Technoeconomic Analysis of Bio-Jet Fuel Production - Dr. Daniel Klein-Marcuschamer Director, Technoeconomic Analysis, JBEI, LBNL Manager, Technoeconomic Analysis, AIBN, UQ

Christopher Turner Process Engineer, AIBN, UQ

THANKS

• JBEI – Harvey Blanch, Jay Keasling, Blake Simmons • SPONSORS: • AIBN (UQ) – DOE EERE – Peter Gray, Lars Nielsen, Bob McCarthy, Robert Speight, Chris Greig – Boeing • James Cook University – Kirsten Heimann, Rocky de Nys – IOR Energy • IMB (UQ) – Ben Hankamer, Evan Stephens – MacKay Sugar Factory • CILR (UQ) – Virgin Blue Airlines – Peter Gresshoff, Paul Scott • QAAFI (UQ) Group – Ralf Dietzgen – Queensland • QSAFI Consortium Members – Mark Allen, Craig Bernadie, Kelly Cox, Aidan Government Dargan, Rocky de Nys, Michael Edwards, John Hodgson, Shaun Jellett, Bryan Lavarack, David – GE White

CONFIDENTIAL Petroleum resources are limited

Source: The Association for the Study of Peak Oil and Gas, C.J. Campbell, 2004 … but demand is increasing… … leading to high and volatile oil prices Jet fuels present a challenge

From WEF, Repowering Transport, 2011 CONFIDENTIAL People like flying

From CSIRO, Sustainable Aviation Fuel Road Map, 2011 CONFIDENTIAL

Life Without Oil

: 2009:06 : ExCo

Jet Fuel Source: IEA :IEA Source:

How expensive is it? Selling you drop-in biofuels

SG Biofuels

Incitor

Sundrop

Kior

Primus

Cool Planet Brent Crude, Nov Nov 15Crude, Brent

Joule

Ensyn

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

Adapted from http://www.biofuelsdigest.com/bdigest/2012/11/12/ CONFIDENTIAL Results depend on assumptions

MESP Feedstock/Process In 2009$ Reference ($/gal)

Softwood (spruce), steam pretreatment, SSF $2.16 $2.54 (Wingren et al. 2003)

Softwood (spruce), steam pretreatment $2.39 $2.81 (Wingren et al. 2003)

(Eggeman & Elander Corn , dilute acid, SSF $1.34 $1.48 2005) (Eggeman & Elander , AFEX, SSF $1.43 $1.58 2005)

Corn stover, dilute acid $2.43 $2.43 (Aden & Foust 2009)

(Hamelinck et al. Poplar, dilute acid $2.37 $2.71 2005)

Corn stover, dilute acid, SSF $3.30 $3.30 (Dutta et al. 2009)

Wood, dilute acid, SSF $1.28 $1.66 (So & Brown 1999) Community-updatable tool

Wiki-based Models

Model

Renewable Jet-Fuels

Pongamia Seeds Naphtha

(C5-C10) Hydrocarbon Jet Fuel Intermediate (triacylglyceride or (C10-C16) farnesene) Diesel

(>C16)

Algae

CONFIDENTIAL Methodology

Experimental Literature Industry best data data practices

Process Primary Parameters Inputs

Material Energy Cost Calculations Balances Balances Estimation

Preliminary design, Material Flows, Energy Use, Cash Flows Primary outputs

Minimum Selling Derived outputs Price (MSP) CONFIDENTIAL CONFIDENTIAL Minimum selling price

Pongamia Seeds Naphtha

(C5-C10) Hydrocarbon Jet Fuel Sugarcane Intermediate (triacylglyceride or (C10-C16) farnesene) Diesel

(>C16)

Algae

n n CFi (MSP V  C)i NPV   i   i  0 i1 (1 r) i1 (1 r)

CONFIDENTIAL

 Bio-Jet Fuel Processes

1. Pongamia oil extraction and refining 2. Sugarcane juice fermentation to hydrocarbons and refining 3. Algae growth, oil extraction, and refining

CONFIDENTIAL Pongamia oil process

• Pongamia pinnata is a leguminous tree and produces seeds with up to ~40% oil • The oil can be extracted and used for , or can be refined to compounds that can replace jet fuel

CONFIDENTIAL Pongamia oil process

Seed Seeds crushing

Oil Extraction Anaerobic Steam/Elec Digestion tricity

Oil cleaning / UOP Biofuels degumming Refining

CONFIDENTIAL Sugarcane molasses process

• Sugarcane is a perennial grass with high sucrose content • Sugar content in cane may be 100-150 kg/MT • Sugar can be fermented to a variety of molecules, including compounds that can replace jet fuel use

CONFIDENTIAL Sugarcane molasses process

Crushing Sugarcane

Steam/Elec Farnesene tricity

Clarification/ Evaporation “A” Sugar

Molasses Farnesene UOP Refining Fermentation separation

Biofuels CONFIDENTIAL Algae oil process

• Microalgae are photosynthetic microorganisms, some are capable of high lipid accumulation • Oil content in microalgae may be 20-50% (or more) • The oil can be extracted and used for biodiesel, or can be refined to compounds that can replace jet fuel

CONFIDENTIAL Algae oil process

(Nannochloropsis sp.)

