April 2016

Velocys is a unique business with a strong market position and a very strong team – indeed we have some of the world's best scientific and engineering minds and operators in the field of GTL. I am leading a review of the company's strategy that will consider how we address low points in the oil price cycle and how we cement our foundations so the company is in a position to move forward with sure footedness, speed and flexibility as environmental conditions change. The review of strategy needs to be a thorough piece of work that can set the direction of the company for decades to come, and, as such, it isn't an exercise that should be rushed. I look forward to updating you all in the months ahead.

While the review of strategy is underway, Velocys remains focused on delivery on a number of fronts. Good progress continues to be made at ENVIA's plant; the modular process units have been delivered and set in place on site. Following the completion of an extensive testing programme at the Velocys pilot plant in 2015, which established the operating parameters for optimum performance over a wide range of feed compositions, April saw our pilot plant being placed into standby mode. This will allow us to send a substantial number of plant operators and engineers to Oklahoma City, who will now, as planned, form the core of the start-up and commissioning team for the ENVIA project.

Elsewhere, significant advances continue to be made on commercial projects incorporating Velocys technology being developed by third party developers, even before the ENVIA plant is in operation. For example, in the last few months an engineering study was commissioned for a project being developed by a national gas company in Central Asia that is seeking to develop its stranded gas reserves.

Please get in touch if you would like more information on any of the items highlighted in this newsletter. Email...


David Pummell, CEO

What's new?

Progress at ENVIA Energy's GTL plant

Good progress continues to be made on the build of Velocys' commercial reference plant in Oklahoma City. Fabrication of the modular process units is complete. These modules, including those incorporating the Velocys reactors, have been delivered and set in place on site.

Part of the Fischer-Tropsch reactor structure

Study commences on UK-based waste-to-liquids plant

Amec Foster Wheeler has commenced an initial engineering study on the development of a new waste-to-liquids (WTL) project in the UK, where a combination of gate fees and fuel credits aid plant economics. Velocys is partnering on this project with a company affiliated to its largest shareholder, Ervington Investments. The company sees significant commercial interest in WTL projects as Fischer-Tropsch (FT) technology is one of only a few commercial options for making sustainable jet fuel.  Read more…

Financial results for the year ended 31 December 2015

In the financial results for 2015 that were announced on 27 April, David Pummell commented, "From my first few months as CEO I am hugely impressed by the quality of the team and the momentum the Company is making on a number of fronts. Our technology is differentiated and is being rolled out at ENVIA, and the next challenge is to determine exactly where we must focus commercially. Even with current commodity prices the economics of smaller scale GTL plants are attractive in certain markets. Today's tough market environment still provides attractive opportunities that our leadership position allows us to pursue. It is clear that Velocys has great potential to deliver significant future value growth." Read more…  » Webcast

Development of larger FT reactors

The company has successfully scaled up its reactor design to individual reactors with capacities in the range 350 to 1,000 barrels per day (bpd) by adding further standard reactor cores within a single pressure vessel. The extensive modelling programme carried out on the design has yielded very positive performance data. While the current 175 bpd reactor will continue to be used for plant designs of a few thousand bpd, use of larger reactors will substantially reduce the plant footprint and simplify piping in intermediate size GTL plants.

Velocys' FT reactor designs: 700 bpd (left) and 175 bpd (right)

On the conference circuit

Neville Hargreaves, Business Development Director presented "Waste to liquid fuels: a route to project viability" at the Energy from Waste conference in London.

Over the next three months members of the team will be presenting at the following conferences:

In the press

Analysts Canaccord Genuity recorded a very positive BRR Media interview on ENVIA's GTL project funding as well as on project progress following the company's announcement on 5th February. They wrote that Velocys is undervalued, and maintained their Speculative Buy recommendation and target price of 130p. In the press, the ENVIA project update was covered by, for example, Waste360 and Shares Magazine.

Once again, Velocys featured in Malcolm Graham-Wood's "bucket list" of companies that in his view "would weather the storm of the low oil price and, in the long term, reward investors".

Energy Voice, Proactive Investors, Downstream Business and Biomass Magazine, amongst others, reported on the company's announcement that it had commenced a study on a new UK-based waste-to-liquids plant.

Energy, Oil & Gas published an article "Think Smaller", after interviewing Neville Hargreaves.

Contact us for further information

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Velocys plc trades through its subsidiaries Velocys, Inc., 7950 Corporate Blvd, Plain City, Ohio 43064, USA (Registered in the State of Delaware, USA) and Velocys Technologies Ltd, 115e Olympic Avenue, Milton Park, Abingdon, OX14 4SA, UK (Registered in England No. 5258554). "Velocys", "Think Smaller" and the Velocys logo are trademarks of Velocys. © 2016 Velocys. All Rights Reserved.