Where the Money Is
It's in ethanol, where companies, private-equity firms and hedge funds see enormous opportunities
Ethanol production, once primarily the domain of small farmers, has become big business.
Corporations, private-equity firms and hedge funds are pouring money into the sector in hopes of cashing in on a surge in demand for ethanol, a low-polluting transportation fuel made from corn or sugar. The shift in funding sources is reshaping the ethanol market, resulting in new plants that are bigger and sprinkled far from the Midwest corn fields, with lower operating costs than their predecessors built by farmer cooperatives.
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New federal rules that require gasoline refiners to blend billions of gallons of ethanol into their product annually have set a floor for ethanol demand. At the same time, this year's record prices for gasoline and crude oil have increased the appeal of ethanol as a way to help wean the U.S. off fossil fuels and foreign sources of energy. All of which has created a big opportunity in the eyes of large investors, particularly private-equity firms and hedge funds.
"We've been inundated with calls from potential investors," says Paul Ho, director in the energy group at Credit Suisse First Boston.
Todd Swanson of Third Point LLC, a $4 billion hedge fund with investments in ethanol production, says "ethanol's generating huge cash" for producers and investors. "In the longer term," he adds, "there's significant legislated demand growth and significant growth above the legislated amount."
Talk of Consolidation
Plant construction is booming. U.S. annual capacity, which started the year at 4.34 billion gallons, is now at 4.8 billion gallons, according to the Renewable Fuels Association, a Washington-based trade association for the U.S. ethanol industry. An additional 2.8 billion gallons in capacity is under construction. That means there already is enough capacity in place or being built to supply the 7.5 billion gallons of ethanol that refiners will be required to blend into their products annually by 2012. And many more plants are in the planning phase.
Many of the plants being built have larger capacities than older plants and run on fuels other than natural gas, which is the dominant fuel for ethanol production but is relatively expensive. Plants using alternative fuels, such as coal or even cow manure, tend to be more expensive to build, so they're usually not built by the farmer co-ops. "These are beyond the range of what the farmers can finance themselves," says Mr. Ho of Credit Suisse. But while the big plants are more expensive at first, their lower costs for producing fuel and their greater economies of scale mean they will be more competitive than the co-op plants, he says.
The surge in plant construction has sparked concern among some investors about the possibility of supply outstripping demand for ethanol. The stocks of publicly traded ethanol companies have fallen sharply since the first quarter, after rallying strongly when President Bush supported ethanol use during his State of the Union speech in January. Recent stock offerings of ethanol companies have been poorly received: Shares of Aventine Renewable Energy Holdings Inc. have fallen 46% since they began trading on the New York Stock Exchange in May; shares of VeraSun Energy Corp., the nation's second-largest ethanol producer, are down 36% since trading began in June; and Global Ethanol Holdings Ltd., an Australian producer, withdrew its initial public offering of shares in August after it was undersubscribed.
"People are to a certain extent skittish because there's a lot of inherent risk," says Bob Simmons, senior vice president at Panda Energy International Inc., a Dallas-based ethanol producer. "That may not be a bad thing. It'll box out the marginal project."
If oversupply causes ethanol prices to fall, the lowest-cost ethanol producers are the most likely to survive, while the higher-cost producers -- the farmer co-ops that run smaller, older plants -- will see their margins come under severe pressure. "A lot of those little farmer cooperative plants right now are just printing money, but they're going to have higher cost structures," says Third Point's Mr. Swanson. "They're the big question mark. Do they just suck it up when times get tough?"
The fragmentation of the ethanol market could encourage consolidation among producers. Agricultural giant Archer-Daniels-Midland Co., of Decatur, Ill., owns nearly a quarter of all ethanol production in the U.S., but the rest of the market is divided among relatively small producers. That puts producers at a disadvantage to their main customers, oil refiners. "Relative to the oil industry, we are significantly more fragmented," says Neil Koehler, chief executive of Pacific Ethanol Inc., of Fresno, Calif. And small producers dealing with big buyers have little leverage. "I think that consolidation is inevitable," Mr. Koehler says.
Wary Refiners
Oil refiners, which for years opposed the ethanol mandate, are still trying to figure out what the burgeoning market means for them and whether they should get involved in ethanol production. Some have embraced ethanol. Houston-based Marathon Oil Corp., for instance, has teamed up with Andersons Inc., a grain-processing company in Maumee, Ohio, in a joint venture to make ethanol.
The refiners "are putting their toes into the water to see what makes sense," says Bob Slaughter, president of the National Petrochemical and Refiners Association. "And the answer will vary."
While many refiners remain uncertain of the long-term market for ethanol, there are indications that demand will continue to grow. Auto makers are increasing their production of "flex fuel" vehicles -- cars that can run on either normal gasoline or E-85, a fuel blend that's 85% ethanol. And U.S. public policy has shifted strongly in favor of increased use of ethanol and other biofuels. Environmental groups mostly support ethanol because it reduces auto emissions, including greenhouse gases, and national-security experts see it as a way to reduce U.S. dependence on foreign oil. Ethanol supporters in Congress are already pushing for an increase in the amount of ethanol that refiners are required to use.
"Certainly from the public-policy arena, we are seeing a long-term commitment to biofuels," says Mr. Koehler of Pacific Ethanol.
