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By Robert Rapier on Jun 22, 2010 with 64 responses

Range Fuels’ Number One Critic

That title appears to be reserved for me, even though I did not set out to earn it. It all started with the first story I wrote on Range Fuels in which I pointed out that their progress does not remotely align with their early promises. Since that initial story was published I have been frequently contacted to provide a skeptical side of the Range story. Below I report on another story on Range that has just come out that reiterates my skepticism – not on the nature of the technology but on the disconnect between the intial claims and actual progress to date.

One person recently e-mailed me and said “I bet (Range backer) Vinod Khosla and (Range CEO) David Aldous don’t like you very much.” Well, that may be (although I have had quite a lot of cordial correspondence with Khosla). I have also said before that I believe Vinod’s heart is in the right place. But this is not personal. I am far more worried about the future and the impact false promises may have on that future than whether I win popularity contests.

What Harm is Done?

Of course some ask “What harm is done? So someone fell short of expectations. Big deal.” In this case I think it is a very big deal. Here’s an analogy to illustrate why. Assume for a second that your house is on fire. Some people show up, dressed as firemen, and start to go through the motions of putting out the fire. To your untrained eye, they appear to be firemen, but you can’t help but notice that the fire continues to burn. After a while, it becomes obvious that these are not really firemen, and don’t know how to put out a fire. Meanwhile, the house burns to the ground. The real firemen never showed up, though, because they had gotten the message that firemen were already on the scene and had the situation under control.

I view our energy crisis as a house on fire, and biofuel hypesters as the faux firemen who lull the public into a false sense of security. They also pose a threat to the real fireman out competing for the same sources of funding. So I want some accountability from biofuel hypesters who go out and make outrageous claims and then fail to deliver on them.

Vinod Khosla on Skepticism

I believe the issues I have raised are fair, especially for Khosla. He made some bold statements about what they would do, and took taxpayer money to do it. The flip-side of that is you have to be prepared to accept responsibility when things don’t go as planned. I have yet to hear anyone from Range or within the government say “Yes, we screwed up a bit.” But all you have to do is read the February EPA report on what Range told them about their progress and contrast that with earlier claims that were made to see that things have not gone according to plan.

And while some have criticized me as the skeptic, note that Vinod has never been shy about expressing his skepticism about certain biofuel technologies. Indeed, Mr. Khosla warned investors to steer clear of clean tech IPO’s that rely too heavily on government funding and lack a clear technological advantage. “There will be Googles in this business, but before there is a dot-com rush, investors should ask questions,” Khosla told Bloomberg in an interview. “My objective is that good companies get funding and that, with the bad ones, people know what questions to ask.”

In response to my criticisms, Range apologists invariably say something like “That guy doesn’t know the big picture.” Actually I know a whole lot more than what I have written. For example, Range laid off a number of employees last year, including employees who were trying to develop a catalyst that could efficiently produce ethanol from synthesis gas. That is pretty key to Range’s claims, and my inference from these lay-offs is that Range couldn’t see any light at the end of that tunnel. That’s not all I know (e.g., a direct quote from a Range insider “There is nothing special about Bud’s (Klepper) gasifier“), and based on what I know, I stand behind my charge that Range has failed to deliver what they promised.

On the other hand, I want to make it clear again that my issue is not with the risk that they may fail. Of course new ventures are risky. Of course there will be unexpected problems. That is exactly why you don’t go out and make a lot of boasts about what you will do and how cheaply you can do it. But if you think I am just trying to belittle someone who took a risk that didn’t pan out, you have it completely wrong. Had they not gone out and made the claims they did – claims that at the time I thought were highly irresponsible and naïve – while chasing tax dollars, this wouldn’t be the same issue.

The Latest Range Story

Back to the new Range story I mentioned in the opening paragraph:

Range Fuels Fights Criticism, Technological Challenges

Let me address some specific bits from the article:

OMAHA (DTN) — Between 2006 and 2009, more than 100 news stories and press releases touted a cellulosic-ethanol-technology developer as a leader in a promising industry.

Many of those 100+ stories were hyped up puff pieces that the company encouraged. This hype created a buzz around the company that had them winning accolades long before they delivered. Shouldn’t they now be accountable for wasted tax dollars, and lost opportunities for companies that were denied funding that went to Range? Shouldn’t some of the writers of these puff pieces be taking a second look now? One thing is crystal clear. Range has not lived up to the expectations they created. No amount of dissembling can change that. They have taken in well over $300 million. That’s a lot of money. What do they have to show for that?

Construction on Range Fuels’ Soperton, Ga., cellulosic ethanol plant has stopped while the company continues work to improve its gasification technology. (Caption below a picture of the construction site).

Range Fuels claimed in 2007 it would produce commercial cellulosic ethanol using wood and other biomass at a 20-million-gallon plant in Soperton, Ga. — by 2008. However, the plant remains in development. Now, Range Fuels CEO and former Royal Dutch Shell executive David Aldous said his company has been honing its gasification/catalyst technology and plans to restart construction on the Soperton commercial plant in 2011.

“We have to do an equity raise before we get into the construction phase of that,” he said.

Note that the above implies that construction has stopped, but another story that came out a few days later quotes Range CEO David Aldous as saying the plant will start up producing methanol within the next couple of weeks – and ethanol at some future date (assuming they get more money).

“They were never going to be a cellulosic ethanol producer,” he (Rapier) said. “Can they do this in a cost-effective manner? No, not in my opinion.

Let me provide two additional pieces of information to put that in clear context. First was the fact that historically “cellulosic ethanol” has referred to the process by which cellulose is hydrolyzed to sugars, and then the sugars are fermented to ethanol. With the influx of the venture capitalists into the sector in the past few years, “cellulosic ethanol” suddenly became a catch-all definition for all sorts of processes involving biomass and some type of fuel product. For someone who is familiar with the long history of cellulosic ethanol in this country, this is very annoying. It would be as if we suddenly decided that calling bicycles “cars” is OK, when in fact that would confuse a great number of people.

So the first reason I said they would never be a cellulosic ethanol producer is that their process isn’t cellulosic ethanol except by the colloquial definition. But the second reason is that their process is gasification, and when you produce alcohols in this way you produce methanol or mixed alcohols. So I saw a process that was gasification to mixed alcohols, not a cellulosic ethanol process. Hence, my comment that they were never going to be a cellulosic ethanol producer (not that they could never be successful with their approach) – their process was only going to be gasification to mixed alcohols (including ethanol).

Unfair Criticism?

The criticism leveled at Range Fuels is “unfair,” Aden said, and the company likely will be commercially successful at some point. Several things make Range Fuels’ technology “fairly unique,” he said.

The Range gasification technology is a two-step process that includes volatilization. Volatilization is a chemical process that rapidly converts nonvolatile solids and liquids (biomass in Range Fuel’s case) into volatile compounds by thermal decomposition. The company then follows that with steam reforming, Aden said.

I don’t know what Aden means when he says the criticism is unfair. What I have done to this point is contrast what Range is now saying they will deliver with their earlier public statements. If you say you are going to build a plant for $120 million and start it up in 2008 producing ethanol, I think by 2010 you have some explaining to do when you have taken over 3 times that much cash, substantially reduced the capacity, still don’t have a completed plant, and are now saying you need more money to continue. Public statements have been made about deliverables. No amount of spin will make them vanish, and I have a right as a taxpayer to question how my money is being spent. So what is unfair about asking for some accountability for how our tax dollars are being spent?

One of the issues could be that the people within the government who are supposed to be looking after our tax dollars are a little too close to Range to remain objective. After all, Range has a fair share of cheerleaders within the government agencies doing the funding, but those cheerleaders need to take a step back and apply some objectivity with respect to what taxpayers are getting for the money they have been forced to spend.

Second, “fairly unique” is a bit generic, isn’t it? All of these processes are “fairly unique.” They have some subtleties that differentiate them from other processes, but not too many of them are “very unique” – which is how Range sold their process. In fact, Aden describes a two-step process in which the 1st stage process is a pyrolysis step. That part certainly isn’t unique, as I know a company that has been doing that sort of two-stage process for 10 years.

That’s what I mean when I say what Range is doing isn’t unique. (I think they aspired to do something relatively unique, but those aspirations were derailed by technical challenges they underestimated). There are numerous off the shelf technologies that can take a gasifier and couple it to a catalyst for producing methanol or mixed alcohols. People just don’t do it because it isn’t economical to do it. But the technology has existed – for decades – to do it (as I explained to a Range contractor who couldn’t understand why I was criticizing this revolutionary technology).

