UC’s Ethanol Partner Delays Annual Report Release

By Richard Brenneman
Friday March 14, 2008

Could UC Berkeley’s first commercial ethanol partnership be headed for rough waters? 

Pacific Ethanol, the Sacramento-based company that has partnered with the Joint BioEnergy Institute (JBEI) to build a cellulosic ethanol plant, announced this week that it would delay the release of its annual report till the end of the month. 

Delayed reports often mean that bad financial news may be coming, and the Fresno Bee reports that the company has burned through three chief financial officers in the last year.  

The Sacramento-based company was picked as JBEI’s partner to build a plant that will produce ethanol from plant fibers—cellulose—rather than the more easily processed sugars derived from corn, sugar cane and other traditional food crops. 

The demonstration plant, which would be built at the site of the company’s corn-based ethanol plant in Broadman, Ore., would be the first of its kind in the Northwest. 

JBEI, headed by UC Berkeley scientist/entrepreneur Jay Keasling, will be providing research support and work on enzymes designed to break down fibers into the constituent sugars, according to official announcement from the company. 

The Department of Energy, which provided the $135 million for the Emeryville-based JBEI lab, is providing $24.3 million for the Oregon plant, which will use patented technology from BioGasohol ApS, the final part in the project. 

Rising oil and grain prices have hit the previously booming ethanol industry, along with a recent report which charges that ethanol may be as environmentally damaging as petroleum-based fuels—a report Pacific Ethanol has challenged. 

Several companies have bailed on a planned refinery, including Pacific Ethanol. The company announced Dec. 10 that it was pulling the plug on a plant already under construction in California’s Imperial Valley. 

The company’s stock has been steadily declining, from a high of $11.24 per share on Sept. 21 to $5.37 at the close of trading Thursday. 

Planned refineries have also faced a flurry of lawsuits, and those that are running have been hit hard by soaring grain prices, which have in turn been impacted by high energy costs. 

Pacific Ethanol announced the delay in releasing its annual report Monday. Revenues had dropped sharply in the third quarter of 2007, with losses of $4.8 million compared to a profit of $2.2 million during the previous quarter. 

With a rapid increase in the nation’s production of ethanol, prices for the fuel have dropped at the same time gasoline prices have been soaring. 

JBEI is a partnership of UC Berkeley, three of its affiliated DOE labs (Lawrence Berkeley, Lawrence Livermore and Sandia) and the Carnegie Institute. 

It is a separate effort from the Energy Biosciences Institute, the $500 million research program funded by BP, the former British Petroleum, and administered by UC Berkeley. 

Blake Simmons, who holds the title of JBEI’s Vice President of Deconstruction, had cited the Oregon plant as one of the institute’s accomplishment during a panel session at the university’s annual Energy Symposium. He said plans called for an annual production of 10 million gallons. 

“We are happy that Biofuel 2.0 will be a resounding success,” he said.