Green Gasoline Producer With Heavy Debt Files Chapter 7 Bankruptcy
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Green Gasoline Producer With Heavy Debt Files Chapter 7 Bankruptcy

September 28, 2012

By: John Clark

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Terrabon, a Texas-based producer of so-called "green" gasoline, is filing for Chapter 7 bankruptcy, according to a recent report from the Houston Business Journal.

Sources say that the alternative energy company has stopped its operations and will soon hand its assets over to a trustee, who will then liquidate the assets in an effort to regain some funds for the company’s creditors.

The company’s collapse surprised many industry observers because Terrabon had recently received a promise from Waste Management for a new round of financing later this year.

Waste Management, however, had second thoughts, and removed its promised loan offer after the conglomerate went through a change in key executives.

The collapse in the funding arrangement left the energy company in poor financial condition. In a recent statement, Terrabon officials said they failed to find enough extra corporate funding to finish the construction of its first commercial-scale plant.

So Terrabon was forced to fold before it had started producing its gasoline on a broad commercial scale, and the company’s collapse reportedly led to the dismissal of 60 full-time employees.

And the company’s bankruptcy filing is a black eye for the alternative fuel industry, which has struggled to create a cost-effective alternative to traditional unleaded gasoline.

Sources note that Terrabon’s product was particularly novel. The company reportedly produced high-octane gasoline using an acid fermentation process that converts biomass (sticks, mud, and the like) into organic salts.

These organic salts, which are also known as bio-crude, would then be transported by truck, train, or pipeline to a refinery where they would be converted into gasoline that can be mixed with traditional forms of fuel.

The biggest advantage to Terrabon’s technology was the fuel could be stored with other types of gasoline, which is a feature absent from ethanol, a more popular gasoline alternative.

And the company seemed to be headed in the right direction. Just last year, Terrabon exceeded its goal of creating 70 gallons of renewable gasoline using its creative process, and it also received a $9.6 million contract from the Defense Advanced Research Projects Agency to create a sustainable jet fuel.

These positive steps, however, were to no avail, as the company’s sinking finances eventually overwhelmed its positive technological developments.

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