Thanks for responding last week. I'll take your word on it. Odd you say more on the public boards than a private email, especially after you advertise your willingness to communicate via privately.
But, whatever, I'm delighted to see the volume and share price moving up, and will assume it's in accord with what you anticipate coming down the pike. We'll see.
Stocker11 thanks for collating Heddle's first month on the job. I hadn't realized how much he'd accomplished until you laid it all out:
"Heddle has been there what, a month or so. His known cuts are fantastic to date. His unknown cuts are ,well, unknown. Do you have any idea what his totals cuts have been and/or will be?
Check out this list:
1) no CEO salary;
2) no COO salary;
3) no CEO bonus;
4) no COO bonus;
5) CFO's salary significantly reduced;
6) no CFO bonus;
7) no salary/commission for a feedstock purchaser;
8) no more expenses relating to trips to and from St. Louis;
9) no more costly mistakes by the COO/CEO;
10) no more purchasing contaminated plastic;
11) no more expenses land-filling contaminated plastic;
12) no more MRF;
Yes, I was thinking the same thing. It would no longer be a trade secret if this method/recipe for feeding the HTF was passed along to those who purchased a machine. So given that management has told us their thinking of selling some, it suggests that they may nevertheless envision running the machines themselves for a fee, as others have proposed.
Such a model does not strike me as being so great as it would still require JBI creating, training, maintaining and insuring(?) a work force wherever they go, while forfeiting the gains of owning the machines outright. That is, if the machines are running efficiently, they take upon themselves the most work--employees and maintenance--and let the owner have the lion's share of the machine's output. But if the plan is to sell a limited number of them to get a sizable amount of cash to work with to take things to the next level, then that's its own strategy and makes sense. We will see.
"Come to think of it, if the P3 pet-coke removal system works well, it could just be a matter of placing catch barrels at the third half-kiln more frequently to receive the output. How Kool would THAT simple solution be?!"--Steelyeye
In John's ASME paper he says, speaking about removing petcoke residues, that:
"This will be done using a screw similar to the feeder but located at the end of the process" (p. 6).
By "screw" he means a big auger-like drill bit. I strongly suspect that the speed at which this "screw" turns, like the drum of a cement truck, can be throttled up or down to keep it in sync with the size load of plastic being fed into the machine. So, yes, I suspect all that will be needed to accommodate greater volumes of petcoke residue will be more barrels to catch it. Any drill you buy these days is variable speed. So if the petcoke screw is not hooked up to a variable speed control, I doubt it would take too much to make that amendment. But given John's propensity towards efficiency, and given that he's already experienced the need to operate the processor at different feed rates, I suspect he saw the need for being able to vary the speed of the screw and that feature is already in place.
"It would have been nice if they had given some target for when they expect to throttle up."--Ryoko
Yes, that would have been nice. But it seems now that they are actively seeking and following some or all of the advice they're getting from the Harris Group, they are making the start up of #3 into a controlled experiment in its own right. Only using Crayola products to date in #3 fits this model. As John said in the cc:
"We use Crayola products because they are consistent feedstock, we've tested it well here, gathered a lot of data about it..."
Using such a feedstock will provide them with a more "neutral" benchmark. This in turn will allow them to more accurately trace changes, irregularities and improvements back to their real source, be that design changes in computer programming, parts, or the addition of HTF.
The next phase is a complete shutdown with a close examination of the inside of the machine, which shouldn't take too long given that it currently appears to be running smoothly. Uniting this internal data with the external they've been collecting will then let John, as he says, "make some adjustment for a primary operating parameter."
Yet given that they've only been running it at a leisurely rate, I suspect it might take another month or two to systematically increase feed rates to capacity while still collecting incremental data at each stage. In other words, I suspect they can't give a very accurate timeline, and had to settle with telling us that we "realize the urgency in making machine three a consistent revenue center" as an amorphous assurance that they're going to move forward on this as quickly as the possibly can.
"If P3 is working continuously as the company says, then the final technical challenges have likely been solved, and P3 would become the showcase model."--Steelyeye
One of the final statements from the cc was this:
"It's extremely important that our shareholders and potential investors know that the hard parts of the start-up we feel are almost behind us."
