Shell to pursue US cellulosic biodiesel project with biotech firm

08 June 2010 17:27  [Source: ICIS news]

HOUSTON (ICIS news)--Shell said on Tuesday it has taken an equity stake in US biotech firm Virent Energy Systems under a plan to develop production of biodiesel from non-food feedstocks.

No financial details were disclosed, but under the deal Shell said it would take a seat on Virent’s board of directors.

The two companies have worked together in the development of biogasoline production from plant sugars. That partnership began in 2007 and resulted in the start-up of a pilot plant last year, the oil company said.

Biodiesel is typically made from vegetable oils, but Shell said it would develop a process started by Virent to convert plant sugars sourced from non-food crops directly into diesel.

"The expansion … to include research into the production of diesel from plant sugars offers considerable potential and complements Shell’s wider biofuels portfolio,” said Luis Scoffone, vice president of alternative energies at Shell.

Market participants said the outlook for the second-generation biodiesel market was good, as the product would not require blending and could fully replace conventional diesel.

The investment in Virent expands Shell reach into the global biofuels market.

The company in February became a heavyweight in the ethanol sector, after announcing a joint venture with Brazil’s top producer Cosan.

Shell is among several oil companies and refiners investing in biofuels.

Brazilian oil company Petrobras last year pledged to spend $2.8bn (2.4bn) in biofuels, while ExxonMobil is pursuing production of biofuels from algae under a $600m project.

US refiner Valero earlier this year became one of the top three US ethanol producers, after acquiring plants formerly owned by bankrupt ethanol maker VeraSun.

($1 = €0.84)

For more on biodiesel, visit ICIS chemical intelligence
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By: William Lemos
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