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Velocys inks Waste Management joint venture for gas-to-liquids fuel plants in US

Last updated: 05:43 24 Mar 2014 EDT, First published: 06:43 24 Mar 2014 EDT

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Gas-to-liquids (GTL) technology innovator Velocys (LON:VLS) has signed a joint venture deal to develop GTL plants in the United States and other territories.

Through a new tie-up with Waste Management, NRG Energy (NRG), and Ventech Engineers International multiple new plant development opportunities will be pursued, the AIM quoted company said.

It is planned that the plants will be fed by a mixture of biogas (or land-fill gas) and natural gas.

Waste Management, a Fortune 500 company, is to provide some of the gas, and it is expected that some of the plants will be developed on its sites.

The first commercial facility being considered for development is at Waste Management's East Oak landfill site in Oklahoma. Some engineering work has already been carried out, and permits have been submitted to the relevant authorities.

A final investment decision for this first project is expected before the end of this year.

Velocys will initially have a minority interest in the JV, and from its point of view principle funding obligations only come into play once a decision is made to proceed with the first commercial project.

"We're delighted to be providing proven FT technology to, and participating as a partner with Waste Management, NRG and Ventech, in the development of projects that promise to unlock the potential of landfill gas and biogas through the production of cost-effective renewable fuels and chemicals," Velocys chief executive Roy Lipski said.

"This project is a milestone in the development of GTL in the US. Smaller scale GTL has the potential to achieve significant installed capacity in North America a long time before any large scale conventional facility comes on stream."

Joe Vaillancourt, Waste Management vice president of corporate venturing, meanwhile, said: "Waste Management has developed a GTL program over many years and selected Velocys technology after completing engineering studies showing it to be the leading smaller scale Fischer-Tropsch technology. 

"We are pleased to have formed a joint venture with a very strong team to take this opportunity forward across several of Waste Management's landfill sites."

On AIM, Velocys shares moved just over 4% higher to trade at 178.70p.

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