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Future Fuel Outlook ServiceWeb Conference
Future Fuels for Shipping January 2020
Services Offered
Fueling the Future Blog & Podcast (Free)
Future Fuels Outlook Service
Individual Consulting (Retainer, Projects)
What Is Future Fuel Strategies?A consultancy that takes a 360° view of future fuels issues, trends and developments
Learn more at www.futurefuelstrategies.com
• Responsible for global business development, sales, marketing, product line management and after-sales service activities in the Company’s key Power Products markets of Heavy Duty Motive, Material Handling and Back-up Power
Rob CampbellChief Commercial OfficerBallard Power Systems
• Responsible for the commercial, financial and corporate development of the Altalto waste-to-jet-fuel project in the UK and for UK government relations and communications
Neville HargreavesVP, Waste to FuelsVelocys
Our Speakers Today
Global Freight Demand to Triple between 2015-2050More than 75% of all freight carried by ships by 2050
Spiraling GHGs Drove Initial StrategyIf not checked, will grow 250% by 2050; greatest increases from Asia and Africa
• Without additional policy measures, carbon emissions from global shipping are projected to reach approximately 1,090 million tons by 2035. This would represent a 23% growth of emissions by 2035 compared to 2015.
• Historical emissions from international maritime transport increased by 80% or 3.0% per year from 1990 to 2010.
What Are the Fuel Options under Consideration?Lloyd’s Register considered several in a study released last year
Pathways considered included (1) renewable electricity-based marine fuels in the form of hydrogen, ammonia, e-methanol, e-gas oil and electricity for use in batteries; (2) bioenergy; (3) an equal mix of the two which would mean a ramp-up of renewable electricity-based marine fuels and bio-based fuels. However, alongside these fuels, also hydrogen and ammonia produced from natural gas with carbon capture and storage (CCS) gradually enter the fuel mix
BALLARD.COM 1 BALLARD.COM Power to Change the World®
Future Fuels For
Shipping - Hydrogen
and Fuel Cells
By: Rob Campbell
Date: January 23, 2020
BALLARD.COM 2 Power to change the world®
Key Questions
•Policy changes and drivers
•Why marine?
•How real is hydrogen and fuel cells?
•How close?
• Is green hydrogen a reality?
BALLARD.COM 3 Power to change the world®
Our World Sees the Need for Change
BALLARD.COM 4 Power to change the world®
Governments and Industry are
Responding as Never Before
2019 Mega Trends
• Acceleration of CO2 reduction plans
• Green hydrogen emerges as a viable option
• Fuel cell technology + green hydrogen now recognized as critical to meeting CO2
and pollution targets
• Sustainability sector investment is significantly increasing
BALLARD.COM 5 Power to change the world®
Marine is No Exception
Major Policy Developments
• IMO phasing-out GHG:
↓50% by 2050, zero-emission by 2099
• Europe EMSA to cut CO2 emissions by 50% (2050)
• Norway is protecting fjords:
Zero Emission by 2026
• POLA/POLB Clean Air Action Plan
• US EPA in Ports and Affected Communities
• Alaska Visible Emission Standards
BALLARD.COM 6 BALLARD.COM Power to Change the World® 6
Why Fuel Cells for
Zero-Emission Marine
Applications Scalable from 200kW to MWs
Distributed power solution
Reliable DC power generator
Long range and quick refueling
No noise, no vibration, no local or
global emissions
BALLARD.COM 7 Power to change the world®
Key Benefits of Fuel Cell Technology
for Marine Transport
• Fuel cells will play a key role in helping marine industries address
greenhouse gas emissions on the water, and in ports.
BALLARD.COM 8 BALLARD.COM Power to Change the World® 8
Centralized hydrogen
infrastructure at
ports can fuel many
applications Vessels
Onshore power
Cargo handling equipment
Drayage trucks
BALLARD.COM Power to Change the World® 9
Yet, internal combustion engines have been the dominate form of
propulsion for the last century and this century so far.
Fuel Cell Technology Pre-dates
Internal Combustion Engines
1860 – introduction of the
internal combustion engine
1800 1900 1850
1839 - invention of the fuel cell by
William Grove
BALLARD.COM Power to Change the World® 10
Early Motive Fuel Cell Applications
BALLARD.COM Power to Change the World® 11
Fuel Cell Technology is Ready for
Scale: Proven, Safe and Reliable
BALLARD.COM 12 Power to change the world®
2019 Mega Trends: H2 Roadmaps
BALLARD.COM Power to Change the World® 13
IEA Report: The Future of Hydrogen
• The time is right to tap into hydrogen’s potential to play a
key role in a clean, secure and affordable energy future.
• Hydrogen can help tackle various critical energy
challenges.
• Hydrogen is versatile.
• Hydrogen can enable renewables to provide an even
greater contribution
• There have been false starts for hydrogen in the past;
this time could be different.
• Hydrogen can be used much more widely
• However, clean, widespread use of hydrogen in global
energy transitions faces several challenges. (Currently
mostly carbon based, infrastructure needed, ongoing
regulatory effort…)
BALLARD.COM 14 Power to change the world®
$6.7 Billion
Investment
Major Investments and Partnerships
Now Accelerating
BALLARD.COM 15 Power to change the world®
2019 Mega Trends: Investments
• Aug 1st: Germany turns to H2 in quest for
clean energy economy
• Sept 20th: €60 Billion Climate Change
Package announced by Germany
• Nov. 14th: EIB Announcement to stop
funding fossil projects
• Dec 5th: Hydrogen Council and EIB Advisory
Services
• Dec 11th: EU announces Moon Shot
Moment regarding new climate change
policies
• January 14th: Blackrock Larry Fink Letter to
Investors “Climate Risk is Investment Risk”
BALLARD.COM 16 Power to change the world®
2019 Mega Trends: Cost Reductions
• January 7th: Ballard Deloitte White Paper: Fueling the Future of Mobility
• January 20th: Hydrogen Council White Paper-Path to Hydrogen Competitiveness
BALLARD.COM 17 Power to change the world®
How Close?
• Ballard is already engaged and mobilizing for the marine market:
Ballard Marine Center of Excellence formed in Denmark
Major projects and contracts underway
• Other fuel cell markets are moving:
Buses, Trucks, Trains, Forklifts, Back-up Power, Power Generation, Cold Ironing/Shore
Power….
• This decade will see major scale-up based on point to point fueling
applications-ferries, barges, tugs, port equipment, service ships and….
Larger vessel demonstrations based on hydrogen availability
BALLARD.COM 18 Power to change the world®
How Close?
