Velocys is currently focusing on the development, with its partners, of its first renewable fuels plant.
The plant is being designed to produce approximately 19 million gallons per year (1,400 barrels per day) of renewable diesel fuel from approximately 1,000 dry tons per day of woody biomass residues in the Southeast U.S. There is an abundant supply of low-cost feedstock sourced from this region that will provide a long term strategic supply of biomass to the plant.
In June 2017 the U.S. Department of Agriculture (USDA) invited Velocys to submit a Phase II Application to obtain a loan guarantee for a commercial-scale biorefinery. This invitation was made after a successful Phase I Application process. The loan guarantee could apply to up to $200 million of debt as part of the total installed cost of the project.
The USDA 9003 Biorefinery, Renewable Chemical, and Biobased Product Manufacturing Assistance Program (9003 Program) enhances the economy of rural America by providing loan guarantees to biorefineries, such as those that Velocys and its partners are developing, which produce advanced biofuels. Under this program, a material portion of the project debt is guaranteed by the USDA, accelerating the timeline and financially de-risking the project to final investment decision (FID). Velocys has engaged the global leading project finance bank, Sumitomo Mitsui Banking Corporation (SMBC), as the lender of record and as its financial advisor.
The Company will now initiate the final phase of the loan guarantee process. The steps required under this process identify and mitigate risk and complete evaluation of the project. These steps match the typical development stages for biorefineries. Work is already underway on Velocys' integrated technology demonstration with its strategic gasification partner ThermoChem Recovery International (TRI), and the Front End Loading (FEL-2) study with IHI E&C, an internationally-recognised Engineering, Procurement and Construction (EPC) company.
Velocys has the goal of completing all work packages required by the USDA 9003 Program, concluding commercial negotiations such as feedstock supply and offtake agreements, securing project equity funding, and reaching FID during the course of 2018.
Velocys intends for this to be the first of many repeatable plants to address the renewable fuels market in the United States. As well as the first plant, Velocys has identified other locations in the Southeast U.S. that could host plants with capacities totalling 100 million gallons over the next 10 years.