BP Pledges $500 Million for Energy Biosciences Institute and Plans New Business to Exploit Research

June 14, 2006

As part of its continuing drive to find longer term commercial alternatives to oil and gas, BP is to fund radical research aimed at probing the emerging secrets of bioscience and applying them to the production of new and cleaner energy, principally fuels for road transport.

The company plans to spend $500 million over the next ten years to establish a dedicated biosciences energy research laboratory attached to a major academic centre in the US or UK, the first facility of its kind in the world.

Chief executive Lord Browne said BP had begun discussions with several leading universities to identify which could host the BP Energy Biosciences Institute (EBI), with the aim of launching early research programmes by the end of 2007.

Speaking in London today, Browne said the new institute would focus initially on three key areas of energy bioscience:

* Developing new biofuel components and improving the efficiency and flexibility of those currently blended with transport fuels
* Devising new technologies to enhance and accelerate the conversion of organic matter to biofuel molecules, with the aim of increasing the proportion of a crop which can be used to produce feedstock
* Using modern plant science to develop species that produce a higher yield of energy molecules and can be grown on land not suitable for food production.

Browne said the EBI would be staffed by scientists drawn both from the host university and other academic institutions, along with a small number of specialists from BP.

“The world needs new technologies to maintain adequate supplies of energy for the future, Browne said. ”Bioscience is already transforming modern medicine and we believe it can bring immense benefits to the energy sector.
“By creating this integrated and dedicated research centre, we plan to harness a technical discipline with enormous potential to provide new energy solutions.”

The EBI will undertake basic research freely accessible to the world’s technical communities as well as proprietary applied projects for commercial bioscience applications.

In the proprietary area, it will support the new biofuels business within BP’s refining and marketing division which has been created to address the increasing requirement that biocomponents be blended into traditional fossil-based transport fuels.

Browne said: "We expect demand for biofuels to rise significantly through the next decade to meet consumer desire for more environmentally responsible products and to satisfy the requirements of governments for more energy to be home-grown.

"It is clear that this demand will outstrip availability without major investment to stimulate the development of new associated technologies that improve cost-effectiveness and broaden the range of biocomponents available globally.

“BP’s biofuels business will bring together all our existing activities in this area and also identify a selection of new demonstration projects to increase our knowledge and expertise which is essential to bring these products to market on a wide scale.”

In addition to its research remit, the EBI will facilitate the cross-training of a new generation of researchers focusing on coupling biotechnology and energy production. It will be a focal point for interactions with leading biotech companies which have a major role in developing and applying energy bioscience.

“While some very good energy bioscience work is already under way, we don’t believe it is adequately integrated into a comprehensive strategic vision for commercial energy production,” Browne said.
“We intend that the EBI will combine a broad science base with BP’s energy knowledge and expertise in the fields of energy processing, distribution, marketing, and regulation, creating the potential for material new offers to meet world demand for lower carbon energy.”

In addition to its focus on advanced biofuels, the Institute will also look at broader applications of bioscience to energy, including improved recovery of oil, coal bed methane and carbon sequestration.

Notes to Editors:

* The establishment of the EBI marks a significant step in BP’s commitment to providing new lower carbon energy and follows on from the establishment of BP Alternative Energy, a low carbon power business, in November 2005.
* In 2005, BP purchased for blending, 590 million gallons of bio-ethanol (575 million gallons in the US) and 70 million gallons of bio-diesel.
* BP is currently finalising plans to make an E85 fuel available in one or more US markets towards the end of this year.
* BP is funding a $9.4 million project in India to examine the possibilities of using Jatropha, a non-edible oil bearing crop which can be grown on marginal land as a biofuels component.
* A project to produce renewable diesel via the hydrogenation of tallow at BP’s Bulwer Island refinery in Australia is currently underway.
* BP has signed a contract and a Memorandum of Understanding (MoU) with two ethanol producers in Australia to enable an E10 gasoline containing ethanol to be sold across the country. Initial product from the contract will be supplied to the Queensland market later this year. Supplies from the MoU are expected in 2008.

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