It's 'full steam ahead' for green fuel plant

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Tuesday, January 12, 2010
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This is Grimsby

FUNDING for Grimsby's first bioethanol plant has moved a stage closer with a partnership formed to raise the required £236-million.

Vireol, the company that brought the South Bank scheme forward, has joined forces with investment company Future Capital Partners and construction firm Simon Carves, with summer 2010 a possibility for work starting.

Bank lending and equity will be combined to meet the financial requirements and with agreements now in place to sell the bioethanol – a wheat-based fuel, key to driving down emissions from road transport – the funding element is at an advanced stage.

More than 50 permanent jobs will be created, with hundreds of roles in the construction period, when the 10-hectare site is realised between Bluestar Fibres and Lenzing, off Moody Lane.

The deal created waves in the financial sector yesterday, with international coverage of the partnership formulation.

Ged Russell, technical and operations director at Vireol, said: "This is very positive news. We have been working in the background for some time to secure finance for the project and this is an important step in this process.

"We have been working with Future Capital for two years and have got to the point where we see how we get through the major fundraising work.

"The thing that has triggered this is the agreement for the ethanol out take – reported to be a £1-billion deal. With that sort of scale of project behind us we are confident we will be able to raise the required amount of finance. It will carry considerable weight in the market for raising finance."

The partnership will see the plant leased to operator Vireol, with Future Capital planning to then sell or float the stake further down the line.

The Government has set targets for the amount of renewable fuel filling the tanks of UK vehicles. Bioethanol is seen as the way forward as it can be blended with traditional fuel.

Grimsby's location, with access to deep-water ports, three of the biggest refineries and the most intense wheat-growing area in Britain, made it ideal for such a development.

Mr Russell said: "It is all hands on deck now, full steam ahead. We are putting the final touches to the paperwork for finance, getting everything ready, so when we close on the finance we are ready."

Asked how optimistic he was about securing the full funding – with targets of 40 per cent investor equity – Mr Russell said: "We sense the banks are in a position where they are now considering lending money again. We have been working behind the scenes with them and a number of advisors think now is the time when we should be able to close the deal. We have still got to close the deal, but banks out there are ready, willing and able to help us."

Planning permission for the 150,000 tonne capacity plant was granted in July 2008, and ground investigative work has been completed on site, so the build can begin once the funding is confirmed.

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  • Profile image for This is Grimsby

    by A Grimland Elder, GRIMLAND the tipsy...

    Sunday, January 17 2010, 5:09PM

    “Sorry to be simplistic and definitely open to informed comment, but isn't Ethanol a.k.a. ethyl alcohol, CH3CH2OH, produced by the fermentation of sugars by yeast. I believe it's the basic process by which Brazil produces its ethanol for 'petrol/gasoline' substitution, using molasses ('Blackstrap') as the food for the yeasts. Of course, yeasts, even the alcohol-tolerant varieties, are killed by the alcohol, eventually, so there's a limit to the amount of alcohol produced by this means.

    I personally use the process fairly often. I call it brewing or wine-making. It uses barley for the beer (but in Germany they also use wheat). Cherry plums, damsons, currants or even brambles are also good sources of flavour, but the process does require the addition of sugar in one form or another to get a reasonable alcohol content. Most yeasts die in concentrations of 15% alcohol.or even less.

    To get the 50%-ish+ of 'hard' spirits, one needs to use a still (as the Kentuckyans and the Irish use, for their hard wiskeys and poteen -- from potatoes, which, of course feed the yeasts with their sugar and starch . This, does requires heat, almost inevitably from a carbon-composed source... In Brazil, they may fire their furnaces with the spent cane, but I know nothing further about ethanol production, but I thought you might be interested.

    Personally, I'd rather drink it than put it in a car so I can't advise on ethanol as a substitute for petrol/gasoline... Maybe Vireol can advise? Isn't Vireol what 'growing girls needed, and took like medicine, by the spoonful every morning. Oh... now we're back to brewing again. I believe 'Virol' is 'malted yeast extract' -- something like 'Marmite' with added sugar?? Marmite, of course, is made from the dead yeast which acted on the malted barley in brewing.

