By Simone Sebastian
Nascent renewable energy company Sundrop Fuels has announced plans to build its first synthetic gasoline plant to produce the fuel using natural gas and biomass.
The facility is slated to locate in Alexandria, La., giving it access to the plethora of natural gas being produced from the nearby Haynesville shale. Cheseapeake Energy, a major natural gas producer in the Haynesville shale, is 50 percent owner of Colorado-based Sundrop Fuels.
The synthetic gasoline is produced from woody material and hydrogen stripped from natural gas. It is identical to petroleum-based gasoline and ready to use with existing pipelines and internal combustion engines, said Sundrop Fuels spokesman Steven Silvers.
Though Sundrop Fuels’ process uses natural gas, a fossil fuel, the company is asking the Environmental Protection Agency to approve its synthetic gasoline as a biofuel, said spokesman Steven Silvers. That designation would make Sundrop Fuels’ gasoline more attractive to refiners that must meet biofuel production targets set by the federal Renewable Fuel Standard mandate.
Sundrop Fuels’ gasoline is “demonstrating that natural gas is a bridge to clean energy,” Silvers said. “It is the first major facility in the United States to make green gasoline, gasoline that is ready to use and to put in the tank at the moment it is created.”
The plant, which would cost between $450 to $500 million to build, will be funded largely by tax-exempt “private activity bonds” approved by the state of Louisiana last week, Silvers said. The bonds are issued by the state, but Sundrop Fuels carries the financial obligation, he added.
The facility qualifies for the private activity bonds as a “waste disposal facility,” because it uses the woody material leftover from paper production to produce gasoline. The woody material would otherwise be discarded, Silvers said.
Sundrop Fuels plant is slated produce between 40 million and 50 million gallons of gasoline a year.
Construction is set to begin next fall and, if that schedule holds, the facility would produce its first gallon of gasoline in late 2013, Silvers said. But moving forward with the company’s plans to build the plant are contingent on securing customers.
Silvers said the company expects to have customer agreements in place in a few months.
“We are evaluating the offtake agreements right now. We haven’t made any announcements about where it will go who will get it,” he said of Sundrop Fuels’ gasoline. “How that market evolves is still to be seen. But there is a market for it.”
Sundrop Fuels aspires to build facilities that would produce as much as 200 million gallons of synthetic transportation fuels annually each, including jet fuel. The company’s goal is to produce a billion gallons of synthetic fuels per year by 2020, Silvers said.