Agrifuels’ promise from an oil industry perspective hinges on unlocking the answers to two root questions: How can today’s photosynthesis supplement the energy supplied by prehistoric photosynthesis? What are the logistics for refiners and pipelines?
Support for agrifuels is high because of the hope for extending energy supply and addressing climate change concerns. Industry is looking for ways to balance the chemistry and the economics.
Pamela Beall, Marathon Petroleum Co. LLC vice-president of business development, downstream, said it’s ironic that fossil fuels and biofuels rely on essentially the same feedstocks-only at different stages in their life cycles. “Fossil fuels are really plants and animals that decomposed over the past 600 million years. What are we talking about using with biofuels?” Beall said. “We are trying to accelerate in a very short time what nature has done over a very long time to provide the fuel we use today.”
The pace of crude oil discoveries is declining while world oil demand is increasing. Oil production becomes increasingly expensive as industry must explore deepwater or arctic regions. National oil companies control much of the remaining reserves, often in geopolitically sensitive areas.
“To the extent that you can harvest renewable fuels, it could be easier,” Beall said. “The cost of corn has not escalated like the cost to produce oil. The two are moving in opposite trends. Corn yields are getting better and will escalate with genetic modifications.”
She notes renewable fuels will not lower the cost of transportation fuels. Marathon and oil companies in general are hoping to find renewable fuels that can be integrated into today’s refining and fuel delivery system.
Rick Zalesky, Chevron Technology Ventures LLC vice-president of biofuels and hydrogen, sees agrifuels as complementing fossil fuels, saying both are needed to satisfy future demand.
“The idea is that you supplement your hydrocarbon feed system with a biofeed system and utilize existing investments in refining assets to process traditional petroleum feedstock along with biofeedstock,” Zalesky said.
Ron Cascone, with energy and chemical industry consultant Nexant Inc. of New York, said the ideal goal is to make gasoline from biomass.
“The Holy Grail is to produce exactly the fuel we are using now but make it from biomass-not from fuels that releases fossil carbon,” Cascone said.
Zalesky said the search is for “a molecule that we already know how to deal with-a chemical identical to gasoline, jet, and diesel blendstocks.... It’s probably a 10-year horizon to get that approach developed and deployable at scale.”
Food vs. fuel
Currently, biofuels rely on corn or soybeans in the US, sugar cane in Brazil, and rapeseed or flaxseed in Europe. The use of food crops has triggered questions about the ethics of pulling grain away from the food and feed supply chain to produce fuel.
Chevron Technology Ventures is among proponents of using nonfood plants to create transportation fuels. Algae grown on a commercial scale potentially could be a feedstock for refining and processing.
“Our bias would be to take bio-oil coming from algae and put it into our hydrotreaters and hydrocrackers in our refining infrastructure,” Zalesky said.
Rob Routs, Royal Dutch Shell PLC executive director, downstream, said using waste plant material instead of food crops could circumvent political pressure and public controversy over using crops for fuel.
Shell is researching cellulosic ethanol through a partnership with Iogen Corp. of Canada.
In addition, Shell has a minority stake in a biomass-to-liquids plant in Germany owned by Choren Industries GMBH. The plant converts wood chips into synthesis gas and fuel for diesel engines using the Shell Middle Distillate Synthesis technology that Shell developed for gas-to-liquids production.
Separately, ConocoPhillips and Tyson Foods Inc. are working to produce renewable diesel from animal fats using a proprietary thermal depolymerization technology.
The ConocoPhillips-Tyson joint venture processes animal fats with hydrocarbon feedstocks to produce ultralow-sulfur diesel. Renewable diesel production began last year using soybean oil at the ConocoPhillips Whitegate Refinery in Cork, Ireland.
Consultant Nexant believes the fundamental aspects of the liquid biofuels industry will change dramatically by 2020. It compiled a global multiclient study, “Liquid Biofuels: Substituting for Petroleum.”
The study foresees an evolution from conventional agriculture, starch-sugar substrates, and enzyme conversions to genetically modified crops, biomass substrates, and combinations of thermochemical, catalytic, and enzyme conversions (see figure.)
