Syntroleum receives $12 million in committed equity financing, announces site for $135 million synthetic biofuels plant
Synthetic biofuels developer Syntroleum Corporation today announced that it has entered into an agreement with an affiliate of Fletcher Asset Management which requires Fletcher to purchase $12 million of Syntroleum common shares over the next 24 months pursuant to its existing shelf registration statement. The issuance of the securities is subject to certain closing conditions.
In a related development, Syntroleum also reports that Louisiana Governor Kathleen Babineaux Blanco and Dynamic Fuels, LLC have announced Geismar, Louisiana, as the site for Dynamic Fuels' new plant to produce next-generation renewable, ultra-clean diesel and jet fuel from vegetable oils and fats. The $135 million facility will have a capacity of 5,000 barrels per day and is scheduled for completion in 2010. Dynamic Fuels is a 50/50 venture between Syntroleum and Tyson Foods, Inc. to construct and operate multiple renewable synthetic fuel facilities (earlier post).
The agreement with Fletcher will make the investor put up an initial $3 million within the next six months at the market price of Syntroleum common stock plus $0.60 per share. If that market price equals the November 16, 2007 closing price of $1.49 per share, shares would be sold at a premium of 40 percent.
Fletcher will make later investments of $9 million in months 7 through 24 of the agreement at the prevailing price minus $0.20 per share. Warrants will be issued for 50 percent of the shares purchased in the later investments, with an exercise price equal to the price of the first later investment plus $0.40 per share. Wm Smith & Co., based in Denver, Colorado, acted as sole placement agent.
The Biofining process [*.pdf] is a 'flexible feed, flexible synthetic fuels' technology capable of processing a wide range of renewable feedstocks including vegetable oils, fats and greases into a broad slate of synthetic ultra-clean fuels, including summer to arctic grade diesel fuel and jet fuel. This dual flexibility is unique in the renewable fuels industry. Biofining processes triglycerides and/or fatty acids from fats and vegetable oils with heat, hydrogen and proprietary catalysts to make renewable synthetic diesel or jet fuel (in this sense it is similar to other hydrogenation based renewable diesel production processes, such as UOP's 'green diesel', Galp Energia's 'H-biodiesel' or Petrobras' 'H-Bio') . The resulting fuel products are extremely stable, exceed all the standards of conventional petroleum based fuels, and are usable across a very wide band of operating temperatures as both diesel and jet fuel.
Syntroleum’s core technologies involve three key, patented processes, which form the starting point for the Biofining process (schematic, click to enlarge):
energy :: sustainability :: biomass :: bioenergy :: synthetic biofuels :: biodiesel :: biomass-to-liquids :: Fischer-Tropsch :: hydroprocessing ::
With its roots in Fischer-Tropsch process technology, Biofining also provides an economical pathway for the company to migrate into the emerging biomass-to-liquids (BTL) industry. By incorporating a gasifier and Fischer-Tropsch reactor to an existing Biofining plant, Syntroleum will then be able to produce ultra-clean and renewable synthetic fuels from biomass. This migration strategy is significant because the amount of potential biomass feedstock in the United States (1,300 million annual tons) dwarfs the current supply of vegetable oils and fats (15 million annual tons), and presents the true long-term growth opportunity in the renewable fuels industry.
A significant advantage of the Biofining process is the flexibility of the feedstock—vegetable oils or fats and greases, of a wide variety of quality levels (both inedible and edible) and in any proportion, can be successfully used by the Biofining process to produce renewable synthetic diesel or renewable synthetic jet fuel—all of the same high quality. Syntroleum plans to use low grade fats and greases in its plants because the cost is typically cheaper than vegetable oils, and because the use of low grade fats does not impact the human food supply.
Biofining fuels have lower emissions, near zero sulfur, no aromatics, and higher cetane levels than comparable conventional fuels. Biofining fuels can be used at much lower operating temperatures, and can be fully utilized in engines without having to be blended with other fuels. They are expected to be completely compatible with existing pipelines, storage facilities and other conventional fuel infrastructures. In summary, Biofining fuels are ultra-clean, flexible in their use, produce fewer emissions and are environmentally friendly.