This assurance carries more gravitas for me coming as it does from the new CEO who's fully gone through such a start-up stretch with his own industrial enterprise.
Thanks, Steelyeye, for your summations, insights and in-person feedback. Your analysis seems very feasible. Let's hope some of those Form 4s show up soon.
And yes, a breath of fresh air indeed:
"... executive salaries will be reduced significantly. There will be absolutely zero consideration of executive bonuses and extras until the company is standing steadily on its own two feet"--Rick Heddle, CEO
" (A)s CFO, my primary focus is going to be doing whatever it takes to get this company cash flow positive. We recognized and are acutely aware that our success is directly predicated on both reducing our cash outflows and the amount we spend on feedstock. These two issues are essentials to our company's future growth; and as such, I'll be working closely with Rich moving forward regarding conservative management of these expenses"--Nicholas Terranova, CFO
There wasn't a lot of detail in my opinion. It was summed up well by another poster (Steelyeye) like this:
New CEO and CFO
New Board of Directors (2: Heddle and Bradley)
P3 working CONTINUOUSLY AND VERY WELL
"Production of fuel with start-up of P3 with over 23 continuous day run has been CONSERVATIVE"
"Rick Heddle is a no nonsense guy who is aligned with shareholders, and he's been a supporter from the beginning. Rick Heddle will get the company to CFP."
As for inflections, Rick H. seemed enthusiastic and actually ready and eager to work! So that's a very welcome change. John sounded excited, understandably, to describe how #3 is doing.
Looks like uptimes for #3 should clock in above 80% for the first month of working so that is fabulous. The design for the petcoke removal appears to be functioning as anticipated, so that, too, is extremely encouraging.
In short, sounds like they've got a machine that's road worthy so they can now begin in earnest to get them made and installed.
"Suddenly the science is becoming quite clear to me."
Yeah, us longs need to stick with what we know. I realize of course that this is an area of specialty for you, but I just wanted share that for years I've kept my earth quake bunker filled with boxes of twinkies and they've never ever spoiled!
"I just don't understand how you can calculate uptimes since there seem to be two factors involved: uptimes and throughput. For instance if a pipe is partly clogged I would think that would reduce throughput and ¨reduce output of fuel oil even if uptime is high."--Snow
I agree with your example and the dilemma you note. I was using the SAIC report data as a benchmark. I wasn't concerned with uptime versus throughput, but was looking at the actual production numbers versus the length of time they had to have the machines running. I loosely took into account the fact that they were testing the processors rather than merely trying to make fuel. It was a very inexact approach and I perhaps made things worse than they actually were in estimating their uptimes were around 10-15%, although I saw another poster concluded they were around 13%.
In my opinion if the throughput is low but uptimes are longish it means they aren't running right. So I'm basically concerned with production levels, for if they are low something's not right.
They've obviously (and understandably) had a hard time getting control of the molten plastic. As a result they've reduced the size of the loads/batches they send through the machine. This makes eminent sense to me. Get control of it in smaller amounts and then work your way up to larger batches. The HTF is going to help out immensely in this regard and hopefully leave them in more or less complete control of moving the molten plastic from the pre-melt to the reactor with ease and efficiency. When this happens uptimes and throughput should should both stay high. But in the learning process I wouldn't be surprised if they keep the batches coming smaller until they get a much better feel for how to run the machines efficiently. We'll have more clarity soon.
Bottom line is whether you want to manufacture twinkies or brake shoes you must first get control of the substance you're using to make such things. The situation in the processor strikes me as very similar to that of a cement truck. The less water you mix with the concrete, the faster it sets up and the harder it will be. Conversely, the more you increase the ratio of water to cement, the longer you have to work with it before it solidifies. It's because they've figured out what conditions arise as the ratio is changed that they now can pump concrete through long, long hoses when building skyscrapers or buildings far from where the trucks can park. Because they know with X amount of water in the mix it will leave X amount of time to deliver and pour the concrete, they can have one concrete truck after another line up to use the same hose, knowing that the concrete won't have time to solidify in the hose before a new batch is pushed through. They have, in other words, control of their substance.
