Is cellulosic startup full of beans?

June 13, 2007 - Exclusive By Dallas Kachan, Cleantech Group

BioCentric Energy says it has heavy hitters. In working with U.S. Sustainable Energy, is it holding the right bat?

A new California-based company is trumpeting plans to start making cellulosic ethanol using a controversial proprietary process.

And it plans to start doing it just a few months from now, using dried distillers grains (DDGs) and "imperfect raw soy beans"... and, it hopes, even automotive scrap.

Huntington Beach, California-based BioCentric Energy, which the Cleantech Group's Dana Childs characterized earlier this week as a small, odd company, is the latest to come forward touting the controversial hydrolysis/pyrolysis process of U.S. Sustainable Energy Corporation (PINKSHEETS: USSE) and its founder John Rivera (see the Cleantech Group's A better biofuel out of Mississippi? Or just a lotta gas?)

Yesterday, BioCentric announced its board had voted unanimously to approve funding to facilitate the first cellulosic ethanol plant based on the 'Rivera Process' at its facility in Mason City, Iowa.

How much money will it contribute?

"As far as the initial buildout, we'll be putting several million. But we may go out much further," Kurt D. Peet, vice president of corporate strategy, told the Cleantech Group.

With this relatively modest investment, BioCentric aims to be in a position to produce 58 million gallons a year of what it calls E-Diesel OD-66, a blend that incorporates ethanol derived from cellulosic means, by October of this year.

By contrast, cellulosic plants being built by better known and well funded industry companies Abengoa, Celunol, BlueFire Ethanol, Poet, Range Fuels and others are costing hundreds of millions of dollars, taking years to build and anticipating yields of less than half of BioCentric's claim.

Small scale trials have been done by many of them, but none are in commercial production yet.

While itself a new company, BioCentric says it's in the process of merging with Core Ventures, a group the company says has designed, engineered and built out approximately 500,000,000 gallons of ethanol and biodiesel nameplate capacity.

Yet when asked how its seemingly advanced science worked, and why, when companies at the forefront of cellulosics were progressing so slowly, BioCentric deferred to the "mysterious black box" and "secret sauce" of USSE's Rivera Process.

"Why? I can't really give you a reason why. All I know is that it does. There is an additive that's used during this process that quickly accelerates the breakdown of the cellulosic proteins, for lack of better words. How that works, I don't know," said BioCentric's Peet.

BioCentric, much like USSE itself late last year, has produced independent laboratory results to the Cleantech Group that showed favorable characteristics of fuel it said was produced by the process.

And BioCentric said those results weren't even necessarily representative, as they were from recent tests using DDGs and scrapped auto "fluff." Further tests next week supervised by visiting "dignitaries" are to be sent to two more independent verification companies, it claimed.

Until its Iowa facility is operational, the "unique blending component" generated by the Rivera Process will be manufactured in Natchez, and shipped to BioCentric's Iowa site, the company said.

USSE and its Rivera Process have skeptics. Inventor John Rivera has claimed he doesn't even fully understand himself why his technique yields high amounts of fuel, achieving five gallons of fuel per bushel of soybeans—even rotten ones—when others only get 1.5 gallons. Nor has the company had the best success with partners (see the Cleantech Group's Swimming with the fishes.)

The majority of BioCentric's funding to date has come from private investors, including Terri Adams of Adams Steel of Southern California, which recycles cars and sends the balance today to landfills. According to BioCentric's Peet, the company is interested in reducing the costs of sending its waste to landfills and the environmental impact of doing so.

The company said its initial calculations showed it should be very inexpensive to produce the fuel, due to low production costs and extremely low feedstock costs.

"We have run some figures. We are continuing to finite those. But utilizing either a negative-, no-, or low-cost feedstock will bring our costs down dramatically. We expect [to get the cost of feedstock] down into the cents per gallon," said Peet.

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Comments

"Secret Sauce"?

Submitted on June 14th, 2007 by InterestedReader

By golly, if the company doesn't know much about its "secret sauce", then how in the world do they plan to fix the problem if it goes sour? The only thing secret here seems to be from the smoke screen that will be covering how investor's money is to be used.

Hotel building construction in Waikiki back in the 1950's, Honolulu used to use this type of "secret sauce". The buildings would often stop after the steel framework was in place. This was due to the fact that the president and high corporate members who handled the finances paid themselves so much that the building funds were depleted within about 6 months and no funds were left to complete the construction.

Yes. I have seen what this type of "secret sauce" can really do.

adrianakau2aol.com

Secret Sauce

Submitted on June 15th, 2007 by InterestedReader

Of coarse they can't tell you what it is. Would you want the ingrediants given out over the internet if you owned it? Rivera process has been demonstrated to senators and have a large contract with a large power company on the East coast to supply biofuel. One of the largest biofuel company executives in the mid west just quit his job to head this company. What else do you need to know?

Hopefully careful diligence is being done

Submitted on June 15th, 2007 by InterestedReader

I wish BioCentric the best, but I really hope the good folks there are not being snowed over by pseudo science or misrepresentation.

Hopefully smart people at the company will do the proper diligence to make sure this too-good-to-be-true sounding process actually works and scales.

