KiOR: The Inside True Story of a Company Gone Wrong. Part 4, the Year of Living Disingenuously

Then, Stamires met with Cannon and warned him that in “dodging O’Connor’s questions and not providing him with complete truthful information about actual bio oil yields, the Management team had misled O’Connor, undermined the KiOR’ Board, and fatally hurt KiOR.”

On March 11th, Stamires provided O’Connor with a list of the most important issues of KiOR’ Technology problems to be included in his presentation to the Board.

O’Connor strikes

On the morning of March 15th, O’Connor wrote directly to Cannon.

Dear Fred

Further to my visit and our telephone conversation Monday, I would like some additional information/data to round of my feedback to the board:

1) Actual performance data from the Demo Plant. Reactor effluent oil yields (BOE or GPBD) and oxygen content (%) as a function of time since demo start-up (No info on reactor or catalyst necessary).

2) Best estimate you have today on % oil recovery to calculate the “Overall product yield” from the reactor effluent yield.

3) Your assumptions and calculation of the $ 1.80 / gallon product cost for a 1500 ton/day plant @ 67? GPBD yield

4) List of abandoned patents (~28) of which I am a co-inventor

I will contact Samir to see how he wants to discuss this at the board. I agree with you that an Oral presentation is the best.

And on March 22nd, O’Connor reported back to the KiOR board.

On March 8th at the invitation of Fred Cannon (CEO) I visited KiOR to discuss my concerns about the in my mind the limited improvements in the overall process yields obtained over the last 2 years.

My concerns were based on the scarce and conflicting information on product yields I received during the board of director meetings (BOD) in the period of 2009 up to 2011 These concerns are further amplified given the fierce, rapidly evolving and well-funded competitive technologies in this space. One example is the JV between Ensyn and UOP.

The following assessment is based on limited additional information I received during the meeting and presentations at KiOR on March 8th, and is constrained by the following limitations:

1) I requested, but did not receive the “raw” actual pilot plant and demo plant yields to be able to check the validity of the data presented to me.

2) I asked, but was not given the opportunity for private one-to-one interviews with key technical personnel, who actually perform the work.

3) I did not receive answers to several critical questions asked during and after my visit to KiOR.

4) I asked, but was not allowed assistance from the in-house expert consultant, Prof Vasalos, to analyze and validate yield performance.

5) I was not given access to detailed information regarding the properties, handling, and the suitability of the raw bio-oil to be hydro-treated for upgrading.

Observations

Notwithstanding the foregoing it is still possible for me to make the following observations:

1) The KiOR management team has made excellent progress in building the organization and scaling up the BCC process from the Pilot to the Demo phase and now also the commercial phase (Columbus plant) in a record time of less than 5 years, considered impossible in the process industry.

2) The KiOR management and technical personnel feel confident that they can start-up the Columbus plant in 2012 and produce good quality salable products (Gasoline, Diesel, Low S Heavy Fuel Oil).

3) As can be expected, the major effort of R&D has been and still is in the scaling-up of the process and the catalyst and hence only limited effort has been spent on searching for the next breakthroughs. In fact the catalyst and reactor concepts presently being developed were already conceived in 2009.

4) The way in which product yields are being reported (e.g. to the BOD) by R&D management is incomplete and misleading and does not correspond with the actual goal of improving overall yield of sale-able liquid products.

5) The present overall yield of sale-able liquid products, estimated from the information received falls short of the targets set for 2012…and has not improved considerably over the last two years .

6) In my opinion it is still possible to reach the target…and possibly even also the long term target…but this will require a drastically different approach, than presently being pursued by R&D.

On March 21st, O’Connor sent back to Stamires his first draft of a report to be presented to the Board during its March 23rd meeting,“Technology Assessment-March 2012”, asking for his further comments. , which Stamires reviewed. Ultimately, O’COnnor would address emails to Cannon on March 23rd, April 21st, and April 23rd asking for response on these items.