BIOREFINING TECHNOLOGIES SUITED TO NEWFOUNDLAND & LABRADOR

Transcription

1 BIOREFINING TECHNOLOGIES SUITED TO NEWFOUNDLAND & LABRADOR Stephanie Jean, Frederic Clerc, Virginie Chambost, Paul Stuart École Polytechnique Montréal EnVertis Consulting

2 PRESENTATION OUTLINE Introduction to the Forest Biorefinery Case Study: Fast Pyrolysis Biorefinery Winning Conditions: Enhanced Strategies 2

3 WHY AM I HERE? 3 École Polytechnique Professor of Chemical Engineering Product and Process Design Process Systems Engineering Value Chain Optimization Forest Industry Transformation EnVertis Consulting EnVertis Consulting is dedicated to supporting the forestry industry in the identification and implementation of successful context specific biorefinery strategies. Conducted a project with FAA NL to explore the potential for the forest based biorefinery 3

4 CONTEXT OFTHIS PRESENTATION 4 Biorefinery in NL: Many possibilities Some friendly advice for the NL context You have a hot potato: Management of much of the forest resource in NL You have an amazing opportunity: Management of much of the forest resource in NL 4

5 OBJECTIVES OF THIS PRESENTATION Introduction to the Forest Biorefinery Identifying the sustainable biorefinery strategy. Case Study: Fast Pyrolysis Biorefinery Fast pyrolysis could present an interesting approach. However the returns don t justify the project risk Winning Conditions: Enhanced Strategies With an innovative approach, the potential upside is there for the Province of Newfoundland and Labrador in the bioeconomy. 5

6 PRESENTATION OUTLINE Introduction to the Forest Biorefinery Case Study: Fast Pyrolysis Biorefinery Winning Conditions: Enhanced Strategies 6

7 FOREST BIOREFINERY DEFINITION 7 Forest biorefinery definition emphasizing sustainability: Full utilization of incoming woody biomass: Wood products Pulp and paper products Green power Engineered wood products and construction systems Biofuels, biochemicals, biomaterials Another (perhaps more practical) forest biorefinery definition that drives biorefinery development: Maximize the economic value from trees Improved business model Innovative value chains 7

8 IDENTIFYING THE RIGHT BIOREFINERY CONFIGURATION 8 Which combination is best for Newfoundland and Labrador? 8

9 VOLUME MARGIN TRADE OFFS FOR THE FOREST BIOREFINERY 9???

10 SYSTEMATIC APPROACH FORBIOREFINERY IMPLEMENTATION PHASED APPROACH FOR BIOREFINERYSTRATEGIES Implementation Compete with all capital spending Phase I Lower Operating Costs Replace fossil fuels at plant (natural gas, fuel oil) Produce building block or primary chemicals Lower risk technologies Phase II Increase Revenues Manufacture of added value derivatives Market development for new products Higher process complexity and technology risk Partners increasingly essential Phase III Improve Margins Knowledge based manufacturing and production flexibility Business flow transformation Product development culture Off shoring, outsourcing, etc Strategic Vision Phases II and III should determine Phase I 10

11 SOME HEURISTICS 11 Obviously: An investment in the forest bioeconomy should target a long term competitive, sustainable strategy The keys to a long term competitive position: Low feedstock cost Added value products Biomass is expensive in general, and the cost is not linear with scale Biomass is not inexpensive in Newfoundland and Labrador Critical element to the strategy in NL must emphasize addedvalue products to be sustainable Consider the approach of the Canadian forest products sector Phased implementation is critical to mitigate technical and market risk Near term: technology Longer term: market 11

12 PRESENTATION OUTLINE Introduction to the Forest Biorefinery Case Study: Fast Pyrolysis Biorefinery Winning Conditions: Enhanced Strategies 12

13 CONTEXT The Forestry and Agrifoods Agency for the Province of Newfoundland and Labrador (FAA NL) retained the services of EnVertis to identify and evaluate biorefinery strategies for utilizing the forest resource in NL. An alternative to the opportunistic approach to managing the forest resource of Newfoundland and Labrador. A systematic approach was used (1) to identify asetof site/technology options for biorefinery implementation, in conjunction with CBPP and (2) to triage and prioritize the preferred options.

