http://www.businesswire.com/news/home/20110414005573/en/Rentech-Receives-Term-Sheet-Loan-Guarantee-U.S.
April 14, 2011 09:00 AM Eastern Daylight Time
April 14, 2011 09:00 AM Eastern Daylight Time
Rentech’s Rialto Project in Due Diligence Phase of U.S. Department of Energy Section 1703 Loan Guarantee Program as Renewable Fuels Production Facility
“We believe that once we demonstrate commercial application of our technologies, we can replicate these projects worldwide through development and licensing opportunities while driving down capital costs and increasing shareholder value.”The Port St. Joe Renewable Energy Center (the Port St. Joe Project) had initially been developed by Biomass Energy Holdings (BEH), a subsidiary jointly held by Bianchi Energy Services, LLC and Biomass Gas and Electric, LLC. Rentech has acquired the project entity for no initial consideration. BEH may become eligible to recover from the project its development costs and a small carried interest in the project when it reaches financial close.
The project is designed to use a Rentech-SilvaGas biomass gasifier to provide synthesis gas to a combined-cycle power plant to produce approximately 55 megawatts net of renewable low-carbon baseload electric power (RenPowerTM) from approximately 930 dry tons per day of woody biomass. Most of the project’s power output has been contracted for sale to Progress Energy Florida under a long-term Power Purchase Agreement (PPA), with a small fraction available for sale on a merchant basis. The PPA has been approved by the Florida Public Service Commission.
Rentech has signed a detailed term sheet with White Construction for the engineering, procurement and construction (EPC) work that is intended to serve as a basis for a definitive lump-sum turn-key EPC contract. White Construction and Ford, Bacon & Davis LLC are finalizing the engineering work necessary to enter the EPC phase of the project. Construction of the Port St. Joe Project is expected to begin in August 2011, with the facility anticipated to be in service in 2013. The Port St. Joe Project would create nearly 200 construction jobs and approximately 85 direct and indirect jobs once the facility is operational.
The Port St. Joe Project is estimated to have a total project cost of approximately $225 million, based on the feasibility engineering. The DOE has provided Rentech with a term sheet, still under negotiation, for a potential guarantee of debt that is expected to represent the majority of the capital required for the project. The provision of a term sheet by the DOE is not an assurance that the project will be offered a conditional commitment or a loan guarantee. Rentech expects the project to qualify for a federal cash grant equal to 30% of eligible project costs under the U.S. Department of Treasury Section 1603 Grant Program for renewable power projects.
Rentech’s Rialto Project, which has been designed to produce both renewable fuels and power, remains in the due diligence stage of the loan guarantee process. Based on discussions with the Loan Program Office of the DOE (the LPO), Rentech will now pursue the Port St. Joe Project for a Section 1705 loan guarantee, and continue due diligence with the LPO on the Rialto Project under the Section 1703 loan guarantee program. The Section 1705 program, which was funded by the American Recovery and Reinvestment Act, imposes a requirement for start of construction by September 30, 2011. This deadline is absent from the Section 1703 program.
The Port St. Joe Project is better-positioned to compete in the Section 1705 process and begin construction before September 30, 2011, with an executed PPA for approximately 90% of its expected output with Progress Energy Florida. Compared to the Rialto Project, the Port St. Joe Project has a simpler design, and will have significantly lower capital costs and equity requirements.
The schedule for the Rialto Project under the Section 1703 program will enable Rentech to optimize the project in ways that would not have been possible under the approaching deadlines in the Section 1705 program. With the commercialization of Rentech’s biomass-to-power technology through the Port St. Joe Project, Rentech will focus the Rialto Project on commercialization of its synthetic fuels technology by shifting from the co-production of renewable power and fuels to a maximum renewable fuels configuration. Rentech will adapt the front-end engineering and design work recently completed by Fluor Corporation to maximize fuels production, and conduct a competitive RFP process for EPC contractors.
Rentech currently expects that the Rialto Project will be designed to produce approximately 1200-1500 barrels per day of primarily certified renewable diesel or jet fuel from approximately 1000 tons per day of green waste. The final choice between production of jet fuel or diesel will be determined by the highest value that can be commanded for the renewable and low-carbon attributes of the fuels. Rentech’s renewable fuels are expected to qualify for renewable identification numbers (RINs) as cellulosic fuels. Rentech’s drop-in renewable synthetic diesel is expected to generate a premium in California due to the state’s Low Carbon Fuels Standard. Rentech’s certified renewable synthetic jet fuel can offer significant value to airlines by helping them to comply with the European Union’s Emissions Trading Scheme which takes effect in 2012. Rentech is currently in discussions with several airlines regarding the potential purchase of fuels from the Rialto Project.