December 11th, 2019:
Kawasaki launches first LH2
carrier vessel
BALLARD.COM 19 Power to change the world®
The Ballard Fleet in Development
400 kW
400 kW
600 kW
200 kW 300 kW 600 kW
BALLARD.COM 20
Power to Change the World®
Marine Industry Leaders Working
with Ballard
Through active participation to a number of marine demonstration projects,
Ballard is developing a unique expertise and strong partnerships with industry
leaders and stakeholders.
BALLARD.COM 21 BALLARD.COM Power to Change the World® 21
Hydrogen is a
clean fuel
High energy density clean fuel
Supplied as compressed gas or
liquid
Can also be produced at port
Growing supply chain
BALLARD.COM 22
Power to Change the World®
Hydrogen is a Safe, Flexible,
Low Carbon Fuel
Hydrogen is very light and buoyant –
extremely fast dispersion, rapidly
dropping below flammability limit with
much less explosive energy than
other fuels
Hydrogen is a flexible energy carrier
with large storage capacity
Hydrogen is produced from
renewable wind and solar
Or by conversion of bio wastes
Hydrogen is also available as a by-
product of some industrial processes
and from natural gas reformation.
BALLARD.COM Power to Change the World® BALLARD.COM Power to Change the World® 23
Hydrogen is the
Most Abundant
Element in the
Universe.
BALLARD.COM Power to Change the World® BALLARD.COM Power to Change the World® 24
Hydrogen is the
energy carrier that
enables energy
sector coupling for
a sustainable
future.
BALLARD.COM 25 BALLARD.COM Power to Change the World® 25
Renewable hydrogen
and fuel cell
technology will
deliver affordable
zero emission
mobility.
BALLARD.COM 26 Power to change the world®
Falling Cost of Renewables
BALLARD.COM 27 Power to change the world®
2019 Mega Trends: Green H2
• August 20th: Bloomberg New Energy: Costs of H2 to drop 80% by 2039
• October 14th: Hydrogen and Fuel Cell Day-Air Liquide announces $150 million new
green LH2 facility in USA (Guarantee of Origin platform)
• November 13th: Air Liquide, the Durance, Luberon, Verdon urban area (DLVA) and
ENGIE are signing a cooperation agreement to develop the “HyGreen Provence” project
which aims at producing, storing and distributing green hydrogen.
BALLARD.COM 28 BALLARD.COM Power to Change the World® 28
Ongoing Work
Product certification for marine
environment
Hydrogen availability (including
LH2) at ports
Hydrogen on board storage
(internal vs external bunkering)
Hydrogen safety and refueling
processes
BALLARD.COM 29 BALLARD.COM Power to Change the World® 29
Fuel cell technology
can deliver
zero-emission large
scale marine
propulsion
BALLARD.COM 30 BALLARD.COM Power to Change the World® 30
Hydrogen is a
necessary, safe and
effective power
solution for zero-
emission marine
applications.
BALLARD.COM 31
Power to Change the World®
We deliver fuel cell power for a sustainable planet.
Future Fuels for ShippingSustainable hydrocarbon fuels
23rd January 2020
After IMO 2020, decarbonization
2
Another storm coming
“The future is already here, it’s just unevenly
distributed.” Our Mission:
To help reduce the environmental footprint of aviation and heavy goods transport through a proven and reliable supply of sustainable fuels
3
4
Fischer Tropsch (FT) route to sustainable fuels
Diesel for marine
• Can produce carbon negative fuels
• Large sustainable feedstock supply
• Improved exhaust emissions
• Drop in – no change to engines
Patented micro-channel Fischer Tropsch reactor and catalyst
5
Velocys proprietary technology and company
• Velocys’ patented FT process made commercially viable at target scale using micro-channel reactors
• Combined with other proven technologies for end-to-end process producing drop-in fuels
• Expert team with deep experience of designing, commissioning and operating synthetic fuel facilities
• Headquartered in Oxford UK with facilities in Columbus, Ohio and Houston, Texas
• Traded on AIM index (London Stock Exchange)
Velocys commercial FT reactor
18 years of experience across multiple scales
6
Velocys
Overview► Over 18 years of design, commissioning, start-up and support
experience at various scales and facilities across the world► Extensive lessons learned, captured and implemented into
future projects
We have over 18 years experience in developing and deploying XTL projectsExperience
Our technology has been operated at laboratory, pilot, demonstration and commercial scale
Scale
Velocys FT technology has operated on syngas derived from natural gas, landfill gas, coal and biomass
Feedstock
Velocys core personnel have been onsite for commissioning, startup and operation at all scales
Presence
Over 18 years, more than $100mn committed:► $15mn spent on catalyst development► >$25mn spent on catalyst testing► >$15mn spent on mechanical development► >$15mn spent on piloting operation► >$10mn spent on field demonstrations► >$25mn spent on supporting commercial
demonstration
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Laboratory
PILOT PLANT
IDU
ENVIA
2019
BTL
ENVIA
7
Completed demonstration at commercial scale
• Landfill gas and natural gas feedstock
• 5,000+ hours of cumulative operation across 2 commercial-scale FT reactors
• 420k gallons of finished fuel and wax delivered
• Produced and sold first Q-RINS
• Culmination of 18 years of development and testing
Oklahoma, 2017-18: Commercial scale Velocys FT demonstration completed
8
Lead client: Red Rock Biofuels
• Commercial biomass-to-fuels project in Lakeview, Oregon. Broke ground July 2018
• Velocys licensing FT technology, supplying reactors and catalyst‒ Reactor manufacturing in
progress and due for delivery in Q1/Q2 2020
• Plant expected to be operational in 2020
• Expected output: 15mm gallons/year of renewable fuels
Velocys solution
10
Municipal Solid Waste
Significant volumes of residual waste unsuitable for recycling
Avoid costly disposalDiverts waste from landfills
Gate fees
Two abundant feedstocks
Woody biomass
Large volumesRe-energize forestry
Leverage existing infrastructureCompliant with Roundtable for
Sustainable Biomaterials protocol
All technology steps demonstrated at commercial scale
11
Conversion process
Chemically react the syngas to form long
chain hydrocarbons
Chemically cut the long
hydrocarbons to sustainable
fuels
HydrocrackerFischer Tropsch
Synthesis
Syngas clean-up
Gasifier
Waste Syngas Clean syngas FT product Fuels
Physically and chemically
remove impurities from the syngas
Thermally and chemically break the
material into its component
parts to produce syngas
Physical preparation of the feedstock,
removal of remaining
recyclables
Woody biomass
Negative Carbon Intensity (CI)
Agreement with Occidental Petroleum for CO2 capture and sequestration materially lowers the CI, from an already low number, and further increases LCFS revenuesCCUS: Carbon Capture, Usage and Storage/Sequestration
*
12
89
29
-125
-150
-100
-50
0
50
100
California baseline Bayou Fuels withoutCCUS
Bayou Fuels withCCUS
gCO
2e/M
J
(net greenhouse gases (CO2 equivalent) per unit of energy)
240% reduction
• Distillate fuels (jet, diesel, gas oil) + naphtha— Approved for aviation
use at up to 50%— Can be used directly as
diesel or blended
• No changes to engines or infrastructure needed
• Up to 90% reduction in particulate matter (soot)
• >70 cetane
• Zero sulfur
13
Cleaner burning fuels that can be used immediately
Diesel made using Velocys process Regular diesel
14
Significant reductions in particulates and sulfur
0
20
40
60
80
100
NOx Unburnt hydrocarbons CO Particulate matter SOx
Max
em
issi
ons
redu
ctio
ns fo
r nea
t FT
fuel
as
% o
f co
nven
tiona
l jet
fuel
Reduced emissions of key pollutants
Anderson, B. E. et. al. (February 2011), Alternative Aviation Fuel Experiment (AAFEX), NASA Langley Research Center.
