Velocys, the technology innovator for smaller scale gas-to-liquids (GTL), has announced the final investment decision (FID) has been made to proceed with construction of a commercial GTL plant using the company’s technology.

The project is being funded by a joint venture (JV) between Waste Management, NRG Energy (NRG), Ventech Engineers International (Ventech) and Velocys, formed to develop a series of GTL plants in the United States and other select geographies. 

The plant, which is designed to be profitable on a standalone basis, will be located at Waste Management’s East Oak landfill site in Oklahoma, US. It will provide a commercial reference site for the Velocys technology and will deploy a number of the company’s full-scale Fischer-Tropsch reactors.

Purchase of major equipment has begun, with construction and commissioning to be complete, and the plant entering full commercial operation, in less than 24 months. The JV has entered into all major contracts needed for the project, including technology license, supply and service agreements with Velocys (at market rates), EPC contract with Ventech (lump sum for the modules), land lease with Waste Management, and gas purchase and product offtakes. Further detail concerning the project will be released during a ground-breaking ceremony scheduled for later in the year. 

As a minority interest holder in the JV, the company’s investment in the East Oak plant is limited to some $5m, drawn down over the course of construction. This amount, which excludes revenues due to Velocys for the supply of technology and services, can be comfortably accommodated from the company’s current balance sheet.

Waste Management is the largest environmental solutions provider in North America, NRG owns the largest and most diverse competitive power generation portfolio in the United States; both are Fortune 500 companies. Ventech is a global leader in the design and construction of modular refineries.

Roy Lipski, CEO of Velocys, said, “Like the four minute mile, this small commercial GTL plant going ahead is a major psychological milestone, for the industry and for Velocys and its customers.”

“After 15 years of development, over $300m of investment, and a commercial plant underway, Velocys is now poised at the forefront of the distributed production revolution taking place in this new age of gas abundance.”