Why Range’s Initial Plans Derailed

I think two things happened with Range on the way from the lab to a demonstration scale. First, I think they had trouble scaling up their gasifier (in fact I have heard this from numerous sources). These can be notoriously difficult to scale because all kinds of temperature issues can give trouble at larger scale. The inability to scale their gasifier will make it very difficult for them to make their economics work; simply stacking up smaller gasifiers is much more expensive than just building one large one.

Second, I think they thought they could develop a catalyst that could produce ethanol for them in high yields. As Aldous admitted above, they get equal amounts of methanol and ethanol – which is what some of us were suggesting all along would happen. Methanol is cheaply produced from natural gas, so the only way they can compete with that is to get very generous subsidies and then sell to biodiesel producers – who will then presumably collect their own subsidies. So for Range to be successful here is going to take a dual biofuel subsidy and involve methanol which we can already cheaply produce in abundance.

The process itself is not necessarily a bad process: Gasify biomass and produce methanol and ethanol. The problem was that they had a number of bad assumptions to start with, and they have had to spend a lot of money getting to the point they are at. If I started out to design a process for producing mixed alcohols from biomass, I could do it for a fraction of Range’s capital expenditure.

A Skeptic and a Cynic

It’s easy to be skeptical or cynical, Aldous said. The question he would ask of those who are skeptical or cynical is, what are they doing to take on the challenges of achieving energy independence?

OK, I am skeptical and cynical, but I can answer the question. I am doing plenty, but we don’t issue press releases about what we are working on. Don’t confuse making lots of press releases about your plans and goals – very typical of many biofuel companies – with concrete actions. But it is possible – as illustrated in the fireman analogy – to actually do more harm than good even though you are trying to take on the challenge. If in the process you sour the public on the biofuel sector, then I would argue that it would have been better to remain on the sidelines.

I will say again that my criticism has never been directed at Range CEO David Aldous. I think the original management recognized a train wreck in progress (of their own making) and decided to get someone who really knew the energy business. (I think their original view was that they were smarter than all of those dinosaurs in the energy business, but finally concluded that maybe they better get someone who knew the business). Thus, they tapped former Shell executive Aldous. I think he has come in and reeled in most of the irresponsible statements. I can’t think of much he has said that I would have much of a problem with, and I realize as the CEO he has to attempt to defend his company against some of the things I am saying.

Conclusion

To conclude, I am not suggesting that Range can’t succeed technically at what they are attempting. I am only saying that what they are now doing is quite different (and has been far costlier) than what they initially claimed, and it will be very difficult for them to produce economical alcohols via this process. Ultimately, this is a cautionary tale about applying a bit more skepticism and a bit less cheerleading for some of these biofuel companies who promise the solution to all of our energy problems. Sort of like the kind of skepticism Vinod Khosla applies toward prospective algal biofuel producers.

  1. By takchess on June 22, 2010 at 4:42 pm

    I’d be interested in hearing what Khosla investments you find may have the most potential .

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  2. By Gary on June 22, 2010 at 5:28 pm

    Well put RR. 

    Yet the devil is still in the details.  Much, much more to this particular story is still missing. 

    It is unfortunate that Klepper’s gasifier wouldn’t scale up.  It is also unfortunate that Range still struggles with catalysis issues. 

    There are more alcohols contained within a synthetic mixture of higher alcohols than just C1 methanol and C2 ethanol.  And there are some formula patents out there to contend with. 

    There is a quiet lawsuit going on in Utah against Klepper & Khosla concerning broken licensing rights perhaps to claims that were legitimately held by others. 

    There are 20 patents filed by Range, 19 of them in the catalysis field which don’t effect other producers at all.  More will surface in time. 

    I agree with you it is too damn bad that public taxpayer money has been wasted thus far with so little ‘show and tell’ which actually surfaced with this private company amid two-year overdue deadlines of their own making…

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  3. By John Gear on June 22, 2010 at 6:21 pm

    Actually, I consider ““fairly unique” to be a significant indicator of clouded thinking, which is a bad sign in folks who claim to be able to cut a new trail over difficult technical ground. Unique, like pregnant, is a binary concept — one can no more be “fairly unique” than one can be “fairly pregnant.”

    It’s not a technical criticism, but I note that there are few successful innovators in any field who exhibit this kind of sloppy thinking about their main challenges.

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  4. By Benny BND Cole on June 22, 2010 at 7:14 pm

    John Gear-

    Bless you, whoever you are. You stole the words out of my mouth. Unique means “one of a kind.”

    You can be “very” innnovative, or “fairly” creative or insightful. You cannot be “very unique.”

    BTW, I take issue with RR that the US energy picture is a “house on fire.” There are global gluts of fossil fuels right now, even while game-changing technologies–PHEVs and lithium batteries–appear to improving radically, and getting very close to commercialization.

    There are also epic global and domestic supplies of natural gas, and CNG cars are a proven commodity.

    Demand for crude is falling, not rising, all over the developed world–and I think “round two” of consumption declines are coming. When a Ford-Lincoln luxury cars can get 41 mpg (as they do), then I think we will see permanently shrinking demand for oil in the USA from now on.

    Japan and France are back to late 1970s levels of consumption, despite far higher living standards than 40 years ago. And still their crude demand is falling.

    Never bet against the price signal and human innovation.

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  5. By anonyminius on June 22, 2010 at 9:10 pm

    Perhaps they were attempting to indicate that among every “unique” fuel producer the things that made them “unique” were more different/divergent than the differences between the rest of the “unique” operators.

    As far as I know no dictionary specifying “unique” does not indicate an amount of granularity to apply when considering its application to something, providing ample ground for nit-pickers to argue as long as they wish the semantics of the meaningless.

    Perhaps now that this thought experiment has been taken to unreasonable lengths we can get back to discussing the construction of ethanol stills in every US county, natural gas gluts, and various other things other than what the article is actually about.

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  6. By russ on June 23, 2010 at 7:32 am

    The ‘fairly unique’ bunch are those that don’t understand what they are getting into – very often senior management that are on the team for other than technical considerations. Khosla would be among the ‘fairly unique’ bunch. Like Robert pointed out, when Aldous came on board he quickly stopped most of the inane chatter.  

    Even taking money from suckers isn’t easy as any conman understands well. Now Khosla has Tony Blair in his pocket for that reason only. You can bet Blair is making a lot heftier salary with Khosla than he ever did as PM. Blair’s ‘fairly unique’ capability is as a door opener – nothing more.

     

     

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  7. By Douglas Hvistendahl on June 23, 2010 at 9:21 am

    An example of transportation innovation is the Personal Rapid Transit (PRT or PodCar) network at Morgantown, WV. It has delivered 110 million injury-free, oil-free passenger miles since going into service in 1975 as a solution to the 1973 Oil Embargo. Like a physical version of the Internet, this is a computer network that moves people on-demand.

    The above is a possible urban transit system that has been proven to work. Lower cost than light rail, both to implement, and to run. Possibly we are just looking in the corners of the box, rather than looking outside the box!

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  8. By Jerry Unruh on June 23, 2010 at 9:35 am

    Robert:
    Is gasification of biomass essentially the same as POX for naphtha we used for syn gas? If so, does the oxygen in the carbohydrates become the oxygen source such that little air oxygen is required?

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  9. By little wally on June 23, 2010 at 9:51 am

    Isn’t the Range story really an indication of the problems when government tries to pick winners and losers? I was at an expensive biofuel conference a few years ago where a high level DoE speaker in the Q&A session indicated that part of the problem was that Congress mandated this jump to 6 commercial scale facilities in 2007, skipping over the preliminary step of funding about 20 or more demonstration projects that would have served to collect a whole lot of useful information about all of these different technologies (DoE funded that approach in 2008-09). Presumably, Congress did that because lobbyists for the cellulosic industry were telling them that these projects were ready for prime time. Clearly that was not the case. It was apparently yet another example of the biofuels industry over-promising and under-delivering.

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  10. By rrapier on June 23, 2010 at 2:28 pm

    I’d be interested in hearing what Khosla investments you find may have the most potential.

     

    I think most of his portfolio consists of long-shots. I have had it on my “to-do” list to talk to Gevo for a long time. I will get around to that as some point so I can get a better feel for their approach.

     

    RR

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  11. By rrapier on June 23, 2010 at 2:30 pm

    BTW, I take issue with RR that the US energy picture is a “house on
    fire.” There are global gluts of fossil fuels right now, even while
    game-changing technologies–PHEVs and lithium batteries–appear to
    improving radically, and getting very close to commercialization.

     

    Yet oil is 10x what it was 10 years ago – in a recession. Oil prices continue to constrict the economy; people continue to be out of work and industries struggle. Despite all of that, we remain heavily dependent upon a depleting resource. That is, in my view, a house on fire. The only question is whether the firemen will show up.

