Velocys chief executive Henrik Wareborn has given a progress update on dedicated green jet fuel production plans for the Humber, as the ink dries on its collaboration with construction giant Bechtel.
The sustainable fuels technology provider has just entered into a master relationship agreement with the US engineering specialist behind some of the biggest infrastructure projects around the globe. It aims to develop the engineering, procurement and construction execution model for the consented Stallingborough plant and others internationally as it scales up.
In his post year-end statement to the City, Mr Wareborn described the agreement as “instrumental in delivering the next important milestones for the reference projects and future commercialisation,” revealing the business is now in the final stages of appointing a global investment bank as financial adviser. It will assist with the delivery of development capital into Altalto - the £350 million plant in North East Lincolnshire - and US sister project Bayou Fuels.
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Mr Wareborn said: “The progress and partnerships outlined reflect the significant achievements made in 2022 and Velocys’ position of strength in a rapidly evolving global market for advanced synthetic fuels technology.
“We have the here-and-now technology to enable sustainable aviation fuel production close to sustainable feedstock sources to decarbonise the aviation industry at scale. In order for SAF production plants to be successful, several threads need to be in place, such as government regulatory support, abundant and sustainable feedstock, carbon capture and sequestration, supply of renewable power, and most of all, a technology that works. Velocys provides a uniquely integrated package with its IP-protected technology at its core.
“The progress we continue to make, supported by these new developments and the policy tailwinds, means we have a solid platform to deliver. Consequently, we are confident about the years ahead and our commercialisation strategy.”
There is a chorus of calls for definitive policy and business model frameworks around carbon capture, with Velocys having said the plant - close to the Port of Immingham where two proposals pass - will be plug-in ready.
The grant funding of £27 million from the Department for Transport’s Advanced Fuels Fund - the highest such award from the DfT to any party involved in the competition - along with private sector matched funding, will be used for the completion of the project front end engineering design (FEED), and “places Altalto on a clear pathway to final investment decision by the end of 2024 and recognises the progress that has been made in advancing the project,” Mr Wareborn said.
Altalto expects to enter into construction in 2025 with commissioning and start-up anticipated in 2027, when it will convert domestic kerbside waste into sustainable aviation fuel. Bechtel will start the FEED in the next quarter, as match-funding is sought.
Mr Wareborn said the backing call will provide an opportunity for new partners to participate in the early development capital ahead of the final investment decision, as well as the shaping of offtake arrangements. He told how Velocys expects to retain a reduced equity position in the Altalto project once it is funded, with revenues to be generated from reactor and catalyst sales, engineering services and technology licensing.
The project is being jointly developed with British Airways. Full year results are anticipated in May, with the company stating performance has been in line with market expectations.
One of a “number of key milestones and objectives which put the company in a strong position to progress its reference projects through to key valuation inflection points and build its commercial pipeline,” was securing long term site control in Stallingborough with the Foresight Group.
Stateside it has also completed construction of a reactor core manufacturing facility in Columbus, Ohio, with fit out now ongoing with the aim of producing 12 reactors a year. Velocys has also appointed a global head of business development and technology delivery, Andy Bensley, and new chief financial officer, Philip Sanderson, together with a number of key technical and engineering roles in Houston, Texas and Columbus, Ohio.
The Oxford University spin-out enhanced by significant US acquisitions, is also bringing forward a second project, E-Alto, which could also emerge on the Humber. It is looking at hydrogen and carbon feedstocks for fuel production, and has been awarded £2.5 million from the same DfT pot, with BA on board again as partner, so too Clariant Catalysts and Technip Energies.
“The business development pipeline continues to grow, with a number of feasibility studies underway with both biorefinery and advanced power-to-liquid developers, as well as an increase in enquiries for potential projects,” Mr Wareborn said. “Velocys expects to move forward with a number of new global clients over the course of 2023.
“Organisation scale-up is planned to support commercial strategy. With the commissioning of the manufacturing facility in Ohio and the significant progress made at the company’s reference projects, the company is planning to materially expand the workforce in 2023, with a particular focus on project and operations engineering and manufacturing resources, business development and a small number of functional support staff.”
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