Posted on 08/25/2011 8:53:23 AM PDT by StolarStorm
Imagine a cheaper gasoline that can be produced domestically and is environmentally friendly.
A pipe dream?
Maybe not if a Pasadena-based company’s business plan pans out.
KiOR, (pronounced KEY-ORE) has spent the last three years perfecting a technology that enables the company to convert low cost biomass like wood chips or algae into hydrocarbon-based renewable crude oil that is then refined into gasoline or diesel.
“Kior was built on the vision that we can reduce our dependence on petroleum by harnessing alternative sources of fuel without having to rebuild the nation’s fuel infrastructure,” Fred Cannon, KiOR’s President and CEO says in a statement on the firm’s website. “At Kior we are commercializing a technology that can create an environmentally friendly crude oil substitute from a wide variety of biomass, everything from agriculture waste and residue such as sugar cane bagasse to wood chips.”
According to the company the process has been tested successfully at KiOR’s labs and Pilot Plant, located on Bay Park Road in Pasadena. The plant is a hive of activity underneath a pair of huge concrete silos that can be seen from nearby La Porte, but considerably smaller than a refinery.
“Pasadena has been KiOR’s headquarters since shortly after its founding in 2007. At the demonstration scale facility, which has been running in Pasadena since the first quarter of 2010, the company is producing 15 barrels of its renewable crude per day. KiOR also has a pilot plant at its headquarters, which has operated successfully for over 9,000 hours,” a company spokesman said in an email to The Citizen. “At its first commercial scale facility in Columbus, Miss., KiOR plans to produce 11 million gallons of renewable fuel per year. The company is also planning to begin construction on another commercial scale facility – three times larger than the Columbus plant – in the second half of 2012.”
The process is very detailed but essentially can be broken down into four steps: Biomass processing. biomass fluid catalyic cracking and product recovery.
The biomass od dried and conditioning using equipment similar to what is typically used for pulp and paper processing. The biomass options are numerous and readily available without the need for exploration or drilling.
“While KiOR plans for Southern Yellow Pine woodchips to be the primary feedstock at its first commercial scale facilities, its feedstock flexible technology allows for the conversion of a wide variety of non-food biomass into renewable fuels,” the spokesman said. “ Potential feedstock options include agricultural resides such as corn stover and sugarcane bagasse, energy crops like switchgrass, and algae. The advantage of this feedstock flexibility is primarily geographic, allowing the company to pursue expansion opportunities virtually anywhere in the world where biomass feedstock is abundantly available.”
The biomass fluid catalytic cracking step involves taking the treated biomass and feeding it into a reactor where it interacts with the catalyst in a process based on fluid cataylic cracking.
This process has been used for decades in conventional crude oil refining, but KiOR has integrated proprietary catalysts in its process. KiOR officials say the company has pending patent applications containing thousands of patent claims covering different aspects of the technology.
Within seconds of insertion the reaction produces renewable crude oil as a primary product as well as light gases, water and coke as byproducts. The renewable crude oil, byproducts and catalysts then enter a separator where the catalyst is separated from the products. The crude oil and byproducts proceed to product recovery where they are cooled and separated.
The catalyst moves to a re-generator where coke created during the reaction is burned off. The re-generated catalyst is then cycled back into the reactor where it will repeat the process.
In product recovery the renewable crude oil condenses into liquid while the light gases are transferred to the co-generation unit. In the final phase the liquid undergoes hydro-treating where reacts with hydrogen to remove the oxygen and is then separated into gasoline and diesel blend stocks.
According to the company KiOR’s blended fuel stocks can be used in vehicles currently on the road or combined with conventional fossil fuels.
“Currently KiOR is planning for its renewable gasoline and diesel blendstocks to be combined with their fossil fuel-based counterparts, to offer more environmentally friendly fuel options to consumers at the pump,” the company spokesman said. “KiOR plans to bring the fuel from its first commercial scale facility in Columbus online in the second half of 2012.”
