29 July 2014
Velocys plc (VLS.L), the technology innovator for smaller scale gas-to-liquids (GTL), is pleased to announce that the final investment decision (FID) has been made to proceed with construction of a commercial GTL plant using the Company's technology.
The project is being funded by a joint venture (JV) between Waste Management, NRG Energy (NRG), Ventech Engineers International (Ventech) and Velocys, formed to develop a series of GTL plants in the United States and other select geographies. (See RNS announcement on 24 March 2014 for additional detail on the JV).
The plant, which is designed to be profitable on a standalone basis, will be located at Waste Management's East Oak landfill site in Oklahoma, US. It will provide a commercial reference site for the Velocys technology and will deploy a number of the Company's full scale Fischer-Tropsch reactors.
Purchase of major equipment has begun, with construction and commissioning to be complete, and the plant entering full commercial operation, in less than 24 months. The JV has entered into all major contracts needed for the project, including technology license, supply and service agreements with Velocys (at market rates), EPC contract with Ventech (lump sum for the modules), land lease with Waste Management, and gas purchase and product offtakes. Further detail concerning the project will be released during a ground-breaking ceremony scheduled for later in the year.
As a minority interest holder in the JV, the Company's investment in the East Oak plant is limited to some $5 million, drawn down over the course of construction. This amount, which excludes revenues due to Velocys for the supply of technology and services, can be comfortably accommodated from the Company's current balance sheet.
Waste Management is the largest environmental solutions provider in North America, NRG owns the largest and most diverse competitive power generation portfolio in the United States; both are Fortune 500 companies. Ventech is a global leader in the design and construction of modular refineries.
Roy Lipski, CEO of Velocys, said:
"Like the four minute mile, this small commercial GTL plant going ahead is a major psychological milestone, for the industry and for Velocys and its customers.
"After 15 years of development, over $300 million of investment, and a commercial plant underway, Velocys is now poised at the forefront of the distributed production revolution taking place in this new age of gas abundance."
Roy Lipski, CEO
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Velocys enables modular gas-to-liquids (GTL) plants to convert unconventional, remote and problem gas into valuable liquid fuels. Systems based on the Company's technology are significantly smaller than those using conventional technology, enabling modular plants that can be deployed cost effectively in remote locations and on smaller fields than is possible with competing systems. Together with world-class partners, Velocys provides complete modular GTL solutions that address an untapped market of up to 25 million barrels of fuel a day.
Velocys plc is listed on the AIM market of the London Stock Exchange (LSE: VLS). The Company has approx. 100 employees with facilities in Houston, Texas, USA and near Oxford, UK and Columbus, Ohio, USA.
About Waste Management
Waste Management, Inc., based in Houston, Texas, is the leading provider of comprehensive waste management services in North America. Through its subsidiaries, the company provides collection, transfer, recycling and resource recovery, and disposal services. It is the largest residential recycler and also a leading developer, operator and owner of waste-to-energy and landfill gas-to-energy facilities in the United States. The company's customers include residential, commercial, industrial, and municipal customers throughout North America.
NRG Energy, Inc. is a Fortune 500 company that serves millions of residential and commercial customers throughout the US and operates the largest and most diverse competitive power portfolio in the country. NRG is driving innovation through solar and renewable power, electric vehicle ecosystems, and carbon capture technology.
Ventech Engineers International LLC is a global leader in the design and construction of modular refineries, gas processing systems, plant relocations, and specialised fabrications for the chemical, refining, and gas production industries. The corporate office and fabrication complex are located in Pasadena, Texas. Additional offices are located in Ankara, Turkey, Moscow, Russia and Alabang, Philippines.