KiOR: the inside true story of a company gone wrong, Part 2

A new approach

Stamires reasoned that, if Prof. Vasalos and Dr. Lappas at CPERI , who had  a similar FCC Pilot plant in operation, could pyrolyze the same kind of biomass with sand, under the same process conditions, the team could confirm that new KiOR pilot was working correctly. If the CPERI FCC Reactor design was responsible for the higher Bio-oil yields, then the design could be introduced into the KiOR Pilot.

On the same day, Bartek replied: “I agree! I am hoping we can do significant alterations to the process to assure some chance at victory in the next two months, so we do not purchase the wrong DEMO“.

After baselining the pilot plant, the expectation was that new catalysts could be tested aimed at improving bio-oil yields. Specifically, Bartek speculated that it was “Time for some Z?”

Meaning “ZSM-5 catalyst”. A commercial grade, high-priced catalyst, well established in the market place, being used by most oil refineries worldwide, containing the ZSM type of Zeolite. Papers had been published by Dr. Paul Williams at Leeds University in 1995 indicating that zeolite catalysts would not produce a high bio oil yield, but could produce, as one observer put it, “a reasonable amount with a substantially improved quality containing a lesser amount of oxygen, easier and less costly to be upgraded to gasoline  and diesel fuels.”

Whose technology is this, anyways?

The other team? In a March 5th memo to the KiOR community, a R&D review of the BCC Technology, specified the continuation of the R&D work on BCC Technology in all four Labs.

As O’Connor confirmed to The Digest, “one of my biggest frustrations was that the technology that was moving forward was never actually the BIOeCON technology. What we were doing in Valencia was not what we did later in Houston. If you look at the first patents and so on, you see that the basic trick was to have an interaction between the biomass and the catalyst before it enters into the reactor. We called it mechano-chemistry. When I compared the data between Houston and Greece, Greece was better, and that was because in Houston, they never pre-treated the biomass.

“That created more conflict with Ditsch. He had a ‘make it simpler, don’t do that’ attitude towards it. And you could sort of get away with it in the pilot plant because  you could mill the biomass very fine. But when you get to demo scale, much less commercial, you can’t mill the biomass like that. For one, it can get sticky. It can even catch fire in the plant, which happened.

“But if you are feeding [larger] wood particles of 1-3 MM instead of this finer sort, it takes quite a long time before the particles heat up, and the outside can get charred while nothing happens to the inside.”

So you coke up and lose yield.

Cannon sidelined by heart problems, and “who’s in charge?” chaos ensues

But the week of March 8th would prove even more fateful for KiOR, as CEO Fred Cannon was hospitalized with a heart problem and was sidelined for some weeks, in hospital or at home, while recuperating.

And so, a leadership crisis erupted.

By March 19th, O’Connor emailed the staff, “In the absence of Fred, I have assumed his responsibilities to assure a smooth continuation of our business.” Most staff at the time took that to mean that, as soon as Cannon returned to the office, O’Connor would assume his former duties.

But more than that was going on.

Cannon had received a memo from O’Connor, expressing concern about  the leadership of KiOR, the direction KiOR was taking, and a lack of team effort and communications between groups. O’Connor expressed the view that, if matters continued as they were, key personnel would leave the company.

Some discussions took place over a potential revision of management duties and structure, which failed, not the least because as Cannon explained, even if he really wanted to re-divide CEO responsibilities and authority, he could not do that without a resolution and approval by the KiOR Board.

A degree of chaos ensued, and morale dropped. In Cannon’s absence, VP for Strategy Andre Ditsch also stepped forward to assume more commercial responsibility, and it became at times unclear to staff who was in charge.

One observer recalls, “[Ditsch and O’Connor] were calling their own regular staff meetings at the same time, and starting to re-organize and re-assigning responsibilities and projects to the staff.”

The controversy over the research program boiled over. Those familiar with this period at KIOR said that Ditsch “accused O’Connor of grabbing for Cannon’s job”, and having failed to develop a feasible technology, despite two years of investment in R&D.

The battle reached the KiOR board in March 2009. The board confirmed Cannon as President and CEO of KiOR, Ditsch remained VP for Strategy; in May 2009 O’Connor was re-assigned from the CTO role, although he continued to work for KiOR until November 2009 when his contract expired.

Observers of KiOR during this period stress that, although Cannon returned to the office by the end of March, Andre Ditsch assumed some extra managerial functions and, according to one observer, “was communicating frequently directly with Samir Kaul (a KiOR Board member, representing Khosla).”