New financing spurs Ore. project to turn wood waste into jet fuel 

Source: Amanda Peterka, E&E reporter • Posted: Wednesday, March 18, 2015

A biofuels company backed by a multi-agency defense program announced plans today to start construction this summer on a biorefinery in Oregon.

Red Rock Biofuels — the recipient of a $70 million award from the Defense, Agriculture and Energy departments — also announced that venture firm Flagship Ventures has agreed to support the company, whose planned 15-million-gallon facility would convert wood waste into hydrocarbons.

The private funding will help close the gap between the federal award and the expected $200 million cost of the biorefinery, said Jeff Manterach, co-founder and chief financial officer of Red Rock.

“It’s really a matching of public and private capital, and the DOD gets something it wants, as well,” he said in an interview. “They’re able to get private capital to come to the table to fulfill something they would like to see in the market.”

Colorado-based Red Rock Biofuels opened 3½ years ago with the goal of converting wastes left after the timber harvests into biofuels. Harvesting that waste would remove fuel for wildfires.

The company uses technology that converts wood waste into a synthetic gas by heating it up in the absence of oxygen. The mixture of hydrogen and carbon is refined through the use of a catalyst to produce clear synthetic crude that can be used in jet fuel, diesel and naptha.

“We have to do something with that resource that is otherwise burning up,” Manterach said. “We can transform that into these high-quality renewable fuels that the military and aviation sector are demanding.”

Red Rock Biofuels last year was one of three advanced biofuels companies to receive an award through the Defense Production Act, an effort by the Obama administration to use military purchasing power to spur the creation of a commercial-scale biofuel industry. Fulcrum BioEnergy Inc. and Emerald Biofuels LLC also received $70 million apiece. Total expected production by the three companies is 100 million gallons a year.

Navy Secretary Ray Mabus called the awards a “game-changer” for the alternative fuels industry, which has struggled to obtain financing in the face of the economic recession and a proposed reduction in federal biofuel mandates by U.S. EPA.

The award has been a boon for Red Rock. Last September, after the federal announcement, Southwest Airlines announced plans to purchase 3 million gallons a year from the company starting in 2016. At the time, the airline called Red Rock the “first viable opportunity” it has found to power part of its fleet with biofuels.

Commercial airlines are looking to renewable fuels to both reduce emissions of heat-trapping carbon dioxide and help limit the volatility of jet fuel prices.

Red Rock also plans to sell its fuel to other customers in the San Francisco Bay Area and the Pacific Northwest, according to Manterach. He said that other airlines have expressed interest in the company’s fuel, but Red Rock isn’t ready to publicly release information about other potential customers.

“It’s an effort by them to try to control all of that price volatility while at the same time trying to move away from a non-renewable resource toward a renewable fuel,” he said. “It’s a fairly tall order, but we think we’re up to it.”

In the investment announcement today, Flagship — which finances new technologies — praised the company for creating a “market-leading position.”

“Their product saves money for customers and offers a stable alternative to the volatile crude oil market, while reducing carbon emissions — a growing priority for companies,” Flagship partner Brian Baynes said in a statement. “We expect increasing demand for renewable fuels and we are excited to support Red Rock as they bring high quality, domestically produced biofuels to market.”

The planned biorefinery in Lakeview, Ore., would convert 140,000 dry tons of woody biomass into biofuels, according to Red Rock. The producer’s goal is to sell its renewable jet fuel at a comparable price of petroleum-based jet fuel.

Manterach said that the company is now looking toward the Obama administration to hold firm on the renewable fuel standard, the federal policy that mandates refiners blend conventional ethanol and advanced biofuels into petroleum fuel.

The company is also urging Congress to allow for the removal of woody waste biomass from the floors of federal forests for the production of renewable fuels and as a means of fire suppression. Red Rock is speaking with a number of members of Congress in Western states, Manterach said, to try to rally support for such a provision.

“What is needed is an alignment of federal policy to encourage and allow removal of waste woody biomass off of federal forests that badly need it,” he said. “We’re not talking about let’s go log Yosemite, let’s go log a national park. It’s a sensible use of waste biomass resources.”