http://www.biomassmagazine.com/articles/8669/epa-approves-new-cellulosic-advanced-biofuel-pathways
The
U.S. EPA has published a new final rule, qualifying additional fuel
pathways under the renewable fuel standard (RFS) for advanced biofuel,
cellulosic biofuel and biomass-based diesel. The rulemaking covers two
new feedstocks, camelina and energy cane. It also qualifies renewable
gasoline and renewable gasoline blendstocks made from certain feedstocks
as cellulosic biofuel.
Under the new rule, ethanol, renewable diesel (including jet fuel and
heating oil) and renewable gasoline blendstock produced using energy
cane feedstock can now qualify to generate cellulosic biofuel renewable
identification numbers (RINs).
According to the EPA, for the purposes of this rulemaking, energy
cane has been defined as a complex hybrid in the Saccharum genus that
that has been bred to maximize cellulosic rather than sugar content.
Within the final rule, the EPA addresses several comments made by
members of the public during the rulemaking process, including those
related to invasiveness and land use change potential. The EPA states
that energy cane does not raise significant concerns about the threat of
invasiveness. Regarding land use change, the EPA specifies that energy
cane is most likely to be grown on land once used for pasture, rice,
commercial sod, cotton or alfalfa, which would have a less international
direct impact than switchgrass because those commodities are not as
widely traded as soybeans or wheat. “Given that energy cane will likely
displace the least productive land first, EPA concludes that the land
use GHG impact for energy cane per gallon should be no greater and
likely less than estimated for switchgrass,” said the agency in the
rulemaking.
According to the rule, EPA believes that cellulsoic biofuels produced
from the cellulose, hemicellulose and lignin portions of energy cane
will have similar or better lifecycle GHG impacts than biofuel produced
from switchgrass.
Biodiesel and renewable diesel (including jet fuel and heating oil)
made from camelina feedstock are now eligible for biomass-based diesel
or advanced RINs. In addition, camelina-based naphtha and liquefied
petroleum gas can qualify for advanced biofuel RINs.
While the EPA notes in the rulemaking that some parties submitting
comments on the proposed camelina pathways expressed concern over the
potential threat of invasiveness, the EPA states that it believes the
production of camelina is unlikely to spread beyond the intended borders
in which it is grown.
The EPA also specified that the crop is currently being grown on
approximately 50,000 acres of land throughout Montana, Washington, North
Dakota and South Dakota. Overall, the EPA estimates that approximately 9
million acres of land in a wheat/fallow rotation is available for
camelina production nationwide.
“Current information suggestion that camelina will be produced on
land that would otherwise remain fallow,” said EPA in the rulemaking.
“Therefore, increased production of camelina-based renewable fuel is not
expected to result in significant land use change emissions; however,
the agency will continue to monitor volumes through EMTS to verify this
assumption.”
Regarding renewable gasoline and renewable gasoline blendstocks, the
rulemaking qualifies fuels produced from crop residue, slash,
pre-commercial thinnings, tree residue, annual cover crops, and
cellulosic components of separated yard waste, separated food waste and
separated municipal solid waste (MWS). The rule also specifies that,
when utilizing natural gas, biogas and/or biomass as the only process
energy source, thermochemical pyrolysis, thermochemical gasification,
biochemical direct fermentation, biochemical fermentation with catalytic
upgrading can all be used with the listed feedstocks to generated fuel
qualifying as cellulosic biofuel. In addition, any other process that
uses biogas and/or biomass as the only process energy sources to convert
the approved gasoline and renewable gasoline blendstock feedstocks into
biofuel also qualifies for cellulosic RINs.
A full copy of the rulemaking is available on the EPA website.
Tuesday, February 26, 2013
Wednesday, February 20, 2013
Local businessman testifies before members of Congress
http://www.baxleynewsbanner.com/archives/4383-Local-businessman-testifies-before-members-of-Congress.html
By Jamie Gardner
Fram Renewable Fuels President Harold Arnold, at the invitation of Congressman John Barrow, testified before the U.S. House of Representatives’ Energy and Commerce Committee’s Subcommittee on Commerce, Manufacturing and Trade on February 14 at the Rayburn House Office Building in Washington, D.C. The hearing, A Nation of Builders: Manufacturing in America, allowed members of Congress to examine manufacturing in America and to garner input from business leaders across the country.
