Key Assets

Our firm has been engaged to seek a buyer, investor, or joint venture partner for Keystone Biofuels, Inc. and KBI Industries, Inc. (“Keystone” or the “Company”), an owner/operator of a biodiesel refinery in Camp Hill, PA – 7 miles southwest of Harrisburg, PA and 80 miles north of Baltimore, MD. Both entities filed Chapter 11 in the United States Bankruptcy Court in the Middle District of Pennsylvania on March 18, 2013. Despite significant capital constraints over the past few years, production in 2011 was over 3 million gallons and in 2012, exceeded 5.6 million gallons. There are an abundance of feedstock sources in close proximity and Perdue and Valley Proteins were among the primary providers.

The refinery is ideally located to distribute and sell biodiesel in the Mid-Atlantic and Northeast regions. With direct access to the Norfolk Southern line, the facility can bring in feedstock by rail and has the ability to hold up to 25 cars on its siding (5 for unloading/loading purposes). There are also separate shipping/receiving lanes for high speed loading and unloading of products. The plant occupies what was formerly a large paper company chemical operation, and aside from a handful of tanks, the plant is all indoors. While the plant has been idle for several months, tanks have been drained and dried properly and all pipes were either flushed with water, purged with nitrogen or both. Certain key management personnel and production staff remain available to rejoin the business.

The technology was designed by Pacific Biodiesel, and initial construction began in March 2006. Production started in 2008 before the refinery was relocated from Shiremanstown, PA in 2010 and underwent considerable design and process upgrades. The facility maintains its multi-feedstock capability utilizing acid pre-esterification/base trans-esterification and is rated for 33 million gallons per year by the EPA. Based on the current configuration and availability of feedstock, recent studies and actual production indicate the capacity to be between 15 – 18 million gallons per year.

In order to maximize production flexibility, the plant is a batch processor using small reactors in parallel (12 x 5,000 gallon stainless esterifying reactors), a 120 gallon per minute methanol recovery from bio stream, and a 40 gallon per minute methanol recovery from glycerin stream. There are eight 5,000 gallon stainless wash tanks with automated magnesium silicate delivery and high capacity horizontal filter press for final polishing. Keystone’s economics are competitive and process times are consistent with the industry. The facility contains 1,200,000 gallons of on-site, indoor flexible storage for feedstock, finished product, or co-products. There is also a full glycerin refinement line for acidulation and separation of glycerin/FOG.

EPA statistics show 2013 biodiesel production set a record of approximately 1.7 billion gallons, using an increasingly diverse mix of feedstock including recycled cooking oil, agricultural oils and animal fats. This is the third consecutive year the biodiesel industry has surpassed the 1 billion gallon mark. Pennsylvania has a statewide mandate that requires all diesel fuel sold to contain at least 2% biodiesel. As a result, Petroleum Products Corp (PPC) has constructed a massive biodiesel terminal system 7 miles from Keystone and 90% of the biodiesel sold to meet