Oxford Catalysts Acquires Velocys; Focus on Accelerating Commercialization of Small-Scale Synthetic Fuel Systems
03 November 2008
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| The Oxford Catalysts-Velosys combination will target cost-effective small-scale synthetic fuels production. Click to enlarge. |
UK-based Oxford Catalysts Group PLC has acquired Velocys, Inc. from Battelle Memorial Institute for $35 million, $5 million of which is in cash. Velocys is a leader in the design and development of microchannel process technology for the production of synthetic fuels and commodity chemicals, with more than $160 million invested in its technology to date, primarily by industrial partners including Dow Chemical, Toyo Engineering and MODEC. (Earlier post.)
Oxford Catalysts (OC) has a platform catalyst technology that provides the increased activity required to unlock the benefits of such microchannel reactors. The companies have been collaborating since May 2007; in more than 3,500 hours of pilot testing, Velocys found that the OC Fischer-Tropsch catalysts were 15 times more productive than conventional fixed bed catalysts. Together, the catalyst and microchannel reactor technologies are capable of producing next-generation synthetic fuels more economically at smaller scales than possible with conventional systems, using feedstock sources including captured flare gas, gas that is currently reinjected, stranded gas reserves and biomass.
In August, Oxford Catalysts announced that it had developed a new metal carbide FT catalyst designed for use in microchannel reactors targeted for the small-scale, distributed production of biomass-to-liquids (BTL) fuels. (Earlier post.)
By combining their efforts, the companies say they will accelerate their time to market and reduce the risk and cost of commercialization. The combined technologies result in substantial capital cost savings, improved product yields, and greater energy efficiencies than conventional technologies.
This is a transformational event for both companies and marks the beginning of an exciting new phase in the development of both Oxford Catalysts and Velocys. The enlarged group has the core technology and critical mass required to become a leader in the fast emerging small scale synthetic fuels market—a potentially significant new industry that could unlock sufficient supplies to produce hundreds of billions of dollars’ worth of transportation fuels each year.
—Roy Lipski, Chief Executive of Oxford Catalysts
Oxford Catalysts has two key platform technologies. The first is for a novel class of catalysts incorporating metal carbides, which can match or exceed the benefits of traditional precious metal catalysts, at a lower cost, for several key processes used in the petroleum and petrochemical industries. Applications of these metal-carbide catalysts include the removal of sulfur from crude oil fractions (hydro-desulfurization, HDS), the conversion of natural gas, coal or bio-mass into virtually sulfur-free liquid fuels via the Fischer-Tropsch reaction (GTL, CTL and BTL processes respectively), and the transformation of biogas (waste methane) into syngas.
The second platform relates to a unique chemical reaction which can be used to generate steam at temperatures between 100ºC and 600ºC+, instantaneously, starting from room temperature, using a cheap liquid fuel alongside the catalysts.
Velocys was formed in 2001 to commercialize microchannel technology developed by Battelle Memorial Institute at Pacific Northwest National Laboratory (PNNL). Velocys, which owns or has licences to more than 550 microchannel patents (the largest microchannel patent portfolio in the world), is commercializing systems for both FT and methane reforming, two of the key components of the GTL process.
The basic building blocks of the Velocys technology are reactor components, each with large numbers of parallel and/or perpendicular microchannels. These microchannel reactors enable the use of significantly more active catalysts than can be utilized by conventional reactors, such as the FT catalyst developed by Oxford Catalysts. They can result in substantial capital cost savings, improved product yields, and greater energy efficiencies than conventional technologies, particularly when incorporated into smaller scale projects such as those suited to BTL, and to GTL for flare gas and small to medium scale stranded gas, a potentially significant new addressable market.
Velocys has formed strategic partnerships with several industry leaders in various application areas. Several partner supported projects are currently targeting commercial demonstration of the technology, including one with Toyo Engineering Corporation (a global EPC company with Mitsui as a minority shareholder) and MODEC, Inc. (the world’s second largest owner/provider of FPSOs, owned by Mitsui). In the synthetic fuels market, these projects are aiming for commercial demonstration beginning as early as 2009.
To fund the cash element of the purchase and to provide working capital to finance the integration of the wo companies, Oxford Catalysts intends to raise approximately £10.3 million (£8.2 million net of expenses) via a conditional, non pre-emptive institutional placement.
Resources
Technical experts’ report on the Velocys technology Prepared by Nexant, Inc.
Acquisition of Velosys Inc. (Oxford Catalysts)
Cool.This could really be a game changer.
Posted by: swisch | 03 November 2008 at 02:01 PM
The technical report makes interesting reading because it gives some indication of where Velocys sees huge market potential.
