Oily mess: Virent Energy’s Progress Could Not Come at a Better Time
The deluge, deluge, deluge of the deep sea disaster unfolding in the Gulf of Mexico (I wish it were only drip, drip, drip) illustrates why Wisconsin’s move into biofuels is so important here and beyond. The endless stream of deception from British Petroleum (BP), which must now stand for Bull Parade, about the pace of the most devastating oil spill in U.S. history, and the progress being made to stop it, has angered even supporters of offshore drilling.
President Obama, reacting to sharp criticism from beleaguered Gulf State governors, has reversed himself and has decided to allow drilling closer to shore of the states that permit it. In return for that access, I hope the Government wrangles higher fees, and then uses them solely for the purpose of accelerating renewable fuel production.
That way, we can ramp up efforts being made by companies like Madison’s Virent Energy Systems, which has finally closed on its latest fund-raising round, securing $46 million for the continued development of a technology that converts plant sugar into fuel. Virent announced the funding, the result of an even deeper commitment from existing investors Shell and Cargill, earlier this week as the news in the Gulf became grimmer.
Virent is working to scale up its BioForming conversion process to commercial volume production. Toward that end, it has launched a 10,000-gallon-per-year biogas production pilot plant in Madison. This pilot plant is in the process of demonstrating the commercial viability of Virent’s technology, and the recent funding is expected to take Virent through the end of 2012. At that point, the company should be ready to build an even larger demonstration plant, one that is at least 100 times larger than the 10,000-gallon pilot.
Last year, Virent President and CEO Lee Edwards told me that operating data coming form Project Eagle, which is the 10,000-gallon plant, will help inform the decision on how large the next plant will be. “I think it’s fair to say that it will be somewhere between 100 and 10,000 times bigger,” he said. “We might need to go 10,000 times bigger to get to commercial size, but I would say normal, logical scale up is at least 100 times bigger.”
Edwards said that Virent is not expecting the current fund-raising to cover capital costs for the next plant. The new funds will be used to continue research and development projects to leverage, modify, and improve the existing process, which includes production at the pilot plant. Virent will then require more fund-raising activity for the larger plant, and since we’re talking about hundreds of millions of dollars per plant, Virent will likely enter into partnerships rather than go it alone.
That couldn’t come soon enough, and there is an important role the government can play to help accelerate and “de-risk” the investments required in breakthrough technologies that will be needed on a scale required to meet the challenges of energy security, environmental improvement, and job creation. The continued investment of Shell and Cargill is worth lauding, but if we’re going to continue permit offshore drilling at any depth, the government should in turn extract more greenbacks from oil companies to hasten the day when we no longer need to rely so heavily on this crude product.
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