World Congress on Industrial Biotechnology July 22, 2015 Tom Browne Program Manager, Biorefinery Biorefinery viability in a world of low oil and gas prices
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…
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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