     

    RR

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  12. By rrapier on June 23, 2010 at 2:33 pm

    Is gasification of biomass essentially the same as POX for naphtha we
    used for syn gas? If so, does the oxygen in the carbohydrates become
    the oxygen source such that little air oxygen is required?

    Jerry, it is essentially the same process. Most of the gasification processes do require oxygen or air, though.

    RR

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  13. By rrapier on June 23, 2010 at 3:11 pm

    Actually, I consider “fairly unique” to be a significant indicator of clouded thinking, which is a bad sign in folks who claim to be able to cut a new trail over difficult technical ground.

    Hi John,

    Not only that, but notice the words that Aden uses to talk about Range: “likely will be commercially successful at some point.” That’s not exactly a ringing endorsement, is it?

    RR

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  14. By OD on June 23, 2010 at 4:03 pm

    Yet oil is 10x what it was 10 years ago – in a recession.

    Part of that is the massive plunge in the dollar as well. If the dollar index returned to its all time high in the 160s.. what would the price of oil be? Also 10 years ago the dollar was 120.. again significantly higher than today.

    Of course flat production and increasing demand are also contributing factors.

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  15. By Franklin Quinn Mulli on June 23, 2010 at 5:23 pm

    Well said Mr. Rapier. I live in the small community (Soperton, Georgia-Treutlen County) that is offering/giving the subsidies to Range Fuels in the way of Taxes and water. As far as cheerleaders go for this company, they have an excellent Public Relations department. They seem to be able to persuade the masses to accept the timeframes as normal project build times.
    As an Engineer in the Power Industry, I notice that when I am asked about how this revolutionary process is going to affect our community as a whole; I explain to them that I see this type of hype all over the country in a moth balled state. Anytime you have R&D companies receiving Gov’t money, you have to be realistic and understand as soon as the money is gone; so are the companies; especially when the product that you have claimed to develop at an economical price is far more expensive than would be acceptable or marketable. I am always skeptical of companies that can claim to do remarkable feats of development; when other reputable companies claim that it can be done, but not economically. This is what we are up against with Range Fuels. Smoking mirrors may be another explanation of this type of snake oil show.
    Thank you for your input on this sore subject.

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  16. By Benny BND Cole on June 23, 2010 at 6:04 pm

    RR said: Yet oil is 10x what it was 10 years ago – in a recession. Oil prices continue to constrict the economy; people continue to be out of work and industries struggle.

    Way off, RR.

    Adjusted for inflation, oil hit an annual average of $98.52 in 1980, and that was 30 years ago. It traded for $34.50 in 2000, and is in mid-upper $70s today. See http://inflationdata.com/infla….._table.asp

    So oil has a little more than doubled in last 10 years, but is down from earlier epochs. You have championed against hyperbole, but….

    The proximate cause of the Great Recession was financial; bad home loans in the trillions, and huge giant global bets on property that did not pan out. The global financial system very poorly tolerates heavily leveraged bets that go wrong. Oil may have played a role, but it was a small actor on a stage crowded with heavyweights.

    We do not face an energy house on fire–we face challenges, though I would see huge upsides in domestic production of energy, including job growth in the USA.

    Sheesh, a moderately stiff gasoline tax would douse the small flames rather easily.

    Crude oil is trading in the mid-high

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  17. By rrapier on June 23, 2010 at 7:01 pm

    Adjusted for inflation, oil hit an annual average of $98.52 in 1980, and that was 30 years ago. It traded for $34.50 in 2000, and is in mid-upper $70s today.

    In 1999, oil traded below $10 and the average for the year was in the teens. In 2000 the average was in the mid-$20′s. The $98.52 price you referenced preceded a terrible recession, which is typical of oil prices much above where they currently are. Still in a recession and oil prices where they are is a prescription for a long recession.

    What I see are many real firemen – analogous to real solutions – but one administration after another has chased the fake firemen and put us in this position.

    RR

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  18. By Benny BND Cole on June 23, 2010 at 7:11 pm

    Well, we may disagree on history, and I contend you need to adjust your figures for inflation, but at least we agree (roughly) that proposed solutions (such as ethanol) have been off the mark.

    BTW, there is some sense in not calling for any fireman. The price signal accomplishes wonders. Global crude oil demand is going nowhere, and falling all over the developed world. I think declining demand will be the norm.

    I happen to think we could give the price signal a boost by taxing gasoline, or oil imports. The latter is preferable from an economic standpoint, but probably impractical from a trade standpoint.

    Well, some see a half-empty glass, and some half-full, as they say.

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  19. By Rufus on June 23, 2010 at 7:41 pm

    840,000 Barrels/day at a plant-gate price of $1.45 (w/o subsidies) is “Missing the Mark?”

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  20. By savro on June 23, 2010 at 7:47 pm

    Rufus, you’re going to like something mentioned during USDA Secretary Vilsack’s conference call with reporters.

    mms://ocbmtcwmp.usda.gov/content/secy/secy062210.wma

    Forward it to the question beginning at the 18:45 mark, and especially the part of Vilsack’s response at 20:35.

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  21. By Rufus on June 23, 2010 at 8:39 pm

    Yeah, they’re catching up, Sam. I think his problem is: He’d, sincerely, like to do a lot more than the Obama administration will let him do.

    The Administration is not going to do anything that would help the Biofuels/Ethanol Business untill Grassley, Lugar, et al get on board with the President’s Cap and Trade/Energy Policy.

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  22. By Jerry Unruh on June 24, 2010 at 9:50 am

    Robert Rapier said:

    Is gasification of biomass essentially the same as POX for naphtha we

    used for syn gas? If so, does the oxygen in the carbohydrates become

    the oxygen source such that little air oxygen is required?

    Jerry, it is essentially the same process. Most of the gasification processes do require oxygen or air, though.

    RR


    Robert:

     

    I suppose my concerns begin to grow when I started wondering what happened to the oxygen if it is decided to make liquid fuels via biomass gasification.  After your comment above, I did a very quick look at biomass gasification.  It appears that a substantial amount of C ends up as CO2 and H2:CO is not very high (close to 1:1).  All of this suggests that liquid fuel production, whether methanol of other, will be rather low – considerably lower than 50% and possibly lower than 25% on a mass balance basis.  Of course, this further lowers the solar conversion efficiency and increases fossil fuel inputs to these biomass fuels.  In addition energy content of the biogas is rather low – 4-10 MJ/cubic meter or 110-270 Btu/cu ft.  All of this makes me much less bullish about biomass gasification as a significant solution to our energy needs.

     

    Is the above essentially correct or am I missing something?

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  23. By Walt on June 24, 2010 at 12:22 pm

    Although my post here may seem like an unrelated issue to the above commentary, I believe it is related to the story above. I’ve faced my own discussions with the Khosla VC group and their unfair criticism of our technology value, and their foolish (my words) expertise in the technology sector (my opinion). Since he is almost the self-proclaimed global expert on energy technologies, with hundreds of millions at his disposal, it is ok to challenge the claims as Robert did above.

    I’m certainly no expert on ethanol technologies, but when you pour in hundreds of millions of other people’s money into these ventures, I expect you will find some of us wanting to see high performance…not just with government contracts, or with government subsidies providing the bulk of your value (read Bloom Energy who I hear is getting subsidies for their fuel cell application, but I could be wrong…as I don’t know as they operate in “stealth” like most VC funded deals…until they are ready to exit on the public).

    My question, in my posting today, is: Is now the time for the Carbon Fund Concept?

    Is it now time to take into consideration the Carbon issues involving these new ethanol technologies (using “well-to-wheel” calculations), or are the new Carbon technologies not necessary?

    As some of you know, back in February we announced our plans to develop a Carbon Fund. You can see the GLITR article here: http://www.wwj.com/pages/6426001.php ? We were seeking a fund size between $100 and $200 million.

    However, the problems that came out of the Copenhagen conference on Climate Change showed the world that even President Obama changed his views. See here where he says, “President Barack Obama says the public is justified in its disappointment with the outcome of the United Nations climate change summit.” Dec. 23, 2009

    http://www.cbsnews.com/stories…..6245.shtml

    The idea for a Carbon Fund after Copenhagen proved as difficult a concept than trying to develop a new technology to reduce 40% of the Carbon Emissions from Gas Flaring. I know and have viewed much of the Gas Flaring reduction efforts led by various groups, and they are not interested to help promote new technologies. You can see this by even reading how they define the tools and solutions to reduce gas flaring. There is no definition or room for new technologies. See here to understand what a new technology looks like:

    http://www.youtube.com/watch?v…..re=related

    Our concept was to try to develop a Carbon Fund that would consider new technologies and support those new technologies that the large carbon leaders do not often support. However, after the events in the Gulf of Mexico, there is a MAJOR PUSH FOR NEW TECHNOLOGIES. Why? Because they have no choice. By definition…the way to solve the problem is by using new technologies…not to remove all new technologies from the definitions as possible solutions.

