Velocys Provides Update of US, UK SAF Projects

April 15, 2022

Print This Article Share it With Friends

(Velocys/Biomass Magazine) ... During 2021 we saw the achievement of a number of important objectives in our growth strategy culminating in two multi-year sustainable aviation fuel (SAF) offtake agreements; the selection of our technology for an e-fuels project commissioned by the Government of Japan; and a significant capital raise to be used to increase the delivery capacity of Velocys’ technology to unlock client sales with a view to achieving our target of net positive cashflow during 2024.

Since the year end, we have completed the sale and purchase option agreement over the company owning the land for the Altalto project site; appointed Andy Bensley as Global Head of Business Development and Technology Delivery along with other key technical role appointments at our catalysis and reactor facility in Ohio. We are moving into 2022 with a clear focus on executing our agreed commercial strategy.

Project update – Bayou Fuels

Worley, our international engineering contractor, has completed the interim engineering (FEL-2) work during Q1 2022 and Koch Project Solutions continue to provide project development support to our SAF biorefinery project in Mississippi, ahead of finalisation of contract execution strategy and FEED award subject to financing.

The site landlord; the local development authority in Mississippi, is well under way to complete the construction of the final section of the levee protecting the biorefinery site by the Mississippi river. Completion is expected later this summer.

We are eagerly anticipating clarity on government policy support from both the U.S. and U.K. Governments to provide sufficient long term revenue stability for biorefineries converting sustainable residues into renewable fuels. This is a condition for successful capital formation for both projects. We are currently anticipating the U.S. Congress to pass favourable legislation including the provision of a SAF Producer Tax Credit, indexed to the carbon intensity of the fuel, in the summer which will allow for the launch of the Series A fundraise for Bayou Fuels in the second half of this year. We expect the U.K. Government to need some additional time to provide matching competitive incentives, which would therefore enable Altalto to go into a Series A fundraise in H1-23.

In anticipation of such policy support, we have launched an RFP process with a selection of U.S. investment banks and advisers in relation to services including underwriting tax-exempt municipal bonds, mezzanine, and equity to finance the final development stage and subsequent construction of the Bayou Fuels biorefinery in Mississippi.

A full 15-year SAF and environmental credit offtake agreement with Southwest Airlines and a 10 year SAF and environmental credit offtake MOU with IAG were entered into in November 2021. As planned, IAG and Velocys are converting the MOU into a fully termed offtake agreement with a view to having that completed later in Q2. A further announcement will be made in due course.

Operations and business development update

We have recently secured a 15 year lease for a modern and sustainable facility in Columbus, Ohio where we will be consolidating our catalysis services, microchannel reactor core assembly and technology licensing under one roof. In line with our recent Placing Circular, this will involve a capital investment of up to £1.5 million in the building enhancements to fit our specific needs and £4.8 million in reactor core assembly automation enabling steady output of at least 12 complete FT reactors per year. This dovetails with the expiry next year of the 10 year lease of our current technology centre in Columbus, Ohio.

We are also pleased to announce the potential sale of the undeveloped Ashtabula site in Northern Ohio which was acquired as part of the Pinto Energy acquisition in 2014 and was intended to be used for a GTL plant at the time. The Ashtabula Port Authority has provisionally agreed to acquire the site for an undisclosed price subject to further due diligence by the purchaser.

We have deepened our collaboration with TOYO regarding biomass to SAF (BtL) and power to SAF (PtL) solutions for the energy transition in Japan. The commercial scale NEDO2 BtL project is currently in FEL2 stage and progressing to plan and the Power to Liquids demonstration project is advancing as planned. Meanwhile our Business Development pipeline continues to grow with a number of feasibility studies with biorefinery plant developers ongoing to accelerate these projects, which we expect to mature into commercial contracts in due course.

Project update – Altalto

Further to our announcement on 24 March 2022, we, together with our partner British Airways are delighted to welcome Foresight Group LLP into the Altalto Immingham municipal solid waste to jet fuel project in Immingham where Velocys is providing project development services, engineering and FTS technology.