Because the HTF speeds up the transfer of heat into the plastic it will tend to retard the plastic from solidifying into unmovable globs. If follows, then, like in the concrete example, that as the ratio of HTF is increased the molten plastic will have less and less chance of binding up. When the ratio is right, John will have control of his substance. Then one load of plastic after another can be seamlessly fed into the beast without any constipation showing up. At that point it makes a lot sense to anticipate being able to run the processors for 30 days at a clip: problem solved.
As a footnote, I am very interested to find out whether or not the ideal ratio of HTF to plastic is analogous to tuning a carburetor and musical instrument. That is, in both these cases a "golden mean" is needed. With a carburetor you cannot just keep adding more and more air into the mix and achieve optimal results. Rather, there needs to be a balance, a ratio. Likewise, when tuning a musical instrument, if you turn the tuning peg too far one way or the other, you'll "go through" the golden mean and the pitch being sought will not come into "view." My guess is that the ratio of HTF to plastic will function similarly. If so, just pouring on as much HTF as possible won't yield the best results. Instead, the goal will be to maintain the ratio as best as possible
Thanks for that excellent detail. That certainly brings more clarity to the mechanism in place than I had. Yet it doesn’t alter my basic premise because that premise was not dependent on that 5' pipe "having to be" hollow, or “having to be” the main bottleneck. Because the information in John’s paper clearly stated problems in this area had occurred, and because that 5’ pipe does not itself rotate as the pre-melt kiln does, it naturally had the earmarks from afar as potentially being the primary bottleneck.
So let me have another stab at what I was trying to say. Today it’s common to get knee replacements, shoulder replacements, hip replaces, heart valve replacements, pacemakers, etc., etc. In each instance the original function and form of the body part is mimicked and an artificial substitute is put in its place and these have proven to work.
If we step back and look at the processor as a whole, it essentially is functioning as an animal: it eats, it digests, and it discharges waste. If we then look at the animal kingdom, all the animals therein likewise do these same three things. Yet there is a fundamental difference between how all these animals accomplish these tasks and how the original design of the processor was intended to accomplish them. That difference is that ever single animal produces internal fluids, saliva, etc. to help get the job done whereas the original design of the processor left this crucial element out. The addition of HTF fills this void by supplying an artificial substitute for the saliva, etc. As a result it paradigmatically changes the original design of the processor so that now it is in alignment with the design used successfully throughout the animal kingdom for millions of years.
John's hypothesis was that the HTF would help, and his preliminary lab tests confirmed this. So, naturally, the next step was to test it out live on a processor. Since he already had confirmation that the HTF would help, the next obvious question is: how much? To find this out he necessarily had to devise some tests to measure it's usefulness. John's no fool, so he no doubt chose to conduct these tests in an area of the processor that would best reveal to him the effects HTF was having on the process. The fact that such tests might not have been inside that 5' pipe, or might have included more points of entry other than this, doesn't matter. What matters is that wherever he set up these tests I'm sure they enabled him to measure what the HTF was doing. By proceeding methodically it would eventually bring into view what ratio of HTF to plastic helped the process most.
Because there are so many varieties of critters who all have their own version of an alimentary canal, and because the types of foods they eat vary widely yet are nevertheless still processed efficiently, it stands to reason this efficiency could be replicated with artificial substances taking the place of the natural ones, as is going on in medicine with knee replacements, etc. My basic premise is if that is so, then John needed to find the analogous ratio of saliva to food, of HTF and plastic, to potentially mirror that efficiency.
The fact that he's now anticipating being able to run #3 for 30 days without maintenance shutdowns strongly suggests he's reached the efficiency levels he'd originally envisioned was possible. So I'd restate what I said before this way: As odd as it may sound, if John has successfully eliminated those hard concrete-like globs of solidified plastic from cropping up inside the processor, then he's essentially reduplicated nature for this will allow the processor to have an efficiency that parallels what's going on in the animal kingdom.
