Techno economic and Market Analysis of Pathways from Syngas to Fuels and Chemicals Michael Talmadge, Abhijit Dutta & Richard Bain IEA Bioenergy, Task 33 / IEA IETS Workshop on System and Integration Aspects of Biomass based Gasification Gothenburg, Sweden November 20, 2013 NREL is a national laboratory of the U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, operated by the Alliance for Sustainable Energy, LLC.
Objective Assess the economics of producing fuels and chemicals from biomass derived synthesis gas. Process economics based on literature (consistent TEA assumptions) Perform more rigorous TEA on promising pathways o o Biochemical conversion of syngas to ethanol and higher alcohols Ethanol and higher alcohols to infrastructure compatible hydrocarbons Simple product market analyses What can we do with syngas? 2
Analysis Approach Simplified TEA model Inputs from literature sources o Feedstock rate and properties (heating value) o Product yields o Operating costs (variable & fixed) o Capital costs Common scaling assumptions o Capital scaling exponents o Economies of scale for fixed operating costs Operating and financing assumptions for n th plant and pioneer plant Minimum Product Selling Price literature values average, standard deviation & 90% confidence intervals 3
n th Plant Assumptions Parameter Value Basis year for analysis 2011 Feedstock processing capacity 2,000 Dry Tonnes / SD Feedstock cost (woody biomass) $75 / Dry Ton ( 21.60 / MWh) Debt / equity for plant financing 60% / 40% Internal rate of return (after tax) for equity financing 10% Annual interest rate and term for debt financing 8% / 10 years Total income tax rate 35% Plant life 30 years Plant depreciation schedule 7 year IRS MACRS MACRS = Modified Accelerated Cost Recovery System Reliability of operations / on stream factor 0.90 Site development costs 4% of ISBL Installed Capital Working capital 5% of Fixed Capital Investment Indirect costs for capital project 60% of Total Direct Costs Capital equipment capacity scaling exponent 0.70 4
n th Plant Assumptions Parameter Value Basis year for analysis 2011 Feedstock processing capacity 2,000 Dry Tonnes / Day Feedstock cost (woody biomass) $75 / Dry Ton ( 21.60 / MWh) Debt / equity for plant financing 60% / 40% Internal rate of return (after tax) for equity financing 10% Annual interest rate and term for debt financing 8% / 10 years Total income tax rate 35% Plant life 30 years Plant depreciation schedule 7 year IRS MACRS MACRS = Modified Accelerated Cost Recovery System Reliability of operations / on stream factor 0.90 Site development costs 4% of ISBL Installed Capital Working capital 5% of Fixed Capital Investment Indirect costs for capital project 60% of Total Direct Costs Capital equipment capacity scaling exponent 0.70 5
Pioneer Plant Assumptions Internal Rate of Return (IRR): 10% 25% Capital Costs: Pioneer Plant Escalation ~ 210% of n th Plant Estimates (Merrow et al, Rand, 1981) Reliability of Operations / On Stream Factor: Initial value of 0.5 (Merrow et al, Rand, 1981) Increasing to 0.9 per experience curve (Heinen, SRI Consulting, 2001) 1.0 On Stream Factor 0.8 0.6 0.4 0.2 0.0 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 Year of Plant Operation 6
Fuel Pathways Explored Hydrocarbons (FT Gasoline, Diesel, Jet, Lubricants) Ethanol & C3+ Alcohols Ethanol Synthetic Natural Gas Syngas Syngas Fermentation Butanol 2,3 Butanediol Methanol Dimethyl Ether (DME) Triptyls Gasoline (MTG) Olefins (MTO) 7
Chemical Pathways Explored Urea Ammonia Hydrogen Hydrocarbons (FT Lubes, Waxes) Syngas Fermentation PHA (Polyhydroxyalkanoates) Acetic Acid Methyl Amines DME Methyl Formate Formaldehyde Syngas Methanol Acetic Acid Ethylene Glycol Formic Acid Propylene (MTO) Aldehydes (Oxosynthesis) Acetic Anhydride Ethyl Acetate Ethylene (MTO) 8
