CORRECTED - Shell boosts stake in Iogen cellulosic ethanol

Tue Jul 15, 2008 12:15pm EDT

(Corrects first paragraph to show Shell investment and ownership stake is in subsidiary of Iogen Corp called Iogen Energy Corp, not in Iogen Corp itself. Adds details in second paragraph)

WINNIPEG, Manitoba, July 15 (Reuters) - Oil major Royal Dutch Shell Plc (RDSa.L) said on Tuesday it will make a "significant investment" in a venture it has with Canadian cellulosic ethanol maker Iogen Corp.

Shell said it would increase its stake in Iogen Energy Corp, a subsidiary of Iogen that focuses on technology develompent, to 50 percent from 26.3 percent.

Shell also said it would consider investing in a full-scale commercial plant for the Iogen technology, which makes ethanol from wheat straw. It did not disclose how much it will invest in the privately held company.

Iogen, which is also backed by Goldman Sachs Group Inc (GS.N), has run a demonstration plant in Ottawa since 2004 that can produce about 2.5 million liters of ethanol a year from the plant stalks that are left behind after farmers harvest crops.

It is planning to open a C$500-million ($500 million) commercial-scale plant in Saskatchewan, Canada's largest wheat-producing province, in 2011. That plant would produce about 90 million liters (23.78 million U.S. gallons) of ethanol a year.

Iogen has also been working on a similar project in Idaho.

Ethanol is a fuel additive promoted as a way to stretch limited world oil supplies while reducing greenhouse gas emissions.

Government programs designed to boost production of ethanol, which is traditionally made from corn and other food crops, have been blamed for soaring food prices around the world.

Cellulosic ethanol costs about twice as much to produce as corn-based ethanol, and has not yet been produced on a commercial scale.

($1=$1.00 Canadian) (Reporting by Roberta Rampton; Editing by Peter Galloway)

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