"Lets clear one point . Plastic does not stick to metal in this system Earlier photos of the inside of #1 showed this(pre oil) ,clean walls . The problem is the solidification of this material in moving parts. The mass forms into a solid mass which cannot be removed, requiring disassembly and replacement. Think of it as extremely fast setting concrete which solidifies in the delivery system before it can be expelled, The plastic is just as hard . The cure was to keep the material moving quickly and cool in input until it enters the drum with no tolerances for mistakes."--Capra1
Capra1, thanks for chiming in. The more facts the better. You of course might be right that no plastic sticks to metal anywhere within the process. That would great. Yet I have my doubts, especially when it comes to that 5 foot (or so) long pipe that connects the pre-melt to the reactor. Indeed, I think John's comments in his recently publish ASME paper strongly suggest such a phenomenon could and has happened. Here's how he puts it:
"Challenges arose from the undesirable properties of molten plastic. Molten plastic is highly endothermic and will freeze up in a pipe if pumped too far"
He then adds that they moved the pre-melt kiln closer to the reactor so as to limit "the chance of the molten plastic binding to the pipe and fouling" (p. 6 of print-out).
So I think your claim that "Plastic does not stick to metal in this system" is a bit too all inclusive. It's also not clear to me when this "cure" you referred to was discovered. Q4 and Q1 numbers were horrendous and suggested uptimes were only around 10% to 15%. Are you saying they discovered this "no tolerances for mistakes" method in Q2 and therefore are expecting much better uptimes than the previous two quarters? I sure would welcome that, and hope it's the case.
However that might be, it's evident--as I'm sure you know--from what John said in the last cc that the HTF will definitely help with the solid masses of plastic binding together that you were talking about. As he said,
"... using HTF allows us to transfer a lot of heat into large chunks of solid plastic and melt them much more quickly than large chunks by themselves" (p. 14).
As a result I suspect the HTF will eliminate the "no tolerance" aspect of the fast footwork method you noted. That is, I would think the HTF will allow the heat going into the kiln to keep the plastic in a molten state longer, thus forestalling it turning into a quick-set type of concrete material. Yet to my way of thinking, the HTF is going to have to more than that in order to achieve the results John is now forecasting. For he evidently told the reporter in the recent Buffalo Newspaper article that:
"The company believes the new processor will be able to run for about a month without having to be shut down for maintenance,..."
This comment was made around July 10th--the article was published July 13th. The new HTF permits came in near the very end of June, and Chris Irons had told me that as soon as they got the permits they'd be ready to use HTF with #1 & #2. So John's comment was apparently made in light of initially running the HTF through those processors for a little while. At any event, in his ASME paper he made a similar, but somewhat less concrete claim as to what he thought HTF and design #3 would do. There he said:
"The ability to run the process 24/7 for weeks without the pauses for residue removal is desirable" (p. 6).
The Buffalo paper comment is clearly more specific and definitive than the ASME one, and because it's later in time I assume it's based on more current data.
At any event, this new prognosis is one hell of a jump in uptimes from the Q4 and Q1 data. I think it's achievable, but I think the HTF will have to effectively remove virtually all the resistance that has plagued the system up until now. And to me, the most likely way that will happen is if the proper balance, the proper ratio, between HTF and plastic is discovered. Because every single critter on the planet has a built-in digestive system that enables it to eat food, process it, and discharge waste without it ever sticking to any aspect of it's alimentary canal, I believe that same phenomenon can be reproduced in the Beast once John finds the right ratio, the right balance, of HTF to plastic. And as I said before, that's exactly what I feel he was looking for in the tests he was making back in the last quarter of 2012 wherein KR said:
"The testing we were doing required more frequent shut-downs as we determined what effect the co-mingled feedstock stream was having on the processor" (p. 4).
My hunch is the "effect" they were looking for was, in a sense, a negative one. That is, we know there's been a lot of resistance in one form or another. Big chunks of solidified plastic is one form of it. So as they methodically increased the amount of HTF to plastic from one test to the next, these solid masses should have started shrinking and eventually disappeared. Likewise, if any plastic is getting stuck to the inside of that 5' pipe as I suspect it has been, then that build-up too should have started to diminish as they continued to add more HTF to the mix.
