Tenaska to form venture to market ethanol, biodiesel products

Seattle (Platts)--2Aug2006

Omaha, Nebraska-based Tenaska, a veteran power generator and natural gas
and electricity marketer, Wednesday said it had formed Tenaska Biofuels to
market ethanol and biodiesel products.

The biofuel market is growing, but fragmented, much like natural gas
markets in the early 1990s, Larry Pearson, president and CEO of Tenaska's
Operations Group said in an interview. Because of that there is "room for
efficiency in moving products from production facilities to markets," he said.
The products will be used primarily for transportation industries.

"We've been looking hard at the ethanol industry for some time. We
believe this is an area that holds great value for marketing and will provide
a growing portion of our energy business," said Pearson. Tenaska Biofuels
would not own plants that produce products, but will buy and sell the products
as part of its marketing and will provide marketing, physical delivery and
financial services, Pearson said.

The company is located in the heart of the Midwest market that produces
ethanol and biodiesel, said Dave Neubauer, vice president and general manager
of Tenaska Biofuels. "There is a lot of activity in this market," he noted. A
number of states, including California, which in July adopted a Bioenergy
Action Plan, are pushing the their use.

The producers of the products are a number of farmer cooperatives and
large agri-companies such as ADM, said Neubauer.

Ethanol is produced primarily by corn and the ethanol industry is
expected to produce more than nine billion gallons annually by 2008, Tenaska
said. Biodiesel uses oil based crops such as soybeans or waste greases and
fats. The use of biodiesel in engines grew to 75 million gallons in 2005.

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