BlueFire Renewables pursues new avenues of revenue for projects

By Katie Fletcher | September 16, 2014

BlueFire Renewables Inc. primary business covers development activities in the design, construction, ownership and long-term operation of biorefineries utilizing the licensed Arkenol Process Technology. The company recently filed a quarterly report with the U.S. Securities and Exchange Commission detailing the company’s financial state and an update on its initial planned biorefineries. Two in particular include a proposed 3.9 MMgy biorefinery in Lancaster, California, and a much larger proposed 19 MMgy cellulosic ethanol plant in Fulton, Mississippi. Although both facilities began with the intention of being primarily for cellulosic ethanol production, the company is exploring other options to improve the project economics for each.

Ethanol Producer Magazine reported last March BlueFire was in the process of obtaining necessary financing for the Fulton plant. Director of Business Development and Marketing, Richard Klann, said that the hardest part in moving the project forward is “getting a bank to finance a project like this in the market.”

One option to circumvent the challenge with financing was shared the following October by Ethanol Producer Magazine with the company’s announcement of plans to integrate a 400,000 ton per year wood pellet production plant with the Fulton facility. According to the SEC filings made by BlueFire, the wood pellet facility addition would “provide a stronger financing package.” The 8-K form filed with the SEC also stated, “The company continues to explore this option and will utilize whichever plant design is the most beneficial for financing.” Arnold Klann, BlueFire CEO, stated in the SEC filing that the estimated total construction cost of the Fulton Project is in the range of approximately $300 million.

The facility in Lancaster is estimated at costing $100 to $125 million. One option to improve the project economics of the small facility is the consideration of producing other products other than cellulosic ethanol, such as higher value chemicals that will yield fuel additives. The plant is “shovel ready” according to the 8-K form, but needs a renewed air permit, which requires minimal capital to maintain until funding is obtained for the construction.

As of June 30, all site preparation activities had been completed on the Fulton project, including clearing and grating of the site, building access roads, completing railroad tie-ins to connect the site to the rail system and finalizing the layout plan to prepare for the site foundation. One setback to the Fulton project’s construction progress occurred on Dec. 23, 2013 when the company received notice from the DOE that they would no longer provide funding to the Fulton project. “Since 2009, our operations had been financed to a large degree through funding provided by the DOE,” said Arnold Klann in the SEC filing. “We rely on access to this funding as a source of liquidity for capital requirements not satisfied by the cash flow from our operations.”

Klann also stated in the filing that if unable to access government funding the company will be “severely hampered” in implementing their strategy and business plan. BlueFire is currently seeking to re-establish funding and has initiated the appeals process with the DOE. “Until the company is notified of the outcome of its appeal, and as of August 11, 2014, we still have approximately $418,000 available under the grant prior to September 30, 2014,” according to the 8-K form filed by BlueFire.

The company is currently actively seeking financing for both projects with no definitive agreements in place. One avenue the company is currently pursuing to secure financing for the Fulton project is with a Chinese engineering procurement and construction (EPC) company. As stated in the SEC filing, “In tandem with the new EPC contractor the company is engaging Chinese banks to provide the debt financing for the Fulton project.”

Although no definitive agreements have yet been executed on the finance front, the company plans to move forward with the projects.  

According to BlueFire’s SEC filings, as of June 30, the company has negative working capital of approximately $1.56 million. Management has estimated that operating expenses for the next year will be approximately $1.7 million , excluding engineering costs related to the development of the biorefinery projects. Throughout the remainder of this year, BlueFire intends to fund its operations with remaining reimbursements under the DOE contract as available, as well as seek additional funding in the form of equity or debt.