Fram Renewable Fuels President Harold Arnold, at the invitation of Congressman John Barrow, testified before the U.S. House of Representatives’ Energy and Commerce Committee’s Subcommittee on Commerce, Manufacturing and Trade on February 14 at the Rayburn House Office Building in Washington, D.C. The hearing, A Nation of Builders: Manufacturing in America, allowed members of Congress to examine manufacturing in America and to garner input from business leaders across the country.
“I’ve seen the
great work the folks at Fram Renewables are doing right here in the 12th
District of Georgia,” said Congressman Barrow. “With expansion plans
underway, Fram Renewables is creating jobs and pumping life into the
economy, both in and around Baxley. I look forward to welcoming them to
Washington, and sharing their story with other members of the
committee.”
Congressman Barrow, a member of both the full E&C Committee and CMT Subcommittee, visited Fram Renewables during his 2012 Made in Georgia Tour, and requested their participation in this hearing. The company manufactures and exports wholesale wood pellet fuel to utility companies globally.
Arnold offered his appreciation to the committee for the opportunity to speak and shared news about his company’s successes and future plans. Fram currently exports over 300,000 metric tons of wood pellets to Europe and has plans to increase to more than one million tons exported by 2015.
Arnold praised the U.S. Government for supporting businesses that increase American exports and thanked the government officials for assistance through the small business loan guarantee program. He further added to members of Congress that timely attention to American ports, such as Savannah and Brunswick, is vitally important to exporters as they rely on economical shipping rates to markets around the world.
Appling Pellets, Fram’s Baxley operation, opened for business in 2007 and provides approximately 40 jobs. The initial investment in the Appling facility was $25 million. The Baxley facility produces over 230,000 metric tons of wood pallets annually.
In 2012 the company opened a second facility in Lumber City and invested $10 million in this facility. The Lumber City operation employs 14 and creates 120,000 metric tons of wood pellets. Fram also broke ground on a third facility that will be built in Hazlehurst. The first phase of this project will employ approximately 50 people and require a $60 million investment. Eventually, phase two of this particular project will add another 25 jobs and an additional investment of $30 million. Arnold estimates that indirectly some 400 jobs will be retained or created in the various parts of the wood pellet supply chain.
While Arnold offered some words of praise to the U.S government, others that testified offered opposing views. As an example, one business owner of a steel company told members of congress that the U.S. government’s stringent regulations have been devastating to the steel industry across the country.
Congressman Barrow, a member of both the full E&C Committee and CMT Subcommittee, visited Fram Renewables during his 2012 Made in Georgia Tour, and requested their participation in this hearing. The company manufactures and exports wholesale wood pellet fuel to utility companies globally.
Arnold offered his appreciation to the committee for the opportunity to speak and shared news about his company’s successes and future plans. Fram currently exports over 300,000 metric tons of wood pellets to Europe and has plans to increase to more than one million tons exported by 2015.
Arnold praised the U.S. Government for supporting businesses that increase American exports and thanked the government officials for assistance through the small business loan guarantee program. He further added to members of Congress that timely attention to American ports, such as Savannah and Brunswick, is vitally important to exporters as they rely on economical shipping rates to markets around the world.
Appling Pellets, Fram’s Baxley operation, opened for business in 2007 and provides approximately 40 jobs. The initial investment in the Appling facility was $25 million. The Baxley facility produces over 230,000 metric tons of wood pallets annually.
In 2012 the company opened a second facility in Lumber City and invested $10 million in this facility. The Lumber City operation employs 14 and creates 120,000 metric tons of wood pellets. Fram also broke ground on a third facility that will be built in Hazlehurst. The first phase of this project will employ approximately 50 people and require a $60 million investment. Eventually, phase two of this particular project will add another 25 jobs and an additional investment of $30 million. Arnold estimates that indirectly some 400 jobs will be retained or created in the various parts of the wood pellet supply chain.
