USDA gives ZeaChem conditional commitment on $232M loan guarantee

January 27, 2012 |

ZeaChem's integrated biorefinery site in Boardman, Oregon

In Colorado, Zeachem has received a conditional commitment for a $232.5 million loan guarantee from the U.S. Department of Agriculture’s 9003 Biorefinery Assistance Program.

The total project cost for the 25 million gallon per year biorefinery is estimated to be $390.5 million, and the remainder of the project cost will be covered through equity contributions by ZeaChem and its investment group. The facility is located adjacent to ZeaChem’s 250,000 GPY integrated demonstration biorefinery at the Port of Morrow in Boardman, Ore.

In a statement released yesterday, ZeaChem president and CEO Jim Imbler called the award “a significant validation for ZeaChem’s highly efficient, economical and flexible biorefinery technology.”

ZeaChem’s integrated biorefinery

Development of the first commercial biorefinery is already underway. The facility is expected to have capacity of 25 million or more GPY, and is expected to be competitive, upon completion, with $50 oil, with a targeted $1.96 operating cost per gallon.

Projected to be operational by late 2014, the biorefinery will create 65 jobs while supporting another 38 jobs with the parent company, plus 242 indirect jobs. Under the conditional commitment, ZeaChem must meet specified conditions before the 60 percent loan guarantee can be completed, and must also source the loan. Currently, Silicon Valley Bank is the bank of record for the project.

Located in the northeast part of the state, the biorefinery will use high-yield cellulosic fermentation technology to produce advanced biofuels (cellulosic ethanol and other biofuels). An estimated 51 percent or more of the biorefinery’s output will be advanced biofuel, and the remainder will be high-value biobased chemicals, such as acetic acid and ethyl acetate.

The feedstock will consist of approximately 30 percent agricultural residue, such as wheat straw and corn stover, and 70 percent woody biomass from a local hybrid poplar farm. This poplar biomass carries a Forest Sustainability Council (FSC) certification, giving this cellulosic ethanol project particular merit as a model of environmentally-responsible, sustainable feedstock dependence.

A second USDA loan guarantee this month

The ZeaChem announcement is the second guaranteed loan under the Biorefinery Assistance Program (Sec. 9003 of the 2008 Farm Bill) to be made by USDA this month. Last week Secretary Vilsack announced that USDA funding will be used to construct a 55,000 square foot facility near Cedar Rapids, Iowa that will produce cellulosic ethanol by converting municipal solid waste and other industrial pulps into advanced biofuels, in addition to production of conventional renewable biofuel derived from seed corn waste.

Reaction from USDA

“In his State of the Union address, President Obama outlined his vision for a new era for American energy—an economy fueled by homegrown and alternative energy sources that will be designed and produced by American workers,” said Vilsack. “This project and others like it will help to establish a domestic advanced biofuels industry that will create jobs here at home and open new markets in the Pacific Northwest and across America.”

Reaction from the Advanced Ethanol Council

“This is a very exciting and innovative project and we are very pleased to see ZeaChem moving into the commercial stages of cellulosic ethanol production,” said Brooke Coleman, Executive Director of the Advanced Ethanol Council (AEC). “The advanced and cellulosic ethanol industry is breaking through in a challenging financial climate, which speaks to the evolution of the technology and the value proposition offered by the most innovative liquid fuel and chemical producers in the world.”

“Secretary Vilsack and the USDA clearly understand the urgency with which this country needs to develop cleaner and more secure sources of energy,” added Coleman. “These programs and USDA’s leadership are critical to our efforts to develop the advanced ethanol industry and ensure that the U.S. emerges as the global leader in the development of advanced biofuels and bio-products.”

Reaction from BIO

BIO President & CEO Jim Greenwood stated, “Companies are making significant investments and progress toward commercialization of technology for advanced biofuels. ZeaChem is investing $390.5 million to build an advanced biorefinery that will generate 188 construction jobs, 65 full-time operations jobs, plus an additional 242 indirect jobs in the rural community of Boardman, Ore. This progress follows the recent completion of a demonstration facility in the same community that I had the privilege to tour.”

Brent Erickson, executive vice president of BIO’s Industrial & Environmental Section, added, “BIO also applauds the USDA for assisting advanced biofuel companies attract necessary capital to commercialize technologies that meet the goals of the Renewable Fuel Standard. For companies with pioneering technology, these public-private programs are a necessary and vital tool. Producing advanced biofuels from new sources of woody biomass and crop residues will make a substantial contribution to U.S. energy security and economic growth in the near term and create a sustainable energy future.”

Related news: The pre-treatment technology

In related news, Andritz noted that it is collaborating with ZeaChem on the production of cellulosic biofuels and bio-based chemicals by providing the technology for a continuous biomass pre-treatment pilot plant.  The ANDRITZ technology will be used to convert various cellulosic feedstocks, including poplar trees and agricultural residues, into low-cost sugars. These cellulosic sugars will be used by ZeaChem to enable the production of sustainable and economical advanced biofuels and bio-based chemicals. The pilot plant system includes an ANDRITZ cooking reactor with continuous steam explosion technology.

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