Progress In Expanding Black Pellet Markets

Transcription

1 Progress In Expanding Black Pellet Markets Zilkha Biomass Fuels ARGUS EUROPEAN BIOMASS TRADING 2014 April 10, 2014

2 The Zilkha Value Proposition Renewable fuel that can support utility-scale baseload power generation. Zilkha Black pellet is an advanced biomass pellet that is grindable, low-dust, water-resistant, and can be fired in existing power stations with minimal capital expenditure 2

3 Loading during heavy rain Black Pellet Advanatges 3

4 LOGISTICS: Black pellets will always be cheaper to ship TWO DISTINCT ADVANTAGES: ZILKHA BLACK STD WHITE 1) Each tonne of Black pellets holds 15% more energy 2) 15% more tonnes of Black pellets fit on each ship Net Calorific Value (CV) 19.4 GJ/mt 17.0 GJ/mt Pellet Bulk Density 750 kg/m3 640 kg/m3 Cubic space onboard 58,500 m3 58,500 m3 Tonnes onboard 43,875 mt 37,440 mt CV onboard 851,175 GJ 636,480 GJ ~30% savings with Zilkha Black pellets 4

5 Progress in Expanding Black Pellet Markets Selma Construction Licensing & Valmet Safety 5

6 Selma Under Construction 6

7 Zilkha Biomass Selma Conversion to Black Pellets Silo Footprint is Site for Thermal Treatment Island 7

8 Site Work Old Pellet Silo Demolition BEFORE AFTER 8

9 Site Work Pellet Silos BEFORE IN PROGRESS 9

10 Site Work WESP Area BEFORE AFTER 10

11 Areas Ready for Equipment Install Burner Area Dry Hammer Mill Area 11

12 Areas Ready for Equipment Install Converyors Control Room 12

13 Accepting Delivery of Procured Equipment Thermal Treatment Capping Valves and Steam Ejector 13

14 Accepting Delivery of Procured Equipment Thermal Treatment Infeed Bin and Screw 14

15 Accepting Delivery of Procured Equipment Green Hammer Mill 15

16 Accepting Delivery of Procured Equipment Mill Conveyors 16

17 Zilkha Selma Under Construction Overview o Selma, Alabama o 275,000 mtpy o Online 4Q-2014 (est.) o Long-term plant staffing: 55 jobs LEGEND --- Truck --- Barge Feedstock o 100% softwood, Southern Yellow Pine Logistics o Trucking from Selma to Jackson o Joint barge fleeting from Jackson to Mobile o Export from Port of Mobile Progress and Notes o Contractors on site o Hiring underway Selma, AL (275,000 mtpy) 17

18 Licensing 18

19 Zilkha European Supply Capability Project development pipeline following Selma Current licensee to provide additional 800,000 mtpy Valmet partnership expands universe of potential licensees, and accelerates development 19

20 Zilkha-Valmet Collaboration Valmet introduced to Zilkha by European technology partner Collaboration between Valmet and Zilkha to jointly market technology to global industry network Valmet to provide equipment and guarantees 20

21 Valmet Overview Valmet 2012 Sales Breakdown Formed in 1951 as Finnish state industrial conglomerate De-merged from Metso Dec ,000 employees in 30+ countries Listed on NASDAQ OMX Helsinki Assets Equity Net Debt Net Sales EBITA = 2,637 mm = 865 mm = ( 72 mm) = 3,005 mm = 192 mm 21

22 Valmet: Business Lines Serving Pulp, Paper and Energy Industry Services Pulp and Energy Paper Mill and plant improvements Roll and workshop services Parts and fabrics Life-cycle services Technologies and solutions for Pulp production Energy production Biomass conversion Biogas & Bio-oil Liquid fuels (ethanol) Black pellets Technologies and solutions for Board production Tissue production Paper production 22

23 Valmet Partnership (formerly Metso ) Well-known, trusted equipment and technology supplier to the pulp & paper industry Performance guarantee of equipment Global footprint Patented thermal treatment process High-quality Zilkha Black pellet Pellet marketing network Active licensing pipeline JOINT GLOBAL MARKETING 23

24 The Safety Case for Black Pellets Pellet Dust Risk Assessment 24

25 How to Quantify Key Operational Risks? Pellet fines, dust, and heating are the problem The history of biomass pellets has been and continues to be one of fires and explosions Risk management requires: o Assessment of sources of risk and the interrelationships between risk factors o Estimation of the probability of occurrence o Calculation of risk exposure 25

