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BP Changes Ethanol Plans in Florida

October 25, 2012 - 6:00pm

Plans for a 36-million-gallon-per-year ethanol plant in Highlands County are being scrapped by BP Oil, which announced Thursday it will seek investment opportunities elsewhere.

Backing off plans announced in 2008 to build the cellulose-based ethanol plant in south-Central Florida, BP said it is ending its pursuit of commercial ethanol production in the United States entirely and will instead focus on developing the next generation of bio-fuel 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," Geoff Morrell, BP vice president of communications, said in a statement.

The decision comes as a blow to Highlands County, which in September had an unemployment rate of 9.2 percent.

Under a 50-50 partnership with BP, the project was originally pushed by Verenium Corp., a Massachusetts-based manufacturer with ethanol research and demonstration facilities in Louisiana and California. In 2010, BP bought Verenium's stake for $98.3 million.

BP said Thursday the research and demonstration facilities would remain open.

The $250 million to $300 million project was to be BP's first facility to produce marketable amounts of ethanol in the U.S. Plans called for employing up to 600 people during the planning and construction phase and 200 to run the plant and grow the crops after start-up.

Lykes Bros., a partner in the deal, was expected to provide up to 400,000 tons of energy grasses and other material to fuel the plant.

Eva Cooper, interim executive director of the Highlands County Economic Development Commission, said Thursday afternoon that local officials had just been informed of the decision and could not comment.

"I should have a lot better idea tomorrow where we go from here," Cooper said.

The company will continue to operate ethanol facilities in England and Brazil.

BP's decision comes a week after Gov. 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.

Officials in Scott's office did not immediately return emails seeking comment.

Florida Agriculture Commissioner Adam Putnam lamented the company's decision but stood by earlier arguments that the marketplace should decide how to proceed in the quest for alternative energy.

Natural gas prices are expected to remain low for the foreseeable future, a factor that has prompted many companies to change direction on the alternative fuels front, Putnam said

"Choosing not to build the cellulosic ethanol plant represents an enormous setback to biofuel development in Florida and highlights the changing nature of energy markets," Putnam said via email. "This begs the question, if a company with the staying power of BP cant make it work, who can?"

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