    Is there any value in New Technologies to solve problems in the Carbon Community? Well, if you look at just one technology which claims to reduce carbon emissions by 25% by turning natural gas into electricity…see the value it brings to the market…in fact the highest value of any new technology that even made the TV program “60 Minutes”. It is Bloom Energy and this is what I wrote back in April of this year:

    ————————————————
    If you study how Bloom Energy raised $400 million dollars for a technology to convert methane gas into electricity, using an advanced fuel cell, it makes me wonder if the VC/lawyers “financial engineering” is more important than the technologies “chemical engineering” being a “disruptive technology”.

    It appears from some press statements their last raise was $150 million at a $1.45 billion valuation, and this is pretty amazing considering an $85 million loss. It makes me speculate that the “financial engineering” of their business model was ***more important*** than the technology value itself.

    What is the best way to finance a “disruptive technology” through multiple rounds of securities (Bloom claims up to an ‘F round’)?

    http://earth2tech.com/2009/02/…..-series-f/

    The conversion of methane-to-liquid is far more disruptive globally than the conversion of methane-to-electricity for multiple reasons, so if the technology is not the driver to their valuation…how did they do this? It cannot be just because Kleiner Perkins backed the startup…and they have an $85 million loss of revenues on this technology.
    ————————————————

    My question to those of you on my email list: “Is now the time for the Carbon Fund Concept?”

    The answer is I do not know. New technologies hold promise to reduce gas flaring, methane emissions and CO2 reductions. However, there is risk, and it appears many do not want to take the risk to introduce these technologies into the solutions basket of tools.

    Nevertheless, once the adoption of new technologies as a solution to the problem (like is ongoing in the Gulf of Mexico) I think people will finally see the value drivers…but it might take an emergency to get leadership to see.

    [link]      
  24. By rrapier on June 24, 2010 at 1:24 pm

    Is the above essentially correct or am I missing something?

    Jerry, the one thing missing is the water gas shift reaction. Either through moisture in the feedstock or injection of steam, it is used to push the ratio higher. Also got this from a reader who is doing some small-scale gasification/FT work, in response to your comment:

    The water-make from the FT chemistry reacts with CO to increase the H2 content to achieve a H2:CO ratio closer to the theoretical 2:1 range. Approximately 50% of the CO in the producer gas is consumed in the WGS reaction, which gives us a liquid fuel production rate of around 40 gallons per ton biomass.

    RR

    [link]      
  25. By Walt on June 24, 2010 at 1:35 pm

    Jerry Unruh said:

    It appears that a substantial amount of C ends up as CO2 and H2:CO is not very high (close to 1:1).  All of this suggests that liquid fuel production, whether methanol of other, will be rather low – considerably lower than 50% and possibly lower than 25% on a mass balance basis.  Of course, this further lowers the solar conversion efficiency and increases fossil fuel inputs to these biomass fuels.  In addition energy content of the biogas is rather low – 4-10 MJ/cubic meter or 110-270 Btu/cu ft.  All of this makes me much less bullish about biomass gasification as a significant solution to our energy needs.
     

    Is the above essentially correct or am I missing something?


     

    From our own research, we have not found a gasification system that will give you the right ratios to make fuels from biomass, tires, etc.  Although many of the VC funded deals I’ve seen over the past 4 years often promote “biomass-to-fuels” using gasification, I have not really seen it come out successfully…at least not cheaply.  Once the right syngas ratios are met, and the costs are reduced, I think biomass could be used to make fuels using this route.  It is just a difficult task, but as fuel prices rise due to our dependencies on crude, I think some fuels will make it into the marketplace that are lower priced than the forthcoming gasoline prices.

     

    The target for gasoline prices predicted by some is $7.00 per gallon, and it might not be far off.  It is coming faster than most people think.

    http://www.nytimes.com/cwire/2…..56291.html

    http://belfercenter.ksg.harvar…..ector.html

     

    You might see some of the ‘ethanol investors’ look pretty good on paper once gasoline hits $7.00 and the subsidies are in place for ethanol.  They might be willing to use gasification to anything fuels in the future with subsidies and mandates…as we are seeing politically.

    [link]      
  26. By Walt on June 24, 2010 at 1:44 pm

    Robert Rapier said:

    Is the above essentially correct or am I missing something?

    Jerry, the one thing missing is the water gas shift reaction. Either through moisture in the feedstock or injection of steam, it is used to push the ratio higher. Also got this from a reader who is doing some small-scale gasification/FT work, in response to your comment:

    The water-make from the FT chemistry reacts with CO to increase the H2 content to achieve a H2:CO ratio closer to the theoretical 2:1 range. Approximately 50% of the CO in the producer gas is consumed in the WGS reaction, which gives us a liquid fuel production rate of around 40 gallons per ton biomass.

    RR


     

    Is that any type of biomass to get 40 gallons per ton?  What is the liquid fuel…or is he saying that his FT reactor can produce anything fuel?  I would really need to see his definition of small-scale to be helpful.

    [link]      
  27. By Jerry Unruh on June 24, 2010 at 3:04 pm

    Thanks Walt and Robert. From your answers it appears that the potential mass yield for liquid fuels from biomass is certainly less than 50% and is probably closer to 25%. From Robert’s comment it appears that about 50% of the C is lost to CO2 in the water-gas shift as I thought. Forty gallons/ton (as methanol) from biomass is essentially a 25% mass yield. Sadly, there appears to be no free lunch.

    [link]      
  28. By rrapier on June 24, 2010 at 3:31 pm

    Is that any type of biomass to get 40 gallons per ton? What is the liquid fuel…or is he saying that his FT reactor can produce anything fuel? I would really need to see his definition of small-scale to be helpful.

    Some additional comments on this:

    We are current scaling up from a 2.5 gpd pilot facility to a 25 gpd commercial-scale system for distributive energy application, using our commercial air-blown, down-flow gasification system. We are making a mixed product of about 20 vol% gasoline and 65 vol % diesel fuel (meets ASTM D 975 standards) and 15% vol FT wax using our proprietary iron-based FT catalyst. Our focus is on on-site generation of liquid fuels for onsite use. At this point the waxes are being recycled back to the gasification system.

    RR

    [link]      
  29. By Walt on June 24, 2010 at 4:14 pm

    Robert Rapier said:

    We are current scaling up from a 2.5 gpd pilot facility to a 25 gpd commercial-scale system for distributive energy application, using our commercial air-blown, down-flow gasification system. We are making a mixed product of about 20 vol% gasoline and 65 vol % diesel fuel (meets ASTM D 975 standards) and 15% vol FT wax using our proprietary iron-based FT catalyst. Our focus is on on-site generation of liquid fuels for onsite use. At this point the waxes are being recycled back to the gasification system.

    RR


     

    Nice job!  At 40 gallons per ton with gasoline and diesel it should be a money maker as both have high prices in the market.  In comparison, we are producing 107 gallons per ton of biomass…in this case the feedstock is wheat.  We estimate 441 m3 of biogas (53% methane) can be produced from 1 ton
    of wheat.  We do hope you go public with your technology in the future so everyone does not have to build these in stealth.

    [link]      
  30. By Rufus on June 24, 2010 at 7:51 pm

    Walt, I would say the $2.00 to $2.35 is w/o significant subsidies. At least, that’s before any “Producer,” or “Blender” Tax Credits.

    I agree on Biomass being the probable winner. Nat Gas prices are so volatile that it seems like it would be difficult to attract Large amounts of Investment Capital for a Nat Gas to Methanol program.

    I’m very much Not in favor of “Carbon” taxes, or higher prices at the pump right now. I would like to see the $0.56/gal “Producer” Credit for Cellulosic extended for a few years, but I think the industry could survive the $0.45 “Blenders” Credit going away.

    [link]      
  31. By Rufus on June 24, 2010 at 5:20 pm

    UL just announced the Certification of E85 Pumps.

    This will bring on a lot more High Ethanol Blend Outlets. Probably a couple of “Big Boxes.” Also, some Eastern States like Virginia. Big News.

    If the Gassifiers can’t get the selling price of ethanol down to the $2.00 – $2.35/gal range, I don’t see how they can make it. To depend on gasoline getting to $7.00/gal seems like a strange business model.

    [link]      
  32. By Rufus on June 24, 2010 at 5:41 pm

    I guess I should have said, “cost,” instead of selling price.

    [link]      
  33. By Walt on June 24, 2010 at 6:44 pm

    Rufus said:

    UL just announced the Certification of E85 Pumps.

