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Mascoma and Valero establish JV for commercial-scale hardwood cellulosic ethanol facility; Valero providing majority of financing

Cellulosic biofuels and consolidated bioprocessing company Mascoma Corporation has entered into definitive agreements with Valero Energy Corporation, the US’ largest independent oil refiner and a leading ethanol producer, to develop and to operate a first-of-its-kind 20 million gallon per year (mgpy) commercial-scale cellulosic ethanol facility in Kinross, Michigan.

In January, Valero invested in Mascoma (earlier post). At that time, Mascoma, Valero, and Mascoma’s operating subsidiary, Frontier Renewable Resources LLC, jointly owned with natural resource management company, J.M. Longyear LLC, signed a non-binding letter of intent to support the construction of a commercial-scale wood-based cellulosic ethanol biorefinery in Kinross; at the time, construction was projected to begin this year.

The cost to construct, commission and start-up the Kinross facility is expected to be approximately $232 million, based on current external engineering estimates, and includes certain up-front infrastructure costs that will enable the expansion of the facility to 40 million gallons per year. These costs are fully funded, with Valero providing the majority of the financing, and the remainder from awards by the US Department of Energy (DOE) and the State of Michigan.

Construction of the Kinross facility is anticipated to start in the next three to six months and is expected to be completed by year-end 2013.

The Kinross facility will use Mascoma’s proprietary consolidated bioprocessing (CBP) technology platform (earlier post), which has been developed by Mascoma over the past five years, to convert hardwood pulpwood into ethanol. Hardwood pulpwood is a selectively harvested, naturally regenerated feedstock and is an underutilized, abundant resource in the surrounding area.

Highlights of the JV agreement include:

  • Frontier Renewable Resources, LLC, a subsidiary of Mascoma, and Diamond Alternative Energy, LLC, a subsidiary of Valero, have formed a joint venture, Kinross Cellulosic Ethanol LLC, to develop and operate a hardwood cellulosic ethanol facility in Kinross, Michigan.

  • Mascoma and Valero will finalize certain ancillary agreements relating to the Kinross facility, including construction, feedstock supply and ethanol off-take marketing.

  • Mascoma will contribute the proceeds from its DOE cooperative agreement award and its State of Michigan grant to the joint venture, while Valero will provide additional financing required to develop the Kinross facility.

  • Valero will provide project management to build and will operate the Kinross facility, and will hold a majority interest in the joint venture. Mascoma, through its subsidiary Frontier, will hold a minority interest. Valero will market the ethanol produced at the Kinross facility.

  • Mascoma will receive royalties for a certain time period based on ethanol yield milestones.

  • Valero will have the option to expand the Kinross facility’s capacity to up to 80 million gallons per year.

  • Mascoma and Valero have developed a framework agreement for partnering on additional cellulosic ethanol facilities beyond Kinross.

This partnership provides an exciting opportunity to combine Mascoma’s innovative CBP technology platform and expertise with Valero’s project management, operating, distribution and marketing capabilities. We view this first commercial-scale cellulosic ethanol facility in Kinross and our partnership with Mascoma as an important foundation for potential expansion beyond Kinross.

—George Stutzmann, Vice President of Alternative Energy of Valero

Using its CBP technology platform, Mascoma has developed genetically-modified yeasts and other microorganisms to reduce costs and improve yields in the production of renewable fuels and chemicals. Mascoma’s first commercial application of its CBP technology is its Mascoma Grain Technology, or MGT, yeast product, which is a “drop-in” substitute for existing yeasts designed to improve the economics of corn-based ethanol production.

Mascoma is pursuing other commercial applications of its CBP technology and is working with collaborators to develop and construct commercial scale facilities to convert hardwood pulpwood to cellulosic ethanol.

Valero Energy Corporation, through its subsidiaries, is an international manufacturer and marketer of transportation fuels, other petrochemical products and power. Valero assets include 16 petroleum refineries with a combined throughput capacity of approximately 3 million barrels per day, 10 ethanol plants with a combined production capacity of 1.2 billion gallons per year, and a 50-megawatt wind farm.

Comments

HarveyD

Is this going to be another ZeaChem whose claimed 2000/gal/acre from fast growing poplar never materialized.

Corn can supply feed stocks at the rate of about 500/gal/acre/year from grain only. Using the total plants could increase liquid fuel rate by another 50% or so. Even 750/gal/year/acre is not enough to feed the majority of our 240 million gas guzzlers.

Hardwood grows rather slow in Mich and it is very doubtful if it could sustain more than 750/gal/acre/year.

Neither farms nor forest can really produce/supply the majority of the liquid fuel required. Low cost coal, NG/SG + agriculture and forest wastes may be more beneficial without using farm/forest land with food production potential. At the current rate, we may need as much as 6000 Kcal/per capita/per day, if we want to keep growing above 400 lbs each.

