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Economics of chemicals and fuels from forest biomass Tom Browne

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1 Economics of chemicals and fuels from forest biomass Tom Browne

2 Annual 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.

3 Source: FAO Newsprint Mechanical pulp

4 Regional newsprint demand
Severe drop in NA, flat in EU, growth in Asia Source: FAO

5 http://ipod. about. com/od/ipadmodelsandterms/f/ipad-sales-to-date

6 A Lesson from Petroleum Refineries
Revenues 43% 42% 15% Petroleum End-uses 26% 70% 4% Transportation Fuels Other Fuels and Products Chemicals, Plastics, Rubber Source: T. Werpy, 2009 BioWorld Conference

7 Today’s Forest ‘Bio-refinery’
Benefits 57% 37% 6% Forestry end-uses 34% 45% 21% 1 odt wood generates: 450 kg $450/t 100 kg $600/t 105 kg $675/t 145 kg BL $65/t 200 kg solid $65/t  Total value $355/t Solid wood products Other Fuels and Products Pulp and paper products

8 Scale of Refineries Where What Capacity, GW
Shell refinery, Montreal (shut) 130,000 bbl/d 9 GW oil Nanticoke 3.5 GW power 11 GW coal Saudi Aramco 7 refineries 1.5 MMbbl/d 105 GW oil US refining capacity 16 MMbbl/d 1100 GW oil World oil use 78.5 MMbbl/d 5400 GW oil Canada’s largest pulp mills 5,000 t/d wood supply 1 GW wood

9 Economies of scale vs. feed costs

10 Economies of scale vs. feed costs
1 GW 10 GW

11 Volume or Value? Market size Market price ($/kg)
Source: “Thermochemical Strategies for Biofuels, Green Chemicals, Polymeric Biomaterials and Biofuels”, Esteban Chornet, November 2005.

12 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 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 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 customer’s needs Involve engineering firms early Good estimates of capex, opex, unexpected problems

15 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 Pathways Products synthesis Bark, Sludge New products Sludge,
Residues Gasification, pyrolysis New products Sludge, Effluents Bio-chemical processes Chips Pulp Mill Cellulose Pulp, papers Conventional processes New Bio-products Ex: NCC Chemical processes Ethanol, others Hemi- cellulose Fermentation processes Lignin New products Chemical processes Polymers Chemical Processes 16

17 Forestry-Chemical Industry: one model
Fermentation or other new New Process Hardwood Sugar Bark BuOH, EtOH Existing steam plant Lignin Bark Resins Softwood Existing P&P mill P&P New processes Existing effluent treatment Shared infrastructure

18 Conclusion Biomass is bulky, wet and distributed
Petroleum is cheap, dense, comes out of a pipe GWTH-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 Mankind’s oldest technologies
The pointy stick… To catch dinner Fire… To cook dinner Fermentation… To wash down dinner

20 Thank you for your attention
Support came from Natural Resources Canada’s Transformative Technologies Program

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