INNOVATIVE BIOFUEL TECHNOLOGY A CLIMATE CHANGE SOLUTION THAT ADDS VALUE TO THE FOREST PRODUCTS INDUSTRY Canfor Pulp (CFX.TO) Martin Pudlas VP Operations Martin.Pudlas@canforpulp.com 1
Canfor Pulp Forward Thinking Partner of Choice in Community Sustainable Largest Existing at Source Bio-Energy Producer in Canada Operational Excellence Solid Long-Term Performance in Pulp and Paper Business 2
Pulp Operations Pulp Mills Canada2 1 4 3 1 Intercontinental 2 Northwood 3 Prince George 4 Taylor 5 Canfor Pulp Ltd. Head Office 5 6 Key Products 1. NBSK Pulp, Power 2. NBSK Pulp, Power 3. UBK Pulp, Kraft Paper, Power 4. BCTMP Pulp 6 Canfor Pulp Innovation Total Sales: $1.1 Billion Direct jobs at Canfor Pulp: 1,232 Total Economic Impact of Canfor Pulp in 2014: $750 Million 3
Significant Capital Investment From 2010 to 2015, Canfor Pulp has invested more than $400 million on capital upgrades in Prince George: Air Quality Improvements Power Generation Productivity Improvements Continuing Investment 5 $200 million has been spent on odour and particulate reduction $105 million has been spent on continuing investments to maintain the mills $60 million has been spent to increase power generation and energy efficiency $55 million has been spent to improve productivity 4
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World Class Technology A$60m invested to date has been leveraged to prove the versatility of the Cat-HTR platform across multiple low cost feedstocks - lignite, waste biomass, waste oil and end of life plastics - to produce a range of high value products. The Cat-HTR has been refined and tested since 2008 and is ready for full-scale commercialisation (4th generation in reactor progression). Reviewed by strategic partners including PT Bukit Asam, Idemitsu Kosan Co, Canfor Pulp Ltd; and leading global consultants such as Leidos Engineering, Gaffney, Cline & Associates and Imperial College London, United Kingdom Cat-HTR less capital and produces a lower carbon emissions footprint. In addition, the process is a net producer of water versus other technologies that are net water users. 6
Cat-HTR Technology - Versatility Feedstock Product Biomass Brown coal (Lignite) Used lube oil Waste plastics Biocrude oil Syncrude oil / MRC New lube oils and fuels Fuels and chemicals 7
Benefits of Pulp Mill Integration Licella s Cat-HTR is a natural extension of the existing pulp process as the technology enhances existing core pulp business through debottlenecking. Ability to access residues including black liquor produced in the pulping process as a low-cost catalyst, rather than purchasing catalyst which lowers production costs. Integration of feedstock, heat and electricity supply into existing pulp mills to increase thermal efficiency and lower capital and operating costs when compared to stand alone facilities. 8
Cat-HTR Simplified Process Wet Feedstock Preparation and Slurrying Slurry Pressurization Catalytic Hydrothermal Reactor Slurry Pre-Heating & Heating Biocrude Separation Primary High Value, Low Volume Chemicals Product De- Pressurization Residual to Refinery KEY ADVANTAGES - No need to dry feedstock prior to processing - Stable and neutral oil produced 5 - No external hydrogen (reduces cost of capital and production) - Potential for higher value biochemical production - Net producer of water - Higher yield and better quality oil than pyrolysis (neutral ph and 1/3 the O2 content) - Mirrors kraft pulping process 9
Cat-HTR Technology - Advantages $ Value Enhancing Turns low-value and low-energy density biomass into high-value and high-energy density products Economical Uses water as cost-effective reactant Processes wet biomass, eliminating expensive drying NATURE TAKES 100s OF THOUSANDS OF YEARS 5 Rapid Nature takes many years, Cat-HTR conversion takes minutes Low Carbon Footprint CAT HTR TAKES MINUTES! 10
It s all about the Oxygen and Hydrogen! Relationship of Oxygen Content to Energy Density biomass (dry) Licella s Bio crude (~36 MJ/kg & 12% O2) 2 Pyrolysis Oils Ethanol diesel jet fuel removal of residual oxygen at refinery Calorific Value in MJ/kg More Oxygen = Less Energy Removal of oxygen with hydrogen is expensive Less hydrogen = cheaper process Percentage oxygen in wt% 11
Hydrothermal Reactions Depolymerisation Hydrolysis: - cleavage of carbonoxygen bonds, e.g. ethers to alcohols Removal of Oxygen Energy Densification Dehydration Decarboxylation 12
A Cautious and Disciplined Approach to Scaling Up Proven Platform - A$60M Invested 2008-16 January 2008, established engineering team and commissioned Small Pilot Plant (SPP) SPP Gen 1 reactor extensively tested the conversion of lignite into Syncrude & Upgraded Coal, and the transformation of biomass into bio-crude oil December 2011, following the success of the SPP, IER constructed the Large Pilot Plant (LPP), which was commissioned by IER s in-house engineers May 2012, after the completion of an array of successful trials using the LPP s Gen 2 reactors, IER installed & commissioned three Gen 3 reactors, that were significantly larger than Gen 2 reactors 1st Generation Reactor 2nd Generation Reactor 3rd Generation Reactor 4th Generation Reactor Gen 1 x2 x3 x2.2 (Commercial) Reactor Scale-Up 13
Licella s Large Pilot Facility NSW Central Coast, Australia 14
THE WONDER from DOWN UNDER Jim Lane Biofuels Digest Biofuels-Bio Chemicals Joint Venture Established Global Application to Kraft, Mechanical Pulpmills and Extracted Lignin Licella Fibre Fuels Pty. Ltd. The Worlds Largest Bio-Refinery Base Integrated into Canfor Pulp s Kraft Mill in Prince George, British Columbia, Canada Initial Project 400,000-500,000 bbls of Biocrude Per Annum Advanced Biofuel Product to Which Meets Highest Standards in Low Carbon Fuel Standards CANFOR PULP LICELLA KRAFT NATURALLY REFINED SOLUTION The Process will Enhance Existing Pulp Industry Value Proposition 15
WHAT IS THE OPPORTUNITY? Diversifies the forest product industry, and encourages growth and opportunity to export clean technologies globally Increases focus on clean tech and green industry that supports climate objectives and transition to a low-carbon economy addresses GHGs emissions in transportation sector Pathway to optimizing value creation in the pulp and paper industry Uses innovation to create near-term and long-term clean tech jobs Adds value to existing waste in economical and environmentally conscious way Demonstrates that strong environmental policy can enhance economic prosperity 16
Questions? Canfor Pulp (CFX.TO) Martin Pudlas VP Operations Martin.Pudlas@canforpulp.com 17