Solazyme-Bunge JV starts full-scale commercial production in Brazil

In California, Solazyme announced that its joint venture with Bunge Global Innovation LLC has successfully produced its first commercially saleable products on full-scale production lines, including the 625,000L fermentation tanks, at the Solazyme Bunge Renewable Oils plant in Brazil. Both oil and encapsulated lubricant, Encapso, products have been manufactured; production is continuing and is expected to reach nameplate capacity within the next 12-18 months.

“With production underway at the Solazyme Bunge Renewable Oils plant, Solazyme is manufacturing products at three large scale facilities, including our 2,000 MT/year integrated facility in Peoria, the 20,000 MT/year Iowa facilities in Clinton/Galva and the 100,000 MT/year facility in Brazil,” said Jonathan Wolfson, CEO Solazyme. “Continued progress at the recently completed adjoining co-gen facility has resulted in more reliable power and steam, enabling startup of commercial operations and production of our first commercially saleable product. We are truly excited to have begun manufacturing operations at our joint venture’s flagship facility in Brazil.”

“The start of production at the Solazyme Bunge Renewable Oils plant is an important milestone for this joint venture. We’re proud of the work we have done with our partner Solazyme in bringing the world’s first built-for-purpose renewable oil plant on line. We remain committed to the success of the joint venture and see significant market opportunities that we can address together,” said Ben Pearcy, Managing Director, Sugar & Bioenergy, Bunge Limited.

The Background on Moema

The Project: Solazyme and Bunge have broken ground on a their 100,000 metric ton renewable oil production facility adjacent to Bunge’s Moema sugarcane mill in Brazil. Construction started on schedule and the plant is targeted to be operational in the fourth quarter of 2013. It will service the renewable chemical and fuel industries within the Brazilian marketplace and will initially target 100,000 metric tons per year of renewable oil production.

In November 2012, Solazyme and Bunge announced in a framework agreement that they intend to expand production capacity from 100,000 metric tons to 300,000 metric tons globally by 2016, and that the portfolio of oils will broaden to include a range of healthy and nutritious edible food oils for sale in Brazil.

Background on Encapso

The global market for drilling fluids was valued at $7.2 billion in 2011 and is expected to reach $12.31 billion by 2018, according to a report released last summer by Transparency Market Research.

The rise in unconventionals and the growth in deep-sea exploration have driven up revenues for drilling fluids in recent months. One factor that has limited the use of conventional oilbased fluids (as opposed to water-based fluids) have been environmental and sustainability concerns associated with conventional oils.

According to Solazyme, Encapso’s efficacy has been demonstrated both in the lab and in the field in over a dozen commercial wells in a number of basins including the Williston Basin, Denver-Julesburg, and the Permian Basin.  Encapso increases drilling speed and control, and protects valuable equipment.

The majority of work so far has been done in horizontal wells, helping demonstrate Encapso’s strong performance capabilities when it comes to “building the curve”—or the point where an unconventional well transitions from vertical to horizontal. This is often when drilling engineers find the most difficulty managing drilling friction.  Improving the speed and efficiency of drilling translates directly to cost savings for well operators.

The Bottom Line

As we wrote earlier this year:

2014 is Solazyme’s take-off year. After more than a decade as a development-stage company, now begins the real-scale up of operations and revenues. We’ll know about scale-up by year-end — by then, SZYM will be past the Hillary Step where AMRS, KIOR and GEVO stumbled…or not. We also should know if the product demand is there at prices that meet the market’s anticipations. Incremental steps along the way. Mechanical completion on all aspects in Q2. And look for any warnings on the commissioning process in Q3, plus news on the customer front.