True to its former advertising slogan, BP has plans to move "behond petroleum" and into biofuels as early as next year. (image: earth2tech.wordpress.com)

Oil giant BP has announced that it may begin commercial production of several types of biofuel as early as next year, Reuters reported on Tuesday.

According to Philip New, chief executive of biofuels at BP, the oil company will work with Verenium, a cellulosic ethanol developer, to produce grass-based ethanol in the United States. Cellulosic ethanol is usually made from natural, non-food feedstocks, such as sugarcane bagasse and wood products, and has relatively high oxygen content, making it a convincingly clean alternative to fossil fuels.

BP is also planning to build a biofuel plant in eastern England, to open sometime in 2012. The plant, which is to be constructed in cooperation with British sugar and chemical-manufacturer DuPont, will produce biobutanol, which New describes as an appealing alternative to ethanol. “Biobutanol can provide a door through the blend wall which I would argue is the key structural barrier to the growth of this industry over the next five to 10 years,” he said in a presentation at the World Ethanol 2009 conference. BP and DuPont are spending $200 million in a joint research venture to develop biobutanol as cheaply and efficiently as possible. The biobutanol made in BP’s British plant would be produced from wheat feedstock; and although burning it would release emissions similar to those of ethanol, the fuel is chemically more similar to gasoline than it is to other biofuels.

To complement its new ethanol and biobutanol plants, BP is spending billions on biofuel research. The company has been eyeing algae as a possible feedstock, largely because algae do not affect fresh water resources, can be produced using ocean and waste-water, and are biodegradable and relatively harmless to the environment if spilled. While algae are expensive to produce, they can yield over 30 times more energy per unit area than other, second-generation biofuel crops. The company is also spending some $1 billion on research on sugar-cane based biofuel in Brazil, which in 2008 produced 37.3% of the world’s ethanol-based biofuel.

As is most often the case with Big Oil, there is a bottom line. To compete with fossil fuels, biofuels like ethanol and biobutanol must be produced relatively cheaply, with costs not exceeding $1 per gallon on a volume basis. “If you can’t chin that bar, you’re not going to be able to compete in the long run,” New said, stressing that sugarcane is currently the most cost-efficient biofuel in development. BP joins a growing list of big oil companies pouring billions of dollars into biofuel. As HeatingOil.com reported in September, ExxonMobil has stated its plans to grow green algae to fuel commercial vehicles; Chevron has unveiled the world’s largest carbon-sequestration project in Australia; and, in recent months, Valero, Marathon, and Sunoco have all made purchases that put about 7 percent of the U.S. ethanol business in the hands of the oil industry.