Posted on 06/25/2006 6:03:45 PM PDT by T Ruth
SAN FRANCISCO (MarketWatch) -- DuPont Co. shares gained as much as 5% Wednesday as Wall Street weighed long-term prospects of the chemical giant's partnership with BP to make biobutanol, an alternative to corn-based ethanol in the red-hot fuel additive market.
DuPont's stock finished up $1.70 at $41.94, joining a broad, triple-digit rally by the Dow industrials after investors initially gave the biobutanol news a lukewarm reception in the prior session. BP's shares added $1.31, or 2%, to $67.01.
DuPont said in a conference call Tuesday that butanol, which can be derived from sugar beets, will be marketed in the U.K. next year and will be more widely available by 2010.
Demand for alternative fuels has spiked over the past year, doubling ethanol prices, after President Bush signed an energy bill requiring oil companies to find an additive to replace the environmentally harmful MTBE. Chad Holliday, DuPont's CEO, called the announcement "good news for farmers, good news for consumers, good news for the environment, and good news for shareholders." DuPont also touted butanol as having higher energy content by volume than ethanol, which translates into greater fuel efficiency and, presumably, better automotive mileage.
Butanol, historically made from petroleum, is used in paint thinner, brake fluids and perfumes, but the cost has limited its use as a fuel.
Bringing down production costs is key for butanol and those backing it, according to Bank of America analyst Kevin McCarthy. If the companies can successfully manage that, there will be commercial opportunity within a few years, he said.
McCarthy pointed out that butanol has several advantages over ethanol, including better energy density, leading to better gas mileage; moisture tolerance, enabling pipeline transport; and lower vapor pressure.
Deutsche Bank analyst David Begleiter said that, while the deal is an important milestone for DuPont, investors should temper their expectations.
"We do not expect DuPont's share price to reflect additional value for bio-based materials in the near term as material earnings from advanced biofuels are still years away," he said.
Both analysts maintained neutral stances on DuPont. End of Story
Seems like the market is inclined to agree.
I sure hope it can't oxidize too easily...butyric acid stinks....rancid butter.
It may be added, too, that butanol has a research octane number of 100.
Looks like a viable candidate if the economics work out. This stuff will pose fuel system problems similar to Methanol. The flash point is 95°F so a cold starting aid will be needed. It also looks like it will attack Aluminum. On the plus side it carries more energy per pound, and if it burns invisible like Methanol, I missed that in the MSDS.
I'm glad to see interest widening in this as a fuel source.
Butanol ping
Ramey is his name, click on the link: http://www.butanol.com/
Yep. When I had more time I was going to post his link. Thanks.
BTW...I have heard him speak on this subject quite a few times. He has me convinced!
I discovered this link independent of this article, then decided to hit the FR search bar and found this post (the only one I might add). Since this was from June 2006, do any of you have any more recent information about developments in possible production? The company said they were going to build a larger experimental production facility, any news on that score?
I have not read anything new on this for some time.
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