Range Fuels Produces Something

I began to hear rumors about a week ago that Range Fuels had started to produce some methanol from their plant in Soperton, Georgia. This week they announced that they have indeed begun to make some product:

Range Fuels Finally Gets its Cellulosic Plant Running

Georgia — After a two year delay, Range Fuels is producing methanol fuel from its commercial-scale cellulosic ethanol facility in Georgia. The company initially said the plant in Georgia would be producing up to 20 million gallons of fuel in 2008. Then it got pushed back to 2009. It is now finally operating in the second quarter of 2010.

The delay is not out of the ordinary for cellulosic ethanol producers. Because of the technical and financial problems companies have been facing, the Environmental Protection Agency scaled back its 2010 mandate for cellulosic fuels from 100 million gallons to 6.5 million gallons.

Let me first extend my congratulations to Range, and let’s hope that the start-up proceeds smoothly. Generally when trying to start up something for which there are not a lot of existing facilities, the learning curve can be bumpy because you have to figure it out as you go along. So do not be surprised to see that they are up and down a lot as they work out the kinks (not that those sorts of things make the news).

Oddly enough, a few people have e-mailed me with this news to claim that this vindicates Range from the criticisms I set forth in Broken Promises from Range Fuels. I don’t want to use this post to rain on their parade, but given these misconceptions let’s have a look at what I have said.

First, nobody ever doubted that Range could take biomass, gasify it, and produce methanol. That technology has literally existed in some form since 1923. And nobody doubts that they can make some ethanol in the same way. Again, very old technology, just not cost-effective. Range has their own particular version of the technology, but nevertheless there is nothing fundamentally new in their approach.

So that’s the first point that should be clear. My criticism was not that they can’t produce some alcohols, therefore production of alcohol doesn’t invalidate the criticism. My criticisms were based on historical claims that Range made and failed to deliver upon. These aren’t issues where the jury is still out; they are history. Range claimed they would build a 100 million gallon per year ethanol plant for $150 million and start producing in 2008. First production of methanol in mid-2010 after taking in more than double the money they claimed they would need for an ethanol plant does not invalidate my criticisms in any way.

People knowledgeable in this field knew when they started hyping this back in 2006 that they could not possibly deliver “cellulosic ethanol” via this process at the cost and on the schedule they were claiming. So when costs started to escalate, schedules started to slip, and they ended up switching to methanol, they were certainly open to criticism given how vocal they had been about hyping themselves.

Imagine if Walmart started to hype $100 Dell laptops — this week only. I go to Walmart to get one, and find that they don’t actually have any for sale. If I criticize them for the false advertising, my criticism isn’t invalidated if you go there a month later and buy a $300 VCR. Yes, Walmart would have delivered something – but that wasn’t what they said they would deliver.

As I have said before, people are accountable for what they write and say. That includes me. So my criticisms of Range are certainly fair game for discussion. Just make sure you understand what those criticisms are before you write to tell me the criticisms were wrong. Keep in mind that the criticisms revolve around costs and time delays that are historical. And contrary to what some people seem to think, I do not wish to see Range fail. If I criticize President Obama, that doesn’t mean that I hope he fails as a president.

Regarding their production of methanol instead of ethanol, a story at earth2tech missed the mark by suggesting this was the nature of my criticism. To the contrary, I favor gasification approaches to methanol (or ethanol, mixed alcohols, diesel, jet fuel, etc.) I like those processes because they don’t rely on a lot of fossil fuel inputs and can result in a higher efficiency to fuels than other approaches.

However, at present the gasification of biomass to methanol has to contend with the much cheaper method of gasification of natural gas to methanol. The latter presently sells for about $1/gallon, and Range’s methanol will struggle to compete with that. So their business plan will be to sell their methanol to the biodiesel industry, which reacts it with a vegetable oil or animal fat to produce biodiesel. Range will rely on a $1/gallon tax credit when they sell their methanol (again, only worth $1/gallon at market prices), and then the biodiesel industry will turn around and collect another $1/gallon tax credit when they sell the biodiesel (presuming this credit is extended as expected).

The path forward for Range is pretty clear. They have to get through this start-up phase and demonstrate that they can run their process consistently. We won’t know that until they have a year or so of operation behind them; any corrosion and reliability issues will take a while before they are obvious. Range will reportedly try to move production to ethanol next year, and that will present its own challenges. Given that they recently requested more DOE funding (which they did not receive), it is clear that the capital requirements for their process are high. So ultimately they must also show that they can run the process cost-effectively.

First production of methanol is a noteworthy achievement, but there is a long road ahead. Just ask Changing World Technologies, who also once started up a plant and began to produce some fuel. But instead of being remembered as an innovative biofuel company, CWT went bankrupt and is the poster child for the “over-promise and under-deliver” strategy. Let’s all hope for a better outcome for Range Fuels.