Two Canadian companies have suspended plans for an $80 million cellulosic-ethanol plant in Grand Junction, citing the tight credit market and unstable energy prices.
The joint venture between Lig nol Energy and Suncor Energy was announced in October. Plans called for the demonstration plant to produce 8,500 gallons of ethanol a day from wood damaged by pine beetles and wood residue.
“While it is disappointing for Lig nol to be suspending the Grand Junction project, this is a practical decision based on the current realities that many companies are facing today,” Lig nol chief executive Ross Mac Lach lan said in a written statement Monday.
Projects nationwide have been canceled or delayed as banks have tightened their lending and plunging oil prices have made ethanol less attractive as an alternative fuel source.
Dallas-based Panda Ethanol announced plans to build a $120 million ethanol plant in Yuma in August 2005 but has since sold the land it purchased for the project, said spokesman Bill Pentak.
“We’re in the process of weighing our options,” Pentak said. “We would need to see changes in the industry as well as in the credit markets.”
The company had to halt construction on an ethanol refinery in Hereford, Texas, in December after one of its lenders backed out on a loan accord.
“We’re seeing this across the board in industries, and certainly alternative energy isn’t immune to the credit crunch,” said Tom Plant, director of the Colorado Governor’s Energy Office. “There are some projects I’ve heard of, particularly some large- scale solar projects that had all their financing lined up, but when the banks crashed, that funding came into question.”
A $30 million grant from the Department of Energy would have been used to help pay for the Lignol-Suncor venture. Lig nol said it is exploring options for the grant.
Some companies have been able to secure funding despite the challenging economy.
Lakewood-based ZeaChem announced in January that it secured $34 million in venture capital to help finance a cellulosic-ethanol plant. The company hasn’t chosen a location for the plant.
Andy Vuong: 303-954-1209 or avuong@denverpost.com
