SOPERTON, GA -- Range Fuels Inc.'s factory, intended to produce ethanol from wood chips to help decrease U.S. dependence on foreign oil, is being forced to liquidate its assets after defaulting on a government loan, according to Bloomberg News.

The company's original investor's including Khosla Ventures, a venture capital firm launched by Sun Microsystems' co-founder Vinod Khosla, closed the plant in January as it struggled to meet its production targets. By that time the company had spent approximately $320 million on the project, half of it in loans from the Department of Energy (DOE) and Department of Agriculture (USDA). 

Before shutting down, the Range Fuels plant produced about 100,000 gallons of cellulosic ethanol from Georgia pine waste. This was a drop in the bucket of the 20-million-gallon goal that the company had set to achieve by then. The plant reportedly had the capacity to produce 100 million gallons of cellulosic ethanol each year. It was designed to be the first of a dozen such plants to be built in Georgia.

Adding to the company's troubles, the plant resorted to the production of  cellulosic methanol using non-wood biomass, which the U.S. Environmental Protection Agency does classify as meeting federal biofuel targets. The DOE suspended its contract with Range Fuels in August.

The USDA told Bloomberg News that a foreclosure sale of the Range Fuels' plant is scheduled for Jan. 3, 2012.