Large Cellulosic Biofuel Facilities Gaining Momentum

Tuesday, June 21, 2011

Kior’s process turns wood waste into synthetic crude. 
Biofuel startup Kior, Inc. said it could raise as much as $241 million in its initial public offering on the Nasdaq Global Market, almost double the original figure the company gave in April.

Based on the estimated prices, Kior will more than double the $100 million it previously planned to raise in an I.P.O. (initial public offering). If Kior’s shares sell at midrange prices, the company will be valued at $2.3 billion. The company plans to use the proceeds for a portion of the funding needs for its first commercial production facility to be built in Newton, Mississippi by the third quarter of 2012.

Said to be the largest cellulosic biofuels facility in the United States upon completion, Kior expects to spend between up to $70 million over the next 12 months to build the $350 million production hub.

Unlike many biofuel companies, Kior’s process turns wood waste into synthetic crude, the product named Re-crude. Chemically identical to gasoline and diesel fuel, this biofuel produce can be a substitute for fossil fuels rather than just being an additive in the form of ethanol.

Kior uses a catalyst and a technique called fluid catalytic cracking, a process borrowed from oil refining. The company’s synthetic crude reportedly has 92 percent lower carbon emissions footprint compared with fossil fuel-based crude, said Fred Cannon, Kior president.

The company is shooting for an unsubsidized gasoline or diesel production cost of below $1.80 per gallon for its wood chips-to-biocrude technology. Kior said this is $1.10 cheaper than producing a gallon of ethanol.

Kior is planning to have a production capacity of approximately 250 million gallons of biofuel from four large biorefineries, including two Mississippi plants plus sites planned in Georgia and Texas. The Newton facility is designed to process around 1,500 tons of feedstock per day, which is three times the size of the company’s initial-scale commercial production facility in Columbus, Mississippi which started building in the first quarter. The $190 million Columbus plant will be in business by the second half of 2012.

Kior is the third biofuel company to go public since last year, backed by investors at Khosla Ventures’ $1.1 billion clean technology fund. Colorado-based biofuels startup Gevo made its debut on the Nasdaq on February 9 of this year and raised as much as $117.5 million at $16.78 per share. Gevo produces isobutanol.

Amyris Biotechnologies based in Emeryville, California raised $84.8 million in an I.P.O. last September 2010, after a $16 per share pricing. Amyris' technology uses genetically modified yeast that consumes biomass and churns out a renewable fuel similar to Kior’s that resemble fossil fuels in chemical makeup.

The above is excerpted from an article by Oliver M. Bayani. Read the whole thing here.

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