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Interview with Bloomberg New Energy Finance
by ANDREW HERNDON
KL Energy Corp., a cellulosic ethanol producer, said Petroleo Brasileiro SA will invest $11 million to update technology at the company’s Wyoming plant so it can convert sugar cane waste into biofuel.
The investment by Petrobras, as Brazil’s state-controlled oil producer is known, is part of an 18-month joint development and licensing agreement with Rapid City, South Dakota-based KL Energy. The upgrades should be complete by the first quarter, KL Energy Chief Executive Officer Peter Gross said in an interview.
KL Energy’s 500,000 gallon-a-year demonstration plant in Upton in northeastern Wyoming, which has been producing cellulosic ethanol from wood waste since 2008, will start using bagasse, the fibrous residue left when sugar cane stalks are crushed. Rio de Janeiro-based Petrobras said it also will license the technology for use in Brazil.
'Petrobras views cellulosic ethanol as a very promising technology to substantially increase the ethanol output by some 40 percent without increasing the planted area output and further improve the carbon footprint of its sugar cane mills,' Miguel Rossetto, CEO of Petrobras’s biofuels unit, said in a statement today.
Petrobras America, a U.S. unit, is funding the KL Energy investment. Brazil is the world’s largest sugar producer.
Both companies have begun engineering work on an 'industrial scale' bagasse-to-ethanol project in Brazil that will be integrated with an existing Petrobras-owned mill by 2013, according to Alan Rae, KL Energy’s head of global business development and corporate finance. Capacity of the facility has yet to be determined, Rae said in an interview.
KL Energy is pursuing two additional facilities in Michigan, as well as a plant in Oregon, Rae said. He declined to discuss details, citing non-disclosure agreements. The company is also developing a project in Colombia and is working with 'large industrial partners' at other sites in Brazil, according to Gross.
The company applies its technology to industries that provide access to feedstock or useable waste, including pulp and paper mills or ethanol mills, Rae said. Its U.S. projects will use wood waste as the primary feedstock. The Wyoming plant chips wood, primarily from Ponderosa Pine, and uses steam to break the product down before the sugars in the fiber are fermented into ethanol using enzymes.
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