Mar
5
Oil In a Fight With Itself
March 5, 2012 | 3 Comments
The renewable fuel producers are about to up the pressure on the world oil industry, and for consumers it’s not a moment too soon.
First off, South Dakota’s government has approved a subsidy of 20 cents per gallon for ethanol plants to transition over to butanol. The cap for the subsidy is $4 million per facility equaling 20 million gallons. The state’s own Redfield Energy is converting its 50 million gallon ethanol facility over to a 40 million gallons of biobutanol, in partnership with Gevo. The math? It’s 40/18 million bushels of corn or 2.22 gallons. Butanol is nearly the same in energy value as gasoline, so it’s expected to be a drop in replacement.
As noted in the post on Feb 24, Big Oil has invested in CoolPlanet and it’s a good guess that more investing is coming. “Big Oil” as in the oil refiner Valero who already owns 8% of the ethanol production in the U.S. now, is a major backer in Mascoma.
Mascoma’s foundation technology comes from consolidated bioprocessing, in which Mascoma’s engineered microorganism both extracts the available sugars from biomass and ferments them, all in one step. No need for those additional enzymes to extract sugars from biomass, which are generally available at 50 cents a gallon today, and perhaps as little as 30 cents per gallon in the future. Cutting those costs out of production makes cellulose based alcohol a much more competitive fuel product.
It’s all working well for corn, new butanol and ramping up of cellulose production. Another big ethanol producer, POET, has announced a stunning deal with DSM to start an ethanol joint venture. This follows news that POET’s Project Liberty is to cost $250 million producing 25 million gallons annually. The math at Project Liberty is a massive improvement. Poet’s first run at cellulose started back in 2008, had costs in the $6 a gallon range. Project Liberty figures to get to $1.85 – more than a 2/3rds reduction.
Valero is invested in Mascoma’s estimated $232 million first commercial facility at Kinross, Michigan. This isn’t to be a corn fed plant. Mascoma’s’s technology is working on hardwoods because hardwood can be gathered and shipped in with better economics than corn stover and operated at larger capacities.
The Kinross facility is designed to reach 40 million gallons, while POET has indicated that it believes that 25 million gallons is the sustainable capacity for add-on cellulosic ethanol capacity at corn ethanol plants. This is a major difference – drawn from those gathering and shipping costs.
Mascoma appears to be slightly ahead of POET, projecting a $1.77 unsubsidized operating cost per gallon, compared to the $1.85 estimated for POET.
It’s still early for figuring what path cellulosic will grow to dominate. There’s still the new guy, CoolPlanet with that big rich investor base.
CoolPlanet’s technology is to make synthetic hydrocarbon fuels based on biomass from plant photosynthesis that absorbs carbon from the air. The announced focus is heading towards Miscanthus grass. The technology is said to make exact replacements for gasoline that will operate in the current gasoline fueled fleet and can make even more advanced “superfuels” for even higher gas mileage and better performance in future vehicles.
Miscanthus isn’t the only potential feedstock. So far as one can tell, CoolPlanet is a kind of pyrolysis, some kind of revolutionary thermal/mechanical processor that directly inputs raw biomass such as woodchips, crop residue, algae, etc. and produces multiple distinct gas streams for catalytic upgrading to conventional fuel components.
Over the course of three steps three fuel precursors are produced. Then a range of simple one-step catalytic conversion processes produce useful products such as eBTX (high octane gasoline), synthetic diesel and proprietary ultra-high crop yield super fuels.
The waste is the highly desirable biochar, in the form of activated carbon that can be used as a soil enhancer similar to “terra preta”.
Even more encouraging is the CoolPlanet model is design to be small and close to the feedstock source and even mobile. As seen in the POET Mascoma competition, the gathering and shipping can limit growth.
There’s a lot of “oil” interest in CoolPlanet already.
The independent oil industry understands full well the implications of higher cost fossil petroleum sources. As the Chevron folks say quite pointedly, “we’ll need and use every molecule”.
It’s also a good time to get in. With Obama and the Federal Reserve busily pouring dollars into the economy creating a pyrolysis of the dollar so to speak, having cash isn’t a real good idea when its clear that some early renewable fuel technologies are getting competitive and can now become real working assets. Those dollars of today will be earning inflated dollars later – one reason rich folks don’t scream as loud as the middle class and poor.
Should CoolPlanet get to scale, the estimated costs the POET and Mascoma processes could be in for real competition. In biofuels pennies matter, two cents saved over 50 million gallons comes to a million dollars.
But we can’t call a dominator yet, POET has already shown it can slash production costs; Mascoma will surely work to the same ends.
Renewables based in ethanol and butanol are about to arrive at scale. It took the U.S. corn farmers decades to get to nearly a million barrels a day, it won’t take the cellulosic guys anywhere near that long and by then a lot of the corn will go to butanol.
One million barrels a day done, ten million barrels a day to go. It’s looking more probable than possible now.
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[…] Oil In a Fight With Itself Posted on New Energy and Fuel talks about the latest developments in bio-fuels that will lower the demand for oil. […]
“Mascoma’s’s technology is working on hardwoods because hardwood can be gathered and shipped in with better economics than corn stover and operated at larger capacities.”
So we are going to take a bio product that take probably 20 years to reach a marketable size, grind it up to turn it into a consumable fuel? Doesn’t sound very `green` to me.
Johnmc I totally agree with you, that’s what I was thinking when I was reading it. Surely that cannot be very environmentally friendly