published: Friday, October 26, 2012

BP Oil pulls plans for biofuel plant

By BARRY FOSTER

News-Sun correspondent

LAKE PLACID - In an unforeseen move, BP Oil announced Thursday that their plans to build a $300 million ethanol plant in Highlands County have been scrapped. Officials from the Highlands County Economic Development Commission said they were blindsided when word came down that the project had been scuttled by the petroleum giant.

The announcement to build the 36-million gallon-per-year ethanol plant south of Lake Placid came with much fanfare back in 2009. The deal was a partnership between BP and the Massachusetts-based Verenium Corporation. The commercial facility was to have been the first in the state of Florida to use next-generation cellulosic ethanol technology, converting renewable grasses to fuel, rather than processing food crops.

In a statement issued by the company last week, BP said it would end its pursuit of commercial ethanol production in the United States entirely and instead, refocus its U.S. biofuels strategy on research and development as well as licensing its technology.

"Given the large and growing portfolio of investment opportunities available to BP globally, we believe it is in the best interest of our shareholders to redeploy the considerable capital required to build this facility into other more attractive projects," said Geoff Morrell, BP vice president of communications.

It is not the first such cancellation of biofuel manufacturing in the industry. Shell Oil recently announced its decision to back out of a similar commercial-scale plant in Canada. That one was intended to make ethanol from straw and plant waste.

The decision comes as a blow to local job creation. Something desperately needed in Highlands County, which registered a September unemployment number of 9.2 percent.

"To say the least it was disappointing," said Eva Cooper, interim executive director of the Highlands County Economic Development Commission. "We need skilled jobs and this was to bring in 150-plus."

Cooper said the Thursday announcement came as a surprise to the local BP leadership and local employees as well.

"They found out about the same time we did," she said.

Paul McGehee, chairman of the EDC, similarly was shocked and stunned by the announcement.

"Naturally we are disappointed by this 11th hour decision. This one was so close, there was some basic infrastructure in the works and some engineering had been done. Our hearts go out to the employees and familes that already are here."

Cooper reported that even the BP officials and workers already in the county were caught off guard by the sudden announcement.

McGehee said it was his understanding that BP now is looking for potential investors to finish up the project and pledged EDC cooperation.

"We need to find out what our role could be, such as giving area tours. We will be glad to do anything they need us to do," he said.

Quite a bit of time, money and effort had been expended by Highlands County staff to help the company locate here.

In July of last year, the county received over $1.6 million in grant funds. That money was designed to start improvements on State Road 70 for truck traffic slated to be drawn by the plant. BP had applied for tax abatement for their project. It appears that any new firm would have to start that process from scratch.

Lykes Brothers, a partner in the deal, also was slated to hire hundreds of harvesters to bring in as much as 400,000 tons of energy grasses and other material to fuel the plant. The land where the crops are being grown reportedly is under a lease agreement and is being administrated through a company known as Highlands Ethanol.

BP's decision was revealed just a week after Florida Governor Rick Scott called on U.S. officials to temporarily suspend ethanol requirements in gasoline, saying ethanol production was pushing up the price of corn and cattle feed prices. Trade magazines also termed the pullout as another blow to the Obama administration, which sees advanced biofuels as a way of weaning the country off expensive oil imports.