Organic Fuels Presentation Fo Lichts 2008 04 23
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Integrated Biorefineries Thomas E. Gieskes © Organic Fuels Holdings, Inc. - All rights reserved
March 2008
1
Organic Fuels
•
Houston based producer of biofuels • Operating 55 MM GPY biodiesel plant on Houston Ship Channel since January 2006 • Projects in development for ethanol from biomass and sugarcane • Biodiesel feedstock integration into palm, jatropha and algae
•
For ethanol, focus is on integrated biorefineries
© Organic Fuels Holdings, Inc. - All rights reserved
March 2008
2
Renewable Fuels 101
Photosynthesis • • • • •
Approximate chemical reaction: n CO2 + n H2O + 7n photons + nutrients => CnH2nOnNxSy + n O2 Solar Incidence is 4 to 7 kWh/m2, but only 47% is in the right frequency range for photosynthesis Other inefficiencies and plants’ internal energy usage make that less than 10% of available sunlight is actually converted into usable biomass Green algae are the most efficient, converting 7 - 8% of total sunlight into usable biomass with a maximum theoretical yield of 140 ton DM/acre/year of which 40% could be available as lipids (15,000 gallons/acre/year) By comparison, soy beans yield only 1.5 ton DM/acre/year containing only 20% oil (90 gallon/acre/year), while sugarcane typically yields 15 ton DM/acre/year for 800 gallon/acre/year of ethanol
Converting CO2 into renewable fuels does not sequester much carbon, it just slows down the continuing increase in atmospheric CO2 from burning fossil fuels © Organic Fuels Holdings, Inc. - All rights reserved
March 2008
3
Importance of Efficiency • Overall conversion efficiency of solar energy into renewable fuels is overriding consideration • Increases cost competitiveness with fossil fuels • Reduces land use requirements and food versus fuels arguments • Ultimate replacement of all fossil fuels by renewables is only feasible with large-scale, highly efficient operations
• Key consideration in efficiency and cost effectiveness is integration of complimentary technologies and processes • Whole Hog approach • Large scale allows effective use of by-product streams © Organic Fuels Holdings, Inc. - All rights reserved
March 2008
4
Integrated Biorefineries Process Selection • •
Microscopic Green Algae are the most efficient converters of sunlight to biomass Limiting factors in algae growth • • • •
• • •
Sunlight (availability, penetration, day/night cycle, seasonality) Nutrients Environment (temperature, salinity, acidity) Carbon dioxide (low ambient air concentration, slow diffusion)
Sunlight is a given, nutrients and environment can be easily adjusted and managed: Carbon dioxide is in most cases the limiting factor Source of enhanced carbon dioxide supply can be fossil or renewable Concept of Integrated Biorefinery as proposed here is an integration of processes that combine the efficiency of algae cultivation with a renewable source of carbon dioxide from a complementary renewable fuels process
© Organic Fuels Holdings, Inc. - All rights reserved
March 2008
5
Integrated Biorefineries Design Criteria • Land & Water Use • Ideal configuration is contiguous acreage with maximum economical transport distance as radius • Competition with food production is unavoidable, but can be minimized by maximizing efficiencies
• Maximize CO2 conversion into usable fuels
• Combine fermentation and combustion with algae cultivation • Increase effectiveness of algae cultivation up to the limit of available sunlight
• Sustainability • Systems requiring the availability of cheap labor in order to be economically viable are not sustainable in the long-term • Minimize undesirable extraneous inputs/outputs (i.e., fertilizer in, waster water effluent out) © Organic Fuels Holdings, Inc. - All rights reserved
March 2008
6
Example Integrated Sugarcane Ethanol & Algae 15,000 acre Solar Incidence 6 kWh/m2/d
Algal Biomass 4,800 t/d
Ponds
190 MM GPY Biodiesel
Extraction & Biodiesel
140 MM lbs/y Glycerin 980,000 t/y Meal/Protein
Carbon Dioxide 1,000 t/d 200,000 acre 24,000 t/d Green Cane Leafy Trash 4,000 t/d
Bagasse 5,600 t/d
Storage & Drying
Ethanol Plant
Sugar Juice
Mill
Filter Cake
Carbon Dioxide 8,500 t/d
