Velocys discusses future plans, proposed Mississippi plant

By Erin Voegele | May 29, 2018

On May 23, Velocys plc released 2017 financial results, discussed its progress in shifting from a technology licensor to a renewable fuels company, and highlighted the commercial roll-out of its technology.

“I believe we will look back at 2017 as the year Velocys transformed into a renewable fuels company,” said David Pummell, CEO of Velocys. “Although some of these changes were difficult they have set up the company for the future delivery of multiple biorefineries and long-term sustainable growth. The Envia plant has validated our FT technology at commercial scale and from this platform we plan to grow and be at the forefront of supplying significant quantities of cellulosic renewable fuels. We have a demanding plan to deliver in 2018, but we are well placed to meet these challenges.”

In a statement, Velocys said it is current seeking opportunities to license its technology, but is also focused on commercializing the technology through the delivery, with its partners, of repeatable biorefineries to become a producer of cellulosic biofuels. As a result, the company said it is winding down research and development programs in the U.S. and U.K.

According to Pummell, Velocys had made considerable headway on work required to progress the USDA loan guarantee program, including the delivery of the FEL-2 engineering study and securing a 100-acre site in Natchez, Mississippi. The company said it aims to secure a conditional commitment from the USDA during the third quarter of this year and reach FID during the second half of next year.

Plans are also in progress for a waste-to-renewable jet fuel plant in the U.K. Velocys said it intends to license its technology to the plant and provide project management, engineering, operations and technical service support to the project.

In its annual report, Velocys also briefly discussed development of the Red Rock Biofuels plant, which will utilize the company’s Fischer-Tropsch technology. Velocys said the third-party developer issued a notice in May to proceed for the manufacture of Velocys FT reactors and catalysts for the project.

In mid-2017, Velocys demonstrated that its technology installed at Envia’s Oklahoma City plant was performing as expected on a commercial-scale. Pummell said the performance milestones the Velocys FT system reached at the Envia site during 2017 and the first part of 2018 are “crucial milestones on the way to delivering our future biorefineries.”

While Velocys recently announced that a leak has been detected at the Envia plant that is believed to have originated inside one of the plant’s two FT reactors, the company said that based on preliminary investigations it believes the root cause of the issue originated with the design of an ancillary system and is not a result of a flaw in the core of the FT technology. Velocys said it is working with Envia and third-party consultants to verify the root cause of the leak and will work with Envia to access the likely repair cost and consequent funding requirements.

Velocys reported £800,000 ($1.06 million) in revenue last year, down from £1.4 million in 2016. Gross profit was £400,000, which was approximately level with 2016. Operating loss was £21.42 million, compared to a loss of £16.72 million in 2016. Loss for the financial year attributable to the owners of Velocys reached £22.13 million, compared to a loss of £12.36 million in 2016. Loss per share attributed to the owners of Velocys was 15.19 pence (20 cents), compared to 8.62 pence in 2016.