14 OVERALL APPROACH USED FOR THE STUDY Part 1 Biorefinery Scenario Definition Part 2 Biorefinery Scenario Selection Biore inery Scenario Biore inery Candidates Early Stage Assessment Decision Making Process Initial Selection Factors Technology maturity Technology risks Access to biomass (quality/quantity) Minimum design capacity Minimum market requirements Capital investment Biomass cost to revenue ratio Strengths and weaknesses Alt.1 Alt.3 Alt.5 Fast Pyrolysis BTG BTL Valmet Fractionation Lignol AVAP Biocomposites Andritz/ Extruders Alt.2 Alt.4 Large Block Analysis Preliminary Techno Economics Preliminary Product/ Market Analysis Criteria De inition & Evaluation Multi Criteria Decision Making (MCDM) Panel Preferred Biore inery Product Process Strategy Uncertainties and Risks v 14

15 OVERALL APPROACH USED FOR THE STUDY Part 1 Biore inery Scenario De inition A set of 6 options was retained considering 3 sites (CBPP, Grand Falls and Goose Bay) as well as 3 technology options (fast pyrolysis, fractionation and biocomposites). 15

16 SUMMARY OF TECHNO ECONOMIC RESULTS Fast Pyrolysis CBPP Fast Pyrolysis Grand Falls Fast Pyrolysis HVGB Fractionation CBPP Fractionation Grand Falls Biocomposites CBPP Biomass volumes (Phase 2) v 680 bdmt/d 680 bdmt/d 340 bdmt/d 1,000 bdmt/d 1,000 bdmt/d 40 bdmt/d Total Capital Cost (Phase 1 +Phase 2) 122 M$ 130 M$ 74 M$ 586 M$ Phase 1: 107 M$ Phase 2: 474 M$ 598 M$ Phase 1: 122 M$ Phase 2: 475 M$ 32 M$ Revenues (In reference year Phase 2) Production cost (In reference year Phase 2) EBITDA Revenues Production costs 63 M$/y 60 M$/y 30 M$/y 267 M$/y 267 M$/y 41 M$/y 30 M$/y 31 M$/y 22 M$/y 171 M$/y 171 M$/y 26 M$/y 33 M$/y 28 M$/y 8 M$/y 96 M$/y 96 M$/y 15 M$/y Operating margin EBITDA/Revenues 53% (Phase 1: 37%) 48% (Phase 1: 35%) 26% (Phase 1: 60%) v 36% (Phase 1: 3%) 36% (Phase 1: 10%) 37% (Phase 1: 24%) Internal Rate of Return (Phase 1 + Phase 2, 20 years) 21% 17% 17% 15% (Phase 2 only: 20%) 14% 30% Very different options: low high CAPEX, low high return, low high biomass utilization, low high EBITDA 16

17 MULTI CRITERIA DECISION MAKING (MCDM) PANEL Decision making criteria were defined in collaboration with FAA in order to reflect its different values, drivers and objectives 1,0 Biorefinery Op ons Ranking Fast pyrolysis was the preferred option, balancing different performance and risk criteria. Overall Score 0,9 0,8 0,7 0,6 0,5 0, C7 DEP C6 GHG C5 PIC C4 SBD C3 RFS 0,3 C2 RPG 0,2 C1 IRR 0,1 0,0 Fast Pyrolysis CBPP Fast Pyrolysis GF Fast Pyrolysis GB Frac ona on CBPP Frac ona on GF Bio compo. CBPP Back to Menu 17

18 PRESENTATION OUTLINE Introduction to the Forest Biorefinery Case Study: Fast Pyrolysis Biorefinery Winning Conditions: Improved Alternatives 18

19 FAST PYROLYSIS LEADING TECHNOLOGY PROVIDERS Company Country Justification Canada Leading Canadian pyrolysis technology provider, with commercial plant of 100 BDMT/d of biomass, and plans to scale up to 400 BDMT/d, based on a fluidized bed technology. The Netherlands Dutch company with more than 15 years experience in pyrolysis, with a demo v plant of 2 t/h of bio oil in Malaysia and a 5 t/h plant recentlystarted in 2015 in the Netherlands (Empyro). Finland Leading pulp and paper equipment supplier with strong energy equipment expertise. Running an 8 t/h pyrolysis oil in Finland, started late Fast Pyrolysis can be considered a proven technology At capacities of interest to NL 19

20 FAST PYROLYSIS PLANT: 100 BDMT/D BIOMASS INPUT 20

21 FAST PYROLYSIS PLANT: 120 BDMT/D BIOMASS INPUT 21

22 FAST PYROLYSIS 21 t/h Flue gas 180 C 2.4 BTU 0.7 MW 5 t/h biomass 81.9 BTU 24 MW Moisture content 5% 23.6 BTU steam 6.9 MW 29 bar 3.4 pyrolysis oil (68 wt %) 52.3 BTU 15.3 MW 22

23 FAST PYROLYSIS PROCESS OVERVIEW Process Rapid heating ( seconds) of biomass in the absence of oxygen at C, producing vapours that are condensed into bio oil. Product Liquid bio oil, 20 25% water content, oxygen content, low ph (2.5 3) suitable as a heavy/light fuel oil substitute. Char 18% yield Biomass 40 55% moisture 340 bdmt/d Biomass drying & grinding 5 8% moisture 1 3 mm size Pyrolysis reactor & combustor Solids separation Non condensable gas 12% yield Condensation Pyrolysis oil / Bio oil 70% yield 68 Mliters/y (18 Mgal/y) Internal steam re circulation Steam production Excess steam to military base (winter) 23