KiOR employs 107 full-time employees and most are based in Pasadena. That number will be growing soon, as KiOR’s recent initial public stock offering raised approximately $100 million from sale of stock.
“KiOR plans to use the net proceeds it will receive from this offering to fund a portion of the capital expenditures for its planned first standard commercial production facility in Newton, Mississippi.” The spokesman said. “The company intends to use any remaining net proceeds for general corporate purposes, including the costs associated with being a public company, much of which will be focused in Pasadena.”
KiOR, Inc. went public with an initial public offering of 10,000,000 shares of Class A common stock at a price to the public of $15.00 per share on the NASDAQ on June 23. The stock was trading at around $14.42 per share on Monday (Aug. 1).
During the last five months KiOR has secured agreements with Catchlight Energy LLC, Hunt Refining, FedEx Corporate Services and the Department of Energy in advance of the plant opening in Mississippi.
Catchlight, a 50-50 joint venture between subsidiaries of Chevron Corporation and Weyerhaeuser Company focused on providing liquid transportation fuels from sustainable forest-based resources, signed a feedstock supply agreement with KiOR. Under the agreement, Catchlight Energy will supply forestry-based feedstocks required by KiOR’s production facility in Mississippi.
Hunt Refining Company agreed to purchase renewable gasoline and diesel blendstocks and fuel oil produced at KiOR’s first commercial facility. The two companies have agreed to collaborate on information and resources aimed at optimizing the performance of their products and services.
Under the agreement with FedEx Corporate Services, Inc., KiOR may supply renewable diesel blendstocks for purchase by affiliates of FedEx Corporate Services.
The Department of Energy’s Loan Guarantee Program provided over $1 billion in loan support for the biofuels project. KiOR’s project under the DOE loan guarantee program will consist of four biorefineries that will contribute approximately 250 million gallons of cellulosic biofuel to the Renewable Fuel Standard. The first two plants are expected to be in Mississippi, with additional sites planned in Georgia and Texas.
“We are pleased to work with the DOE on reaching this milestone and are excited about the scale and impact of the project. The project’s first facility, planned in Newton, Mississippi, is expected to be the largest cellulosic biofuels facility in the United States,” Cannon said on Feb. 3 when the agreement was announcd. “Additionally, the project will have a significant impact on rural communities through the creation of direct, indirect and induced jobs, with over 14,000 jobs created during construction and over 4,000 jobs created during operations. The project also expects to reduce greenhouse gas lifecycle emissions by over 70 pecent as compared to fossil-derived gasoline and diesel fuels. While the term sheet is an important step in the process, we recognize that more work lies ahead to finalize the loan guarantee and there is no assurance it will be issued until the loan is closed.”
The DOE agreement came six months after KiOR had reached agreement with the state of Mississippi to build five commercial-scale renewable crude oil production facilities in return for a State assistance package that includes a $75 million loan.
According to the agreement, KiOR will build three of the five facilities over the next five years. By 2015, the project will deliver more than 1,000 direct and indirect jobs and an estimated $500 million worth of investment. In addition to the loan, the State’s package includes assistance with infrastructure needs and workforce training.
In July of this year former Secretary of State Condoleezza Rice joined KiOR’s Board of Directors. Secretary Rice has also served on the board of directors for the Chevron Corporation, the Charles Schwab Corporation, the Transamerica Corporation and the International Advisory Council of J.P. Morgan. She is currently on the board of Makena Capital, a private endowment firm, and C3, an energy software company.
“Secretary Rice has achieved immense success in many roles over the years and has shown herself to be one of the great strategic minds of her time,” said Fred Cannon, President and CEO of KiOR. “Her expertise will become an asset for KiOR, and her wisdom will help guide the company as we continue to grow.”
KiOR, however, has yet to turn a profit, the spokesman confirmed.
