Biorefinery viability in a world of low oil and gas prices Browne_0.pdf · Biorefinery viability in a world ... Cumene p-Xylene Iso-butylene Butadiene Styrene Adipic acid ... Conversion

World Congress on Industrial Biotechnology

July 22, 2015

Tom Browne

Program Manager, Biorefinery

Biorefinery viability in a world

of low oil and gas prices

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0 $

20 $

40 $

60 $

80 $

100 $

120 $

1945 1955 1965 1975 1985 1995 2005 2015

Nominal Inflation Adjusted

I’ve been using this slide for some time

now …

2

$80 to $100/bbl:

the new normal?

http://www.inflationdata.com/Inflation/Inflation_Rate/Historical_Oil_Prices_Table.asp

Annual average oil

prices, $US/bbl

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Surprise, surprise …

3

Oil at $80-$100

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Geopolitical drivers

OPEC

▫ Saudi Arabia: low-cost

producer driving out high-

cost capacity

▫ Other OPEC producers

not so happy (Iran)

▫ Current turmoil in the Arab

world

Currently stable at?

▫ $45-$60, January-June

4

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EIA Forecasts are often optimistic

Graph provided by Karl Bartholomew, ICIS

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My estimates are no better

Graph provided by Karl Bartholomew, ICIS; forecasts by TCB

$75 in

2017?

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Graph provided by Karl Bartholomew, ICIS; Source: Oil & Gas Journal Financial, January 12, 2015

Global Supply Curve

3/6/15

$48.71

World

demand

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So maybe $80 to $100 is a little

optimistic …

…but $70 to $90 may be reasonable.

So: Can we still make money with

bio-based chemicals at this price?

8

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Chemical prices track oil – NOT

natural gas

R2, US IPEX vs Henry Hub = 2.2%

R2, US IPEX vs crude oil = 89.8%

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So what are the possibilities?

10

10

Benzene

Xylene

Toluene

Butanes

Ethyl Benzene

Cyclohexane

Cumene

p-Xylene

Iso-butylene

Butadiene

Styrene

Adipic acid

Caprolactam

Phenol

Acetone

Terephthalic

acid

Polystyrene

Nylon 6,6

Polyurethanes

Nylon 6

PF resins

Bisphenol A

Caprolactam

Salicylic acid

Methyl Mecracrylate

Solvents

Bisphenol A

Pharmaceuticals

Polyester fibres

Polyester films

Toluene diisocyanate

Foam polyurethanes

MTBE

Polybutadiene

Neoprene

Styrene butadiene

Biomass

Conversion A

Bio-crude

Conversion A: UOP-Ensyn pathway

Petroleum

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So what are the possibilities?

11

Petroleum

11

Benzene

Xylene

Toluene

Butanes

Ethyl Benzene

Cyclohexane

Cumene

p-Xylene

Iso-butylene

Butadiene

Styrene

Adipic acid

Caprolactam

Phenol

Acetone

Terephthalic

acid

Polystyrene

Nylon 6,6

Polyurethanes

Nylon 6

PF resins

Bisphenol A

Caprolactam

Salicylic acid

Methyl Mecracrylate

Solvents

Bisphenol A

Pharmaceuticals

Polyester fibres

Polyester films

Toluene diisocyanate

Foam polyurethanes

MTBE

Polybutadiene

Neoprene

Styrene butadiene

Biomass

Conversion C

Conversion B

Conversion B: Lignin from black liquor

Conversion C: Succinic acid from sugar

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Plywood resin prices vs oil prices

(inflation adjusted)

Data for 1955, 1960, 1980 ignored in the regression analysis

Sources: SRI; http://www.inflationdata.com/inflation/Inflation_Rate/Historical_Oil_Prices_Table.asp

y = 8.28x + 588R² = 0.784

500 $

750 $

1,000 $

1,250 $

1,500 $

0 $ 20 $ 40 $ 60 $ 80 $ 100 $ 120 $

1980

1955, 1960 ↑

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So what are the possibilities?

13

Petroleum

13

Benzene

Xylene

Toluene

Butanes

Ethyl Benzene

Cyclohexane

Cumene

p-Xylene

Iso-butylene

Butadiene

Styrene

Adipic acid

Caprolactam

Phenol

Acetone

Terephthalic

acid

Polystyrene

Nylon 6,6

Polyurethanes

Nylon 6

PF resins

Bisphenol A

Caprolactam

Salicylic acid

Methyl Mecracrylate

Solvents

Bisphenol A

Pharmaceuticals

Polyester fibres

Polyester films

Toluene diisocyanate

Foam polyurethanes

MTBE

Polybutadiene

Neoprene

Styrene butadiene

Biomass

Conversion E

Conversion D

End-users:

- Injection molders

- Compounders

- Tire mfg

- Belts & hoses

- Auto mfg

- Etc.

Conversion D: Coke Plant bottle

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Market pull is there…

14

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Role of the Canadian forest sector

Unique Canadian context requires unique

solutions

▫ Biopathways process identified multiple paths

forward

Existing infrastructure provides a basis to

build a new bio-economy

▫ Harvesting, logistics, transportation

▫ Wood handling systems, CHP plants, effluent

treatment systems

15

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What will the Canadian forest

biorefinery look like?

Wood is

expensive

▫ It is spread thinly

all over the map

▫ It is too

expensive to

make into fuels

directly

16

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Getting wood-based products to where

the people are costs money

Typical SW harvesting

costs, Eastern Canada:

▫ Single-grip harvester,

forwarder to roadside

▫ Cut-to-length, clearcut

▫ 120 m3/ha

▫ 8 ft spruce pulp logs

▫ 0.100 m3/stem, 400

kg/m3

▫ 250 m skid distance

▫ 100 km haul distance

17

Activity $/odt

Felling & processing $36.00

Forwarding & skidding $19.00

Stumpage (typical) $20.00

Road maintenance $ 6.25

Total in-woods $81.25

Loading and transport $34.00

Other overhead $ 7.25

Total transport & other $41.25

Total roundwood

delivered cost

$122.50

Source: FPInnovations BiOS model

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Residues are not a lot cheaper, and are

full of bark

18

Pre-piling Comminution

$9.00

$30.54

$13.52

$2.48

$0.00

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

$/ODt

Transport:

- 120 km one-way,

live-floor chip van

Other:

- roads, supervision,

overhead, maintenance,

compliance, stumpage

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Residues are not a lot cheaper, and are

full of bark

19

Pre-piling Comminution

$9.00

$30.54

$13.52

$2.48

$0.00

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

$/ODt

Transport:

- 120 km one-way,

live-floor chip van

Other:

- roads, supervision,

overhead, maintenance,

compliance, stumpage

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The Canadian forest biorefinery will

include:

A secondary industry making energy products

from residues

▫ Heat and power onsite (CHP), solid fuels

(pellets), liquid or pipeline fuels

A healthy primary industry making chemicals

and materials

▫ and residues for fuels

20

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Conclusions

Oil prices are a function of economics

▫ But also, to a great extent, of geopolitical stresses

Platform chemicals track oil

▫ Bio-ethylene is challenging

Intermediates: Oil a smaller part of costs?

Growth in bio-based organic acids continues

▫ Succinic, lactic, FDCA, etc.

Canadian forest sector is well-placed to play

a major role

21

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Thank youThomas Browne, ing., Ph.D.

Directeur de recherches, Bioraffinage/énergie

Research Manager, Biorefinery/energy

570, boul. Saint-Jean, Pointe-Claire (QC) H9R 3J9

Tel +1 514-630-4104

Cell +1 514-266-4104

tom.browne@fpinnovations.ca