Chesapeake buys stake in Sundrop

LOUISVILLE – Biofuel company Sundrop Fuels Inc. in Louisville said Monday that it has signed agreements to receive $175 million to build a “green gasoline” biorefinery.

Of the total new investment to Sundrop Fuels, $155 million will come from Chesapeake NG Ventures Corp., a subsidiary of Chesapeake Energy Corp., (NYSE: CHK) an Oklahoma City-based natural gas company, the company said in a statement. That amount represents a 50 percent stake in the company.

Another $20 million will come from Oak Investment Partners, a current investor, the company said.

SPONSORED CONTENT

Select your Republic Services residential cart now!

In preparation for Republic Services becoming the primary provider of residential recycling, yard trimmings, and trash, residents should now select the best cart size and service schedule for their household needs.

Sundrop plans to build the commercial biorefinery starting in 2012, the company said, without naming a location. The refinery is expected to produce more than 40 million gallons of gas every year, using Sundrop Fuels’ technology of heat transfer, and the ExxonMobil methanol-to-gasoline process, the company said in the statement. Cellulose materials will be used to make the gasoline.

A Sundrop spokesman was not available for immediate comment.

“We are to be a part of bringing this ground-breaking technology to market,” Aubrey K. McClendon, chief executive officer at Chesapeake Energy Corp., said in a statement. “The combination of Sundrop Fuels’ advanced technology and Chesapeake’s proven execution capabilities is a tremendous partnership and represents an important step in further utilizing America’s clean, abundant, affordable natural gas resources to provide realistic and timely solutions to our country’s energy needs.”

All in all, in the future, Sundrop Fuels plans to build several new biorefineries with its technology, each capable of generating more than 200 million gallons of biofuel every year.

Chesapeake Energy Corp. is the second-largest producer of natural gas and is the most active driller of new natural gas wells in the United States, according to the press statement. The company has said it plans to spend $1 billion to promote wider use of natural gas as a transportation fuel, including the investment in privately held Sundrop Fuels and another $150 million in Clean Energy Fuels Corp. (Nasdaq: CLNE), which is based in Seal Beach, California.