Cascone believes ethanol from grains and sugar-although an excellent high-octane gasoline blendstock-represents a transition to something else long term because of grain-based ethanol’s “practical problems” of fitting into the fuel distribution system.
He said while there are environmental, political, and societal benefits to using an alcohol for fuel rather than a hydrocarbon, society must make tradeoffs between the current renewable, biodegradable biofuels having low toxicity but limited in supply potential against other fuel options not as biodegradable or more noxious but more attractive in other ways.
“We agree with many others that the next phase of development is likely to be ethanol made by fermentation of sugars made by hydrolysis of biomass,” Cascone said.
“We also conclude that...integrated thermochemical platforms will take the lead in producing both gasoline and diesel range biofuels, probably together with electric power and chemicals,” he said. “This alternative should be and probably will be pursued contemporaneously with developing biomass-based ethanol. We also believe that ethanol will eventually need to be dehydrated to hydrocarbon gasoline fractions.”
Biofuel economics
In 5 years, US corn ethanol production nearly tripled, and biodiesel production increased tenfold although at a much lower level than ethanol.
Among federal programs to support renewable fuels, ethanol receives a 51¢/gal volumetric excise tax credit and biodiesel receives a $1/gal tax credit (50¢/gal for nonvirgin feedstock). These provisions expire in 2010 for ethanol and 2008 for biodiesel.
Chevron’s Zalesky said biofuels of the future-subsidies or no subsidies-must be produced at scale economically.
Ethanol also benefits from a 54¢/gal tariff on imports, which ConocoPhillips Chairman Jim Mulva opposes.
“This penalizes lower-cost and less carbon-intensive imports, such as from Brazil. This tariff should be phased out,” Mulva said in a July 19 speech in Washington, DC.
The Energy Policy Act of 2005 established a renewable fuels standard (RFS) phasing up to 7.5 billion gal/year in 2012, a target that analysts expect production to surpass. President George W. Bush has called for an enhanced RFS of 35 billion gal/year by 2017.
Charles T. Drevna, National Petrochemical & Refiners Association executive vice-president, warns against “an overdose of heavily subsidized products,” saying the free market should set fuel specifications.
“The goal of the biofuels industry, including both corn-ethanol and cellulosic ethanol, should be economic parity, or better, with that of refined petroleum products,” Drevna said (see article, p. 17).
Pearce Hammond, analyst with Simmons & Co. International, forecast that US ethanol production will reach nearly 15 billion gal by 2015 and biodiesel will reach 2 billion gal by that time. By volume, ethanol then will represent about 10% of gasoline supply.
Ethanol’s progress
Existing alcohol fuels made from agriculture products or wastes-the most common one now being ethanol-are produced through fermentation of sugars, distillation, and drying. Sugar cane juice can be fermented directly into ethanol. Corn is low in sugar but high in carbohydrate cellulose that must be turned into fermentable sugar.
Researchers are seeking methods to more efficiently convert cellulose to sugar.
Marathon has a 50:50 joint venture with The Andersons Inc. to construct and operate corn-based ethanol plants. The joint venture’s first plant is under construction in Greenville, Ohio. Its expected capacity is 110 million gal/year.
“Certainly one of the reasons that we decided to invest in an ethanol plant is to ensure reliability of supply,” Beall said, noting Ohio has no ethanol plants now so all ethanol must come into the state by rail or by truck.
“We find it very important to have ethanol. Once you put a customer into blended ethanol gasoline, you really don’t want to run out,” she said. “If you don’t have that gallon of ethanol, then that could hold up the sale of 9 gal of hydrocarbon if you are blending at 10%.”
The Greenville ethanol plant is within 100 miles of Marathon terminals in Columbus, Cincinnati, and Indianapolis and is convenient to its Louisville, Ky., market, she said.
“We can send our transport trucks to the ethanol plant after they have made a delivery to wholesale locations or retail gasoline stations,” she said. “On their way back, they can stop at the ethanol plant and then resupply the terminal with ethanol.”
Marathon is one of the nation’s leading blenders of ethanol in gasoline and has been doing so for more than 15 years because of the company’s heavy marketing presence in the Midwest, Beall said.
