10 Dec Edwards sees Virent Energy thriving in era of low-cost crude
Madison, Wis. – Lee Edwards, the new president and CEO at Virent Energy Systems, does not believe history will repeat itself.
Edwards, who will succeed Eric Apfelbach on Jan. 2, has no qualms about Virent’s potential now that crude oil prices have fallen below $50 a barrel. Unlike the 1980s, when the demand for alternative fuels and energy subsided along with gas prices, he knows the public now views energy independence as both an economic and national security issue.
And the volatile 2008 energy markets – it’s hard to believe gasoline was more than $4 per gallon just a few months ago – have taught them that what goes down can go back up (and vice versa), especially when the global economy heats up again.
This is why Edwards believes that American consumers will continue to demand alternative energy and more fuel-efficient engines. Virent has developed a BioForming technology platform to convert plant sugars into a variety of hydrocarbon molecules identical in structure to the petroleum-based hydrocarbons used in modern fuels. The company will use the platform to develop green gasoline, then renewable jet and diesel fuel.
“There is no question that the combination of those two driving forces, homeland security and environment, won’t go away,” Edwards said. “Fifty-dollar per barrel oil will force those with clarity and a pathway to success to survive and thrive, and those that are troubled at those kinds of prices will probably find ways to redeploy their assets and do something different.
“Our ultimate goal is we need to compete with a feedstock that will create its own economic value and be able to compete, whether oil is at $40, $50, or $60. For those technologies that are dependent on $100 barrel oil, I think this is going to be a big testing time.
“Virent is not one of those.”
The chief executive’s position at Virent Energy Systems was attractive to Edwards for a variety of reasons, including the existing staff led by founder and CTO Randy Cortright. Having worked in a variety of roles for BP Solar, most recently in the alterative energy business, he also believes that Virent has a compelling technology platform to deliver a range of transportation fuels – from gasoline to jet fuel.
In Edwards’ view, the platform doesn’t compromise the performance of the products, or the logistics of delivering the products to the customer. It also will allow tremendous flexibility of biomass feedstocks in the translation to molecules for transportation that are very similar, if not identical, to molecules that come from a crude oil refinery.
In a growing business space, Edwards said this continues to be one of the unique opportunities for a catalytic approach that creates heat rather than requires heat, and creates products from gasoline to diesel “which are dropped in and immediately useable through the existing logistics infrastructure around the world.”
Given the flexibility of biomass, he said the Virent technology could work in a number of different places, with a number of different feedstocks, and generate products that are exactly what consumers want – with all the benefits of security and a significant improvement in CO2 emissions.
For this and other reasons, Edwards believes the opportunity for business success is very high. “To me, the technology is unique in some aspects, but it’s fantastic when you can see it become something that the customers want and that will generate profit for continued investment, continued development, and continued growth,” he said. “Virent, to me, has that combination.”
An energy executive, Edwards has worked in the renewable space on an international stage. As CEO of BP Solar, he led a company that reached markets in 70 countries around the world, including China and India, so his vision for Virent is international in scope. He also knows something about corporate positioning, having been responsible for rebranding BP (Beyond Petroleum) as consumers know it today.
“That was really about changing the public’s willingness to think that new things are possible for companies of any size,” he said. “I think Virent plays absolutely perfectly into that space of bringing alternative energy beyond petroleum to reality in the marketplace.”
Since Virent’s process can produce gasoline, jet fuel, and diesel, Edwards’ vision also is to work with speed and get its products to the customers as quickly as possible, and in as many places that have the opportunity to match biomass feedstock sources with customer demand.
Virent has several paths to commercialize its gasoline technology platform, but first it must prove scale. A production facility in Madison continues to expand so the company can demonstrate the gasoline technology at larger volumes. Virent is in the process of developing similar tracks for jet fuel and has the potential to do several other projects in either diesel or in the chemical range.
“The first priority is the most demanding transportation fuel in terms of volume and impact – gasoline – so that’s where we want to start,” he said.
Once the transportation fuels are developed, there is a back to the future possibility. Virent, which was founded on hydrogen development, has fairly significant intellectual property around producing hydrogen from renewable feedstock sources. As it became clear to Cortright and other scientists that Virent could use similar processes to make transportation fuels, and as the market for the biofuels grew significantly faster than the market for hydrogen fuel cells, the company changed course.
“That’s going to be another horizon of development,” Edwards said of hydrogen. “Where will fuel cells actually start to grab hold form a commercial scale standpoint? It could be the commercial sector. It could be the residential sector. It could be the transportation sector. That is the most logical extension of the technology platform that we’ve got.
“It’s not yet at the market maturity where there is a big market to play into.”
Given the alternative energy thrust of the incoming Obama administration, Edwards is confident the alternative energy industry will have a strong partner in the federal government. One issue that must be addressed is accessing low-cost feedstocks, and another will be developing ways to accelerate R&D through the development phase, which typically requires more capital because alternative fuels must be proven at greater scale.
“Whether it’s Virent or the industry in general, the new administration has a great opportunity to accelerate or otherwise clear development paths just by making it easier to access pilot plant and commercial demonstration plant capital,” he said, “to build demonstration units as quickly as possible.”