“Our association with Business Plans Canada provided the focus we required to verbalize and put into context several loosely defined concepts into a format acceptable and preferred by the Investment Community. We were very impressed how over the span of a few hours of “interrogation” via conference calls, our ideas were picked up, written up and most importantly a realistic financial plan put into place. This was achieved by using proprietary software and the creative writing skills provided by Adrian, Sapphire and their team of experts. Our heartfelt thanks for a job well done in a very short time frame.”
Chris Willmann
ABOUT NRG BIOFUELS
Business Description
NRG Biofuels Inc. is on the leading edge of improving biofuels production processes. Working with the School of Chemical and Materials Engineering at the National University of Science and Technology in Islamabad, NRG Biofuels has developed technology that will turn the marginally efficient biofuels industry into a highly profitable enterprise. Their processes are 36 times quicker than conventional technology, use 3.6% of the energy required for operating traditional plants, and are 99% efficient.
Governments around the world are requiring oil companies to include a certain percentage of biofuels in their gasoline and diesel fuel in order to address dwindling resources and rising fuel prices. The term biofuels is generally associated with ethanol produced from food crops such as corn, sugar cane, rape seed/canola and palm oil. These sources of feedstock remove valuable food crops from the market and take arable land out of food production. In addition, there are not enough of these crops to meet rising demands for biofuels.
To meet this demand, researchers are scrambling to find an economical and sustainable method of producing biofuels. Over the past five to ten years, the primary focus has been on using algae/micro algae for biofuels feedstock. Production of biofuels from algae is projected to increase by 43% a year. In 2010, the market value of micro algae technology was $271 million; by 2015 the market value of micro algae technology is expected to be $1.6 billion. (Arkstore Enterprise – Algae Biofuels Production Technologies Worldwide).
In order to make biofuels production commercially viable, two key improvements are needed. The first need involves finding a way to increase biomass stocks (the feedstock used to extract biofuels); the second is increasing the processes for extracting the lipids that are used to make biodiesel from the biomass.
NRG Biofuels’ technological innovations for extracting lipids and then processing lipids into biofuels (transesterification) will set the benchmark for production in the biofuels industry. NRG Biofuels will use their patent pending procedures make extraction of microalgae lipids 85-90% efficient, and Jatropha extraction levels 75-80% efficient. Combined with their overall improvements, NRG’s processes are 99% efficient.
These unprecedented results are based on their procedures for extracting lipids and on transesterification procedures that increase production rates for turning lipids into biodiesel. The key benefits to NRG Biofuels’ technological innovations include:
- Reducing processing time to five minutes compared to one and one-half hours to two hours for conventional processes.
- Increasing production levels to 280 batches/per day compared to 8 batches/per day for conventional processes.
- Using only 3.6% of the energy required for conventional processes.
- Cutting capital costs as production plants are smaller as well more flexible and relatively mobile.
NRG has made considerable progress in strategies to improve microalgae production and is lab testing some revolutionary designs in this area. The company also has a nursery and testing facility for improving Jatropha stock and has identified and is testing additional easy to grow non-food biomasses with high lipid content. The Jatropha plant is the other biomass feedstock that is broadly used in the biofuels industry. Jatropha is a toxic plant that is found in tropical and sub tropical regions; it grows well in substandard soil, is extremely drought tolerant and will produce high quality yields for a minimum of 40 years. Jatropha growth and lipid extraction is an established industry; the challenge has been to make the process cost-effective.
NRG Biofuels is using a highly efficient vertically-integrated business model that eliminates traditional bottlenecks in biofuels production so that their processes are measured from the concept to final production and shipping. This continuous improvement model ensures that every step of the processes is involved in the company’s research and development arm.
NRG Biofuels is building a processing demonstration plant in Pakistan that will begin producing oil in March 2012.
