NEW YORK, Aug 31 (Reuters) – Virginia’s sole ethanol plant is closing on Monday with no set date for reopening, a company official said, the second U.S. producer of the biofuel expected to suspend operations this week amid headwinds from low oil prices and compressed margins.
Vireol Bio Energy LLC, a 62-million-gallon-per-year ethanol facility in Hopewell, Virginia, will cease running after Monday and is courting investors to reopen if market conditions improve, said Peter McGenity, Chief Executive Officer and Chairman.
“We’re just squeezing the last drops out now,” McGenity said. He said the producer, the only one in Virginia, took a hit from weak ethanol prices and steeper competition from oil.
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The statements follow news of a Wyoming producer’s closure last week and comes just over a year after Vireol reopened the shuttered Virginia facility, which primarily runs on corn.
Ethanol futures have sunk 10 percent this year, and profit margins in the 15-billion-gallon ethanol industry are under pressure as oil prices revisit 6-1/2-year lows and prices of corn have held up.
Weaker prices of gasoline tend to reduce ethanol’s competitiveness, discouraging blending beyond government-mandated levels. The industry also took a hit in recent months when the U.S. government proposed reducing targets for volumes required to be used next year.
The biofuels industry was gripped by a wave of closures amid a drought-induced run-up in corn prices in 2012. Most affected were older plants and biofuels producers farther from the country’s key corn-growing regions.
Vireol is speaking with investors from within the ethanol industry, primarily with other producers, he said.
“We are confident that either by ourselves or with investment, this will be resurrected. But a lot depends on market conditions,” Vireol’s McGenity said.
