Valero now is calling ethanol the highlight of its otherwise troubled operations

BP, DuPont pursuing ethanol substitute
by PHILIP BRASHER & DAN PILLER • businessdmregcom • November 1, 2009

An official with oil company BP says the company is moving forward with the development of butanol as an alternative fuel to ethanol. Butanol costs more to produce but has some key advantages to ethanol, including a higher energy content. Cars can get more miles per gallon on butanol.

DuPont and BP have formed a joint venture called Butamax to develop the fuel. Susan Ellerbusch, president of BP Biofuels North America, told the House Agriculture Committee last week the companies plan to have the production technology commercially available in the United States by 2012 or 2013. A demonstration plant is being built in Britain.

She said that butanol could be used in all existing vehicles at a 16 percent blend.




Ethanol shines for Valero as oil refiner loses money
When Valero Energy of San Antonio bought seven ethanol plants from bankrupt VeraSun Energy last spring, many believed the Texas oil refiner had sniffed a little too much sulfur.

Valero became Iowa's largest ethanol producer when it resumed the operations at the ex-VeraSun plants at Albert City, Charles City, Fort Dodge and Hartley, as well as plants in other states.

Valero now is calling ethanol the highlight of its otherwise troubled operations. The company reported a third-quarter loss of $219 million vs. a third-quarter profit of $1 billion a year earlier.

"Similar to last quarter, our retail and ethanol segments had outstanding results. Our ethanol business earned $49 million of operating income in the third quarter, more than double the second- quarter results, as we increased run rates at all seven ethanol plants and captured very good margins.

"In October, ethanol margins have continued at strong levels."

Monsanto eases price increases on seeds
Monsanto will increase the price of its new triple-stack corn seed by 7 percent, less than the 8 to 10 percent the company had targeted previously.

Monsanto had run into resistance from farmers reluctant to spend up to $111 per acre for a bag of corn seed. The seeds combine herbicide tolerance and insect resistant traits.

Pioneer Hi-Bred of Johnston claimed a gain in corn seed market share of about 2 to 3 percentage points in the 2008-09 sales year. Latest market share breakdowns have Pioneer at 32 percent and Monsanto at 36 percent, primarily through its DeKalb seed subsidiary.

Investors show little interest in new biofuels
The prospect of federal loan guarantees isn't turning out to be enough to get banks to lend money for development of next-generation biofuels.

The Obama administration has issued just two conditional commitments for such guarantees, one for $80 million and another for $25 million.

Of those two projects, only the $80 million commitment, which went to Range Fuels in Georgia to make ethanol from wood residue, would really be considered to be for a second-generation fuel. The $25 million commitment is for a shuttered SoyMor biodiesel project in Minnesota that has some new technology for processing grease.

"Very few credit providers even with loan guarantees are willing to take much risk at all," Dallas Tonsager, the Agriculture Department's undersecretary for rural development, told the House Agriculture Committee.

The committee chairman, Rep. Collin Peterson, D-Minn., said criticism of corn ethanol and its impact on food supplies and greenhouse gas emissions is discouraging investment in next-generation fuels.

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