Since John's prognosis going forward is obviously based on the test results, I think there's basically only two conclusions they could have discovered to warrant stating that he now thinks it's feasible for the processor to run for a month without being shut down. The first one, which would be best, is also the one I suspect is the most likely to have occurred, namely, that he found the ratio that mimics nature, and thus it leaves the alimentary canal of the processor free of unwanted build-up and blockage. As I mentioned before, I suspect the molten plastic going through the 5' pipe will displace the fluid and effectively create a thin membrane that coats the steel with HTF and thus prevents a direct contact of bare steel with molten plastic. (The clearance inside an engine between the outside surface of a piston and the cylinder wall is extremely slight, but oil fills the gap and prevents overheating and melt down; I suspect a similar film of HTF protection inside the 5' pipe might do the same trick.) If this is the case, then the problem is truly solved. With no build up showing up via their tests, especially after the 3 day stack test, then John's prognosis seems fully justified.
The other possible outcome is that they discovered that the HTF made significant improvements, but no matter how much HTF they added it did not fully eliminate the negative forms of resistance showing up inside the processor. Yet with their test results in hand, they should be able to calculate via their incremental testing, how long it will take before the resistance they're still detecting will force a shut down. If, for instance, after the final 3 day stack test the 5' pipe had, say, 5% build up, then if the processor were to run for 30 days, that would suggest that at the end of 30 days there's apt to be a 50% build up. (If 3 days = 5% then 10 x that is 50%.) My point being, if they know some resistance still remains there ought to be a way to translate whatever that data is telling them into a forward projection. So since John is in fact making the estimate he is, if there were still visible signs of resistance in the testing they did, it must have been quite minimal to justify expecting such a remarkable jump in uptimes.
"That's a huge pipe to keep lubricated"-SS
Yes it is. But I suspect if you add enough HTF the molten plastic will displace the HTF and, as if, push it to the outside. If so, it will coat the pipe as the Beast sucks down another molten milk shake.
I look forward to hearing the facts about what's going on.
Thanks for those kind words, CS.
As odd as it may sound, if John, as I believe he has, has figured out how to keep that 5 foot pipe sufficiently lubricated, he will have duplicated nature.
Every single animal is supplied with enough lubricants in their mouths and digestive tracts to process the kinds of food they eat. That 5 foot pipe is equivalent to such a digestive tract. The "Beast" eats, digests, and craps, just like any other animal. And like any other animal "he" needs fluids to help process his "food." The circle now appears unbroken.
I look forward to the upcoming cc. Thanks for turning my attention to the notion of "steady state" a while back; I hadn't given it much thought until I read and thought about your posts.
"the strategy in play here re: settlement is flat out brilliant."
"but imo it's not the reason for the co.s delay of the Q or the rescheduling of the CC."--4kids
I'm glad that you, Brig, xxxxcslewis and others familiar with legal settlements are pleased with the results--not my focus.
As for the rescheduling of the cc and Q, I'm with you and don't regard it as a negative. Whatever the reason, one thing is for sure: the extra delay will allow them to offer more concrete data on what's going on with #3 and HTF. It will be great when the numbers will speak for themselves.
"Well, I can say with absolute certainty, that recently all the tanks have been full....leaving the plant."--Commando
Thanks for that bit of feedback.
Do you (or anyone) by chance know how that Crayola clip you posted last week--the one that starts with a teenage reporter interviewing other teens and including a lot of NF footage--is being used for by Crayola? It looks like a perfect intro clip for teachers to use in class to convey in short order what the recycling program is all about. Anyway, I'd be curious to know if any has any insight into this matter. tia
"4 Answer not fool according to his folly, lest he be wise in his own eyes."
Nice quote Mr. Snuggle. I'll follow that advice with you.
So let's take it from the top. John is trying to figure out how to do something that is extremely elemental. He wants to convert mass into energy. He wants in short to replicate a rain forest in that he wants the processors to enter a steady state that, like a rain forest, can perpetuate itself indefinitely. Yet, naturally, he has to find a balance as the conversion of mass into energy requires a type of exchange that must be harmonious if the circle is to remain unbroken.
I said before that our little fellow, our little beast, had a horribly deformed stomach which, in fact, all of his kind have had. For he could not on his own produce any intestinal fluids. So, naturally, his intestinal tract which leads from his upper torso and head to his stomach proper is bone dry. This is completely out of accord with every single critter in the animal kingdom. So how could John replicate a rain forest if his little beast goes against the design of all the critters who live in such rain forests? That doesn't strike me as a very promising approach, and all the days our little beast has been laid up sick confirms that it's not.
