Velocys – one of the leading developers of small–scale gas-to-liquids (GTL) technology – has acquired Pinto Energy, a developer of small-scale GTL projects in North America, as part of a strategy to accelerate the commercialisation of its “micro-channel” technology.
The move gives Velocys ownership of the proposed Ashtabula GTL project, a 2,800 barrel per day (b/d) plant at an 80 acre industrial site owned by Pinto Energy owns near the port of Ashtabula in Ohio. Velocys says the project will have access to “abundant low-cost natural gas from the Marcellus shale region”, as well as “benefitting from substantial existing infrastructure”.
The biggest challenge currently facing developers of small-scale GTL technology is to get a commercial plant up and running – to demonstrate the technical and economic feasibility of the various technologies.
Accelerating early adoption: “The acquisition of Pinto Energy provides Velocys a key stepping stone for commercial growth,” said Velocys CEO Roy Lipski (pictured above on the right). “It will strengthen our route to market, accelerate early adoption, and deepen our ties with suppliers, partners, investors and customers across the entire GTL value chain.”
Initial engineering for the Ashtabula facility is already complete and the project’s air permit has been issued. Final investment decision (FID) is expected within nine months. Velocys claims that “future expansions could see installed capacity of 10,000 b/d or more at the site”. In addition to Ashtabula, Pinto Energy has a pipeline of small-scale GTL projects it is seeking to develop elsewhere in North America.
Velocys says its technology “remains fully available for license to new customers”. The company is also open to partnering with project developers to bring promising smaller scale GTL opportunities to market.
“Velocys continues to work with and welcome customers seeking to take advantage of the historic opportunity presented by smaller-scale GTL,” said Lipski.
“The entire Pinto Energy team is excited to be joining Velocys,” said John Baardson, CEO of Pinto Energy. “Combining its technology leadership with Pinto’s project development capabilities makes for a formidable business. Together we are set to accelerate development of smaller-scale GTL assets in North America, the time for which has never been better.”
Velocys has acquired 100% of Pinto Energy and its wholly owned subsidiaries, including Ashtabula Energy LLC, for an initial consideration of 955,977 ordinary shares in Velocys plc, and a further sum of 1,072,476 shares at financial close of the Ashtabula GTL project.
In addition, five-year warrants over up to $750,000 worth of shares will be granted for each additional project in the Pinto Energy pipeline, up to a maximum of two, that achieves financial close by the end of 2015.
Modular technology: Velocys says its technology “enables modular GTL plants to convert unconventional, remote and problem gas into valuable liquid fuels”. Systems based on the company’s technology are claimed to be significantly smaller than those using conventional technology, resulting in “modular plants that can be deployed cost effectively in remote locations and on smaller fields than is possible with competing systems”.
Together with its technology partners, Velocys says it is offering “complete modular GTL solutions that address an untapped market of up to 25 million b/d of fuel”.
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