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President Clinton Proposes New Sulfur Specifications for Gasoline

6 May 1999

President Clinton Proposes New Sulfur Specifications for Gasoline - Energy BioSystems' Biodesulfurization Technology Ideally Positioned to Help Industry Meet New Standards

    THE WOODLANDS, Texas, May 6 -- Newly proposed sulfur
specifications for gasoline that provide a significant opportunity to
implement Energy BioSystems' proprietary biodesulfurization
technology have been announced by the Clinton Administration.
    On Saturday, May 1, 1999, President Clinton personally announced newly
proposed federal standards for sulfur levels in gasoline that promise to allow
automobiles to run 80 percent cleaner.  The tough new specifications call for
30 parts per million sulfur in gasoline, down from the current average of
340 parts per million.  The U.S. Environmental Protection Agency (EPA)
estimates that this reduction in gasoline sulfur would be equivalent to
removing 166 million cars from the road, and would take 3 million tons of
pollution out of the air.  The plan would be phased in between 2004 and 2006,
and about two dozen smaller refiners would be granted an additional two years
to meet the standard.
    Refiners argue that the cost may be too high to meet the new sulfur
standards.  The oil industry estimates that meeting the new sulfur targets
using existing technology will require more than $6 billion in new U.S.
refinery investment and add as much as 6 to 10 cents to a gallon of gasoline.
    Energy BioSystems believes it has a feasible solution with potential
benefits to both industry and the environment.  The Company is currently
developing its biocatalytic technology to desulfurize gasoline at a target
cost of 1 to 2 cents per gallon of gasoline, with a requirement for capital
investment that could be up to 50 percent less than would be required to
implement existing technology.  In addition to the cost advantages,
biodesulfurization technology offers the advantage of operating under milder
conditions, while consuming less energy and emitting fewer greenhouse gases
than existing technologies.
    The Company is currently working on a $3 million dollar program to
complete the development of its gasoline biodesulfurization technology.  This
program is funded 80 percent by the U.S. Department of Energy, and oversight
is provided by a committee of the Coordinating Research Council, with members
representing both the auto and oil industries.  "The development of our
proprietary technology clearly has been recognized as a win-win for both
government and industry," stated Dr. Peter P. Policastro, Chief Operating
Officer, "as biodesulfurization has the potential to produce the desired low-
sulfur fuels at substantially lower cost and with much less impact on the
environment compared to traditional technologies."
    The EPA has also indicated that it will "put forward shortly" a proposal
for cleaner diesel fuel.  Similar sulfur standards for diesel fuel will be
much more difficult to reach using conventional technology, while
biodesulfurization offers the same advantages for diesel fuel as for gasoline.
Energy BioSystems has already licensed its first unit for diesel fuel
biodesulfurization to Petro Star Inc., a subsidiary of Arctic Slope Regional
Corporation, for their Valdez, Alaska refinery.
    Energy BioSystems Corporation, of Houston, is developing and
commercializing biotechnology-based processes for the petroleum refining and
production industries.  The company's focus to date has been on developing
biocatalytic desulfurization, a proprietary process involving the use of
enzymes to remove sulfur from petroleum, including gasoline, diesel, and heavy
and crude oils, while operating at mild temperature and pressure.  The Company
is also pursuing opportunities to apply the principles of biocatalysis to the
chemical industry, initially by developing a line of organo-sulfur products
that are derived from its biodesulfurization process.  Additional information
about Energy BioSystems is available at the company's web site:
http://www.energybiosystems.com.
    This document contains forward-looking statements that are subject to
certain risks, uncertainties and assumptions, including but not limited to,
the Company's need for additional funds, the ability to raise sufficient funds
on acceptable terms, its history of operating issues, the technical
uncertainty and risks associated with commercialization of the Company's
technology, the Company's reliance on environmental regulations and the
uncertainty of the adoption of any newly proposed regulations, the market
acceptance of the Company's technology, the Company's dependence on
collaboration partners, competition, and the ability to enforce and defend the
Company's patents and proprietary technologies.  Should one or more of such
risks and uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those indicated in such
forward-looking statements.  For a discussion of such risks and assumptions,
see "Risk Factors" included in the Company's annual report or Form 10-K for
the year ended December 31, 1998.