Fortunately, John discovered this abnormality and has found a way to amend the defect so our little emaciated, can't-eat-too-much beast is now in harmony with all the critters of the kingdom. I'm sure, too, that his appetite has increased now that he doesn't get heart burn and indigestion with each bite of food he eats.
You see, the little fellow being himself a critter is very much like our selves. Imagine, that is, that we're all sitting around a table at a pub. We all have a big pint glass in front of us. But instead of beer, these big glasses are filled to brim with bleached white flour. Now lets all pick up our glasses and drink the contents down in one go. Yeah, that's right, no one can do it. As soon as the flour hits the inside of our mouths it instantly absorbs all the fluid and immediately starts gumming up. We literally would choke to death if we did not abort the endeavor. Yet does that mean we cannot eat flour? No indeed. Rather, we need to properly mix the flour with enough fluids, just like our little beast's diet, in order to get it down. And once we find the proper ratio of flour to fluids, we can eat it all day long without any flour sticking to the insides of our mouths and throats.
The primary objective of the tests John was conducting last fall was, I'm sure, to try to discover what the proper ratio of HTF to plastic was needed so that the molten plastic stopped sticking to the "intestinal track", the "portal", connecting the first and second kilns. If, as I believe he has, John discovered what that ratio is, he can then maintain the proper balance which in turn will allow for a continual exchange, like in a rain forest, of intake and outtake, allowing the compressors thereby to remain in a steady state.
Yet for more details, we'll have to talk with the beast himself and see how he's feeling now that he's had his intestinal operation. Perhaps he'll be on cc on Monday? I hope so.
"Actually, depending upon the point(s) of injection, the HTF could help with both the pre-melt (varying densities of feed stock) and keeping the connecting pipes clean and the material moving."--Steelyeye
I think it will and won't depend on where it's injected: it's part of the inherent nature of heat transfer fluid. The right ratio needs to be established from the get-go and that, I suspect, is what those short tests were all about that KR referred to in the last cc. When there's enough HTF in the mix to sufficiently engulf the plastic, the desired effects should kick in.
We shall see. Thanks for the added detail you provided.
"If what you describe is the current state of the machines, it means that units 1 and 2 are effectively unusable and will need to be scrapped or at least undergo a substantial upgrades."--Ryoko
If that description is basically correct, then the HTF will dramatically improve #1 & #2's uptimes. They will no longer have to be shut down because of the molten plastic issue: petcoke or other limiting factors will be the determining factor. But the turn around time frame will be I suspect much shorter so they'll be able to run a lot more than they currently are. Nevertheless, I agree they already are obsolete, and I doubt they warrant too much more money and time to fiddle with. But they will help contribute to CFP which I suspect will be attainable in Q4. Once they reach this milestone, it will be a new game. When the intense pressure is off, they'll eventually be able to swap #1 & #2 out for the new commercial version.
The NF site, as I understand it, has the potential to eventually permit 6 processors. Currently they're only permitted to run 3. Because the processor's foot print has enlarged, I suspect the ideal solution would be to build more building(s) that have the proper dimensions to comfortably house 2 processors--I'm not sure the originally building's dimensions would serve that purpose anymore. Yet with a new building up, install 2 new versions and retire #1 & #2. That would give NF 3 commercial grade processors churning out fuel, and potentially leave a work space--the original building--to build more processors. We shall see.
My main concern now in terms of the processors is to find out if #3 can do what I think it can do, which is to stay in steady state for a long stretch of time. Working out the further kinks that will surely arise from that vantage point will be a much different affair in that the survivability of the company won't be resting on those improvements as it currently is in regards to HTF and design #3 working.
There's a long way to go, but I believe the advent of adopting HTF coupled with design #3 will prove to be a new beginning for the company. Let's hope so, and that it is accompanied by a new management team as well. Here's to finding out the truth.
For whatever it's worth, here's what I think has happened.
