Vercipia, a 50-50 joint venture between BP and Verenium, is hopeful that commercial operations can begin in 2012, Tom Mueller, press officer for BP America tells Recharge

None of the parties are publicly discussing plant cost but officials in Highlands County where it will be located say they were told by Vercipia that outlays will total about $300m.

Vercipia has applied for a loan guarantee from the US Energy Department (DOE) for the project, which Mueller says is progressing through the due diligence phase. “We anticipate progress on this in 2010,” he says.

To help finance the project, Verenium received a $7m Farm-to-Fuel grant from Florida’s Department of Agriculture and Consumer Services.

The company has contracted with Lykes Brothers, a family owned Florida agricultural business, to provide the estimated 400,000 dry tons a year of energy cane for conversion to fuel.

Vercipia will site the plant in the middle of 20,000 acres of land from Lykes east of Brighton where the crop will be cultivated on a large scale.

Energy cane and common sugarcane found in the southern US are from the same genus, saccharum. Energy cane is bred for high fiber content and its cousin is grown for high sugar content and low fiber.

As a result, test results have shown that energy cane can produce high biomass yields and may have a stand life of eight years of more.

Whereas Brazil uses sugarcane to produce ethanol, Vercipia intends to use the cane stalks and fibers as the plant’s raw materials. Backup purpose-grown feedstocks include energy grasses, miscanthus and bagasse, a sugar cane residue, according to Mueller.

Vercipia’s Highlands project will use lignocellulosic conversion technology being jointly developed by Verenium and BP. It enables conversion of nearly all the sugars found in cellulosic biomass into ethanol.

Vercipia expects efficiency advantages combined with the low output cost of cellulosic biomass will result in superior economics in the production of ethanol.

President Barack Obama’s administration has been supportive of cellulosic biofuel development, which slowed last year because of the financial crisis. Projects were also kept on hold because ethanol demand plummeted for blending into gasoline as cash-strapped Americans used their cars less.