The Company is targeting a financial closing by the end of 2012 for the Rialto Project with the support of a DOE loan guarantee under Section 1703.
D. Hunt Ramsbottom, Rentech’s President and Chief Executive Officer, said, “Rentech is pleased to be working with the DOE on two separate projects that would commercially deploy Rentech’s biomass-to-power and synthetic fuels technologies.” Mr. Ramsbottom continued, “We believe that once we demonstrate commercial application of our technologies, we can replicate these projects worldwide through development and licensing opportunities while driving down capital costs and increasing shareholder value.”
Commenting on Rentech’s acquisition of the Port St. Joe Project, Herman “Buddy” White, President and CEO of both Bianchi Energy Services and White Construction, Inc., said, “Our family of companies shares the vision that the nation’s future economic security will come from a diverse national energy portfolio. To that end, we have been recognized for many years as a champion of alternative forms of power generation, and through our construction operations, White Construction has become known as the North American EPC leader in both the wind and solar PV industries. We first became acquainted with the SilvaGas technology approximately 10 years ago and upon keen due diligence, we believed beyond a doubt that SilvaGas was the ideal solution to utility scaled biomass fueled power generation. Upon the advent of the DOE loan guarantee program, we made the decision to combine efforts with another long time champion of the SilvaGas technology, Biomass Gas and Electric, to pursue the commercialization of the SilvaGas technology and develop what is today called the Port St. Joe Renewable Energy Center around such technology. It gives us great pride today to transition the development activities on the project to Rentech and to act as the EPC contractor to bring the project to fruition. We believe the unique advantages offered by Rentech's SilvaGas technology will help this innovative project set the standard for biomass energy production worldwide.”
About Rentech, Inc.
Rentech, Inc. (http://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.rentechinc.com&esheet=6683916&lan=en-US&anchor=www.rentechinc.com&index=1&md5=c8871e5ebd779649634e6129b65db7e4), incorporated in 1981, provides clean energy solutions. The Company's Rentech-SilvaGas biomass gasification process can convert multiple biomass feedstocks into synthesis gas (syngas) for production of renewable fuels and power. Combining the gasification process with Rentech's unique application of syngas conditioning and clean-up technology and the patented Rentech Process based on Fischer-Tropsch chemistry, Rentech offers an integrated solution for production of synthetic fuels from biomass. The Rentech Process can also convert syngas from fossil resources into ultra-clean synthetic jet and diesel fuels, specialty waxes, and chemicals. Final product upgrading and acid gas removal technologies are provided under an alliance with UOP, a Honeywell company. Rentech develops projects and offers licenses for these technologies for application in synthetic fuels and power facilities worldwide. Rentech Energy Midwest Corporation, the Company's wholly-owned subsidiary, manufactures and sells nitrogen fertilizer products including ammonia, urea ammonia nitrate, urea granule, and urea solution in the corn-belt region of the central United States.
Safe Harbor Statement
This press release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995 about matters such as the characteristics of the renewable fuels and power to be produced from Rentech’s technologies, the Company's development of its proposed renewable energy facilities in Rialto, California and Port St. Joe, Florida, the timing and finalizing of satisfactory commercial agreements related to the projects, the prospects and implications of loan guarantees from the Department of Energy and the prospects of receiving a Federal cash grant. These statements are based on management's current expectations and actual results may differ materially as a result of various risks and uncertainties. Other factors that could cause actual results to differ from those reflected in the forward-looking statements include the financial means of Rentech to build proposed projects, fluctuations in commodities prices including the price of oil and the materials necessary to construct projects, the impact of changing government regulations on the project permitting process and the qualification of renewable power and fuels, the DOE’s rejection of the Company’s loan guarantee application and factors set forth in the Company's press releases and periodic public filings with the Securities and Exchange Commission, which are available via Rentech's web site at www.rentechinc.com. The forward-looking statements in this press release are made as of the date of this release, and Rentech does not undertake to revise or update these forward-looking statements, except to the extent that it is required to do so under applicable law.
Contacts
Rentech, Inc.
Julie Dawoodjee
Vice President of Investor Relations and Communications
310-571-9800
ir@rentk.com
Julie Dawoodjee
Vice President of Investor Relations and Communications
310-571-9800
ir@rentk.com
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