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Valero invests in Mascoma; to invest up to $50M in commercial wood-based cellulosic ethanol biorefinery

13 January 2011

Valero Energy Corporation, the US’ largest independent oil refiner, has invested in cellulosic biofuels and consolidated bioprocessing company Mascoma Corporation (earlier post). Further, Mascoma, Valero, and Mascoma’s operating subsidiary, Frontier Renewable Resources LLC, jointly owned with natural resource management company, J.M. Longyear LLC, have signed a non-binding letter of intent to support the construction of one of the first commercial-scale wood-based cellulosic ethanol biorefineries, slated to break ground in 2011 in Kinross Charter Township, Michigan.

Under the terms of the letter of intent, Valero would potentially invest up to $50 million of the equity required to finance the project through Frontier Kinross LLC, a subsidiary of Frontier, and would enter into an off-take agreement for the project’s ethanol production.

Valero’s participation in the project strengthens the financing package for the Kinross biorefinery, complemented with funds from the State of Michigan, through the Michigan Economic Development Corporation (MEDC) and the US Department of Energy (DOE). As further support of the project, Valero would provide project development and construction oversight services.

The biorefinery is planned to have an annual production of 40 million gallons of cellulosic ethanol, to be covered by the off-take arrangement with Valero. Frontier will use hardwood pulpwood, which is selectively harvested, naturally regenerated, and is an underutilized, abundant resource in the area surrounding the Kinross biorefinery.

Mascoma’s 200,000 gallons of cellulosic ethanol per year demonstration facility in Rome, New York, has demonstrated the viability of the technology over the past two years and sets the stage for the commercial facility.

Mascoma recently announced the acquisition of SunOpta BioProcess Inc. (SBI) (earlier post), a fiber preparation and pretreatment company, creating a company with comprehensive capabilities for converting non-food cellulose (wood chips, energy crops and organic solid waste) into ethanol and high value co-products. With the addition of SBI and Valero, Mascoma has now covered the entire process of commercializing cellulosic ethanol, from raw materials supply, to pre-processing, through Mascoma’s consolidated bioprocessing (CBP) process and into final distribution.

Valero Energy Corporation is an international manufacturer and marketer of transportation fuels, other petrochemical products and power. Its assets include 15 petroleum refineries with a combined throughput capacity of approximately 2.8 million barrels per day, 10 ethanol plants (7 acquired in 2Q09, 3 in 1Q10) with a combined production capacity of 1.1 billion gallons per year, and a 50-megawatt wind farm.

Valero is also one of the largest retail operators with approximately 5,800 retail and branded wholesale outlets in the United States, Canada and the Caribbean under the Valero, Diamond Shamrock, Shamrock, Ultramar and Beacon brands.

January 13, 2011 in Cellulosic ethanol | Permalink | Comments (4) | TrackBack (0)

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Using surplus wood and forest waste to produce energy and fuel could be called sustainable with reduced environmental effects if done properly.

With worldwide growing use of color e-books etc, a lot less wood will be used to produce paper in the coming years. A large volume will be available for cellulosic fuel and other uses.

Forests can be harvested and replanted with fast growing trees every 3 or 4 decades. Young growing forests capture more CO2 than old forests.

However, after 5 to 10 crops, something may have to be done to keep the soil sufficiently fertilized.

It is good to see Valero working on this. They are on the inside of the oil industry and realize that ethanol and alternative fuels are here to stay. If you can not beat them, join them might be a summary here.

The second half of the RFS calls for cellulose fuels. When we have enough cars that can run on E20-E85 with blend pumps then we can develop resources. Make those cars HEV/PHEV/EREV and we are all better off. That is why OFS is key on many fronts.

Harvesting from forest lands, even plantation is energy intensive, disturbs the hydology and can release a substantial CO2 dose also consume a lot of liquid fuel.

Old telephone books, newspapers garbage and mill and furniture trimming, building and demolishion wastes including tree trimmings - on the other hand - are already 'in stream' and must be dealt with regardless.
Those sources are very economical energy wise to send to one of the digesters.

Mascoma, Range, Coskata and others are setting the direction of future waste to fuel production processes. They will use a steadily growing stream of waste from industry, municipal landfill, construction and agriculture to replace some fossil fuels.

But as the technology for cellulosic improves, so too will battery and even FC technology. What we may see is a PHEV with a small 7.5kWh battery and an alcohol-tuned 3 cylinder ICE for range extension. This combination burning ethanol/methanol may fill the low cost market need in NA and Asia/India. Provided the best alcohol production processes are copied and scaled up.

This would provide a curve to bring emerging economies out of gasoline, to hybrid EVs able to burn waste->alcohol fuels. The next challenge would be to build out the power plant infrastructure with renewables wind, solar, nuclear and Residential Power Units greatly limiting demand on new grid expansion.

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