Fulcrum Clears Financial Hurdle to Rev Up Construction in 2013

Three years after announcing its breakthrough in converting MSW to ethanol, Fulcrum BioEnergy appears to have secured all the funding necessary for its first MSW to low-carbon fuels plant in Storey County, located 20 miles east of Reno, Nev.

The Pleasanton, Calif.-based company landed a $105 million loan guarantee by the U.S. Department of Agriculture in August. Fulcrum originally filed a registration for an initial public offering with the Securities and Exchange Commission in September 2011 but rescinded its filing later.

Courtesy: Fulcrum BioEnergy

“The current IPO market environment remains challenging, especially for development stage companies like Fulcrum,” President and CEO James Macias said. “Because of this we have secured commitments from alternative capital resources to advance our MSW to renewable fuel program and we have withdrawn our registration statement.”

Fulcrum also closed an equity investment agreement with Waste Management in November 2011 that could provide up to $70 million for the Sierra BioFuels plant. The proposed plant is expected to produce close to 10 million gallons of ethanol each year. The company secured its feedstock and entered an offtake agreement for the plant in 2009. In addition to ethanol, the Sierra BioFuels plant will produce its own renewable energy to run the plant.

Fulcrum uses a two-step process to convert post-recycled MSW into ethanol. An InEnTec downdraft partial-oxidation gasifier is used to convert the sorted MSW to a syngas. The syngas then runs through a catalyst in Fulcrum’s proprietary alcohol synthesis process which it developed with Nipawin and the Saskatchewan Research Council before the ethanol is finally separated and purified.

The basis of Fulcrum’s business strategy is to secure zero-cost feedstock agreements around the country, thus giving it a competitive advantage over those who use corn or other forms of biomass. While Fulcrum has only just started construction on its Sierra BioFuels plant in Nevada, the company currently has feedstock agreements in 23 other cities across the U.S.

Better BTU: Fulcrum’s turning point was landing the $105 million loan from the USDA. The government has laid out significant dollars in an attempt to jumpstart development of biofuel technologies that utilize non-food feedstocks.  While we’d still like to see the industry focus on clearing one hurdle – clean, economic and efficient gasification – before approaching the next, we like Fulcrum’s business approach. Still a lot has to happen if the plant is to be in production by the end of 2013, as the company states. We’ll be keeping our eyes peeled for news out of Nevada.

Recommended Reading:

Fulcrum Secures $175M for Waste-to-Fuel Gasification Project – Waste Management World (Dec. 3, 2012)

$105 Million USDA Loan Guarantee for Waste-to-Biofuel Facility – Waste Management World (Aug. 7, 2012)