Houston-based KiOR Inc. received a term sheet for a loan guarantee from the U.S. DOE to support a $1 billion-plus biofuels project. If approved, the company said it plans to leverage the funds towards the build-out of four bio-crude oil production plants that will contribute approximately 250 million gallons of advanced biofuel for RFS2. The first two plants are expected to be in Mississippi, with additional sites planned in Georgia and Texas.

“While the term sheet is an important step in the process, we recognize that more work lies ahead to finalize the loan guarantee, and there is no assurance it will be issued until the loan is closed,” said KiOR President and CEO Fred Cannon.

According to Cannon, KiOR’s first bio-crude oil production facility will be located in Newton, Miss., and is expected to be the largest facility of its kind in the U.S. Additionally, it’s anticipated that more than 14,000 jobs will be created during the construction of the facility, with more than 4,000 jobs created during operations.

The Newton project complements a previous arrangement KiOR inked with the state of Mississippi, which provided a $75 million loan to the company last year to be used toward the construction of three plants in Mississippi before 2015. KiOR’s first facility under that agreement, an 11 MMgy plant in Columbus, Miss., broke ground in August 2010. The second and third facilities built in Mississippi will be the first two production plants constructed under the terms of the DOE project. KiOR also has additional projects in various stages of development in Arkansas, Alabama and other southern states, according to the company.

Formed in 2007 between Khosla Ventures and Netherlands-based biofuel startup BIOeCON, KiOR uses a thermochemical technology platform—what the company calls a "biomass catalytic cracking process"—with the help of a furtive catalyst that can break down any nonfood cellulosic biomass into its branded Re-Crude oil (short for renewable crude), which can be further refined into gasoline and diesel blendstocks and is fungible within the existing transportation infrastructure. The company claims its Re-Crude has a 92 percent lower carbon emission profile than fossil crude.

Though woody biomass will be initially used by KiOR in its process at the proposed production facilities, the technology can also process other feedstocks such as agricultural residue or purpose-grown energy crops. According to KiOR’s website, the company is capable of producing approximately 15 barrels per day of Re-Crude from woodchips at its demonstration production facility outside of Houston.