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Fulcrum Bioenergy files for Chapter 11 relief

  • Spanish Market: Biofuels, Emissions, Oil products
  • 13/09/24

A US company that had set ambitious plans to convert garbage into sustainable aviation fuel (SAF) and attracted investments from major airlines and energy companies filed for Chapter 11 bankruptcy protection this week.

Fulcrum Bioenergy and subsidiaries filed for relief before the US Bankruptcy Court for the District of Delaware on Monday, estimating outstanding obligations to over 200 creditors at more than $456mn. A lawyer representing Fulcrum, Robert Dehney, said at a Thursday hearing that the company was on the verge of declaring Chapter 7 bankruptcy, which typically involves liquidation of assets, before a late-breaking bid from an interested company prompted a change in plans.

Fulcrum chief restructuring officer Mark Smith said in a declaration to the court that the company wants to initiate the sales process and move through the chapter 11 process on an "expeditious timeline." Judge Thomas Horan on Thursday preliminarily approved various first-day motions, including a request to continue paying Fulcrum's handful of remaining employees.

Fulcrum began initial operations at its flagship Nevada facility in 2022, becoming the first company to commercialize a clean fuels pathway based on gasifying garbage and signing offtake agreements with BP, United Airlines, and others. The process at the Nevada site involved receiving and sorting landfill waste, converting that to a synthetic crude oil through a gasification process, and then sending that feedstock to a Marathon Petroleum refinery to be processed into a usable low-carbon fuel. Fulcrum eventually wanted to be able to upgrade the synthetic crude into SAF on site.

An archived version of the Fulcrum website, which is no longer online, also set plans for eventual biorefineries and feedstock processing facilities in Indiana, along the US Gulf coast, and in the UK and said its suite of facilities could ultimately support 400mn USG/yr of production capacity. But Fulcrum has reported few updates on its progress more recently, and there were signs of financial struggles. Multiple contractors have filed lawsuits alleging missed payments, while UMB Bank indicated in October last year that Fulcrum had defaulted on debt obligations.

The Nevada site ceased operations in May and plans for other US facilities are apparently on hold, though filings indicate that Fulcrum has not yet determined whether to begin restructuring proceedings for any subsidiaries outside the US.

Fulcrum's business "represents a revolutionary idea," Smith said in his declaration, but "as with all cutting-edge businesses, the cost of innovation has been born through delays in operations and the inability to anticipate issues based on prior ventures and experiences." There were necessary equipment changes after initial operations begun, but these were expensive and affected by supply chain delays, he said.

It is unclear how much feedstock was successfully delivered to Marathon, which declined to comment. The Hong Kong-based airline Cathay Pacific, which had signed an offtake agreement with Fulcrum, told Argus that it never received any SAF. Other companies that had signed offtake agreements did not immediately respond to requests for comment or declined to comment.

Fulcrum had been soliciting interest from potential buyers for months and finalized an agreement with a company called Switch LTD, which agreed this month to offer a "stalking horse" bid to purchase Fulcrum's assets for $15mn and issue a loan of up to $5mn to fund Fulcrum's bankruptcy cases. A stalking horse bidding method is a way to arrive at a minimum bid price that other prospective buyers then must exceed.

Filings before the court this week did not elaborate on the nature of Switch's business or its reasons for wanting to acquire Fulcrum's assets. Dehney described Switch as a "disinterested third party" and said that Fulcrum has received other interest from prospective buyers, some eyeing all of Fulcrum's assets and some just looking at physical property, intellectual property, or the UK subsidiary specifically.

Failure to launch

The idea of gasifying waste to produce fuel has long been attractive, since feedstock costs would be low and the Fischer-Tropsch chemical process to convert synthetic gas to liquids has been known for decades. Demand for low-carbon alternatives to jet fuel is high among major airlines, some of which have government mandates to meet or voluntary goals to rapidly scale up SAF consumption by 2030.

While Fulcrum's Chapter 11 filing "was not really a surprise" given its recent financial troubles, it could give investors pause about future projects aiming to use similar technology, according to BloombergNEF renewable fuels senior associate Jade Patterson. The large majority of SAF capacity currently and the bulk of planned capacity additions through 2030 come from the more established method of hydroprocessing non-petroleum feedstocks like fats, oils, and greases, Patterson said.

