NEW YORK -- Xethanol Corporation has formed a venture with Renewable Spirits LLC to build a biomass-based pilot production facility using waste citrus peels as raw material for making ethanol.

The venture is located in Bartow, Fla., the heart of the state's citrus industry. The venture is expected to establish a pilot plant to produce up to 50,000 gallons of ethanol this harvesting season. The pilot plant, which will increase to more than 500,000 gallons per year (GPY), is co-located at a facility owned and operated by Peace River Citrus Products Inc., a leading producer of orange and grapefruit juice and other citrus products.

Slated to begin production by the second quarter of 2007, the program plans to use a production technology process, developed through a Cooperative Research and Development Agreement (CRADA) with the USDA that will convert waste citrus biomass into ethanol, as well as other marketable co-products, such as limonene and citrus oil, to improve the economics of fuel production.

In building the pilot production facility, Xethanol will use equipment and production processes from its Permeate Refining test facility in Cedar Rapids, Iowa. This facility had been a pilot plant for testing various sugar-based feedstocks, and the lessons learned and processing techniques from its operation will be applied to the new citrus project.

"Here's what's exciting: The next time you drink grapefruit juice, remember we will be making ethanol from what's left of the fruit. We are extremely excited to advance the efforts to convert biomass to ethanol with the use of citrus peels, a very promising feedstock" said David Ames, president and CEO of Xethanol. "We are also extremely proud to be partnering with leading scientists from the USDA to extend their breakthrough work into the pilot production phase."

"We are extremely confident in Mr. Ames' vision, leadership, and strategy of focusing on biomass based ethanol production in the southeast," said Chandler Hadlock, President and CEO of Coastal Energy Development, Inc., who will be overseeing the construction and management of the plant. "We look forward to working with Peace River Citrus Products and the USDA to further this technology and exponentially increase the citrus-to-ethanol production in Florida over the coming months."

In juice processing, one half of a citrus fruit is waste. Converting this alternative biomass feedstock into ethanol creates a tremendous economic opportunity for America's citrus growers. Co-locating the processing facility adjacent to the biomass source also helps to reduce the transportation and shipping costs associated with production.

There are more than 35 major citrus producers located in Florida that collectively produce waste that could be converted to more than 80MM GPY of ethanol.

Renewable Spirits, an investor group, has spent the last two years working with the USDA to develop the technology used in the pilot plant, and has been successful in removing limonene from the peel, allowing for the fermentation of the sugars in the peel and batch distillation of ethanol at the USDA laboratory in Winter Haven, Fla. USDA scientists say this is the first facility of its kind.

Doug Westfall, president of Renewable Spirits, said "Xethanol's acquisition of this technology allows for a much quicker path to commercial applications. We believe that there is tremendous potential for citrus to ethanol production in central Florida, and that this is a winning proposition for both the citrus and ethanol industries."

Xethanol Corp. is a renewable energy company focused on converting biomass to biofuel. Xethanol, with headquarters in New York City, currently owns and operates a 5 MGPY corn-based ethanol facility in Blairstown, Iowa.

SOURCE: Xethanol Corp. via Business Wire.