Saturday, December 17, 2011

Solazyme, Glauthier in the news

Note the post at the Daily Mail titled Crony capitalism sinks the Navy includes the text

You won’t be surprised to learn that a member of Obama’s presidential transition team, T. J. Glauthier, is a “strategic advisor” at Solazyme, the California company that is selling a portion of the biofuel to the Navy. Glauthier worked – shock, shock – on the energy-sector portion of the 2009 stimulus bill.

A post at TucsonCitizen titled Another questionable energy deal $16 jet fuel notes

A member of Obama’s presidential transition team, T. J. Glauthier, is a ‘strategic advisor’ at Solazyme, the California company that is selling a portion of the biofuel to the Navy. Glauthier worked on the energy-sector portion of the 2009 stimulus bill. Solazyme had already gotten a nearly $22 million chunk of change out of the taxpayers thanks to the 2009 stimulus.

And from Human Events: Jet-Fuel Gate :

The biofuel will be used next summer by — we're not making this up — "the Great Green Fleet Carrier Strike Force" in exercises near Hawaii.


**Update. As to the comment below, the blog IPBiz does not give legal, or financial, advice. Another blog, heartland, covered this episode in the following way:

A recent undertaking by the Department of Defense, however, raises questions as to whether the military’s commitment to innovation may be endangered by political pandering — especially in the face of the announcements earlier this year that 3,000 sailors nationwide, approximately one out of every one hundred people in the force overall, will be forced to leave the Navy. The creation of a so-called “Great Green Fleet,” a series of improvements designed to make the military more “eco-friendly,” seems a contradiction in the face of increased Department of Defense cuts (a possible trillion dollars over the next ten years).

According to Wired’s Danger Room, the 450,000 gallons of biofuel that constitute the first stage of the transition to a “green” fleet will cost more than $12 million, a relatively small amount as far as Defense expenditures go. When compared with conventional fuels, however, the cost differential raises serious concerns about the long-term utility of the program. According to Wired:

The Navy previously paid about $1,000 for each barrel of biofuel it bought to test out in its jets. This new purchase, at first, will cost just as much: $26 per gallon, or $1,092 per barrel. That biofuel will then be blended with an equal amount of fossil fuel, producing 900,000 gallons — and an effective price of about $15 per gallon for that 50/50 blend. It’s “roughly half of what was paid in 2009,” according to Deputy Assistant Secretary of the Navy Tom Hicks, who serves as Mabus’ point man on energy issues. But it is still far more than the Navy currently pays for its JP-5 jet fuel: $3.97 per gallon, or $167 per barrel.

The full order will be shared between two companies: Dynamic Fuels (a joint venture between Syntroleum and Tyson foods) uses animal fats and wastes to create biofuel, while Solazyme employs algae to break down a wide variety of material, from plant matter to household waste into fuel. A closer look at the California-based Solazyme, however, reveals that political motives, rather than national security priorities, may be a driving force in the push to “go green.”

**As one historical footnote of Civil War vintage, Spencer could not get any traction for his repeating rifle until a friend of Secretary of Navy Welles was brought on board. The Navy did buy some rifles, which purchase had little impact on the outcome of the war. However, Spencer rifles used at East Cavalry Field at Gettysburg on July 3, 1863 and in Wilson's Raid on Selma did impact the outcome of the war. As a different footnote, the Wright Brothers had difficulty in getting the federal government to appreciate the strategic significance of the airplane. At the end of the day, Curtiss attracted the interest of the Navy. Franklin Roosevelt, then in the Navy Dept., had a great deal to do with the patent pooling of airplane patents during World War I.

**All that said, how big a future is there for a technology based on converting sugars to fuel?

Further update: from a post on seekingalpha:

Many of the companies in this industry have proven themselves on a demonstration scale but need the infrastructure capacity to be built on a commercial scale in order to be cost-comparable to the price of conventional fuels and chemicals. Consider the following advanced biofuel companies that "made it" into the IPO window:

Company IPO Price Amount Raised Current Price (12/21/11)
KiOR (KIOR) $15 $150 Million $10.19
Gevo (GEVO) $15 $107 Million $5.65
Amrys (AMRS) $16 $ 85 Million $10.6
Solazyme (SZYM) $18 $227 Million $10.79

We see that the advanced biofuel industry as a whole has suffered in light of the recent market volatility as all four publicly traded companies have fallen to levels well below their IPO prices. This can only go to further diminish the ability for other private companies to raise capital, such as Genomatica and OiriginOil, which recently filed for an IPO.

***Meanwhile, at Technorati

Algae is one surprising potential energy source that is showing great promise. It has gained recent media attention as the U.S Navy has announced plans to test the use of algae biofuel in one of its cargo ships.

***And of subsidies, from ABC News :

Vice President Joseph Biden heralded the Energy Department's $529 million loan to the start-up electric car company called Fisker as a bright new path to thousands of American manufacturing jobs. But two years after the loan was announced, the company's manufacturing jobs are still limited to the assembly of the flashy electric Fisker Karma sports car in Finland.


Blogger karmester said...

I take it - were someone to solicit your advice on investments - you would not recommend investing in Solazyme? Just curious...

12:38 PM  

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