While Arnold offered some words of praise to the U.S government, others that testified offered opposing views. As an example, one business owner of a steel company told members of congress that the U.S. government’s stringent regulations have been devastating to the steel industry across the country.
Monday, February 18, 2013
The Compression Spread
You’ve heard about the crack spread, and the crush spread — as means to value oil refining and crop refining.
Let’s think about biomass densification and compression, and in that context, a little about KiOR.
You might have heard a little or a lot about KiOR — which is currently commissioning its first commercial-scale (11 million gallon) biofuels plant in Columbus, Mississippi.Now, the oil industry might, via the American Petroleum Institute, be currently talking down the validity of the Renewable Fuel Standard — but it is not entirely clear that KIOR would have found the financing that it did without the EISA Act galvanizing investors into action.
KiOR’s secret sauce
Now, it is getting more clear — among all the glittering pieces of technology that the biofuels industry has developed — that the oil refining and marketing sector would really, really like to have invented KiOR’s BFCC unit — KiOR’s secret sauce.
What is a BFCC? It is a fluidized-bed catalytic cracker that works with biomass (in KiOR’s case, they are working now with southern yellow pine they expect to obtain at $72 per bone-dry ton).
Why is it coveted? It takes biomass, which has low density, and liquifies it into an intermediate with very high energy density — and does so at a transformatively low cost. That intermediate can be hydrotreated into an in-spec drop-in fuel — either in the gasoline range, or diesel, or even jet.
Why is that important? Because it is expected to be available at a lower cost than the marginal cost of oil production — when taken to an appropriate scale.
Equally importantly — because it is produced from renewable biomass — it can help de-carbonize an atmosphere that is producing increasingly wacky weather.
The marginal cost of producing oil
In a world where oil prices are highly volatile, one statistic for price prediction has held true for a long time — and that it is averaged cost of marginal production of oil for the world’s 50 largest public oil companies.
What exactly does ” the marginal cost of production” mean? It is the cost of exploring and capturing the last barrel of oil needed to meet overall global demand.
Bernstein Research circulated a note last year estimating that the marginal cost of production (for the top 50 public companies — note that some national oilcos have very different cost structures) increased by 229 percent between 2001 and 2010. Meanwhile, oil prices increased by 228%. Eureka — a driver of long-term oil prices.
It stands to reason. If the oil price falls below the marginal cost of production – production stalls until the price rises. That’s simple economics.
All that lovely Bakken crude
Further, it is not as easy as many suppose to disrupt that price with, for example, an explosion of oil production in the Bakken oilfields of North Dakota or the tar sands of western Canada. Bakken crude sells at a very deep discount, already, to Brent Crude — the spread has exceeded $30 per barrel at times.
That’s because of the lack of pipeline and railcar capacity to move it to international markets.
Which brings us back to KiOR — and the possibility that, long-term, the future of the company may focus less on building complete field–to-wheels fuel capacity via hydrotreating intermediates onsite, at its own facilities.
It has a future — perhaps a very big one— not so much as a supplier of finished fuels to its own customer base of fuel buyers, but as a supplier of crude-equivalent feedstocks to existing refinery infrastructure.
That’s where that $92 a barrel becomes important — not the $100-$115 retail value of the barrel, but the production cost of that barrel.
Recovering prehistoric algae as an energy business
You see, at the end of the day what you get from punching holes in the ground (i.e. oil exploration) is a well tapping into some prehistoric algae which — over 60 million years or so — has been transformed by Nature into crude petroleum and natural gas.
Nature made the biomass for free — via its own cocktails of carbon dioxide, water, and trace nutrients. Then, Nature conveniently densified the biomass for free, too. What we pay for is the harvest — it’s the energy equivalent of hunter-gatherer.
With a barrel of oil, you get around 5.8 million BTUs. That’s around $15.86 per million BTUs for the marginal cost of production.
In the case of KiOR, you have to pay for the biomass — the aforementioned $72 for each bone-dry ton. In that ton, you start with 14-20 million BTUs. So, you are paying $3.60-$5.14 per million BTUs for the wood.
The problem is, you can’t burn wood in a car engine — and even if you could, you think range anxiety for battery-electric vehicles is bad. Sheesh!
