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27 March Economics of chemicals and fuels from forest biomass Tom Browne
2 © FPInnovations Annual average oil prices, $US/bbl $80 to $100/bbl: the new normal?
3 © FPInnovations Mechanical pulp Newsprint Source: FAO 3
4 © FPInnovations Source: FAO Regional newsprint demand Severe drop in NA, flat in EU, growth in Asia
5 © FPInnovations 5
6 © FPInnovations A Lesson from Petroleum Refineries Transportation Fuels Other Fuels and Products Chemicals, Plastics, Rubber Petroleum End-uses 70% 26% 4% Revenues 43% 42% 15% Source: T. Werpy, 2009 BioWorld Conference
7 © FPInnovations Todays Forest Bio-refinery Solid wood products Other Fuels and Products Pulp and paper products Forestry end-uses 45% 34% 21% Benefits 57% 37% 6% 1 odt wood generates: kg $450/t kg $600/t kg $675/t kg BL $65/t kg solid $65/t Total value $355/t
8 © FPInnovations Scale of Refineries WhereWhatCapacity, GW Shell refinery, Montreal (shut) 130,000 bbl/d9 GW oil Nanticoke3.5 GW power11 GW coal Saudi Aramco 7 refineries 1.5 MMbbl/d105 GW oil US refining capacity 16 MMbbl/d1100 GW oil Canadas largest pulp mills 5,000 t/d wood supply 1 GW wood World oil use78.5 MMbbl/d5400 GW oil
9 © FPInnovations Economies of scale vs. feed costs
10 © FPInnovations Economies of scale vs. feed costs 1 GW10 GW
11 © FPInnovations Volume or Value? Source: Thermochemical Strategies for Biofuels, Green Chemicals, Polymeric Biomaterials and Biofuels, Esteban Chornet, November Market size Market price ($/kg)
12 © FPInnovations Substitution of Existing Chemical Feeds Tactical approach: –Requires an exact molecular replicate of existing feeds –Cost, product performance will be crucial Olefins: thin margins, strong competition –Bio-ethylene from Brazilian sugar cane BTX: Breakthrough required –No easy path from lignin to commercial aromatics –The same issues of volumes vs. capex arise
13 © FPInnovations New Chemicals Based on Bio-properties Identify novel products based on unique biomass properties Requires strategic thinking –Cost less critical if new functionalities available? –Exact molecular replicate less critical? New capital infrastructure? Is this our 4%?
14 © FPInnovations Approach Identify value-added products from wood –Focus on chemicals first, then energy from residues Early economic evaluation (Bio-Pathways) Start with bolt-on additions to existing plants –Improve economics of existing infrastructure –Reduce costs due to shared infrastructure Build relationships with customers –Lab-scale samples initially, pilot scale as demand arises –Ensure product meets customers needs Involve engineering firms early –Good estimates of capex, opex, unexpected problems
15 © FPInnovations Long term: brownfield biorefineries Located on an existing mill site –Reuse existing equipment Integrated with forestry supply logistics –Build it as big as possible, consistent with supply costs –Produce a cheap-to-ship intermediate –Better understanding of processes and markets allows this –Use all components of wood in profitable fashion –Energy self-sufficient Integrated with end-users infrastructure –Minimize changes to existing petro-chemicals
16 © FPInnovations Pathways Pulp Mill Pulp, papers Chips Conventional processes Lignin New products Chemical processes Ethanol, others Hemi- cellulose Fermentation processes Products synthesis Bark, Sludge Residues Gasification, pyrolysis Polymers Chemical Processes New products Sludge, Effluents Bio-chemical processes Cellulose New Bio-products Ex: NCC Chemical processes
17 © FPInnovations Forestry-Chemical Industry: one model Existing P&P mill Existing steam plant Existing effluent treatment Softwood Bark P&P Hardwood Bark New Process Fermentation or other new BuOH, EtOH Sugar Lignin Resins New processes Shared infrastructure
18 © FPInnovations Conclusion Biomass is bulky, wet and distributed Petroleum is cheap, dense, comes out of a pipe GW TH -scale of forestry installations: –Driven by feedstock costs –Implies additives, not wholesale replacement Competing in commodities will be very challenging The petroleum example is critical –4% of feed makes 42% of revenues –Doing something useful with the other 96% is equally critical We can always burn the residues –Combustion, fermentation are among our oldest technologies
19 © FPInnovations Mankinds oldest technologies The pointy stick… –To catch dinner Fire… –To cook dinner Fermentation… –To wash down dinner
20 © FPInnovations Thank you for your attention Support came from Natural Resources Canadas Transformative Technologies Program
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