Major Pathway Categories Explored Synthetic Natural Gas via Methanation of Syngas Ethanol o Catalytic Mixed Alcohol Synthesis o Syngas Fermentation * Hydrocarbons o Fischer Tropsch o Methanol to Naphtha Hydrocarbons o Ethanol & Higher Alcohols to Hydrocarbons * Hydrogen via Steam Reforming, WGS & Purification Methanol via Catalytic Methanol Synthesis * Pathways explored by NREL through Aspen modeling and rigorous TEA. 9
Synthetic Natural Gas Methanation of Syngas 10
Synthetic Natural Gas Process Sources Min. Selling Price Range ($ / MScf) Syngas to SNG via methanation 35 McKeough & Kurkela, 2007 Mozaffarian et al, 2004 van der Drift et al, 2005 n th Plant 16.52 19.13 Pioneer 10% IRR 27.07 29.52 Pioneer 25% IRR 47.50 53.97 2011 $ / MScf 30 25 20 15 10 Europe Pricing History (EIA) US Pricing History (EIA) Pioneer 10% IRR $28 / MScf n th Plant $18 /MScf 133 / MWh 83 / MWh 5 0 2000 2002 2004 2006 2008 2010 2012 2014 Historical Pricing Data Source: U.S. Energy Information Administration. 11
Synthetic Natural Gas Techno economic Analysis 2011 $ / MScf 40 35 30 25 20 15 10 5 0 50.80 ±5.30 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 14.80 5.50 Market Analysis 17.62 ±2.23 28.29 ±2.05 IRR = 10% 25% Market Price (5 Yr) nth Plant MSP Pioneer Plant MSP U.S. Europe Average Product Yield Scf / Ton 11,440 11,440 Consumption (EIA, 2012) Scf / Year 25.5T 19.0T 10% of Natural Gas Market Scf / Year 2.55T 1.90T Equivalent Biomass Consumption MMTon / Year 223 165 Equivalent Biorefineries (2,000 Tonne / Day) 310 230 12
Ethanol Catalytic Mixed Alcohol Synthesis Syngas Fermentation * * Pathways explored by NREL through Aspen modeling and rigorous TEA. 13
Ethanol via Mixed Alcohol Synthesis Process Sources Min. Selling Price Range ($ / Gal GE) Syngas to ethanol via catalytic mixed alcohol synthesis Dutta et al, 2011 Dutta & Phillips, 2009 Dutta et al, 2010 He & Zhang, 2011 Villanueva Perales et al, 2011 n th Plant 2.87 4.83 Pioneer 10% IRR 5.34 9.08 Pioneer 25% IRR 10.66 18.15 12 2011 $ / Gallon GE 10 8 6 4 2 Europe Pricing History (EIA) US Pricing History (EIA) Pioneer 10% IRR $7.60 / GGE n th Plant $4.20 / GGE 302 / MWh 165 / MWh 0 2000 2002 2004 2006 2008 2010 2012 2014 Historical Pricing Data Source: U.S. Energy Information Administration. 14
Ethanol via Syngas Fermentation Process Sources Min. Selling Price Range ($ / Gal GE) Ethanol via syngas fermentation Putsche,1999 van Kasteren & Verbene, 2005 Piccolo & Bezzo, 2007 n th Plant 3.67 5.08 Pioneer 10% IRR 5.77 8.50 Pioneer 25% IRR 8.92 16.12 12 2011 $ / Gallon GE 10 8 6 4 2 Europe Pricing History (EIA) US Pricing History (EIA) Pioneer 10% IRR $6.80 / GGE n th Plant $4.30 / GGE 269 / MWh 172 / MWh 0 2000 2002 2004 2006 2008 2010 2012 2014 Historical Pricing Data Source: U.S. Energy Information Administration. 15
Ethanol via Syngas Fermentation NREL TEA Model Flue Gas Seed Train Woody Biomass Feed Handling & Preparation Biomass Gasification Syngas Cleanup Syngas Fermentation Product Recovery Ethanol Acetic Acid C3+ Alcohols Heat Integration, Power Generation & Other Utilities Power Design Report NREL/TP 5100 51400 utilized as basis through clean compressed syngas from biomass. Yield structures based on publications from LanzaTech & INEOS Bio. Capital costs for fermenters, seed train and cell recovery developed by Harris Group Inc. 16