Vinasse
Biofuel 5,800 t/d
120 MM GPY Fuel Ethanol
Power Generation
240 MW Export power
Ash
Fertilizer Plant
© Organic Fuels Holdings, Inc. - All rights reserved
March 2008
7
Sugarcane Ethanol & Algae - Capital • Investment • • • •
Land 200,000 acres @ $500/acre Farm Equipment & Infrastructure Mill & Ethanol Power, fertilizer & utilities
• • • • •
Ponds 15,000 acres @ $50,000/acre Water circulation and CO2 distribution Extraction Plant Biodiesel 190 MM GPY Offsites
Total Ethanol
$MM 100 100 220 80 500
Total Algae
750 250 60 100 40 1,200
Total Capital
1,700
• Petroleum Analogy • Capital is equivalent to $35/bbl of “reserves” when taken over a 20 year “life of the field” • Capital includes equivalent of downstream as well as upstream • Renewables have no exploration risk and field life is in principle unlimited • Petroleum does not have same level of co-product benefits (meal/protein, power)
© Organic Fuels Holdings, Inc. - All rights reserved
March 2008
8
Sugarcane Ethanol & Algae - Margins • Revenues • • • • •
Biodiesel 190 MM GPY @ $3/gallon ($70/bbl WTI, $15/bbl refining, $1/gallon tax credit) Glycerin 140 MM lbs/y @ $0.10/lbs Meal/Protein 980,000 t/y @ $200/ton Ethanol 120 MM GPY @ $2/gallon ($70/bbl WTI, $15/bbl refining, no tax credit) Power 240 MW @ $80/MWh dispatched 8,200 h/y Total Revenues
• Costs • • • •
Sugarcane production 8.2 MM ton @ $25/ton Ops & Maintenance cost Mill, Ethanol & Power Ops & Maintenance cost Algae & Biodiesel S, G & A
Total Costs EBITDA
$MM/y 570 14 196 240 160 1,180 $MM/y 200 120 180 30 530 650
• Petroleum Analogy • Overall gross margin $265/bbl versus petroleum $60 to 90/bbl upstream and $10 to 15/bbl downstream • Even without excise tax credits for biodiesel, EBITDA of $460 MM will result in viable project and gross margins of $184/bbl, better than petroleum
© Organic Fuels Holdings, Inc. - All rights reserved
March 2008
9
Other Integrated Biorefinery Options • Sugarcane and biothermal ethanol with algae • Sugarcane to ethanol through conventional fermentation • Gasification of co-produced biomass (bagasse and leafy trash) • Conversion of synthesis gas into additional ethanol through anaerobic digestion • Carbon dioxide from fermentation and tail gas from anaerobic digestion to algae cultivation • Application in environments with low power prices
• Cellulosic Ethanol & Algae • Enzymatic hydrolysis of lignocellulosic biomass followed by fermentation • Remaining lignite combusted for heat and power • CO2 from fermentation and combustion used for algae cultivation
• Algae with fermentation of meal & protein • • • •
Extraction of oil in aqueous environment Meal and protein fermented to ethanol CO2 from fermentation recycled to algae culture Suitable for arid environments
© Organic Fuels Holdings, Inc. - All rights reserved
March 2008
10
Current Status • • • • • •
Integration of biomass fermentation and algae cultivation is subject of a patent held by Cargill (WO/2006/127512) NREL Aquatic Species program and other early studies also explored integration options as a means for enhanced carbon dioxide environments UT Auburn and several other institutions actively exploring process options Problems are in the realm of cost effective engineering solutions rather than fundamental science Capital intensity of large scale operations will make the first project difficult to finance Likely path to commercialization through small to intermediate scale algae projects piggybacking onto large scale proven sugarcane technology
© Organic Fuels Holdings, Inc. - All rights reserved
March 2008
11
Conclusions • Large Scale Integrated Biorefineries • Are economically viable and can compete in a $70+/bbl crude oil environment without tax credits or subsidies • Can be designed to combine complimentary processes to yield ethanol and biodiesel • Can be designed to utilize carbon dioxide from renewable fuel processes to cultivate algae up to the maximum limit of available sunlight • Can be designed to produce a product slate of ethanol and biodiesel to fit the demand profile in the major fuel markets • Can be commercialized using the strength of known technologies such as sugarcane ethanol to support emerging algae technologies