So, here’s the challenge, and here’s the prize, and a caveat.
Challenge? Densify the wood biomass into a crude-equivalent refinery feedstock for less than $12.72 per ton of biomass, including your operating and capital costs and your cost of capital.
Prize? Well, the International Energy Agency expects that energy demand will rise some 50 percent over the next 25 years — rising demand that you can serve.
Caveat? Lowest-cost producer wins. No one is likely to buy your $92 per barrel intermediate if there’s a $90 barrel available.
Catalytic fast pyrolysis
Where does this all lead us? In the case of making crude-equivalent intermediates — catalytic fast pyrolysis has emerged, of late, as the lowest-cost path towards answering that challenge. It is not entirely clear this class of technologies will actually reach scale — and reach the targeted costs — and find boatloads of affordable capital any time soon. But the signs are quite encouraging.
Catalytic fast pyrolysis — that’s what KiOR does. That’s why so many people watch their development with such attention. Why there is such an intense interest in their progress that media have been snooping around the plants, trying to get information on production prior to the company’s quarterly earnings call (earnings are expected to be reported March 25, according to NASDAQ).
Other paths to biofuels heaven
Nor is it entirely certain that crude-equivalent intermediates are the only viable path to market. For instance — there is the entire class of alcohol fuels, which are controversial in the US and the EU because of infrastructure issues, but are well-established in Brazil.
Crude-equivalent intermediates certainly are attractive — if one of your goals is to avoid finding out how much the oil & gas industry is willing to spend to send you to the devil, if you come up with a technological path to affordable meeting transportation fuel demand that doesn’t pass through oil refineries.
The oil industry’s anguish over alcohols is as profound as the Prohibition Party’s anguish used to be.
Back to KiOR
So — that brings us back to KiOR, and its prospects. We’ll know quite a lot more on the next earnings call. For now, they are in the business of making finished fuels and earning revenues from RINs and fuel sales.
For sure, right now they are proving the validity of their process to investors. One might speculate that they are also surrounding their IP — their secret sauce — with a complete path to market so that never become the captive of a refiner & marketer who can form a barrier to entry between their crude and the downstream gas station. With ethanol producers we have seen, ahem, where that can lead.
Long-term — we don’t see a process that can turn that much southern yellow pine (and other biomass, down the line) into sub-$92 crude-equivalent intermediates having a market cap of $584 million, as KiOR has today. If the technology does not work out — well, it’s not very valuable, is it? But if it does work out – as sports broadcaster Keith Jackson used to say “Whoa, Nelly!”.
Why? Looked at it as a technology that converts resources into proved reserves (valued at, say, $20 per barrel, or the spread between Brent crude and the marginal cost of production) – KiOR is valued at around 29 million barrels of oil. That’s the volume of oil you get from converting 400,000 tons of wood into oil refining intermediates.
But there’s a lot more wood out there.
The above-ground oil field a/k/a the US wood basket
The US Department of Energy, in their Billion Ton update study in 2011, estimated that there would be 120 million tons of wood biomass available, per year, at $80 per ton, that could be sustainably used for bioenergy. The figure declines to around 85 million tons at $40 per ton.
That’s a big spread.
So — in all things biofuel – keep that cost of densification very much in your mind.
The Compression Spread
In traditional oil and agricultural economics, we think about the the cost of liberating a known molecule. In the new bioenergy — getting biomass sufficiently densified, via technology instead of Nature — may open the door to ultra low-cost feedstocks and some amazing upside value for the liberators and their inventions.
That’s the compression spread.
Friday, February 8, 2013
Georgia Southern University center opens pilot pellet mill
http://www.biomassmagazine.com/articles/8620/georgia-southern-university-center-opens-pilot-pellet-mill
Georgia Southern University’s Herty Advanced Materials Development Center has opened the first fully-integrated pilot pellet mill in the United States. The new production line, located in Savannah, Ga., includes a nearly $2 million investment in process equipment. The facility will provide a much-needed platform for innovation in process technology and pellet design in the U.S. and will help rising global demand for biomass pellets in Europe and North America.
With the introduction of the new mill, Herty will work with technology providers and developers to help validate a number of product development projects. The team will also support researchers working to enhance pellet design and will develop methods for lowering operating costs.
