Southern States Power buys Mexican oil extraction plant to produce bio-diesel

provided by Southern States Power Company


outhern States Power Company has purchased an oil extraction plant in Mexico to produce bio-diesel for U.S. and Mexican markets in response to new environmental protection laws. The facility was designed with state of the art equipment.

The plant is in excellent condition and has only been in operation a total of 1,000 hours. Production capacity is approximately 7 million gallons of oil per year, plus feed meal byproduct. Details of location and purchase price remain confidential for competitive reasons.

The plant is located on 3 hectares of land near a major city in Mexico. Equipment in the plant includes oil extraction machinery, rail siding for transportation, meal and seed/bean unloading and loading equipment, oil storage tanks, boiler and steam generator equipment and offices and labs.

The plant was purchased in late 1998. Approximately 45 people were hired in early January to refurbish electrical and mechanical equipment and paint buildings. The plant is now fully refurbished and ready to enter into agricultural processing in the near future. SSPC has reached confidential agreements with the farmers in the region to allow purchase of soybeans at a set price for a 15 year period. This will provide price certainty for raw material supplies that will help insure plant profitability.

Several laws and air quality management agreements that are just going into effect in 1999 will sharply impact demand for bio-diesel fuel:

  1. The California Air Resources Board recently ruled that small particulates are a toxic health hazard. New fines for exceeding smoke limits went into effect in April that will lead to $5,000 fines for trucks on a second violation, and forfeiture of the truck for failure to pay. Mexican trucks crossing the border to deliver in LA will be a focus of enforcement actions because engines and fuel are so dirty.
  2. The Transportation Equity Act of the 21st Century allows fleets or heavy duty equipment affected by alternative fuel mandates to meet requirements with a diesel engine vehicle operating on 20 percent bio-diesel, 80 percent petroleum. Off-road heavy-duty equipment using alternative fuels will be given bid preferences and equipment operating advantages on highway construction contracts. Funding is available in the bill for purchase of bio-diesel fuel and fueling facilities.
  3. The Interstate Clean Transportation Corridor consists of interstate highway systems in four Western states (CA, AZ, NV, UT). The states are working together to provide alternative fuel stations for trucks in the ICTC. Many trucks may use bio-diesel, particularly in California to avoid smoke violation fines.

Bio-diesel fuel can be used in existing diesel engines with little or no modifications as an alternative fuel. Use of the fuel leads to much lower emissions while also improving engine lubricity and providing other benefits. The recent change in the alternative fuel requirements that allows 20 percent bio-diesel to qualify will create a strong demand among the more than 8 million fleet vehicles in the U.S. All of these fleet vehicles will be impacted in the near future by alternative fuel rules. Some fleets such as federal, state and utility fleets must purchase 75-90 percent alternative fuel vehicles starting this year.

Bio-diesel is the lowest cost alternative fuel option for many fleets because diesel vehicles can be utilized and fueling infrastructure costs are very low compared to natural gas, ethanol, methanol or electricity. Over 12 million gallons of diesel fuel is consumed daily in California alone. Even a very small shift in the consumption of diesel represents a tremendous market opportunity for bio-diesel.

Southern States Power Company (SSPC) was formed in March, 1998 to provide lower cost electric utility services to consumers in states that are deregulating gas and electric utilities. SSPC has subsequently expanded business activities and formed several Divisions and joint ventures to enter into composite auto manufacturing, "Oxy-Green" fuel production and fuel cell development and manufacturing (for more information see the SSPC web site at www.sspowerco .com).

  Contact: Michael Sealey of Southern States Power Company, (318) 221-5703,