October 27, 2012
BP Ends Plans for U.S. Cellulosic-Ethanol Plant
Published in WSJ
BP said it is ending plans to build a commercial-scale cellulosic-ethanol plant in Florida, saying it instead will focus on research and development.
BP planned to build a plant in Highlands County, Fla., to produce 36 million gallons each year of cellulosic ethanol, a renewable fuel made from nonfood crops like switchgrass and wood cuttings. The London-based company still plans to use the technology that produces the ethanol but has decided to try applying it to other projects, BP spokesman Matt Hartwig said.
The cellulosic project started as a joint venture between BP and San Diego-based Verenium Corp. in 2008. Verenium sold its stake to BP for $98.3 million in 2010, but the plant never left the engineering phase.
"We think the technology is pretty good," Mr. Hartwig said. "The decision that was made was that we're not going to be build the physical plant."
Cellulosic-ethanol production has been successful in small-scale projects but has proven difficult to make at commercial levels because of costs and the availability of raw materials, said Sander Cohan, principal at energy consulting firm ESAI Inc. Another factor for canceling the project is the possibility of the U.S. Environmental Protection Agency changing how much cellulosic ethanol it will require to be blended into gasoline, Mr. Cohan added.
"They're probably just taking cellulosic off their front burner until the market catches up," Mr. Cohan said.
BP said it still will invest in renewable-fuel projects in England and Brazil and renewable-fuel research and development at its facility in San Diego.