Louisiana's governor commented on the selection of the site for the first Biofining plant:
Together with Tyson Foods, Syntroleum is focused on siting, engineering and constructing a plant that produces clean renewable synthetic diesel and jet fuel using low grade fats and greases as feedstock. The 50/50 venture, Dynamic Fuels, was formed to construct and operate multiple renewable synthetic fuel facilities, with production on the first site beginning in 2010. The Company plans to use its portfolio of technologies to develop and participate in synthetic and renewable fuel projects.
Fletcher Asset Management pursues an investment strategy that combines traditional investment management, corporate finance, quantitative methods and social responsibility. Since 1991, the firm has invested roughly $1 billion in promising companies led by solid management teams with responsible business practices.
References:
Syntroleum: Syntroleum Receives $12 Million in Committed Equity Financing - November 19, 2007.
Syntroleum: Syntroleum Announces Site Selection for Dynamic Fuels Joint Venture - November 15, 2007.
Syntroleum: Syntroleum Biofining - Flexible Feed / Flexible Synthetic fuel [*.pdf] - June 2007.
Biopact: Syntroleum and Tyson Foods to produce ultra-clean synthetic biofuels - June 25, 2007
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In a related development, Syntroleum also reports that Louisiana Governor Kathleen Babineaux Blanco and Dynamic Fuels, LLC have announced Geismar, Louisiana, as the site for Dynamic Fuels' new plant to produce next-generation renewable, ultra-clean diesel and jet fuel from vegetable oils and fats. The $135 million facility will have a capacity of 5,000 barrels per day and is scheduled for completion in 2010. Dynamic Fuels is a 50/50 venture between Syntroleum and Tyson Foods, Inc. to construct and operate multiple renewable synthetic fuel facilities (earlier post).
The agreement with Fletcher will make the investor put up an initial $3 million within the next six months at the market price of Syntroleum common stock plus $0.60 per share. If that market price equals the November 16, 2007 closing price of $1.49 per share, shares would be sold at a premium of 40 percent.
Fletcher will make later investments of $9 million in months 7 through 24 of the agreement at the prevailing price minus $0.20 per share. Warrants will be issued for 50 percent of the shares purchased in the later investments, with an exercise price equal to the price of the first later investment plus $0.40 per share. Wm Smith & Co., based in Denver, Colorado, acted as sole placement agent.
We are very excited about Syntroleum's Dynamic Fuels venture with Tyson Foods to construct renewable synthetic fuels plants. We've invested in Louisiana and the dynamic new field of renewable energy for years and look forward to sharing our insights with Syntroleum as they review alternatives to raise the balance of the capital they require to construct Dynamic's first plant. - Alphonse Fletcher, Chairman of Fletcher Asset Management.Dynamic Fuels, the joint venture between Syntroleum and Tyson Foods, selected Lion Copolymer's Geismar plant as the site for their first facility. The Geismar plant will have a capacity of 75 million gallons per year and will utilize Syntroleum's Biofining technology and feedstock supplied by Tyson Foods.
The Biofining process [*.pdf] is a 'flexible feed, flexible synthetic fuels' technology capable of processing a wide range of renewable feedstocks including vegetable oils, fats and greases into a broad slate of synthetic ultra-clean fuels, including summer to arctic grade diesel fuel and jet fuel. This dual flexibility is unique in the renewable fuels industry. Biofining processes triglycerides and/or fatty acids from fats and vegetable oils with heat, hydrogen and proprietary catalysts to make renewable synthetic diesel or jet fuel (in this sense it is similar to other hydrogenation based renewable diesel production processes, such as UOP's 'green diesel', Galp Energia's 'H-biodiesel' or Petrobras' 'H-Bio') . The resulting fuel products are extremely stable, exceed all the standards of conventional petroleum based fuels, and are usable across a very wide band of operating temperatures as both diesel and jet fuel.
