Sugar Shock: Sweetwater, Naturally Scientific ink $250M pact for biobased sugars

The end-goal? High-value oils.  Low-cost sugars become shock troops in the war for sustainability.

In New York, we’ve learned that Sweetwater Energy will announce a project today to provide Naturally Scientific with customized industrial sugars over the course of 15 years in a transaction valued at $250 million.

Sweetwater will use its patented, decentralized process to convert locally available cellulosic material, such as crop residues, energy crops, and wood waste into sugar, which Naturally Scientific will utilize to process into high-value vegetable oils in the United States.

Sweetwater will use its patented, hub-and-spoke process to convert locally available cellulosic, non-food biomass, such as crop residues, energy crops, and woody biomass into highly fermentable sugar, The company’s sugar solution is sold to refineries, which use it to produce biofuels, biochemicals, and bioplastics. Unlike petroleum-based technologies, Sweetwater Energy’s process uses renewable plant materials that are both grown domestically and significantly reduce greenhouse gas emissions.

Sweetwater on the move

It’s the third landmark deal for Sweetwater, it’s biggest to date, and the first outside of the corn ethanol corridor.

Back in January, Sweetwater Energy announced a 15-year commercial agreement with Colorado-based Front Range Energy, to supply renewable sugars for up to 3.6 million gallons of cellulosic ethanol per year during the initial phase of the relationship at Front Range’s current corn-ethanol facility. The agreement has a total potential value in excess of $100 million, and requires a minimal capital outlay by Front Range while stabilizing the company’s feedstock costs.

Earlier in January, Sweetwater annoucned a project to build, own and operate a cellulosic sugars facility dedicated to supplying cellulosic feedstock to Ace Ethanol. Pre-permitting work has already started up, and construction of a first cellulosic sugars facility is expected to be completed by mid-2014. The initial project delivers enough refined monomeric sugar for Ace to produce up to 3.6 million gallons of cellulosic ethanol per year. It’s a 16-year deal for this phase of the relationship, with a total deal value of up to $100 million – or around $1.73 per gallon of ethanol.

Reaction from Sweetwater

“This agreement shows how Sweetwater’s sugar is an ideal feedstock—not just for biofuel production, but also ideal for biochemicals,” says Arunas Chesonis, Chairman and CEO of Sweetwater Energy. “Naturally Scientific’s innovative oil technology meshes amazingly well with Sweetwater’s. We’re looking forward to helping Naturally Scientific expand new markets for bio-based oils.”

The capacity

“It’s very exciting to be an early adopter of Sweetwater’s technology,” says Geoff Dixon, CEO of Naturally Scientific. “We’ll be accepting in excess of 50,000 tons of cellulosic sugar annually, which adds a new, greener dimension to the oils we produce.”

The location

Naturally Scientific is in active discussions with several municipalities in the eastern United States to determine where to locate their facility. Sweetwater will place its cellulosic facilities near the Naturally Scientific site and will deliver clarified sugars directly to Naturally Scientific.
Florida, New York and New Jersey are among the competitors — access to feedstock and to low-cost, high-value infrastructure being two factors in that decision.

More about Naturally Scientific

Now here’s an intriguing company, we first learned about in 2009. Back then, we observed in “Drop In, Tune Out, Turn On”: From corn to soy and over to advanced, high-yield feedstocks like algae, we kill the biomass to harvest the energy. The exceptions are the harvestable large oilseed crops like jatropha and palm, but new continuous harvest options for algae are under development at Iowa State, Ames Lab as well as companies like Naturally Scientific and Catilin.

We observed in “7 Paths of the New Agriculture” We wrote: “Then, there’s plant cell culturing. Naturally Scientific is using this process, and waste CO2, to bio-manufacture fermentable sugars and pure vegetable oil (PVO) from plant cell cultures. In the first stage waste CO2, water (either fresh or salt) and light are combined in a photosynthetic reaction to produce sugars (Sucrose and Glucose). This natural sugar can be sold in either crystalline or syrup form, or alternatively used in the second stage of the Naturally Scientific process. This stage converts these sugars to produce pure vegetable oils (PVO) and their derivatives.”

We also looked at the company is “No Kill Farming“, where we asked: Does continuous harvest, and direct production from CO2 and water, offer a transformative, no-kill way to improve the carbon and dollar economics of biofuels? Can the dairy model work?

Naturally Scientific has constructed a demonstration plant in Nottingham, UK, that uses full-sized equipment that proves the technology, automated process control systems, yields and unit economics at a commercial scale.

The bottom line

We’re not sure which part of this announcement is more important — Naturally Scientific’s imminent expansion to the US, or the third and biggest deal to date for Sweetwater. They’re both big shakers on the biobased Richter scale. And it’s more evidence that unlocking streams of sustainable, scaleable, low-costs sugars will be critical to making important technologies like no-kill farming a reality.