Verenium, BP Form Joint Venture to Build Biofuel Plant in Florida
Verenium (NASDAQ: VRNM), a Cambridge, MA, startup whose proprietary microbes break down high-cellulose material like sugar cane into ethanol, said yesterday that it has established a joint venture with British Petroleum (NYSE: BP) to build commercial-scale biofuel plants in the United States. BP, which owns 50 percent of the new company, is contributing $22.5 million to the venture. Verenium says it is contributing “development assets,” including two biofuel plant projects that have not yet broken ground but are valued at an additional $22.5 million.
Initially to be based in Cambridge, the joint venture will include employees from both Verenium and BP. Its first plant is likely to be in Highlands County, FL, where plans call for the construction of a facility capable of producing 36 million gallons of ethanol per year. The new company’s first task will be to secure funding for the plant, which is projected to cost $250 to $300 million; it got a start last month by procuring a $7 million grant from the State of Florida. BP and Verenium expect to start construction next year.
The two companies have a longstanding relationship. Last August, BP agreed to pay Verenium up to $90 million over an 18-month period for access to its microbes, which are called ethanologens and are reported to be more effective than conventional yeasts at fermenting high-cellulose, non-food materials. The companies said at the time that they hoped to form a joint venture aimed at building commercial-scale cellulosic ethanol plants. It’s not clear whether the $22.5 million BP is investing in the joint venture is part of, or in addition to, the $90 million it committed to Verenium in August.
“This next stage in our relationship with Verenium demonstrates our real commitment to making cellulosic ethanol a reality in the U.S. fuels market in the near term,” Sue Ellerbusch, president of BP Biofuels North America, said in a statement. “BP and Verenium together have the technological know-how, engineering capability and market expertise required to demonstrate that we can deliver better, more sustainable biofuels, more quickly.”
Verenium was formed in 2006 from the merger of Cambridge, MA-based Celunol and San Diego-based Diversa, and still has about 180 employees in San Diego. On December 5, the NASDAQ stock exchange warned Verenium that its stock would be delisted within 30 days unless it came back into compliance with a requirement that listed companies maintain a market capitalization of at least $50 million. The company said on January 13 that it had met this requirement.