Velocys announces close-out of cellulosic diesel joint venture

By Erin Voegele | May 02, 2019

Velocys announced April 29 the successful close-out of its Envia joint venture. The project was used to demonstrate the company’s Fischer-Tropsch gas-to-liquids technology. Operations at the plant were suspended in September 2018, with FT reactors returned to Velocys in late March. The Envia project site in Oklahoma City will be repurposed into a renewable natural gas (RNG) production plant.

The Envia joint venture project broke ground in May 2015. The plant produced its first Fischer-Tropsch product in early 2017. The company began generating renewable identification numbers (RINs) for its fuel products under the Renewable Fuel Standard in 2018.   

The Envia facility experienced a leak in May 2018. A third-party inspector found that an ancillary coolant system was the root cause of the leak and determined the leak was not a result of any flaw in the core FT technology. In September 2018, Velocys announced Envia’s board had elected to suspend operations at the demonstration project due to financial circumstances. The company explained that the project had been running at reduced capacity for several months using a single reactor to generate products. However, that configuration of the plant did not meet the specific process energy requirements applicable under its RFS pathway to generate RINs, which exacerbated the plant’s operating losses.  

In March 2019, Velocys announced that Envia Energy had reached an agreement to settle all insurances claims and disputes related to the leak. Later that month, Velocys announced an agreement with Envia to officially complete the return of ownership of the two Velocys FT reactors to Velocys. The reactors were transferred to Velocys’ Plain City, Ohio, facility in late 2018 for catalyst discharge. The company said an initial review of the reactors concluded that both have met expected performance and durability measures throughout the allowed operating envelope. 

A statement issued April 29 by Velocys indicates the company has agreed with Envia and other Envia joint venture partners to transfer rights of the site from Envia to another joint venture partner in return for payment of $4.15 million to Velocys. As part of the agreements, Envia will sell certain parts of the site infrastructure and remove the remaining equipment from the site. Velocys also released its liens on all equipment from the site in return for a significant recovery under its collateralized note to Envia.

“We are pleased to have worked collaboratively with the other Envia joint venture partners on a mutually beneficial solution allowing the Envia site to be repurposed to a renewable natural gas plant, and for Velocys to get a fair reimbursement for its financial contributions to Envia during the strategically critical demonstration of the new full-scale Velocys FT reactors over the last two years,” said Henrik Wareborn, CEO of Velocys.

“We continue to focus our attention, resources and assets on the development of our two commercial scale biorefineries in Immingham, U.K., and Natchez, Mississippi,” he continued. “We are leveraging all the experience and evidence embedded in the two Velocys microchannel FT reactors from Envia, which recently were returned to Velocys in Ohio, upon the completion of the commercial scale production run.”

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