US DOE awards KiOR term sheet for loan guarantee supporting a more than $1B biofuels project; drop-in fuels from wood biomass
KiOR, Inc., a developer of a catalytic pyrolysis process to produce renewable oil from biomass, has received a term sheet for a loan guarantee from the US Department of Energy’s Loan Guarantee Program supporting a more than $1-billion biofuels project. The project would convert wood biomass into drop in biofuels such as gasoline and diesel fuel.
KiOR’s project under the DOE loan guarantee program will consist of four biorefineries that will contribute approximately 250 million gallons of cellulosic biofuel to the Renewable Fuel Standard. The first two plants are expected to be in Mississippi, with additional sites planned in Georgia and Texas.
This project is designed to complement an earlier Mississippi agreement, which requires KiOR to build three plants in Mississippi before 2015. (Earlier post.) The first plant under that agreement (and the company’s first commercial unit overall) will be located in Columbus, MS and funded by the proceeds of a $75-million loan from the State of Mississippi. The second and third facilities built in Mississippi will be the first two facilities built under the terms of this DOE project.
While the term sheet is an important step in the process, we recognize that more work lies ahead to finalize the loan guarantee and there is no assurance it will be issued until the loan is closed.—Fred Cannon, President and CEO of KiOR
This project accelerates KiOR’s commercialization strategy. In August 2010, KiOR announced the start of engineering and construction on its first commercial facility in Columbus, MS which is expected to produce more than 11 million gallons of fuel per year. KiOR also has additional projects in various stages of development in Arkansas, Alabama and other southern states.
KiOR combines a proprietary catalyst system with a biomass-to-renewable crude conversion technology to produce a high-quality oil called Re-Crude using a process similar to Fluid Catalytic Cracking used in the oil industry. Re-Crude is refined into gasoline and diesel blendstocks that are compatible with existing fuel infrastructure.
Khosla Ventures incubated the company in 2007 and is the lead investor.