Range Fuels secures $80M for cellulosic ethanol plant

Broomfield, Colo.'s Range Fuels said it has secured a conditional commitment for an $80 million loan guarantee from the U.S. Department of Agriculture.

CEO David Aldous told the Cleantech Group that the money is the final, critical step needed to complete the plant in Soperton, Georgia, which is already under construction (see Range Fuels' Mitch Mandich breaks ground). The plant is expected to be mechanically ready in the first quarter of 2010, with volume production to begin in the second quarter.

The initial phase of the Soperton facility is expected to produce less than 10 million gallons of ethanol and methanol a year using 125 dry tons a day of biomass feedstock from the nearby timber industry.

The first phase was scaled back from the original projections of 20 million gallons of production by late 2009 (see Range Fuels gets cellulosic production plant go-ahead). It was expected to be the first commercial-scale cellulosic ethanol facility.

"The lead time for equipment was longer than we had been given indications of early on. We're not paying extra to expedite that," Aldous said. "We’re running the project first and foremost with a cost priority, not a schedule priority."

The second phase plans to use 625 dry tons per day of feedstock to produce less than 30 million gallons, with engineering work to start in about three months. The third phase is expected to use 2,625 tons a day to make 100 million gallons a year.

Other startups might beat Range Fuels to market with commercial cellulosic ethanol facilities, including Montreal, Canada-based biofuel and biochemical maker Enerkem, which plans to start production of 1.3 million gallons a year at its biomass-to-ethanol facility within the next month (see Utility poles make cheap ethanol feedstock for Enerkem).

Aldous said Range Fuel's goal is now to be the first cellulosic ethanol facility to produce 100 million gallons of ethanol and methanol a year. He declined to say when that would be, noting that the time frame for the two final phases depends completely on the company's access to capital through traditional fund-raising or strategic partners.

Range Fuel's modular process means it can be easily replicated for plant expansion so that there's little additional engineering work, Aldous said.

Aldous joined Range Fuels in November from Royal Dutch Shell, where he oversaw the refinery, retail, and merger-and acquisition sides of the fuel business. Aldous took over from founding CEO Mitch Mandich, who is serving as director of the board (see Using superpowers for the greater cleantech good).

"Although our fuel is much greener than most, at the end of the day we’re still a transportation fuel company," Aldous said.

The company opened its first pilot plant eight years ago. Range Fuels uses a thermo-chemical conversion process, dubbed K2, to convert biomass to a synthetic gas, and then uses catalysts to convert syngas to ethanol or methanol. The methanol could then be used to make specialty chemicals, which yield a higher price per-gallon than ethanol, Aldous said.

Range Fuels can use many kinds of biomass, including wood chips, switchgrass, olive pits, sugarcane and cornstalks. One benefit of Range Fuel's proprietary technology is that it can use a feedstock of varying sizes, Aldous said.

"We can get biomass through the temperature-pressure boundary and get it into syngas pretty much irrespective of how it comes in the front end," he said. 

Range Fuels has been testing the technology using a single feedstock at a time, but Aldous said the company plans to look at using varying feedstocks, such as municipal solid waste, to produce syngas.

For now, Range Fuels is planning to stick in the American Southeast for production facilities using local biomass in Georgia, Mississippi and Arkansas (see Range Fuels' Mitch Mandich breaks ground). The company plans to sell its cellulosic ethanol across the U.S.

In addition to the loan guarantee, Range Fuels has raised significant funding since it was founded by investor Vinod Khosla, including $74 million in backing from the U.S. Department of Energy (see U.S. government granting $385M to six cellulosic ethanol plants) and $170 million in venture capital (see Cleantech research gets a cash infusion), Aldous said.

The company has 116 employees.

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