Rentech Receives Term Sheet for Loan Guarantee from U.S. Department of Energy for Recently-Acquired Advanced-Stage Renewable ...
14 April 2011 - 11:00PM
Business Wire
Rentech, Inc. (NYSE AMEX: RTK) today announced that it has
received a term sheet for a loan guarantee from the U.S. Department
of Energy (DOE) under the Section 1705 Title XVII Loan Guarantee
Program, for an advanced-stage renewable power project in Port St.
Joe, Florida, that would employ a Rentech-SilvaGas biomass gasifier
to produce renewable power.
The Port St. Joe Renewable Energy Center (the Port St. Joe
Project) had initially been developed by Biomass Energy Holdings
(BEH), a subsidiary jointly held by Bianchi Energy Services, LLC
and Biomass Gas and Electric, LLC. Rentech has acquired the project
entity for no initial consideration. BEH may become eligible to
recover from the project its development costs and a small carried
interest in the project when it reaches financial close.
The project is designed to use a Rentech-SilvaGas biomass
gasifier to provide synthesis gas to a combined-cycle power plant
to produce approximately 55 megawatts net of renewable low-carbon
baseload electric power (RenPowerTM) from approximately 930 dry
tons per day of woody biomass. Most of the project’s power output
has been contracted for sale to Progress Energy Florida under a
long-term Power Purchase Agreement (PPA), with a small fraction
available for sale on a merchant basis. The PPA has been approved
by the Florida Public Service Commission.
Rentech has signed a detailed term sheet with White Construction
for the engineering, procurement and construction (EPC) work that
is intended to serve as a basis for a definitive lump-sum turn-key
EPC contract. White Construction and Ford, Bacon & Davis LLC
are finalizing the engineering work necessary to enter the EPC
phase of the project. Construction of the Port St. Joe Project is
expected to begin in August 2011, with the facility anticipated to
be in service in 2013. The Port St. Joe Project would create nearly
200 construction jobs and approximately 85 direct and indirect jobs
once the facility is operational.
The Port St. Joe Project is estimated to have a total project
cost of approximately $225 million, based on the feasibility
engineering. The DOE has provided Rentech with a term sheet, still
under negotiation, for a potential guarantee of debt that is
expected to represent the majority of the capital required for the
project. The provision of a term sheet by the DOE is not an
assurance that the project will be offered a conditional commitment
or a loan guarantee. Rentech expects the project to qualify for a
federal cash grant equal to 30% of eligible project costs under the
U.S. Department of Treasury Section 1603 Grant Program for
renewable power projects.
Rentech’s Rialto Project, which has been designed to produce
both renewable fuels and power, remains in the due diligence stage
of the loan guarantee process. Based on discussions with the Loan
Program Office of the DOE (the LPO), Rentech will now pursue the
Port St. Joe Project for a Section 1705 loan guarantee, and
continue due diligence with the LPO on the Rialto Project under the
Section 1703 loan guarantee program. The Section 1705 program,
which was funded by the American Recovery and Reinvestment Act,
imposes a requirement for start of construction by September 30,
2011. This deadline is absent from the Section 1703 program.
The Port St. Joe Project is better-positioned to compete in the
Section 1705 process and begin construction before September 30,
2011, with an executed PPA for approximately 90% of its expected
output with Progress Energy Florida. Compared to the Rialto
Project, the Port St. Joe Project has a simpler design, and will
have significantly lower capital costs and equity requirements.
The schedule for the Rialto Project under the Section 1703
program will enable Rentech to optimize the project in ways that
would not have been possible under the approaching deadlines in the
Section 1705 program. With the commercialization of Rentech’s
biomass-to-power technology through the Port St. Joe Project,
Rentech will focus the Rialto Project on commercialization of its
synthetic fuels technology by shifting from the co-production of
renewable power and fuels to a maximum renewable fuels
configuration. Rentech will adapt the front-end engineering and
design work recently completed by Fluor Corporation to maximize
fuels production, and conduct a competitive RFP process for EPC
contractors.
Rentech currently expects that the Rialto Project will be
designed to produce approximately 1200-1500 barrels per day of
primarily certified renewable diesel or jet fuel from approximately
1000 tons per day of green waste. The final choice between
production of jet fuel or diesel will be determined by the highest
value that can be commanded for the renewable and low-carbon
attributes of the fuels. Rentech’s renewable fuels are expected to
qualify for renewable identification numbers (RINs) as cellulosic
fuels. Rentech’s drop-in renewable synthetic diesel is expected to
generate a premium in California due to the state’s Low Carbon
Fuels Standard. Rentech’s certified renewable synthetic jet fuel
can offer significant value to airlines by helping them to comply
with the European Union’s Emissions Trading Scheme which takes
effect in 2012. Rentech is currently in discussions with several
airlines regarding the potential purchase of fuels from the Rialto
Project.