    Full circle. Hope 'twas intrestin.”

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    by Pensioner, Immingham

    Thursday, January 14 2010, 12:21PM

    “Dave Grimsby,

    If you look at todays wind, how can your windmills possibly supply the entire south Humbert bank.....I think you are whistling in the wind a little!

    http://www.xcweather.co.uk/

    I agree they are a fantastic engineering feat.........who ever thought up building wind turbines that only generate now and then was also fantastic...... I wonder if the vast subsidies were an attraction.”

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    by Dave, Grimsby

    Wednesday, January 13 2010, 10:19PM

    “If anyone checks the planning application for this site there is an associated application that is a 3 km pipeline that will be used to transport the ethanol from the site to the storage facilities at Immingham where, I assume, it will be blended with the petrol that is shipped through those docks for distribution throughout the NE. Now I'm not sure, but usually companies don't invest that kind of money without knowing the investment won't fall apart really quickly?

    Ethanol is corrosive to steel (not entirely sure of the mechanism) which is why it can't be distributed in the existing petrol infrastructure (wrong steel or can't treat it etc). This is further exasperated by the fact ethanol is hygroscopic (it attracts water), so if it contacts any air it will absorb the moisture that is carries with it (all ambient air carries water vapour). Everytime the ethanol is transferred from storage tank to storage tank it collects water by contacting the air and these big tanks (10 000 m3) are too big to provide controlled atmospheres. The Brazilians have mastered using hydrous ethanol 95% ethanol 5% water, this is less of an issue, however the speed with which the car fleet changes and the time it takes the EU government to issue fuel specs we are unlikely to see hydrous ethanol at our pumps any time soon. It will be some years (I believe) before E85 pumps become common place (there is a handful in the entire country) producing fuel that can be used by flex fuel cars.

    As for the arguement on Wind Power etc, I have been to Butlins Skegness the past 2 years for a break with the kids and I marvelled when looking out at the sea and watching the wind farm which is producing enough electricity for domestic use for the entire South Humber bank, a fantastic engineering feat.

    My comment about my diesel car was slightly tongue in cheek, I already make my own biodiesel using waste oil from a couple of the take aways in town, my production cost is about 65p/Litre and Mr Brown kindly gave me a personal allowance of 2500L/yr tax free! Not the most exciting hobby in the world but I feel I am doing my bit to save the planet!

    Happy motoring.”

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    by The Wrangler, NE Lincs

    Wednesday, January 13 2010, 12:55PM

    “Jim, I'm not saying that it is not transported by road in your part of the world.

    I am saying that it *CAN* be transported by pipeline if you want to.

    Please explain the mechanism by which condensation occurs inside a pipe!

    This is what I do for a living Jim - Condensation of water can only occur if a gas containing water is cooled or compressed below the dewpoint of the water in the gas at which point condensation will occure. As with any pipeline transporting a gas or liquid that that cannot be mixed with water, the pipeline would be dried with Nitrogen (or heated Nitrogen or a suitable solvent ) and then commissioned on what ever you want to put into the line.

    If the Ethanol is dry going in, I can assure you it will be dry coming out - that is how pipes work!!!”

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    by Jim, Regina

    Wednesday, January 13 2010, 12:42PM

    “Sorry Wrangler the fact is Ethanol is not transported by pipe line because it will pick up water. Condensation happens & pipe lines gather moisture. In this part of the world it always goes by tanker.”

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    by OAP., Nth Lincs.

    Wednesday, January 13 2010, 11:49AM

    “Jim. Regina. I agree with your comment about the sustainability of a plant to produce any ammount of ethanol which would be financialy viable.

    I believe the fact that these plants are planned near to the ports suggests that this fuel may be loaded onto tankers for export also it is convenient for cheap subsidised wheat from France and other E U countries who are paid higher subsidies than British farmers, this imbalance in E U subsidies is caused by our very own labour government failing to claim money that we were entitled to.
    Over the past 20 years or so the E U has forced british farmers to take valuable land out of production, this land should have been farmed to provide alternative crops but if they hadn't taken this land out production they would have lost the reduced subsidies that they were to get.

