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Now that the buzz is out of Ethanol and all the ethanol stocks are back to earth, lets look at an ethanol company creating some buzz.  I wrote about Cilion back in June when the announcement came but now more information is coming out.  Cilion is a joint venture between well known VC Vinod Khosla and Western Milling. 

The company recently finished successful second round of funding to raise over $200 million.  One of the investors is British billionaire Richard Branson and his Virgin Group. Yucaipa Companies and Advanced Equities Inc. also participated in the second round of funding. 

Cilion looks very promising:

• Cilion plans to have 8 plant units in production by 2008 for a total of 440 million gallons per year capacity. The first three plants are expected to be in California
• Cilion ethanol plants will have an energy balance advantage that is 2X that of gasoline.
• Cilion is expected to be price competitive per mile driven with gasoline even if oil prices drop to $40 per barrel.

Cilion ethanol production process will be using technology provided by India based PRAJ Industries.  Interestingly, Vinod Khosla has a stake in PRAJ as well.  I am very skeptical of Cellulosic ethanol until I see it being mass produced.  Xethanol (AMEX: XNL) has been talking about opening cellulosic plants but nothing has materialized there.  The one thing I am really skeptical about is, “Cilion is expected to be price competitive per mile driven with gasoline even if oil prices drop to $40 per barrel”.  I will believe this when I see it.

I will keep an eye on this to see what happens. 

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• Vinod Khosla forms Cilion to produce ethanol in California
• Xethanol’s luncheon presentation in Atlanta
• Super VC Vinod Khosla bankrolling California Alternative Energy Initiative
• Pacific Ethanol completes the construction of its first plant. Production will start October 17th.
• My take on the Sharesleuth.com article on Xethanol