15
Velocys fuels meet requirements for drop-in
• Representative fuels were made from local feedstock, upgraded, and analyzed by Southwest Research Institute
• Meets all requirements and regulations to be sold in the US and generate Federal and State credits— Qualifies for cellulosic RINs under the RFS (D3 and D7) and credits under the
LCFS— Diesel complies with ASTM D975, naphtha as a blend into ASTM D4814, and
Synthetic Paraffinic Kerosene (SPK) with ASTM D7566• On-highway fuels certified under Part 79 of EPA’s fuels regulations• Products expected to qualify as Development Fuels under Renewable
Transport Fuels Obligation (RTFO) in the UK • Drop-in ready
— Diesel no blend restriction— SPK blend up to 50% in Jet A1 (ASTM approved)
RIN: Renewable Identification NumberRFS: Renewable Fuels StandardLCFS: Low Carbon Fuels Standard (California)ASTM: American Society for Testing and Materials
Altalto projectWaste to Sustainable Aviation Fuel
17
• Plan to build commercial waste-to-jet-fuel plant (with co-investors)
• 70% lifecycle greenhouse gas reduction (200+% possible with CCS)1
• Target start construction in 2021, production 2024 (subject to planning and funding)
80 million liters2 of
clean fuel/yr
600,000 tonnes1 of
residual waste /yr
Immingham
1 GHG reduction 70% on biogenic fraction of waste – methodology for non-biogenic fraction to be confirmed by Government2 Nameplate capacity
• 12 million tonne capacity gap in UK
• Better use of waste than landfill or waste-to-energy
• Gate fees paid to the project
• Expect to contract ~90% of the volume from medium to large waste contractors
18
Waste supply
• Pre-FEED1 completed; £7.3M invested to date, plus £0.4M grant
• Option secured on 32ha site near Immingham
• Planning application submitted; supportive local community
19
Project status
1 Pre-Front End Engineering Design (+/-30% cost estimate)
MagnoliaWoody biomass to fuel project portfolio
• Located in Natchez Mississippi, the Bayou Fuels project will produce 23.5 million gallons per year, at nameplate capacity, of renewable fuels from forestry waste materials supplied under long term contracts from local sources.
• With a relentless focus on environmental attributes, the project will deliver drop-in transportation fuels to a rapidly growing market while achieving a Carbon Intensity of -125 g CO2e/MJ.
— At a 50/50 blend with fossil fuels, this enables net zero carbon transportation.
21
Bayou Fuels overview
Renewable Woody BiomassFeedstock
Captured and SequesteredCO2 Emissions
Below Zero (Carbon Sink)Lifecycle Fuel Emissions
Treated grey water from City of NatchezWater Intake
Maximum reuse of effluent within the facilityEffluent Treatment
SolarElectricity Source
6%
20%
28%
46%
Base Case D3/7 RINs and LCFS at long term forecast values
Naphtha Diesel RINs LCFS
• Highly negative Carbon Intensity drives high LCFS revenues and helps to reduce exposure to RINs
• Relatively insensitive to crude price
• Assumes only a modest premium for green fuels
22
Revenues supported by federal and state credits
>$13 per
gallon
Chart1
Naphtha
Diesel
RINs
LCFS
Base Case
Base Case D3/7 RINs and LCFS at long term forecast values
14523610.758716
52702757.8978629
74277841.3012608
120853148.037166
Summary Cases
Base Case
CAPEX reduction to 577
Naphtha sales to CA
CI Reduction
Increased leverage under DOE
maintain WTI Adjustment
Low RIN Scenario
RIN Prices reduce to $1.00/RINNo IRR as Cash negative
High WTI scenario
WTI at $8013.4% Project Levered IRR, DSCR at 1.63x
Base Case #s
FS Ann
Model period ending - annual-Error chks01 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 04
Timeline label - annual106Track chgsConstructionConstructionConstructionCommissionOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsPost - ops
Financial year ending - annual4Alerts202020212022202320242025202620272028202920302031203220332034203520362037203820392040204120422043204420452046204720482049
-Model column counterConstantUnitTotal123456789101112131415161718192021222324252627282930
-
PROFIT AND LOSS
-
-NaphthaPL$204,473,368---3,803,2917,060,7986,693,9107,121,2066,613,1097,354,8056,812,3877,556,8387,019,7157,809,2787,235,4198,028,3807,459,8388,301,2147,693,3238,538,7927,936,2428,833,7028,188,9749,091,2798,451,9169,410,0848,725,4819,689,3089,010,09810,033,978-
-SolventPL$-------------------------------
-DieselPL$862,349,168---16,468,20430,517,33128,849,23430,543,09128,223,69631,351,79129,080,96332,140,81729,894,46533,239,34130,774,21634,114,81631,662,47335,185,54332,557,34936,070,09933,456,70237,155,91334,358,09938,039,47035,258,79839,129,05336,155,70939,998,84037,045,37041,077,787-
-Drilling fluidsPL$-------------------------------
-Jet FuelPL$-------------------------------
-WaxPL$-------------------------------
-LubesPL$-------------------------------
-D3 RINsPL$599,157,187---9,298,44418,475,88818,992,99019,625,58118,196,61919,963,68418,775,08620,839,47719,080,60321,459,32420,100,52822,548,46221,182,18923,831,05722,329,77325,057,88123,547,77426,501,77224,841,02227,885,85626,214,70129,513,87727,674,38631,077,82129,226,06532,916,327-
-D7 RINsPL$2,716,179,246---42,152,94583,757,36186,101,55488,969,30282,491,34090,502,03485,113,72594,472,29786,498,73597,282,26891,122,394102,219,69296,025,923108,034,123101,228,302113,595,727106,749,910120,141,364112,612,632126,415,882118,839,979133,796,243125,457,217140,886,122132,491,496149,220,680-
-LCFS RINsPL$2,200,942,798---29,113,21175,462,68272,232,83776,160,47070,360,80677,783,51571,583,48578,842,37873,523,01282,178,47576,493,34185,264,88379,583,67288,952,62582,798,85392,293,45286,143,92696,285,18289,624,14199,901,40093,244,956104,222,17797,012,053108,136,489100,931,340112,813,436-
