AE Biofuels to restart Cilion ethanol plant

By Holly Jessen | January 04, 2010
Posted Jan. 28, 2010

A California ethanol plant that has been idle since April is on the way to being restarted. AE Biofuels has entered into a three-year lease agreement with Cilion Inc., the owner of the plant, to operate the plant with the subsidiary name AE Advanced Fuels Keyes.

Andy Foster, president and chief operating officer of the AE Biofuels Advanced Biofuels Division, said the plant will first undergo repairs and retrofitting. The goal of the Cupertino, Calif.-based company is to start producing ethanol again in late spring this year.

AE Biofuels has agreed to pay $1.6 million in the process to repair and restart the plant. Praj Industries Ltd., the engineering contractor, will pay $1 million, Foster told EPM. AE Biofuels is leasing the ethanol plant from Cilion for $250,000 a month. Once ethanol is being produced again, the company will pay Cilion $3 million yearly for three years. Cilion investors will be able to convert their shares into AE stock, according to the terms of the agreement.

The 55 MMgy ethanol plant will, in the beginning, continue to use corn as its main feedstock. Eventually however, AE Biofuels plans to utilize up to 25 percent ag residues, such as corn stalks and wheat straw, collected from 50 to 100 miles from around the plant. "We anticipate making the conversion to cellulosic inputs once the plant has been up and running at a steady state for at least 6 to 9 months," he said. "Our goal for cellulosic production is the first half of 2011."

Implementing cellulosic ethanol technology at the plant is still subject to final approval from Cilion. To reach that point, AE Biofuels will conduct further testing, put some jointly agreed upon plant modifications in place and update operating protocols, Foster said.

AE Biofuels operates a cellulosic ethanol demonstration plant in Butte, Mont. The company announced in August 2008, for the facility's grand opening, that it was the first integrated cellulose and starch ethanol demonstration facility in the United States, according to the Web site. The plant uses a variety of feedstocks, including grasses, wheat straw, corn, corn stover and sugar cane stalks.

The company also operates Universal Biofuels Ltd. in Kakinada, India, a 50 MMgy biodiesel plant. Although the plan was to upgrade it to 100 MMgy in 2009, that hasn't happened yet. "Due to macroeconomic conditions, the India plant expansion has been temporarily put on hold," Foster said. "However, we are currently evaluating additional technology upgrades at the Kakinada facility including, but not limited to, fractionation."

AE Biofuels also owns land for two potential ethanol plant sites in Sutton, Neb., and Danville, Ill. Currently there are no specific plans to build, Foster said, but the company will continue to evaluate that possibility.