Oxford Catalysts Acquires Velocys; Focus on Accelerating Commercialization of Small-Scale Synthetic Fuel Systems

Jose Michael

Velosysoc
The Oxford Catalysts-Velosys combination will target cost-effective small-scale synthetic fuels production. Click to enlarge.

UK-based Oxford Catalysts Group PLC has acquired Velocys, Inc. from Battelle Memorial Institute for $35 million, $5 million of which is in cash. Velocys is a leader in the design and development of microchannel process technology for the production of synthetic fuels and commodity chemicals, with more than $160 million invested in its technology to date, primarily by industrial partners including Dow Chemical, Toyo Engineering and MODEC. (Earlier post.)

Oxford Catalysts (OC) has a platform catalyst technology that provides the increased activity required to unlock the benefits of such microchannel reactors. The companies have been collaborating since May 2007; in more than 3,500 hours of pilot testing, Velocys found that the OC Fischer-Tropsch catalysts were 15 times more productive than conventional fixed bed catalysts. Together, the catalyst and microchannel reactor technologies are capable of producing next-generation synthetic fuels more economically at smaller scales than possible with conventional systems, using feedstock sources including captured flare gas, gas that is currently reinjected, stranded gas reserves and biomass.

In August, Oxford Catalysts announced that it had developed a new metal carbide FT catalyst designed for use in microchannel reactors targeted for the small-scale, distributed production of biomass-to-liquids (BTL) fuels. (Earlier post.)

By combining their efforts, the companies say they will accelerate their time to market and reduce the risk and cost of commercialization. The combined technologies result in substantial capital cost savings, improved product yields, and greater energy efficiencies than conventional technologies.

This is a transformational event for both companies and marks the beginning of an exciting new phase in the development of both Oxford Catalysts and Velocys. The enlarged group has the core technology and critical mass required to become a leader in the fast emerging small scale synthetic fuels market—a potentially significant new industry that could unlock sufficient supplies to produce hundreds of billions of dollars’ worth of transportation fuels each year.

—Roy Lipski, Chief Executive of Oxford Catalysts

Oxford Catalysts has two key platform technologies. The first is for a novel class of catalysts incorporating metal carbides, which can match or exceed the benefits of traditional precious metal catalysts, at a lower cost, for several key processes used in the petroleum and petrochemical industries. Applications of these metal-carbide catalysts include the removal of sulfur from crude oil fractions (hydro-desulfurization, HDS), the conversion of natural gas, coal or bio-mass into virtually sulfur-free liquid fuels via the Fischer-Tropsch reaction (GTL, CTL and BTL processes respectively), and the transformation of biogas (waste methane) into syngas.

The second platform relates to a unique chemical reaction which can be used to generate steam at temperatures between 100ºC and 600ºC+, instantaneously, starting from room temperature, using a cheap liquid fuel alongside the catalysts.

Velocys was formed in 2001 to commercialize microchannel technology developed by Battelle Memorial Institute at Pacific Northwest National Laboratory (PNNL). Velocys, which owns or has licences to more than 550 microchannel patents (the largest microchannel patent portfolio in the world), is commercializing systems for both FT and methane reforming, two of the key components of the GTL process.

The basic building blocks of the Velocys technology are reactor components, each with large numbers of parallel and/or perpendicular microchannels. These microchannel reactors enable the use of significantly more active catalysts than can be utilized by conventional reactors, such as the FT catalyst developed by Oxford Catalysts. They can result in substantial capital cost savings, improved product yields, and greater energy efficiencies than conventional technologies, particularly when incorporated into smaller scale projects such as those suited to BTL, and to GTL for flare gas and small to medium scale stranded gas, a potentially significant new addressable market.

Velocys has formed strategic partnerships with several industry leaders in various application areas. Several partner supported projects are currently targeting commercial demonstration of the technology, including one with Toyo Engineering Corporation (a global EPC company with Mitsui as a minority shareholder) and MODEC, Inc. (the world’s second largest owner/provider of FPSOs, owned by Mitsui). In the synthetic fuels market, these projects are aiming for commercial demonstration beginning as early as 2009.

To fund the cash element of the purchase and to provide working capital to finance the integration of the wo companies, Oxford Catalysts intends to raise approximately £10.3 million (£8.2 million net of expenses) via a conditional, non pre-emptive institutional placement.

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