Pemco will jointly establish SSTP Europe to sell biocrude and other SSTP products into Europe. As part of the agreement, Pemco acquired 50 million shares of SSTP for $2 million, and agreed to contribute up to $6 million to the SSTRP Europe venture. Pemco recorded sales of $500 million last year.

Sustainable Power background

Sustainable Power’s bioreactors utilize the Rivera process to produce bio-crude from algae, palm fruit, coconuts, and other industrial or food waste. Sustainable Power is the exclusive licensee of the Rivera process, originally developed by US Sustainable Energy (USSE.PK).

Sustainable Power announced that its 10 percent biojet fuel blend had been successfully tested in conjunction with AmSpec Services and an undisclosed major domestic US airline.  Tests concluded that the blend had met and exceeded current jet fuel specifications, providing the company with a viable entry into the 18 billion gallon commercial aviation fuel market.  A link to view the laboratory test results has been posted here.

The company announced last month that it received confirmation from AmSpec Services, LLC that its bio-crude samples produced and taken from its Baytown, Texas facility were found to have similar properties to material used for gasoline blend stocks, which are used to create marketable gasoline.

In April, the company signed an initial agreement with with L. Solé, S.A., a leading company in Spain responsible for building over 400 biomass powered facilities throughout Spain, the European Union, Russia and in all of Latin America. In the initial agreement, L. Solé agreed to provide up to $2 billion in financing to fund the expansion of SSTP’s Baytown, TX facility, as well other facilities worldwide utilizing SSTP’s total solution technology. The financing will be in the form of debt, and is therefore non-dilutive to the existing SSTP shareholder base. L. Solé also plans to “ EPC “ (engineer, procure and construct ) a minimum of 400 reactors in Baytown, Texas.

As February eneded, Sustainable Power Corporation (SSTP.PK) sold a 2.44 percent stake to Borneo Oil (KLSE: BORNOIL) for $2.0 million, and has signed a collaboration agreement to install a pilot bioreactor in Malaysia, using the Rivera process to produce biocrude. Under the agreement, Borneo Oil will install and commence production with up to 20 additional biofuel reactors in Indonesia and Malaysia by summer 2009.

The announcement by Sustainable Power and Borneo Oil is the most significant international expansion announced to date in biocrude production. It confirms that Sustainable Power is a step ahead of a large group of competitors in taking biocrude from the development stage to commercial viability.

Sustainable Power’s bioreactors utilize the nanobacteria-based Rivera process to produce bio-crude from algae, palm fruit, coconuts, and other industrial or food waste. Sustainable Power is the exclusive licensee of the Rivera process, originally developed by US Sustainable Energy (USSE.PK).

Borneo Oil is a diversified Malaysia trading company with interests in real estate, resorts, restaurants, food processing, catering services, machinery, phone cards, as well as providing management and technical services to the oil & gas industry as well as other energy related businesses. CEO of the Borneo Oil & Gas and Borneo Energy subsidiaries, Abd. Hamid Bin Ibrahim, has joined the board of Sustainable Power as of February 24th. Ibrahim retired from Petronas in 2003 after 27 years service, during which he served as Managing Director or CEO of numerous Petronas subsidiaries, including Petronas Gas.

In February, Sustainable Power announced a definitive Joint Venture agreement and an additional $100,000 in deposits from Farmers Sustainable Energy International (FSEINT) located in Quincy, Illinois. The entities had previously executed a Memorandum of Understanding announced on December 11, 2007 . SSTP had previously received the initial $200,000 deposit of the $2,000,000 that was required to implement the initial terms of the agreement.

Earlier in February, the Baytown (TX) Sun reported today that President Julio González Gamarra, president of the Central American Parliament (Parlacen), offered to contribute up to $4 billion for the rollout of the “Rivera” process to Latin America. The Rivera process is used at the Baytown Green Energy Facility, a joint venture of US Sustainable Energy and Sustainable Power Corporation, now operating at 2.4 Mgy capacity.

President Gamarra and engineer Fernando Ricardo Luna Waldheim visited the Baytown facility following a demonstration of the “Rivera process” earlier this month in the Dominican Republic. “This technology has a great future,” Waldheim told the Sun. It’s just a great opportunity for us to enter and to substitute the demand and to lower the energy costs in these countries where they don’t have crude oil, but they do have the agriculture,” he added.

In January, Sustainable Power conducted a successful demonstration of its soybean-to-crude oil production capabilities at its Baytown, TX facility. The biocrude producer is also awaiting lab results from a test of biocrude production using 20 pounds of algae as a feedstock.

The company had recently installed a new production line at its Baytown facility, and has been successfully testing up to 1,000 gallons per day of soybean-based bio-crude production.

The company’s “Rivera” process, which is closely held as a trade secret, will produce fuels that will be certified at an on-site facility by Amspec. Amspec Senior VP Jim Ford, who serves on the board of the Americas Committee of the International Federation of Inspection Agencies, has recently joined the board of Sustainable Power, a related company that has licensed the Rivera process.

According to US Sustainable Energy CEO John Rivera, following Amspec’s certification of each batch of biocrude, the company will transfer the certified oil to an onsite, Aspec-controlled storage facility. The certified biocrude will be then be sold to George E. Warren Co., a major wholesale petroleum distributor, which will have the option of distribution via pipeline or barge.

The initial production line has a capacity of 3 million gallons per year, and the company has plans in place to add additional lines, with potential maximum capacity of more than 1 million gallons per day at its 500-acre Baytown plant.

The company ran its initial test of 20 pounds of 5% oil-content algae feedstock with 40 percent water content, and resulted in an ignitable oil product.

The algae was supplied by Green Star Products, which is negotiating with US Sustainable Energy to install a series of algae bioreactors at the Baytown facility, should test results be favorable.

Biocrude, as compared to biodiesel or ethanol, can be distributed using existing infrastructure, and when refined into gasoline or diesel fuel has the same performance and engine-wear characteristics as the corresponding fossil fuels it replaces. Derived from a sustainable feedstock that can be produced in large quantities with negigible environmental impact, biocrude (and synthetic crude oils as a category) have been one of the most elusive yet valuable prizes in the quest for a global energy solution.

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