Runway cleared for aviation biofuels surge in 2012
// Biofuels Digest
Jim Lane | June 10, 2011 29
ASTM gives preliminary OK to Bio-SPK fuel spec; path to 58B gallon aviation biofuels market comes clearer, closer
In Washington, Bloomberg is reporting that ASTM has given preliminary approval to the blending of biofuels produced from algal, jatropha, municipal waste and other cellulosic feedstocks in aviation fuels. Final approval is expected no earlier than July 1st, according to ASTM, of the new BIO SPK fuel standard, which will limit such fuels to 50 percent by weight.
Following final approval of the standard, Lufthansa and Airbus are expected to begin a six-month commercial trial of a 50 percent biofuel blend, on four flights per day operating between Frankfurt and London.
Cautionary note. A Bloomberg New Energy Finance analyst predicted that “The real winners of this type of regulatory breakthrough will be technology companies involved in the production of aviation biofuels. The biotech-biofuels business models of Amyris Inc., Codexis Inc., Gevo Inc. and Solazyme Inc. are all making claims to these types of new markets.” Amyris and Gevo are not producing Bio-SPK fuels and are not directly impacted by the announcement – although Solazyme will receive a potential direct impact for its Bio-SPK-based Solajet fuel, which it is producing in large test quantities for the US Navy among other customers..
Other airlines are expected to follow rapidly with flight trials, and on the sidelines of the Advanced Biofuels Leadership Conference this past April, aviation experts predicted a number of new offtake agreements between producers and airlines, following approval of the standard.
The Bio SPK standard relates to hydrotreated oils produced from waste, non-food oilseeds such as jatropha or camelina, oil recovered from organisms such as microalgae or cyanobacteria, or oil produced from animal wastes in the rendering process.
Many companies can or have trialled the UOP hydrotreating process, including Sapphire Energy, Solazyme, Terasol and Sustainable Oils. In the process, excess oxygen content is removed from the oil feedstocks to produce bio-based synthetic paraffinic kerosene, which is used as jet fuel under one of a variety of fuel specs, including Jet A, JP-4, JP-5, JP-7 or JP-8.
Other companies that could enter the aviation fuel space include Neste Oil and Dynamic Fuels, which use hydrotreating to produce renewable diesel. In addition, the fuel spec would make it possible for almost any producer of virgin or used oils, such as waste cooking oil, to potentially enter into what is expected to be a fast-growing market for renewable jet fuels.
Fuel performance
Kerosene is a powerful fuel. A 12-carbon, fuel-grade kerosene – RP-1- is mixed with liquid oxygen to power the first stage of a Saturn V launch vehicle. Five F-1 rocket engines can generate up to 217 million horsepower.
Kerosene also has excellent performance in cold temperatures compared to other high density fuels, such as diesel, and is used as an additive to diesel, for example, to halt gelling at low temperatures.
More on Bio-SPK performance from Boeing
Last year, Boeing released an excellent white paper on the topic, the Evaluation of Bio-Derived Synthetic Paraffinic Kerosenes”, which is also downloadable from the Digest’s BIZ database of useful public documents relating to biofuels. It can be downloaded here.
Additional bio-based fuel specs and opportunities
There is another fuel spec, approved some time ago, which relates to bio-based fuels produced using the Fischer-Tropsch process. Rentech is among the leading companies producing this fuel, which is already approved for use and was the subject of a 13-airline offtake agreement at LAX, announced last year. Rentech is also working with UOP for unionfining, unicracking and dewaxing technologies.
In addition, several companies are developing technologies that will produce jet fuels directly from fermentation, or from catalytic conversion processes. Companies pursuing this track include Cobalt Technologies, Gevo, Amyris, Joule Unlimited, and Virent. The latest guidance from Amyris suggests that they expect to see approval and commercial-scale production of those fuels by mid-decade.
The market and drivers for aviation fuels.