Biobutanol potential
Many chemists see biobutanol as a potential game changer for biofuels because of its potential to integrate better than ethanol into the refining and gasoline distribution infrastructure.
Unlike ethanol, “butanol has low solubility in water and a low vapor pressure. Its Reid vapor pressure contribution in a gasoline blend is minimal,” said Cascone. The same feedstocks used for ethanol could be used, including sugar cane, beets, and corn.
Butanol is currently used as an industrial solvent. Future feedstocks for biobutanol fuel could involve cellulosic material: grass, straw, sugar cane stalks after juice extraction, and corn stalks (stover). Production economics have yet to be determined.
Cascone said, “With the right regulatory regime, you could blend butanol at the refinery and distribute it as a butanol blend.” Nexant is studying the process and feasibility of converting ethanol plants into butanol plants.
“There is a tradeoff and a continuum between ethanol, butanol, and gasoline,” Cascone said. “While more toxic, butanol has another advantage as contrasted with ethanol in that it...has an energy density approaching that of a gasoline.”
Ethanol has about 70% of the energy density of conventional gasoline.
Biobutanol was produced in commercial quantities around WWI in the UK, Canada, and the US. The plants eventually were closed because natural gas-sourced butane became commercially available as a feedstock.
BP PLC and DuPont are working with British Sugar, a subsidiary of Associated British Foods PLC, to convert an ethanol fermentation facility to produce biobutanol.
To begin market development of biobutanol, BP and DuPont will import small quantities of biobutanol from a manufacturing plant in China. First product is expected to arrive by yearend and will be used to carry out infrastructure and advanced vehicle testing.
Initial laboratory engine tests using conventional butanol indicated butanol has fuel performance properties similar to those of unleaded gasoline.
The joint venture plans to use sugar beets as the feedstock at British Sugar’s plant in Wissington, England, east of Cambridge. Development work is under way on a biotechnology process to produce biobutanol.
The BP-DuPont venture is looking for a genetically modified microbe or some “ultimate bug” for the catalyst to boost conversion ratios in processing feedstock into biobutanol, independent chemists told OGJ.
A bioethanol plant will be built alongside a demonstration plant to advance the development work. Initial production would be bioethanol. The partners are looking at the feasibility of converting the plant to biobutanol pending technology developments.
The bioethanol plant would be built at BP’s existing Saltend chemical site in the UK. The bioethanol plant is scheduled to be commissioned in late 2009. Plans call for it to have a 420 million l./year capacity from wheat feedstock.
Biodiesel production
Biodiesel refers to additives and substitutes for diesel based on methyl esters of vegetable oils or fats. An alcohol-ester mixture, methyl soyate, is separated, and excess alcohol is recycled. The ester is purified through numerous techniques.
Made from soybeans in the US and rapeseed in Europe, biodiesel is manufactured through transesterification with an alcohol such as methanol and a catalyst. Biodiesel can be blended in various concentrations. Ideally, biodiesel could be handled similarly to conventional diesel fuels, but it is being distributed primarily via trucks now because of integrity concerns about pipeline shipments.
When asked about biodiesel, Beall said Marathon blends only soy-based biodiesel because it is not yet comfortable with other feedstocks.
“The concern is too much glycerin and the potential to gum up engines and filters,” Beall said. “It’s more of a concern in the winter months, but we don’t really want to take a chance at handling any bad products. We are going slowly and carefully with biodiesel.”
Marathon recently completed biodiesel blending projects at its Robinson and Champaign, Ill., terminals, which will market soy-based B2 (2% biodiesel) and B11 (11% biodiesel) product. Marathon has offered biodiesel at its St. Paul Park, Minn., terminal since July 2005 and at its Louisville, Ky., terminal since February 2007.
Biodiesel manufacturers are looking to widen their distribution by integrating biodiesel plants with existing diesel capacity.
Green Earth Fuels LLC of Houston built a biodiesel plant in Kinder Morgan’s Galena Park, Tex., liquids terminal on the Houston Ship Channel.
Jeffrey Trucksess, Green Earth executive vice-president of regulatory and government affairs, said biodiesel plants built near terminals help reduce product handling and lower transportation costs.
