Velocys pivots from “FT tech co” to “renewable fuels company”, eyes California

In the UK, Velocys CEO David Pummell said that “Our new strategy is for Velocys to be at the heart of building plants that convert woody biomass to high specification renewable diesel and jet fuel for the US market, our primary focus market. We have a world class, proven technology and highly skilled operations and engineering teams that, with our partners, will successfully design, build, commission and start up these commercial plants. Our route to the production of renewable fuels from woody biomass uses cost effective, abundant and entirely sustainable feedstock, allowing our solution to be highly scalable to meet the increased demand for renewable fuels. All of this contributes to our differentiated value proposition to the market”.

His remarks came as the company confirmed that Fischer-Tropsch product is being produced at its ENVIA project and that operational data from the FT units meet the set performance requirements at commercial scale. Production of first saleable product is expected shortly and ENVIA will continue to ramp up production to full capacity over the coming months.

“The US renewable fuels market is a high value market with substantial potential for volume growth, now, and for many years to come. The estimated consumption of renewable diesel in California in 2016 was around 300 million gallons. By 2030 around 1 billion gallons of the total diesel supply would need to come from renewable diesel to meet State obligations. Increasing pressure from public opinion and legislation to curb greenhouse gas emissions and reduce pollution drives this market. This has led to long term structural incentives for renewable fuels in the form of fuel credits at both federal and state level, greatly enhancing the revenues from a Velocys plant. Successful delivery of the Velocys strategy will result in the construction of multiple plants, to meet this fundamental need to replace fossil fuels.

Velocys pointed to strong momentum, including engaging IHI E&C to carry out the pre-FEED engineering study for our first biomass-to-liquids (plant and selecting TRI as our strategic partner for gasification technology  Meanhile, thecompany is pursuing a Phase 2 of a USDA  loan guarantee programme for up to $200 million of debt for its first BTL plant. Sumitomo Mitsui Banking Corporation will be the lender of record and lead the syndication of the debt funding portion in 2018. All these carefully planned initiatives have the aim of securing project equity funding and reaching final investment decision during the course of 2018.

Pummel said, “The Company is transforming – moving away from being ‘a FT technology company’ to being Velocys, ‘the renewable fuels company’. The time is now right for Velocys to take forward a bold growth strategy and I am confident that we are the right company, with the right technology, at the right time to enter this attractive market and deliver sustainable growth.”