The Company is targeting a financial closing by the end of 2012
for the Rialto Project with the support of a DOE loan guarantee
under Section 1703.
D. Hunt Ramsbottom, Rentech’s President and Chief Executive
Officer, said, “Rentech is pleased to be working with the DOE on
two separate projects that would commercially deploy Rentech’s
biomass-to-power and synthetic fuels technologies.” Mr. Ramsbottom
continued, “We believe that once we demonstrate commercial
application of our technologies, we can replicate these projects
worldwide through development and licensing opportunities while
driving down capital costs and increasing shareholder value.”
Commenting on Rentech’s acquisition of the Port St. Joe Project,
Herman “Buddy” White, President and CEO of both Bianchi Energy
Services and White Construction, Inc., said, “Our family of
companies shares the vision that the nation’s future economic
security will come from a diverse national energy portfolio. To
that end, we have been recognized for many years as a champion of
alternative forms of power generation, and through our construction
operations, White Construction has become known as the North
American EPC leader in both the wind and solar PV
industries. We first became acquainted with the SilvaGas
technology approximately 10 years ago and upon keen due diligence,
we believed beyond a doubt that SilvaGas was the ideal solution to
utility scaled biomass fueled power generation. Upon the
advent of the DOE loan guarantee program, we made the decision to
combine efforts with another long time champion of the SilvaGas
technology, Biomass Gas and Electric, to pursue the
commercialization of the SilvaGas technology and develop what is
today called the Port St. Joe Renewable Energy Center around such
technology. It gives us great pride today to transition the
development activities on the project to Rentech and to act as the
EPC contractor to bring the project to fruition. We believe the
unique advantages offered by Rentech's SilvaGas technology will
help this innovative project set the standard for biomass energy
production worldwide.”
About Rentech, Inc.
Rentech, Inc. (www.rentechinc.com), incorporated in 1981,
provides clean energy solutions. The Company's Rentech-SilvaGas
biomass gasification process can convert multiple biomass
feedstocks into synthesis gas (syngas) for production of renewable
fuels and power. Combining the gasification process with Rentech's
unique application of syngas conditioning and clean-up technology
and the patented Rentech Process based on Fischer-Tropsch
chemistry, Rentech offers an integrated solution for production of
synthetic fuels from biomass. The Rentech Process can also convert
syngas from fossil resources into ultra-clean synthetic jet and
diesel fuels, specialty waxes, and chemicals. Final product
upgrading and acid gas removal technologies are provided under an
alliance with UOP, a Honeywell company. Rentech develops projects
and offers licenses for these technologies for application in
synthetic fuels and power facilities worldwide. Rentech Energy
Midwest Corporation, the Company's wholly-owned subsidiary,
manufactures and sells nitrogen fertilizer products including
ammonia, urea ammonia nitrate, urea granule, and urea solution in
the corn-belt region of the central United States.
Safe Harbor Statement
This press release contains forward-looking statements as
defined in the Private Securities Litigation Reform Act of 1995
about matters such as the characteristics of the renewable fuels
and power to be produced from Rentech’s technologies, the Company's
development of its proposed renewable energy facilities in Rialto,
California and Port St. Joe, Florida, the timing and finalizing of
satisfactory commercial agreements related to the projects, the
prospects and implications of loan guarantees from the Department
of Energy and the prospects of receiving a Federal cash grant.
These statements are based on management's current expectations and
actual results may differ materially as a result of various risks
and uncertainties. Other factors that could cause actual results to
differ from those reflected in the forward-looking statements
include the financial means of Rentech to build proposed projects,
fluctuations in commodities prices including the price of oil and
the materials necessary to construct projects, the impact of
changing government regulations on the project permitting process
and the qualification of renewable power and fuels, the DOE’s
rejection of the Company’s loan guarantee application and factors
set forth in the Company's press releases and periodic public
filings with the Securities and Exchange Commission, which are
available via Rentech's web site at www.rentechinc.com. The forward-looking statements
in this press release are made as of the date of this release, and
Rentech does not undertake to revise or update these
forward-looking statements, except to the extent that it is
required to do so under applicable law.
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