Gibson

Camilo Thame, Business Reporter

Energen Development Limited (EDL), a Jamaican firm set up in early 2004 to develop energy projects, is near to finalising a deal with Canadian equity backers of a 120-million gallon (454 million litres) ethanol plant in Kingston, scheduled to break ground for construction this year.

Energen, which is controlled by the principals of Gibson Energy Limited, Deryck Gibson and Steven Hawkes, also plans to build a 20-30 million gallon bio-diesel plant and a cogeneration facility.

Its ethanol plan, similar to that of Jamaica Broilers, is to convert 'wet' or hydrous ethanol imported from Brazil into fuel-grade anhydrous ethanol for export to North America.

Letter of intent

Northern Ethanol, a Canadian firm incorporated in Delaware, United States, informed the U.S. Securities and Exchange Commission (SEC) last week that it had executed a non-binding letter of intent to acquire a 70 per cent stake in EDL through an injection of capital in the project.

Hawkes, the managing director of EDL, told Wednesday Business on Monday that representatives from the overseas firm were in Jamaica to iron out details of the financing that would lead to finalising the deal.

He said all indications pointed to a commissioning date for the ethanol plant during the first quarter of 2008.

"Things are moving quickly," said Hawkes. "We may even bring online the bio-diesel plant within the same timeframe, because it is much quicker to turn around."

Original cost

The original cost for the ethanol plant was US$32 million (J$2.2 billion), including US$7 million (J$476 million) to acquire the 26 acres of land equipped with docking facilities on the Kingston Harbour designated as the project site.

But that was for a plant half the size of what the Jamaican firm is aiming for now.

According to Hawkes, EDL is "pushing for a 120 million gallon-a-year plant," which is likely to tag on another US$20 million on the initial project cost by Wednesday Business estimates.

Hawkes said that the bio-diesel plant, which will convert crude palm oil imported from Malaysia and Honduras into the fuel, will be built in 10 million gallon modules - 20 million gallons to start.

The cost of a 30 million gallon plant was estimated at US$10 million.

The bio-diesel would be marketed locally for use in diesel automobiles which require no conversion to fully usethe fuel. Hawkes believes his firm can deliver the fuel at comparable price to regular diesel. Up to yesterday, diesel sold at J$41.60 cents per litre out of the state-run oil refinery, Petrojam.

Currently, Jamaica consumes about 60 million gallons of diesel for rail and road transportation, according to the Petroleum Corporation of Jamaica, the state's overseer of the energy sector and parent to Petrojam.

Eventually, Hawkes' firm plans to grow the oil palms here in Jamaica.

The plant can grow in most areas of Jamaica and is not susceptible to the yellow leaf disease which plagues coconut farms. It takes one acre of oil palm to produce 600 gallons of bio-diesel, which means that 3,300 acres of land would be needed to grow enough palms to accommodate a 20-million gallon plant.

The bio-diesel is not the only project which marries agriculture with energy in Jamaica that EDL is looking at. It is among five entities prequalified to bid for the government-owned sugar factories and estates, which grow cane that can be used to make feedstock for the ethanol dehydration plant.

Also among those five firms is Coimex, which jointly operates a 40-million gallon ethanol facility in partnership with Petrojam along the Marcus Garvey Drive industrial strip.

The joint venture company, named Petrojam Ethanol Limited, had also planned to build out another 60 million gallon a year plant, but energy minister, Phillip Paulwell, has indicated to private sector firms, that the state would not go ahead with expansion plans should private investors move on similar projects.

EDL's ethanol plant will make the fourth ethanol facility to come into operation in Jamaica. Apart from Petrojam Ethanol, Jamaica Broilers' US$17 million, 60-million plant in expected to come on stream in July, while Jamaica Ethanol Processing Limited (JEPL) operates a 60 million-gallon plant at Rockfort at the eastern end of Kingston.

JEPL is owned by the Californian company, ED & F Man.

After completing both fuel plants, EDL also plans to build a co-generation facility, the size of which is yet to be determined. Ultimately the proposed site, which is being acquired from Chevron and a sale which should close in a few weeks, will be able to support a 240 million gallon-a-year ethanol plant.

camilo.thame@gleanerjm.com