SOURCE: BlueFire Ethanols

December 23, 2008 08:30 ET

BlueFire Issues Annual Letter to the Shareholders

IRVINE, CA--(Marketwire - December 23, 2008) - BlueFire Ethanol Fuels, Inc. (OTCBB: BFRE) CEO and President Arnold R. Klann issues the following letter to the company's shareholders:

Dear Fellow Shareholders:

First, I would like to take this opportunity to wish you and yours a Merry Christmas, Happy Hanukkah and a very Happy New Year.

This 2008 year end review is to provide you with an update and perspective on the progress of BlueFire as we position the company as a successful, sustainable and dynamic cellulose-to-ethanol company in what has quickly become a very difficult market.

BlueFire is currently focused on developing and building two facilities. The first project, BlueFire Ethanol Lancaster, LLC ("Lancaster Project"), has been in the licensing phase for nearly 18 months. As previously announced, the Los Angeles County Planning Commission issued a Conditional Use Permit for the Lancaster Project in July. However, a subsequent appeal of the county decision, which BlueFire overcame, combined with the waiting period under the California Environmental Quality Act, pushed the effective date of the now non-appealable permit approval to December 12, 2008. Due to this permitting delay and recent capital market decline, BlueFire will be unable to break ground before the end of the year.

During this permitting process, estimated total project costs grew above the previously estimated price to approximately $100 Million. This was due in part to a combination of significant increases in materials costs on the world market and the complexity of our first commercial deployment. In recent weeks, prices for materials have started to decline and we expect, by the end of the first quarter of 2009, items like structural and specialty steel will decline in price by 25% to 30%, and other materials should follow suit.

The uncertainties of the world credit markets have also caused a delay in the financing we need to enable placement of equipment orders for the construction and which would allow us to achieve a sustainable construction schedule after breaking ground. Hence, to insure a timely and continuous construction of the project, BlueFire's board of directors determined it is prudent to delay Lancaster's groundbreaking until all the necessary funds are in place. Project activities have advanced to a point that once credit is available, orders can be immediately placed and construction started. We remain optimistic in being able to raise the additional capital necessary after the new federal administration is in place and the capital markets normalize.

Early in the year, BlueFire undertook a Commercial Scale-up Program (CSP) that united the process design in order to validate actual feedstock input from the landfill and its conversion into ethanol. As a result of the CSP and subsequent efforts during the delay of the permitting process, the projected output of Lancaster increased from approximately 2.5 million gallons to about 3.7 million gallons per year.

Over the coming months BlueFire will continue to make enhancements to its already robust technology, targeting improvements in sulfuric acid concentration and distillation/dehydration efficiencies.

The cellulosic sugars produced by BlueFire's concentrated acid hydrolysis process provide renewable and sustainable raw materials for fermentation or other conversions to fuels. So, BlueFire has been forging relationships with various fermentation technology providers for the production of other transportation fuels, including bio-butanol, bio-diesel and bio-gasoline.

Our second major development project, BlueFire Mecca, LLC, is progressing in both permitting and design activities. BlueFire has been drawing down on the $40 million DOE award which helps fund this project.

BlueFire is optimistic the new administration's stated commitment to developing alternative fuels will sustain the growth of the cellulosic ethanol industry. Loan guarantee programs and other similar credit enhancements would be particularly helpful in this current financial market for further commercialization for the industry as a whole. BlueFire was one of 16 finalists chosen for a Department of Energy Loan Guarantee for its third project, but due to current credit markets BlueFire chose to forego this round of submissions under the DOE Loan Guarantee but will pursue future opportunities from both the USDA and DOE.

Additionally, on December 22, the DOE announced a new solicitation for further grants to demonstrate alternative products production that BlueFire, in conjunction with another fermentation company, may pursue.

We expect 2009 to be a dynamic year for BlueFire, with plants anticipated to be in construction and many new opportunities pursued. The recently announced consulting agreement for South Korea is but one example of the many opportunities in our pipeline. This includes opportunities in the Middle East.

As we end 2008, we need to remember many people are hurting by this recession. I would ask us all to turn our hearts to one another to help sustain and create new ways of supporting one another. I encourage everyone to help a neighbor who may have lost their job or the homeless person who has no one else. Reach out and help and feel the Real Power of the season.

Sincerely,

Arnold R. Klann
President and CEO
BlueFire Ethanol Fuels, Inc.

About BlueFire Ethanol Fuels

BlueFire Ethanol Fuels, Inc. was established to deploy a patented Concentrated Acid Hydrolysis Technology Process for the conversion of cellulosic ("Green Waste") waste materials to ethanol, a viable alternative to gasoline. BlueFire's technology has demonstrated production of ethanol from urban trash (post-sorted MSW), rice and wheat straws, wood waste and other agricultural residues.

BlueFire is one of four ethanol companies awarded funding from the U.S. Department of Energy to construct a commercial scale cellulosic ethanol production facility. Its biorefineries will be located in markets with the highest demand for renewable transportation fuels thereby dramatically reducing delivery costs and increasing the biofuels supply, while providing a unique waste processing technology that helps cities better manage the problem of overflowing landfills. For more information, go to www.BlueFireEthanol.com.

If you would like to receive regular updates on BlueFire Ethanol, please select this following link: http://www.b2i.us/irpass.asp?BzID=1437&to=ea&s=0.

Forward-Looking Statements

Statements about BlueFire Ethanol, Inc.'s expectations, including future revenues and earnings, and all other statements in this press release other than historical facts are "forward-looking statements" within the meaning of section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and as the term is defined in the Private Litigation Reform Act of 1995. BlueFire's actual results could differ materially from expected results. BlueFire undertakes no obligation to update forward-looking statements to reflect subsequently occurring events or circumstances. Should events occur which materially affect any comments made within this press release; BlueFire will appropriately inform the public.

Contact Information

  • Company contact:
    Rigel Stone
    BlueFire Ethanol Fuels, Inc.
    Email Contact
    949.588.3767, ext. 404

    Investor Contact:
    Scott Kitcher or Ron Both
    Liolios Group, Inc.
    Email Contact
    949.574.3860

    Media Contact:
    Laura Finlayson
    Avalanche Strategic Communications
    Email Contact
    201.488.0049