Rentech Successfully Producing Synthetic Fuels at Colorado Demo Unit
07 August 2008
Rentech, Inc. has successfully produced synthetic fuels at its Product Demonstration Unit (PDU) in Commerce City, Colorado. Rentech’s PDU is the only synthetic fuels facility in the United States today producing transportation fuels following the shutdown of Syntroleum’s demonstration facility in 2006.
In September 2006, Syntroleum announced the completion of the production of 100,000 gallons of Fischer-Tropsch aviation fuel for the military at the Catoosa Demonstration Facility and shut down the facility. (Earlier post.)
The Rentech facility is designed to produce approximately 420 gallons per day of synthetic jet and diesel fuels and demonstrates the successful design, construction and operation of a fully-integrated synthetic fuels facility utilizing the Rentech Fischer-Tropsch Process.
The Rentech Process is a patented and proprietary technology that converts synthesis gas from carbon-bearing resources into hydrocarbons that can be processed and upgraded into clean-burning synthetic jet and diesel fuels. Rentech’s Colorado facility provides a platform for the production of these products from a wide variety of resources, including waste materials, into fuels that could have a potentially carbon neutral or even carbon negative footprint. These fuels are also cleaner burning and more efficient than petroleum-derived fuels. The PDU is currently producing synthetic fuels from natural gas, and once gasification is added, it will also be capable of producing fuels from biomass and fossil resources.
Rentech believes the design of the PDU will verify the engineering parameters for scale-up to commercial operations. In addition, the PDU provides the Company with engineering, design and process knowledge that will be transferred to the planning and construction of its commercial scale facilities.
Achieving production at the PDU is the result of the successful operation and integration of all processes at the facility, including the steam methane reformer for the production of synthesis gas; the conversion of the synthesis gas in the Rentech reactor into clean hydrocarbons; the separation of the Rentech catalyst from the wax produced from the reactor; and the processing and upgrading of the hydrocarbons into synthetic fuels using UOP hydrocracking and hydrotreating technologies. Rentech and UOP maintain an alliance which provides a one-stop solution to developers of commercial synthetic fuels facilities worldwide for synthesis gas conversion and product upgrading. (Earlier post.)
With the PDU successfully operating, the Company will focus on confirming and refining the design parameters of the Rentech Process during longer-term production runs as well as the effect of various operating parameters on product yields and composition.
No. Synthetic Natural Gas (SNG) or sometimes called Substitute natural Gas is a synthetic fuel produced from syngas and is produced commercially in the US.
http://en.wikipedia.org/wiki/Substitute_natural_gas
Posted by: Selim Nouri | 08 August 2008 at 03:02 AM
Liquid fuels are needed to operate most automobiles and trucks in the US. While plug-in-hybrids can replace much fuel in the future, liquid fuels are important now. Rentec should be given large loans to build production facilities for methanol as well. US government research labs should now develop methanol combustion systems that can be added to systems in present cars and trucks to reduce the combustion of gasoline and diesel and burn methanol as a partial or full substitute part of the time. Methanol will require tanks of double size for the same distance, but it is much easier and more efficient to make than gasoline or diesel from natural gas. ..HG..
Posted by: Henry Gibson | 11 August 2008 at 10:21 PM
Coal is the Future, Gasification of Coal. Rentech (RTK) Significant Announcement on the Horizon
Company: Rentech
Ticker: RTK
Company Snapshot: Rentech is composed of two business segments each focusing on a major global issue, alternative green energy and fertilizer production. Rentech’s alternative energy segment is one of the world's leading synthetic fuels technology and development companies. Over the last twenty-five years, Rentech has developed and patented the Rentech Process, an advanced version of the well-established Fischer-Tropsch process. The Rentech Process can convert a wide array of carbon-bearing materials, including green resources such as biomass and municipal solid waste, into ultra clean fuels and chemicals ranging from jet fuel to diesel gasoline. Rentech’s objective is to help the world reduce its dependency on oil and lower emissions, including greenhouse gases. Rentech’s second business segment is their fertilizer plant Rentech Energy Midwest Corp. -REMC-, located in East Dubuque, IL. REMC is one of the country’s largest nitrogen manufacturers producing nitrogen-based fertilizer products and industrial nitrogen products.
Recommendation: Buy
Recommendation Date: Friday, November 21, 2008 at .50 cents per share
Recommendation Results:
** Friday, November 21, 2008: UP 8.00%
** Monday, November 24, 2008: UP 12.96%
** Tuesday, November 25, 2008: DOWN -1.72%
** Wednesday, November 26, 2008: UP 3.42%
*** Since Date of Recommendation: UP 24.00%
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On Friday, November 21, 2008 we recommended Rentech (Ticker: RTK) with a buy rating at .50 cents a shares. Since then a few positive and significant developments have taken place.
