The defunct Memphis Biofuels may rise from the ashes – as a different entity with new ownership, a new name and new cause for optimism – after a foreclosure auction next month.
   The lowest of the lows for the green-energy company, closed since July, may have come in the dark of night Nov. 18.
   According to a police report, burglars smashed the front glass of the offices at 2227 Deadrick, pried open a back door, ransacked the place, and, like buzzards, scavenged the remains of the company’s carcass.
   That’s a painful contrast to Memphis Biofuels’ grand-opening celebration in December 2006, when Ruby Wilson sang and guests ate barbecue and big customer contracts were in hand and the old converted plant near Lamar and Airways was immediately being touted as one of the largest biodiesel plants in the nation.
   But bad things started to happen fast, not just for Memphis Biofuels but for the entire fledgling biodiesel industry.
   Oil jumped to $150 a barrel. That raised the production cost and price of soybeans that biodiesel plants use to make the greener diesel, said Kenneth “Pete” Moss. He’s president of Frazier, Barnes & Associates, consultants for renewable fuels and renewable energy facilities.
   Then the recession hit, making it hard to borrow the capital to buy raw materials and operate plants, Moss said.
   And in December, the government stopped giving the $1 per gallon tax credit to refineries and blenders who buy biodiesel to add to traditional petroleum-based diesel.
   Many other biodiesel companies besides Memphis Biofuels went under around the nation, Moss said.
   Milagro Biofuels, another Memphis plant at 61 Keel in Uptown, stopped operations in March 2009.
   Milagro is Spanish for miracle, “which is what we need right now,” said Milagro president Diane Miller Mulloy.
   The plant was killed “when the industry just kind of fell apart,” she said.
   Milagro Biofuels is for sale, but it also could restart operations if it is able to raise more capital.
   In a way, Memphis Biofuels has succeeded in raising capital for a reincarnation.

   The original New York investors, who are majority owners, used their own money and a loan from Bank of America to start Memphis Biofuels.
   But when the business continued going south, the investors walked away, said Ken Arnold, who co-founded the company and was a minority owner with Brandon Sheley.
   Arnold and Sheley found another partner, created Bioenergy Development Group LLC, and purchased the note from the Bank of America.
   Now they’ve foreclosed on the original loan, setting up the auction on the Shelby County Courthouse steps on July 8.
   Chances are slim anybody would bid enough for BDG to hand over the assets. If not, BDG plans to restart operations.
   We intend to make additional investments to allow us to handle lower-cost feedstock,” Arnold said. “We’ll start up on a slower scale than we did last time in terms of volume. We’ll make sure we have working capital and have technology in place to support it.”
   Despite the brutal beating the industry has taken, there are some solid reasons for optimism.
   Starting July 1, the federal government will require refineries and blenders to purchase biodiesel for blending into their petroleum-based diesel. For 2010, 650 million gallons of biodiesel plus 500 million retroactively for 2009; for 2011, at least 800 million gallons; and for 2012, at least 1 billion gallons.
   “The renewable fuel standard does mandate we’ll be using it more than we ever have in the past,” Moss said.
   The new demand “will force some of these plants to come back to production to meet the demand,” he said.
   Mulloy, of Milagro Biofuels, compared the first biodiesel companies to sacrificial pioneers who take the hits and pave the way for successors to enjoy success.
   “I’m very bullish on the industry,” she said.
   “I think the industry will have a huge improvement. I think 2010 and 2011 will see a major shift back to biofuels. We just got ahead of government a little bit, and ahead of policy.”


    – Tom Bailey Jr.: 529-2388