After the Natchez project is operational, Cannon said KiOR should spend approximately $50 million a year in total operating expenditures, $35 million of which would be buying feedstock for the plant matter-to-oil process the company will use to produce 33 million gallons of oil a year.

The initial feedstock KiOR will utilize in the plant is southern pine, and Cannon said the Natchez area was chosen in part because of its pine growth-to-harvest ratio, where forests are being regrown 18 percent faster than they are being harvested.

“We emphasize the buy local approach,” Cannon said.

“Our operation, it is kind of like a paper mill. If a paper mill in your area is buying the local wood in you area, you are not only getting the local payroll, you are getting your feedstock from the area.”

Not your father’s oil

KiOR’s product is unique because it is not a biofuel, Cannon said. Instead, the company seeks to recreate the process by which oil is produced.

“Nature took organic matter over a million years to make crude oil, then (oil companies) produce and it refine it,” he said. “KiOR’s idea was to catalytically accelerate that reaction, and literally that is what we do. We compress a million years into literally a couple of seconds.

“Imagine taking something like sawdust, putting it in a reactor under relatively low pressure and temperature and turning it into crude oil.”

Cannon said the KiOR process breaks down the molecular structures of the feedstock and rearranges the hydrocarbons to get a liquid crude oil product.

“We are very flexible in the feedstock we use,” Cannon said. “The (KiOR) gas and the diesel are the same molecules that are made of petroleum and crude oil. The only difference is ours is made from carbon from today instead of digging up dinosaurs.”

KiOR fuel has the same energy density as gasoline and other fuels, Cannon said.

“I put it in my car — along with petroleum — and it runs just as well,” he said.

“We can drop it into the liquid fuels infrastructures, the pipelines, the refineries and the gas stations — it doesn’t have the same blend walls that ethanol does.

The initial Natchez investment will only produce crude oil that needs refining.

Turning trees to liquid gold

While KiOR’s initial feedstock will be pine, Cannon said the process can use many different fibrous products, including sugarcane that has had the sugar removed, Miscanthus, switch grass and other organic matter. Cannon said KiOR has figured out how to use their process with 30 different feed stocks.

“Fundamentally, it is the same whether it is a tree or a hardwood or a plant,” Cannon said.

And that is why the company plans to locate its companies in rural areas that have the ability to produce the feedstocks it needs, he said.