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Corn Ethanol Takes Another Hit With Pacific Ethanol Plant Suspensions

Our ethanol deathwatch map is getting pretty crowded. Sacramento, Calif.’s Pacific Ethanol (s PEIX) said today it has temporarily suspended operations at two of its 60-million-gallon-per-year plants in Burley, Idaho, and Stockton, Calif., just a few weeks after the company suspended another facility in California, a 40-million gallon plant in Madera.


The company said it shut down the two bigger plants due to “extended unfavorable market conditions for producing ethanol.” Back in 2007, Pacific Ethanol suspended construction of a 60-million-gallon plant in Calipatria, Calif., also citing market conditions for the move. But the company plans to push on with production — it still has a 40-million-gallon-per-year facility in Boardman, Ore., and holds a stake in a 48-million-gallon-per-year plant in Windsor, Colo.

Last October, VeraSun Energy put the viability of a number of ethanol plants in question when it filed for Chapter 11 bankruptcy protection. But there’s a chance that some of those plants could continue to operate, as oil refiner Valero Energy (s VLO) put in a bid earlier this month to buy four of VeraSun’s facilities, as well as one development site, for $280 million.

The waning fortunes of the corn-based ethanol industry comes as next-generation biofuel companies are making their way (albeit slowly) toward commercialization. Earlier this week, Mascoma announced that it has started operations at its pilot plant in Rome, N.Y., producing cellulosic ethanol from non-food biomass, including a diet of wood chips purchased from a local sawmill. Also this week, ZeaChem said engineering work has begun at its 1.5-million gallon per year demonstration plant in Boardman, Ore., and Honda Motor (s HMC) said it plans to build a large-scale plant to test the viability of its own cellulosic ethanol production technology.

Of course, cellulosic ethanol isn’t immune to the economic downturn. Earlier this month, Verenium (s VRNM) and BP (s BP) said their cellulosic ethanol venture won’t break ground on its first plant until 2010 because of a slower loan guarantee process and difficult capital markets. The companies were previously aiming for construction to start before the end of this year. And startup Coskata told us in December that its plans for a commercial plant could get pushed back to 2011, instead of late 2010, also due to the shaky economy.