They highlight stranded gas and associated gas.
They also mention presently available forest industry wood wastes.
Velocys points out that FT is fundamentally more amenable to make a high quality diesel fuel.
Polygeneration from coal is also mentioned, where FT fuel is combined with electric power generated via integrated gasification combined cycle units (IGCC) and concentrated carbon dioxide is sequestered.
Some extracts from the technical report:
4. Market opportunities.
4.1 Petroleum demand and reserves.
One area that Velocys is targeting for its technologies is the opportunity represented by unexploited
natural gas resources, either for flared gas or for stranded or remote small sized gas discoveries.
Small scale GTL (using SMR/FT) may be a superior choice for most of these fields, especially for associated gas, compared to LNG, since instead of being flared, the gas can be converted via SMR/FT into syncrude that can be mixed with the fields’ crude oil production and transported to market without incurring any separate transportation expense or capital charges.
4.3.2 Routes to biofuels and biodiesel.
This opportunity appears to have two primary time routes. One that is actively being considered at
the present time in various locations is that of using spent liquors, waste biomass, or other available bio materials as feedstock to gasifiers to make synthesis gas. The synthesis gas would then be used to feed a MPT FT unit based on Velocys’ technology. The key market advantage that Velocys has is that such FT plants would likely be typically smaller scale, rather than the
large FT plants used in large scale GTL projects. Thus, these BTL opportunities are ideally suited to Velocys’ MPT FT technology and its capital cost advantage in smaller scale applications.
BTL utilizing presently available forest industry wood wastes is within today’s technology capability, as long
as the FT technology employed can be scaled down economically.
Thus, BTL is an application for which Velocys’ MPT FT technology appears very well suited.
4.3.3 Development pathways for biofuels.
Nexant foresees substantial opportunities for both broad bio-based routes as the BTL concept develops and finds its place alongside the existing extensive industry infrastructure in the downstream petroleum and natural gas industry. Gasification, however, is the route that can be used to produce syngas for FT synthesis. While gasoline type components can be made via FT, FT is fundamentally more amenable to make a high quality diesel fuel.
4.4 Polygeneration from coal, etc.
This application could provide another promising opportunity for Velocys’ MPT. The advantage of FT
plants of an economical scale as part of a large integrated coal to power and chemicals/fuel facilities
is very promising, and has environmental advantages if the electric power is generated via integrated
gasification combined cycle units (IGCC) and the concentrated carbon dioxide is sequestered to
reduce greenhouse gas emissions.
Posted by: Kristoff | 03 November 2008 at 07:52 PM
Integrated Coal Gasifiaction Combined Cycle power plants will be faster and cheaper to build than steam cycle power plants and they can be more flexible and reliable because the engines, turbines and generators can be more efficient and smaller and easier to build and repair. It is natural that the coal delivery and handling facilities and gasification units be shared with methanol production and even methane production. Waste heat is produced in all chemical processes and this can be used as part of the energy needed for power production.
Careful gasification of the coal can produce fertilizer, gaseous fuels and liquid fuels and chemicals in large quantities prior to the gasification of the remaining coke. The immediate and direct gasification of coal as now practiced is wasteful of these products.
There is no doubt that combined cycle power plants should be used for all new fuel powered electric generating plants and these are all run on gas or liquid fuels of some type. Without needing a single boiler the largest piston engine in the world can achieve %50 efficiency, and smaller versions get %47. This can be improved with exhaust and cylinder heat recovery in the known Still cycle. ..HG..
Posted by: Henry Gibson | 06 November 2008 at 02:04 PM
@Henry Gibson
The IGCC plants won't be cheaper by any means than a conventional power plant. But they will have a much higher efficiency. That is definitely worth the additional investment, and will pay back in the long term, not to mention lower CO2 emittion per kWh made.
Posted by: black ice | 06 November 2008 at 10:32 PM
FPSO VESSELS mean the process will be placed on a ship and moved to sites directly adjacent to drilling platform rather than burning off gas.In delta areas probably cheaper and less complicated than platforms.
This is good news in politically unstable areas. Just move the ship if terrorist get HOT
James Diego
is it the micro channel with same catalyst used today or what??????
Posted by: James Diego | 07 November 2008 at 11:00 AM
The technical report from Nexant does not address the challenges yet needing addressed prior to commercial manufacturing of FT reactors. Significant challenges do remain for Velocys to commercially produce technically and economically viable FT reactors. Time to market is not what Velocys claims, and therefore the valuation at $35m is significantly overstated. Historically, Velocys has overstated its own value in annual reports by approximately 40%. Buyer beware.
Posted by: Werner | 11 November 2008 at 06:11 PM