24 POTENTIAL MARKETS FOR FAST PYROLYSIS BIO OIL Market drivers to produce and sell bio oil in Newfoundland and Labrador: No access to natural gas in NL Premium on price for HFO/LFO is paid in NL Large energy consumers in the Labrador mining sector Fuel oil consumption in Newfoundland Potential for RINs with export to the USA Phased implementation can mitigate market risk, and lead to an increase in produced volume as the market is developed 24

25 ESTIMATE OF PYROLYSIS OIL MARKET IN NL (VS 68 ML/Y) NALCOR in Labrador 15 ML/y of LFO (eq. to 20 ML/y of PO) Total PO Potential in Labarador = 200 ML/y Iron Ore Canada (Rio Tinto) 100 ML/y of HFO (eq. to 140 ML/y of PO) Arcelor Mittal Mont Wright (QC) 6 ML/y of HFO (Eq. To 10 ML/y of PO VALE 25 ML/y of LFO (eq. to 30 ML / y of PO) Government institutions (island) 23 ML/y of LFO (Eq. to 30 ML/y of PO) Total PO Potential on the Island = 36ML/y CBPP 6 ML/y of PO 25

26 RINS: THE KEY TO IMPLEMENT RFS2 AND DRIVE REFINERY COMPLIANCE RINs is a tool to implement the Renewable Fuel Standard 2 (RFS2 2007), which targets 36 billion gallons of renewable fuels by 2022 (~ 26% of 2014 gasoline consumption) Renewable Identification Number (RIN) is a serial number associated with each gallon of renewable fuel produced, enabling the EPA to track compliance of refineries RINs can be exchanged on markets in the forms of a credit: refineries who exceeded their quotas can sell RIN credits to refineries did not meet their quotas, i.e. did not blend sufficient biofuels quantities RIN Name Min. GHG reduction Qualifying Fuel Different categories of RINs exists, depending of the type of biofuel generated and its feedstock. Bio oil from the fast pyrolysis process falls into the Cellulosic category (C RINs), with significant mandates starting Cellulosic Biofuels Bio based Diesel Advanced Biofuel C RIN (D3 RIN) D RIN (D4 RIN) A RIN (D5 RIN) 60% 50% 50% Any fuel derived from cellulosic biomass FME or any hydrogenated biodiesel Any fuel other than Corn Ethanol, e.g. butanol, bio gas, from sugar cane or noncorn starches Renewabl e Fuel R RIN (D6 rin) 20% Conventional Corn Starch Ethanol 26

27 RINS CREDITSVALUEISVOLATILE RIN Prices have fluctuated significantly over the past 3 years in response to a number of market and regulatory factors Source: The International Council on Clean Transportation Generally, RIN prices are inversely related to fluctuation in crude oil and gasoline/diesel prices Source: Turner, Mason & Company 27

28 BIO OIL VALUE PROPOSITION TO REFINERIES Traditionally, RIN Credit generation and value capture occurs when the biofuel is blended downstream of the refinery at rack terminals with diesel and gasoline. In the case of co processing of bio oil in FCC units, refineries would generate RIN credits upstream, giving independent refineries without significant downstream infrastructure the ability to capture C RINs value. Through this model, the bio oil producer may negotiate a % of the RINs value. Upstream Downstream Crude Oil / VGO Diesel / Gasoline Bio oil Refineries RIN Obligations Biofuels, e.g. ethanol to the blend wall limit 28

29 FAST PYROLYSIS IN NL: COULDTHIS STRATEGY BE A WINNER? Proven scale fast pyrolysis plant in Happy Valley Goose Bay Opportunity to enter pyrolysis oil market Discounted wood from Muskrat Falls Allowable cut 74 MM$ investment, 17% IRR Potential off takers: Mining industry in Labrador Off takers in Newfoundland US refineries for RINs Sounds good but not good enough The return must justify the risks: technology and market Need a business plan competitive for the longer term Can we define a strategy that achieves 25% IRR Follow with further pyrolysis oil production in a second location 29

30 PRESENTATION OUTLINE Introduction to the Forest Biorefinery Case Study: Fast Pyrolysis Biorefinery Winning Conditions: Enhanced Strategies 30

31 ENHANCED STRATEGIES BASED ON FAST PYROLYSIS Due to the scale of the plant, there should be a focus on added value products. Due the location of HVGB, local markets should be emphasized if possible, to minimize transportation costs and market risk. Potential opportunties: Fresh fruits and vegetables come from outside NL, and must be subsidized, Unemployment in the region (when there isn t a mega project under construction ), Timber 31