In February of 2012 #2 was turned on. Within a short period of time, that is, as soon as they tried to continuously run between 120k lbs to 160k lbs of plastic through the machine they hit an impenetrable wall which has strangled production ever since. However, in the short window of time that it was running, the processor did what it was intended to do, namely, make spec fuel. John, I suspect, assumed he'd be able to tweak the machine in some way to address the matter. But, lo, it proved to be formidable obstacle. Indeed, given that John stated in his paper published in the American Society of Mechanical Engineers in late April or May of 2013 that
"The existing process can convert anywhere from 120,000 lbs. to 160,000 lbs. of plastic between residue extractions"
I'd say that that impenetrable wall will be fully intact for all of Q2, and accordingly reflected in the numbers.
The petcoke "problem" was a red herring of sorts. Yes, it needed to be addressed, but it was a straight forward cause and effect problem to solve: too much petcoke is coming out of the machine. What can we do? Make more room! So a third kiln was added and John either invented or adapted an existing extruder to make it self cleaning. Not a real brain teaser for John I'm sure.
Rather, I suspect that the pipe that connects the pre-melt, that is, the first kiln, to the second kiln is where the problem exists. The pre-melt melts the plastic and it has to pass through the pipe to get into the second kiln. But as it passes through the molten plastic starts sticking to the sides of the pipe. Then depending on the density of the plastic moving through the system, the walls of the pipe get so gummed up by the time 120k to 160k pounds have moved through it, that it chokes itself out. The glob of cooled down plastic then needs to be meticulously cleaned off, and once cleared the process starts all over again.
Sooner or later John realized that the only way to really address the problem was to have internal access to the bottleneck while the processor was running. For only then would he have a shot at keeping that portal open and unclogged: manipulating the plastic from the outside before it went into the processor wasn't enough.
John then hit upon the idea of using HTF. The NYDEC gave them permission to experiment with the HTF for 90 days and get ready for the stack test. They bought a one time circumscribed amount of HTF to work with. We were told by KR in the previous cc that:
"The testing we were doing required more frequent shut-downs as we determined what effect the co-mingled feedstock stream was having on the processor."
I suspect the core test went something like this. Let's say they knew the maximum ratio of HTF to plastic they could use was 10%. So if they used the full amount that would be 100% of what they were allowed to use. What the actually numbers were doesn't matter. It's the strategy of the test that matters.
They know the bottleneck forces a shutdown between 120k and 160k. So run say 20k pounds with a 20% mix of HTF. Stop, take apart the pipe connecting the first and second kiln and check for cooled plastic stuck to the pipe. Ideally, do this once with your lightest plastic, and once with your densest plastic. This will give you the extremes, and with this data in hand you can meaningfully calculate what's needed for densities in between these two extremes. Repeat this process and each time add a higher percentage of HTF to the mix. Once you can run 20k lbs without leaving any trace of plastic on the portal, move up to 40k lbs, and so on.
Eventually they'd reach 160k pounds. Given that this is the upper limit of the wall that had stopped John cold since February, I have no doubt that he would want to definitively pierce that barrier. Presumably he ran, say, 200k pounds through at one go to make sure. Then whatever amount it was, they shut it down and checked the connecting pipe again for any residual plastic on it.
Having this incremental data to work with, John would thereafter have a rough blueprint of how to control the bottleneck inside the processor with a lever that is now accessible to him from the outside of the processor. And bingo: the portal can now be held open so steady state can continue indefinitely.
This, at least, is what I believe in rough outline took place, and why John can state in confidence that:
"Processing plastic with heat transfer fluid is a huge move forward in the evolution of our technology."
"Under the business judgment rule, it is the responsibility of shareholders to demonstrate a CEO's failure to uphold his fiduciary responsibilities."-- Matt Petryni, of Demand Media
So if that's the case, can shareholders ask to audit the CEO's business activities as a means to gain such evidence? If not, how are shareholders supposed to "demonstrate" a CEO's fiduciary failure?
"On the other hand the Company stated that significant quantities of Waste oil were processed in September and October last year if I remember correctly. Production does not seem to have been high during those months. This might suggest that the value of the HTF is Limited."--Snow
Yes, the Company did make those purchases and according to the last cc made a lot of tests with it. Like you say, the production was not at all impressive in Q4. So you may indeed be right that the value of the HTF is considerably lower than I am presently thinking it will be. However, the former CEO Kevin Rauber stated this in that same cc:
"The testing we were doing required more frequent shut-downs as we determined what effect the co-mingled feedstock stream was having on the processor. We were extremely pleased with the results, but our production numbers in Q4 did suffer" (p. 5).
