RAPID CITY, SD--(Marketwire - Jun 26, 2012) -  KL Energy Corporation ("KLE") (OTCQX: [ KLEG ]) (PINKSHEETS: [ KLEG ]) today announced that part of the ethanol produced in its US demonstration plant in 2011 has been successfully tested by Petrobras SA ("Petrobras") in a large-scale trial in Brazil.

During the Rio+20 Conference, a United Nations-sponsored international meeting on sustainable development, Petrobras used the second-generation ethanol to fuel a dedicated minivan fleet servicing the Rio+20 event.

The ethanol was produced from sugarcane bagasse in KLE's demonstration plant in the US in 2011 as part of the Joint Development Program with Petrobras. Since then, the demonstration plant has been retrofitted and is presently producing more ethanol from bagasse.

Following up on the successful industrial trials, KLE is now engineering its first commercial plant designed especially for the integration with Brazilian sugarcane mills.

The president of Petrobras Biocombustível, Miguel Rossetto, who presented the technology at the trade booth, said the mission of Petrobras is to be a major energy company and technological innovator. "Producing ethanol from waste is an achievement. It means more energy with the same acreage. This is a technology that preserves natural resources. Applying this technology of second generation ethanol, Petrobras has already produced 80,000 liters of ethanol in a second generation demonstration plant located in the United States. Research has been conducted by the Research Center of Petrobras (Cenpes) since 2004, in partnership with scientific institutions and technology companies nationally and internationally, achieving yields of 300 liters of ethanol per ton of dry bagasse. One partner is KL Energy Corporation owner of the demo plant unit adapted jointly with researchers from Petrobras to test the technology that fueled the minivans during Rio+20."

KLE's President and Chief Executive Officer, Peter Gross commented: "This is the result of a very successful partnership initiated in August 2010. We take pride in having supported Petrobras in the globally first production of fuel ethanol from sugarcane bagasse. While we continue optimizing the technology jointly with Petrobras, we will initiate the commercial deployment in the Brazilian sugarcane industry."

More information and images of the Rio+20 test fleet are available on:
[ www.klenergycorp.com ] and [ www.tecnologiaetanol2g.com.br ]

About the Rio+20 Conference

At the Rio+20 Conference, world leaders, along with thousands of participants from governments, the private sector, NGOs and other groups, will come together to shape how we can reduce poverty, advance social equity and ensure environmental protection on an ever more crowded planet to get to the future we want. The United Nations Conference on Sustainable Development (UNCSD) took place in Brazil on 20-22 June 2012 to mark the 20th anniversary of the 1992 United Nations Conference on Environment and Development (UNCED), in Rio de Janeiro, and the 10th anniversary of the 2002 World Summit on Sustainable Development (WSSD) in Johannesburg.

About Petrobras

Petrobras is a major integrated oil, gas, and energy company operating in the following segments of the industry: exploration and production; downstream, marketing, transportation and petrochemicals; distribution; natural gas, energy and biofuels. Established in 1953 as Brazil's National Oil Company, Petrobras today is a publicly traded company whose principal operations are still in Brazil, but where it now competes under an open and competitive regulatory framework. Recognized by its massive resource base and its global leadership in deep and ultra-deep water exploration, Petrobras is now one of the world's ten largest companies by market capitalization. The company operates in all five continents and in 29 countries. The company has also activities in renewable energies, especially in biofuels, for which Petrobras established a subsidiary company, Petrobras Biofuel.
[ http://www.petrobras.com.br/en/ ]

About KL Energy Corporation

KL Energy Corporation develops and commercializes technology to convert biomass into ethanol, fermentable sugars and lignin. KLE operates a demonstration plant with a production capacity of up to 10,000 liter of fuel spec anhydrous ethanol per day. Since 2010, the company has focused on optimizing its technology for sugarcane bagasse feedstock working in close cooperation with Petrobras. KLE has developed a process technology designed especially for integration with Brazilian sugarcane mills, which it is commercializing in the form of a pre-engineered and ready-to-implement plant.
[ www.klenergycorp.com ]