Worldwide demand for aviation fuels is growing fast, primarily due to growth in the robust Chiese aviation market. According to the International Energy Agency, aviation fuel demand will reach “7.6 million barrels per day in 2012, up from about 6.8 million barrels per day in 2007″. That translates into 116 billion gallons of jet fuel, globally, by 2012. With an approval of Bio-SPK, the biofuels industry will have a new path to supply up to 58 billion gallons of fuel to the sector.
Among demand drivers for Bio-SPK are the prospect of big carbon credit payments by airlines operating into, out of, or within Europe. Commencing in January 2012, the airline industry is scheduled to enter into the EU Emissions Trading Scheme, which will cap carbon emission levels, and is expected to cost airlines up to $19 billion in 2012 alone, according to a March report from Point Carbon.
Aviation accounts for 12% of the fuel consumed by the entire transportation sector, which is equivalent to roughly 1.5 to 1.7 billion barrels of kerosene annually (about 70 billion gallons). Analysts project that aviation biofuels will replace roughly 1% of kerosene by 2015, 25% by 2025, and 30% by 2030. This represents a market value of US $2 billion, $56 billion, and $68 billion in delivered fuel respectively, assuming current kerosene prices.
The use of Bio-SPK fuel, in a 50 percent blend, would eliminate all those carbon payments. In addition, airlines cite corporate sustainability programs as well as supply chain diversification among reasons that they are taking such a strong interest in Bio-SPK. Unlike, for example the passenger car market, which has carbon-mitigation options such as hybrids and electric vehicles, biofuels are generally agreed as the primary tool for aviation emissions reduction over the next 30 years, in conjunction with increases in fuel efficiency.
http://biofuelsdigest.com/bdigest/2011/06/10/runway-cleared-for-aviation-biofuels-surge-in-2012/
NEWS OF THE COMPANIES Myriant’s $125M IPO IPO Myriant’s $125M IPO: The Complete Digest analysis
// Biofuels Digest
Jim Lane | June 3, 2011
Myriant becomes the 8th industrial biotech player to file an IPO in the 2010-11 greentech bull market.
Will it fly? Should it? The risks, the rewards, the rationale.
In Massachusetts, Myriant filed for a $125 million IPO, becoming the 8th company in industrial biotechnology to file in the past 18 months. The filing is the first since Solazyme raked in a record $227 million (assuming sale of its overallotments) in its IPO last week. Solazyme stock, meanwhile, has jumped 24 percent in the first few days of trading on NASDAQ.
UBS Securities LLC, J.P. Morgan Securities LLC, Citigroup Global Markets Inc. and Piper Jaffray & Co. will be acting as joint bookrunning managers, with Morgan Joseph TriArtisan LLC acting as co-manager, for the offering.
Myriant background
The company is the 8th elite integrated biorefining company to file for an IPO in the past 18 months – following Codexis, Amyris, Gevo, Solazyme, KiOR, and Ceres.
From the S-1: “We are an industrial biotechnology company focused on becoming a low-cost producer of high-value biochemicals that substitute for traditional petroleum-based industrial chemicals. We have developed a proprietary technology platform that we believe will enable us to manufacture a variety of “drop-in” chemicals and replacement chemicals for large and growing markets using a broad range of low-cost, renewable and readily available feedstocks. We believe that we can produce our target high-value chemical intermediates at an average of half the cost of traditional petrochemical intermediates at a wide range of oil and industrial sugar prices without relying on government subsidies.”
Breakout Markets in organic acids: Succinic, fumaric, acrylic, lactic acids at half price
From the S-1: “Our technology platform combines proprietary microorganisms, or biocatalysts, and a fermentation process capable of using diverse industrial sugars to create various chemical intermediates, such as succinic acid (a $7.5 billion addressable market at current market prices), fumaric acid (a $1.7 billion addressable market at current market prices), acrylic acid (a $14.5 billion addressable market at current market prices) and lactic acid (forecast to eventually become a multi-billion pound market).