Ownership and Management
The founders and primary shareholders of NRG Biofuels Inc. are Dr. Qamar Malik and Mr. Chris Willmann. Dr. Malik is a Petroleum Engineer with 27 years experience in the oil and gas industry and international R&D experience. Mr. Chris Willmann is an earth scientist who has worked in the oil and gas industry for over 30 years. Mr. Richard Wolfli is the Chief Financial Officer. He has 24 years experience in business management, risk management, engineering and finance. The Corporate Secretary, Mr. Roger MacLeod, has over 20 years of experience in corporate finance and securities law. He acts as counsel to the Board of Directors. Dr. Malik and Mr. Willmann will manage the production and implementation of the demonstration plant. Engineers will be hired to oversee production and running of additional plants after the pilot project is scaled up to commercial production.
Key Initiatives and Objectives
The first key initiative for NRG Biofuels is the construction and testing of the pilot project to ensure that their processes will scale up successfully to commercial production. In order to meet this initiative the company will fabricate all necessary equipment (expellers and bioreactors) for micro algae production, build a demonstration plant, and run the plant to test the ability of the system to reliably manage the high levels of output required.
The primary objective for NRG Biofuels is to reach a commercial production level of biodiesel from micro algae. The company will minimize risk by using Jatropha lipids as a feedstock as it is a well understood biomass; however with its lower risk there is also a lower economic return. The pilot plant will commence operation using purchased Jatropha feedstock during the commissioning stage. As the plant moves to full operational capacity NRG will transition to using micro algae feedstock from their own growth facility.
Market Opportunities
Building on a long and successful association with the National University of Sciences and Technology in Islamabad, NRG Biofuels is focusing its initial biofuels production in Pakistan. Pakistan is ideally suited to this project. The country urgently needs energy to support the world’s sixth largest population. Pakistan also has a favourable business environment, including low development and labour costs, and a supportive legal, tax and regulatory framework. English is the official language. There are ten countries currently growing Jatropha commercially; and many more countries where Jatropha production is in the start-up phase. These growers are all potential markets for NRG Biofuels’ processing services.
Competitive Advantages
NRG Biofuels’ processes are better, faster and more cost efficient than competitors’, utilizing production equipment that is compact and portable. NRG Biofuels’ CO2 infusion processes and bioreactors rapidly accelerate micro algae growth, providing high volumes of product for processing. In addition, their proprietary technology extracts lipids from feedstock at twice the normal rate, and converts the lipids into biodiesel in five minutes ad compared to a one-to –two hour process in conventional plants. Because their processes are accelerated, less energy is used in creating the biodiesel, and the biodiesel produced is “tank ready” for compression ignition engines.
Another competitive advantage for NRG Biofuels is the size and portability of their production equipment. Buildings are not required for Jatropha extraction, the equipment is mounted on skids that can move between fields and plantations.
The company also has a significant market advantage. Pakistan imports most of its diesel fuel and the Pakistan State Oil company has made a commitment to mixing 10% biodiesel into imported diesel by 2012. NRG Biofuels is targeting smaller countries where the need is greatest. They are not attempting at this time to compete with the international oil companies and their subsidiaries that are looking for solutions for the major markets of North America and Europe.
There are also competitive advantages of biofuel production verses oil and gas. Drilling and successfully completing a commercial producing oil and gas well is very high risk. The oil and gas industry has huge environmental challenges (Gulf of Mexico) before and after drilling programs. All oil and gas producing wells encounter decline rates in daily production and reserves. On the other hand, NRG Biofuels cleans-up the environment when producing bio fuels. For bio fuel production, there is no drilling risk, no environmental challenges, and no decline in daily production and/or company reserves.
Marketing Strategy
NRG Biofuels is selling a wholesale product to a very specific market; the company does not need to engage in retail level strategies. Their public relations process will focus on building relationships and developing contracts with government operations such as transport services and the military, as well as with the state run oil companies.
NRG Biofuels is working with Canaccord Genuity Corp. to develop a financial strategy with the view of obtaining a listing on a major stock exchange by the end of 2012.
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