Verenium, BP partnership moves forward

By Anna Austin | February 04, 2009
Web exclusive posted Feb. 23, 2009, at 11:06 a.m. CST

Massachusetts-based Verenium Corp. and BP Amoco PLC have announced the formation of a company that will serve as a commercial entity to develop and commercialize cellulosic ethanol.

The proclamation follows the companies' announcement of a strategic partnership in August 2008. (Read "BP invests $90 million in Verenium.") BP will commit an additional $22.5 million, and Verenium will contribute $22.5 million in assets, for a $45 million 50/50 joint venture.

On Feb. 18, Verenium and BP held a conference call to discuss the new partnership developments. "Ever since we announced the first phase of our partnership with BP back in August of last year, we've been actively working to define the second phase of our collaboration, which is intended to serve as the vehicle for commercializing the cellulosic ethanol technology we are now jointly developing," said Verenium President and Chief Executive Officer Carlos Riva. "Verenium has always held a view that working with like-minded, strategic partners such as BP is the most effective path to bringing our technology to the market."

Before discussing the particulars of the new developments, Riva addressed the current environment, emphasizing that despite the weak economy, opportunities for cellulosic ethanol development still remain.

"Certainly, there's been significant change over the last six months, with a virtual freeze in the credit markets, extremely strained capital markets, together with a dramatic swing in oil prices as the economy continues to stumble," he said. "Despite these challenges, a number of factors continue to favor our strategy—the political environment has never been more favorable for next generation ethanol."

Riva added that science and technology is at a point where advanced biofuels can be a practical reality, and the demand for alternative fuel sources to compliment the world's energy mix remains high.

Specific details of the project's second phase involve each company contributing $45 million in funding and assets, including the Highlands County project in Florida, which was announced in January. (Read "Verenium to build Florida cellulosic ethanol facility.")

Riva said initial focus is on the project developments, such as securing necessary debt financing, perfecting necessary regulatory approvals, and completing preliminary engineering, which will allow groundbreaking to occur in early 2010.

The joint venture company, which will be based in Cambridge, Mass., will have its own management team comprised equally of Verenium and BP employees. Also in the coming year, according Riva, the joint venture company will develop a second site in the Gulf Coast region, as the potential location for its next commercial project.

Also on Feb. 18, Verenium Executive Vice President Gerald Haines was a presenter during a webcast given by The IntraLinks and Electric Utility Consultants Inc. In addition to Haines, panelists from PricewaterhouseCoopers and UTS Energy Corp. provided insight and details on scaling alliances and partnerships in the energy industry.

Haines provided attendees of the webcast, titled "Forging and Maintaining Partnerships in Energy," with details of the company's strategic search for a business partner.

Haines said two main objectives during the search, which ended in the BP and Verenium project, were to find a partner who shared the company's objectives, experience and world view, and also had complimentary capabilities. These capabilities included industry leadership; expertise in large-scale commercial design, operation and marketing; like-mindedness in total commitment to making commercial-scale ethanol a reality; and a strong balance sheet.