26 What Are The Risk Factors? The total quantity of fines and dust the more fine dust the higher the risk Dust mobility lighter material stays afloat in air longer where it is easily exposed to detonation Ignitability the easier it detonates the higher the risk Self-heating though not explosive, self-heating is a key source of pellet fires 26

27 Model for Probability-Based Risk Assessment Explosion Risk Fuel Oxygen Ignition Thermal Risk Quantity of Dust Dust Mobility Dust Ignition Energy Self Heating x x + = Relative Probability of Occurrence % Fines Dust Settling Rate Dust Ignition Potential Ratio of Emissions 27

28 Quantity of Dust: More Dust = Higher Exposure Pellet fines ( 3.15 mm) are limited in IWPB Industrial Grade 2 Spec to < 5% Say white pellets fines are ~4% and Zilkha Black pellets fines are ~1% Conclusion: white pellets have 4x the dust exposure as Black pellets 28

29 Dust Mobility: Black Pellet Dust Is Less Mobile Dust explosion risk is higher when mixed with air Slow-settling fluffy dust has a higher risk of explosive detonation than more granular dust which settles quicker Settling rate is a function of dust bulk density White pellet dust is 23 lb/ft3 and Black dust is 36 lb/ft Conclusion: White dust ~50% more likely to remain airborne longer 29

30 Dust Ignition Energy: The Trigger Threshold DUST EXPLOSION ANALYSIS WPAC Standards Zilkha Black Coal Dust cloud auto-ignition temperature C Dust cloud minimum ignition energy (mj) Dust cloud max. explosion pressure (bar) Dust cloud Minimum Ignition Energy (MIE) is a standard measure for safe dust handling MIE for white pellets is 17 MJ MIE for Black pellets is MJ Conclusion: It takes 6 to 18 times as much energy to detonate Black pellet dust 30

31 Self Heating: A Non-Explosive Fire Risk Decaying, moist biomass decomposes and produces CO, CO2, & methane Workplace hazard for workers, requiring confined space work rules & breathing equipment Self-heating temperature increases can reach thermal ignition temperatures Off-gassing is a marker for self-heating risk and is 8x higher for white pellets than for Black pellets Conclusion: White pellet self-heating risk is 8x Black 31

32 SAFETY: Black pellets limit dangerous gas emissions Less carbon monoxide: Zilkha Black pellets tested as far less reactive than white WHITE Zilkha Black pellets showed reduced oxygen depletion Less methane: BLACK WHITE More oxygen: BLACK Oxygen depletion is a significant operational barrier. Buddy systems and other special safety restrictions are required for workers handling white pellets BLACK WHITE Similar 45 deg. C 32

33 Overall White Pellet Risk Is Much Higher 4x the dust exposure as Black pellets 50% more likely remain airborne longer than Black 6 to 18 times as much energy to detonate Black pellet dust White pellet self-heating risk is 8x Black Applied to the previous model the event probability could easily be ~5% for white pellets and <0.5% for Black Risk can t be measured but it is real and can be quantified 33

34 How About The Costs of an Explosion or Fire? Direct fire fighting cost Damage to the power plant and repairs Fuel that is burned (lost) in the incident Fines & penalties Lost profits during repairs & restart (revenue - fuel) Increased insurance cost (zero if self insured) Public relations Management time opportunity cost Costs could easily be $40+ million or more per incident 34

35 Rolled Up Risk Assessment The cost of an explosion/fire event may be about the same for either white or Black But the probability of occurrence is higher for one than the other (10x, 20x ) The Expected Risk (Cost x Chance) is far higher for white than Black Assessment methods vary, the importance of assessing the risk does not 35

36 The Safety Case for Black Pellets Key goal for management is to minimize expected, probability-weighted costs Despite considerable experience with biomass, risks of fire & explosions are real Margin of safety is far better with Black Black pellets provide a quantifiable, lower cost approach to receiving, storing, and burning biomass fuel 36

37 Summary Update WIND Zilkha Renewables ( ) E & P Zilkha Energy ( ) BIOENERGY Zilkha Biomass (2006) Selma under construction Actively licensing to provide reliable supplies Valmet collaboration Better safety profile Zilkha Black pellets are grindable, low-dust, water-resistant, and can be fired in existing power stations with minimal capital expenditure Selim Zilkha Michael Zilkha 37