-Tipping fee revenuePL$-------------------------------
-CO2 sales revenuePL$-------------------------------
-Operating revenue$6,583,101,766---100,836,095215,274,060212,870,524222,419,650205,885,570226,955,829211,365,647233,851,808216,016,530241,968,686225,725,898252,176,233235,914,095264,304,561246,607,600275,555,952257,834,554288,917,932269,624,867301,333,888282,010,351316,071,435295,024,846329,788,580308,704,369346,062,208-
-EBITDA$4,172,517,604(965,014)(2,952,943)(6,061,461)47,245,995131,040,559137,831,850136,970,319130,890,192138,933,028134,601,109143,431,988136,479,973148,244,546143,972,939156,287,782152,257,536165,415,514159,469,515173,026,862167,875,763182,333,118176,163,294190,161,570184,783,903200,994,263194,127,452210,397,828203,196,628236,363,496-
-Cash flow available for debt service$3,533,218,352439,8027,311,19116,296,36178,177,917129,740,438122,752,809135,334,257119,921,218138,072,654123,272,588129,256,732101,112,921121,284,281105,822,202127,149,564112,665,485135,350,382119,507,022142,433,711126,079,769150,611,843133,036,033158,279,060140,320,124167,088,720147,878,980175,328,015161,396,848207,297,425-
-Guaranteed loan interest - paidCF$(175,855,395)(439,802)(7,311,191)(16,296,361)(23,683,041)(24,062,500)(21,562,500)(19,062,500)(16,562,500)(14,062,500)(11,562,500)(9,062,500)(6,562,500)(4,062,500)(1,562,500)----------------
-Unguaranteed loan interest - paidCF$-------------------------------
-Refinance debt interestPL & CF$-------------------------------
-Refinancing debt 2 interestPL & CF$-------------------------------
-Guaranteed loan repaymentCF$(500,000,000)----(50,000,000)(50,000,000)(50,000,000)(50,000,000)(50,000,000)(50,000,000)(50,000,000)(50,000,000)(50,000,000)(50,000,000)----------------
-Unguaranteed loan repaymentCF$-------------------------------
-Refinance debt repaymentCF$-------------------------------
-Refinancing debt 2 repaymentPL & CF$-------------------------------
Total Debt Service439,8027,311,19116,296,36123,683,04174,062,50071,562,50069,062,50066,562,50064,062,50061,562,50059,062,50056,562,50054,062,50051,562,500----------------
DSCR1.75x1.72x1.96x1.80x2.16x2.00x2.19x1.79x2.24x2.05x
RIN$1 #s
FS Ann
Model period ending - annual1Error chks01 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 04
Timeline label - annual104Track chgsConstructionConstructionConstructionCommissionOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsPost - ops
Financial year ending - annual7Alerts202020212022202320242025202620272028202920302031203220332034203520362037203820392040204120422043204420452046204720482049
0Model column counterConstantUnitTotal123456789101112131415161718192021222324252627282930
0
PROFIT AND LOSS
0
0NaphthaPL$204473367.6370640003803291.134240337060798.350456846693909.69560447121206.279470896613109.348892277354804.578453086812386.80563467556838.217944017019715.071629337809277.7772927235419.399570248028380.238070477459838.182359968301214.183573327693323.483974398538792.485446717936241.591774048833701.970407048188973.591128799091279.116864638451915.963257489410083.875683098725481.207220179689308.414681469010098.4870389510033978.1863960
0SolventPL$0000000000000000000000000000000
0DieselPL$862349168.41260300016468204.291198530517330.902007828849234.432036530543091.132612728223695.927044531351791.384884329080962.592390732140816.556698529894464.817523333239340.763467230774215.967963934114815.796838331662472.534074735185542.732984532557349.455015536070098.950556333456701.798611837155913.060058734358099.118539338039469.720210635258797.527183939129053.468556436155709.28898839998839.897436537045369.722721541077786.57299960
0Drilling fluidsPL$0000000000000000000000000000000
0Jet FuelPL$0000000000000000000000000000000
0WaxPL$0000000000000000000000000000000
0LubesPL$0000000000000000000000000000000
0D3 RINsPL$154269549.311850003361359.112656294889.33925988142.1886277690.1885744516.50086294889.33925744516.50086277690.1885744516.50086294889.33925744516.50086277690.1885744516.50086294889.33925744516.50086277690.1885744516.50086294889.33925744516.50086277690.1885744516.50086294889.33925744516.50086277690.1885744516.50086294889.33920
0D7 RINsPL$699,355,29000015238161.3106828536831.6710427146244.585628458862.185626041808.1369628536831.6710426041808.1369628458862.185626041808.1369628536831.6710426041808.1369628458862.185626041808.1369628536831.6710426041808.1369628458862.185626041808.1369628536831.6710426041808.1369628458862.185626041808.1369628536831.6710426041808.1369628458862.185626041808.1369628536831.671040
0LCFS RINsPL$2,200,942,79800029113211.283162575462681.926348272232836.625825776160469.54064770360806.01383777783515.400546671583485.45926678842378.344035873523011.774175782178475.315973976493341.449852485264883.298742779583672.444426488952624.541776382798852.811181392293451.80120686143926.46475396285181.520423989624141.09392999901400.387035393244956.3941238104222177.00914597012052.6324464108136488.607963100931339.558797112813436.1799110
0Tipping fee revenuePL$-000000000000000000000000000000
0CO2 sales revenuePL$-000000000000000000000000000000
0Operating revenue$4121390173.4547700067984227.1319314147872532.189053140910367.527067148561319.326331136983935.927534151321832.374124139263159.495051153276585.492278142223516.301088158058814.866973146289301.455147162144631.707251150492307.798621167271102.468574154835850.387931171638895.610809159323194.492899177106517.56113163957538.441357181768701.597711168741994.522325187593035.363624173679567.766415192561189.293681178773132.406318198756921.9495460
