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Velocys Buys Pinto Energy to Step Up North America GTL Development

Velocys plc on Wednesday said it acquired Houston-based gas-to-liquids (GTL) project developer Pinto Energy LLC in an all-stock deal to advance "shovel ready" projects across North America.

The transaction also gives the UK-based operator Pinto's 2,800 b/d GTL project in Ashtabula, OH, announced last September (see Shale DailySept. 24, 2013). The facility, on an 80-acre site near ports and refineries on Lake Erie, is to convert natural gas produced in the Marcellus and Utica shales into specialty products such as solvents, lubricants, waxes and transportation fuels.

Initial engineering for the Ashtabula plant is complete and an air permit has already been issued. A final investment decision is expected within nine months. If approved, the site would offer more than 10,000 b/d of capacity.

Although the Ashtabula GTL plant is the only one Pinto has announced publicly for the United States, Velocys said it has similar projects under review across North America. The Ohio facility is slated to use Velocys’ Fischer Tropsch (FT) technology to create liquids from gas, but the acquisition also is to help to accelerate efforts across the continent.

"The acquisition of Pinto Energy...provides Velocys a key stepping stone for commercial growth," said CEO Roy Lipski. "It will strengthen our route to market, accelerate early adoption and deepen our ties with suppliers, partners, investors and customers across the entire GTL value chain."

In March, Velocys agreed to partner with three companies to develop GTL facilities in the United States, Canada, UK and China (see Daily GPIMarch 25).

No financial details of the Pinto purchase were disclosed. However, the terms call for Velocys initially to offer Pinto 955,977 of its ordinary shares, of which 201,089 would be held in escrow. More than one million additional shares would be issued after the acquisition is completed. Pinto would also receive additional compensation if up to two more GTL projects are financially closed by 2015.

Other GTL plants have been proposed for the Appalachian Basin, including Marcellus GTL LLC's 84,000 gallon/d facility in Blair County, PA (see Shale DailyMarch 26, 2013) and one by EmberClear Corp. in southeast Pennsylvania for a 500,000 gallon/d plant (see Shale DailyMarch 5).

The Ashtabula plant is expected to start out with two 1,400 b/d modular units, which combined will consume about 80 Mcf/d of natural gas sourced from Ohio, West Virginia and Pennsylvania.

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