Speeding up Mother Nature

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Published: August 27,2010

Tags: biofuels, economic development, KIOR

Barbour unveils ‘revolutionary’ biofuel project

The areas around Columbus, Bude and Newton County have lots of timber.

A Houston, Texas-based biofuel company hopes to put it to good use.

Gov. Haley Barbour announced last Thursday that Kior is building facilities in each of those areas that will convert biomass — in this case, wood products — into renewable crude oil that can be refined into diesel and gasoline and used in vehicles that are on the road today.

“This may do more to change and do good for the people in Mississippi than any other” economic development project in his term, Barbour said. “I don’t say that lightly. This is revolutionary.”

Using technology that has been around for 70 years, and with a modification in the catalytic process, Kior hopes to produce between 1,500 and 2,500 barrels of renewable crude oil per day at two of the three facilities, with Columbus’ producing less. Barbour and Kior president and CEO Fred Cannon both said that, while the foundation for the technology is decades old, the catalytic process has not been used before.

“We’re simply reducing mother nature’s process (of turning biomass into oil) from millions of years to just a few seconds,” Cannon said.

Said Barbour: “It sounds like a science project.”

Barbour said he was first approached by one of Kior’s investors from Silicon Valley last September, and deemed the project too good to be true.

To protect the state – legislators were scheduled to consider Friday loaning Kior $75 million for costs related to construction of the three facilities – Barbour inserted a clause into the agreement with Kior that it has to sign a binding agreement with a major oil company to buy and refine the renewable crude oil the company produces here. “They never hesitated on that idea,” Barbour said.

Cannon said Kior was “in final negotiations” with an oil company to do that.

To produce the company’s desired 1,500-2,500 barrels of crude oil per day at two of the three facilities, between 100 and 150 truck loads of logs will be needed. For comparison’s sake, the Georgia-Pacific paper mill in Louisville receives approximately 90 loads of logs a day, Barbour said.

Barbour’s special session call included a total of $50 million in incentives for Kior, including $45 million in bonds for construction costs, $4 million for the state’s workforce training fund and $1 million for wood-to-crude oil research at Mississippi State University’s Sustainable Energy Research Center in Starkville.

The $75-million loan figure comes from the $45 million in bonds included in the call and $30 million left over from a bond package the Legislature passed in the 2010 regular session. The company also will not receive the Advantage Job Tax Credit, which would have been worth about $2 million annually.

Kior’s Columbus plant will be the smallest of the three, and will be built first adjacent to the Port of Columbus on the Tennessee-Tombigbee River, with a completion date of the end of 2011, Cannon said. It will only produce around 800 barrels of crude per day, while the facilities in Franklin and Newton counties will, at their peak, produce roughly triple that.

To go with those two plants, Kior has agreed that two of its next five facilities within the United States will be built in Mississippi, though locations for neither have been determined, and the company will receive no state subsidies for the construction of those.

At the start, the Mississippi facilities will only use wood products to produce the renewable crude, though the technology exists to use agricultural waste and any other kind of biomass for the process.

“We’ll start with wood only and work our way up to other biomass,” Cannon said.

With the three facilities, Kior’s investment will come to $500 million and create 1,000 direct and indirect jobs, according to its agreement with the state. Kior has assured state officials that it will pump a minimum of $85 million into the economy annually.

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