Velocys commercial-scale biorefinery plans move forward
Velocys plc announced that the US Department of Agriculture (USDA) has 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 MM of debt as part of the total installed cost of the project.
The plant is being designed to produce approximately 1,400 bpd of renewable diesel fuel from approximately 1,000 dry tpd of woody biomass residues in the Southeast US 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.
The USDA 9003 Biorefinery, Renewable Chemical, and Biobased Product Manufacturing Assistance Program (9003 Program) provides 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-recognized 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.
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