“As with any company progressing toward commercial production, KiOR has thus far been largely focused on research and development and improving its technology, and does not yet sell its product for revenue,” the spokesman said. “The company will begin taking in revenue with the completion of the Columbus commercial facility, where KiOR already has customer offtake agreements in place for all of its fuel output.”
Once the process is commercialized and produced on a large scale the company is optimstic consumers at the pump will quickly discover the advantages of KiOR’s biofuel.
“First, the renewable nature of KiOR’s gasoline and diesel blendstocks gives it a tremendous benefit over their fossil fuel counterparts,” the spokesman said. “ In addition, KiOR believes its blendstocks can become cost competitive alternatives to petroleum without government subsidies, with the potential to offer many societal benefits including lowering dependence on foreign oil, reducing greenhouse gas emissions, and creating jobs.”
The potential, assuming the process can be duplicated commercially on a large scale, is considerable. A process that utilizes available non-food biomass and converts it renewable crude oil that in turn yields gasoline and diesel blend stocks that can utilize the existing fuels infrastructure could be a game-changer in the energy industry.
“Our technology puts us in a unique position to scale up rapidly and sustainably over other alternative fuel technologies,” Cannon said. “Our modular fuel design will allow us to build faster and in more locations.”
Good for them. I hope it works.
interesting.
hope it gets to market.
Very encouraging post. I hope they make a fortune.
“And they don’t use biomass from food sources.”
Wood chips? From TREES?
No, no one should object to that.
I was pretty surprised that Condi joined the board. I think that speaks volumes about the real possibility that their process can work, without sucking up annual subsidies.
The big questionis the energy cost of production.
For example, if it takes more BTU/watts. joules or whatever measure you wish to produce the consumer product, then it is a farce.
For example, it costs about 10% of a barrel of oil to produce consumer products-the 10% goes to electricity, heat, etc used from well to point of sale and the output is approx 90% useful products ranging from asphalt to gasoline and oils etc.
These “green” ideas are usually (if not always) more costly to produce than the energy they provide....
One of our algae researchers has made diesel fuel from fatty acid bearing algae-only problem is it costs about $1000 per gallon to produce, and to just manufacture enough bio-diesel to run the MODOT truck fleet, it would take every acre-foot of impounded water in the state of MO converted into algae ponds..... Realistic? NOT.
I don’t think they are cutting down trees for fuel... that wouldn’t be cost effective anyway. They are using waste materials left over from the lumber and paper industries.
Why do I feel like this is the only reason they are into this?
“I was pretty surprised that Condi joined the board. I think that speaks volumes about the real possibility that their process can work, without sucking up annual subsidies.”
I wanted to see her become Commissioner of the NFL...
yes...good point.
this stuff would have to be burned to be useful. won’t the left still be against it because of that?
I am skeptical though, I think at some point they will begin to whine and lobby for Federal Funding. We have been scammed to many times.
The only drawback I can see is whether or not the “biomass” crude can be co-mingled in the current delivery system of natural crude (pipelines, etc.)
If it needs a stand alone delivery system from crude production to refining, their costs will be much to high to make a real difference.
I’m guessing KiOR is developing this process to challenge Ethanol as a combustion fuel additive.
(I wish I had the money to convert my 1994 Tracker to NatGas!)
Environmentalists would do whatever it took to kill anything of the sort ASAP.
Luckily the GOP will be doing a total takeover in this next election cycle. That’s another reason I find Condi being on the board of directors to be positive. She may not be a die hard conservative, but she’s no dummy either.
Well, there would be fewer high speed accidents.... ;-)
There are extremely fast growing varieties of trees, particularuy a couple cultivates of willow.
If there were a cost effective way to convert it to fuel, I can see entire crops of trees being planted and cut for fuel assuming there is a profit to be had.
Assuming a good conversion process, there are options other than trees. We bury hundreds of millions of tons of trash every year. The energy to dry and process it my be overwhelming though.
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