December 21, 2006

Xethanol's Cellulosic Ethanol Business Approach

Xethanol Corporation is a well-known - some would say "notorious" - and aggressive marketer of cellulosic ethanol technology. They have had their share of controversy which is addressed on their website and which resulted last month in a major change in top management.

Xethanol has one of the most comprehensive cellulosic ethanol business approaches around. They aim to:
1 - identify appropriate bioconversion technologies for a wide range of biostocks,
2 - utilize waste forestry and urban biomass in addition to waste agricultural biomass
3 - locate their manufacturing facilities near the sources of the feedstock,
4 - size the facilities to the close proximity of the biostock rather than truck it great distances
5 - build some facilities near urban sources of municipal solid waste

Here are excerpts from their press release announcing their current plans to implement their business approach for the bioconversion of citrus waste into ethanol and other bioproducts:

Xethanol Corp. Joins Renewable Spirits to Produce Ethanol From Citrus Peels
Plans Pilot Production Facility in Bartow, FL

Xethanol Corporation (AMEX: XNL), a renewable energy company focused on converting biomass to biofuel, Dec. 13 announced the Company has formed a venture with Renewable Spirits, LLC for the purpose of building a biomass-based pilot production facility, utilizing waste citrus peels as raw material for making ethanol.

The venture is located in Bartow, FL the heart of the state's citrus industry. The venture is expected to establish a pilot plant to produce up to 50,000 gallons of ethanol this harvesting season.

The pilot plant, which will increase to over 500,000 gallons per year (GPY), is co-located at a facility owned and operated by Peace River Citrus Products, Inc., a leading producer of orange and grapefruit juice and other citrus products.

Slated to begin production by the second quarter of 2007, the program plans to utilize a production technology process, developed through a Cooperative Research and Development Agreement (CRADA) with the USDA that will convert waste citrus biomass into ethanol, as well as other marketable co-products, such as limonene and citrus oil, to improve the economics of fuel production.

"Here's what's exciting: The next time you drink grapefruit juice, remember we will be making ethanol from what's left of the fruit. We are extremely excited to advance the efforts to convert biomass to ethanol with the use of citrus peels, a very promising feedstock" said David Ames, president and CEO of Xethanol. "We are also extremely proud to be partnering with leading scientists from the USDA to extend their breakthrough work into the pilot production phase." Ames said, "This project is a perfect example of how Xethanol is executing on its unique strategy of partnering with best-in-class research institutions and developing regional footprint facilities whereby ethanol production is located adjacent to the biomass feedstock."

"We are extremely confident in Mr. Ames' vision, leadership, and strategy of focusing on biomass based ethanol production in the southeast," said Chandler Hadlock, President and CEO of Coastal Energy Development, Inc., who will be overseeing the construction and management of the plant. "We look forward to working with Peace River Citrus Products and the USDA to further this technology and exponentially increase the citrus-to-ethanol production in Florida over the coming months."

In juice processing, one half of a citrus fruit is waste. Converting this alternative biomass feedstock into ethanol creates a tremendous economic opportunity for America's citrus growers.

Co-locating the processing facility adjacent to the biomass source also helps to reduce the transportation and shipping costs associated with production.

There are more than 35 major citrus producers located in Florida that collectively produce waste that could be converted to more than 80MM GPY of ethanol.

Renewable Spirits, an investor group, has spent the last two years working with the USDA to develop the technology used in the pilot plant, and has been successful in removing limonene from the peel, allowing for the fermentation of the sugars in the peel and batch distillation of ethanol at the USDA laboratory in Winter Haven, FL.

USDA scientists say this is the first facility of its kind.

Doug Westfall, President of Renewable Spirits, said "Xethanol's acquisition of this technology allows for a much quicker path to commercial applications. We believe that there is tremendous potential for citrus to ethanol production in central Florida, and that this is a winning proposition for both the citrus and ethanol industries."

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