Celanese Corp. (CE) would make low-cost ethanol for U.S. motorists using natural gas if policy makers end subsidies for corn-based production and amend the law that allows only renewable sources of the fuel additive. Celanese can make ethanol from natural gas for about $60 a barrel, one-third less than the corn-based process encouraged by a 45-cent-a-gallon federal subsidy, Chief Executive Officer David Weidman said today in a telephone interview. Celanese has begun building a demonstration plant and research center in Clear Lake, Texas, where it plans to begin production in mid- 2012. The tax credit and a 54-cent-a-gallon tariff on ethanol imports from Brazil would end this month under a compromise reached in the Senate, Senator Dianne Feinstein, a California Democrat, said July 7. Feinstein said at the time she hopes the deal is included in a deficit-reduction package that President Barack Obama is negotiating with Congress. Celanese also is seeking legislation amending the Energy Independence and Security Act to permit gas-derived ethanol, Weidman said. “We are working on and are very optimistic about progress being made to find legislation that achieves those twin objectives,” Weidman said from Dallas, where the company is based. “We need to be on a level playing field with other raw- material bio-feedstocks.” New Ethanol Plants Celanese may someday enter fuel markets around the world with ethanol plants built near gasoline producers under long- term agreements to provide guaranteed quantities of ethanol at a fixed price plus costs, Mark Oberle, a Celanese spokesman, said in a separate interview. That would eliminate the risk of fuel- market volatility for Celanese, he said. Celanese currently plans to make hydrocarbon-based ethanol for industrial customers that use the material as a chemical ingredient. The company plans to use its TCX technology at its acetyls plant in Nanjing, China, to make 200,000 tons of ethanol a year derived from coal in mid-2013. Celanese also plans to build a coal-to-ethanol plant near its Nanjing site that would open in mid-2014 and produce 400,000 tons a year, expandable to 1.1 million tons, Oberle said. A similar plant may be built soon after in Zhuhai near Hong Kong, he said. Celanese today reported second-quarter net income rose 27 percent to $203 million, or $1.28 a share, from $160 million, or $1.01, a year earlier. Excluding costs to fire employees, relocate a German factory and other one-time items, profit was $1.66 a share, topping the $1.43 average estimate of nine analysts in a Bloomberg survey. Celanese rose $3.04, or 5.6 percent, to $57.66 at 4:15 p.m. in New York Stock Exchange composite trading, the biggest gain in 12 months. The shares have increased 40 percent this year. To contact the reporter on this story: Jack Kaskey in Houston at jkaskey@bloomberg.net. To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net.

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