Qteros, Praj partner on cellulosic process design

By Kris Bevill | January 05, 2011

Cellulosic ethanol technology developer Qteros Inc. has formed a strategic partnership with engineering firm Praj Industries Limited to develop a process design package for cellulosic ethanol production facilities. The package will be created using Qteros’ consolidated bioprocessing technology and Praj’s technology and process engineering and is expected to become available to potential customers within two years.

The companies began collaborating approximately one year ago to determine the commercial opportunities for their combined technologies and engineering expertise, according to Qteros President and CEO John McCarthy Jr. About six months ago, the duo began crafting the details of their long-term partnership, which will focus on developing a process design package that will enable facilities to produce cellulosic ethanol for the total operating cost of $1 per gallon by 2013. The low operating costs will be achieved through a combination of Qteros’ technology platform and the process design expertise of Praj, said McCarthy. “Both of those things allow us to uniquely offer the low-cost solution to the marketplace,” he said. “By being able to offer that solution to those that are building these facilities it enables them to maximize their profitability and, as a result, puts a high degree of value on the licensing package.” The companies are not releasing the financial details of their partnership, but McCarthy said they expect licensing revenue to begin being received in 2013 and profits will be shared equally between the two. Research and development will be conducted at Qteros’ facilities in Boston as well as at Praj’s pilot plant in India, which will be retrofitted with Qteros technology.

Praj’s existing ethanol customers in India and Southeast Asia are being targeted as the first potential users of the pair’s cellulosic process design package. The technology is multi-feedstock friendly, according to McCarthy, and will be capable of processing nearly any agricultural residue. However, sugarcane, corn and wheat residues are the initial focus of the partnership.  Facilities that range in size from 3 MMgy to approximately 40 MMgy will be able to utilize the package, which can be installed as a bolt-on addition to an existing plant or as part of a new construction project. “Our goal is to be commercial as rapidly as possible so that when the big companies are looking to build a 30 to 50 to 100 MMgy cellulosic facility, we are the low-cost solution, having built a whole series of commercial facilities other places around the world,” McCarthy said.

Praj has expressed interest in strengthening its business in the U.S. and Brazil and the partnership with Qteros could provide an outlet for that expansion, according to McCarthy. Likewise, Qteros is working with other U.S. firms and could eventually form another partnership to focus on licensing its technology to producers in the U.S., Brazil and China. The partnership with Praj is a major step forward for Qteros, however, and represents “transformational initiative” for the company, McCarthy said. “While there is some overlap between the two companies, they are extremely complimentary,” he said. “We’ve been working together for almost a year now, so we know each other quite well. Each of us is bringing a lot to the table. We are bringing a biological platform. They are bringing a lot of other important intellectual property to the table. That sort of collective intellectual property estate will be embedded in these process design packages.”

Additionally, Qteros recently completed the initial tranche in its Series C financing, raising $22 million to be used for its commercialization efforts. The company’s backers include BP, Valero Energy Corp. and investment firms such as Venrock Associates, Battery Ventures and Soros Fund Management LLC. “We have one of the best investor bases, I think, in this marketplace, from a venture perspective as well as a corporate partner perspective,” McCarthy said. Regarding its ability to raise funds, McCarthy said Qteros doesn’t have any secret formula. “I think it’s a question of starting with the right investor base and executing well,” he added.