May 14, 2011

AE Biofuels Restarts 55 Million Gallon Per Year Ethanol Production Facility In Keyes, California

AElogoAE Biofuels, Inc. announced this week that its wholly owned ethanol subsidiary AE Advanced Fuels Keyes, Inc. (AE Keyes) has restarted operations at the 55 million gallon per year ethanol production facility located in Keyes, California. Approximately 50 full time employees have been hired at the AE Keyes facility.

The original $130 million construction and commissioning of the plant was completed in November 2008 by Cilion, Inc. In early 2009 the plant was closed due to technical and market issues. AE Keyes took possession of the facility under a project agreement with Cilion in March 2010, signed a facility lease for up to five years, and funded $8 million of financing to retrofit and restart the plant.

The Keyes plant is a leader in environmentally responsible ethanol production with a 2.6:1 positive energy balance and near zero water discharge. In addition, the plant’s natural gas and steam powered turbine cogeneration unit generates all of the operating electric needs of the plant (4.3 megawatts), thus eliminating dependence on the state’s electrical grid.

AE Keyes was recently awarded a $1.88 million matching grant from the California Energy Commission (CEC) to accelerate the commercial implementation of AE Biofuels’ patent-pending, enzyme based, cellulosic ethanol production technology. The integrated cellulose/starch pre-commercial facility will be located near the 55 million gallon per year commercial ethanol facility. The CEC grant will enable the company to build upon prior enzyme optimization work conducted at its cellulose/starch pilot facility in Montana which was opened in 2008, and will help the State of California achieve the goals of the Low Carbon Fuel Standard (LCFS).

“The retrofit and restart of the Keyes plant was accomplished by a talented, dedicated management and operations team that has been expanded to more than 50 members,” said Eric McAfee, chairman and CEO of AE Biofuels, Inc. “We’re very pleased that the AE Keyes plant is now fully operational and delivering product to our California biofuels and animal feed customers."

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