© Organic Fuels Holdings, Inc. - All rights reserved
March 2008
12
March 2008
1
Organic Fuels
•
Houston based producer of biofuels • Operating 55 MM GPY biodiesel plant on Houston Ship Channel since January 2006 • Projects in development for ethanol from biomass and sugarcane • Biodiesel feedstock integration into palm, jatropha and algae
•
For ethanol, focus is on integrated biorefineries
© Organic Fuels Holdings, Inc. - All rights reserved
March 2008
2
Renewable Fuels 101
Photosynthesis • • • • •
Approximate chemical reaction: n CO2 + n H2O + 7n photons + nutrients => CnH2nOnNxSy + n O2 Solar Incidence is 4 to 7 kWh/m2, but only 47% is in the right frequency range for photosynthesis Other inefficiencies and plants’ internal energy usage make that less than 10% of available sunlight is actually converted into usable biomass Green algae are the most efficient, converting 7 - 8% of total sunlight into usable biomass with a maximum theoretical yield of 140 ton DM/acre/year of which 40% could be available as lipids (15,000 gallons/acre/year) By comparison, soy beans yield only 1.5 ton DM/acre/year containing only 20% oil (90 gallon/acre/year), while sugarcane typically yields 15 ton DM/acre/year for 800 gallon/acre/year of ethanol
Converting CO2 into renewable fuels does not sequester much carbon, it just slows down the continuing increase in atmospheric CO2 from burning fossil fuels © Organic Fuels Holdings, Inc. - All rights reserved
March 2008
3
Importance of Efficiency • Overall conversion efficiency of solar energy into renewable fuels is overriding consideration • Increases cost competitiveness with fossil fuels • Reduces land use requirements and food versus fuels arguments • Ultimate replacement of all fossil fuels by renewables is only feasible with large-scale, highly efficient operations
• Key consideration in efficiency and cost effectiveness is integration of complimentary technologies and processes • Whole Hog approach • Large scale allows effective use of by-product streams © Organic Fuels Holdings, Inc. - All rights reserved
March 2008
4
Integrated Biorefineries Process Selection • •
Microscopic Green Algae are the most efficient converters of sunlight to biomass Limiting factors in algae growth • • • •
• • •
Sunlight (availability, penetration, day/night cycle, seasonality) Nutrients Environment (temperature, salinity, acidity) Carbon dioxide (low ambient air concentration, slow diffusion)
Sunlight is a given, nutrients and environment can be easily adjusted and managed: Carbon dioxide is in most cases the limiting factor Source of enhanced carbon dioxide supply can be fossil or renewable Concept of Integrated Biorefinery as proposed here is an integration of processes that combine the efficiency of algae cultivation with a renewable source of carbon dioxide from a complementary renewable fuels process
© Organic Fuels Holdings, Inc. - All rights reserved
March 2008
5
Integrated Biorefineries Design Criteria • Land & Water Use • Ideal configuration is contiguous acreage with maximum economical transport distance as radius • Competition with food production is unavoidable, but can be minimized by maximizing efficiencies
• Maximize CO2 conversion into usable fuels
• Combine fermentation and combustion with algae cultivation • Increase effectiveness of algae cultivation up to the limit of available sunlight
• Sustainability • Systems requiring the availability of cheap labor in order to be economically viable are not sustainable in the long-term • Minimize undesirable extraneous inputs/outputs (i.e., fertilizer in, waster water effluent out) © Organic Fuels Holdings, Inc. - All rights reserved
March 2008
6
Example Integrated Sugarcane Ethanol & Algae 15,000 acre Solar Incidence 6 kWh/m2/d
Algal Biomass 4,800 t/d
Ponds
190 MM GPY Biodiesel
Extraction & Biodiesel
140 MM lbs/y Glycerin 980,000 t/y Meal/Protein
Carbon Dioxide 1,000 t/d 200,000 acre 24,000 t/d Green Cane Leafy Trash 4,000 t/d
Bagasse 5,600 t/d
Storage & Drying
Ethanol Plant
Sugar Juice
Mill
Filter Cake
Carbon Dioxide 8,500 t/d
Vinasse
Biofuel 5,800 t/d
120 MM GPY Fuel Ethanol
Power Generation
240 MW Export power
Ash
Fertilizer Plant