0EBITDA$1710806011.77351(965,014)(2,952,943)(6,061,461)14,394,12863,639,03165,871,69363,111,98961,988,55963,299,03262,498,62262,856,76662,686,95964,334,67564,536,34266,256,18166,835,74968,382,05667,697,76569,109,80669,364,40470,521,70370,495,96570,596,38471,515,54772,515,86472,782,17473,170,43773,265,39189,058,210-
0Cash flow available for debt service$1588080263.89784431705.3707176897096616.9349440315780849.841666977494200.374657263218621.542051757323291.810470767705336.644126445619377.232494368818738.922596646258948.126006267545741.457236340550657.563565765677969.005820643433764.234893468473285.042516141133581.69536765785103.822160854617850.399664967737566.90556653835820.487031164372911.691119551563058.251164766056576.533540452982536.7087567986489.235704954309814.835181669474676.551176361203580.868119781591591.80953110
-Guaranteed loan interest - paidCF$(174,433,496)(431,705)(7,096,617)(15,780,850)(22,999,324)(24,062,500)(21,562,500)(19,062,500)(16,562,500)(14,062,500)(11,562,500)(9,062,500)(6,562,500)(4,062,500)(1,562,500)----------------
-Unguaranteed loan interest - paidCF$-------------------------------
-Refinance debt interestPL & CF$-------------------------------
-Refinancing debt 2 interestPL & CF$-------------------------------
-Guaranteed loan repaymentCF$(500,000,000)----(50,000,000)(50,000,000)(50,000,000)(50,000,000)(50,000,000)(50,000,000)(50,000,000)(50,000,000)(50,000,000)(50,000,000)----------------
-Unguaranteed loan repaymentCF$-------------------------------
-Refinance debt repaymentCF$-------------------------------
-Refinancing debt 2 repaymentPL & CF$-------------------------------
Total Debt Service431,7057,096,61715,780,85022,999,32474,062,50071,562,50069,062,50066,562,50064,062,50061,562,50059,062,50056,562,50054,062,50051,562,500----------------
DSCR0.85x0.80x0.98x0.69x1.07x0.75x1.14x0.72x1.21x0.84x
0Retained cash balance BEG$0-0.000926138-0.0012619962-0.0014784765-0.0015318674-14252123.4722963-33591648.012665-34256620.8989373-65338080.8625228-60734467.254903-86637455.1476982-77805245.8015977-104896251.471993-92969226.274598-72531430.9461862-5060512.841956221744567.910038550000000.000000150000000.000000150000000.000000150000000.000000110000000.000000210000000.000000210000000.00000023000000.000000163000000.000000163000000.000000163000000.000000163000000.000000160.0000001416
0plusNet cash flow-$0-(0)(0)(0)(0)(14,252,123)(19,339,525)(664,973)(31,081,460)4,603,614(25,902,988)8,832,209(27,091,006)11,927,02520,437,79567,470,91826,805,08128,255,432---(40,000,000)--(7,000,000)----(3,000,000)-
0Retained cash balance$-0.000926138-0.0012619962-0.0014784765-0.0015318674-14252123.4722963-33591648.012665-34256620.8989373-65338080.8625228-60734467.254903-86637455.1476982-77805245.8015977-104896251.471993-92969226.274598-72531430.9461862-5060512.841956221744567.910038550000000.000000150000000.000000150000000.000000150000000.000000110000000.000000210000000.000000210000000.00000023000000.000000163000000.000000163000000.000000163000000.000000163000000.000000160.00000014160.0000001416
High WTI #s
FS Ann
Model period ending - annual0Error chks01 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 0401 Jan 04
Timeline label - annual107Track chgsConstructionConstructionConstructionCommissionOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsOperationsPost - ops
Financial year ending - annual4Alerts202020212022202320242025202620272028202920302031203220332034203520362037203820392040204120422043204420452046204720482049
0Model column counterConstantUnitTotal123456789101112131415161718192021222324252627282930
0
PROFIT AND LOSS
0
0NaphthaPL$235150870.1653480005123671.67599659595209.8927529127639.592289568993.472288756284.4376489595209.8927528756284.4376489568993.472288756284.4376489595209.8927528756284.4376489568993.472288756284.4376489595209.8927528756284.4376489568993.472288756284.4376489595209.8927528756284.4376489568993.472288756284.4376489595209.8927528756284.4376489568993.472288756284.4376489595209.8927520
0SolventPL$0000000000000000000000000000000
0DieselPL$982382939.59619300021481425.132138340139984.645794138089620.103734439836849.546270436360903.104032239858162.282214436396238.161183639780567.626361436429522.655724740094576.895104236728757.379434440267313.207147636943427.99529740561935.586061537062150.782076440523383.684787537072425.35187240580697.737547336960535.398282940274726.812623936711440.97204540030265.519577936308661.573975939389472.17837135734149.296046538765745.96848810
0Drilling fluidsPL$0000000000000000000000000000000
0Jet FuelPL$0000000000000000000000000000000
0WaxPL$0000000000000000000000000000000
0LubesPL$0000000000000000000000000000000
0D3 RINsPL$506781854.9795040005353636.6587176510904007.313362211721908.095853812630461.550648511793607.266472413561206.001225312967441.768245914827904.22405614117953.533026116253534.301048615578715.894654717876323.86008517171890.406866819748283.99830118908876.822741421676106.468137620802034.184860823901028.399935122864760.692778426188427.17919825111580.186098528829506.800012427558235.78979731540568.010504530221791.313525534672064.25935120
0D7 RINsPL$2,297,411,07600024269819.5195249431499.820575553139316.701203757258092.362939853464352.941341661477467.205554958785736.01604867219832.482387264001389.349718473682688.831420370623512.055768181039334.832385377845903.177796389525554.125631585720241.596427998265015.988890594302554.9713689108351328.746372103653581.807262118720869.879031113839163.510313130693764.160056124930668.913746142983908.314287137005453.954649157180024.6423920
