Pacific Ethanol suspends construction on new plant

Sacramento, Calif.-based Pacific Ethanol (Nasdaq: PEIX) today became the latest company to delay plans for a new plant amid a glut in the ethanol industry, along with rising feedstock costs.

"We remain committed to completing our ethanol project in Imperial Valley," said Neil Koehler, CEO of Pacific Ethanol.

"However, given current ethanol market conditions, we feel it is prudent and strategic to suspend construction until the market improves."

The 50 million gallon per year Imperial Valley plant, going up near Calipatria, Calif., was previously scheduled to be operational in the fourth quarter of 2008.

"Our Stockton and Magic Valley plants remain under construction, and in addition to our existing production capacity, we remain on target to attain our production capacity goal of 220 million gallons in 2008," said Koehler.

Brookings, S.D.-based VeraSun Energy (NYSE: VSE), Glacial Lakes Energy in Watertown, S.D., and Benson, Minn.'s Chippewa Valley Ethanol have also suspended construction projects in recent weeks.

U.S. ethanol production is currently approaching 7 billion gallons per year, and is expected to hit more than 13 billion gallons in 2008.