    This will bring on a lot more High Ethanol Blend Outlets. Probably a couple of “Big Boxes.” Also, some Eastern States like Virginia. Big News.

    If the Gassifiers can’t get the selling price of ethanol down to the $2.00 – $2.35/gal range, I don’t see how they can make it. To depend on gasoline getting to $7.00/gal seems like a strange business model.


     

    This is excellent news on the E85 pumps.  Unfortunately, I assume M85 will not be allowed, but to get E85 pumps I’m absolutely thrilled.

    Our methanol cost is less than $1.00/gal. on with a $4.00/mcf natural gas price and as our scale increases we are cheaper.  I can certainly compete with your $2.00 – $2.35/gal ethanol.  Can you tell me if the ethanol costs of $2.-2.35/gal have any subsidy in those prices, or are those net before subsidies?

    Our gasoline price is $1.67/gal at 10mmscfd, but that is with a ZERO price for the natural gas.  I am trying to convince gas producers to take ownership of the plant and make their money on the downstream side…but everyone wants to sell their gas from $4-10/mcf (dreaming) and then also have some of the downstream profits…since they are all hoping gas prices will now skyrocket if the Congress forbids all oil drilling, and next may try to restrict natural gas drilling (see the HBO movie “Gasland” where they want to stop gas dirilling too).

    It looks like biomass to fuels is the only solution…with tax payer subsidies in Carbon Taxes and at the Pump higher taxes?  Is it the answer?

    [link]      
  34. By Walt on June 24, 2010 at 10:19 pm

    Rufus said:

    Walt, I would say the $2.00 to $2.35 is w/o significant subsidies. At least, that’s before any “Producer,” or “Blender” Tax Credits.

    I agree on Biomass being the probable winner. Nat Gas prices are so volatile that it seems like it would be difficult to attract Large amounts of Investment Capital for a Nat Gas to Methanol program.

    I’m very much Not in favor of “Carbon” taxes, or higher prices at the pump right now. I would like to see the $0.56/gal “Producer” Credit for Cellulosic extended for a few years, but I think the industry could survive the $0.45 “Blenders” Credit going away.


     

    Rufus,

    One of the policy decisions I made in our discussions is to vertically integrate with gas producers so that we are not buying on Henry Hub indexing, and insure prices are either fixed with a share of the downstream revenues, or we would own the reserves and price out our feedstock at cost of production.  I learned this working in Russia back in 1994-1997 when the currency was worthless and I was forced to barter food from Europe in order to pay for refined products.  The only companies that survived were those who had fixed priced crude to process.  When I developed the first (at least I was told) crude processing agreement in Romania with the Petrobrazi refinery in 1994/1995 it too was all based upon fixed crude and a fixed processing fee where I left the naptha and fuel oil, and only exported out the Ron 90 gasoline for blending in Rotterdam.  The idea I’m going to pay some producer based upon Henry Hub is overly optimistic, but from what I can see all producers seem to play the hedging game here so they assume they will make money on their reserves by pushing up the market.  I’m not convinced.  I’m far too conservative to risk making money on the market movements…unless I’m like Goldman with insiders everywhere…which is impossible for most.

    I’m more pragmatic like the Chinese and Russians thinking long-term and holding on to solid margins…asset rich.

    What do you mean by a Blenders Credit?  Is this something currently available for only ethanol?  Do you know if methanol is allowed?  I also wonder if you know what the “Blending Wall” term is? I am trying to get that term defined and if you have any comments it would be helpful.

    [link]      
  35. By Rufus on June 25, 2010 at 12:46 am

    Walt, there’s a $0.45/gal “tax credit” available to anyone who blends certain alcohols (I think Methanol qualifies -I’m not sure – but, I think the feedstock would have to be biological – again, I’m not positive of that, either.) I hang around “ethanol” websites, and don’t know beans about methanol. I’m sure someone will be along later with more information on the Tax Credit and Methanol.

    The “Blending Wall” simply refers to the fact that, at present, EPA only allows 10% ethanol by volume in standard gasoline. A couple of years ago, when the big ethanol plant building boom began, it was assumed that we would be using more gasoline than we are at present. As a result, there is more product getting ready to come online than can be accepted by the market.

    We’re producing 840,000 bpd, at present. There’s enough coming online to kick it up to 950,000, but we’re only using 9.2 million bpd total gasoline. It’s a bit more complicated than that at the margins, but that’s the gist of it.

    [link]      
  36. By Walt on June 25, 2010 at 3:01 am

    Rufus said:

    Walt, there’s a $0.45/gal “tax credit” available to anyone who blends certain alcohols (I think Methanol qualifies -I’m not sure – but, I think the feedstock would have to be biological – again, I’m not positive of that, either.) I hang around “ethanol” websites, and don’t know beans about methanol. I’m sure someone will be along later with more information on the Tax Credit and Methanol.

    The “Blending Wall” simply refers to the fact that, at present, EPA only allows 10% ethanol by volume in standard gasoline. A couple of years ago, when the big ethanol plant building boom began, it was assumed that we would be using more gasoline than we are at present. As a result, there is more product getting ready to come online than can be accepted by the market.

    We’re producing 840,000 bpd, at present. There’s enough coming online to kick it up to 950,000, but we’re only using 9.2 million bpd total gasoline. It’s a bit more complicated than that at the margins, but that’s the gist of it.


     

    Thanks Rufus, you have been very helpful.

    [link]      
  37. By Walt on June 25, 2010 at 9:15 am

    Robert Rapier said:

    A Skeptic and a Cynic

    It’s easy to be skeptical or cynical, Aldous said. The question he would ask of those who are skeptical or cynical is, what are they doing to take on the challenges of achieving energy independence?

    OK, I am skeptical and cynical, but I can answer the question. I am doing plenty, but we don’t issue press releases about what we are working on. Don’t confuse making lots of press releases about your plans and goals – very typical of many biofuel companies – with concrete actions. But it is possible – as illustrated in the fireman analogy – to actually do more harm than good even though you are trying to take on the challenge. If in the process you sour the public on the biofuel sector, then I would argue that it would have been better to remain on the sidelines.


     

    I was thinking about this comment yesterday and this morning.  For those of us who are developing technologies, we should take a more balanced view than what Robert is suggesting.  Let me explain my views.

    For those who have been funded as is likely the case in Robert’s company, he can sit back and operate in Stealth Mode not saying anything until it is time to unvail the award winning process.  Especially if you have a blog, you can attack your competitors publicly via your own media arm, and never say a word about your own technology achievements through “Press Releases”.  You can burn through money on your own development work, stay Stealth avoiding publicity, and then play only the devils advocate (e.g., one who is skeptical and cynical) publicly while gathering all the best comments.  Often the best comments come after you attack a competitor if they choose to respond, or others come forward to explain better ways to achieve your goals.  Although it is all in a public forum for all the learn, those in Stealth mode learn lots.

    The final concern I have with this is the mindset of those who operate in Stealth Mode with their (or other peoples) money.  In this case, without any press whatsoever, nobody ever can really understand how much has been spent.  When the 60 minutes piece disclosed to the CEO that word was out there they had raised/spent up to $400 million, he sort of looked like a deer in the headlights on camera saying something along those lines of funding.  I’ve been asked to speak at multiple conferences about our technology, and have chose to go our to show all the CAPEX, OPEX and other positives/negatives the technology development has to offer.  In presenting at last years GTL Conference in London, we opened ourselves up to all the criticism, concerns, skepticism and cynicism about our technology.  We put out the numbers and asked them to debunk them since we have less than a couple million invested, and I started this out of my pocket back in 2002 just studying the problem.  It would have been much easier to avoid all criticism, cynicism and skepticism on our technology if we just “shut up and stay stealth” not to upset people and the market place…we have plenty of money to spend which nobody needs to know about…but that is the easy way.

    With that thinking as your fundamental basis, and then to reach out slamming technologies and their developers who use press releases, I don’t want to be put in the broad brush that all companies are the same.  I told the audience…you want to see improvements faster…it will not take $300 or $400 million, but it might take $1-10 million to “demonstrate” what our claims are…as it should be in technology development.  Nobody is going to do this in Stealth Mode unless you are a VC funded deal, a global energy company, or a critic where you don’t want anyone to know.  I cannot plead any of these three structures, and so we do use press releases for our small group of followers and those interested in progress.

    [link]      
  38. By moiety on June 25, 2010 at 9:34 am

    Walt said:

    Robert Rapier said:

    The question he would ask of those who are skeptical or cynical is, what are they doing to take on the challenges of achieving energy independence?


     

    For those of us who are developing technologies, we should take a more balanced view than what Robert is suggesting. 


     

    These two comments when taken together are interesting and all too often define the research/consensus industry behind a particular product or theory (whether that be corn ethanol or dark matter).

