Fulcrum BioEnergy: Biofuels Digest’s 2014 5-Minute Guide

March 17, 2014 |

Fulcrum design, develop, own and will operate facilities that convert sorted, post-recycled municipal solid waste, or MSW, into ethanol. Fulcrum have entered into long-term, fixed, zero-cost MSW feedstock agreements which will provide us with a significant competitive advantage over companies using alternative feedstocks for the production of biofuel. their proprietary process, built around numerous commercial systems available today, has been tested, demonstrated and will be deployed on a commercial scale at facilities that Fulcrum will build, own and operate.

Fulcrum is ready to begin construction on their first commercial scale project, the Sierra BioFuels Plant (Sierra) located approximately 20 miles east of Reno, Nevada.

Rankings

50 Hottest Companies in Bioenergy: #28, 2013/14

The Situation

In November 2012, Fulcrum BioEnergy announced that it has successfully secured commitments and is proceeding toward closing $175 million in financing to fund construction of its first municipal solid waste to low-carbon fuels plant, the Sierra BioFuels Plant and to fund the development of future projects. The project is expected to be completed in 2015. $105 million of the $175 million is the USDA loan guarantee, which the company secured in a conditional commitment in August 2012.

The cost of production at future Fulcrum plants is now expected to be less than $0.50 per gallon, down from $0.70 per gallon as previously disclosed. Generally speaking, capex is amortized over 15 years by most close observers of the industry – and with that, the company is looking at $1.14 in capex and $0.75 for opex, or $1.89 per nameplate gallon of capacity on plant #1- well under the market price of ethanol. That compares to $2.01 per nameplate gallon, last year at the time of the Series C financing, when the figures were projected at $120 million for capex and $1.25 per gallon for opex. For future plants, the company is projecting that costs will decline to $1.64 per gallon – and perhaps more, if there are economies of scale in capital expenditure, or reductions in the engineered cost as design redundancies are reduced after operation at scale.

Major Investors
Fulcrum is privately held and financed by US Renewables Group (USRG) and Rustic Canyon Partners (Rustic Canyon). USRG manages a portfolio of renewable power and clean-fuel assets, and Rustic Canyon is one of the largest venture capital firms based in Southern California.

Type of Technology(ies)
Fulcrum’s proprietary process converts MSW into ethanol. This process, built around numerous commercial systems available today, has been tested, demonstrated and will be deployed on a commercial scale at facilities that Fulcrum will build, own and operate. Fulcrum utilize sorted, post-recycled MSW and convert it into ethanol using a two-step thermochemical process that consists of gasification followed by alcohol synthesis.

Gasification System

Fulcrum’s gasification system is comprised of a down-draft partial oxidation gasifier, a Plasma Enhanced Melter (PEMTM) and a thermal residence chamber that Fulcrum have purchased from InEnTec. Fulcrum’s first plant, Sierra, will utilize three trains of this gasification system to convert the organic material in the MSW feedstock to a syngas consisting primarily of carbon monoxide, hydrogen and carbon dioxide.

Alcohol Synthesis Process
Fulcrum’s proprietary alcohol synthesis process incorporates a catalyst that was developed and is owned by Nipawin and SRC. The Nipawin/SRC catalyst is very similar to hydrotreating catalyst used in almost every refinery in the world. The catalyst contains no precious or rare earth metals and can be recycled by the catalyst manufacturer.

The technology of sub-$4 jet fuel

Biofuels DIgest: Tell us what you can about the technology solution.

Fulcrum CEO Jim Macias: We have a tubular reactor design. Probably not the most long term cost effective, but reliable and predictable, and that’s important now. So we have our MSW system, and our gasification technology and scrubbing systems, and then the FT process to produce jet fuel and diesel from the gas stream.

BD: That’s a remarkable size for F-T technology. Usually, those systems are built at massive scale to get the economies of scale needed. How is this different?

JM: But, let’s start with the cost issue. Our feedstock cost gives us the flexibility, and the operating cost margins. It’s a game changer. You’re right, the FT technology that’s out there is large-scale, and there have been efforts to scale it down. We took a fresh approach, rather than trying to scale down an existing system. For example, the tubular reactors rather than the slurry bed reactor. The other technology is tougher to scale up or down. We built full scale reactor tubes with all the heat and chemistry components, and then found some designs and technology for the fuel upgrading, to crack the FT liquids and turn it to distillate.

BD: Oxygen and hydrogen needs?

JM: We need oxygen for the gasification, but we have all the hydrogen we need for the fuel conversion with our existing technology and the gas stream. That’s made it easier to go multiple fuels, either ethanol alcohols or distillates, because we can precisely control the hydrogen ratio.

BD: So you have multiple fuel capabilities. How does it compare on cost to your ethanol process?