Efforts to build gas-to-liquids facilities, by comparison, have faced delays and financial challenges. Red Rock Biofuels had aimed for a refinery converting forest waste to begin operations in 2020, but the company that later acquired the Oregon site at auction is now targeting a 2026 launch for its clean fuels facility. And Fulcrum's plans for converting waste into fuel go back more than a decade, having inked its first deal with a municipal solid waste supplier in 2008.

Kickstarting a market for a novel fuel pathway has also not been helped by a dip over the last year for prices of US federal and state environmental credits, which function as a crucial source of revenue for biofuel producers. There is also uncertainty about how much federal subsidy certain fuels will earn when an Inflation Reduction Act tax credit for low-carbon fuels kicks off next year.

But other gas-to-liquids companies are marching on — including DG Fuels, whose president told Argus last month that the company plans to reach a final investment decision by the first quarter next year on a potentially 178mn USG/yr SAF plant in Louisiana that will gasify biomass. The company has earlier-stage plans for similar facilities in Maine and Nebraska.


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27/11/24

Australia on track for 2030 GHG emissions target

Australia on track for 2030 GHG emissions target

Sydney, 27 November (Argus) — Australia is on track to reduce greenhouse gas (GHG) emissions by 42.6pc by 2030 from 2005 levels, nearly within the country's 43pc target, climate change and energy minister Chris Bowen announced today. The forecast is based on the baseline scenario from the Department of Climate Change, Energy, the Environment and Water (DCCEEW)'s emissions projections 2024 report, which will be released on 28 November, according to Bowen. It compares to a 37pc reduction estimated in the 2023 report under the baseline scenario and is slightly above the previous report's 42pc projection under a scenario "with additional measures", as those policies have now been incorporated into the baseline assumptions. The inaugural emissions projections report, published at the end of 2022 , showed forecast reductions of 32pc in the baseline scenario and 40pc in the additional measures scenario. The main policies incorporated are the expanded Capacity Investment Scheme (CIS) and the fuel efficiency standards for new passenger and light commercial vehicles, Bowen said. Under the CIS, Australia will support 32GW of new capacity consisting of 23GW of renewable capacity such as solar, wind and hydro, as well as 9GW of dispatchable capacity such as pumped hydro and grid-scale batteries. Tenders will run every six months until 2026-27 and winners will need to start operating their assets by 2030, in time to help the Labor government meet its target of sourcing 82pc of electricity from renewable sources by 2030. Bowen last month announced tender volumes would be accelerated on the back of strong interest in the initial 6GW tender in May. NEM review The government separately announced the start of a review of the National Electricity Market (NEM) wholesale market settings, which will need to be changed following the conclusion of the CIS tenders in 2027 and as Australia transitions to more renewables from its aging coal-fired plants. The tenders will give up to 15 years of support, but new settings will be needed to promote investment in firmed renewable generation and storage capacity into the 2030s and beyond, especially as the Renewable Energy Target scheme will come to an end on 31 December 2030 . An expert independent panel will carry out widespread consultation and make final recommendations to energy and climate ministers in late 2025. The panel will need to consider the importance of decarbonising Australia's electricity system to achieve the 43pc emissions reduction target by 2030 and net zero emissions by 2050, according to the government. But the panel "will not consider" options that involve implementation of carbon trading schemes or carbon markets, or that entail governments supporting new fossil fuel generation, it added. The federal government will need to co-ordinate and introduce a "clear and enduring" carbon signal in the energy sector to adapt the 25-year-old NEM to a "post-coal era" , domestic think-tank Grattan Institute said earlier this year. By Juan Weik Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Q&A: AtJ learnings, mandate critical for Australian SAF


