Zeachem Presents Possibilites to Mayors/Managers of Morrow County, Oregon

Morrow County, Ore. -- Carrie Atiyeh of ZeaChem gave a presentation to the Mayors and City Managers of Morrow County during May's meeting in Boardman.

ZeaChem believes they have the most efficient and economical processes in the industry to produce a range of bio-based fuel as well as chemicals from a variety of non-food renewable resources. They are looking at forming a number of strategic partnerships to bring these products to market. One of those partnerships is Valero Energy Corporation which is the nation's largest petroleum refiner. As a refiner they are required by law to blend ethanol into their gasoline for sale into markets here in Oregon as well as across the country. They are also looking into forming a number of strategic partnerships with chemical companies for their chemical-based product line.

Mayor James Ray of Irrigon asked what bio-based fuels Atiyeh was talking about. Atiyeh said, it will be cellulosic ethanol, and they have the ability to produce butanol, which is also another gasoline replacement. On the chemical side, one chemical they can do is ethyl-acetate, which is used in solvents and the paint industry. They can also create a propylene, which is used for bio-based plastics. Propylene right now is 100% dependent on fossil fuels as the input. So if they can replace some of those fossil fuels with renewable resources they can create green plastics.

Irrigon City Manager, Jerry Breazeale asked if these products are by-product of the processes or are they a product that ZeaChem has to prepare for. Atiyeh said that they are separate product streams so they could have a bio-refinery that is producing a number of different products. One of the intermediate chemicals to get to ethanol is ethyl-acetate, so they would be selling the ethyl-acetate into the solvent and paint market and doing one additional step to create cellulosic-ethanol so they are not constrained to just one feedstock or just one end product. They have a lot of flexibility on both the front end and the back end.

ZeaChem has a large vision for what can happen here in the state of Oregon. The first step of which is building a demonstration scale advanced bio-refinery here in Boardman at the Port of Morrow. They anticipate that there will be immediate job creation at the end of this year continuing into 2010. This lays the ground work for production of advanced bio-fuels and advanced bio-chemicals here in the state of Oregon starting right here in Morrow County. From there, is the potential to build their first commercial scale bio-refinery. Right now they have a 5-acre site lease at the Port of Morrow for the demonstration scale facility and they have an option on 35-acres for their first commercial scale facility. As they look into the future they see the potential for multiple commercial scale plants along the Columbia River as well as across the state.

Mayor Chet Phillips of Boardman asked if they are in the process of applying for their permits. Atiyeh said they were in the process of trying to identify all the permits they would need. They are working very closely with DEQ, Department of Energy and the Department of Agriculture. They also spoke with DEQ, Air quality and water quality earlier that week. They have not actually applied for any permits at this time to her knowledge, but they are about to, they are in the process of preparing them.

The Boardman site has many advantages, The POM has been bringing in many clean tech companies, and they are partnering with Greenwood Resources to use their hybrid poplar trees as their primary feedstock. They are also in discussions with Umatilla National Forest to use some of the forests thinning and debris from the forest as well as looking for opportunities to work with local farmers to wheat straw or other feedstock. The flexibility on the front end is the key because they are going to be using local resources. For the purpose of the demonstration facility they will be bringing in products from across the country for the purpose of showing that their technology has the ability to process a variety of feedstock. As they go to commercial scale they will be using local feedstock entirely. The Columbia River is vital; they have seen navigatible water ways as a way of getting their product to market.

City Manager of Heppner, Dave DeMayo asked if this is strictly a bio-chemical process or multiple processes. Atiyeh said, "we are doing a combination of technologies so folks that are doing ethanol are either doing fermentation or they are doing gasification. ZeaChem is taking the best of the biological world and the chemical world and bringing those together. They are able to use 100% of the feedstock. We can take the cellulose and hemi-cellulose fractions of the product that can be fermented. We are not fermenting using yeast or enzymes, we are using a naturally occurring organism, the bacteria that's found in the guts of termites. The ligament part of the plant, the glue, goes through a gasification system that uses heat and pressure. We are going to use a sim gas and pull off the hydrogen and then re-combine the hydrogen with their fermentation strain to get to ethanol the remaining sim gas will be enough to power the bio-refinery."

The benefits are job creation; they are looking at 75 construction jobs and once the plant is online 20 full-time operations jobs. This is a fairly recession proof business. People still drive cars and use paints so there is still a market for the product. These jobs are not going to be outsourced. They are building the facilities here, using local resources, and using local residents for the jobs.

They see a number of positive impacts involving private business, local land owners, local farmers, expanding and growing clean tech industries at the POM, and secondary job creation and benefits on a local and state level. Oregon can become a leader in this ground breaking technology.

Atiyeh had a graph that showed the estimated job creation, from the demonstration plant with 20 full-time jobs with a ZeaChem investment of approximately $30 million. In 2011 and 2012 is when they get into the first commercial facility which will have somewhere between 200 and 300 jobs created and $204 million invested. 2013 and beyond is dependent upon how many commercial facilities are built but the potential is great.

Boardman City Manager, Karen Pettigrew asked if the $30 million dollars was going to be added onto grants. Atiyeh said yes. They are looking to leverage their dollars with local, state, and federal grants.

Carrie also showed a graph of the impact of the job creation throughout the state of Oregon. Construction would be 118 jobs statewide and 96 jobs in Morrow County. Total production would be 174 jobs across Oregon and 71 jobs in Morrow County. So each job ZeaChem creates is creating 1 to 4 jobs indirectly.

ZeaChem signed a contract with Greenwood Farms to supply hybrid poplars for their demonstration plant and they are in discussions with them for supplying the hybrid poplars for the commercial plant.

ZeaChem started engineering the facility in January of 2009; they expect to complete the engineering sometime in June. They will start ordering and fabricating equipment sometime this summer. They are doing a skid mounted design, so it will be manufactured in the shops and brought to Boardman to be assembled. They anticipate hiring at the end of this year and assembling components on site throughout the winter with plant operations starting up in the middle of next year.

ZeaChem is primarily venture capital backed, they have 4 venture capital firms that are involved with them. They have raised approximately $40 million to date, and have also have Valero Energy Corporation as an investor. They are committed to spending $30 million on the first plant and will have significant expenditures starting this summer. They are seeking a competitive grant through the U.S. Department of Energy for up to $25 million. They were told their notification will not be until sometime towards the end of the year.

There is also a tax abatement incentive for creating more than 5 average wage jobs if ZeaChem locates at the POM. It depends on how many jobs are created, and can be up to a 15 year tax abatement.

ZeaChem sees significant efficiency gains by using fermentation and gasification by using the technology in that combined way they are able to produce 40% ethanol per bone-dry ton of feedstock ,whereas their competitors are producing 90 to 100 gallons of ethanol per bone-dry ton, ZeaChem is producing 135 gallons of ethanol. ZeaChem can get 135 gallons per ton, and 15 tons per acre.

Mayor Les Paustain of Heppner, asked if any solid products come from the by-products. Atiyeh said, some gas and mineral will come out of the gasification system and they have had discussions with the POM and Greenwood Resources and they intend to put the ashes and minerals back onto the land.