New Life for INEOS Bio plant: Alliance Bio-Products wins US OK for cellulosic ethanol re-fit

Source: By Jim Lane, Biofuels Digest • Posted: Thursday, July 13, 2017

In Florida, Alliance Bio-Products reports receiving approval from the USDA Office of Rural Development for the collateral purchase of the 8 million gallon cellulosic ethanol plant originally built by INEOS New Planet Energy JV, and operated intermittently between 2012 and 2015 as INEOS sought to stabilize and demonstrate the technology, hoping to build a chain of cellulosic ethanol facilities around the world.

The INEOS Bio technology featured syngas fermentation based on work originally developed near Fayetteville, Arkansas in the 1990s and 2000s under Dr. Jim Gaddy.

Alliance proposes to deploy its own Cellulose to Sugar (CTS) process

The company said that by renovating the plant and utilizing a state-of-the-art fermentation and distillation system already in place, and with an abundance of free feedstock available, Bio-Products believes it can increase production capacity and profitability of its sustainable,environmentally friendly alternative to petroleum-based fuels and other products. The plant also sits on a large parcel of land that would allow Bio-Products to expand as demand increases.

The company said that its patented CTS process allows it to produce biofuels for less than $1 per gallon that have 85-95% less greenhouse gases than petroleum-based products. The CTS process enjoys a family of patents centered around the main U.S. patent # 8,062,428. Bio-Products said that expects to begin production at the plant by summer of 2018, potentially generating $25 million in EBITDA and then will look to double capacity to 16 MMGY, potentially generating $54 million in EBITDA in 2020 before maximizing capacity of 34 MMGY, generating $112 million in 2023.

The company added that the plant purchase will create approximately 100 permanent jobs in the short term, with additional employment opportunities created as production expands. The purchase of the plant is being funded through a mixture of debt and equity. The equity portion of the investment is being done via a 506(c) filing that is still open for investor consideration, in order to reduce as much debt as possible.

The USDA approval

Back in November, Arbor Bank foreclosed on a $49 million loan for the facility, backed by a USDA loan guarantee, and began seeking buyers for the plant, after INEOS Bio reportedly sold the underlying technology and its Arkansas-based pilot plant to an undisclosed Chinese company, which according to Alliance and media reports did not wish to acquire the Florida-based commercial-scale plant.

The plant itself is owned by a joint venture between New Planet Energy and INEOS Bio, that was formed almost a decade ago after New Planet Energy won a preliminary DOE grant towards a commercial-scale plant, and forged the JV with INEOS as a step towards commercialization. INEOS itself acquired the Gaddy/BRI technology in 2008. INEOS Bio scaled back its cellulosic ambitions at the same time as the plant experienced a series of technical difficulties we reported on here, and in the face of declining oil prices and the resulting downturn in interest among investors in deploying alternative fuel technologies.

In a statement in September 2016 when it announced that it was selling its cellulosic ethanol business, INEOS noted that it had invested $300 million in developing and commercializing the technology — but noted that the economic drivers in the US ethanol market had changed.

Among those drivers were falling US gasoline prices — but another primary driver has been saturation of the US demand for ethanol via lower-cost corn fermentation technology, and a resulting fight between obligated parties under the Renewable Fuel Standard and other stakeholders over how additional fuel volumes — which as envisioned by Congress in 2007, were to come primarily from cellulosic ethanol — would find a market.

The technology

Alliance states that it’s “mechanocatalytic process” can convert virtually any plant, paper or wood material into its base components of sugars and lignin without the use of enzymes, liquid acid, applied heat or pressure in only a matter of minutes. The company notes that it uses a dry powder catalyst to convert C5 and C6 sugars, “leaving only a pure lignin as a byproduct.”

The only pretreatment needed, according to the company, “is size reduction, using a very low energy shredder or hammermill, for capacity and convenience of loading the CTS reactors.”

Under a master license agreement with the University of Central Florida, the company notes that “Alliance subsidiary AMG Energy Group enjoys the exclusive rights to North America (including Canada, U.S. and Mexico) and Africa to four issued patents and fourteen filed and pending patents to the revolutionary CTS Cellulose Conversion process. The rest of the world, except for Southeast Asia, is a joint venture between AMG and Thor Renewable Energy Singapore, under Carbolosic, LLC.”

The Alliance technology has been developed at lab scale.

Next steps

Alliance will need to lock down access to the Indian River County feedstock supply — pre-conversion activities which were initially handled at the 143-acre INEOS Bio New Planet Energy project site were transferred to the Indian River County Landfill in early 2017.

The equity raise

The company needs to raise equity and debt to commercialize its process — and this is a small publicly traded (over-the-counter) stock without the kind of balance sheet that we saw in the case of INEOS.

In March, the company launched an $80M Regulation D (506(c)) offering, “to secure funds through accredited investors for the purchase of a bioethanol plant in Southeast Florida that would enable the Company to increase production capacity and profitability of its sustainable, environmentally friendly alternative to petroleum-based fuels and other products through its patented Cellulose to Sugar conversion process.”

In the offering? 1 million shares of 8% Convertible Preferred Stock at $10 per share, with a preferred minimum investment of $5,000.

Although the purchase price for the old INEOs BIO New Planet facility has not been yet disclosed, the plant would have sold at a considerable discount to the original construction price for the original plant — which would have included costs for the scaling up of the INEOS syngas fermentation technology, as well as for the steel in the ground. That will considerably reduce the cost of deploying this newer technology.

Over in New York

Meanwhile, we reported this week that New Planet Energy itself re-surfaced in New York, moving forward with a 250,000 square-foot processing facility on 39 acres to sort through trash and convert an impressive estimated 86.5 percent of it into fuel using a steam reformation system gasification process. They estimate that half the materials will be recycled into EPA certified solid recovered fuel, and the other half will be converted into diesel fuel with total volume of diesel estimated at about 20 million gallons a year.

Public meetings will be held later this year and a state environmental impact study is currently underway.

According to NPE, since 2012, the company has focused its efforts on New York State due to communities resisting landfill expansions. New Planet has identified five future sites for development in New York State. In addition, NPE has identified future project opportunities in the North East and California for development.