Nova Biosource Fuels provides update on refineries

Web exclusive posted August 12, 2008 at 1:17 p.m. CST

Houston-based biodiesel producer Nova Biosource Fuels Inc. recently announced that the company has maintained refinery production with all three 20 MMgy production trains at its biodiesel refinery in Seneca, Ill. Two trains are currently operating at approximately 75 percent of nameplate capacity, the other one is producing at approximately 65 percent.

In July all trains were idled for a period for maintenance and repairs. During this time, additional feedstocks were received, bringing the amount in storage and onsite to capacity.

"The nature of the commissioning and testing process of these trains has made it difficult to support steady-state operations, which, along with the stress of the summer feedstock markets and working capital constraints, are expected to continue to affect our financial results through the fourth quarter," said Kenneth T. Hern, Nova's chairman and chief executive officer.

According to Hern, Nova's patented proprietary process, which is capable of manufacturing biodiesel from various feedstocks, is helping his company remain competitive while the production of many biodiesel producers has suffered due to soy oil prices. Nova's technology allows the company to use any kind of fat, oil or grease to produce biodiesel.

In August, Nova plans to continue operating the trains at 50 percent to 75 percent capacity while continuing to make refinements and adjustments to ensure reliability for the performance demonstration runs required to be completed by September 30 under the terms of the refinery's credit agreement. In addition, Nova continues to seek additional capacity under its working capital facility in order to address unprecedented spikes in the feedstock market.

"We are very proud of our operating crews who have been doing a magnificent job to ensure all trains are properly conditioned to operate at maximum capacity while maintaining high quality ASTM D6751 standard biodiesel production," Hern said. "Our plan for the next three months is to continue to work through the fixed price sales commitments that range from $3.54 to $4.07 per gallon, with most of our sales in July being at the lower end of that range. We have additional sales commitments priced at a spread above NYMEX heating oil, for which we expect to begin making significant deliveries in the month of October. Additionally, we are pleased that the summer commodity price spike has had a positive effect on our sales of coproducts, which have helped offset the overall cost of B100 production by approximately $0.30 to $0.35 per gallon."

The coproducts Nova produces include glycerin and bottoms, the material left over from the production process that can be used for fuel and in some cases used in animal feed.

Nova also announced that the repairs at the Scott biodiesel refinery in Greenville, Miss., were completed on schedule in June. The refinery was restarted June 19 and is producing at near capacity using animal fat feedstock with free fatty acid levels of between two percent and five percent.

Nova's Clinton County, Iowa, biodiesel refinery continues to operate at 50 percent to 60 percent capacity, with production limited in the month of July due to maintenance requirements and working capital constraints.