     

    The first question (in its tactful form) is glib has nothing got to do with the debate. It is suggesting that if you are doing nothing to alleviate energy independence then you have little right to comment; a position often taken by researchers. Of course the question is self defeating as the cynic is actually challenging potentially looking for the best route towards energy independence. 

     

    The balancing of course is the removal of such questions. I find that while the intricacies of a technology can often be unexplainable to the lay person (often happens to me also when talking with material scientists), the overall scheme and aim are well understood if explained properly. Technology developers need to take criticism as an opportunity.

    [link]      
  39. By rrapier on June 25, 2010 at 12:35 pm

    For those who have been funded as is likely the case in Robert’s

    company, he can sit back and operate in Stealth Mode not saying

    anything until it is time to unvail the award winning process.

    Given that we are not making big claims and taking taxpayer money, I see no problem at all in operating in stealth mode and still being able to criticize those who sought publicity, took taxpayer money, and failed to deliver. We operate in stealth mode because we believe that you must deliver on what you say you will deliver. We take a very cautious and conservative view. It is a different mindset than what Silicon Valley brought into the sector over the past few years, which seems to be to make outrageous claims so you get funded, and then try to sort out the problems as you go along.

    With that thinking as your fundamental basis, and then to reach out
    slamming technologies and their developers who use press releases, I
    don’t want to be put in the broad brush that all companies are the
    same.

    I am not slamming them for their press releases. If I wanted to do that, I would have started slamming them 3 or 4 years ago. I am slamming them for a gross failure to deliver on those press releases; press releases which helped them raise some taxpayer dollars. As I am a taxpayer, I want some accountability.

    It will be the same situation for you if you hype and fail to deliver. After all, it isn’t hype that I have a problem with. It is the fallout from failing to deliver on the hype.

    RR

    [link]      
  40. By Walt on June 25, 2010 at 1:19 pm

    Robert Rapier said:

    It will be the same situation for you if you hype and fail to deliver. After all, it isn’t hype that I have a problem with. It is the fallout from failing to deliver on the hype.

    RR


     

    I was wondering it a reply was forthcoming.  Thank you.

    You know as well as I that in this sector that claims need to be made to raise money.  I cannot imagine you sitting down with your investor (whoever has backed your technology concept) and providing him only facts, proof and no risks to develop a new technology.  So you made some claims backed up with not only scientific merit, but financial merit.  It is one thing to have the great scientific invention/patent, but another to show it has a cost advantage, and can actually deliver customers to your doorstep.

    In our case, we hired a third-party engineering consultancy to put the financial hard numbers to the process technology against Shell, Exxon, Sasol, Syntroleum, ConocoPhilips and all LNG technologies to convert gas-to-liquids.  Thus, our patents were justified by the economic considerations.  After we received the report, did we not want to go out and tell the world…yes, absolutely…since we ourselves did not know the value of the economics until we learned it by a third-party.  What does it mean to say you are 50-70% cheaper in CAPEX than Exxon and Shell’s technology in the sector.  It means a lot to say these things, but entirely different to not have it backed up by a professional opinion.

    Is this “hype” worthy of a press release…I think so.  Absolutely.  We attract some attention from the super majors, for certain, but it is really just to gather as much of the information as possible to work around our claims.  Did you know the evil word claims are used by the patent office? :)   It is hard to be stealth when you put everything out there in your claims.

    Until you need money to validate your hype Robert, congratulations on being stealth with your technology development.  However, when you do go public with your claims, I look forward to being critical of the money you spent to stay stealth and being a critic of others.  I hope you don’t spend more than $2 million on developing your entire process from idea to demonstration scale.  I think this is reasonable using other people’s money.  If you exceed this figure…I’ll be watching…since only government funded R&D programs do this without criticism in the GTL space, or the biomass-to-liquids sectors.  If your private spending more than this…through demonstration…you deserve criticism…so I’m told.

    I look forward to your first press release and your claims coming out of stealth! 

    [link]      
  41. By russ on June 25, 2010 at 2:20 pm

    I believe the claims by Khosla are more along the lines of pump and dump – some of the dumping may be long term.

    He did the same thing on the Bloom Box – lots of hype over nothing – no new technology and nothing different than a few dozen others. Same with any company he has money in and now he has Tony Blair to help him.

    Serious Materials is another – the big money Silicon Valley boy running all over making presentations that have very little fact in them but presented as the ‘new great truth’.

    Many parties are doing the same thing in the RE sector today: UniSolar for PV – most small wind turbines (say Mariah) – Solyndra who got big bucks from the government but will surprise many if they ever manage to make a commercially viable product.

    Some of these parties don’t realize what they have will never work while others have a very good idea they are sitting on a dud.

    The excessive hype is when they are talking through their hat and making impossible claims.

    [link]      
  42. By rrapier on June 25, 2010 at 2:53 pm

    You know as well as I that in this sector that claims need to be made to raise money.

    But the claims need to be credible. That seems to be the piece you aren’t hearing. If you resort to claims that aren’t credible in order to get funded, one shouldn’t get funded.

    However, when you do go public with your claims, I look forward to

    being critical of the money you spent to stay stealth and being a

    critic of others.

    But I am not spending your money, nor am I out making claims that I am unlikely to deliver upon. Range was guilty on both counts. That is the very big difference between that and the things I am working on.

    One more time: Hype is fine if you can deliver on it. But if you hype, reel in taxpayer dollars, and then fail to deliver? Different story. So the lesson is to be careful with your claims; to make sure you have lots of basis for the hype. In this case, Range didn’t.

    RR

    [link]      
  43. By Walt on June 25, 2010 at 4:46 pm

    Robert Rapier said:

    But the claims need to be credible….If you resort to claims that aren’t credible in order to get funded, one shouldn’t get funded…But I am not spending your money, nor am I out making claims that I am unlikely to deliver upon….That is the very big difference between that and the things I am working on.

    RR


     

    I agree that claims need to be credible to raise funding…and if they are not credible they should not be funded.  We agree on this point.

    I was not implying you were spending my money as a taxpayer…as others who use government funding for all (or most) of their R&D work to remove any risk to their investors, and shift it to the taxpayer.  I saw this week Dow Chemical get multi-million dollar grants for their R&D work, and it seems with their own cash flows they could waive asking the government to fund their risks in R&D. There was lots of claims in those grant requests I’m most certain.

    Thanks for the clarification.

    [link]      
  44. By russ on June 26, 2010 at 12:40 am

    When the big boys (DOW, GE etc.) get the grants it is supposed to be for something where there is no end game in sight but the government wants to go there.

    The big companies have the capability, labs and equipment but are not charitable organizations either.

     

    [link]      
  45. By johnny p on June 28, 2010 at 10:01 pm

    Robert,

    In the interest of accuracy, you should take your firemen analagy a little further – As the fake firemen bumble through, a host of very skilled firemen are trying to break through a baracade to offer real help. The phonies are not only keeping them out, but they are wasting all of the scarce and precious water (capital) needed to fight the flames. The faux firemen have used their skill in securing water, in spite having no idea how to put it to good use, to deny those that do know what to do with it. One has to wonder when the suppliers of precious water (the DOE, USDA, et al and private investors), will learn to put it in the most capable and meritorious hands, rather than those who talk a good game but had no chance to put the fire out.

    [link]      
  46. By Walt on June 29, 2010 at 5:07 am

    johnny p said:

    Robert,

    In the interest of accuracy, you should take your firemen analagy a little further – As the fake firemen bumble through, a host of very skilled firemen are trying to break through a baracade to offer real help. The phonies are not only keeping them out, but they are wasting all of the scarce and precious water (capital) needed to fight the flames. The faux firemen have used their skill in securing water, in spite having no idea how to put it to good use, to deny those that do know what to do with it. One has to wonder when the suppliers of precious water (the DOE, USDA, et al and private investors), will learn to put it in the most capable and meritorious hands, rather than those who talk a good game but had no chance to put the fire out.


     

    Johnny, I could not help but find your comments so refereshing after seeing this article yesterday from another VC leader in the space.

    —————————————–

    Kleiner-Backed
    Bloom Energy Looking For $50M More Before Its IPO?
    Camille Ricketts,
    VentureBeat |  Jun. 28, 2010, 2:55 PM

    Bloom Energy shook
    the cleantech sector earlier this year when it unveiled its unique Bloom
    Box, a fuel cell capable of powering 100 homes while producing close to
    zero greenhouse gas emissions. Now, despite the company’s assurances
    that it is closing in on an IPO next year, it looks like it might be
    raising $50 million more to get it there.