27/11/24
27/11/24

Q&A: AtJ learnings, mandate critical for Australian SAF

Sydney, 27 November (Argus) — Australian bioenergy developer Jet Zero has received strong government backing for its proposed Project Ulysses, an alcohol-to-jet sustainable aviation fuel (SAF) project in the northern Queensland state city of Townsville. Argus spoke to chief executive Ed Mason on the sidelines of the Townsville Summit on 27 November about the project's initial engineering. Edited highlights follow: Regarding the proposed 102mn l/yr refinery here in Townsville, what are some of the initial engineering study findings? So with front-end engineering and design (FEED), what we're doing is value engineering, which you typically do at the end of FEED, we're doing it at the front because we've seen so many opportunities to improve on the reference project design in Georgia, US — they're just basically lessons learned from what LanzaJet have seen, as well as what we've identified as opportunities to eliminate, reduce, simplify costs. We've got hydroprocessed esters and fatty acids (HEFA), that's the kind of space rocket that can get you to the moon, we've now got alcohol-to-jet commercialised, which is like the space shuttle — slightly better, which can do more. But we really need to see a SpaceX type of system where you can go up and down and make it more efficient, so it's making those technologies far more capital efficient and better, so that's what we're focused on. W here are negotiations at with refiners Wilmar and Manildra, the two main producers of ethanol in Australia? We basically have constructive discussions in particular with Wilmar, they have surplus capacity, they're vocal supporters of development of the ethanol market, as you know, for many years. We've got ample supply (183mn l/yr) and confidence about what we need for SAF and importantly, assisting that supplier getting that feedstock RSB and Corsia certified. Looking at the regulatory situation at the moment, a low-carbon fuel standard. How critical is that to building a project like yours to final investment? We made a submission on the [low-carbon liquid fuel paper]. We're advocating both supply and demand measures and were fairly aligned with the wider industry submission. We believe a modest mandate, 1-2pc, supports and is ahead of what the project pipeline is, so you're not putting a mandate that can't be achieved by the projects at our stage but that sends a strong signal, like other countries have already sent. Secondly, supply measures around financing like other types of mechanisms you've seen with Hydrogen Headstart , just to get the industry going. How tight is the window for Australia to catch up with the rest of the world? It's very tight. I think we've got to move in the next two years — there is a wall of demand from 2030 and these projects take five years to develop from start to finish. If we don't move in this in the next few years, we'll end up seeing the feedstock develop that market, but not the production of SAF and we'll lose out on those jobs. A standard size plant has been proposed in Townsville, how much room do you have to grow that capacity in Townsville? We'd very much like to be bigger if the market was there for ethanol. We've sized it at the minimum size that we feel can deliver commercial volumes of SAF at a price that's in line with benchmark, but the bigger you go, the bigger economies of scale you get. These are modules, we can increase and add another train to Townsville quite easily, so a huge opportunity to grow that. The actual plant construction timeframe, what does that look like? The longest lead item is 14 months, but I'd assume two years. So if we are at final investment decision in the second half of next year, we could conceivably see this project start producing SAF by the second half of 2027. Is sugarcane going to be sufficient for growing AtJ SAF, or will we need other feedstock in the future? The sugarcane industry has theoretically got the biggest contributing opportunity, particularly short to medium term with this industry. But you've got agave, you've got other types of crops that can produce like sorghum and other types of sources of ethanol that can be used, and they are a potentially medium-to-long-term supply opportunity. [Farming lobby] Canegrowers ran a fairly extensive campaign around the potential of biofuels in the last Queensland state election, and we've seen other bodies in the sugar industry run similar campaigns so the industry, from grower to miller, is supportive of developing the industry. We've only seen sugar mills close in north Queensland over the last decade, I think ultimately the rest of the world's sugar industry has already moved on [biofuels]. By Tom Major Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Norden agrees marine biodiesel deal with Meta


26/11/24
26/11/24

Norden agrees marine biodiesel deal with Meta

London, 26 November (Argus) — Danish shipping company Norden has agreed with tech giant Meta to utilise marine biodiesel blends on operated vessels. The deal is based on Norden's book-and-claim, a system that can be used to deliver proof of sustainability (PoS) documentation to customers to offset the latter's scope 3 emissions and fulfil their voluntary demand. The PoS can be obtained on a mass-balance system, allowing shipowners flexibility with regards to the port at which a blend can be bunkered. Norden did not specify which marine biodiesel blends it will use as part of this agreement, but said the biofuel will be ISCC-certified and will have an 80-90pc greenhouse gas (GHG) emissions reduction potential. The agreement follows recent drops in Argus assessments for marine biodiesel blends comprising Advanced Fatty acid methyl ester (Fame) 0 in the ARA trading and refining hub. By Hussein Al-Khalisy Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Nigeria restarts Port Harcourt refinery: Update