Algae CO2, N, P, Ponds Light

Algae Water Harvesting recycle Biofuels

Oil UOP Oil extraction

Cleaning Refining Nutrient recycleNutrient

Anaerobic Steam/Elec digestion tricity CONFIDENTIAL Summary of the Results

CONFIDENTIAL Likely current economics

Pongamia Sugarcane Algae Total Capital Investment ($M) $506 $259 $3,451

Annual Operating Cost ($M) $303 $253 $984

Facility-dependent Costs1,2 31.93% 18.84% 84.17%

Raw Materials1 57.86% 70.89% 10.11%

Utilities1 5.56% 8.13% 4.43%

Labor Cost1 4.53% 2.14% 1.25%

Consumables1 0.12% 0.01% 0.04% Minimum Selling Price $373.68 $301.35 $1,343.18 ($/barrel eqv.)

1 As percentage of annual operating cost 2 Facility-dependent costs include depreciation, maintenance, insurance and overhead

CONFIDENTIAL Capex breakdown

CONFIDENTIAL Costs of Harvesting

Source: Shelef, SA, Green M. Microalgae Harvesting and Processing. Carbon Dioxide Information Analysis Center (1990)

Sensitivity analysis

CONFIDENTIAL Sensitivity analysis

CONFIDENTIAL Sensitivity analysis

DAF

CONFIDENTIAL Likely current and future economics

CONFIDENTIAL CONFIDENTIAL Technology progress

$67,108,864 $16,777,216 $4,194,304 $1,048,576

$262,144 ~500,000-fold less

$65,536 $16,384 $4,096 $1,024

$256 Logarithmic Scale Logarithmic

MSP (Arbitrary Units) (Arbitrary MSP $64 $16 $4 $1

CONFIDENTIAL Community-updatable tool

http://qsafi.aibn.uq.edu.au

Model Questions?

Daniel Klein-Marcuschamer

Email: [email protected]

CONFIDENTIAL Pongamia model validation

Raw Materials Capex

$590/MT $54.4M for oil extraction

~20% more Range for oil expensive than extraction is $56-78M* soybean

Overall process

MSP of $440/MT for meal and $1150/MT for oil

Similar to market prices for soybean meal and oil

* Source: Soares et al., FEASIBILITY STUDY & PRELIMINARY BUSINESS PLAN FOR A MICHIGAN SOYBEAN CRUSH PLANT, 2006

Sugarcane model validation

Raw Materials

$190/MT molasses Capex

Validated by Not publicly available Mackay Sugar Ltd.

Overall process

MSP of the farnesene intermediate $4.30-$7.10/gal

Farnesene for non-fuel target markets start at ~$6.40/gal*

* Source: http://www.biofuelsdigest.com/bdigest/2011/05/03/amyris-the-owners-manual/ Algae model validation

Overall process Raw Materials MSP $1340/bbl ($32/gal oil) Unimportant IHI Japan reported current fuel price at $48/gal*

Capex**

$34,000/ha $197,000/ha $22,000/ha $5,600/ha ($12,000/ha with refining)

Sources: * http://www.yomiuri.co.jp/dy/business/T121108003031.htm ** Benemann, J.R. & Oswald, W.J. Final Report to the Pittsburgh Energy Technology Center (1996). Need for R&D

Source: Benemann, J.R. & Oswald, W.J. Final Report to the Pittsburgh Energy Technology Center (1996).

Source: Shelef, SA, Green M. Microalgae Harvesting and Processing. Carbon Dioxide Information Analysis Center (1990)

QSAFI: Building a

europe.org

- www.biocore

Concept Pre- Feasibility Business Analysis feasibility Study / Implement Operations Case QSAFI Study FEED

CONFIDENTIAL Economic Estimates

• CAPEX based on data from various NREL and ORNL reports, vendor quotes, and Aspen calculators • Refining equipment numbers were validated by IOR • Minimum selling prices (MSP) included a discount rate (i.e. a WACC) of 10% for 25 years, a debt-equity split of 60/40, with an interest rate of 8% (admittedly optimistic, under the assumption of government support. These can be changed)

CONFIDENTIAL Economic Estimates

• Analysis includes annual operating costs (AOC), breakdown of CAPEX by section, and minimum selling prices (MSP) • MSP analysis was carried out by varying the prices of naphtha, aviation fuel, and diesel simultaneously. – This analysis gives the equivalent price of oil that would make the biorefinery competitive with an oil refinery

CONFIDENTIAL TEA: Value proposition

• For Government agencies (DOE, USDA, etc.) – Assess the potential impact of a grant or program, advise policy, provide independent evaluation on technology • For researchers at early stages – Evaluate different research directions, prioritize efforts, apply for grants • For start-ups and researchers with technologies close to commercialization – Attract capital, make informed decisions, apply for grants • For venture capital and industry – Due diligence, valuate intellectual property, analyze competitive advantage of proprietary technologies