(Corrects headline, first bullet point and first and second paragraphs to state U.S. ethanol fuel use to rise to 12 billion gallons by 2010 from 10.5 billion gallons this year, not the ethanol blend rate to rise to 12 percent from 10 percent)
* Ethanol use rising to 12 billion gallons by 2010
* ADM will be selective in buying bankrupt ethanol plants
By Karl Plume
CHICAGO, May 13 (Reuters) - U.S. agricultural processor and ethanol producer Archer Daniels Midland Co (ADM.N) said on Wednesday that U.S. ethanol fuel use was rising to 12 billion gallons by 2010 from the 10.5 billion gallons this year.
Despite recession-dampened demand for fuel, U.S. law mandates that amount be blended into the U.S. fuel supply, said Steve Mills, ADM’s chief financial officer, speaking at the BMO Capital Markets’ Agriculture, Protein, and Fertilizer conference in New York City.
Ethanol supporters have petitioned the U.S. Environmental Protection Agency to consider increasing the ethanol blend rate as high as 15 percent from the current 10 percent, but a step-up increase may be more likely.
Supporters argue that increased blend rates are needed to accommodate rising federal production mandates that require 12.95 billion gallons of biofuel to be blended into the nation’s fuel supply in 2010 and 36 billion gallons in 2022. [ID:nN05479991]
The EPA said in April it would take a year to complete government testing on whether a higher percentage of ethanol could be blended with gasoline without harming car engines and is currently seeking public comment on the issue.
ADM also said it was open to acquiring existing ethanol facilities from bankrupt biofuels makers, but would be very selective with any purchases it makes.
“It really would have to be a great fit at a great price for us to consider it,” Mills said.
The high cost of corn, which ethanol makers convert into the biofuel, coupled with a steep drop in fuel prices from last year’s record highs, have squeezed profitability of the ethanol sector and forced several producers into bankruptcy.
ADM, the second largest ethanol producer in the United States, bid on some assets of bankrupt ethanol producer VeraSun Energy Corp VSUNQ.PK in a March auction, but did not acquire any facilities.
Another ethanol producer, Pacific Ethanol Inc (PEIX.O), warned on Tuesday it would need to file for bankruptcy protection if it could not soon restructure its debt after its first-quarter sales fell by nearly half. [ID:nN12306260] (Reporting by Karl Plume; Editing by David Gregorio)