Will the Gas Bubble Burst? More Projects Struggle for GTL Finance

by Jim Lane (Biofuels Digest) Remember how natural gas was the no-brainer of all time. Gas-to-Liquids was the rage, and a gold rush of companies popped up such as Siluria Technologies, Calysta, and Mango Materials. Fuels, chems, materials and more. The world had discovered new technologies for making a chemical building block out of methane, instead of a runaway combustion train suitable only for power generation.

Market entries came from all over. Intrexon jumped into the fray with a gas fermentation play with an aim of producing low-cost isobutanol. Meanwhile, companies like Coskata and Primus Green Energy opted for natural gas in hopes of making the leap to commercial projects with a lower base cost of carbon.

And Velocys went agnostic — developing for the low-carbon markets via its customer relationship with Red Rock Biofuels and Red Rock’s syngas feed, and the ENVIA project with NRG and Waste Management in Oklahoma. But Velocys bought out a 5000 barrel per day project in the Marcellus shale that would plant will convert natural gas to diesel fuel and other liquids.

Over the past 12 months we have passed from what is some circles is described as “the peak of inflated expectations” to the “trough of disillusionment” in the natgas-to-liquids space.

The delta between natgas prices and fuel prices has narrowed enough to put projects on the shelf, and the forward view is pessimistic that the new relationship will fundamentally change any time soon.

ENVIA uses biogas as a feedstock. That qualifies under the Renewable Fuel Standard, if the project and pathway go through the approval process — and under the California Low Carbon Fuel Standard as well. So, it can access RINs and other carbon-pricing mechanisms such as a cellulosic production tax credit, to make project economics work better. READ MORE