© Organic Fuels Holdings, Inc. - All rights reserved
March 2008
7
Sugarcane Ethanol & Algae - Capital • Investment • • • •
Land 200,000 acres @ $500/acre Farm Equipment & Infrastructure Mill & Ethanol Power, fertilizer & utilities
• • • • •
Ponds 15,000 acres @ $50,000/acre Water circulation and CO2 distribution Extraction Plant Biodiesel 190 MM GPY Offsites
Total Ethanol
$MM 100 100 220 80 500
Total Algae
750 250 60 100 40 1,200
Total Capital
1,700
• Petroleum Analogy • Capital is equivalent to $35/bbl of “reserves” when taken over a 20 year “life of the field” • Capital includes equivalent of downstream as well as upstream • Renewables have no exploration risk and field life is in principle unlimited • Petroleum does not have same level of co-product benefits (meal/protein, power)
© Organic Fuels Holdings, Inc. - All rights reserved
March 2008
8
Sugarcane Ethanol & Algae - Margins • Revenues • • • • •
Biodiesel 190 MM GPY @ $3/gallon ($70/bbl WTI, $15/bbl refining, $1/gallon tax credit) Glycerin 140 MM lbs/y @ $0.10/lbs Meal/Protein 980,000 t/y @ $200/ton Ethanol 120 MM GPY @ $2/gallon ($70/bbl WTI, $15/bbl refining, no tax credit) Power 240 MW @ $80/MWh dispatched 8,200 h/y Total Revenues
• Costs • • • •
Sugarcane production 8.2 MM ton @ $25/ton Ops & Maintenance cost Mill, Ethanol & Power Ops & Maintenance cost Algae & Biodiesel S, G & A
Total Costs EBITDA
$MM/y 570 14 196 240 160 1,180 $MM/y 200 120 180 30 530 650
• Petroleum Analogy • Overall gross margin $265/bbl versus petroleum $60 to 90/bbl upstream and $10 to 15/bbl downstream • Even without excise tax credits for biodiesel, EBITDA of $460 MM will result in viable project and gross margins of $184/bbl, better than petroleum
© Organic Fuels Holdings, Inc. - All rights reserved
March 2008
9
Other Integrated Biorefinery Options • Sugarcane and biothermal ethanol with algae • Sugarcane to ethanol through conventional fermentation • Gasification of co-produced biomass (bagasse and leafy trash) • Conversion of synthesis gas into additional ethanol through anaerobic digestion • Carbon dioxide from fermentation and tail gas from anaerobic digestion to algae cultivation • Application in environments with low power prices
• Cellulosic Ethanol & Algae • Enzymatic hydrolysis of lignocellulosic biomass followed by fermentation • Remaining lignite combusted for heat and power • CO2 from fermentation and combustion used for algae cultivation
• Algae with fermentation of meal & protein • • • •
Extraction of oil in aqueous environment Meal and protein fermented to ethanol CO2 from fermentation recycled to algae culture Suitable for arid environments
© Organic Fuels Holdings, Inc. - All rights reserved
March 2008
10
Current Status • • • • • •
Integration of biomass fermentation and algae cultivation is subject of a patent held by Cargill (WO/2006/127512) NREL Aquatic Species program and other early studies also explored integration options as a means for enhanced carbon dioxide environments UT Auburn and several other institutions actively exploring process options Problems are in the realm of cost effective engineering solutions rather than fundamental science Capital intensity of large scale operations will make the first project difficult to finance Likely path to commercialization through small to intermediate scale algae projects piggybacking onto large scale proven sugarcane technology
© Organic Fuels Holdings, Inc. - All rights reserved
March 2008
11
Conclusions • Large Scale Integrated Biorefineries • Are economically viable and can compete in a $70+/bbl crude oil environment without tax credits or subsidies • Can be designed to combine complimentary processes to yield ethanol and biodiesel • Can be designed to utilize carbon dioxide from renewable fuel processes to cultivate algae up to the maximum limit of available sunlight • Can be designed to produce a product slate of ethanol and biodiesel to fit the demand profile in the major fuel markets • Can be commercialized using the strength of known technologies such as sugarcane ethanol to support emerging algae technologies
© Organic Fuels Holdings, Inc. - All rights reserved
March 2008
12
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