Range Fuels Starts Construction on Cellulosic Ethanol Plant

rangefuels1.jpgCompanies working on cellulosic ethanol — biofuel made from non-food crops and plant waste — have been racing to be the first to build a commercial plant in the U.S. This morning Khosla-backed startup Range Fuels said it has officially “broken ground” on its plant in Soperton, Ga., which it claimed will be the nation’s first commercial cellulosic ethanol plant.

The Broomfield, Colo.-based company said the plant will eventually produce over 100 million gallons of ethanol per year, produced from wood waste out of Georgia’s pine forests. Construction of the first 20 million-gallon-per-year phase of the plant is expected to be finished sometime in 2008. Later this afternoon the company will be out in Soperton with shovels, doing the symbolic groundbreaking.

We chatted with Range Fuels’ CEO Mitch Mandich in August, and he said then that the company is looking to raise significant amounts of money this year and next for this plant, which will cost in the range of “hundreds of millions of dollars.” Mandich also told us that Range Fuels is considering an IPO sometime in 2008.

The company is backed by an undisclosed amount from Khosla Ventures and a $76 million federal grant from the DOE. This morning Range Fuels also said that its $76 million grant, which it first announced in February, has been signed and that they’ve agreed to the terms and appropriation of funds. The first $50 million will go towards this first phase of the plant, and the remaining $26 million will go towards the next phase of the project.

Range Fuelss technology is different from the more traditional enzyme-based process; it’s a thermochemical process that turns biomass into synthetic gas and then into fuel. Mandich said that the process has lower capital and production costs than enzymatic cellulosic ethanol, and will be cost-competitive to corn-based ethanol from day one.

Last week, Khosla Ventures disclosed another investment in a thermochemical biofuel startup, KiOR, which has developed a “biomass catalytic cracking process” — a thermochemical process that produces biocrude from grass, wood and plant waste that can then be refined. KiOR CEO Rob Van Der Meij claims his company’s technology has lower capital costs compared with other biomass conversion technologies like gasification.

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