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Velocys, Southwest Airlines in 15-year off-take agreement for 219M gallons of negative-carbon-intensity SAF; 575M gallons of net-zero blend

Velocys plc announced that its wholly owned subsidiary, Velocys Renewables LLC, has entered into its first offtake agreement for the sustainable aviation fuel (SAF) to be produced at the planned Bayou Fuels biorefinery project in Mississippi with Southwest Airlines.

The agreement covers the purchase by Southwest of an expected 219 million gallons of negative-carbon-intensity SAF at a fixed price, over a fifteen-year term starting as early as 2026, when the biorefinery is scheduled to begin commercial delivery of fuel.

After blending, the off-take agreement volume will enable approximately 575 million gallons of net-zero SAF. (Net-zero is determined as a fuel with a carbon intensity of zero (0) gCO2e/MJ or lower on a lifecycle basis.)

Through the combination of biogenic feedstock, renewable power and carbon capture and storage, Velocys’ carbon mitigation technology will enable the commercial-scale production of SAF at the Bayou Fuels plant with a strongly negative carbon intensity of up to -144g CO2e/MJ, which is expected to achieve a total of 6.5 million tonnes of avoided CO2 over the term of the contract.

The offtake agreement covers two-thirds of the project facility’s planned output and has the potential to generate multi-billion revenues over the life of the contract. Each gallon of SAF generated by the project is expected to generate tradable greenhouse gas credits for which Southwest guarantees a minimum price payable to the project (included in the fuel fixed price), de-risking a significant proportion of the revenue stream to the project. The project may additionally benefit from the value of greenhouse gas credits if sold above the minimum price by Southwest.

In addition, Southwest and Velocys have established a long-term strategic relationship as a part of the offtake agreement, potentially advancing future Velocys SAF-producing facilities and allowing Southwest first-offer rights to purchase significant volumes of SAF from such facilities.

The agreement is subject to certain customary conditions precedent including completion of satisfactory financing for the final engineering phase and certain construction milestones, eligibility for greenhouse gas credits as well as the enactment of the proposed SAF tax credit legislation.

Off-take agreement with IAG. Velocys also announced a Memorandum of Understanding (MoU) with International Consolidated Airlines Group S.A. (“IAG”) for the offtake of Bayou Fuels SAF.

The MoU covers the purchase by IAG’s constituent airlines, which includes British Airways, Aer Lingus and Iberia among others, of an expected 73 million gallons of SAF, in aggregate, at a fixed price.

After blending, this will produce the equivalent, under US regulations, of 192 million gallons of net zero SAF (blended basis) during the term of the purchase contract, which will last for ten years from 2026, which is when the Project’s biorefinery is expected to begin delivering SAF.

It represents one third of the facility’s planned annual output and complements the binding offtake agreement for the remaining two-thirds annual output announced with Southwest Airlines.

Bayou Fuels. Bayou Fuels will process waste from the paper and lumber industries, and will have a nameplate capacity of 35 million gallons per year. The end-to-end solution for Bayou Fuels uses commercially demonstrated technology.

At the heart of the process is the Velocys FT (Fischer-Tropsch) hydrocarbon synthesis reactor which uses high performance catalysts to turn syngas into long chain hydrocarbon molecules that form the basis of liquid transportation fuels. This FT technology has been demonstrated at commercial scale, producing ASTM-qualified fuels and generating RINs under the Renewable Fuels Standard.

SAF produced using the Velocys FT reactor can be blended with conventional liquid fuels and has already been successfully used in commercial aircraft.



biogenic feedstock, renewable power and carbon capture
This is the way to do it


F-T synthesis is not particularly efficient (lots of energy lost as waste heat), and it wouldn't surprise me if they're using autothermal gasification to produce the input syngas (also inefficient).

It's cute, but wasting carbon as CO2 (even if it's sequestered) is no way to get the entire system to carbon neutrality; too much feedstock is required.

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