Coskata Fires Up First 'Flex' Ethanol Plant, in Pennsylvania
October 19, 2009

Coskata Inc. has pushed toward the front of the pack of second-generation ethanol producers by firing up its new "semi-commercial" facility for manufacturing cellulosic ethanol in Madison, Pa., near Pittsburgh. The $50-million result of research and construction is 65 feet tall and includes an 8,000-degree torch that processes the pine chips which serve as a raw material.

The opening of the facility last week moves the Warrendale, Ill.-based company closer to building a full-scale commercial plant, which Coskata anticipates opening by late 2012.

And the Pennsylvania plant, with annual capacity of about 50,000 gallons of ethanol, "gives us a proof statement and demonstrated capabilities," William Roe, Coskata's CEO, told AutoObserver. "We've put our head down and for the last year have completed a lot of the deliverables that have to be done in order to do this on a commercial scale."

Coskata already has been delivering small quantities of cellulosic ethanol to General Motors Corp. for use in its test fleet in Milford, Mich. That was one of the early markers laid out by Roe and his colleagues when GM announced its minor-stake investment in Coskata nearly two years ago, touting the startup's product and technology as a promising development in America's efforts to break free of dependence on foreign oil.

GM has been preoccupied with other things lately, but Coskata has stayed on task. The company long ago validated its technique for using bacteria to produce "flex" ethanol from numerous feedstocks, including not only wood biomass but also agricultural waste, sustainable energy crops, construction waste and even certain municipal wastes.

Roe said that Coskata believes the Pennsylvania plant will help demonstrate that the company can produce the fuel commercially for $1 a gallon or so, its long-declared cost goal that analysts say would make flex ethanol cost-competitive with gasoline. And Coskata's technique is as much as 7-times as "energy-positive" as the fossil fuels used in its production. Nor is it particularly thirsty when it comes to water requirements for production.

Coskata also has managed to stay largely out of the way of the economic and political storm that has battered the corn-ethanol industry over the last year or so. And its funding has remained adequate thanks to other major investors including the venture capitalist Vinod Khosla and the Blackstone Group investment firm.

Now, Roe said, Coskata is moving full-speed ahead toward building full-scale facilities on its own or with big partners who might supply feedstocks, or are interested in the ethanol output, or both. For example, Coskata is working with Florida-based U.S. Sugar to explore the possibility of using wastes from sugarcane production and processing to fuel an ethanol plant.

Coskata's first commercial-size flex-ethanol facility is likely to be located in the Southeast, Roe said, using wood biomass as its primary raw material, with a capacity of about 55 million gallons a year - more than 1,000 times that of the Pennsylvania plant that Coskata calls Project Lighthouse.

"There is a high probability that we will beat most of our partner companies out there with the first commercial plant, because we have our own plant design and want to be first," Roe said. Coskata intends to break ground on such a plant next year and to begin operating it two or so years later.

At the same time, Roe noted, Congress has been helping GM and Ford - both of whom field many "Flex Fuel" models that can run on ethanol-gasoline blends - essentially by mandating demand for Coskata's end products. In 2007, Congress established a quota for gasoline marketers to blend 100 million gallons of advanced biofuels into gasoline by next year.

Roe maintained that Coskata is on a timetable that puts it at or near the pole position in the developing flex-ethanol industry. "The differentiators for us are the simplicity of our approach and our cost points, both operating and capital [costs] and the speed with which we can get this to market on a commercial scale as advertised," he said. "I think we'll be among the first out there operating plants at the scale and cost points that we've targeted for the last few years."

He also believes that Coskata may be in a position to consider being acquired or launching an intial public offering of stock within a few years. "We owe our investors an exit, and there are a couple of ways to do that," Roe said. "We're not in any big rush. The road to an IPO, for example, is one of continually hitting your marks and doing what you say you're going to do - combined, of course, with the status of the investment markets themselves.

"No one would have dreamed of an IP in this space six months ago, but an IPO now may make a lot of sense at some point." - Dale Buss, Contributing Writer

Photo by David A. DeNoma for General Motors

Coskata employee Hector Cruz takes media on a tour of the Coskata ethanol-making process at the opening of the biofuel company's flex ethanol facility Thursday in Madison, Penn. Coskata says its flexible conversion technology is efficient, affordable and ready for commercialization.

 

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