Dallas venture chooses Peru for ethanol siteadmin
The domain of snakes, scorpions and scrub brush since time immemorial, a stretch of desert in northwest Peru could soon become an unlikely generator of jobs and economic well-being, thanks to the booming U.S. market for ethanol.
At a ceremony this month, energy firm Maple Cos. closed a deal to buy 25,000 acres of unused and heretofore unwanted land near the city of Piura. The Dallas company announced plans to invest $120 million in an ethanol processing plant, a sugar-cane field to provide raw material for the fuel and a mile-long underwater pipeline to the Pacific Ocean to deliver fuel to tankers and onward to U.S. customers.
Maple President Rex W. Canon said the company would be able to ship 30 million gallons of ethanol a year by 2010, perhaps growing to 100 million in the following decade.
Peruvian President Alan Garcia attended the ceremony and beamed as he heard Maple promise that the project would directly or indirectly create 3,200 jobs.
Gov. Cesar Trelles of the Peruvian region, also called Piura, which includes the site, said in a telephone interview that the project would spark economic development. He predicted that northwest Peru would someday be an ethanol hub, producing 400 million gallons a year. That’s an ambitious goal ”” it would represent 7 percent of all the ethanol Americans bought last year.
It’s easy for entrepreneurs and government officials to wax on about ethanol as they contemplate booming U.S. demand, which last year grew 30 percent and could have years of expansion ahead.
President Bush, in his State of the Union address last week, called for increasing use of alternative fuels such as ethanol ”” which can be made from sugar, grains and even plant waste ”” as part of a strategy to reduce U.S. dependence on imported oil.
Maple sees Peru, with its favorable growing conditions and trade preferences with the United States, as the perfect platform from which to fulfill such demand.
“The big driver for us is that Peru is one of the best places in the world to grow sugar cane in terms of how many tons you can produce per acre per year,” Canon said.
“That gives us a cost advantage,” he said of his privately held group of companies, which has been developing and operating energy projects since 1986, with a focus on Peru since the early 1990s.
Two factors are spurring growth in ethanol demand: the high cost of crude oil and the environmental harm that it and other hydrocarbons are doing to the planet. Global warming and rising pollution have touched off a grass-roots movement in the U.S. and other countries advocating cleaner-burning automobile engines.
But the market relies on more than consumer preferences. Much of ethanol’s market growth is a product of changing laws.
Under the Andean Trade Promotion and Drug Eradication Act, Peru and other Andean countries can export a variety of agricultural products to the U.S. without paying duties. The program’s intent was to give farmers an incentive not to grow coca, marijuana or the poppy from which heroin is made.