Cobalt Technologies and American Process Inc. have announced an agreement to build an industrial-scale cellulosic biobutanol refinery. The companies have also agreed to jointly market a joint biorefining solution to biomass power facilities and other customers.

API is developing and commercializing lignocellulosic sugar production and bioenergy process technologies. The company is currently working to construct a facility in Alpena, Mich., which will demonstrate the conversion of hemicelluloses extracted from woody biomass into fermentable sugars. The project, funded in part by an $18 million U.S. DOE grant and a $4 million grant from the state of Michigan, will initially produce cellulosic ethanol.

API’s technology, known as GreenPower+, is a patent-pending proprietary process for extracting hemicelluloses sugars from woody biomass using steam or how water. The sugars are then converted fermentable sugars. The extracted biomass is returned to a boiler and used to produce steam and electricity. The sugars are further processed into end products.

Cobalt operates a pilot-scale facility that converts cellulosic sugars into biobutanol. The company’s fermentation process employs a bacterial biocatalyst and features an advanced bioreactor design. “One of our key technology advances is the design of our bioreactor,” said Steve Shevick, Cobalt’s chief financial officer. “Our bioreactor is an immobilized—or a fixed-bed—type reactor rather than a stirred tank reactor. This allows us to deliver significantly higher productivity out of the bioreactor and reduce capital costs.”

While the industrial-scale facility in Alpena that API is constructing will initially produce cellulosic ethanol, Cobalt will be adding biobutanol production capacity to the site. “We are building our fermentor and our distillation unit [at the site],” Shevick said. “It will integrate very seamlessly with their facility.” Fermentable sugars produced by API will simply be diverted to Cobalt’s production equipment rather than flowing into the ethanol process.

Shevick said there are several reasons his company became interested in working with API. “API is a very experienced and knowledgeable engineering firm with a lot of expertise in managing wood and wood-type extracts,” he said. “Based on our due diligence and discussions with them, we have a high degree of confidence that they’ll be able to deliver very clean, very fermentable hemicelluloses sugars. It’s a good partnership for this project because…they were already building a facility for ethanol, and it’s a good way to demonstrate our technology with a cellulosic feedstock.”

The agreement between the two companies also calls for the joint marketing of a combined biorefinery solution for biomass power plants and other entities. “API has expertise in [sugar extraction] and we have a backend butanol process, so it’s a complimentary relationship for certain applications—particularly biomass power,” Shevick said. “What will happen is we will both be looking for opportunities to bring the other company into commercial relationships that we are developing. In the end, each solution of course has to stand on its own, and the customer has to be willing to have both parties, but we think by demonstrating it at Alpena and offering it on an integrated basis, we have a very compelling solution for the market.”

According to Shevick, Cobalt expects to begin commercial-scale production of biobutanol in 2012. The company’s business plan moving forward includes both licensing and build, own, operate components. “We think there will be a license and royalty element to most of the deals we do,” he said. “Over time we would like to be build, own operate. But, I think initially we will partner with other people, particularly facility owners because our technology works best in a co-location arrangement with wood processing facilities or sugar mills…In those cases we think that the facility owner would be a partner, including an equity investor.”