Velocys plc, the sustainable fuels technology company, is pleased to provide the following update.
In 2021, we saw the achievement of a number of important objectives in our growth strategy, culminating in two multi-year Sustainable Aviation Fuel (SAF) purchasing agreements; the selection of our technology for an electronic fuels project commissioned by the Government of Japan; and a significant fundraising to be used to increase Velocys’ technology delivery capacity to unlock customer sales towards our 2024 positive net cash flow goal.
Since the end of the year, we have concluded the put and call option agreement on the company owning the land of the Altalto project site; appointed Andy Bensley as global head of business development and technology delivery, as well as other key technical appointments at our catalyst and reactor plant in Ohio. We approach 2022 with a clear focus on executing our agreed business strategy.
Project Update – Bayou Fuels
Worley, our international engineering contractor, completed Interim Engineering Works (FEL-2) during the first quarter of 2022 and Koch Project Solutions continues to provide project development support for our SAF biorefinery project in Mississippi, prior to the finalization of the contract execution strategy and the purpose of the FEED funding award.
The owner of the site; the Mississippi Local Development Authority, is on track to complete construction of the final section of the levee protecting the biorefinery site on the Mississippi River. Completion is expected later this summer.
We look forward to clarification on policy support from the US and UK governments to provide sufficient long-term revenue stability for biorefineries converting sustainable residues into renewable fuels. This is a condition for successful capital formation for both projects. We currently anticipate that the US Congress will pass favorable legislation, including the provision of an SAF Producer Tax Credit, indexed to the carbon intensity of the fuel, this summer, which will enable the launch of fundraising. Series A for Bayou Fuels in the second half of this year. We expect the UK government to need more time to provide equivalent competitive incentives, which would therefore allow Altalto to embark on a Series A fundraising in H1-23.
In anticipation of such political support, we have initiated a bidding process with selected U.S. investment banks and advisors for services, including underwriting tax-exempt municipal bonds. tax, mezzanine and equity to finance the final phase of development and subsequent construction of the Bayou. Fuel biorefinery in Mississippi.
A comprehensive 15-year SAF and Environmental Credit Levy Agreement with Southwest Airlines and a 10-year SAF Levy and Environmental Credit Memorandum of Understanding with IAG were entered into in November 2021. As planned, IAG and Velocys are converting the memorandum agreement into a full drawdown agreement with a view to completing this later in the second quarter. A further announcement will be made in due course.
Operations and business development update
We recently secured a 15-year lease for a modern, sustainable facility in Columbus, Ohio, where we will consolidate our catalysis services, microchannel reactor core assembly and technology licensing under one roof. In line with our recent set-up circular, this will involve a capital investment of up to £1.5m in building improvements to meet our specific needs and £4.8m in building automation. assembly of the reactor core allowing stable production of at least 12 complete FT reactors per year. . This aligns with the expiration next year of the 10-year lease of our current technology center in Columbus, Ohio.
We are also pleased to announce the potential sale of the undeveloped Ashtabula site in northern Ohio, acquired as part of the Pinto Energy acquisition in 2014 and intended to be used for a GTL plant at the era. Ashtabula Port Authority has tentatively agreed to acquire the site for an undisclosed price, subject to further due diligence by the buyer.
We deepened our collaboration with TOYO regarding biomass to SAF (BtL) and power to SAF (PtL) solutions for the energy transition in Japan. The commercial scale NEDO2 BtL project is currently at the FEL2 stage and progressing as planned and the Power to Liquids demonstration project is progressing as planned. Meanwhile, our commercial development pipeline continues to grow with a number of feasibility studies with biorefinery plant developers underway to accelerate these projects, which should turn into commercial contracts in due course.
Project Update – Altalto
Following our announcement on March 24, 2022, we and our partner British Airways are delighted to welcome Foresight Group LLP to the Altalto Immingham Municipal Solid Waste Jet Fuel Project in Immingham, where Velocys provides project development services, engineering and technology FTS.
Over the past few months, we have completed site engineering, geotechnical investigation and integration of carbon sequestration from biogenic CO2 in preparation for connecting the Altalto plant, once built, to the new East Coast Carbon Capture and Storage (CCS) cluster, which is being developed by a consortium of major companies including Drax, BP and Equinor.
This leading CCS cluster, designed to sequester 40 kt of CO2 per day, is expected to enter service around the same time as the commissioning of the Altalto plant, scheduled for 2027, subject to funding from Altalto and the CCS cluster. Our application to BEIS to participate in the East Coast CCS cluster has met the eligibility criteria and has advanced to Phase 2 of the evaluation process to identify and sequence CCS clusters suitable for deployment in the mid-2020s.
We benefited from the £1.9m Green Fuels Green Sky grant awarded by the DfT in August 2021, which more than covered our costs for essential site engineering and other site-related work up to the T2/22.
Notice of publication of the annual report and accounts of Velocys plc 2021
The Company’s results for the year ended December 31, 2021 are expected to be announced during the week beginning May 16, 2022. A further announcement will be made later.
Henrik Wareborn, CEO of Velocys, said. “The Velocys group is well positioned at the crossroads of energy security and the net zero transition. Through the deployment of our patented and proven FT and catalyst technology, we provide decarbonization solutions for hard-to-reduce sectors such as commercial aviation, to provide carbon-negative fuels to airlines and others. who are committed to achieving net zero targets, while reducing import dependency. fossil fuels.
“Improving the air quality impact of the synthetic fuels our customers produce using our patented technology is an additional driver of demand growth for our technology. Synthetic paraffinic kerosene, SPK, produced using Velocys’ proprietary superactive catalyst and FT synthesis, FTS, contains less than 15 ppm sulfur, compared to up to 3,000 ppm sulfur for conventional fossil jet fuel. This significantly reduces the amount of PM2.5 (2.5 micron particulate matter) generated by fuel combustion.