Syntroleum’s core technologies involve three key, patented processes, which form the starting point for the Biofining process (schematic, click to enlarge):
- Production and cleanup of synthesis gas consisting of carbon monoxide (CO) and hydrogen (H2)
- a Fischer-Tropsch process used for the production of biomass-to-liquids (BTL), coal-to-liquids (CTL) and gas-to-liquids (GTL) fuels; the key innovation is a process whereby the synthesis gas is converted to wax
- Synfining, or product upgrading, which transforms this Fischer-Tropsch wax into diesel and jet fuel.
energy :: sustainability :: biomass :: bioenergy :: synthetic biofuels :: biodiesel :: biomass-to-liquids :: Fischer-Tropsch :: hydroprocessing ::
With its roots in Fischer-Tropsch process technology, Biofining also provides an economical pathway for the company to migrate into the emerging biomass-to-liquids (BTL) industry. By incorporating a gasifier and Fischer-Tropsch reactor to an existing Biofining plant, Syntroleum will then be able to produce ultra-clean and renewable synthetic fuels from biomass. This migration strategy is significant because the amount of potential biomass feedstock in the United States (1,300 million annual tons) dwarfs the current supply of vegetable oils and fats (15 million annual tons), and presents the true long-term growth opportunity in the renewable fuels industry.
A significant advantage of the Biofining process is the flexibility of the feedstock—vegetable oils or fats and greases, of a wide variety of quality levels (both inedible and edible) and in any proportion, can be successfully used by the Biofining process to produce renewable synthetic diesel or renewable synthetic jet fuel—all of the same high quality. Syntroleum plans to use low grade fats and greases in its plants because the cost is typically cheaper than vegetable oils, and because the use of low grade fats does not impact the human food supply.
Biofining fuels have lower emissions, near zero sulfur, no aromatics, and higher cetane levels than comparable conventional fuels. Biofining fuels can be used at much lower operating temperatures, and can be fully utilized in engines without having to be blended with other fuels. They are expected to be completely compatible with existing pipelines, storage facilities and other conventional fuel infrastructures. In summary, Biofining fuels are ultra-clean, flexible in their use, produce fewer emissions and are environmentally friendly.
Louisiana's governor commented on the selection of the site for the first Biofining plant:
I want to thank Dynamic Fuels for choosing Louisiana to create high-paying technical jobs and making the capital investment necessary to employ this new proprietary technology. This decision will allow even more Louisiana agricultural by-products to be converted into premium value-added products. - Governor Blanco, State of Louisiana Economic Development officeSyntroleum and Tyson Foods spokespeople added:
The site provides excellent people, infrastructure and utilities with an outstanding safety and environmental record. We look forward to working with Lion and expect that installing our plant within the existing complex will minimize cost while keeping Dynamic Fuels on schedule for production in 2010. - Jeff Bigger, senior vice president of Syntroleum Corporation.
The state of Louisiana, including Governor Blanco, the economic development team and local officials, have been outstanding partners to work with throughout our site selection process. This marks another important milestone in the execution of our strategy of leveraging access to animal by-products, our trading skills and industry relationships to become a premier player in renewable energy. - Jeff Webster, senior vice president of Tyson Renewable Products DivisionSyntroleum has developed an advanced Fischer-Tropsch (FT) conversion process that converts synthesis gas derived from biomass, coal, natural gas and other carbon-based feedstocks into liquid hydrocarbons. It also owns the Synfining Process for upgrading FT liquid hydrocarbons into middle distillate products such as synthetic diesel and jet fuels, and the Biofining technology for converting animal fat and vegetable oil feedstocks into ultra-clean middle distillate products such as diesel, jet fuel, naphtha and propane.
