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KiOR yet to land refinery customer

 

Dirt work is being done at the site of KiOR’s synthetic crude oil plant, at the Port of Columbus on the Columbus island. The plant is the first of three planned in the state.

Dirt work is being done at the site of KiOR’s synthetic crude oil plant, at the Port of Columbus on the Columbus island. The plant is the first of three planned in the state. Photo by: Kelly Tippett  Buy this photo.

 

Jason Browne

 

While work has begun at the site of the KiOR plant in Columbus, the company has yet to secure a contract with a refinery that would process its synthetic crude oil -- and free up $75 million in state loans. 

 

But the Pasadena, Texas-based company is fully invested in Columbus, and plans to build here with its own funds before tapping into state incentives, officials said. 

 

Columbus Lowndes Development Link CEO Joe Max Higgins said KiOR has roughly $150 million invested in the Columbus plant. Higgins said that in a meeting with KiOR officials several weeks ago, he was informed the company expected to close a refinery deal soon.  

 

A KiOR representative said the company continues to talk to "a variety of different customers." 

 

KiOR expects to begin construction later this year and finish sometime in 2012. The company will use its own money to complete the Columbus plant, the first of three in the state, before borrowing the state''s $75 million. 

 

In the deal announced last August, KiOR agreed to invest $500 million to build three facilities in Mississippi and create an estimated 1,000 jobs, in return for the $75 million in loan guarantees. The Columbus plant, to be located on a 30-acre site at the Port of Columbus, is expected to employ 50 people. 

 

The state placed restrictions on the $75 million, insisting KiOR provide proof of a contract with a refinery which will turn its synthetic crude to usable gasoline before making the funds available. 

 

The company is also angling for federal funds for its projects. Earlier this month, KiOR said it was a step closer to receiving $1 billion in federal loan guarantees to build its other two Mississippi refineries, in Newton and at an unnamed site in southwest Mississippi, and one each in Georgia and Texas. 

 

 

 

Some refining in Columbus 

 

KiOR is a startup biofuel company that plans to turn trees -- plentiful in Mississippi -- into crude oil. The Columbus plant would be the company''s first full-scale plant, but has a test facility in Pasadena, outside Houston. The refining process is unique to KiOR, the company said. 

 

KiOR''s demonstration plant is owned by Milton Sundbeck of West Point. Sundbeck''s company Southern Ionics produces the chemicals KiOR uses in its crude production process.  

 

KiOR officials say the crude process has more than 70 percent lower emissions than a barrel of conventional oil. 

 

Friday, a representative for KiOR said some refining will be done on site in Columbus to create a substance that lies somewhere between crude oil and refined gasoline. The product can be blended with fully refined gasoline to increase the octane of the gasoline. 

 

The representative, who spoke on condition of anonymity, wasn''t sure how much of the additive would be produced in Columbus. Higgins expects the majority of KiOR''s crude product will still need to be refined into fuel off-site. 

 

In addition to the dirt work now being done on the island to make way for the plant, the company has deposited $50,000 in an escrow account which will go to the city in the event KiOR pulls the plug on the deal. 

 

 

 

Land purchase, infrastructure work needed 

 

Additional details to be worked out prior to the Columbus plant''s construction include the purchase of seven acres of land from the U.S. Army Corps of Engineers. Army appraisers have visited the site but have yet to provide a purchase price. 

 

The lease currently in place with the Corps was recently reworded to remove language stating the Army can revoke Columbus'' lease at any time. KiOR will lease 30 acres from Columbus before eventually purchasing the land. 

 

Work also continues toward the installation of a third lane to Industrial Park Access Road to prevent congestion once log trucks begin regular deliveries to the chip mill which will feed KiOR''s synthetic crude process. Neel-Schaffer engineer Kevin Stafford said the project remains in the design phase. The turn lane will offer improved access to other available sites on the island, as well. 

 

The Lowndes County Port Authority recently secured a $150,000 Development Infrastructure grant to assist in building the third lane, which will lower the amount of money the port, city and county will borrow from the Mississippi Development Authority to complete the lane to $217,000. Repayment of the loan will cost each entity between $9,000-10,000 annually. 

 

Columbus Light and Water is in the process of building a new substation on the island which will serve KiOR as well as any other industries at the location, and Atmos Energy has agreed to run a new 8-inch gas line to the site. 

 

 

 

HOW THE REFINERY WORKS 

 

How the KiOR refinery in Columbus will work: 

 

· Once wood chips arrive at the plant, it is "processed and conditioned" for conversion into oil. 

 

· The wood is fed into a reactor, where it interacts with a catalyst in a process similar to "cracking" at a traditional refinery. 

 

· Renewable crude and its byproducts go to a separator, where the crude is separated from byproducts including light gases and water. Crude and byproducts then go to a Catalyst Regenerator, where the crude and byproducts are separated further.  

 

· Renewable crude and byproducts are sent to a Product Recovery unit where they are cooled and separated. The crude condenses into liquid, while light gases are transferred to a cogeneration facility where they are burned to generate electricity. 

 

· The crude is sent to a storage area, where it is then transferred to barges and shipped to traditional oil and gas refineries. 

 

Source: kior.com

 

 

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Reader Comments

Article Comment hope commented at 2/20/2011 7:06:00 PM:

Why is it a problem to get an oil company to refine this crude? Are they afraid that it may gum-up their equipment? How does a vehicle perform on this fuel? Has it met all government standards required of other fuels? They seem really interested in getting the $75 million dollars. You would think if they had enough money to complete this plant, the $75 million would not be that big of concern.
We hear so much on FAUX and CNBC that government is a problem with business and they need to get out. But here comes this business that wants this government money ($75 MILLION) and a billion dollar government loan guarantee. If it doesn't work the taxpayer loses, not the business.
Some people just can't get enough of bashing the government. On a TVA comment, a person says that the government made them build too many power plants. So I ask that person if that's the case, why did TVA have to buy power from other sources last year? It seems to me that if they had a surplus of power plants, they would be selling instead of buying.

 

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