Blue Sugars to Install Ethanol Technology at Brazil Mills

Blue Sugars Corp.(KLEG), a U.S. producer of cellulosic ethanol, will provide its technology to three Brazilian sugar-cane mills by 2015 to take advantage of cheap feedstock.

Five Brazilian ethanol producers have visited Blue Sugars’s demonstration plant in Upton, Wyoming, this year to evaluate the technology, Peter Gross, chief executive officer of the Rapid City, South Dakota-based company, said yesterday in a telephone interview.

Producing cellulosic ethanol from crop residues is cheaper at Brazilian sugar-cane mills than anywhere else in the world because raw material is readily available, he said. Blue Sugars has been studying ways to turn crushed cane stalks, called bagasse, into fuel with Brazil’s state-controlled oil producer Petroleo Brasileiro SA (PETR4) since August 2010.

“Bagasse is available in large quantities, it’s of consistent quality, and you don’t need to transport it,” Gross said. “We’re very much commercially focused on Brazil.”

Petrobras, as the oil producer is known, will install Blue Sugars’s technology at one of its mills that will be capable of processing 120,000 metric tons of bagasse into 10 million gallons (37.9 million liters) of fuel a year, he said.

Blue Sugars, which yesterday changed its name from KL Energy Corp., expects the Petrobras facility and two other similarly sized plants to go into production in 2015, when its technology will be competitive with ethanol produced from cane juice. They will each cost $50 million, he said.

24,000 Gallons

Blue Sugars produced 24,000 gallons of ethanol at its U.S. facilities last year which it shipped to Petrobras in January to be used as fuel during the Rio+20 sustainable development summit that concluded in Rio de Janeiro June 22, he said.

The company expects to produce 1 liter of ethanol for about 40 cents to 50 cents in 2015, he said. A liter of standard anhydrous ethanol sells for 1.32 reais (63 cents) in Brazil now.

Brazil consumed about 29 billion liters of ethanol in 2010, which accounted for about 6.5 percent of its energy use, according to the Ministry of Mines and Energy’s 10-year energy expansion plan.

source: bloomberg