Together with Tyson Foods, Syntroleum is focused on siting, engineering and constructing a plant that produces clean renewable synthetic diesel and jet fuel using low grade fats and greases as feedstock. The 50/50 venture, Dynamic Fuels, was formed to construct and operate multiple renewable synthetic fuel facilities, with production on the first site beginning in 2010. The Company plans to use its portfolio of technologies to develop and participate in synthetic and renewable fuel projects.
Fletcher Asset Management pursues an investment strategy that combines traditional investment management, corporate finance, quantitative methods and social responsibility. Since 1991, the firm has invested roughly $1 billion in promising companies led by solid management teams with responsible business practices.
References:
Syntroleum: Syntroleum Receives $12 Million in Committed Equity Financing - November 19, 2007.
Syntroleum: Syntroleum Announces Site Selection for Dynamic Fuels Joint Venture - November 15, 2007.
Syntroleum: Syntroleum Biofining - Flexible Feed / Flexible Synthetic fuel [*.pdf] - June 2007.
Biopact: Syntroleum and Tyson Foods to produce ultra-clean synthetic biofuels - June 25, 2007
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Monday, November 19, 2007
Scientists propose new geoengineering option: increasing ocean's alkalinity to soak up more carbon dioxide
The new idea is interesting, but competes with options that are far more cost-effective and energy efficient today, the researchers say, such as capturing carbon dioxide from large point sources (coal plants). A less costly and more efficient option still, is the production of carbon-negative biofuels and negative emissons via biomass with carbon-storage. However, given the threat of 'abrupt' and 'catastrophic' climate change, all possibilities must be looked at, even those that are not strictly cost-effective or efficient. The scientists' study is scheduled to appear in the Dec. 15 issue of ACS Environmental Science & Technology but is available as an ASAP open access article.
Scientists believe that excessive build-up of carbon dioxide in the air contributes to global warming. In addition to cutting down on carbon dioxide emissions by reducing the use of fossil fuels, researchers have focused on new technologies that remove the gas directly from the atmosphere.
Several of these geoengineering methods rely on natural processes that are emulated and strengthened in an artificial way. Some of these ideas are controversial and highly risky. An example would be the proposal to seed the oceans with iron, so that algae blooms are generated which sequester CO2. The idea has been rejected by scientists, environmentalists and international maritime organisations (previous post; for other risky proposals, see here and here). A safer geoengineering idea is to build 'artificial trees' which capture CO2 from the air by solvent regeneration cycles, to produce a pure stream of CO2 which can then be stored in geological formations. However, the process is very energy intensive (previous post).
Last but not least, a very natural, efficient and cost-effective geoengineering option consists of utilizing real trees to let them act as machines that clean up the atmosphere. The biomass stores CO2. If this biomass is then used for the production of fuels and energy, while the carbon is captured before, during or after the transformation, and thereafter stored underground, the fuels and energy become carbon-negative. These so-called 'bioenergy with carbon storage' (BECS) or negative emissions systems can be implemented safely and offer a cost-effective CO2 removal option because the energy obtained from these systems replaces fossil fuels while at the same time taking CO2 out of the atmosphere. Moreover, the energy required to capture and store the CO2 is generated by the system itself. Renewables like wind and solar, or nuclear power, are all 'carbon-neutral' at best because they do not add new emissions to the atmosphere. BECS systems go much further and actually take historic emissions out of it. Biopact readers are aware of the growing interest in these bio-based negative emissions energy concepts.
Despite the existence of several feasible options, researchers keep searching for alternative geoengineering methods to offset carbon dioxide, because, according to the latest IPCC synthesis, climate change is more serious than expected and is now said likely to result in 'abrupt' and 'irreversible' changes (previous post). To avert catastrophic climate change, all options must be considered, including less efficient techniques than can be deployed in a decentralised manner and thus contribute to a planetary effort.
Boosting ocean's CO2 uptake
In their new study, Kurt Zenz House and colleagues propose building hundreds of special water treatment facilities worldwide, in remote locations, that would remove hydrochloric acid from the ocean by electrolysis and neutralize the acid through reactions with silicate minerals or rocks (schematic, click to enlarge).
