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IRVINE, CA--(MARKET WIRE)--Dec 23, 2008 --
BlueFire Ethanol Fuels, Inc. (OTC BB:BFRE.OB - News) CEO and
President Arnold R. Klann issues the following letter to the
company's shareholders:
Dear Fellow Shareholders:
First, I would like to take this opportunity to wish you and yours
a Merry Christmas, Happy Hanukkah and a very Happy New Year.
This 2008 year end review is to provide you with an update and
perspective on the progress of BlueFire as we position the company
as a successful, sustainable and dynamic cellulose-to-ethanol
company in what has quickly become a very difficult market.
BlueFire is currently focused on developing and building two
facilities. The first project, BlueFire Ethanol Lancaster, LLC
("Lancaster Project"), has been in the licensing phase for nearly
18 months. As previously announced, the Los Angeles County Planning
Commission issued a Conditional Use Permit for the Lancaster
Project in July. However, a subsequent appeal of the county
decision, which BlueFire overcame, combined with the waiting period
under the California Environmental Quality Act, pushed the
effective date of the now non-appealable permit approval to
December 12, 2008. Due to this permitting delay and recent capital
market decline, BlueFire will be unable to break ground before the
end of the year.
During this permitting process, estimated total project costs grew
above the previously estimated price to approximately $100 Million.
This was due in part to a combination of significant increases in
materials costs on the world market and the complexity of our first
commercial deployment. In recent weeks, prices for materials have
started to decline and we expect, by the end of the first quarter
of 2009, items like structural and specialty steel will decline in
price by 25% to 30%, and other materials should follow suit.
The uncertainties of the world credit markets have also caused a
delay in the financing we need to enable placement of equipment
orders for the construction and which would allow us to achieve a
sustainable construction schedule after breaking ground. Hence, to
insure a timely and continuous construction of the project,
BlueFire's board of directors determined it is prudent to delay
Lancaster's groundbreaking until all the necessary funds are in
place. Project activities have advanced to a point that once credit
is available, orders can be immediately placed and construction
started. We remain optimistic in being able to raise the additional
capital necessary after the new federal administration is in place
and the capital markets normalize.
Early in the year, BlueFire undertook a Commercial Scale-up Program
(CSP) that united the process design in order to validate actual
feedstock input from the landfill and its conversion into ethanol.
As a result of the CSP and subsequent efforts during the delay of
the permitting process, the projected output of Lancaster increased
from approximately 2.5 million gallons to about 3.7 million gallons
per year.
Over the coming months BlueFire will continue to make enhancements
to its already robust technology, targeting improvements in
sulfuric acid concentration and distillation/dehydration
efficiencies.
The cellulosic sugars produced by BlueFire's concentrated acid
hydrolysis process provide renewable and sustainable raw materials
for fermentation or other conversions to fuels. So, BlueFire has
been forging relationships with various fermentation technology
providers for the production of other transportation fuels,
including bio-butanol, bio-diesel and bio-gasoline.
Our second major development project, BlueFire Mecca, LLC, is
progressing in both permitting and design activities. BlueFire has
been drawing down on the $40 million DOE award which helps fund
this project.
BlueFire is optimistic the new administration's stated commitment
to developing alternative fuels will sustain the growth of the
cellulosic ethanol industry. Loan guarantee programs and other
similar credit enhancements would be particularly helpful in this
current financial market for further commercialization for the
industry as a whole. BlueFire was one of 16 finalists chosen for a
Department of Energy Loan Guarantee for its third project, but due
to current credit markets BlueFire chose to forego this round of
submissions under the DOE Loan Guarantee but will pursue future
opportunities from both the USDA and DOE.
Additionally, on December 22, the DOE announced a new solicitation
for further grants to demonstrate alternative products production
that BlueFire, in conjunction with another fermentation company,
may pursue.
We expect 2009 to be a dynamic year for BlueFire, with plants
anticipated to be in construction and many new opportunities
pursued. The recently announced consulting agreement for South
Korea is but one example of the many opportunities in our pipeline.
This includes opportunities in the Middle East.
As we end 2008, we need to remember many people are hurting by this
recession. I would ask us all to turn our hearts to one another to
help sustain and create new ways of supporting one another. I
encourage everyone to help a neighbor who may have lost their job
or the homeless person who has no one else. Reach out and help and
feel the Real Power of the season.
Sincerely,
Arnold R. Klann
President and CEO
BlueFire Ethanol Fuels, Inc.
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