Shell Looking to Get a Bargain in the Biofuels Industry
Shell’s focus on venturing further into renewable energies took another step on October 12, when the company offered to purchase the cellulosic ethanol plant of Abengoa SA, located in Hugoton, Kansas. The parent company, located in Spain, has struggled financially over the past few years. The main reason for those troubles has been its bid to take advantage of the growing market for renewables coincided with European financial troubles and their own excessive borrowing.
The price that Shell is offering in bankruptcy court is over $26 million for a plant that has a capacity to handle 25 million gallons of this fuel. If other companies offer bids, an auction would then be held on November 21. The original cost to build the plant was approximately $500 million.
The process of creating this biofuel focuses on using assorted waste as the main byproduct. This waste may be algae, plants, wood or grass, items that might ordinarily be dispatched to a landfill. That’s in contrast to standard ethanol, which uses a feedstock like corn.
Shell’s push to look toward alternatives to fossil fuels has been going on for the past few years. While that time frame coincides with the precipitous price drop in crude oil, the push toward broadening the scope of the company’s operations began long before those economic roadblocks began.
During 2014 alone, Shell invested $1.6 billion to expand its advanced biofuels supply. On the Gulf Coast of the United States, an Emerald Biofuels plant that would use waste fats to produce 82 million gallons of renewables was announced. In addition, wood-oriented biomass would be the main source used for Oregon’s Red Rock Biofuels, taking advantage of the extensive logging industry within the state. Finally, a Nevada plant that would handle municipal solid waste finished financing.