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