Heat Death: Joule Unlimited collapses as oil prices flag, time passes, pressure mounts

July 18, 2017 |

One of the more striking outcomes from the DOE Bioeconomy 2017 conference in Washington DC was confirmation of the demise of Joule Unlimited. “We had a lot of prospects last year,” former CEO Brian Baynes told The Digest, “but those new investor prospects walked away, particularly post election. The insiders would have been happy to see this project go forward, but didn’t have an ability to go it alone given the amount of capital we needed. Baynes was responding to reports that the technology and the Hobbs, New Mexico pilot facility would be auctioned shortly.

Baynes clarified to The Digest that the cessation of development of Joule’s technology by its investor set would not have any direct impact on Red Rock Biofuels, which was acquired by Joule and continues to seek to finance its first commercial plant to make diesel and aviation fuels from wood residues, under the management of Jeff Matternech and Terry Kulesa.

The news from Joule closes out an extraordinary period of silence for a company that we once described as The Sultans of Stealth for their secretive approach to development. The news marks another victim of investor gloom over what is turning into a long-term depression in oil prices. West Texas Intermediate crude closed a notch above $46 at the end of last week, and has hit first-commercial advanced biofuel investments hard and renewable chemical investments even harder — despite the boom in diesel prices in the California market and in markets such as Oregon and British Columbia where low-carbon fuel developers are seeing bumper prices. Renewable diesel fuels have an implied price of more than $4.00 in US-based LCFS markets at the moment.

Joule’s solar process broke ground by using engineered photosynthetic bacteria as catalysts to directly produce and secrete targeted fuel molecules in a continuous, single-step conversion process. By design, the process requires no use of biomass feedstocks or agricultural land. Its main inputs of sunlight, waste CO2 and brackish or sea water make the process well suited for wide-ranging geographies.

Joule technology applied engineered biocatalysts to continuously convert waste CO2 directly into renewable fuels such as ethanol or hydrocarbons for diesel, jet fuel and gasoline.

Were the skeptics right?

At any industry gathering over the past 8 years, the room divided into passionate Joule supporters and deep skeptics. Does the news from Joule mean that the technology was doomed, or that the timing was flawed?

“Obviously this is a totally novel process,” Joule EVP Tom Einar Jensen once told The Digest. “And, we’re claiming to be very efficient in this process, and it is understandably hard to wrap your head around the idea until you see it work in practice. Also, there are companies including Joule that have claimed productivity levels and timelines that haven’t materialized. If you have provided promises on timelines and haven’t delivered, you have to show what stands up to scrutiny.”

“And when it comes to demonstration and visibility, Joule has been inactive on the communications front and is just now resurfacing. We have to accept the fact that people will ask tough questions and we have to have answers for that.”

The Joule backstory

Joule last appeared on the news radar in April 2016 when we reported that the company obtained EPA approval of Joule’s Sunflow-E ethanol pathway for generating advanced biofuel (D-code 5) RINs under the Clean Air Act (CAA). This recognition from the EPA validates Joule’s mission to create carbon-neutral fuels for a sustainable tomorrow, and follows the 2015 announcement that Joule’s Sunflow-E ethanol was registered by the EPA for commercial use. In the EPA’s analysis, Joule’s Sunflow-E was found to reduce lifecycle GHG emissions by a whopping 85 percent, significantly above the required threshold.

One continuing quest for Joule had been obtaining low-cost, clean CO2 for its process that created ethanol. diesel and jet fuel from CO2 and water. We last reported an update on CO2 acquisition efforts in December 2015 when Joule and HeidelbergCement announced a partnership designed to explore application of Joule’s technology to mitigate carbon emissions in cement manufacturing — and opened up the possibility of co-locating a Joule plant at a Heidelberg site.

 

The Joule-RedRock merger — now, unmerged

In November 2015, we reported that Joule and Red Rock merged — always, an odd marriage of convenience. The technologies had similar end goals in renewable diesel and jet fuel, but wildly different approaches (Red Rock, based in gasification and the Fisher-Tropsch process, while Joule was fermentation-based and used cyanobacteria).

2014-15: Turbulence at the top

It was rocky at Joule in 2014 and 2015 when oil prices started their plunge, Despite a $40 million capital raise as the company pivoted towards commercialization, the company went through four CEOs in less than two years and laid off as many as 40 people in Massachusetts and 20 in New Mexico in 2015. Baynes, a long-time partner at Flagship succeeded Serge Tchuruk, who in turn replaced Paul Snaith. Snaith has briefly succeeded longtime CEO Bill Sims  More on that 2014 transition here.

The key patent

Apparently on the market now is Joule’s key patent, won in 2015 — which you can read about here.

U.S. Patent #9,034,629 covered both the cyanobacterium and the process for directly converting CO2 into medium-chain alkanes, which are the molecular basis of diesel, jet fuel and gasoline. By the way, here it is, that patent.

Joule’s technology, visualized

The Digest’s Visual Guide is here, looking at Joule’s underlying technology.

Your Joule Guide: Liquid Fuel from the Sun

The Digest’s 2016 Multi-Slide Guide is here.

The Digest’s 2015 5-Minute Guide is here.

The Bottom Line

An auction effort is underway for the Hobbs facility which appears to have been idle for some time — though dates and times and process are not known; the auction may only attract scrap value, since it is likely in this phase to cover only the site and not the technology. We’ll have to see what value comes out of that.

We expect to see a few more companies finding themselves trapped in the Valley of Death during this cycle of low commodity prices, unable to attract the financing for a commercial-scale plant despite striking advances in technology — in many cases.

For many companies it is a matter of rate, titer and yield — but for others, we see the problem not in the metrics but in the large checks associated with first commercials, and debt providers continuing to sit on their wallets with respect to first commercial projects — making the returns too slight to tempt equity to step forward into the breach.

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