CORE BioFuel prepares to land funding for first biogasoline plant

By Bryan Sims | January 27, 2012

Toronto-based CORE BioFuel Inc. has signed an exclusive agreement with Osprey Capital Partners Inc., Canada’s leading mid-market investment banking firm, to secure equity investment capital for financing the completion of construction engineering for its first wood-to-green-gasoline biorefinery in Canada.

CORE is commercializing a patent-pending variant of ExxonMobil’s methanol-to-gasoline process, trademarked the Melnichuk-Kelly-Stanko Fuel Synthesis Process (MKS Process). The company has modified the process by incorporating advanced, commercially-proven direct gasification modules developed by Energy Products of Idaho, which creates an exothermic reaction for sufficient electricity and steam generation to power the process. CORE has devised a novel route to effectively and efficiently produce biogasoline straight from DME, bypassing the production of methanol entirely, via a robust zeolite-based catalytic reaction without the need for further upgrading to meet retail pump 92-octane requirements.

According to Doug Sheppard, vice president of corporate development for CORE, the engagement with Osprey Capital is a big step for the company in its effort to establish an EPC contract with an undisclosed international oil and gas engineering company to define a fixed cost on construction of the biorefinery.

“We’re excited about this stage because this is what we came out to do,” Sheppard told Biorefining Magazine. “Once you have an EPC contract with a big player, it puts you a giant step ahead. Then it becomes project finance at that point in time.”

Sheppard said it will likely take approximately three months before both CORE and Osprey Capital determine an exact amount for the financing of the project, which is currently based on ongoing third-party evaluation of performance criteria on the technology.

“We’re just tabulating and getting some estimates as to what the engineering cost is going to be from a couple of big international engineering companies,” Sheppard said. “We’re currently waiting for the numbers from them. Once we get a fixed cost backed by a major international engineering company, that’s a bankable number, if you will.”

The EPC contract, according to Sheppard, will also allow CORE to secure project debt financing, performance guarantees and “stitch up the rest of the equity,” he said, for its first commercial and subsequent biorefineries through AON Reed Stenhouse, one of the largest insurance brokers in the world. Osprey’s work for CORE will be spearheaded by Alan Crossley, who has more than 25 years of experience in the chemical, petroleum and renewable fuels industries.

Sheppard said that CORE is currently vetting potential sites in central British Columbia for its first biogasoline biorefinery, adding that he anticipates the plant to break ground by early 2014. When operational, the biorefinery will be capable of converting more than 250,000 tons of wood and other cellulosic material into roughly 18 million gallons of biogasoline annually, in addition to coproducing 6.5 million gallons of distilled water, 190,000 tons of carbon dioxide and 10 megawatts of electricity.

According to Sheppard, the company’s first biogasoline facility will be considered a demo plant that utilizes commercially demonstrated equipment and process technology. It will serve as the model for CORE’s long-term commercialization strategy for deploying future biogasoline production facilities through either a build/own/operate model via joint venture partnerships or through licensing arrangements to third parties of the combined technology package.

“Once we prove out our technology and the quality of our product and the profitability of the business, I think there’s a massive demand for green gasoline,” Sheppard said.