Biodiesel has been gaining in popularity elsewhere in Europe for up to a decade but is only now beginning to make an impact in Britain.
"I believe we’re in the right place at the right time," Sean Sutcliffe, the firm’s newly-appointed chief executive told Reuters by telephone.
"Our top priority is to get our new 250,000-tonne-a-year plant at Teesside up and running by the middle of this year so we can produce the first biodiesel going into the north- east — and potentially into Europe as well."
Biodiesel, produced from a variety of vegetable oils, is seen as an environmentally-friendly alternative or addition to regular diesel.
UK-based Biofuels Corp., which floated in London in June last year, refused to be drawn on the plant’s cost, but industry estimates put the figure at between 21 and 25 million pounds ($40 to $47 million).
Sutcliffe said a sizeable amount of output will move to a nearby refinery owned by Dutch oil refiner Petroplus after it agreed to buy around 350,000 tonnes in a five-year deal — Petroplus markets "Bioplus," a 95:5 blend of ultra-low- sulphur diesel and biodiesel.
The firm said it has also agreed a 30-year contract with Simon Storage, which will store and handle biodiesel near the plant at Teesside. Simon Storage is to invest 3.5 million pounds on tanks and facilities.
Teesside located on England’s north-east coast is a key hub for Britain’s energy and chemical sector.
"It’s a good time to be doing this. I think that the market is showing a lot of appetite for this product because of the positive (commercial) environment and also because of the technical specifications the product has," said Sutcliffe, who until joining the firm on Jan. 10 was previously vice- president and managing director of new businesses at BG Group.
Glycerine, a type of alcohol, will also be produced at the plant.
EYES RAPE, PALM OIL
The company said it would be looking to process mainly rapeseed and palm oil at the new facility.
"It’s a highly flexible plant in terms of feedstocks. We’ll be able to use a combination of predominantly rapeseed and refined palm oil, but we can adapt ourselves to ensure that we have the best commercial mix," Sutcliffe said.
The EU is keen to see biofuel account for two percent of all fuels sales in 2005, rising to 5.75 percent in 2010.
($1 US = 0.5311 British Pounds)