Presentation on theme: "Economics of chemicals and fuels from forest biomass Tom Browne"— Presentation transcript:
1Economics of chemicals and fuels from forest biomass Tom Browne
2Annual average oil prices, $US/bbl $80 to $100/bbl: the new normal?Apart from a couple of geopolitical events in the 1970’s and 1980’s, oil has been at $20/bbl from the end of WWII to about 2004.At $20, there are not a lot of commercially-viable biomass-based opportunities for new products.Barring unforeseen events such as a glut of shale oil driving prices down, new oil production costs a lot more than drilling a hole in Saudi Arabia. The cash costs associated with deep offshore or arctic drilling, or oil sands production, imply a new long-term price of $80 to $100 which leaves lots of room for new bio-products.
6A Lesson from Petroleum Refineries Revenues43%42%15%Petroleum End-uses26%70%4%Transportation FuelsOther Fuels and ProductsChemicals, Plastics, RubberSource: T. Werpy,2009 BioWorld Conference
7Today’s Forest ‘Bio-refinery’ Benefits57%37%6%Forestry end-uses34%45%21%1 odt wood generates:450 kg $450/t100 kg $600/t105 kg $675/t145 kg BL $65/t200 kg solid $65/t Total value $355/tSolid wood productsOther Fuels and ProductsPulp and paper products
8Scale of Refineries Where What Capacity, GW Shell refinery, Montreal (shut)130,000 bbl/d9 GW oilNanticoke3.5 GW power11 GW coalSaudi Aramco7 refineries1.5 MMbbl/d105 GW oilUS refining capacity16 MMbbl/d1100 GW oilWorld oil use78.5 MMbbl/d5400 GW oilCanada’s largest pulp mills5,000 t/dwood supply1 GW wood
11Volume or Value? Market size Market price ($/kg) Source: “Thermochemical Strategies for Biofuels, Green Chemicals, Polymeric Biomaterials and Biofuels”, Esteban Chornet, November 2005.
12Substitution of Existing Chemical Feeds Tactical approach:Requires an exact molecular replicate of existing feedsCost, product performance will be crucialOlefins: thin margins, strong competitionBio-ethylene from Brazilian sugar caneBTX: Breakthrough requiredNo easy path from lignin to commercial aromaticsThe same issues of volumes vs. capex arise
13New Chemicals Based on Bio-properties Identify novel products based on unique biomass propertiesRequires strategic thinkingCost less critical ifnew functionalitiesavailable?Exact molecularreplicate less critical?New capitalinfrastructure?Is this our 4%?
14Approach Identify value-added products from wood Focus on chemicals first, then energy from residuesEarly economic evaluation (Bio-Pathways)Start with bolt-on additions to existing plantsImprove economics of existing infrastructureReduce costs due to shared infrastructureBuild relationships with customersLab-scale samples initially, pilot scale as demand arisesEnsure product meets customer’s needsInvolve engineering firms earlyGood estimates of capex, opex, unexpected problems
15Long term: brownfield biorefineries Located on an existing mill siteReuse existing equipmentIntegrated with forestry supply logisticsBuild it as big as possible, consistent with supply costsProduce a cheap-to-ship intermediateBetter understanding of processes and markets allows thisUse all components of wood in profitable fashionEnergy self-sufficientIntegrated with end-users infrastructureMinimize changes to existing petro-chemicals
17Forestry-Chemical Industry: one model Fermentation or other newNew ProcessHardwoodSugarBarkBuOH, EtOHExisting steam plantLigninBarkResinsSoftwoodExisting P&P millP&PNew processesExisting effluent treatmentShared infrastructure
18Conclusion Biomass is bulky, wet and distributed Petroleum is cheap, dense, comes out of a pipeGWTH-scale of forestry installations:Driven by feedstock costsImplies additives, not wholesale replacementCompeting in commodities will be very challengingThe petroleum example is critical4% of feed makes 42% of revenuesDoing something useful with the other 96% is equally criticalWe can always burn the residuesCombustion, fermentation are among our oldest technologies
19Mankind’s oldest technologies The pointy stick…To catch dinnerFire…To cook dinnerFermentation…To wash down dinner
20Thank you for your attention Support came from Natural Resources Canada’s Transformative Technologies Program