32 ENHANCED STRATEGIES BEING CONSIDERED Pathway 1: Strategies Emphasizing Local Markets 1.1 Greenhouse, with low grade steam/biochar from fast pyrolysis 1.2 Using fast pyrolysis steam as heat for lumber drying in a sawmill adjacent to the pyrolysis plant 1.3 Production of activated carbon using the char from fast pyrolysis, activated with the steam Pathway 2: Strategies Emphasizing Export Markets 2.1 Progressive pyrolysis oil condensation to separate higher value, oxygen containing organic chemicals 2.2 Production of PF Resins from the lignin content in pyrolysis oil 2.3 Extraction of biomass hemicelluloses before pyrolysis to produce Xylose 2.4 Separation of condensed pyrolysis oil, to eliminate water fraction and sell this as natural herbicide 32

33 FAST PYROLYSIS BASE CASE Char 18% yield Biomass 40 55% moisture 340 bdmt/d Biomass drying & grinding 5 8% moisture 1 3 mm size Pyrolysis reactor & combustor Solids separation Non condensable gas 12% yield Condensation Pyrolysis oil / Bio oil 70% yield 68 Mliters/y (18 Mgal/y) Internal steam re circulation Steam production Excess steam to military base (winter) 33

34 FAST PYROLYSIS BASE CASE REMINDER Fast Pyrolysis Unit Char 18% yield Biomass 40 55% moisture 340 bdmt/d Biomass drying & grinding 5 8% moisture 1 3 mm size Pyrolysis reactor & combustor Solids separation Non condensable gas 12% yield Condensation Pyrolysis oil / Bio oil 70% yield 68 Mliters/y (18 Mgal/y) Internal steam re circulation Steam production Excess steam to military base (winter) 34

35 VALUE ADDED SCENARIO 1: SAWMILL Phase 1 Char Fuel logs & Residues Biomass drying & grinding 5 8% moisture 1 3 mm size a Pyrolysis reactor & combustor a Solids separation Fast Pyrolysis Unit Non condensable gas 12% yield Condensation Pyrolysis oil / Bio oil Internal steam re circulation Steam production Excess steam to military base (winter) 35

36 VALUE ADDED SCENARIO 1: SAWMILL Phase 1 Phase 2 Char Fuel logs & Residues Biomass drying & grinding 5 8% moisture 1 3 mm size a Pyrolysis reactor & combustor a Solids separation Fast Pyrolysis Unit Non condensable gas 12% yield Condensation Pyrolysis oil / Bio oil Internal steam re circulation Steam production Bark, shavings, sawdust Excess steam Sawlogs Sawmill Lumber (value added) 36

37 VALUE ADDED SCENARIO 2: ACTIVATED CARBON Phase 1 Fuel logs & Residues Biomass drying & grinding 5 8% moisture 1 3 mm size Pyrolysis reactor & combustor Solids separation Fast Pyrolysis Unit Non condensable gas 12% yield Condensation Pyrolysis oil / Bio oil a Internal steam re circulation Char Char a Steam production a Excess steam To military base (winter) a 37

38 VALUE ADDED SCENARIO 2: ACTIVATED CARBON Phase 1 Phase 2 Fuel logs & Residues Biomass drying & grinding 5 8% moisture 1 3 mm size Pyrolysis reactor & combustor Solids separation Fast Pyrolysis Unit Non condensable gas 12% yield Condensation Pyrolysis oil / Bio oil a Internal steam re circulation Char Char a Steam production a Excess steam To military base (winter) Greenhouse a Fresh vegetables 38

39 VALUE ADDED SCENARIO 2: ACTIVATED CARBON Phase 1 Phase 2 Fuel logs & Residues Biomass drying & grinding 5 8% moisture 1 3 mm size Pyrolysis reactor & combustor Solids separation Fast Pyrolysis Unit Non condensable gas 12% yield Condensation Pyrolysis oil / Bio oil Phase 3 a Internal steam re circulation Char Char a Steam production a Excess steam To military base (winter) Greenhouse a Fresh vegetables Char Activation Activated carbon 39

40 TAKE HOME MESSAGES The biorefinery represents a great opportunity for NL in the emerging bioeconomy Critical element to the strategy in NL must emphasize addedvalue products to be sustainable Fast pyrolysis can be considered as proven, initially implemented at Happy Valley Goose Bay may be a good place to start Create employment in the region Local market: Unique long term opportunity with mining industry as off takers Export market: US refineries with RINs credits Pressure for GHG emission reduction Enhanced business model essential Increased competitive operation over the longer term Potential for local products to enhance the quality of life? 40

41 Paul Stuart