PERUQS SAMOAFIBER Q EXCITING NEW BIOFUEL

UNCLAS LIMA 004404 SIPDIS SIPDIS DEPT FOR WHA/AND, WHA/EPSC, OES/STAS TREASURY FOR U/S TAYLOR, K. KOZLOFF, J. LEVINE STATE PASS TO EXIM DEPT OF ENERGY FOR S. LADISLAW ENERGY INFORMATION ADMINISTRATION FOR CHARLES ESSER E.O. 12958: N/A TAGS: EPET ENRG ECON ETRD PE SUBJECT: PERUQS SAMOAFIBER Q EXCITING NEW BIOFUEL ¶1. (U) SUMMARY: A U.S. company is developing a promising new biofuel source in the Amazon. The Samoafiber reed is endemic to Peru and may be the fastest growing plant suitable for biofuel; the riverine grassQs cellulose is converted to a crude bio-oil that can then be converted to ethanol. SamoaFiber Holdings (SFH) has invested $2 million and seeks more financing. A few months ago, President Garcia announced GOP support through land concessions. Samoafiber could fit in well with USG and GOP strategies for alternative development to coca and job creation in the jungle. END SUMMARY. SAMOAFIBER Q FASTEST GROWING CELLULOSE? -------------- ¶2. Gynerium sagittatum (called samoafiber, or in Peru cana brava) is a riverine grass found in the northern Amazon basin. While growing wild in other nations, in Peru the plant forms vast monocultures. Amcit William New, CEO of SFH, told us of his research to demonstrate that samoafiber can be successfully farmed. Samoafiber produces 5,000 dry tons of cellulose per year per hectare (ha),four times more than the fastest growing wood and 12 times more than other energy crops or agricultural waste material. It grows at a constant rate year round. ¶3. SFH is investing in Peru because of recent German technology that efficiently converts cellulose to a bio-oil which can be combusted for energy or converted to ethanol. CEO New reported to us that Samoafiber costs considerably less to refine than sugar cane for ethanol. Samoa Fiber biofuel can be produced for $8.73 BOE (Barrel of oil equivalent). A plantation of 15 ha would produce the energy equivalent of 3,000,000 barrels of crude oil annually. COMPARED TO ETHANOL -------------- ¶4. According to CEO New, Samoafiber oil can be mixed with engine fuel to run cleaner and increase octane. It has many of the same characteristics of ethanol, but can be produced at a much lower cost Q or converted to ethanol. SFH uses a relatively new but proven German technology called Fast Pyrolysis (FP). FP is uniquely suited to combine with fast-growing samoafiber to provide a cellulosic crude oil to supply the gasification market. FP uses heat to extract slurry from samoafiber that has the same energy content as low grade coal and a similar consistency to crude oil. The refining units are fairly inexpensive (roughly $10 million/per unit) and the components can be transported fairly easily to riverine plantations. (NOTE: this part of the Amazon basin has few roads. Most commerce is by barge. End note.) SFH INVESTMENT -------------- ¶5. CEO New met with President Garcia and Minister of Agriculture, Jose Salazar in September. New said both were supportive, and Salazar agreed to concession 25,000 ha in Ucayali, Huallaga, and Iquitos. (Note: most land in riverine Amazon is untitled, aside from that reserved for indigenous communities. End Note.) New invested $2 million in research and feasibility studies, and now seeks financing of an additional $9 million to begin farming and to build a pilot refinery, up to a total of $45 million ultimately needed to build three refineries. ¶6. Further information can be found at SFHQs website: www.sfiber.com. Post ESTH officer Hal Howard, howardhh@state.gov, has additional technical data on samoafiber. STRUBLE