Pellets, formed from wood and bioenergy feedstocks such as miscanthus and switch grass, are highly regarded as an effective, alternative energy solution because of their relatively high energy density and ease of handling. Pellets can also be easily integrated into existing electric power generating plants as a fuel. As a result, the pellet industry has witnessed tremendous growth as major European countries, which have adopted mandates for greenhouse gas emissions, are using biomass pellets at unprecedented rates. Most of the growth in Europe has come from imports.
According to a recent report from the U.S. International Trade Commission, annual global imports of wood pellets have grown from virtually zero to more than $1.5 billion during the last decade.
However, research into improving the production of pellets, as well as optimizing pellet operation and composition has lagged behind industry growth. Developers, manufacturers and researchers will now be able to benefit by having a flexible, integrated production facility that can produce pellets with properties that are consistent with those achieved in large-scale commercial facilities.
“For more than 75 years, Herty has been helping companies in a variety of industries develop and validate new processes and products,” said Alex Koukoulas, Ph.D., president and chief executive officer of Georgia Southern’s Herty Advanced Materials Development Center. “This new pilot mill is a first and will help address a global need. The new mill will serve as a valuable testbed by helping our clients confirm product performance and operating efficiencies and before they commit to an investment in full-scale manufacturing. Ultimately, the Savannah-based facility will help companies lower technical risk and accelerate delivery."
“To be a part of a larger mandate, assisting in clean energy solutions, promoting a cleaner environment and impacting Georgia’s economic growth makes our efforts here at Herty all the more meaningful,” said Jill Stuckey, director, biomass development. Herty’s pellet mill and production facility provides access to both advanced technology and to new product development capabilities and support.
Capabilities and services include:
- Biomass preparation and pretreatment
- Biomass testing
- Pellet analysis
Georgia Southern University’s Herty Advanced Materials Development Center has opened the first fully-integrated pilot pellet mill in the United States. The new production line, located in Savannah, Ga., includes a nearly $2 million investment in process equipment. The facility will provide a much-needed platform for innovation in process technology and pellet design in the U.S. and will help rising global demand for biomass pellets in Europe and North America.
With the introduction of the new mill, Herty will work with technology providers and developers to help validate a number of product development projects. The team will also support researchers working to enhance pellet design and will develop methods for lowering operating costs.
Pellets, formed from wood and bioenergy feedstocks such as miscanthus and switch grass, are highly regarded as an effective, alternative energy solution because of their relatively high energy density and ease of handling. Pellets can also be easily integrated into existing electric power generating plants as a fuel. As a result, the pellet industry has witnessed tremendous growth as major European countries, which have adopted mandates for greenhouse gas emissions, are using biomass pellets at unprecedented rates. Most of the growth in Europe has come from imports.
According to a recent report from the U.S. International Trade Commission, annual global imports of wood pellets have grown from virtually zero to more than $1.5 billion during the last decade.
However, research into improving the production of pellets, as well as optimizing pellet operation and composition has lagged behind industry growth. Developers, manufacturers and researchers will now be able to benefit by having a flexible, integrated production facility that can produce pellets with properties that are consistent with those achieved in large-scale commercial facilities.
“For more than 75 years, Herty has been helping companies in a variety of industries develop and validate new processes and products,” said Alex Koukoulas, Ph.D., president and chief executive officer of Georgia Southern’s Herty Advanced Materials Development Center. “This new pilot mill is a first and will help address a global need. The new mill will serve as a valuable testbed by helping our clients confirm product performance and operating efficiencies and before they commit to an investment in full-scale manufacturing. Ultimately, the Savannah-based facility will help companies lower technical risk and accelerate delivery."
“To be a part of a larger mandate, assisting in clean energy solutions, promoting a cleaner environment and impacting Georgia’s economic growth makes our efforts here at Herty all the more meaningful,” said Jill Stuckey, director, biomass development. Herty’s pellet mill and production facility provides access to both advanced technology and to new product development capabilities and support.
Capabilities and services include:
- Biomass preparation and pretreatment
- Biomass testing
- Pellet analysis
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