$75M secured for KiOR; Is Mississippi the new leader in state-level biofuels development?

August 30, 2010 |

In Mississippi, the state legislature approved Governor Haley Barbour’s special session request for a $75 million loan to KiOR for a proposed development of five biofuel plants in Mississippi by the Houston-based pyrolysis group.

The state approved $51 million in new bonds to support a total of $81 million in incentives supporting the project, even as legislators question the viability of a process that has, to date, been proven only at pilot project levels.

$30 million was available from a previous state-level authorization.

The total package included $4 million in workforce training, and $2 million to Alcorn State University and Mississippi State University to develop methods to harvest and acquire additional feedstocks, such as corn stover, for biofuels production.

Overall, KiOR committed to invest a total of $500 million of its own funds towards its first three projects, including sites in the northern city of Columbus, in the center of the state in Newton County, and near the city of Bude in the struggling southwestern section of the state.

The Houston-based pyrolysis company has committed to constructing five plants in the state. The projects will create 1,000 direct and indirect jobs over a five-year period and will generate $85 million in incremental payroll for the state, according to KiOR. In addition, timber feedstock for the woodchip-based pyrolysis process will be acquired in the state.

A model for state-based development

California has been generally credited with being the national leader in renewable energy development and policies to support development of energy alternatives, but Mississippi has shown remarkable progress in advancing projects with Bluefire Ethanol, Enerkem and now KiOR in bringing business to the state.

Key elements from the company’s point of view: up to 15 percent in additional financing, a fast-moving legislature prodded by a governor calling in a special session, the prospect of swift-action on permitting at the proposed sites around the state, and tie-ins with local universities proving technology and feedstock R&D support.

Key elements for the state? Massive additional outside investment to supplement state funds – in this case, $500 million. A multi-project agenda of development. Feedstock acquisition requirements. In all, its a strong package of development opportunities for existing state business as well as the new KiOR venture.

Three in Mississippi

The KiOR news complements two other major projects aimed at utilizing Mississippi’s biomass resources.

In “Waste Makes Haste, we reported: “In December 2009, Enerkem was awarded US$50 million in funding by the U.S. Department of Energy for development of its planned Mississippi plant, a third project. Enerkem will build and operate the 300 ton-per-day biorefinery in Pontotoc, which will produce 20 Mgy of ethanol, as well as green chemicals, from sorted municipal solid waste and wood residues and will reduce the pressure to landfill. Enerkem signed a Memorandum of Intent for the supply of 189,000 tons of unsorted municipal solid waste per year, for use as feedstock, with the Three Rivers Solid Waste Management Authority of Mississippi.

Also, BlueFire Renewables, who we last profiled in “The Blue Phoenix“, submitted an application in February for a $250 million dollar loan guarantee for the company’s planned cellulosic ethanol biorefinery in Fulton. The Fulton plant is already a recipient of an award of up to $88 million from the DOE. BlueFire is in the detailed engineering phase and expects to have all necessary permits for its second commercial plant in Fulton, MS by this summer, putting the company on a path to commence construction by the end of 2010. These two planned facilities will create more than 1,000 construction jobs and, once in operation, more than 100 new operations and maintenance jobs.

Progress for pyrolysis and drop-in fuels

According to KiOR, “Renewable fuels that can be “dropped-in” to our country’s existing fuels infrastructure are generally viewed by government officials and researchers as one of the most viable and sustainable solutions to reducing our dependence on foreign oil in a cost effective and environmentally friendly manner.”

The White House Biofuels Interagency Working Group adds: ““Expansion of the biofuels industry should focus on advanced biofuels and direct substitute fuels that can leverage the existing American multitrillion-dollar liquid fuels infrastructure.”

The USDA’s Economic Research Service adds: “Developing the capacity to use multiple feedstocks and to produce bio-based fuels that are equivalent to fossil fuels that can be used in current vehicles without limit and distributed seamlessly in the existing transportation sector may become the least risky business model to pursue.”

More about KiOR

The company combines a proprietary catalyst system with a biomass-to-renewable crude oil conversion technology based on Fluid Catalytic Cracking (FCC), a proven process technology which has been used in the oil refining industry for decades.

The company has published an animation of its process, here.

Pyrolysis risks, scale, and business model

According to KiOR, the company’s commercial facilities will be constructed in modules at central locations, and installed where biomass is grown. KiOR expects its modular facilities will require significantly lower capital costs compared to other biofuel technologies and can be built and operating quickly to meet growing demand. The company expects its minimum efficient size to be significantly smaller than that of other alternative fuel technologies. Many competing technologies require significantly greater amounts of feedstock to run a minimum economically efficient plant.

The company points to lower operating costs due to the maturity of catalytic cracking technology, and the fact that  the process generates enough heat and electricity to be self-sufficient allowing for significant utility cost savings. The company has

More on KiOR

KiOR is testing the commercial viability of its process at its demonstration-scale Facility located near Houston, Texas.  The facility is a 400 time scale-up from KiOR’s Pilot Plant and is producing up to 15 barrels of renewable crude per day from woodchips.

Finance

Last month,  KiOR announced that it has raised $110 million in its latest round, and said that it is producing 229,000 gpy at its Houston-based pilot plant. The company’s pyrolysis-based technology is producing biocrude from wood and agricultural waste residues, which can be upgraded into a drop-in replacement fuel. The company is a JV between Khosla Ventures and the Dutch biofuels pioneer BIOeCON.

Recognition

In May, KiOR was named to the TiE50 as a top startup of 2010, by TiE, a global, not-for-profit, organization dedicated to fostering entrepreneurs, and sponsored by top venture capital, legal and accounting firms and Fortune 500 corporations.

In all, 3,747 companies were nominated, and 287 finalists had been announced, with 10 cleantech sector companies in all receiving recognition in the top 50. 96,718 votes were cast in the public voting.

More on Pyrolysis

One of the surprisingly popular storyline this year has been the rise of pyrolysis as a commercial biofuels technology. An August profile of Anellotech drew the largest readership of all of the pyrolysis and biocrude stories this year , but stories like Pyromaniax would draw big numbers throughout the year . Pyromaniax, in particular, forcused on the development of pyrolysis technology at Mississippi State University’s SERC center.

Along with Envergent — a joint venture of UOP and Ensyn — and Dynamotive, the SERC and KiOR projects are at the forefront of a remarkable resurgence of pyrolysis over the past few years as an advanced biofuels processing technology aimed at drop-in renewable fuels. SERC’s advantages — high yield and an end-to-end process for creating biooil from forest products via pyrolysis, then upgrading bio-oil to drop-in renewable fuels via hydroprocessing to add more hydrogen.

Overall, Pyromaniax detailed 18 pyrolysis projects of note, while BTG Bioliquids is a newer addition to the list, developing an integrated biorefinery project in the Netherlands showcasing pyrolysis technology.

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