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ABQ startup gets first Catalyst Fund payout

ALBUQUERQUE, N.M. — Transportable production plants that directly supply fuel for hydrogen-powered cars at gas stations, and nitrogen fertilizer on-site to farms, are a step closer to market thanks to a new $2 million venture investment in Albuquerque-based BayoTech Inc.

Gov. Susana Martinez announced the funding Monday at BayoTech’s 5,000-square-foot facility near the Albuquerque Balloon Fiesta Park, where the company is building its modular chemical production units. The investment includes $1 million from Cottonwood Technology Funds — $300,000 of which comes from the state’s new Catalyst Fund — plus $1 million from another unnamed venture investor.

BayoTech is the first company to benefit from the state’s $20 million Catalyst Fund.

“New Mexico has great potential to be the next technology startup capital of the U.S.,” Martinez told event participants. “This is a homegrown New Mexico startup with the potential to grow into a $1 billion company operating on a global scale.”

The governor announced a $2.5 million award to Cottonwood in early May from the Catalyst Fund, which New Mexico recently established with local, federal and private money to invest in venture firms like Cottonwood that back local technology startups.

Cottonwood had already invested $1.5 million last September in BayoTech, which used that initial money to build the first prototype of its modular reactor technology. The new money will allow BayoTech to build three more prototypes, each producing different chemicals as part of what the company calls a “nested-flow” system for production of hydrogen, nitrogen fertilizer, ammonia and urea.

The technology, originally created at Sandia National Laboratories and licensed by BayoTech, employs traditional “steam methane reforming,” or SMR, which is a pressurized heating and cooling process that most chemical plants use today to separate hydrogen from methane. The hydrogen can then be used for transportation or fuel cells, or further processed into the other chemicals.

But SMR plants require mammoth investments of $2 billion or more, and they’re usually centrally located far from markets, driving up costs for chemical end users.

BayoTech’s nested-flow reactor contains the entire SMR process in a small space the size of a cargo container. The contained area makes better use of energy in the heating and cooling process, improving efficiency by 25 percent or more compared with traditional plants, according to the company. And because they’re modular, the mobile units can be placed next to farms or at gas stations, reducing shipping costs, said BayoTech CEO Justin Eisenach.

“We can make hydrogen at the equivalent cost of gasoline,” Eisenach said. “Companies all over the world have expressed interest.”

With the new funds, the company expects to have all its modular reactor prototypes operating by summer, and a commercially viable product in place by year-end, said Cottonwood managing partner David Blivin.

The company must yet decide if it will build and then operate the reactors itself, selling final product to end users, or if it will license out production units for others to deploy where needed. Either way, BayoTech expects to build two or three manufacturing plants in the U.S., starting in Albuquerque.

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