KiOR (KIOR)

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The Holy Grail is a renewable fuel that no one can tell is renewable. Its price would be similar to that of a barrel of oil. It would be dropped into existing pipelines, refineries and vehicle engines that already process millions of barrels of petroleum a day. 

– ClimateWire

There are a couple of companies working on this “Holy Grail” – one of them is KiOR (KIOR) which was featured on 60 Minutes on 5-Jan-14 – it’s worth the 14 minutes: http://www.cbsnews.com/news/cleantech-crash-60-minutes/.

Despite the recent negative publicity (see 60 Minutes and this article), 2013 marked an historic turning point where for the first time ever alternative fuels began production at commercial scale. And KiOR was one of the companies to make it happen.

KiOR is a Vinod Kholsa backed biofuel company that takes wood chips from yellow pines (or other biomass) and turns it into fuel. The company line is something like, “We do what Mother Nature does, but instead of millions of years, it takes us just seconds.” Most people look at the chart and think, “these guys must be complete failures”. But it’s fairly remarkable what KiOR has been able to accomplish – KiOR has gone from an idea on paper in 2007 to demo facility in 2010 to IPO in June 2011 (raising $150MM) to commercial start-up in March 2013.

What’s interesting about Kholsa / KiOR versus a lot of other biofuel companies is the focus on scale. The question, “How can we get this technology everywhere quickly?” has driven much of the decisions the company has made. For example:

So as long as these guys can produce it, they can deliver it and sell it without any policy hassles / infrastructure build-out (unlike Tesla charging stations, for example). The real question is: can they get to economic scale before they run out of financing options? By economic scale, I mean: Can they sell their product at cost parity to oil (or less) without subsidies and still be cash flow positive?

This is a difficult question to answer at this point – which is why I’m not putting capital to work but rather simply writing about the company. But some recent developments have me believing this is a possibility within a few years (but the timescale is very uncertain):

Any company backed by geniuses and attempting to change the world is one worth keeping on your radar; that’s where it’ll remain until I see tangible progress through results. In the event of failure, the company holds 2 main assets: their $213MM Columbus facility and a portfolio of over 70 patents and 2,000 pending IP claims. The Company is covered by Goldman, among others.

 

Sources: 

IR site: http://investor.kior.com

S-1: http://www.sec.gov/Archives/edgar/data/1418862/000095012311034676/h80686sv1.htm

Evaluation of the process: http://www.energytrendsinsider.com/2010/09/05/evaluating-kior/

Presentation: http://files.shareholder.com/downloads/ABEA-6B1XEW/2880074443x0x583465/A496719B-2FFC-448A-8C4E-677189E50717/KiOR_CorporateOverview.pdf

3Q13 CC here.


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