Over the last few months, we have completed site engineering, geotechnical survey and integration of carbon sequestration of biogenic CO2 in preparation for the connection of the Altalto plant, when built, into the new East Coast Carbon Capture and Storage (CCS) cluster, which is being developed by a consortium of major corporations including Drax, BP and Equinor.

This leading CCS cluster, designed to sequester 40kt of CO2 per day, is scheduled to come on stream around the same time as the Altalto plant is expected to be commissioned, in 2027, subject to funding of both Altalto and the CCS cluster. Our application to BEIS to participate in the East Coast CCS cluster has met the eligibility criteria and passed through to Phase 2 of the evaluation process to identify and sequence CCS clusters suitable for deployment in the mid-2020s.

We have benefitted from the £1.9m Green Fuels Green Sky grant awarded by the DfT in August 2021, which has largely covered our costs for the essential site engineering and other site-related work through to Q2/22. READ MORE

Further business update 19 Apr 2022 (Velocys)

Velocys provides update on development of US, UK SAF projects (Biomass Magazine)

Velocys completes construction on reactor core assembly facility (SAF Magazine)

Excerpt from Velocys: Velocys plc (AIM: VLS), the sustainable fuels technology company, is pleased to announce, further to the business update on 4 April 2022, that it has entered into a contract with a European renewable fuels developer to provide initial engineering services to a project, which is in the planning stages. Whilst the revenue for this initial stage of the project is de minimis (and project progression to material revenues to be determined), the agreement broadens the Company’s customer base and demonstrates the ability to progress its pipeline of potential global customers towards commercial contracts. This is also in line with the aims of the Company’s business development function, headed by Andy Bensley.

The Company has also agreed with British Airways (”BA”) to extend both the UK Altalto project Joint Development Agreement and the Option Agreement for BA to acquire 50% of Altalto Ltd by one year to 31 March 2023. The original option was signed on 12 May 2020 and initially extended on 30 March 2021.

Velocys offers its customers a technology solution enabling commercial scale production of sustainable synthetic fuels from a variety of waste materials, such as municipal, commercial and forestry residue. Sustainable aviation fuel, SAF, is the only commercially available alternative to fossil aviation fuels.

The importance of sustainable synthetic fuels from bio-based feedstocks was also recently highlighted by President Biden, as part of the US aviation decarbonisation agenda.

The Company’s customer pipeline is growing with increased demand for the Velocys technology to ramp up the commercial scale production of sustainable synthetic fuels to accelerate the global clean energy transition, and to strengthen host country fuel independence. READ MORE

Excerpt from SAF Magazine: Velocys plc on Jan. 26 (2023) released a business update, reporting that the company has completed construction on a new reactor core assembly facility in Ohio. Velocys also outlined timelines for the development of its proposed biorefineries in the U.S. and U.K.

According to Velocys, construction is now complete on the new reactor core assembly facility in Columbus, Ohio, with fit-out now being undertaken on site. The company has begun recruiting manufacturing personnel and expects to begin commissioning during the third quarter of this year. The new facility will scale up the company’s reactor core assembly capacities, with a capacity to produce 12 reactors annually. Each reactor is comprised of four cores.

Velocys also offered an update on its Bayou Fuels facility under development in Mississippi and the Altalto project under development in the U.K.

The Bayou Fuels facility will convert woody biomass into fuels. The facility is expected to have a nameplate capacity of 35 MMgy, including 25 MMgy of sustainable aviation fuel (SAF). Velocys said Series A funding for the development capital for the Bayou Fuels project is scheduled to be launched during the second quarter of this year, with an aim to enter front-end engineering design (FEED) by the fourth quarter. A final investment decision (FID) is currently expected to be made during the first quarter of 2025. Velocys is currently targeting commissioning and startup of the facility in 2028.

The Altalto project will convert municipal solid waste (MSW) into SAF and naphtha. The project is expected to have an annual capacity of 20 MMgy. Velocys plans to make a final investment decision on the Altalto project by the end of 2024, with construction beginning in 2025 and commissioning and startup currently expected to begin in 2027.

A full copy of the business update is available on the Velocys website. READ MORE