Markets

GreenHunter Puts 'For Sale' Sign on Biodiesel Refinery

By Kirsten Korosec

Updated on: June 24, 2009 / 9:00 AM EDT / MoneyWatch

GreenHunter Energy has joined the growing list of U.S. biodiesel companies struggling with European tariffs on exports and low oil prices. Just last year the company opened a massive biodiesel refinery in Texas -- considered the largest in the U.S. -- capable of producing 105 million gallons a year. Now that same refinery, located along the Houston Ship Channel, may be sold.

GreenHunter is considering selling its refinery in an effort to improve its balance sheet, the company announced Tuesday on its Web site. The company, which also operates biomass and wind power projects, also negotiated a new amendment on its credit agreement with WestLB, which will give it until Nov. 15 to make payments on a $38.5 million loan and $10 million credit line.

The company has hired investment firm to look for a buyer or find new alternative financing that would bring the refinery back on-line. The refinery has been idle since February due to weak domestic demand for fuel, trade barriers on U.S. biodiesel exports to Europe and low oil prices, a company spokesman told the Houston Chronicle.

The biodiesel refinery has suffered from a number of setbacks including a temporary shutdown after Hurricane Ike damaged the facility.

GreenHunter isn't alone its biodiesel problems. Imperium Renewables laid off 24 employees in March and shuttered its 100-million-gallon-a -year Washington plant. The biofuels industry, which includes corn-based ethanol producers, have experienced a number of bankruptcies in recent months including Pacific Ethanol, Aventine and VeraSun. Earlier this month, the Oregonian published an expansive article on the booming and subesquent busting of the biofuels industry in the Northwest.

So when is the biofuels industry going to finally hit bottom? Imperium CEO John Plaza certainly doesn't want to find out. In a pointed guest column in the Seattle Times on Monday, Plaza criticizes a recent report on biodiesel adoption in Washington.

And Plaza does what any self-respecting biodiesel advocate and businessman would do: encourages the state to buy its product.

The rest of industry may soon turn the corner as the gap between biodiesel and diesel prices begins to close. But it's unclear how long these biodiesel producers and their idling plants can wait before running to deep in the red.

See BNET's additional coverage of the biofuels industry: