Range Fuels Makes Methanol, Next-Gen Ethanol Coming Soon

Updated: The well-funded Range Fuels said it has begun producing cellulosic methanol from its first commercial factory and plans to begin making cellulosic ethanol sometime this quarter.

The Broomfileld, Colo.-based startup is showing the world that it really can make that leap to commercialization. After all, it’s gotten hefty venture capital and government funding since it announced in 2007 an ambitious plan to one day produce 1 billion gallons of cellulosic ethanol per year. But the company has a long way to go to cross the billion-gallon mark.

Range Fuels, backed by Khosla Ventures, Passport Capital and others, is producing methanol from what it calls the initial phase of its first commercial plant near Soperton, Ga. Phase 1 of the plant has an annual capacity of “less than 10 million gallons,” said company CEO David Aldous in an email. How the company will allocate the capacity to produce methanol and ethanol “will depend on the relative economics of ethanol and methanol in the marketplace,” he said. The company has set a goal of expanding its capacity of the same plant to 60 million gallons per year, with construction set to start next summer.

Range Fuels broke ground on its Georgia plant in 2007 and said at the time that the first phase of the plant would have a capacity of 20 million gallons per year.

The company is selling the methanol to a biodiesel producer, said Aldous, who declined to disclose the producer’s name.

Many biofuel companies have struggled to meet their initial deadlines for delivering fuel that could either blend with or completely replace gasoline or diesel. Challenges have been both technical and financial. Figuring out the right process to convert plants or green wastes into fuels isn’t a simple task, particularly with the goal to make fuels price-competitive with gasoline.  Plus, the recession hit just when some of these companies were trying to raise millions of dollars to build their first commercial plants.

The company uses high heat, pressure and steam to convert biomass into a synthesis gas of hydrogen and carbon monoxide. The syngas is then processed into alcohols that can be separated and refined to produce different types of biofuels. Many of its competitors, on the other hand, use enzymes or other catalysts to break down the plant materials and turn them into sugar before fermenting it into fuel.

Other biofuel starts also are using the syngas process. Fulcrum BioEnergy, for example, announced last September it was able to make ethanol from landfill wastes. Although it demonstrated it could make it happen, commercial production at its plant near Reno won’t begin until next year, according to the Pleasanton, Calif.-based Fulcrum.

Range Fuels has discussed publicly its ethanol plans for several years now, but it only recently made clear that it would be churning out methanol first. Biofuel blogger Robert Rapier penned a post critical of Range Fuels’ decision to add methanol to its production plan. Methanol, Range Fuels said, can be turned into biodiesel to power cars, heaters or fuel cells. Its feedstock will first come from timber operations, but it also wants to make fuel with plants such as miscanthus and switchgrass.

Update: Robert Rapier emailed us to clarify that his criticism of Range was not about their decision to add methanol to the mix, per se, but rather he says what the company is delivering is at a far greater taxpayer cost and at a much later date than what they initially hyped.

Range Fuels’ decision to make products other than ethanol isn’t unusual in the biofuel world. Companies such as Solazyme, BlueFire Ethanol (who just changed its name to BlueFire Renewables) and LS9 all have lined up or pursued opportunities to sell various compounds, for products such as soaps and sugars, that come from their processes of converting plants or biomass into chemicals, including fuels. Some of these products will generate revenues a lot sooner than transportation fuels can.

Range Fuels snagged an $80 million loan guarantee from the U .S. Department of Agriculture to help build the first commercial plant. Back in 2007, the company also announced that it would receive a $76 million grant from the U.S. Department of Energy for building the same factory, and it was supposed to complete the first phase of the factory — at 20 million gallons per year — by the end of 2008. In April 2008, the company said it had raised more than $100 million in equity to help fund the factory, but the first phase’s completion was pushed back to 2009. Along the way, the company replaced its CEO, a former executive at Apple, with Aldous, who came from Royal Dutch Shell.

The company was trying to raise $80 million in debt (in connection with the USDA loan guarantee) for its Soperton plant earlier this year, according to its February filing with the Securities and Exchange Commission. Aldous declined to disclose the cost of building the plant.

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