0LCFS RINsPL$2,142,782,38500028394763.693057473580418.360338770411687.373809474219173.702227268547684.491387575756462.329459369696958.207162776740644.833019371563078.792418679987810.104148974454227.175632482991942.447568777462177.953527986581378.064703780591649.942850589833147.526117483847552.600541693718468.074353987234993.725603597238287.91629490759287.4721179101443883.82961494425962.6859914105253850.02393698240771.5785055109806122.2924780
0Tipping fee revenuePL$-000000000000000000000000000000
0CO2 sales revenuePL$-000000000000000000000000000000
0Operating revenue$6164509125.84500084623316.6794299183651120.032822182490171.866881193513570.634366178922832.240882200248507.711206186602658.590288208137942.638104194868228.768536219613820.024474206141496.943138231743907.819466218179683.971136246012361.66745231039203.581744259866647.140213244780851.546291276146732.85096259470156.061575291991305.259427275177756.578223310592630.202012291979813.401159328736791.999378309958450.580374350019167.0554610
0EBITDA$3749789984.81264(965,014)(2,952,943)(6,061,461)30,815,45599,079,432107,126,881107,737,612103,641,474111,926,752109,578,732117,449,626115,099,947125,651,369124,185,596135,649,881134,350,130146,950,647143,759,278157,200,089154,712,636169,460,304165,932,882180,755,242177,910,695195,490,756191,078,310209,362,095204,484,578240,379,004-
0Cash flow available for debt service$3200864394.10674435694.2848326417202309.3000742816034714.079045777817820.286325298043203.61323392236858.2528649106055222.1606492849750.3629122111013938.62322298718406.0069125115627469.62471398230116.7053905106041838.93314690413064.8842825111110199.65385698701313.0689545120976600.559466107232197.459219130084056.161037115763867.411523140529198.244179124976111.689589150858427.077216134843194.027345162665941.486877145344703.225037174338339.317201162200453.226164210519384.3814810
0Guaranteed loan interest - paidCF$-175120661.363184-435694.289176807-7202309.30178328-16034714.0801053-23322943.6921188-24062500-21562500-19062500-16562500-14062500-11562500-9062499.99999999-6562500-4062500-15625000000000000000000
0Unguaranteed loan interest - paidCF$0000000000000000000000000000000
0Refinance debt interestPL & CF$0000000000000000000000000000000
0Refinancing debt 2 interestPL & CF$0000000000000000000000000000000
0Guaranteed loan repaymentCF$-5000000000000-50000000-50000000-50000000-50000000-50000000-50000000-50000000-50000000-50000000-500000000000000000000000
0Unguaranteed loan repaymentCF$0000000000000000000000000000000
0Refinance debt repaymentCF$0000000000000000000000000000000
0Refinancing debt 2 repaymentPL & CF$0000000000000000000000000000000
Total Debt Service435,6947,202,30916,034,71423,322,94474,062,50071,562,50069,062,50066,562,50064,062,50061,562,50059,062,50056,562,50054,062,50051,562,500----------------
DSCR1.32x1.29x1.54x1.39x1.73x1.60x1.96x1.74x1.96x1.75x
Graphs
Revenue Splits - Average first 5 years
Base Case$0.5 RIN$1 RIN and $190 LCFS
Naphtha14,523,61114,523,61114,523,611
Diesel52,702,75852,702,75852,702,758
RINs74,277,84116,476,79932,953,598
LCFS120,853,148120,853,14892,943,078
Revenue Splits - Over first 10 years - $ Millions
Base Case2024202520262027202820292030203120322033
Naphtha$ 7$ 7$ 7$ 7$ 7$ 7$ 8$ 7$ 8$ 7
Diesel$ 31$ 29$ 31$ 28$ 31$ 29$ 32$ 30$ 33$ 31
RINs$ 105$ 109$ 101$ 110$ 104$ 115$ 106$ 119$ 111$ 125
LCFS$ 72$ 76$ 70$ 78$ 72$ 79$ 74$ 82$ 76$ 85
Total$ 215$ 220$ 209$ 223$ 214$ 230$ 219$ 238$ 229$ 248
Low RINs2024202520262027202820292030203120322033
Naphtha$ 7$ 7$ 7$ 7$ 7$ 7$ 8$ 7$ 8$ 7
Diesel$ 31$ 29$ 31$ 28$ 31$ 29$ 32$ 30$ 33$ 31
RINs$ 35$ 33$ 35$ 32$ 35$ 32$ 35$ 32$ 35$ 32
LCFS$ 75$ 72$ 76$ 70$ 78$ 72$ 79$ 74$ 82$ 76
Total$ 148$ 141$ 149$ 137$ 151$ 139$ 153$ 142$ 158$ 146
Max WTI2024202520262027202820292030203120322033
Naphtha$ 10$ 7$ 7$ 7$ 7$ 7$ 8$ 7$ 8$ 7
Diesel$ 40$ 29$ 31$ 28$ 31$ 29$ 32$ 30$ 33$ 31
RINs$ 60$ 65$ 70$ 65$ 75$ 72$ 82$ 78$ 90$ 86
LCFS$ 74$ 72$ 76$ 70$ 78$ 72$ 79$ 74$ 82$ 76
Total$ 184$ 173$ 184$ 170$ 192$ 179$ 201$ 189$ 213$ 201
EBITDA and DSCR
Base CaseLow RINHigh WTI
Sensitivities Chart from Model
reflects levered project IRR sensitivity on base case
Run STORE SENSITIVITY OUTPUTS macro to update the chart >>>STORE SENSITIVITY OUTPUTS
CategoryUpside SensitivityBase IRRIRRΔ IRR
RevenueRevenue +5%17.3%19.1%1.8 %
Plant Availability UptimePlant Availability +5%17.3%19.1%1.8 %
Capital expenditureCapex -5%17.3%18.8%1.5 %
RINRIN +5%17.3%18.2%0.9 %
Commission delayCommission -3 months17.3%18.0%0.7 %
Operating expenditureOpex -5%17.3%18.0%0.7 %
LCFSLCFS +5%17.3%17.9%0.6 %
Construction delayConstruction -3 months17.3%17.9%0.6 %
WTIWTI -5%17.3%17.8%0.5 %
Operating cost UptimeOpCost Availability -5%17.3%17.7%0.4 %
CategoryDownside SensitivityBase IRRIRRΔ IRR
RevenueRevenue -5%17.3 %15.5 %(1.8)%
Plant Availability UptimePlant Availability -5%17.3 %15.6 %(1.8)%
Capital expenditureCapex +5%17.3 %16.0 %(1.3)%
RINRIN -5%17.3 %16.4 %(0.9)%
Commission delayCommission +3 months17.3 %16.6 %(0.8)%
Operating expenditureOpex +5%17.3 %16.6 %(0.7)%
LCFSLCFS -5%17.3 %16.7 %(0.6)%
Construction delayConstruction +3 months17.3 %16.8 %(0.5)%
WTIWTI +5%17.3 %16.8 %(0.5)%
Operating cost UptimeOpCost Availability +5%17.3 %16.9 %(0.4)%
CAPEX Bridge
TotalsMovementsNote
Old "Core Capex"720720
Biomass boiler reduction(65)backup note from Sulis
2nd hand equipment savings(20)backup note from Cadmus
Design margin and other direct field cost savings(50)based on Ivan calc that used 6MWe for compressors
Associated indirect field cost savings(7)
Revised "core" capex577577
CI Bridge
TotalsMovementsNote
Original CIOriginal CI2626
Switch to solar with upgraded infrastructureSwitch to solar- 0backup note from Sulis
Sequestration of all Diesel associated CO2Sequestration of CO2(123)backup note from Cadmus
