Tuesday, January 31, 2012
The last post “Ethanol IPO” on Coskata’s planned common stock offering mentioned the company’s unique cellulosic ethanol process. A particular look at the Coskata process makes sense as it appears significantly different than most in the ethanol market.
Coskata puts syngas through a bioreactor filled with designer micro-organisms to turn out fuel grade ethanol. Ordinary anaerobic bacteria - single-celled organisms - have been “embellished” to make them particularly good at consuming the carbonoxide and hydrogen in syngas. Coskata claims the little biological wonders are better at capturing the chemical energy in syngas than chemical catalysts used in competing processes. Coskata’s bacteria are also apparently less susceptible to viruses that can require considerable downtime to clean the bioreactor.
Other ethanol producers have turned to enzymes such as those produced by Codexis, Inc. (CDXS: Nasdaq). Enzymes are proteins that accelerate the rate of chemical reaction. These proteins are highly specific and operate on only one substrate or material. Furthermore enzymes typically work best within a narrow temperature range and particular pH. Any process relying on enzymes must have the means to maintain a constant and optimal temperature
The company holds that its micro-organisms are not that fussy, ready to work in a wide range of nutrient (feedstock) and temperatures. Bacteria can extract almost the entire energy value available in the incoming syngas stream, producing approximately 100 gallons of ethanol per dry ton of biomass input material. This approaches the theoretical ethanol yields of corn and bagasse of 124 gallons and 112 gallons, respectively.
Coskata proposes to use a wide range of feedstock from corn stover to bagasse to wood chips to municipal waste. The micro-organisms are indifferent, since the feedstock is gasified in preliminary step. Coskata engineers claim gasification leads to higher yields of ethanol per unit of input material because it makes more of the carbon in the feedstock available for its bacteria to process.
Likely investors will hear more about Coskata and its bacteria over the coming weeks as the company prepares its IPO. I am staying tuned for this one, although it might be better to participate in the secondary market after the initial stock sale.
Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.