* November 22, 2008 Indiana and Illinois announce they are pursuing major clean coal power projects. Illinois Attorney General Lisa Madigan has announced a measure that will create 2 clean coal projects including a $2.5-billion plant near Taylorville, Illinois. That plant comes in the wake of another $2 billion coal gasification project in southern Indiana.
http://www.wthitv.com/dpp/news/news_wthi_Indiana_and_Illinois_Clean_Coal_200811212155
* November 22, 2008 Baard Energy has received its final air permits from the Ohio EPA which in turn allows them to build a coal to liquid plant in Wellsville along the Ohio River. One of the first of its kind. The permit is the third and final state environmental permit necessary for Baard Energy to proceed into final design and construction of the 53,000 barrel-per-day coal/biomass to liquids plant at the Columbiana County Port Authority site in Wellsville. Baard has yet to release who will supply their Fischer-Tropsch technology.
http://www.reviewonline.com/page/content.detail/id/507886.html?nav=5008
* November 22, 2008 President-elect Barack Obama reaffirmed his support for alternative energy. This includes Rentech’s Fischer-Tropsch technology that converts biomass, natural gas, and coal into liquid fuels ranging from jet fuel to diesel gasoline.
http://news.yahoo.com/s/ap/20081122/ap_on_bi_ge/obama_economy_12;_ylt=Anucx2RdHWzyzTRuGeA1tl0Gw_IE
* November 24, 2008 The US Air Force concluded analysis of the effects of using a natural gas-based synthetic fuel with its Lockheed Martin F-22, as work to trial the technology accelerates through its trainer, transport and fighter fleets. The office of the assistant secretary of the air force for installations, environment and logistics is expected to select a private partner during December to develop a Fischer-Tropsch production facility at Malmstrom AFB, Montana.
http://www.flightglobal.com/articles/2008/11/24/319113/us-air-force-completes-f-22-synthetic-fuel-trials.html
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As of Friday, November 21, 2008 for an Aggressive short-term trade we like Rentech at these current levels. Rentech will release fiscal year 2008 financial statements December 16, 2008. Rumor has it these numbers will be very positive.
Rentech’s stock price has been down significantly along with everyone else:
15 days down –43%
45 days down –62%
65 days down –79%
The last time Rentech hit .46 cents a share was October 27, 2008 and the stock proceeded to rally .43 cents to .87 cents. An 89 percent increase in 7 days. Since March of this year a 40 to 80 percent fluctuation in price has been common and we look for this type of volatility to continue. Rentech could easily exceed a $1.20 per share before year-end based on a number of reasons.
Rentech’s management is currently in a pickle. The stock has dropped significantly and the officers of the company need results ASAP if they want to be able to justify their year-end bonuses. In addition, all stock options are underwater including those belonging to the board of directors. As we have seen in the past, Rentech actively manages their stock price by issuing press reports before releasing their latest financial numbers. Only to be followed with additional press releases over the coming weeks, all in an attempt to influence the stock price. One news release could easily move Rentech’s stock price .50-.60 cents like it has done so many times in the past. Two or more press releases could be very significant.
Press releases for Rentech's alternative energy segment could focus on:
* Technology licensing partnerships = Revenue increase
* Revenue and cost sharing relationships = Revenue increase and cost decrease
* New business strategies and directions = Shareholder assurance
* New product sales revenue generated by their Product Demonstration Unit -PDU- leading the way to future business opportunities as companies discover value in Rentech’s numerous gas to liquid products = Revenue increase and shareholder assurance
* Continued process improvements at their Product Demonstration Unit -PDU- facility in Commerce City, CO = Shareholder assurance
Rentech’s fertilizer plant, Rentech Energy Midwest Corporation -REMC- located in Dubuque IL, is an extremely valuable asset that generates a tremendous amount of cash. The value of this plant alone creates a support at current levels helping to reduce downside risk. Rentech currently has 166 million shares outstanding and their fertilizer plant alone is valued between 120-210 million. A quick back of the envelope calculation, 122/166 and 210/166, suggests a stock price between .73 to $1.27.
Rentech recently reaffirmed EBITDA guidance for their fertilizer plant and there’s a good chance Rentech will post a net income, something they haven’t done in years. Moving from a net loss to a net income would be a significant event and I think the street HAS NOT priced this into the stock. Last quarter Rentech successfully completed their Product Demonstration Unit -PDU- that converts natural gas into various petroleum based products like jet fuel and diesel gasoline. The completion of the PDU means a reduction in expenses. Combine reduced expenses with record fertilizer sales revenue, coming from greater demand for corn that is used in the production of ethanol based fuels, could translate to a positive earnings per share. Management needs a homerun if they want to justify year-end bonuses; there’s an incentive for them to be aggressive. Shareholders are less likely to be pissed off when they hear about seven figure total compensation packages when the stock is trading at $3.15 versus .50 cents a share. Again, management has a strong incentive to move this stock and all stock options are currently underwater.
Press releases for Rentech's fertilizer segment could focus on:
* Record fertilizer sales revenue growth for fiscal year 2008
* Very favorable EBITDA guidance for 2009
* Favorable asset valuation discussion of their fertilizer plant
As reported at Mutual Fund Facts About Individual Stocks -MFFAIS- the overall number of institutional owners has recently increased 20 percent from 81 to its current level of 97. This is very positive.
Institutions adding to an already existing position include:
Goldman Sachs added 825,221 shares
Vanguard Group added 5,662,885 shares
Barclays Global Investors added 1,918,971 shares
Credit Suisse added shares
Putnam added shares
Oppenheimer added shares
Northern Trust added shares
Bank of New York Mellon added shares
Bank of America added shares
Wells Fargo added shares
There’s a large short position, I believe 8-9 million shares and it’s probably a safe assumption that these sellers are in the money since Rentech is currently near 52-week lows. If Rentech’s stock price does move quickly, press releases and an overall market rally, we could see short sellers add to the buying as they lock in profits. This 1-2 combo could move Rentech’s stock price in excess of .40 cents a share.
Because of a crisis in confidence the major indices, DJIA and S&P 500, have seen a record setting retreat in the last 30 days, especially in the last 7, and the market is due for a 1,200-point rally. This alone could move Rentech’s stock price .30 cents a share.
Posted by: Doctor Alpha | 26 November 2008 at 01:30 PM