Reel$$

Like it or not this facility is going forward producing sustainable, renewable liquid fuel in the form of alcohol. Whining about forest land use is, like so much of the fading gloom agenda, total BS. We welcome this project as an excellent pioneering entry into cellulosic ethanol production adn expect it to scale up further.

Harvey why in the world would anyone who really cares about conservation of land and environment, suggest CTL??? Coal, a dirty fossil, non-renewable, outdated source of energy requires mountain top removal and strip mining. Resulting in severe, cataclysmic, grand-children threatening destruction of environment. Recommendation for coal use over a cellulosic is the work of people who care little or none about preserving habitat or environment.

HarveyD

Reel$$...coal can be converted to NG and liquid fuels without strip mining and/or removing mountain tops. Governments can and should control application of least polluting methods. Waste is waste and turning it into useful fuel instead of dumping it in waste dumps is positive. NG/SG is something that USA has plenty of and it can be turned into liquid fuels rather easily.

Land is there to feed and house a growing population of 7B going to 14+B by the end of the current century. Using farm land and /or forest land to feed our gas guzzlers is about the worse solution.

The best solution is to switch to electrified vehicles and trains ASAP and to produce the e-energy required from the Sun, Wind, Hydro, Geothermal, Ocean currents etc.

Henry Gibson

Turn off the sun. The earth is the only life inhabited recipient of its energy, and it gets one part in two-thousand-millionths of the energy produced, and by the time it gets to the earth it is not powerful enough to toast bread. Then the plants only convert one or two parts in a hundred into dry, energy containing carbohydrates of many kinds.

It would be more efficient to grind up the trees and feed them to a steam generator. It will remove more net carbon from the air to let the trees grow until they are dead and then store the wood chips in salt beds forever, and the same is true of the combined maize and maize stalks.

Batteries are sufficient for most automobile journeys of less than 20 miles, and the Chinese can use their pebble be reactors to extract hydrogen from water with heat directly and combine it with CO2 into fuel methanol or jet fuel or Dimethyl-Ether(DME) for all liquid and gas fuel needs beyond that range. All automobiles, no matter the size, can be made twice as efficient immediately with hydraulic hybrids, with no other modifications to the engine, as demonstrated by Artemis of the UK.

But the real point is missed! Given the most efficient plant growth and harvesting, there is not enough land to grow the energy needed for automobiles and lorries in all of the US, UK or any other country to match the demand for fuel. With a much smaller population, the area of the UK depleted their forests, two hundred years ago, just for small hearth fires. Iceland did it centuries before without much population even. Rome did it thousands of years ago and even ruined the fertile areas of North Africa just for food as well.

Save the billions of tons of hydrogen that the sun uses for fusion on the earth. Meanwhile there is enough uranium not being used in the oceans and also more running in to sustain all of the human energy demands for all of the thousands-millions of years that the expanding sun will allow the inhabitants of the earth to exist. This does not include the three times as much thorium as uranium available in the earth crust.

Lead, Mercury, Bismuth, Gold and many other elements can be fissioned to produce nearly as much energy per atom as comes from uranium, and as much money should be spent on inventing ways to do it as is now spent on maize ethanol or cellulose. For example the thorium atom could be induced to start its natural progression into the stable lead isotope 208, and it gives off one fourth of its energy that it gives off by fast neutron fission, but it does nothing to support the fears and profits of those who use fears of radioactive substances; because the total half lives of the radioactive decay products is only 25 years.

The half life of Thorium is over one billion years, but most of it will be wasted before the dust of the earth is formed into a new planet if the humans don't use it, and most of the uranium U235 that the earth was formed with is already gone to heat up the interior of the earth. Most elements, with atomic numbers greater than iron, are fossil fission fuel from dust from exploded stars, and unlike hydrogen.

Uranium and thorium cannot be stored without loss for thousands of millions of years. If the human race on the earth lets this energy go to waste, it is lost, unlike hydrogen and carbon. ..HG..

HarveyD

HG...time will determine how many various energy sources are developed and which one will supply future energy mix on a worldwide scale. Reel$$ is convinced that most energy will come from (CANR-LENR-Ecats) transmutation machines. Oil and NG people think that they have the magic solution. You maintain that Nuclear reactors will do it. Others claim that Capturing Solar energy will be a better clean way. Many others prefer to Capture Wind and Ocean current energy etc.

Personally, I prefer Hydro + Wind + Sun + Ocean current because they are all relatively clean and sustainable.

SJC

People need to get out of the "I have THE way" mode. It will be some, many or ALL methods. Just because ONE method can not do it all is irrelevant.

HarveyD

SJC...I agree with you but we have to be more selective and avoid using highly polluting energy sources, even if it is cheaper to do so.

Reel$$

@Henry,

"Turn off the sun. The earth is the only life inhabited recipient of its energy..."

Not sure the lifeforms on Mars and Europa would agree.

Henry Gibson

Thanks for introducing a bit of Reel$$ality to the subject. ..HG..

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