Assigment Name : Heri Wibowo

Energy Decisions and Policies NIM : 29316018

ENEMBA 2 KESDM – SBM ITB

Case Study
KiOR: Catalyzing Clean Energy

1. Put yourself in Paul O’Connor shoes prior to his meeting with Vinod Khosla. You had
thought to yourself: “If I can only get to see Vinod, I will be able to convince him to
invest in me” What’s your pitch?

The trend of energy needs is increasing from year to year, and at this time almost all
of it is sufficient from the energy of fossils. As we know energy from fossils is energy
that is not renewable and will run out at some later time and also cause adverse
effects to the environment.
America has a lot of alternative energy that is abundant one of them is biomass. With
the technology I have found that Biomass Catalytic Cracking (BCC) can successfully
convert biomass into crude oil. This cruide oil catalyst can be used like crude oil from
fossil oil. And this is the advantage of BCC It takes millions of years for nature to turn
biomass into crude oil; We have developed a catalytic process at KiOR that can do
this in a matter of minutes.

2. If you are Vinod Khosla, what concerns do you have about investing in KiOR?
 Clean Energy for future
 Energy resources could be renewable
 Biomass Catalytic Cracking is proof of technology
 The potential customers of product and their purchasing power
 Government insentive
 The financing scheme

3. Assuming that the technology cost curve facing KiOR is similar to that of cellulosic
ethanol, what is the projected price per barrel of oil produced by KiOR in 2012?
What factors will determine whether the bio-crude produced by KiOR will be
competitive relative to conventional sources of crude oil?
Assume:
1 ton biomass = 60 gallon oil
1 barrel = 42 gallon oil
Feedstock cost are expected to rise to 50 $/dry ton in 2012

Production cost = 0.83 $/galoon x 42 $/barrel = 34.86 $/barrel

Feedstock cost = 50 $/ton : 60 gallon/ton x 42 gallon/barrel = 35 $/barrel

Total cost of producing bio-crude = 34.86 $/barrel + 35 $/barrel = 69.86 $/barrel

Assigment Name : Heri Wibowo
Energy Decisions and Policies NIM : 29316018
ENEMBA 2 KESDM – SBM ITB

Factors that determine the competitiveness of bio crude:

- Oil prices
- Feedstock cost, which is very depend on the volume and distance to biomass
- Production cost relate volume, more high volume more cheap and efficient
- The government incentive to support the project economic of the biofuels

4. Why is the location of a firm’s headquarters an important factor in the potential

success of the venture? What makes the location decision for KiOR (which is in the
emerging clean-tech industry) different from that of a firm in a mature industry such
as IT or biotech?

KiOR is clean-tech industry and this industry faced by fossil industry with power full
than KiOR. So, for success have to choose criteria:
 Infrastructure, road,
 Resources Biomass
 Close to consumer used
 Investor and scientist
 Fossil Fuel company competitor
 The government policies and support
 Low land price

5. Where should KiOR choose to locate its headquarters?

Denver is the best choice. Here are the reason why we choose Denver than others:
Denver is a center for cutting-edge research into biofuels, and the presence of the
DOE's NREL served as a hub that had contacts with various start-ups and oil
companies working on developing alternative fuels. KiOR would also be supported
by the Government, since they had research programs on biomass. Another
advantage is the land price is cheaper than in California.