The reaction increases the alkalinity of the ocean and its ability to absorb carbon dioxide from the atmosphere. The process is similar to the natural weathering reactions that occur among silicate rocks but works at a much faster rate, the researchers say:
sustainability :: ethanol :: biomass :: bioenergy :: biofuels :: greenhouse gas emissions :: carbon dioxide :: CCS :: BECS :: oceans :: geoengineering ::
A range of efficiency scenarios indicates that the process should require 100–400 kJ of work per mol of CO2 captured and stored for relevant timescales. This means the process is energy intensive. The researchers suggest to utilize power from 'stranded energy sources' too remote to be useful for the direct needs of population centers.
But herein lies a problem. If these 'stranded energy sources' are fossil fuels, the energy required to desalinate the water may contribute to the release of more carbon dioxide than the method sequesters. The work input required for the overall process is expected to be between 1.5 and 3.5 times higher per unit of CO2 than the work required for postcombustion capture and geologic storage (CCS) of CO2 from a modern coal-fired power plant. BECS and carbon-negative bioenergy production is more cost-effective still, because it requires similar amounts of energy to capture and store CO2 compared to coal plants with CCS, while reducing atmospheric CO2 and resulting in net negative emissions (as opposed to merely reducing the amount of new emissions entering the atmosphere, as is the case in coal + CCS) (For a comparison of costs at different carbon prices, see: Christian Azar, Kristian Lindgren, Eric Larson and Kenneth Möllersten, "Carbon Capture and Storage From Fossil Fuels and Biomass – Costs and Potential Role in Stabilizing the Atmosphere", Climatic Change, Volume 74, Numbers 1-3 / January, 2006, DOI 10.1007/s10584-005-3484-7).
The new geoengineering technique will not be able to compete with either (coal + CC or biomass + CCS) because it is too energy intensive and risks relying on fossil fuels for its energy requirements. However, if low or zero-carbon renewables like wind, geothermal or hydropower were to be coupled to the system, it could become greener though (graph, click to enlarge).
However, an advantage of the method of electrolyzing seawater to enhance ocean CO2 uptake is that it can be performed in geographic regions with an abundance of zero and low carbon power sources. For example, stranded geothermal energy from active volcanic regions is a relatively inexpensive and carbon-free power source. Therefore, volcanic islands with large geothermal resources and large basalt deposits might be ideal locations. Wind turbines—whose general deployment is partially limited by intermittency of supply—are another interesting carbon-free power option because the process can be designed to operate only when an excess of wind power exists. Alternatively, the process could be powered by gas-turbines in oil-producing regions where natural gas is flared because the infrastructure required for long-distance transport is not available.
Research into actively capturing CO2 from the air by solvent regeneration cycles is ongoing (see the discussion of the 'artificial tree method'). The new method - enhancing ocean uptake of CO2 via seawater electrolysis - has some benefits over the solvent regeneration proposals. The goal of the solvent regeneration processes is to separate CO2(g) from air and produce a near pure stream of CO2(g) for compression to ~200 atm, transportation to a storage site, and injection into a geologic reservoir. In contrast, the CO2 in the process discussed by the scientists is chemically altered to a more stable state and permanently stored in the ocean. Hence it would not be necessary to locate and fully characterize a multitude of suitable geologic storage depositories for the captured CO2.
This is clearly an advantage over carbon sequestration from existing point sources such as coal plants. However, bio-energy with carbon storage systems can be decentralised, because biomass can be planted and planned at a selected site, close to geological storage depositories (unlike coal and fossil fuels, which are 'discovered' and remain where they are found, in a fixed place).