26/11/24
26/11/24

Nigeria restarts Port Harcourt refinery: Update

Recasts and adds details throughout London, 26 November (Argus) — Nigeria's state-owned NNPC said today it has restarted its 210,000 b/d Port Harcourt refinery after three and a half years offline. Product loadings began today after the plant's smaller, 60,000 b/d capacity crude distillation unit (CDU) came into operation. This gradual restart had been planned by Italian engineering firm Maire Tecnimont, which has been rehabilitating the plant under a $1.5bn contract, although a number of deadlines announced by NNPC have been missed. Refined products from Port Harcourt will add to the gasoline that has been supplied since September from the 650,000 b/d Dangote refinery. Product imports are likely to fall, an industry source said. Nigerian downstream regulator NMDPRA's head Farouk Ahmed said products from Port Harcourt will be made available nationwide and would stoke price competition. Nigeria's National Bureau of Statistics (NBS) reported an average national gasoline price of 1,185/litre (70¢/l) for October, a rise of 88pc on the year and 15pc from September. The price of diesel, which has been deregulated since 2003, was an average N1,441/l in October, NBS said, up by 43pc on the year and by 2pc on the month. The Dangote Group dropped its ex-gantry gasoline prices on Sunday, 24 November, to N970/l from N990/l. Nigerian importers already appear under pressure to compete with Dangote on product pricing, which the Port Harcourt start-up may exacerbate. A local trader said he has found gasoline trading economics most workable when lifting from Dangote ex-single point mooring (SPM) and delivering to coastal ports such as Port Harcourt and Warri in Nigeria's southeast, where truck deliveries from Dangote would prove uneconomic. Nigeria's presidency and NMDPRA's Ahmed urged NNPC to now bring back online its 125,000 b/d Warri and 110,000 b/d Kaduna refineries, which have been closed since 2019. NNPC has opened a combined tender for operating and maintaining these. The outcome of a similar tender for Port Harcourt is unclear. Nigeria would become a net products exporter when Warri and Kaduna come online, NMDPRA's Ahmed said today. A source at the regulator said exports might become vital to Nigerian refiners. "The patronage for petroleum products is low and Nigeria is oversupplied," the source said, attributing the latest Dangote price cut to competition with imports and weak demand. The prospect of Port Harcourt running at its nameplate capacity is in doubt, sources said. It would at best reach 40-50pc of capacity, the industry source said, which would focus on mainly local gasoline deliveries. Port Harcourt was shut in 2020 after several years of low capacity utilisation. NNPC previously said it expects the initial 60,000 b/d phase to produce 12,000 b/d of gasoline, 13,000 b/d of diesel, 8,600 b/d of kerosine, 19,000 b/d of fuel oil and 850 b/d of LPG in the first year of resumed operations. By Adebiyi Olusolape and George Maher-Bonnett Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Bimco develops FuelEU clause for charter parties


26/11/24
26/11/24

Bimco develops FuelEU clause for charter parties

Sao Paulo, 26 November (Argus) — Danish shipping association Bimco has developed a contractual clause to support time charter parties ahead of FuelEU Maritime regulations that come into force at the beginning of 2025. The clause designates the shipowner to be the party responsible for FuelEU Maritime. Bimco said the clause is intended to be the standard applicable for most scenarios and commercial relationships. Among the recommendations, the clause states it is mandatory for a shipowner to present the vessel's compliance balance for the previous two years and in the current year. The FuelEU maritime regulation will start in 2025 and will require that ships traveling in, out of, and within EU territorial waters gradually reduce their greenhouse gas (GHG) intensity on a lifecycle basis. It will start with a 2pc reduction in 2025, 6pc in 2030, and will be 80pc by 2050, all compared with 2020 levels. The regulation applies to all commercial ships above 5,000 gross tonnes (GT) carrying passengers or cargo. "The clause we have adopted today is the result of a collaborative process between owners, charterers, Protection and Indemnity (P&I), legal experts, and other stakeholders," said Bimco's documentary committee chairman Nicholas Fell. Bimco has also already adopted a clause for emission trading allowances under the EU emissions trading system (ETS) for ship management agreements, voyage charter parties, and contracts of affreightment. By Gabriel Tassi Lara and Natália Coelho Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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