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BP cancels plans for Highlands cellulosic ethanol plant in US; investing in “more attractive projects”

BP last week announced it was canceling plans to build a commercial-scale cellulosic ethanol plant in Highlands County, Florida and refocusing its US biofuels strategy on research and development as well as licensing its biofuels technology. The Highlands project (formerly known as Vercipia Biofuels, earlier post) was targeted to be the first commercial-scale cellulosic biofuel plant using dedicated energy grass.

The progenitor of the Highlands project, Vercipia biofuels, was initially a 50-50 joint venture between BP and Verenium. (Earlier post.) In 2010, BP acquired Verenium’s cellulosic biofuels business, including its stake in Vercipia.

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.

—Geoff Morrell, BP vice president of communications

BP originally announced plans to build the Florida facility in 2008 with the intention of turning thousands of acres of energy crops into 36 million gallons per year of cellulosic ethanol. While ending its pursuit of commercial-scale cellulosic ethanol production in the US, BP continues to invest in and operate its biofuels research facility in San Diego, California, and a demonstration plant in Jennings, Louisiana—both also acquired in the Verenium transaction—to further develop next-generation cellulosic biofuel technologies and license them for commercial use in the US and around the world.

Globally, BP is a leading investor in commercial biofuels production. The company has completed construction of its joint venture 110 million gallon per year ethanol plant in Hull, England, which is expected to come online later this year. In Brazil, BP took ownership of three sugarcane ethanol mills located in the Goiás and Minas Gerais states of Brazil in 2011 and is currently expanding production there. In addition, BP is developing advanced biofuel technology via its joint venture investment in biobutanol company Butamax.

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