keynote presentation, wi bio summit 2011

2011 Wisconsin Bioenergy Initiative

Replacing the Crude Oil:Energy and Economic Security

Competitive Advantageand Lower Carbon

Lee Edwards Virent CEO6 October 2011

Slide 1© 2011 – Virent, Inc.

Slide 2

Overview

• The case for Biofuels and Bioproducts

• Conversion Technologies and Products

• Supporting Industry Scale-Up

Slide 2© 2011 – Virent, Inc.

Slide 3

History of US Energy Consumption

Slide 3© 2011 – Virent, Inc.

Slide 4

Energy Use Per Capita

Slide 4© 2011 – Virent, Inc.

Slide 5

2009 Regional Shares of World Oil Reserves, Production and Consumption

Slide 5© 2011 – Virent, Inc.

Data Source: ENI World Oil & Gas Review

U.S. Crude Oil Supply

Slide 6© 2011 – Virent, Inc.

Carbon Dioxide Emissions

Slide 7© 2011 – Virent, Inc.

By Sector By Country

Source: Japanese Ministry of Land, Infrastructure, Transport and Tourism, 2006

Slide 8

US Liquid Fuels Consumption 1970-2035

Slide 8© 2011 – Virent, Inc.

U.S. EIA, Annual Energy Outlook 2011

U.S. FeedstocksPotential Fuel Impact

Slide 9© 2011 – Virent, Inc.

2 %

12 %

23 % Percent of US Liquid Fuel Demand

World Oil Price Scenarios

U.S. EIA, Annual Energy Outlook 2011

Slide 10© 2011 – Virent, Inc.

Value of US Crude Oil Imports

Slide 11© 2011 – Virent, Inc.

Inflation-adjusted annual value in billions of dollars. Constant dollars valued in the year 2000

SOURCE: U.S. Energy Information Administration, Annual Energy Review 2008, DOE/EIA-0384(2008) (Washington, DC, 2009), p. 81

Slide 12

Economic Costs of Petroleum Dependence

“…the rising price of oil acts like a tax on the U.S. consumer. $75 billion is taken out of our purchasing power for every $10 increase in a barrel of oil.“

- Fred Smith, CEO of FedEx

Slide 12© 2011 – Virent, Inc.

Slide 13

Fuel Cost of Military Action

About $500 billion annually, plus indirect and long-term costs, such as lost productivity and future disability costs from military casualties.

Slide 13© 2011 – Virent, Inc.

Transportation Cost and Benefit Analysis II – Resource Consumption External CostsVictoria Transport Policy Institute (www.vtpi.org)

Estimated to be $140 per barrel or $3.33/gallon of gasoline

Slide 14

Energy as a Competitive Advantage

• Minimize Exposure to Petroleum Price

• Rural Development – agriculture advantage

• Jobs at Biorefineries stay local

• US Technology Leadership from Global Deployment

Slide 14© 2011 – Virent, Inc.

Slide 15

Advantaged Biofuels

Slide 15© 2011 – Virent, Inc.

Abundant Feedstocks• Deployment Flexibility• Low Cost• Low Volatility

Conversion Technology• Yield• Scalability• IP Position• Product Quality

Economic Returns•Capital and Cash Costs•Customer Off-Take•Strategic Partners•Stable Policies

Advantaged Products• Customer Pull• ‘Drop-In’• Large Markets• Low Carbon

Slide 16

Fuels and Chemicals from Biomass

Biomass

Fermentation

Fermentation

AqueousPhase

Reforming

Refining

Fischer-Tropsch

Catalysis

Gasification

Pyrolysis

Hydrolysis

Syngas

Bio-oils

Sugars

DieselJet Fuel

Ethanol

MethanolEthanol

Liquid Fuels

EthanolButanolHydrocarbonsGasoline,Jet, Diesel,Chemicals, Alcohols, Hydrogen

CH1.4O0.6

CH1.6O0.4

CH2O

CO + H2

CH2

CH2

CH3O0.5

CH3O0.5

CH3O0.5

CH2

CH2

CH3O0.5

Virent’sBioForming® Process

© 2011 – Virent, Inc. Slide 16

Slide 17

Secure and Sustainable Energy

Slide 17

Virent Technology can Replace > 90% of the Barrel

The US consumes over 18 million barrels of oil per day. 49% is imported from foreign countries.

In the USA, E-15 and B20 combined would be 10% crude displacement

© 2011 – Virent, Inc.

Slide 18

Virent at a glance

The global leader in catalytic biorefinery research, development, and commercialization

Employees

Financial Infrastructure

115 Employees

> $76 MM in Private Funding> $61 MM in Gov & Industry

25x Development Pilot Plants1x 10,000 gal/yr Demo Plant

Partners & Investors

Slide 18© 2011 – Virent, Inc.