    The company has
    declined to comment on the story. Private Equity Hub caught wind of the
    fund raise via internal sources, who also said that Northgate Capital
    may
    be joining existing backers Kleiner Perkins Caufield & Byers and New
    Enterprise Associates. These investors have already sunk $400 million
    into
    Bloom, which is quickly becoming one of the most expensive green tech
    plays to date.

    http://green.venturebeat.com/2…..nergy-50m/

    —————————————–

    It seems to me that after $400 million to develop the technology they could find somewhere $50 million in that cash reserve to give the lawyers, accountants and other investment bankers to do an IPO?  I really hope that in this exit there will be more than a small group of people who make money…but if it is the next Google or Facebook as it being touted by the VC community, then perhaps it is possible.

    I really have my doubts they will get down these installed in houses around the world…as converting clean natural gas to electricity is possible with this technology, but I’m not sure by the time you pay for the natural gas it will be economic.  I think high-end solar collectors would be my preferred tool for cheap electricity if you had to choose a CAPEX of $3,000 for the Bloom Box or Solar Panels…both requiring susbidies? 

    [link]      
  47. By russ on June 29, 2010 at 11:57 am

    Unless Bloom has something totally different than displayed so far the following are correct:

    1) No different than what numerous others have

    2) No heat generated for outside use – only electricity

    3) Not an off/on device – must be on 24 hours a day and 7 days a week

    4) Requires natural gas or equivalent feed (possibly biogas)

    5) Not particularly efficient – say 50% which is lower than a combined cycle gas turbine

    6) No cleaner than any other device converting CH4 to power

    7) No details on the deals made to facilitate sales so far – more than likely were sweetheart deals just to get some – reference with the units supplied at a very low cost to amke them attractive.

    As far as I can see and understand this is nothing more than the VC’s that got suckered into investing in Bloom trying to offload their white elephant off on others – preferably the public in an IPO as they are the dumbest available bunch around.

    For fuel cells Bloom is not even at the forefront of thechnology!

    [link]      
  48. By paul-n on June 29, 2010 at 4:40 pm

    Russ, Bloom’s objective was never to be at the forefront of technology, it was to be at the forefront of money making.  Personally, I hope they fail completely at that, so that scarce capital can be applied to something that actually achieves something.

    [link]      
  49. By Anthony J. Richards on June 30, 2010 at 3:32 pm

    I think Range Fuels got them selve’s in a pickle and is hiding the fact they really don’t have the abilty or needed technology to produce “True” Cellulosic Ethanol. When I read more on their method of production. I noticed something familiar and it wasn’t the process that I recognized to make the lignocellulosic material such as wood or straw amenable to hydrolysis. In fact, Range Fuels is using a heat and pressure process which is more akin to making Methanol instead of Ethanol. Methanol being the least desirable of the two. Methanol is corrosive to some metals and rubber and removes essential oils out of plastics. Making plastic automotive fuel system parts brittle and unusable.

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  50. By paul-n on July 1, 2010 at 1:55 am

    Anthony, their process does indeed make methanol, or more accurately a methanol dominant mixed alcohol.  Rather than go through the pain of upgrading that to ethanol, I think they are better off to stop there and refine their methanol, which is, after all, a widely used chemical.  But the mixed alcohol product can be blended with gasoline and used in Flax Fuel vehicles – they are designed for it.  Given that there are many flex fuels out there already, why go to the expense of further upgrading, when they have a useable fuel?

    If they simply optimised this process, there is quite a market for wood to methanol, as there is lots of waste wood around.  Even if not used for automobile use, the methanol can be used to co-fuel diesel engines, or upgrraded to DiMethyl Ether, probably a much better pathway than ethanol.

    It’s a good example of how the governments focus on ethanol leads to capital being shifted from other, promising fuels, into ethanol, just because that’s where the (free) money is.   And Range has used a lot of it.

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  51. By Wendell Mercantile on July 1, 2010 at 11:26 am

    Rather than go through the pain of upgrading that to ethanol, I think they are better off to stop there and refine their methanol, which is, after all, a widely used chemical. But the mixed alcohol product can be blended with gasoline and used in Flax Fuel vehicles – they are designed for it.

    Very insightful Paul. Although I doubt the corn ethanol lobby would go for flex-fuel cars that use an alcohol blend of ethanol/methanol. For some reason the corn ethanol people seem to have too much invested emotionally and financially in corn and corn ethanol and that gives them a jaundiced eye evaluating the potential of methanol and its derivative di-methyl ether as transportation fuels.

    Even if not used for automobile use, the methanol can be used to co-fuel diesel engines, or upgraded to Di-Methyl Ether, probably a much better pathway than ethanol.

    Yes. If DME was made from corn, the Corn Belt politicians would have been behind it 30 years ago.

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  52. By Peanuts on July 1, 2010 at 9:21 pm

    Walt said:

     

    From our own research, we have not found a gasification system that will give you the right ratios to make fuels from biomass, tires, etc.  Although many of the VC funded deals I’ve seen over the past 4 years often promote “biomass-to-fuels” using gasification, I have not really seen it come out successfully…at least not cheaply.  Once the right syngas ratios are met, and the costs are reduced, I think biomass could be used to make fuels using this route.  It is just a difficult task, but as fuel prices rise due to our dependencies on crude, I think some fuels will make it into the marketplace that are lower priced than the forthcoming gasoline prices.

     

    No gasification system gives you a H2 to CO exactly right for mixed alcohol - or Fischer-Tropsch synthesis.  The mixed alcohol synthesis catalysts are (most likely) molybdenum-based and they operate at around 300-350 deg C.  At that temperature the watergas shift reaction is at equilibrium and will therefore consume CO and water to produce H2 as required by the system.  Of course CO2 is also produced.  If you do low temperature FT you can do the WGS in the reactor by utilizing an iron based catalyst.  If you’re wanting to use cobalt, you’ll need to shift outside the reactor to obtain the appropriate H2 to CO ratio.
     

    What I find amazing about the “syngas to ethanol” brigade is that they are peddling their technology as being new and unique.  In the mean time, what they’re using is basically work that was patented by Dow, Union Carbide and others in the 70′s and 80′s.  Then it was already shown that methanol is a major product, with diminishing selectivities to higher alcohols.  To my mind, the approach followed by Enerkem in Canada (syngas to methanol followed by methanol homologation to produce ethanol and other oxygenates) is a better way to go, depending of course on how efficient their methanol homologation step is.

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  53. By paul-n on July 2, 2010 at 11:05 am

    Peanuts,

    Enerkems approach is good, but once again, why bother to change methanol to ethanol? (or anything else) If it was worth doing that, Methanex would be doing that with some of the methanol they produce today.  In fact, they did do that for while in New Zealand in the 80′s and 90′s, but the upgradingwas not economical.

    The biggest hurdle is turning wood/cellulose/MSW into a useable liquid fuel.  Once you have done that (methanol), I think it is better to find uses for it.  And as a motor fuel, it is similar, but slightly superior to ethanol, so why bother upgrading to ethanol, just mix it in and go.  

    The product they get from their reaction is a mixed alcohol, which has a slightly higher energy content than pure methanol.  As you point out, the work to develop this process was done back in the 70′s, and also back then it (methanol) had ben carefully studies as a fuel, and found to be eminently suitable (paper here).

    This paper also found that;

    The output of the methanol plant can be invreased by 50% if small amounts of other alcohols can be tolerated in the product.  It can be produced in  larger volumes at lower prices than pure methanol, and, in general, has superior properties as a fuel.

    So everything both Range and Enerkem are working on has been know for some time, even the ability to use MSW as the feedstock (the Purox process).

    But why then increase the cost and complexity, and reduce the net energy yield, by going to ethanol?  The only reason is becasue that is where government  money is.  If the said money was to be paid on the basis of liquid btu produced, they would stop at mixed alcohol, and we would probably all be using it today.

    We’ll see how Enerkem goes – they are going to a lot of effort to answer a question (how to convert mixed alcohol to ethanol) that shouldn’t be being asked.

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  54. By Peanuts on July 2, 2010 at 1:10 pm

    Paul

     

    I agree with you.  My point was that if you’re hell-bent on making ethanol you’re not going to do it with so-called “ethanol catalysts” and perhaps the methanol homologation route is superior (but time will tell, Enerkem is somewhat cagey about making public process performance which usually indicates somewhat below par performance…).  Regarding methanol as a fuel, does it not suffer from a few drawbacks (hygroscopic, attacks seals in the engine fuel supply system etc)?  I also believe that mixed alcohols would be a better bet as a fuel additive but the ethanol lobby would be dead against that, wouldn’t they?

     

    As an aside, I see there is another crowd barking up this tree:  http://cleantech.com/news/4934…..validation  Can’t find any information on their technology though…

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  55. By rrapier on July 2, 2010 at 1:22 pm

    What I find amazing about the “syngas to ethanol” brigade is that they
    are peddling their technology as being new and unique.