哪儿能赚大钱？
美国的乙醇生产曾经主要是小农户的领地，现在，它已成为一桩大生意。
企业、股权投资公司和对冲基金正将大量资金投向这个领域，希望抓住乙醇市场需求激增的时机大赚一笔。这种从玉米或糖类提取出的产品是低污染的燃料。随着投资来源的变化，乙醇市场也出现了新格局。新的乙醇工厂规模更大，而且远离美国中西部的玉米产地，它们的运转成本也比农民联合体建的老式乙醇厂更低。
联邦新法律规定，炼油厂在加工汽油时要添加一定比例的乙醇，全美这方面的乙醇年需求量高达数十亿加仑。这为乙醇的市场需求打下了基础。同时，今年以来原油和汽油不断报出创纪录高价，这使乙醇在帮助美国减轻对化石类燃料和进口能源的依赖方面魅力大增。在财大气粗的投资者、特别是股权投资公司和对冲基金看来，所有这些都意味着巨大的商机。
瑞士信贷第一波士顿(Credit Suisse First Boston)能源部门主管Paul Ho说，我们简直要被有意向的投资者打来的电话淹没了。
Third Point LLC的斯万森(Todd Swanson)说，乙醇能为生产商和投资者带来巨大收入。他说，从较长时期来看，因联邦法律规定产生的需求会大幅增长，法律要求之外的需求也会明显上升。
行业整合不可避免
在美国，新建乙醇厂正如雨后春笋。据位于华盛顿的乙醇行业所属协会组织Renewable Fuels Association提供的数字，今年初时，全美的乙醇年产能是43.4亿加仑，现在已增至48亿加仑，正在建设的还有28亿加仑。根据新规定，到2012年时，每年汽油的乙醇总添加量要达到75亿加仑，与此相比，目前已有和在建的产能已能满足需求。此外，还有许多建厂计划正在讨论阶段。
许多乙醇厂的规模普遍比老式乙醇厂大，并且还采用了非天然气作燃料。天然气一直以来是乙醇生产的主要燃料，但它价格相对较高。不过采用煤炭甚至牛粪作燃料的乙醇厂建设成本往往比较高，所以投资方很少有农户联合体。Ho说，这类工厂超出了农户联合体自身的融资能力。不过他说，大型乙醇厂虽然初始投资较高，但低成本的生产燃料和规模效应使它们比联合体建的老式乙醇厂更有竞争力。
乙醇厂的大量涌现也让一些投资者担心，该行业会出现供大于求的局面。已上市乙醇企业的股价一季度以来明显下跌，在那之前，布什总统在新年国情咨文中表示支持推广乙醇燃料之后，该类股票曾经历过一轮强劲上扬。
新上市乙醇企业的股票在市场也遭到了冷遇。比如5月份上市的Aventine Renewable Energy Holdings Inc.至目前的股价已下降了46%；全美第二大乙醇企业VeraSun Energy Corp.的股价自6月份上市以来下跌36%。澳大利亚乙醇厂家Global Ethanol Holdings Ltd. 8月份准备首次公开募股时因认购不足甚至撤回了发行申请。
达拉斯乙醇生产商Panda Energy International Inc.高级副总裁西蒙斯(Bob Simmons)说，人们存在一定程度的担心，因为这方面有很大的内部风险。不过这或许不是坏事，它能让那些效益欠佳的乙醇项目被排斥掉。
如果供大于求的局面导致乙醇价格下跌，那么低成本生产商生存下来的几率更大，而高成本厂家将感受到他们的毛利率水平要面对巨大压力。
Third Point的斯万森说，许多农户联合体办的乙醇厂现在虽然利润滚滚，但他们将面临成本上升的局面。这将是一个大问题。等问题真的来了，他们能消化掉吗？
乙醇市场的分散状况可能会促发一波整合。虽然全美近四分之一的乙醇厂都属于伊利诺伊州农业巨头Archer-Daniels-Midland Co.，但其余四分之三的市场都是规模相对很小的厂家。这种情况导致乙醇生产商在面对他们的主顾炼油厂时毫无优势可言。
加州乙醇企业Pacific Ethanol Inc.的首席执行长科勒(Neil Koehler)说，与石油业相比，我们非常分散。小生产商跟大买家打交道时非常被动。科勒表示，他认为一场整合将不可避免。
炼油厂小心翼翼
多年来一直反对添加乙醇的炼油企业现在正试图搞清方兴未艾的乙醇市场对他们意味着什么、他们是否应该涉足乙醇生产。有些厂家已付诸行动。比如休斯顿的Marathon Oil Corp.就与俄亥俄谷物加工企业Andersons Inc.成立了生产乙醇的合资公司。
全美石化和炼油协会主席斯洛特(Bob Slaughter)说，许多炼油厂正在试探看看怎么做最合适。不过答案会各不相同。
尽管许多炼油厂对乙醇的长期市场前景还很不确定，但有迹象表明，对乙醇的需求会继续上升。汽车厂家正在增加适应不同燃料的车型，比如既能用普通汽油、也能用含85%乙醇的混合汽油的车。
同时，美国的公共政策也急剧转向支持使用乙醇及其他生物燃料。环保组织大多支持使用乙醇，因为它能减少汽车的有害物排放（包括温室气体），而国土安全专家也支持乙醇，认为这是降低美国对进口石油依赖的一个途径。国会里支持使用乙醇的人甚至主张提高炼油厂的乙醇添加比例。
Pacific Ethanol的科勒说，很明显，从公共政策的角度看，生物燃料将是人们长期追求的一个目标。
MATTHEW DALTON
