http://biomassmagazine.com/articles/9308/kior-announces-q2-financial-results-discusses-expansion-plans/
KiOR
Inc. has released financial results for the second quarter, reporting
operational progress at its Columbus, Miss., plant. The company shipped
more than 75,000 gallons of cellulosic fuels during the three-month
period, which ended June 30.
“I am happy to report that Columbus has made significant operational
progress and is continuing to build its on-stream performance and
reliability," said Fred Cannon, president and CEO of KiOR. "In addition
to making our first shipment of cellulosic gasoline in the second
quarter, we more than doubled the run time of our core technology, the
Biomass Fluid Catalytic Cracking Unit, to 43 percent in the quarter, up
from 20 percent in the first quarter."
During a call to discuss the financial results, Cannon spoke about
three phases he said are necessary to bring a first-of-king facility to a
steady state of operation. First, there is a reliability phase that
concentrates on simply running the facility and building its on-stream
percentage, he said. Second is a throughput phase, which focuses
bringing the facility to nameplate capacity while maintaining the
on-stream percentage. Finally, the third phase focuses on optimization,
during which process efficiency is optimized, increasing yield.
According to Cannon, the facility has achieved significant progress of
the first phase and is beginning to work on the second stage.
Cannon also noted that the plant’s CFCC unit operated for just under
40 days during the second quarter, which doubled the quarterly on-stream
percentage. “Our first run was April 22 to April 27,” he said. “We then
started the BFCC back up on May 6 and rant it until May 12. We decided
to terminate both of these runs due to feed synchronization issues.
Nothing about the KiOR technology prevented the runs from going longer.”
The BFCC was brought back online on May 30 and operated through June
29. The 30-day run more than doubled the facility’s previous longest
individual run.
According to Cannon, a small repair requirement in the
wood yard necessitated the shutdown of that run.
He also stressed that nothing about the KiOR technology resulted in
these operational terminations.
“As has been the case since we first
started the facility, these issues are not related to our core
technology,” Cannon continued. “They are simply part of the break-in
process, and again, let me reiterate that our goal last quarter was to
keep the plant running as long as possible, not to push the plant from a
throughput standpoint. Our focus was on reliability, and we typically
ran Columbus at 40 percent to 50 percent of its nameplate capacity.”
Cannon said longer runs are KiOR’s main objective in the third
quarter. He also stressed that the plant is currently operating, with
high quality oil being produced and stored. “I anticipate that the
hydrotreater will start up shortly, meaning we will have fuel ready to
ship in the very near term,” he said, noting that the company’s focus
will likely not shift to process optimization and increasing yield until
the fourth quarter. “I look for us to achieve normal, steady-state
optimal operations at Columbus in the first half of 2014,” Cannon
continued.
During the call, Cannon also spoke about KiOR’s long-term business
plan, highlighting two developments that have factored into the
company’s strategic thinking. “First, we believe that we have made some
important gains in our research and development efforts that…can have a
significant impact on the operating efficiency and catalyst performance
of our technology at a commercial scale.” Second, Cannon said KiOR is
beginning to see traction on the commercial development of feedstocks
other than Southern Yellow Pine, including hardwood, energy crops and
waste products.
Cannon said the company expects to be able to procure
these alternative feedstocks at a lower price.
As a result of the two developments, combined with progress at the
Columbus facility, Cannon said KiOR is considering an alternative growth
strategy that would involve the construction of a second 500
bone-dry-ton-per-day facility adjacent to the existing Columbus plant.
While Cannon stressed that the company is still in the early stages of
evaluating the possible expansion, the move is exciting because it could
reduce the cost and time required to design, engineer and construct the
second facility. Cannon also said building a second plant adjacent to
the Columbus plant would be expected to reduce start-up and
commissioning risk as a result of shared experienced personnel, site
infrastructure, equipment and operational knowledge. “On a preliminary
basis, we expect that the total cost of this second 500 ton-per-day
commercial facility in Columbus will range from $175 million to $225
million,” he said, noting that current estimates shows cellulosic
gasoline and diesel could be produced at a cost of $2.60 to $2.80 per
gallon at a yield of 72 gallons per bone dry ton. At a yield of 92
gallons per bone dry ton, the cost would drop to $2.20 to $2.30 per
gallon.
KiOR has also continued to refine the design for its proposed
facility in Natchez, Miss. According to Cannon, the current estimated
cost to build that plant is $560 million to $600 million. “We also
estimate that this facility will be able to produce cellulosic gasoline
and diesel at a per-unit unsubsidized cost between $2.25 and $2.48 per
gallon at our current yield of 72 gallons per bone dry ton, excluding
cost of financing and facility depreciation,” he said. “This would
decrease to between $1.81 and $1.96 per gallon at our short-term yield
target of 92 gallons per ton.”
Regarding quarterly financial results, KiOR reported a net loss of
$38.5 million, or 36 cents per share, compared to a net loss of $31.1
million, or 30 cents per share, during the previous quarter. During the
second quarter of 2012. KiOR reported a net loss of $23 million, or 22
cents per share.
Revenues for the quarter equaled $239,000, up from $71,000 during the
first quarter of the year. The company posted no revenues for the
second quarter of 2012.