JM: The economics are very similar, in fact a little better. The front end of the plant – the MSW sorting,
gasification, and gas scrubbing are all the same. It’s different on on the FT process – little less costly, because the ethanol process requires higher pressures. We’ll produce at well less than a dollar a gallon for jet fuel, given our feedstock cost.

BD: That’s on the operating cost (opex) side. What about capex? You were at around $173 million for the first 10 million gallon ethanol project at Reno.

JM: It’s about the same. Less than 200 million for the 10 million gallon plant, and a little over 300 million for a 30 million gallon plant.

BD: Will you be able to produce any fuel at any plant, or will you put in specific technologies at a given project?

JM: For each plant you have to decide which of the different paths you’ll take, and go alcohol or distillate, because the economics aren’t there to do noth at a single small refinery. But you can have diesel or jet produced via the distillate route.

Feedstocks:
Fulcrum’s feedstock will consist primarily of the organic material found in MSW, which is currently being landfilled.

Products

Although Fulcrum’s main product for Sierra will be ethanol, the catalyst and their proprietary alcohol synthesis process provide us with the flexibility to produce other alcohols, such as methanol and propanol.

Product Cost 

Fulcrum believes Fulcrum can produce advanced biofuel at a production cost of approximately $1.30 per gallon at Sierra, a substantially lower cost per gallon than traditional fuels and other renewable biofuels. Fulcrum believe their production process will also generate sufficient electricity to operate their facilities, contributing to their lower production costs. The modular design of their technology will allow them to more efficiently construct future facilities with up to six times the production capacity of Sierra, which Fulcrum believe will lower their production costs below $1.00 per gallon.

Offtake partners

Fulcrum has entered into a three-year off-take agreement with Tenaska BioFuels, LLC for the full output of Sierra.

Past Milestones
• Completed construction and began operations of their TurningPoint Ethanol
Demonstration Plant to demonstrate their proprietary alcohol synthesis process utilizing a full-scale reactor identical to those that will be used at Sierra. To date, Fulcrum have successfully operated the demonstration plant for more than 8,000 hours.
• Entered into an EPC contract with Fluor for Sierra. Continued development efforts with the project and progressed to detailed engineering, with construction beginning by the end of 2011.
• Raised the equity capital needed for the construction of Sierra ($86 million).

In May and June 2013, the DoD announced that it would award four contracts totaling $20.1 million to Emerald Biofuels, Natures BioReserve, Fulcrum Biofuels, and Red Rock Biofuels forPhase 1 of the DPA Title III Avanced Drop-in Biofuels Production Project, which includes front end engineering and designing, permitting, and development of detailed business cases.

Future Milestones
• Complete construction and commence commercial operations of Sierra, their first
waste-to-biofuels facility.
• Develop and bring to construction at least two additional, larger waste-to-biofuels facilities in the U.S.
• Continue development efforts on 15+ additional project opportunities throughout out U.S. when once completed, along with the other projects mentioned above, will produce more than 700 million gallons of advanced biofuels each year.

Business Model:

Developer/Owner/Operator

Competitive Edge(s):

Fulcrum’s production facilities will provide numerous social and environmental benefits. By providing a reliable source of domestic renewable transportation fuels, their facilities will be helping the United States reduce its dependence on foreign oil. In addition, Fulcrum expect their process will reduce GHG emissions by more than 75% compared to traditional gasoline production.

Other competitive strengths include:

Feedstock Economics: Fulcrum have entered into long-term, zero-cost contracts for enough MSW located throughout the United States to produce more than 700 million gallons of ethanol per year. their stable cost structure, based on long- term zero-cost MSW feedstock arrangements, will allow us to enter into fixed-price off-take contracts or hedges to secure attractive unit economics.

Infrastructure. By using MSW, Fulcrum benefit from existing infrastructure for collection, hauling and handling. No new logistical networks would be required to transport the feedstock to their facilities.

Technology: Fulcrum have licensed and purchased the gasification system from a third party. their alcohol synthesis process demonstration unit has operated at full scale for more than 8,000 hours. Fulcrum have filed patent applications for the integration of the MSW to ethanol process.

Electrical Supply: The Fulcrum process will generate enough electricity to power their plants and reduce their reliance on external electricity sources.
Research, or

Manufacturing Partnerships or Alliances.
Fulcrum has been successful in securing long-term, zero-cost MSW feedstock agreements with national, large solid waste companies to provide us with a reliable and abundant stream of MSW not only for Sierra BioFuels, but also for future projects that Fulcrum expect to develop in locations throughout the United States. Currently Fulcrum have access to enough zero-cost MSW feedstock across 19 states to produce more than 700 million gallons of ethanol per year.

Stage
Sierra will be a commercial-scale waste-to-biofuels facility. Construction is expected to begin by the end of 2011 with commercial operations commencing during the second half of 2013.

Company website

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