2011 $ / Gallon GE Ethanol Techno economic Analysis 12 10 8 6 4 2 0 2.72 3.06 4.16 ±1.06 Market Price (4 Yr) Price Projection (4 Yr) nth Plant MSP Pioneer Plant MSP Market Analysis 7.59 ±1.96 14.91 ±3.88 IRR = 10% 25% Mixed Alcohols (Literature) 4.32 ±0.83 nth Plant MSP 6.77 ±1.69 11.95 ±3.70 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ~~~~~~~~~~~~~~~~~ Pioneer Plant MSP Syngas Fermentation (Literature) IRR = 10% 25% IRR = 10% 25% U.S. nth Plant MSP Pioneer Plant MSP Syngas Fermentation (NREL TEA) Europe Average Product Yield Gallons / Ton 85 85 Consumption (EIA, 2013) Gallons / Year 13.0B 10.0T 50% of Fuel Ethanol Market Gallons / Year 6.5B 5.0T Equivalent Biomass Consumption MMTon / Year 76 60 Equivalent Biorefineries (2,000 Tonne / Day) 100 80 17
Hydrocarbons Fischer Tropsch Methanol to Naphtha Hydrocarbons Ethanol & Higher Alcohols to Hydrocarbons * * Pathways explored by NREL through Aspen modeling and rigorous TEA. 18
Fischer Tropsch Hydrocarbons Process Sources Min. Selling Price Range ($ / Gal GE) Hydrocarbons via Fischer Tropsch synthesis 2011 $ / Gallon GE 8 7 6 5 4 3 2 1 Europe Pricing History (EIA) US Pricing History (EIA) Hamelinck et al, 2003 Larson et al, 2009 McKeough & Kurkela, 2007 SRI PEP Yearbook, 2009 Udengaard, 2011 Byrne, 2011 Freeman, 2011 0 2000 2002 2004 2006 2008 2010 2012 2014 Historical Pricing Data Source: U.S. Energy Information Administration. n th Plant 2.52 4.19 Pioneer 10% IRR 4.50 7.00 Pioneer 25% IRR 9.04 12.80 Pioneer 10% IRR $5.30 / GGE n th Plant $3.10 / GGE 211 / MWh 122 / MWh 19
Methanol to Hydrocarbons Process Sources Min. Selling Price Range ($ / Gal GE) Hydrocarbons via methanol synthesis and methanol conversion 2011 $ / Gallon GE 8 7 6 5 4 3 2 1 Phillips et al, 2011 Hindman, 2010 SRI PEP Report 191A, 1999 Udengaard, 2011 Jones & Zhu, 2009 Ahn et al, 2009 Europe Historical Pricing (EIA) US Pricing History (EIA) 0 2000 2002 2004 2006 2008 2010 2012 2014 Historical Pricing Data Source: U.S. Energy Information Administration. n th Plant 2.61 3.84 Pioneer 10% IRR 4.42 6.12 Pioneer 25% IRR 8.22 10.79 Pioneer 10% IRR $5.20 / GGE n th Plant $3.20 / GGE 205 / MWh 128 / MWh 20
Ethanol & Higher Alcohols to Hydrocarbons NREL TEA Model Flue Gas Woody Biomass Feed Handling & Preparation Biomass Gasification Syngas Cleanup Alcohol Synthesis Alcohol Separation Co Product(s) Natural Gas Heat Integration, Power Generation & Other Utilities Hydrogen Plant Light Ends Mixed C3 Mixed C4 Naphtha Mid Distillates Hydrocarbon Product Recovery Alcohol to Hydrocarbon Conversion Ethanol (and C3+ Alcohol) Intermediates Ethanol (and higher alcohol) intermediates for hydrocarbon fuel production. Eliminates constraints of renewable ethanol blend limits. Technology development taking place in academia, national labs and industry. 21
2011 $ / Gallon GE Hydrocarbon Fuels Techno economic Analysis 8 7 6 5 4 3 2 1 0 2.72 3.06 3.09 ±0.96 Market Price (4 Yr) Price Projection (4 Yr) nth Plant MSP Pioneer Plant MSP Market Analysis 5.33 ±1.45 10.10 ±2.43 3.24 ±0.81 nth Plant MSP 5.16 ±1.02 9.18 ±1.65 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ~~~~~~~~~~~~~~~~~ Fischer Tropsch (Literature) Pioneer Plant MSP MeOH to Hydrocarbons (Literature) U.S. nth Plant MSP Pioneer Plant MSP EtOH to Hydrocarbons (NREL TEA) Europe Average Product Yield Gallons / Ton 65 65 Consumption (EIA, 2013) Gallons / Year 220B 160B 10% of Hydrocarbon Fuels Market Gallons / Year 22B 16B Equivalent Biomass Consumption MMTon / Year 338 242 Equivalent Biorefineries (2,000 Tonne / Day) 440 310 22
Hydrogen Steam reforming, water gas shift & purification 23
Hydrogen Process Sources Min. Selling Price Range ($ / MScf) Syngas to H 2 via steam reforming, water gas shift & purification 2011 $ / MScf 18 16 14 12 10 8 6 Spath et al, 2005 McKeough & Kurkela, 2003 Williams et al, 1995 Hamelinck & Faaij, 2001 n th Plant 5.33 8.84 Pioneer 10% IRR 9.87 14.82 Pioneer 25% IRR 19.80 27.60 Pioneer 10% IRR $11.80 / MScf 188 / MWh 4 Europe Pricing History (IHS) n th Plant $6.70 / MScf 106 / MWh 2 US Pricing History (IHS) 0 2000 2002 2004 2006 2008 2010 2012 2014 Historical Pricing Data Source: SRI / IHS CEH Marketing Research Reports. Projected values based on ratios to EIA natural gas projections. 24
