Nova, ConAgra in biodiesel sales agreement

Houston-based Nova Biosource Fuels (AMEX: NBF) said today it signed a biodiesel sales agreement for ConAgra Trade Group to market and sell fuel and manage logistics for Nova at a Mississippi refinery.

ConAgra Trade is a unit of Omaha food giant ConAgra Foods (NYSE: CAG).

The 20 million gallon per year biodiesel refinery, designed and constructed by Nova, is owned by Scott Petroleum.

Nova has contractual rights to obtain 50 percent of the biodiesel and glycerin production from the refinery at a specified cost.

Financial terms of the that deal and the ConAgra agreement were not disclosed.

Nova said ConAgra will also be working with Scott Petroleum to assist in procuring some feedstock requirements, primarily animal fats and waste products.

The refinery, located on the Mississippi River, is scheduled to start production of biodiesel in September.

Nova previously designed and built a 10 million gallon per year biodiesel refinery owned by Clinton County Bio Energy in Clinton, Iowa.

Nova said the Clinton refinery has produced in excess of 4 million gallons of biodiesel from soy oil.

The company said it's also is in the process of commissioning a 20 million gallon per year biodiesel refinery in Deforest, Wis. for Sanimax.

The Sanimax has produced over 2 million gallons of biodiesel from multiple feedstocks, according to Nova.

In addition, Nova said it expects a 60 million gallon per year biodiesel refinery in Seneca, Ill. will be ready to start operations by the end of 2007.

ConAgra has agreed to market the fuel and manage logistics for Nova at that refinery as well.