“Verde Technology Converts Stranded Resources into Fuel” – Ernie Miller, Verde Clean Fuels CEO

In this interview, Ernie Miller, Chief Executive Officer of Verde Clean Fuels, speaks with Ndubuisi Micheal Obineme, Managing Editor of The Energy Republic (TER), about the company’s innovative technology that converts organic materials into fully finished renewable fuels, such as gasoline and methanol.

Miller revealed that Verde Clean Fuels’ technology can also convert flared natural gas into gasoline and has just signed a JDA with Diamondback Energy, which will see it deploy its proprietary STG+® process utilizing Permian Basin natural gas produced by Diamondback Energy’s operations. The goal is to produce approximately 3,000 barrels per day of Reformulated Blendstock for Oxygenate Blending (RBOB) gasoline.

Miller is an expert in the financial management, strategic planning, and positioning of complex, high-growth capital and credit-intensive companies for optimum enterprise value. With over 25 years of experience in the commodity-driven Energy Sector, Ernie has a deep commercial understanding of all points along the value chain. He uses his expertise in financial analysis, hedging, risk management, and problem-solving to bring a forward-looking perspective to financial strategies to achieve the highest value allocation of capital and resources while measuring and reporting past performance as a metric of effectiveness. He has held previous roles in corporate development, risk management, and marketing. Excerpts:

TER: Verde Clean Fuels has developed a technology that converts organic materials into fully finished gasoline for ICE vehicles. What inspired your company to develop this innovative technology and how proactive is the technology so far?

Miller: Verde Fuel Cells was founded in 2007. Initially, we started as a renewable gasoline company. We started producing gasoline from biomass. For example, wood waste, through the use of a gasification process. The synthesis gas that comes out of the gasification process is what we use in our chemistry to produce renewable gasoline. This is an interesting business when you consider the carbon credit and all the value you can bring when you are able to produce fully renewable gasoline products.

In early 2010 in the United States, we had a fracking revolution which led to the deployment of fracking technology and the US discovering abundant and cheap natural gas in several natural gas basins in the country.

At that point, Verde developed the capacity to start using natural gas as a feedstock in the front end of our process to make gasoline. As natural gas became so abundant and more affordable through the use of fracking technology, we started to focus on natural gas as a feedstock, which is now a profitable business.

TER: What are the processes involved in using the Verde technology?

Miller: Verde’s technology converts synthesis gas to gasoline. We are flexible regarding the source of the synthesis gas. It can come from biomass through the gasification process or it can come from natural gas through the reforming process. In either case, we will choose the synthesis gas that is suitable for us to produce methanol and gasoline.

What differentiates the Verde process is the scale at which we can operate. There are two families of chemistry that can take gas to produce a liquid.

One that is well known is the Fischer–Tropsch process developed by Sasol in South Africa.

In the 1920s, the Fischer–Tropsch chemistry used synthesis gas to produce a synthetic crude oil after which it was refined into a finished product.

However, our process is different because it is a methanol-to-gasoline process. We also use synthesis gas which will be converted into finished gasoline products and it doesn’t require any further refining.

We can deploy this technology elsewhere and there is no need to build a refinery or transport crude materials to a refinery, our products are ready to go into the energy market.

We can also deploy this technology to capture flared natural gas in the field.

TER: What are the success stories recorded so far?

Miller: We have been able to build a demonstration facility in New Jersey.

We are currently in the design process with Diamondback Energy to build a 3,000-barrel-per-day facility in the Permian Basin. We have successfully gone through the development process and we are now focused on the commercialization of the facility. There have been tremendous investments made in the company.

However, we have reached the point for the commercialization of the facility and are ready to deploy our technology to areas where there is stranded natural gas.

TER: What are the economic benefits of the technology?

Miller: The primary economic benefit of our company’s technology is that otherwise stranded resources can be used productively.

For instance, Diamondback Energy has natural gas trading in West Texas, which has zero value. Since the adoption of our technology, Diamondback is now getting positive value from its stranded natural gas resources.

In West Africa, there has always been flared gas that burns in the atmosphere which affects the environment and local communities. Verde’s technology offers a viable solution to capture the flared gas and turn it into a refined commodity such as gasoline.

For gas producers, our technological solutions provide the opportunity to turn their stranded resources into a high-value commodity.

TER: What are the challenges your company encountered in the development of this technology and how was it resolved?

Miller: The conversion process is advanced chemistry. Controlling the chemical reaction in an efficient way and managing the commodities along the value chain, was a challenge.

For example, the process of converting methanol to gasoline involves a series of four reactors. There are intermediate products along the way that you don’t want in finished fuel because they can change the properties of the fuel and the way it performs, is transported, and stored.

Controlling and managing the reactions to avoid these intermediate products in the finished fuel was a challenge that required adjustments to the operating conditions within the reactors.

However, we have developed the capacity. We have a strong technical team that efficiently overcomes the challenges in using the feedstocks and converts them to the finished products that we want.

TER: As a private sector player, what do you think the global energy sector should focus on in this evolving era of energy transition?

Miller: We call this an energy transition but transition takes time.

Energy transition is an evolution and it takes time to get to something better.

One of the things that you are seeing in the energy space is that some industry players have unrealistic expectations about how this energy transition can happen.

The truth is that we cannot move into a hydrogen economy overnight.

We also cannot transition to all-electric vehicles overnight. So when I see mandates from policymakers stating that there would be no more production of gasoline vehicles by 2030, will they give everybody a bicycle?

Some of those policies are driven by a complete lack of understanding of the carbon impact.

For instance, when you think about natural gas being flared, we come in as a technology provider to turn the flared gas into gasoline to mitigate that flared gas.

If flared gas is eliminated, we can capture and convert that gas to produce gasoline. Our gasoline performs like other gasoline.

Our technology eliminates the flared gas and the gasoline produced from that natural gas field is more than 30% less carbon intensive than the gasoline that comes from crude oil (hydrocarbons). This is a huge incremental step in the right direction and adopting such technology to eliminate flared gas can only be seen as a positive.

But those people who are expecting us to go from where we are today to zero emissions don’t fully understand the technicalities involved because it can’t happen overnight.

TER: What advice do you have for the government in creating policies and enabling an environment for private sector players such as Verde to operate efficiently in the energy sector?

Miller: First of all, policymakers need to understand the issues that they are dealing with.

For instance, the electric vehicle mandate is a good example. Just because an electric car doesn’t have a tailpipe or exhaust from a tailpipe, it doesn’t mean that an EV is clean energy.

You need to consider the value chain and carbon lifecycle of an electric vehicle; the mining and production of an EV battery, including the lifespan of the battery compared with the traditional combustion vehicle running on fuels. It’s clean energy; however, it is only 40% cleaner.

If you combine an electric vehicle’s carbon footprint and lifespan compared to a traditional combustion vehicle running on renewable fuels, or even fuel from flared natural gas, the traditional combustion vehicle is a better solution and a lower carbon proposition.

Regulators need to understand and integrate all of this information into their energy policies.

They need to understand the full carbon lifecycle of this renewable energy to drive the energy transition agenda.

TER: What are your target markets in deploying the Verde technology?

Miller: This is a global process and we are very fortunate to have a partner like Diamondback Energy. We are building the first large-scale commercial facility in the Permian Basin in partnership with Diamondback.

The project will demonstrate, and be used as a case study, of what we will be offering globally.

There are great opportunities across the African continent, Middle East, and Asia as there are underutilized gas resources.

We see our technology as a global opportunity. We started here in the United States but we are actively looking for opportunities in the Middle East and Africa.