CO2 emissions (estimated) to sequester CO2Incremental CO2 emissions13based on Ivan calc that used 6MWe for compressors
All CO2 Sequestration CINew CI(85)(85)
IRR Bridge
TotalsMovementsNote
Original Unlevered Project IRR7.20%7.2%CAPEX $720m, 1660 boiler FEED, 11MW Power, No Naphtha LCFS, CI 26, no change to pre_FID $ or FID Sept '20 -- OP COST at 100% unplanned, Power declines to 5% end of commissioning, IRR is now at 7.2%
CAPEX9.21%2.0%CAPEX reduced to $576m, Boiler FEED to 315sgt, Power at $70/mwh, increased ramp to match opcost ramp,
Sell Naphtha to CA9.88%0.7%Getting LCFS for Napthta adds ~$7m p.a. in revenue
Sequestration of CO213.15%3.3%backup note from Cadmus
Project Unlevered13.2%
DOE Leverage17.71%4.6%10 year DOE Debt at 5%, 2.1 DSCR, no Refi
Project Levered IRR17.71%17.7%
New Project Unlevered13.15%13.2%
Upside Reliability13.47%0.3%1.5% increase in reliability to 90.6%
Upside Regulatory Reform13.93%0.5%25% decrease in Feedstock
Premium pricing14.33%0.4%add $0.25/gallon premium for all products, by adding $53 to Naphtha adder $0.25*42/.2
Upside Unlevered IRR14.33%14.3%
Upside Leverage33.37%19.0%$700m DOE debt at 15 years, 2.3xdscr, no refi
Upside Project IRR33.37%33.4%
FEED Spend Profile
Check underlying data
We do not have this over time to my knowledge
Graphs
Base Case
Tables
$0.5 RIN
Low RIN
$1 RIN and $190 LCFS
Naphtha
Diesel
RINs
LCFS
$ Millions
Revenues Over Time - Base Case
Naphtha
Diesel
RINs
LCFS
$ Millions
Revenues Over Time - Low RINs
Naphtha
Diesel
RINs
LCFS
$ Millions
Revenues Over Time - High WTI
20241.7517696288
20251.7153230996
20261.9595910451
20271.8016333211
20282.155280454
20292.0023973755
20302.1884737617
20311.7876317543
20322.2434086712
20332.0523093785
EBITDA
DSCR
EBITDA vs DSCR - Base Case
131.0405588491
137.8318501369
136.970319064
130.8901924985
138.9330281873
134.6011092599
143.4319884387
136.4799727015
148.2445458456
143.9729385665
EngineeringEngineering
Project ManagementProject Management
Project FinanceProject Finance
Site & PermittingSite & Permitting
Commercial AdvisoryCommercial Advisory
FEED Spend %
28800000
0.7396002194
5688000
0.1460710433
3800000
0.0975861401
281989.6
0.0072416517
369966.4
0.0095009455
20241.7517696288
20251.7153230996
20261.9595910451
20271.8016333211
20282.155280454
20292.0023973755
20302.1884737617
20311.7876317543
20322.2434086712
20332.0523093785
EBITDA
DSCR
EBITDA vs DSCR - Base Case
131.0405588491
137.8318501369
136.970319064
130.8901924985
138.9330281873
134.6011092599
143.4319884387
136.4799727015
148.2445458456
143.9729385665
20241.7517696288
20251.7153230996
20261.9595910451
20271.8016333211
20282.155280454
20292.0023973755
20302.1884737617
20311.7876317543
20322.2434086712
20332.0523093785
EBITDA
DSCR
EBITDA vs DSCR - Base Case
131.0405588491
137.8318501369
136.970319064
130.8901924985
138.9330281873
134.6011092599
143.4319884387
136.4799727015
148.2445458456
143.9729385665
EBITDA and DSCR
Base Case2024202520262027202820292030203120322033
EBITDA$ 131$ 138$ 137$ 131$ 139$ 135$ 143$ 136$ 148$ 144
DSCR1.75x1.72x1.96x1.80x2.16x2.00x2.19x1.79x2.24x2.05x
below not yet updated
Low RINs2024202520262027202820292030203120322033
EBITDA$ 64$ 66$ 63$ 62$ 63$ 62$ 63$ 63$ 64$ 65
DSCR0.85x0.80x0.98x0.69x1.07x0.75x1.14x0.72x1.21x0.84x
High WTI2024202520262027202820292030203120322033
EBITDA$ 99$ 107$ 108$ 104$ 112$ 110$ 117$ 115$ 126$ 124
DSCR1.32x1.29x1.54x1.39x1.73x1.60x1.96x1.74x1.96x1.75x
Spend Profiles
table to right for formatting puropsesFEED
External SpendFEED
Site and Permitting$ 281,990
Legal$ 168,000
Commercial$ 369,966
Project Finance$ 2,000,000
Engineering$ 28,800,000
Feedstock$ 72,000
Plant Operations Management$ 448,000
Internal and Other Spend
Total internal labor costs$ 5,000,000
Additional internal costs$ 1,800,000
Contingency$ - 0
Total Costs$ 38,939,956
Categories for Chart
Engineering$ 28,800,00074%
Project Management$ 5,688,00015%
Project Finance$ 3,800,00010%
Site & Permitting$ 281,9901%
Commercial Advisory$ 369,9661%
Total$ 38,939,956Note, this figure is not represented in model for Pre-FID Spend. Once aligned on $ for FEED, suggest we update pre-FID spend
Engineering Breakout
FEED contractor$ 8,000,00028%
Licensor packages$ 8,000,00028%
License fees$ 3,800,00013%
AL engineering$ 6,700,00023%
Other support$ 2,100,0007%
Other licensor services$ 200,0001%
Total$ 28,800,000
Sources and UsesBasecase
table to right for formatting puropsesSOURCES AND USESSOURCES AND USES
SourcesUSD% totalUsesUSD% totalSourcesUSD% totalUsesUSD% total
Core CAPEX567,749,93963.6 %Core CAPEX567749939.10.6364694123
Guaranteed loan500,000,00056.1 %EPC cost's profit and risk68,129,9937.6 %Guaranteed loan5000000000.5605191375EPC cost's profit and risk68129992.6920.0763763295
Unguaranteed loan--Owners engineering3,000,0000.3 %Unguaranteed loan00Owners engineering30000000.0033631148
Power Infrastructure4,000,0000.4 %Power Infrastructure40000000.0044841531
1st lien500,000,00056.1 %Construction costs642,879,93272.1 %1st lien5000000000.5605191375Construction costs642879931.7920.7206930097
Pre COD operating costs58,606,5876.6 %Pre COD operating costs58606586.91326110.0657002271
Owner's Risk capital8,516,2491.0 %Owner's Risk capital8516249.08650.0095470412
Equity308,322,06034.6 %Insurance during construction3,499,2740.4 %Equity308322059.9389510.3456408302Insurance during construction3499274.286561220.0039228204
Pre COD revenue83,708,1439.4 %Performance risk insurance14,000,0001.6 %Pre COD revenue83708143.1133710.0938400324Performance risk insurance140000000.0156945358
Other sources392,030,20343.9 %O&M reserve deposit16,904,2521.9 %Other sources392030203.0523220.4394808625O&M reserve deposit16904251.59442580.018950313