Organization Capabilities

Employees from leading energy, agribusiness and chemical companies; start-ups; and research institutes

Catalytic Process Research

Feedstock

Techno‐Economic Analysis

Operations

Partnering

Process Engineering

Process Development

Analytical

Slide 19© 2011 – Virent, Inc. Slide 19

Virent’s BioForming® Technology

• Fast and Robust– Inorganic Catalysts– Moderate Conditions– Industry Proven Scalability

• Energy Efficient – Exothermic– Low Energy Separation– Low Carbon Footprint

• Premium Drop-in Products– Tunable Platform– Infrastructure Compatible– Fuels and Chemicals

• Feedstock Flexible– Conventional Sugars– Non-Food Sugars

Slide 20

Leading catalytic route to renewable hydrocarbon fuels and chemicals.

Virent Biogasoline Demonstration Plant- Madison, WI

© 2011 – Virent, Inc.

BioForming® Concept

Biomass

Cane

Corn

© 2011 – Virent, Inc. Slide 21

Reformate

Distillate

Biomass

SugarCane

Corn

APR

ModifiedZSM‐5

Condensation + Hydrotreating

AromaticsGasoline

Jet Fuel Diesel

26 Issued/Allowed Patents –U.S. (13), South Africa (3), Australia (3), New

Zealand (2), India (2), Japan, Canada and China

142 Pending Patent Applications –22 U.S. and 120 Foreign Patent Applications

High quality, Drop-in Fuels

Slide 22

Energy dense, Drop‐in Fuels

Premium Biogasoline – 120,000 Btu/gal Virent Distillates meet ASTM Specifications

Virent fuel in Scuderia Ferrari race fuel

Slide 22© 2011 – Virent, Inc.

Slide 23Slide 23

Virent's plant-based para-xylene

Bio-Based PX Press Release

Slide 23© 2011 – Virent, Inc.

Slide 24

BioForming Refinery Break Even

5

10

15

20

25

60 70 80 90 100 110 120

Net Sugar Cost, 

¢/lb

Crude Oil, $/BBLNotes:*Product Values utilize historic Crude to Product Value Ratios from Mid 2007 to Mid 2010*Major Utilities Cost Assumptions of $6/mmbtu NG and $0.07/kw-hr*Includes Variable and Fixed costs

Cash cost break even for a Virent Bioforming refinery producing aromatic chemicals and biogasoline.

Slide 24© 2011 – Virent, Inc.

Slide 25

Leadership in Sustainability

Great Green Fleet

Slide 25© 2011 – Virent, Inc.

“…still on target to produce a 100% bio-based polyethylene terephthalate(PET) bottle by 2020”

Newly announced initiative to use plant based plastics in packaging

Objectives include being supplied 100 percent by renewable energy

Slide 26

Policy Leadership and Investment

• US Railroads• Solar Power In Germany• China with Solar and Wind• France with Nuclear

Slide 26© 2011 – Virent, Inc.

Slide 27

Eu

Building the Industry

Slide 27© 2011 – Virent, Inc.

FeedstockPricing Risk

Technology/CapitalRisk

Product PricingRisk

Policy Risk

Slide 28

Challenges to Sensible Policies

• Fiscal realities• Lack of long term stability • Priorities for oil industry, electricity • Renewables not yet fully valued • Uneven success of implemented policies

– Loan guarantees/grants– Volumetric Incentives

• Short term – no certainty• Don’t reward performance

Slide 28© 2011 – Virent, Inc.

Slide 29

State and Regional Incentives

• Loans/Grants• Product Payments• Tax Exemptions/Reductions• State Tax Credits & Deductions• Renewable Fuel Use Standard• State Fleet Requirements• Funding for Workforce Training or Supply

Chain Development

Slide 29© 2011 – Virent, Inc.

Wisconsin Biomass

Slide 30© 2011 – Virent, Inc.

Benefits for Ag and Forestry sectors should:• Optimize land-use for food, feed, fiber, fertilizer, and energy needs• Secure biomass resources for products without other renewable sources• Support biorefineryinvestment with grants, loans, and tax policies to create jobs and rural growth

Slide 31

Summary

• Unique Opportunity for Bioproducts

• Competitive Advantages Available

• Collaboration & Leadership Required

• Wisconsin Assets & Advantages

Slide 31© 2011 – Virent, Inc.

Lee EdwardsPresident and CEOVirent, Inc3571  Anderson StreetMadison, WI 53704E‐Mail:  lee_edwards@virent.comPhone: +1 (608) 237‐8606Fax: +1 (608) 663‐1630

www.virent.com

© 2011 – Virent, Inc. Slide 32.