Velocys, the technology innovator for smaller scale gas-to-liquids (GTL), reached a final investment decision (FID) 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 US and other select geographies.
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. 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, according to company officials.
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 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 accommodated from the company's current balance sheet.
"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," said Roy Lipski, CEO of Velocys. "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."