Friday, March 09, 2012
Beverage Bottles Key to Virent Success
In the last post “License to Major Refiner Lifts Virent” on March 6, 2012, I highlighted Shell’s adoption of Virent’s Bioforming process to produce a “drop-in” biofuel at one of Shell’s refineries. As impressive as that apparent endorsement of Virent’s process might be, it still does not bring Virent to commercial scale production - an accomplishment that is after all necessary to eventually provide investors with a return.
It turns out Virent’s Bioforming process - which is based on aqueous phase reforming (APR) - yields out a variety of chemical intermediates including alcohols, ketones, acids, furans, paraffins and other oxygenated hydrocarbons. Subsequently, the chemical intermediates from the APR step can be converted into hydrocarbon components through a condensation step. This is followed up by conventional hydrotreating.
Virent’s hydrocarbon molecules are the same as those found in today’s petroleum products, but from renewable feedstocks. It is an elegant solution for refiners as we noted in the previous post, which are under pressure to blend in an increasing portion of renewable fuel, but are reluctant to invest in new infrastructure to accommodate alternative fuels. Likewise users of plastics, such as beverage bottlers and others are keen on replacing plastic bottles made from petrochemicals, but only those plastics fit into their existing infrastructure.
The CocaCola Company (KO: NYSE) thinks Virent’s Bioforming process fits the bill. In December 2011, Virent announced a partnership with CocaCola for the production of plastic bottles. Virent along with two other biofuels technology firms, Gevo and Avantium, were contracted to help CocaCola produce renewable, plant-based bottles.
Virent announced in June 2011 that it has produced a molecule that mimics a petroleum molecule that's key to making PET recyclable bottles. The molecule paraxylene, also known as BioFormPX, is made from 100% plant sugars.
So when can we expect revenue? Well you can take your time to get a calculator out. Virent claims its CocaCola deal is a multi-million dollar agreement that supports Virent’s plans to open a commercial-scale plant - but not until 2015. Apparently, Virent has more development work to do first.
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. Virent is included in Crystal Equity Research’s Beach Boys Index in the Alternative Chemicals Group.