Velocys: Biofuels Digest’s 2015 5-Minute Guide

March 17, 2015 |

5-Minute-Guide-logoVelocys enables modular gas-to-liquids (GTL) and biomass-to-liquids (BTL) plants to convert unconventional, remote and problem gas and waste biomass into valuable, drop-in liquid fuels.

The Situation

After 15 years and some $300 million in investment, Velocys technology is headed for scale. In one direction, there’s the Red Rock Biofuels project which will be producing cost-competitive military aviation jet fuels. The Red Rock refinery, slated to begin construction this summer, will convert approximately 140,000 dry tons of woody biomass into at least 12 million gallons per year of renewable, liquid transportation fuels. Also in 2014, Southwest Airlines agreed to purchase approximately 3 million gallons per year of Red Rock’s low carbon, renewable jet fuel.

Velocys is also the technology supplier for British Airways and Solena Fuels in their GreenSky London project.

In the GTL direction, Velocys advised last August that the final investment decision has been made to proceed with construction of a commercial GTL plant using the Company’s technology. The project is being funded by a joint venture between Waste Management, NRG Energy, Ventech Engineers International and Velocys, formed to develop a series of GTL plants in the United States and other select geographies.  The plant, which is designed to be profitable on a standalone basis, will be located at Waste Management’s East Oak landfill site in Oklahoma, US. It will provide a commercial reference site for the Velocys technology and will deploy a number of the Company’s full scale Fischer-Tropsch reactors.

With the Waste Management deal, Roy Lipski, CEO of Velocys, commented: “Like the four minute mile, this small commercial GTL plant going ahead is a major psychological milestone, for the industry and for Velocys and its customers. After 15 years of development, over $300 million of investment, and a commercial plant underway, Velocys is now poised at the forefront of the distributed production revolution taking place in this new age of gas abundance.”

Major Investors

LSE:VLS:L

• Lansdowne Partners

• Henderson Global

• Invesco

• Ruffer

• Battelle Memorial Institute

• Ervington Investments

• Baillie Gifford

Type of Technology

• Fischer Tropsch (FT) microchannel reactor technologies for the efficient and economic small scale distributed production of biofuels via BTL and liquid fuels from natural gas via GTL

• Microchannel reactor technology for steam methane reforming (SMR)

• Patented OMX method for the development and preparation of tailored highly active selective and stable catalysts for use in microchannel reactors and for the generation of clean fuels.

Feedstocks:

• For biofuels: a wide range of waste feedstocks including agricultural, municipal and construction waste, forestry waste

• For gas-to-liquid fuels: stranded and associated gas from oil wells which would otherwise be reinjected, vented or flared

Fuel Type (if applicable): (e.g. ethanol, biobutanol, biodiesel, renewable diesel, renewable jet fuel, power etc):

• Synthetic diesel and jet fuel from biomass waste feedstocks via BTL

• Synthetic diesel and jet fuel from stranded and associated gas via GTL

Co-products

• After upgrading, products of the FT process can include ultra-high quality specialty products – lubricants, solvents, base oils and waxes as well as ultra-clean liquid fuels.

• The FT process produces high temperature steam which can be used for district heating or to assist the initial gasification stage of the BTL process to enhance process efficiency, or to enhance project economics by integration with co-located refinery operations (for GTL).

Past Milestones

In June 2014, Velocys announced the acquisition of Pinto Energy LLC and the Ashtabula GTL project. This represents a significant step in the North American oil & gas industry’s adoption of smaller scale GTL and of the Velocys technology, accelerating the development of “shovel ready” projects. As its first facility, Pinto Energy is developing an approximately 2,800 barrels per day (bpd) plant at an 80 acre industrial site that it owns near the Port of Ashtabula, Ohio, USA. The project will benefit from both access to abundant low-cost natural gas from the Marcellus shale region and substantial existing infrastructure. Initial engineering for the facility is complete and the air permit has been issued. Final investment decision is expected within six to nine months. Future expansions could see installed capacity of 10,000 bpd or more at the site. In addition to Ashtabula, Pinto Energy has a pipeline of smaller scale GTL projects it is seeking to develop throughout North America.

In March 2014, Velocys, Waste Management, NRG Energy, and Ventech Engineers International announced a joint venture to develop gas-to-liquids plants in the United States and other select geographies.

• 2013: First order of commercial scale FT reactors (to Ventech, sufficient for a plant of capacity 1,400 bpd).

• 2012: First selection to provide FT technology for a commercial scale project. As of January 2014, Velocys has been selected for a total of four commercial projects of more than 1,000 bpd (BTL: GreenSky London, Red Rock Biofuels, Oregon, USA and two GTL projects in the USA being developed by Pinto Energy and Calumet Specialty Products).

Business Model

Technology developers and licensors

Competitive Edge

• Systems based on Velocys technology are significantly smaller than those using conventional technology. This enables modular plants that can be deployed cost effectively in remote locations and on smaller fields than is otherwise possible as well as at scales suitable for biofuels facilities.

• Velocys has the world’s largest microchannel patent portfolio with over 25,000 claims in more than 800 patents worldwide. The Company’s patent estate includes fundamental and broad patents relevant to smaller scale gas-to-liquids. The Intellectual Property portfolio is of high quality, having been cited more than 3,000 times in others’ patents. Velocys’ patent strength has been demonstrated through an excellent record of successful defence and re-examination of its patents that have been challenged.

• Catalyst development, including OMX, a patented method, for producing highly active and more stable catalysts by enabling greater control of the particle size resulting in a narrower particle size distribution of crystallites in the nanometre diameter range which exhibit terraced surfaces. Both of these features enhance catalyst activity. OMX also produces fewer very small crystallites that could sinter at an early stage of operation. This results in greater catalyst stability.

Distribution, Research, Marketing or Production Partnerships or Alliances

• Joint demonstration testing agreement between Velocys, offshore facility developers, MODEC, Toyo Engineering and the Brazilian State Energy Company, Petrobras, to build and operate a microchannel gas to liquid (GTL) demonstration facility in Fortaleza, Brazil.

• Onshore, Velocys is working with Ventech, Haldor Topsøe, Mourik, PTT, SGS, Hatch and others to offer a complete modular GTL solution.

More on the company.

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