Velocys applies for D7 RINs, stock tumbles after offering

The company has submitted a fuel pathway petition to the EPA to certify that it has met lifetime emissions targets for its Oklahoma City gas-to-liquids plant.

The company expects that the gas-to-liquid plant, which is run by a joint venture called ENVIA energy, will qualify for the most valuable renewable identification number (RIN): D7 cellulosic biofuel or biomass-based diesel. These numbers cover the most requirements set out by the EPA, and as such are the most in-demand from oil refiners and importers, who must buy the credits. At the time of writing the fuel pathway petition has not been released.

The OKC plant produces fungible fuels from renewable biogas produced from a landfill nearby the facility and pipeline natural gas.

Pending approval from the EPA, Velocys expects that the plant will begin to generate RIN credits in Q1 of 2018. The company emphasised that a ‘significant contribution’ of the plant’s revenue could come from these credits, estimating that the OKC D7s would have traded above €1.96 per gallon in 2017. It went on to say that its biorefinery in development in Mississippi is expected to generate RINs in excess of €3.27 per gallon, also citing 2017 prices.

The Mississippi facility will produce biodiesel and jet fuel from forestry waste. €20.69 million was raised for the facility 15 January with a discounted stock offering. The sale saw the company’s share price fall by 63% to 10.22 pence per share, from 27.25 pence on Friday, according to Alliance News.

Velocys CEO David Pummel said: “This is a major achievement and milestone for both ENVIA and Velocys. On confirmation of the pathway compliance, these will be the first RIN credits generated by our technology and also the first associated with a Fischer-Tropsch process on landfill gas. This in itself represents a significant commercial validation of our technology.”

The CEO remained bullish about America’s RIN market despite calls from oil-state legislators to reform the programme that manages the credit, the Renewable Fuel Standard (RFS).