The Path to Commercial Production of Drop-In Biofuels/Alternative Fuels

Transcription

1 The Path to Commercial Production of Drop-In Biofuels/Alternative Fuels Jim McVaney VP Government Affairs & Aerospace Business Development May 24, 2012

2 Safe Harbor Statement This presentation contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 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 are 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 The forward-looking statements in this presentation are made as of the date of this presentation 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. Clean Energy Solutions 2

3 Who Has The Oil? Clean Energy Solutions 3

4 Where It Goes? Clean Energy Solutions 4

5 Why Does It Matter? 8,000, Annual U.S. Oil Imports (in thousands of barrels) 7,000, ,000, ,000, Other Imports 4,000, Canadian 3,000, Domestic 2,000, Column1 1,000, Clean Energy Solutions 5

6 Price Volatility Wreaks Havoc on Budgets Clean Energy Solutions 6

7 Solutions

8 DOE-USDA Billion Ton Study Sufficient Biomass to Produce 85 billion gallons of biofuels per year Enough to displace 30% of U.S. consumption Enough to cut non-canadian imports by 60% Makes U.S. Agriculture Industry an even greater part of the Energy Security Solution Includes feedstocks such as woody biomass, agricultural wastes, purpose-grown energy crops Keeps more dollars spend on energy in North America Clean Energy Solutions 8

9 Biofuels In A Nutshell Proven fuels for DOD Platforms Clean Energy Solutions 9

10 Understanding the RFS Source: Advanced Biofuels Association, Clean Energy Solutions 10

11 The Natural Gas Boom EIA Annual Energy Outlook 2012 Early Release Clean Energy Solutions 11

12 Rentech Technologies: Diverse Inputs/High Value Fuels Bagasse Ag Waste Rentech s Biomass Gasification Technologies Rentech-ClearFuels Combined Cycle Power (third party) Renewable Power Grass Switchgrass Wood / Timber Other Biomass Rentech-SilvaGas Cellulosic Fuels Technologies (third party) Renewable Fuels Natural Gas Steam Methane Reformer (third party) Rentech Fischer-Tropsch Process Upgrading Clean Energy Solutions 12

13 GTL Shell s $20B Natural Gas Bet The Shell Pearl plant in Qatar, costing an estimated $20 billion, will produce 140,000 barrels of fuels from natural gas, and another 100,000+ barrels of natural gas liquids per day. Should oil prices remain high, the EIA estimates that world gas to liquids production could reach 1 million barrels per day by South African petrochemical company Sasol is developing large scale GTL plants in Louisiana and Alberta Clean Energy Solutions 13

14 What s the Hold Up?

15 Impact of the Recession Limited appetite for large-scale risk in debt and equity markets Can t get a shopping center financed let alone a first-of-a-kind alternative fuels plant Companies have slowed or parked many commercial projects However Technology has advanced even further, becoming more competitive Persistent high oil prices have kept interest high Clean Energy Solutions 15

16 Fuels Markets Favor Incumbents Cost of entry at commercial scale is staggering: entry-level GTL $1.5B $2.5B, Drop- In Biofuels: $600M to $750M Well beyond VC appetite Oil volatility has limited the use of long-term supply contracts Refiners exposed to global oil price volatility won t assume risk in contracts to customers (marketers, airlines, DOD) Investors remember $47/bbl oil & $147/bbl oil Regulatory uncertainty Will the Renewable Fuel Standard Survive? How do producers get credit for Green Attributes? Cap & Trade? Tax Incentives? The Future of Hydrofracking? Consumer Confusion Liability concerns along supply chain Clean Energy Solutions 16

17 How DOD Can Change the Paradigm Investors and Alternative Fuels Companies will react to Certainty In this debate the DOD is The Gorilla and it must act like it When DOD REALLY wants something they get it NATO Fuel Supply Convoy attacked in Afghanistan by Taliban Rebels Clean Energy Solutions 17

18 How DOD Can Change the Paradigm Time to Get Creative ID bases with highest-cost fuels Understand and share fully burdened cost of fuels Allow for bundling of fuel, power, heat, waste handling services to meet individual base or regional needs ID cost and tactical advantages of alternative fuels (lower O&M, reduced heat signature, etc) and create a way to allow that leverage that value via Energy Service Performance Contracts Look over the horizon Tactical waste-to-fuels facilities Synthetic jet fuel burns at 135 degrees below conventional fuels Thermal Stealth? Long-term Contracts New authority for biofuels (get it) Existing authority for GTL (use it) Clean Energy Solutions 18

19 Final Thoughts Alternative Fuels should not be Politicized DOD messaging should include leveraging U.S. biomass and natural gas resources Great Green Fleet has a great green bull's-eye on it Must demonstrate value It s not just up to the Pentagon Need to retain the Renewable Fuel Standard to sustain market pull in private sector Airlines need to continue to be engaged Alternative fuels regulations need not create new barriers to entry Wishing won t make it happen and it won t happen overnight Clean Energy Solutions 19

20 Jim McVaney VP, Government Affairs & Aerospace Business Development