EPC Contingency Deposit34,064,9963.8 %EPC Contingency Deposit34064996.3460.0381881647
Development capital & fee--Development capital & fee00
Corporation tax3,637,4500.4 %Corporation tax3637449.611566870.0040777202
Other costs139,228,80815.6 %Other costs139228807.8383150.1560808226
Equity financing fee9,249,6621.0 %Equity financing fee9249661.798168520.0103692249
Guaranteed loan upfront fee15,000,0001.7 %Guaranteed loan upfront fee150000000.0168155741
Guaranteed loan agency fee350,7820.0 %Guaranteed loan agency fee350782.096320.0003932402
Guaranteed loan interest paid47,730,3955.4 %Guaranteed loan interest paid47730394.5321030.0535075991
DSRA deposit37,590,6254.2 %DSRA deposit375906250.0421405294
Financing cost109,921,46312.32 %Financing cost109921463.4265920.1232261677
Total sources892,030,203100.0 %Total uses892,030,203100.0 %Total sources892030203.0523221Total uses892030203.0569071
23
Future U.S. projects• Velocys initial site identification process involved a
US wide search for sites, which has resulted in 11already vetted sites and three priority sitesfocused in the Southeast which can be quicklysecured for future development.
• Future site opportunities have strong localinfrastructure, sufficient woody biomass within a75 mile radius, and excellent State and Countylong term incentive packages on offer.
• Abundance of woody biomass enablesincreasing production capacities for futureplants by 2x leading to economies of scale.
• Recently closed paper mills, have infrastructure(e.g. woody biomass boiler and wood yards) thatcould materially reduce the required investmentsfor a biorefinery.
• Magnolia believes a number of potential sites existin other states based on discussions with localrepresentatives, feedstock supply, and futureregulatory changes.
• Future plants also benefit from leverage at FID,reducing equity and increasing returns.
Arkadelphia,Arkansas
Shreveport,Louisiana
Epes,Alabama
Portfolio accelerates both volume of fuels and carbon savings
Industry implications and conclusion
• Carbon-negative, sustainably sourced fuels can be made available as soon as plants are built (~4 years)— RSB and RFS-compliant woody feedstock for 100 plants (~2
billion gallons, 10 million tonnes) in the US
• Can be blended into marine diesel / marine gas oil — Immediate CO2 reductions (double due to negative CI) with no
change to engines or bunkering infrastructure— Air quality improvements (particulates, sulfur)— Higher cetane likely to improve maintenance and performance
• Challenges— Marine fuels do not currently qualify for credits in US or UK— No internationally agreed decarbonisation structure for sector — Competition for feedstock with aviation in long term
25
Sustainable hydrocarbon fuels for marine
• Velocys is advancing sustainable fuels projects in the US and UK— One of the few sustainable routes to producing drop-in,
renewable fuels not limited by blending, derived from waste resources
— Demonstrated technology and operational capability— CCUS enables negative Carbon Intensity fuels, enabling the
growth of a material supply of sustainable fuels
• Opportunity to deploy in the marine sector — Easily implemented route to decarbonization— Requires supportive regulation and a concerted drive
26
Summary
27
Neville Hargreaves
• Neville is responsible for Velocys’ waste to fuels business, including the commercial, financial and corporate development of the Altalto waste-to-jet-fuel project in the UK. He developed this project from inception, building the collaboration with British Airways and Shell and securing £8M ($10M) in funding to date. He is also responsible for government and stakeholder relations in the UK.
• Neville has over 30 years’ technical and commercial experience in the oil, renewable energy and consulting industries, including 12 years with Exxon and 4 years with Bain and Company, the strategy consulting firm. At Exxon he led technical and commercial teams in areas including marine fuels and product development, bringing over 70 new products to market. He has delivered complex projects with many stakeholders across global public companies, contributing hundreds of millions of dollars to corporate value, led two small businesses and launched a successful innovation programme for the UK government.
• He holds an MA in chemistry from Cambridge University and a PhD from University College London, and is a Fellow of the Royal Society of Chemistry.
VP Waste to Fuels
Questions? Tammy Klein, Principal
+1.703.625.1072 (M); [email protected]
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http://www.futurefuelstrategies.com
FFO_Shipping_WebinarTK.pdfFuture Fuel Outlook Service�Web Conference ��Future Fuels for Shipping ��January 2020Slide Number 2Slide Number 3Slide Number 4Slide Number 5Slide Number 6Questions?
FFS_Shipping_WC2.pdfBallard Marine Webinar_FinalFuture Marine Fuels - Velocys finalFuture Fuels for ShippingAnother storm comingSlide Number 3Fischer Tropsch (FT) route to sustainable fuelsVelocys proprietary technology and companyVelocys Completed demonstration at commercial scaleLead client: Red Rock BiofuelsVelocys solutionSlide Number 10Conversion processNegative Carbon Intensity (CI)Cleaner burning fuels that can be used immediatelySignificant reductions in particulates and sulfurVelocys fuels meet requirements for drop-inAltalto projectSlide Number 17Waste supplyProject statusMagnoliaBayou Fuels overviewRevenues supported by federal and state credits�Future U.S. projectsIndustry implications and conclusionSustainable hydrocarbon fuels for marineSummaryNeville Hargreaves