I assume that KR is speaking truly here. As such, by his own admission the goal of the testing was not to increase production, but to try to understand what benefits may be expected by incorporating HTF into the mix. We will all have to wait and see what his (and John's) claim that they were "extremely pleased with the results" translates into in terms of uptimes and production. Management should be able to give us quite a glimpse into these matters in Q2 notes. And given how things have been going, I believe their choice to reveal or not to reveal will be an important revelation in itself.
Thanks a lot Rawnoc for that DD. Excellent and informative. I especially liked this summation about the guy's experience at GTI:
"He's visited and sampled fuel and oil from over 50 P2O operations over the years, almost all of them in the R&D stage, and found JBII's fuel to be the only thing he can actually use."
So why is it JBI's technology has become the irresistible apple of some wealthy investors' eyes?
Thank you very much, Dr. Bagai, for speaking up on this crucial matter.
I hope all employees at JBI are documenting and dating any and all suspect behavior and "directives" that the acting CEO, Tony Bogolin, is doing or giving. The situation is totally untenable for shareholders and the well being of the company.
Again, thank you for speaking out on this matter.
"Perhaps the tide has turned finally? The gross profit margin should improve with more free stuff to process. HTF should improve throughput and the third processor should improve uptime. Put together these factors should have a significant effect on the bottom line."--Snow
Yes, I believe so. Incorporating HTF into the process paradigmatically changes how JBI processes plastic. I have not thought too much about the revenues HTF will bring to the table as there are for me too many unknowns at present. But in thinking carefully about how and why and in what way the HTF will affect the processors, I believe there is a high probability that the uptimes for all three processors will be remarkable improved, especially with #3.
Yet strange things have been going on, and it's very unclear to me whether or not management has properly kept its eye on increasing gross margins and decreasing costs per gallon. We'll get a glimpse into this topic soon. Supposedly near the beginning of Q2 they incorporated some procedural changes for operating the processors more efficiently. If I recall correctly those changes were the direct result of seeking advice and consultation from the Harris Group. So I am anticipating that this will be the best quarter yet in terms of fuel production even if, as I expect, the numbers won't reflect commercial viable outputs.
But if management wants to, they should be able to give us quite a revealing look into how HTF is changing things for #2. Of course, I hope they have at least some hard data along these lines on #3 itself. At the very least I should think we'll find out if the automatic pet coke removal system is working well or not. But, clearly, it would be especially nice to hear that #3 is in steady state with HTF running through it and has been for X number of days. Again, if management wanted to, I should think they could tell us that #2 can run for X number of days with HTF before a shutdown is required. This would give us more concrete data than we've ever had about what to realistic expect #2s output to be on an ongoing basis.
Still, I expect John and crew have much to learn about how to most effectively use HTF. So I assume whatever numbers we see won't be the whole story. But having a roughly reliable benchmark on uptimes for #2 would be very nice to have, as I'm sure you'd agree.
Crayola's redoubling its commitment to partner with JBI on a nationwide program certainly portends that things are changing for the better. I also like the fact that their HTF supplier is just down the street from them so that inherently will cut costs. And if all goes well, they'll have for the first time 3 processors running and a 24/7 crew on hand to keep them running.
Yet, as you know, it all comes down to HTF and #3. We of course need a new Board and a dedicated and competent management team. But first things first.
Yes indeed, 4kids. But when I said:
"Let's hope the outcome is similar!" I was referring to how things turned out for Apple in the wake of their early-on school program you referred to.
Interestingly, I went to a movie theater for the first time in ages a few weeks back. One of the trailers was about a new Steve Jobs movie that's come out or coming out soon. Of course they only included snippets in the trailer, but one of the scenes sure did sound awfully similar to what's going on here: a bright guy with innovative and disruptive tech, desperate for cash to bring things to fruition, and damn killer whales circling round to snatch it up on the cheap. Obviously, it's an old tale, just new names and characters.