There are scoundrels who prey on people who want to believe that miracles exist.

If it looks like, smells like and sounds like a rat, what is it?

Submitted on June 16th, 2007 by InterestedReader

Gerald,

When something is too good to be true, it often turns out not to be true. If the process is controllable and really works, then all the best to Rivera but when they claim that they "can't really give a reason" then I become awfully suspicious.

Perhaps you have not been scammed before but I have been through the wringer several times and there is not much left to wring out. Stupid as I may be, I am not so stupid as to swallow this excuse of a reason hook, line and sinker.

"What else do I need to know?" Well I need to know if these guys are on the level or are they just a bunch of white collar, fast, smooth-talking dishonest people. Right now, the band wagon is starting up for cellulose ethanol and sometimes unwelcomed visitors jump on for the ride.

Pardon me for saying so but when something looks like a rat, smells like a rat and sounds like a rat, then you can be pretty sure that it just might turn out to be a rat.

adrianakau2aol.com

Smells like a rat

Submitted on June 17th, 2007 by InterestedReader

I agree we have to be dilligent and I hope this is what I am doing thoroughly. SO far though everything seems to be up and up. Can't sit on the sidelines when everyone including some I know have seen the results. Now even with cellulostic car "fluf". Sorry, but I've missed out on too many good companies and ideas that have passed me by and don't intend to do it again.

Diligence

Submitted on June 17th, 2007 by InterestedReader

Gerald,

Your diligence to this matter is commendable. I would not wish for you to miss out on any good company but be especially careful with this one if you plant to invest.

adrianakau2aol.com

Ethanol by accident

Submitted on June 20th, 2007 by Dallas Kachan

An article published today by the local newspaper in USSE's hometown, quotes John Rivera as saying his company didn't actually know it was producing ethanol until outsiders told them so.

â€œWe were making cellulistic ethanol without our knowledge,â€ he said.

The secret of the termite finally discovered?

Submitted on June 20th, 2007 by InterestedReader

If a process is patented, then the owner of the patent is supposed to state the function of the patent when papers are filed. It seems strange indeed that Rivera, who patented the â€œRivera Processâ€ did not even realize that one of the fuel fractions was ethanol, since the specialty of his process was to produce fuel from cellulose material.

It may be that the percent of ethanol as compared to the other fuel fractions is very low. I used to test for percentages of ethanol in "beer" and "slop" products for the pineapple industry (California Packing Corporation). Pineapple skins and cores (removed by the Genaca Machine) were fermented to produce "beer" which was about 4% alcohol. Then the alcohol was extracted by steam distillation and became "slop" which was about 0.04% ethanol. Steam distillation produced about 250 gallons/hour (when in operation) which was then shipped to Del Monte. Del Monte processed the ethanol into vinegar for its catsup.

"Rivera said critics are not looking at how much fuel his process makes." Nowhere in the report does it state the percentage or amount of ethanol produced in the process. Anyone could have thrown in a handful of sugar and production of ethanol would have been guaranteed but in a small amount. If the cellular material had been smashed, some sugar compounds might also have been released which caused the production of ethanol but this would not have come from the cellular material itself.

Ethanol produced from natural sugars and ethanol produced from the break-down of cellulose materials are two different processes. If the Rivera process does actually convert the cellulose materials into compounds which are then converted into ethanol, I wish to commend Rivera on his discovery. It would be the equivalent of copying the process used by the bacteria in the stomach of a termite.

If Rivera's plans of having "200 fuel reactors producing 6,000 gallons a day by Decemberâ€ are to be instituted, Rivera should verify the % of the cellulose material converted into ethanol and that his complete process, including verification procedures be open to validation by an independent laboratory.

adrianakau2aol.com

According to Wall St

Submitted on June 20th, 2007 by InterestedReader

According to Wall St Resources (Analytical Profile) of USSE:OTC their biofuel is 117,000 BTU gal, premium gasoline is 116,200 BTU gal, has remarkable cold temp physical properties (won't freeze at -90% F), has a flash point between that of regular and petroleum deisel which means it only has to blend 20% bio-diesel with metal corosian properties tested at 1A, traditional bio-
diesel production yeilds 1.5 gallons of oil from 1 bushell of soybeans. The Rivera process doesn't require food grade feed stocks and with minimum prep processes from bean to fuel in minutes instead of 24 hrs with cost of production less than $1 and produces 4.5 gal bio-fuel for every bushell. Producing fertalizer to pay for everything.

Full of it

Submitted on December 2nd, 2008 by Unregistered user (not verified)

Biocentric Energy holdings is a very bizarre company, and doesn't seem to have any real knowledge or legitimate dealings in the energy industry. Beware!

To invest or not to invest and that my friend is the bottom line

Submitted on December 19th, 2008 by Mr. Robertson (not verified)

I believe what we all want to know is this company legit. Can we benifit from buying shares at a fraction of what other companies in this field is going at. Why wasn't this process rushed to forefront when our pockets were being dug in by the big oil companies as well as opec. Why didn't this process be offered if it is so big on being green and why isn't there a connection with the green planet figters like Al Gore. Hey catching a company on the rise seems to be hard to do lately with so many misusing money and not being legit, kinda of makes investors gunshy.