    Finaly Dave. Grimsby. Your diesel car will run on rape seed oil, another crop grown on food producing land.”

  • Profile image for This is Grimsby

    by The Wrangler, NE Lincs

    Wednesday, January 13 2010, 10:38AM

    “Jim - your comments that Ethanol cannot be transported by pipeline are completely untrue!

    Whilst things like Ethanol and Methanol are polar molecules and therefore soluble in water - steel pipelines are just as impervious to water as road tanker barrel. How do you think it is made and transported internally in the plants that make it - that is just a nonsense statement!

    We are not in the USA or Canada, we are in Grimsby and I know the slates that the Humberside refineries keep and they souce crudes from across the globe!

    Whilst things like Bioethanol, Biobutanol, solar etc are still developing - Oil and Gas reserves are finite and depleting. They are getting more difficult and expenseve to find, extract and process.

    This may not be an issue in the short term, or even in our life times but we will eventually need alternate technologies, they will definately *NOT* die - they may be superseded by newer, yet to be invented technologies, but we need these in the global energy architecture!”

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    by James, Regina

    Tuesday, January 12 2010, 9:07PM

    “Well there have been many arguments provoked by the proposed Ethanol Plant. Here in Canada we have some large ones, but they all depend on large government subsides to stay in operation. They are consuming wheat, There has been much talk of using things like wheat stalks ,grasses & wood. All these feed stocks have to be digested using an enzyme & steam. His obviously uses more energy. When any crop is harvested fuel is used in the process. The crop must be transported. Ethanol cannot be transported in a pipe line as it will absorb any moisture it comes into contact with, (Petrol does not do this). Ethanol must be transported by tanker (road, rail it doesn¿t matter). Lincolnshire & Yorkshire cannot begin to provide enough grain to supply the demand. People still have to eat so I am sure they will want their chickens. A lot of ethanol plants have shut down in North America. A lot of money has been lost. Were I live we are lucky to sit on large Oil and Natural Gas reserves. We have as much oil as Saudi Arabia, so while the government is on an Ethanol kick we are pumping lots of oil. Contrary to the belief The USA gets most of its oil from The Middle East; It in fact comes from Canada & to a lesser extent from Mexico.
    Ethanol like Wind Power and Solar Power are impossible dreams that will eventually die.”

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    by Dave, Grimsby

    Tuesday, January 12 2010, 6:12PM

    “Let's look at this from a what's best for us (UK Plc), for a change instead of trying to right the worlds wrongs. This project will create inward investment that will create jobs, both the 50 permanent at the site but also dozens in support contracts. It will be providing direct consumption of feed wheat which is the predominant grain crop grown in Lincolnshirre and the Vale of York providing security to our farmers. The alternative destination of this grain is battery chicken farms and other animal farms on the continent as it is not suitable to make bread (too low protein content). The food versus fuel debate becomes a bit mute as this grain is going for meat production which is far less efficient than converting it to fuel!

    The project has been given planning permission so they have gone through the scruntiny of the local council and if getting my house extension was anything to go by then that won't have been easy!

    Look back 3 years, how many bioethanol plants were announced on the South Humber bank? At least 3. How many have arrived? As members of the local community we should be welcoming these businesses back to an area that, let us not forget, has seen a significant number of closures (Tioxide etc) in recent years.

    The debate about whether ethanol is the right biofuel etc seems to have been answered by the Brazilians, USA and a number of other countries. The UK should look inward to rebuild and support its own manufacturing sector instead of assuming it can import its fuels from other nations, how is that any different from importing oil from the middle east?

    I for one am pleased with the announcement and if given the opportunity would gladly fill my car up with whatever renewable products are available (it's diesel so ethanol is no good!).

    Cheers”

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    by Idris, Wrekin

    Tuesday, January 12 2010, 5:48PM

    “David Sanderson. What's your hang-up about the British worker? I don't see it and I think it must be you who has the problem as you always seem to be so spiteful. Is it because you see so many doing better than yourself and don't know why? I could give you an answer but it's better you find one yourself.”

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