Technical and cost barriers
The electrolysis and HCl removal process process must overcome several technical hurdles before it can offset an appreciable quantity of CO2 emissions. The magnitude of the CO2 problem is daunting, and offsetting even 15% of global emissions by electrolysis of seawater would be a serious task. To offset 15% of annual carbon emissions (3.7 Gt CO2 or 1 Gt of carbon), 1014 moles of HCl would have to be removed from the ocean and neutralized per year. Seawater would have to be separated into acid and base at a global volumetric flow rate of ~6000 m3/s. Large sewage treatment facilities have a capacity of 60 m3/s. Thus, capturing and storing 3.7 Gt of CO2 annually by the process would require around 100 plants with a volumetric flow capacity similar to that of large sewage treatment facilities.
If the process were to be employed with artificial brine from mined halite deposits, then the volumetric flow rate requirements would be reduced by an order of magnitude. The chloralkali industry would have to grow for 50 years by 3.75% per year over and above the normal consumption growth from a base of 43 million t of Cl2 production in 2003. Chemical weathering would increase from 0.4 to 1.4 Gt of C per year over this same period. With 1020 moles of mineral NaCl in continental basins, there is a sufficient resource of mineral NaCl to offset many centuries of anthropogenic CO2 emissions using the standard Chloralkali process coupled with an HCl fuel cell and silicate rock dissolution.
Economical electrolysis of seawater is another technological challenge. The current cost of removing multivalent cations before running the Chloralkali process is high. Additionally, ohmic losses in seawater would need to be reduced, e.g., by concentrating through evaporation, boiling, or dissolution of mineral halite.
One potential undesirable consequence of employing this process directly with seawater would be the production of halogenated organics as a byproduct of the electrochemical reactions on seawater. During the electrolysis, some dissolved organic carbon (DOC) can be expected to be halogenated and some of this could be in the form of volatile stratospheric ozone-destroying compounds such as CH3Br3 and CH3Cl3. Even when the process employs artificial brine, there is evidence for generation of chlorinated organics from chloralkali plants due to leakage. Present estimates do not list the chloralkali process as a major contributor to the atmospheric chloroform flux.
Seawater electrolysis could significantly add to this contribution. The use of more concentrated NaCl solutions for electrolysis would reduce these emissions by limiting the availability of DOC. In any case, it will be important to quantify this unintended flux of bromine and chlorine to the atmosphere before any large scale implementation of this process proceeds, the researchers say.
Conclusion
A variety of technologies will be used in this century to mitigate anthropogenic climate change. The process described by the scientists enhances the solubility of CO2 in the ocean by, in essence, electrochemically accelerating the natural chemical weathering reaction. The three key benefits of the process are the permanency guaranteed by the storage of CO2 in the ocean without acidification, the process’ capability to offset the CO2 emissions from any source including mobile point sources, and its capability to be performed in remote regions using stranded energy. Deployment of the process will be limited by any damage to local marine biota caused by local pH changes and rock dissolution products.
More efficient and cost-effective geoengineering options - such as BECS and negative emissions fuels and energy from biomass - will be implemented earlier than the new proposal. The bio-based methods were developed specifically in the context of the doom scenario of 'abrupt climate change'. However, if such a scenario really unfolds, even the more inefficient geoengineering ideas could find an opportunity for deployment.
References:
Kurt Zenz House,Christopher H. House, Daniel P. Schrag, and Michael J. Aziz, "Electrochemical Acceleration of Chemical Weathering as an Energetically Feasible Approach to Mitigating Anthropogenic Climate Change", Environ. Sci. Technol., ASAP Article, November 7, 2007, DOI: 10.1021/es0701816
Biopact: IPCC to warn of 'abrupt' climate change: emergency case for carbon-negative biofuels kicks in - November 16, 2007
Biopact: Scientists propose artificial trees to scrub CO2 out of the atmosphere - but the real thing could be smarter - October 04, 2007
Biopact: International maritime body rejects risky ocean geoengineering - November 09, 2007
Biopact: Simulation shows geoengineering is very risky - June 05, 2007
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posted by Biopact team at 8:17 PM 3 comments links to this post