    The truly amazing thing is that I have discussed this with many of them who are entirely ignorant of the history. It is just like all the people claiming to be the first to produce commercial cellulosic ethanol. That was done prior to 1900. Many believe that what they are doing has never been done. In fairness, some of the approaches are using microbes, and that doesn’t have the history of some of these other approaches. But none of this has been invented in the past decade.

    RR

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  56. By paul-n on July 2, 2010 at 4:07 pm

    And they appear to have fooled the government (and other investors) into thinking that their “new and unique” stuff is worth a lot of gov funding.

     

    Peanuts, methanol as a fuel behaves very similarly to ethanol, most seals that can handle ethanol, can handle methanol.  The fact that it absorbs water is a positive, as you don’t have to worry about condensation in the tank.  In fact, if you are running the vehicle on pure alcohol fuel (either pure E or M or any mix) you can leave water in the fuel, for no performance penalty, and in high load/hot weather, and actual improvement.  This means the expensive molecular seive dehydration step to get ethanol from 5% water to 0%, can be omitted entirely.

    The ethanol lobby would probably be against that, but really, if you had 100% replacement of gasoline by mixed alcohol, with ethanol being, say, half of that, then that is 50% displacement by ethanol.  Today they are at 10%, so there is plenty of room to grow – i think the two alcohol fuels united (mixed) are a better, stronger, and more profitable proposition than ethanol alone.  But, the ethanol lobby will never admit that…

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  57. By Walt on July 3, 2010 at 11:02 am

    I think methanol to gasoline (MTG) and DME as being pushed by China is the way to go with cheap methanol processing.  These are relatively low cost processing steps compared to the cost of making methanol or ethanol via syngas.  Here is Exxon’s process, but there are others as well.

    http://www.exxonmobil.com/apps…..n_mtg.html

    Although most companies desire to scale it with coal to jumbo scale process technologies, I had a very interesting discussions with one of the largest automobile companies in Europe who said the methanol based gasoline is their preferred quality if it could be produced globally.  They were not at all interested in ethanol or methanol blended gasoline…but would not give me the reason.  They wanted DME and methanol based gasoline.

    Perhaps it is the European way to make a silent statement against the US Corn Lobby…but we shall never know.  Their number one target market is China where methanol, DME and MTG is being developed aggressively. 

     

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  58. By WILLIAM RICKS on August 10, 2010 at 10:07 pm

    There is a rumor in Soperton, GA, that the Range Fuels plant produced a small quantity of ethanol for the first time yesterday (08/09/2010).
    Also in Soperton, local agribusiness native Phillip Jennings is doing some merging or name-changing with his intentions to produce ethanol from the tall Japanese grass plants. Jennings has a knickname, “The Sodfather” for his production of grass for famous golf courses and landscapes.
    Bill

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  59. By rrapier on August 11, 2010 at 12:57 am

    Ethanol or methanol? They were planning on starting up on a methanol catalyst, and weren’t expecting to make any ethanol this year.

    RR

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  60. By I'm a Believer on August 18, 2010 at 11:34 am

    You are correct. Soperton HAS produced. Unfortunate this column continues to pummel Range Fuels or any other company trying to get Americans off of their dependency of imported oil. Obviously this columnist has no reputable background in bio fuels, methanol, ethanol and simply bases his facts on speculation. You have no clue what Range Fuels has actually done nor where they are in their process or for that matter what type of fuel they are working with, you purely speculate. Range Fuels has made progress and you can’t stand to live with that Mr Rapier.
    How many billions upon billions of dollars have been spent in medical researches for causes in cancers etc. We continually here in the news there are breakthroughs yet nothing has really happend, they’re all false starts. Wasn’t it 10 years ago there was an aides cure? If so, where is it? And at least 15 year ago there was a cancer cure, again, where is it? Why don’t you pummel those companies for a while.

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  61. By rrapier on August 18, 2010 at 1:04 pm

    You are correct. Soperton HAS produced. Unfortunate this column continues to pummel Range Fuels or any other company trying to get Americans off of their dependency of imported oil.

    Every once in a while I get a comment that is so clueless it defies belief. Yours is just such a post. If you want to come here as an anonymous coward and bash me, at least have the decency to properly reflect my position. I will do so for you now since you are apparently too lazy to spend time grasping it.

    Obviously this columnist has no reputable background in bio fuels, methanol, ethanol and simply bases his facts on speculation. You have no clue what Range Fuels has actually done nor where they are in their process or for that matter what type of fuel they are working with, you purely speculate.

    You are right that someone in this exchange has no clue, but it isn’t me. I have plenty of idea what Range has done and are in the process of doing. In fact, after I wrote this column several Range/ex-Range employees contacted me to say that my analysis was spot on. You don’t appear to understand the analysis, so let me break it down for you. Nobody doubted they could produce methanol. I don’t doubt that they can produce ethanol. What I have criticized is their long history of overblown promises and blown taxpayer money. We could produce methanol from biomass in 1923. The reason we haven’t been doing it all these years is that it isn’t cost-competitive with methanol from natural gas. But I am all in favor of the idea of methanol from biomass, and if that was Range’s story all along we wouldn’t have this problem.

    Range came along and said “We can produce X million gallons of cellulosic ethanol for X dollars by 2008.” Two and a half years later, the story is 1/10th X million gallons of methanol for 3X dollars in 2010. The original backers of Range had no idea what they were doing, so they made promises they couldn’t keep.

    You come in here all puffed up as if delivery of something lets them off the hook. Here is an analogy for you. I hear Walmart claim that they are selling Dell computers for $100. I go down there and find nothing of the sort. I let people know that Walmart has made false representations. You come along and say “You have no idea what Walmart is doing or can do. I just went down and bought a VCR for $300.” You see, I made a specific claim. You attempted to bash me but did not address my specific claims. You think because you bought expensive old technology that they aren’t accountable for the $100 Dell claim.

     

    Range Fuels has made progress and you can’t stand to live with that Mr Rapier.

    Are you really this clueless? Actually, I wish them success. But people need to be accountable for broken promises. They made representations and took taxpayer money. Whether they can deliver “something” is not the issue. They can’t deliver on what they promised, and some of the money they took could have been better deployed elsewhere.

    How many billions upon billions of dollars have been spent in medical researches for causes in cancers etc.

    You really are mixed up, aren’t you? First off, this isn’t a cancer blog. If it was, I would spend time exposing those who made claims like “You and your loved ones should fear cancer no more. My company will have a cure in 3 years. We just need taxpayer money.” Those claims are dangerous for multiple reasons. Then if said company runs off and does research that has been known for years, they would be rightfully held accountable for diverting funds from more promising areas. One shouldn’t promise cancer cures in the first place if you can’t deliver, but if you take taxpayer money and promise a cure you should certainly be held accountable.

    Sorry you don’t feel they should be held accountable, since after all they did produce something at some inflated price.

    RR

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  62. By I'm a Believer on August 18, 2010 at 6:37 pm

    Smiles…. checkmate. You have definately proven how dense you are in the bio field and certainly have no idea how government monies are applied to new theories. You are the best comedian on the net Mr. Rapier. Keep up the good work.

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  63. By rrapier on August 18, 2010 at 6:53 pm

    Smiles…. checkmate.

    Checkmate? Guy, you are playing checkers here. Rolls eyes…. Touchdown!

    You have definately proven how dense you are in the bio field…

    Boy, if only everyone was as smart as you. Then I would have more spare time and wouldn’t have to deal with conference invitations, writing book chapters, and all that other stuff that comes from people thinking you know what you are talking about. Would really simplify my life. Heck, maybe my boss would stop paying me to work in the bio field and I could find a job as an anonymous troll on the Internet.

    and certainly have no idea how government monies are applied to new theories.

    LOL! New theories? What on earth are you babbling about? What new theory is involved here? Do you even know what a theory is? Perhaps you don’t know – since you are clearly out of your element here – but what they have done has been known technology for decades. I can tell you with 100% certainty that I could build what they have built for 1/4th of the money they have spent. The reason they couldn’t is that they started out trying to do something else that didn’t work out (even though they had been promising that it would). So they had to spend a lot more money due to initial incompentence within the organization.

    You don’t seem to understand, but Range wasn’t given money to do basic research. They were given money to do something they claimed they could do. For $150 million. By 2008.

    But by all means, keep living in your delusional fantasy world where Range has invented something new and novel and lived up to the hype.

    If you want to have a serious discussion, let me know. Otherwise, stop trolling.

    RR

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  64. By Kit P on August 18, 2010 at 8:51 pm

    anonymous coward

     

    Wasn’t me!

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