Green Earth’s Galena Park plant started up in July with a production line designed to yield 43 million gal/year. A second line of the same size is scheduled for operation in September.
In conjunction with Green Earth, pipeline operator Kinder Morgan Energy Partners LP is building Galena Park terminal biodiesel tanks. KMP plans to invest up to $100 million to expand terminals for biodiesel in Houston, New Orleans, New York Harbor, and elsewhere.
James Holland, vice-president of logistics for KMP’s products pipeline, said biodiesel is a business opportunity for terminal operators who can bring in a B100 that is soy-based and also a B100 that is palm-based. At the rack, they blend a common diesel with whatever biomaterial the customer wants. KMP is contemplating pipeline opportunities.
“We are more than happy to do this if we can get some definitive decisions on what the specs are going to be and what demand is going to be,” Holland said. “If you can get the specs and demand to line up, it becomes a perfect pipeline opportunity.”
KMP expects to run biodiesel tests on its Plantation Pipe Line system from Baton Rouge, La., to Greensboro, NC, in the third quarter. It will involve B5 or B10 biodiesel, depending upon the marketer.
Colonial Pipeline Co. last year tested biodiesel in its pipeline system, concluding that biodiesel was feasible to transport, but the test results raised concerns about potential contamination of jet fuel so biodiesel pipeline shipments are not occurring yet.
Consequently, Colonial is working with the renewable fuels industry toward ensuring the quality of jet fuel and permitting biodiesel shipments on the same pipeline.
Colonial’s biodiesel tests contained compounds not allowed in jet fuel, but the company did not specify the compounds. Industry analysts told OGJ that biodiesel is basically a form of lubricity additive, incompatible with jet fuel.
Biodiesel would have to be carried in Colonial’s mainline reserved for distillate products and diesel fuel. Its other mainline is reserved for gasoline shipments.
KMP’s Holland said Kinder Morgan moves jet fuel in a pipeline separate from the pipeline used for diesel, and he does not foresee the company experiencing those compatibility issues.
“With biodiesel, some parties will want palm-based material and others will want soy-based material-making fungibility a real problem,” Holland said. “A lot of biodiesel producers say their product is special and cannot be commingled with others. So if you were to commingle two types of biodiesel, what do you get?”
Although both biodiesel products are B5, pipeline operators might wind up with cloudy diesel or other unknown issues if the base material is different in each biodiesel. He noted B100 has specifications, but there are none yet for B5 or B10.
“Physically yes, you can move it,” Holland said. “But all the product grades and specification issues have to be worked out to make it happen.”
The National Biodiesel Board said regulation of fuel standards is a function primarily left to the states. However, regulation of biodiesel and blends is not uniform across all states.
NBB is working to catalog information regarding fuel regulation authority by state.
Elsewhere, BP is investing $9.4 million in India to demonstrate the feasibility of producing biodiesel from jatrapha curcas, a succulent whose seed produces an oil that can be used for biodiesel. At its Bulwer Island 85,500 b/cd refinery in Australia, BP plans to produce around 110 million l./year of biodiesel from tallow feedstock.
Refinery expansions
Although NPRA opposes the mandated use of biofuels, it supports integration of biofuels based on market demands, Drevna said.
NPRA members are among the largest users of ethanol, and refiners will continue to rely on it as a gasoline blendstock, especially pending major US refining expansions. Drevna believes mandates to increase ethanol use could supplant refining expansions.
“Refiners must make investments today on what they believe to be the 10-15 year outlook,” Drevna said.
Marathon has announced an estimated $3.2 billion expansion to its 245,000 b/cd refinery in Garyville, La. The expansion will increase crude capacity by 180,000 b/d.
Beall said the investment decision confirms Marathon’s commitment to support the US gasoline infrastructure of the future despite uncertainty about future gasoline standards.
“We think that there is room for conventional hydrocarbons as well as renewables in order to satisfy the demands that the country will have,” Beall said, noting that the US imports a lot of feedstocks, blendstocks, and products.
“Some of the production that we make in the US will offset some of those imports and will help to meet the growth in demand. Corporate average fuel economy (CAFE) standards are increasing, and with alternative fuels growing, we think there is still a need to increase the refining capacity in the US.”
