Pacific Ethanol slips, stops plant construction
Shares of Pacific Ethanol Inc. (Nasdaq: PEIX) are sagging on news before the start of trading that the ethanol producer will halt construction of a plant in California.
Sacramento, Calif.-based Pacific Ethanol announced that it will suspend construction on a plant near the small town of Calipatria in the southern part of the state and wait for market conditions to improve.
“We remain committed to completing our ethanol project,” said CEO Neil Koehler in a statement. “However, given current ethanol market conditions, we feel it is prudent and strategic to suspend construction until the market improves.”
The facility, originally scheduled to be operational in the fourth quarter of 2008, is designed to produce 50 million gallons of ethanol a year.
Pacific Ethanol is currently operating two plants and owns a 42% stake in a third. The company, the largest West Coast-based producer of ethanol, is building two more facilities, expected to be up and running in 2008.
Ethanol, which in the United States is produced primarily from corn, is viewed by some as a clean energy alternative to gasoline and has been the focus of much recent attention. However, increased demand for ethanol has lifted the price of corn and narrowed the profit margins of ethanol producers.
At 1:24 p.m. ET, shares of Pacific Ethanol (PEIX) had declined $0.01, or 0.16%, to $6.10. The 52-week low of $4.20 was set on Nov. 23, while the 52-week high of $18.79 was established on Jan. 23.