Hydrogen Techno economic Analysis 2011 $ / MScf 18 16 14 12 10 8 6 4 2 0 22.95 ±5.50 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 6.50 (EU) 5.95 (US) Market Analysis 6.67 ±2.48 11.84 ±3.50 IRR = 10% 25% Market Price (5 Yr) nth Plant MSP Pioneer Plant MSP U.S. Europe Average Product Yield SCF / Ton 37,500 37,500 Consumption (EIA, 2013) SCF / Year 4.1T 3.2T 10% of HydrogenMarket SCF / Year 0.41T 0.32T Equivalent Biomass Consumption MMTon / Year 11 8.5 Equivalent Biorefineries (2,000 Tonne / Day) 14 11 25
Methanol Catalytic Methanol Synthesis 26
Methanol Process Sources Min. Selling Price Range ($ / Gal) Syngas to methanol via catalytic synthesis 2.5 Tarud & Phillips, 2011 McKeough & Kurkela, 2007 SRI PEP Yearbook, 2009 Williams et al, 1995 Hamelinck & Faaij, 2001 n th Plant 0.96 1.32 Pioneer 10% IRR 1.54 2.03 Pioneer 25% IRR 2.82 3.71 2011 $ / Gallon 2.0 1.5 1.0 0.5 Europe Pricing History (IHS) US Pricing History (IHS) Pioneer 10% IRR $1.83 / Gal $3.72 / GGE n th Plant $1.15 / Gal $2.33 / GGE 147 / MWh US Contract US Spot 93 / MWh 0.0 2000 2002 2004 2006 2008 2010 2012 2014 Historical Pricing Data Source: IHS CEH Marketing Research Report, 2013. 27
Methanol as Chemical Intermediate Techno economic Analysis 2011 $ / MScf 2.5 2.0 1.5 1.0 0.5 0.0 3.24 ±0.60 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 1.15 Market Analysis 1.15 ±0.26 1.83 ±0.37 IRR = 10% 25% Market Price (5 Yr) nth Plant MSP Pioneer Plant MSP U.S. Europe Average Product Yield Gallons / Ton 170 170 Consumption (IHS) Gallons / Year 1.9B 2.2B 10% of Methanol Market Gallons / Year 0.19B 0.22B Equivalent Biomass Consumption MMTon / Year 1.1 1.3 Equivalent Biorefineries (2,000 Tonne / Day) 1.4 1.6 28
Methanol as Fuel Intermediate Techno economic Analysis 2011 $ / MScf 2.5 2.0 1.5 1.0 0.5 0.0 3.24 ±0.60 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 1.15 Market Analysis 1.15 ±0.26 1.83 ±0.37 IRR = 10% 25% Market Price (5 Yr) nth Plant MSP Pioneer Plant MSP U.S. Europe Average Product Yield Gallons / Ton 65 65 Consumption (EIA, 2013) Gallons / Year 220B 160B 10% of Hydrocarbon Fuels Market Gallons / Year 22B 16B Equivalent Biomass Consumption MMTon / Year 338 242 Equivalent Biorefineries (2,000 Tonne / Day) 440 310 29
Conclusions Hydrocarbon, ethanol and methanol economics can be competitive for n th plant. Pioneer plant economics are challenged overall. Market capacities do not constrain bio product pathways in major hydrocarbon fuel markets (natural gas, petroleum fuels). With fixed ethanol blend limit, cellulosic pathways and grainderived product will compete for limited market. Market capacities for methanol derived chemicals are constraining. Syngas fermentation is potentially competitive, depending on CO / H 2 conversion to product(s). Methanol and ethanol are attractive intermediates for production of infrastructure compatible hydrocarbons. 30
Future Work Apply simplified TEA and market analysis on emerging pathways to identify economic feasibility in early stages of development. Explore opportunities to improve Pioneer Plant economics o Biomass co feeding opportunities (NG Biomass to Liquids) o Utilizing inexpensive feedstocks o High value co products o RIN credits Evaluate infrastructure hurdle for methanol economy 31
Acknowledgements Abhijit Dutta and Richard Bain (co authors) Matt Worley and Ben Fierman of Harris Group Inc, Atlanta, Georgia. Bioenergy Technology Office (BETO) of the United States Department of Energy NREL Biorefinery Analysis and Thermochemical Platform Teams 32
References For a complete list of references utilized in this analysis, please contact Mike Talmadge (michael.talmadge@nrel.gov / 303 275 4632) 33