Range Fuels Cellulosic Ethanol Plant Fails, U.S. Pulls Plug
Range Fuels Inc., a cellulosic ethanol company backed by as much as $156 million in U.S. loans and grants from President George W. Bush’s administration, is being forced by the government to liquidate its only factory after failing to produce the fuel.
The closely held company, which counts Vinod Khosla, a venture capitalist and Sun Microsystems Inc. co-founder, as an initial investor, shuttered the factory in Soperton, Georgia, in January after not delivering on its promise to convert woodchips into ethanol, which was intended to help the U.S. become less dependent on foreign oil.
Soperton’s failure comes after Solyndra LLC, a solar-panel maker that received a $535 million federal loan guarantee, filed for bankruptcy in September. The ethanol project received $46.3 million of a $76 million grant from the Energy Department and half of an $80 million loan from the Agriculture Department, according to each department.
“We are disappointed that this company did not succeed and we will be working on behalf of the American people to protect the federal government’s interest in the loan, which was announced by the previous administration,” Justin Dejong, a spokesman for the Agriculture Department in Washington, said today in an e-mailed statement.
While the Solyndra guarantee won approval under President Barack Obama’s administration, the Soperton project was initiated as part of President Bush’s push to aid alternatives to corn as a source for ethanol. The loan guarantee was announced on Jan. 19, 2009, the final day of the Bush administration, according to an Agriculture Department document.
Cellulosic ethanol is a variety of the fuel that uses non- food feedstocks, such as corn cobs, woodchips or switch grass. The U.S. has had to slash the amount of the fuel it required in gasoline because it isn’t available.
The Soperton plant began construction in 2007 and was to initially produce 20 million gallons of the biofuel in 2008 and expand capacity to more than 100 million gallons a year by 2009, Khosla said in a November 2007 interview.
In an e-mail, Khosla referred questions to Range Fuels Chief Executive Officer David Aldous. A website for the company goes to the server default page and a telephone listing says the line has been disconnected.
Aldous said today in an e-mail that the company found a buyer that would take over the debt and purchase the distillery, only to have the Agriculture Department reject the deal, citing taxpayer interest.
The project received more than $160 million in venture capital investments from Khosla Ventures LLC and other companies, Aldous said.
The plant was closed after a technical defect limited it to run at half rates and it produced cellulosic methanol, a fuel the Environmental Protection Agency doesn’t consider eligible for use to meet federal biofuel targets.
AgSouth Farm Credit, servicer of the loan, will move forward with a liquidation plan in anticipation of a foreclosure sale for the Soperton plant to begin in January, according to an Agriculture Department document.
Range repaid $2 million of the Agriculture Department loan in 2010, then missed its scheduled payment in January 2011 and triggered the default, according to the document.
A foreclosure sale is planned for Jan. 3, according to the Agriculture Department.
The Energy Department said it suspended funding earlier this year and formally terminated its agreement with Range in August.
“Based on signs that the project was in trouble earlier this year, the department took steps to reduce the future financial risk for the American taxpayers, including terminating the technology investment agreement with the company,” Jen Stutsman, a spokeswoman for the Energy Department in Washington, said in an e-mail.
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