Targeted Growth Spins Out Camelina Biofuels Producer Sustainable Oils

3/15/13Follow @bromano

[Updated 3/15/13 2:45 pm. See below.] Sustainable Oils, formed in 2007 by Seattle’s Targeted Growth and Texas-based Green Earth Fuels with ambitious goals for producing camelina-based biodiesel, has been acquired by Global Clean Energy Holdings.

Targeted Growth “and the other minority owner of Sustainable Oils” were paid 40 million shares of Global Clean Energy Holdings (GCEH) stock—worth about $800,000 based on Friday afternoon OTC trading—and a $1.3 million promissory note. Last summer, Matrix Genetics—a Targeted Growth company working on algae for oil production—spun out on its own after collecting investment from Spokane utility Avista’s venture capital arm.

Long Beach, CA-based GCEH says the addition of Sustainable Oils’ technology and intellectual property to its biofuels feedstock development portfolio could position the company for more than $60 million in camelina-based sales over the next three years.

Sustainable Oils, which according to a spokeswoman will continue research operations in Bozeman, MT, has had camelina sales of more than $20 million in the last four years, including as a feedstock for aviation biofuels, GCEH says in a release.

The outlook for the camelina market brightened last month when the EPA qualified the non-food oilseed crop as a valid feedstock to produce biodiesel and renewable diesel—including jet fuel and heating oil—under the National Renewable Fuel Standard.

Political, business, and environmental leaders have been working to establish an aviation biofuels industry in the Pacific Northwest and in 2011 produced a road map under the name Sustainable Aviation Fuels Northwest, backed by Boeing, Alaska Airlines, and the region’s major airports.

“Sustainable Oils and Targeted Growth were key stakeholders in the SAFN effort and we’ve been involved in the efforts to help commercialize camelina and clear some of the sustainability hurdles,” says Ross Macfarlane of Climate Solutions, who managed the SAFN.

(While the SAFN has no formal ongoing effort under that name, its road map informs the myriad private industry and academic research efforts continuing in the region.)

We’ve asked the companies whether Sustainable Oils intends to remain engaged in the Northwest aviation biofuels efforts and will update this story with their response.

[Updated with comments from GCEH 3/15/13 at 2:45 pm] “The idea is to continue the efforts that [Sustainable Oils] has had in the past and expand on them even further,” GCEH chief executive Richard Palmer tells Xconomy.

He noted the company’s significant contributions on the policy front, including work on EPA approval of camelina under the RFS, FDA approval of camelina meal as livestock feed, and crop insurance for farmers growing the crop.

“All of these enabling regulatory things have to happen to allow the crop to be grown in very large scale,” Palmer says.

He also notes that Targeted Growth is now a significant GCEH shareholder, and he expects the companies to work closely. “We show [this transaction] as an acquisition, but we really look at it as an integration,” he says.

Scott Johnson, president of Sustainable Oils, maintains a Washington residence and GCEH Chairman David Walker is general manager of Sunheaven Farms in Prosser, WA.

“I think what you’ll see is that we’ll have a very large presence in the state of Washington,” Palmer says. “The Northwest is a key strategic region for us.” [End of update.]

Boeing Commercial Airplanes global business development and policy vice president Billy Glover lauded the deal and the companies involved in a statement. “This agreement is a positive indicator that the aviation biofuel sector is generating momentum,” he says, adding that Sustainable Oils “was instrumental” in the EPA camelina approval.

Benjamin Romano is editor of Xconomy Seattle. Email him at bromano [at] xconomy.com. Follow @bromano

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