Vireol To Build Third Major UK Bioethanol Refinery
Author: Nigel Hunt
LONDON - Biofuels company Vireol is set to break ground in July on Britain's third major refinery making bioethanol from feed wheat and further expansion could be on the cards, the company's chief executive Dave Knibbs said.
"I think you could see some more plants here...We are the most efficient place to produce feed wheat in Europe, our yields are better than anyone else's and there is room for more growth (in yields)," he told Reuters in an interview.
Vireol's refinery, at Grimsby in eastern England, will use 530,000 tonnes of grain, most likely feed wheat, to produce about 200 million liters (44 million Imp. gallons) of bioethanol as well as protein rich by-product DDGS (dried distillers grains with solubles), which is used for animal feed.
"I do believe it is something the UK can excel at. We should be leading the charge in Europe, not bringing up the rear," Knibbs said.
Britain's bioethanol industry got off to a slow start and was limited until recently to a British Sugar refinery with a capacity to produce about 70 million liters using sugar beet as its feedstock. It began operating in 2007.
Ensus is currently bringing into commercial production Britain's first wheat-based bioethanol refinery in Teesside in northeast England with capacity to produce about 400 to 450 million liters from about 1.1 million tonnes of wheat.
Vivergo Fuels is building a second major bioethanol refinery in Hull, eastern England, with a similar capacity to the Ensus plant. It is due to come on line either late this year or early in 2011.
Ensus is owned by two U.S. private equity funds, the Carlyle Group and Riverstone while Vivergo Fuels is a joint venture of British Sugar, BP and Du Pont Co.
Future Capital Partners is in the final stages of completing the financing of the Vireol plant, which already has a 10-year agreement to sell all its bioethanol to a major investment bank.
Knibbs said confidentiality clauses meant he could not name the investment bank.
Vireol also has an agreement with UK merchant Gleadell to supply wheat to the refinery. Gleadell is a joint venture of ADM controlled Toepfer and French co-op Union Invivo.
Knibbs said the refinery should come on line in 2013, coinciding with Britain's target date for obtaining five percent of its motor fuels from renewable sources.
The European Union has also mandated that 10 percent of motor fuel should come from renewable sources by 2020, which Knibbs said would equate to about six billion liters for the UK market.
He noted the combined capacity of the Ensus, Vivergo and Vireol refineries would, however, amount to only about one billion liters.
"My personal sense is the rest of the world will only be able to supply a limited amount," he said, adding most of the production of top exporter Brazil was likely to be used up supplying the United States and meeting domestic demand.
Wheat production in Britain may, however, need to rise if it is to support a further expansion in the bioethanol industry.
Britain's exportable wheat surplus currently ranges from about 2.0 million tonnes to 3.5 million tonnes and the three refineries could consume more than 2.5 million.
All three are, however, located at ports providing the option of imports if domestic supplies are tight.
Knibbs said there was plenty of scope for UK wheat production to rise, adding there had been little emphasis on expanding EU wheat yields in the last few years.
"Europe is probably working at 50 to 60 percent of capacity when it comes to the amount of crops it could produce," he said.
(Editing by Anthony Barker)