Key initial market: Succinic acid as substitute for existing molecules
From the S-1: “We are currently focused on commercializing and producing biosuccinic acid. There is currently a small existing merchant market for succinic acid for use in pigments, solvents, detergents, metal plating and PBS polymers. In addition to targeting the existing succinic acid market, we plan to sell our biosuccinic acid as a drop-in or replacement chemical in the following target markets:
“Butanediol, or BDO, is a high-value chemical intermediate with end markets in a wide variety of everyday products, including engineered plastics, biodegradable food packaging, adhesive tapes, foams, fibers such as elastane (better known as Spandex and Lycra) and coatings. Approximately 27% of global BDO production capacity utilizes a proprietary production process licensed by Davy…we are negotiating a joint development agreement…to replace their petroleum-derived MAN with our biosuccinic acid.
“Our biosuccinic acid can be used to substitute for adipic acid in these and other applications. Several prospective customers have already tested our biosuccinic acid as an adipic acid replacement, and one customer has signed a supply contract with us for that purpose.
“Phthalic anhydride is a major chemical intermediate used as a raw material to produce plasticizers, coatings and a wide variety of everyday plastics used in food wrap films, flexible PVC piping, flexible wire jackets and toys. Several prospective customers have already tested our biosuccinic acid as a phthalates replacement, and one customer has signed a supply contract with us for that purpose.
“Lactic acid can be converted, through a process called polymerization, into polylactic acid, or PLA. PLA is used in a range of everyday products, including packaging, apparel, bottles, durable goods, films, bedding, non-wovens and plastic dining utensils. The market for PLA is currently limited because conventional PLA cannot be used in applications requiring heat resistance. Our D(−) lactic acid can be used…to address the thermal stability problem…Market forecasts indicate that the addressable market for D(−) lactic acid will eventually exceed one billion pounds.”
Beyond the green premium, the green discount
Based on current commercial-scale cost metrics, we estimate that our production process for our initial product, biosuccinic acid, will be cost-competitive with petroleum-based processes down to $45 per barrel of oil.
The company’s financial progress.
The company recorded operating losses of $4.98M for the 3 months ending in March 2011, up from $3.241M in the corresponding period of 2010. The company is essentially, pre-revenue, recording $2,519 in sales over the past 3 months. Total assets are booked at $61M, with $50M in cash.
Customers and partners
Davy Process Technology, using Myriants’s succinic acid in their butanediol process in place of petroleum-derived maleic anhydride, without significant additional capital expenditures. Davy believes that its butanediol process ccounts for approximately 1.2 billion pounds or 27% of total global capacity, and 50% of plant capacity installed since 1992.
Uhde GmbH, to integrate Myriant fermentation technology with its separation technology in the plant design and, on a project-by-project basis provide process and performance guarantees for our future plants on mutually agreeable terms.
MOU with China National BlueStar (Group) Co. Ltd., to develop a proposal for a jointly-owned 220 million pound biosuccinic acid plant in Nanjing, China, and an agreement for the exclusive supply of biosuccinic acid to BlueStar.
Partnership with PTT Chemical International, to access PTTCH’s breadth of commercial and technical expertise and extensive knowledge and infrastructure in Asian markets.
Scale-up to date
From the S-1: “We are currently building a 30 million pound biosuccinic acid plant in Lake Providence, Louisiana, or the Louisiana Plant, which we expect will begin commercial operations during the first quarter of 2013. We intend to expand the annual production capacity of this plant to approximately 170 million pounds by the end of the first quarter of 2014.
“We have already scaled up our biosuccinic acid production 1,000 fold at the tolling plant owned by Fermic, in Mexico City, and have produced 24 metric tons of biosuccinic acid at this facility in support of internal testing and customer/vendor sampling and validation programs.”
“Our technology platform has been deployed on a commercial scale since June 2008 at Purac’s manufacturing facility in Barcelona, Spain, for the production of D(−) lactic acid.”
As Myriant sees itself
Competitive strengths: Validated proprietary technology – Low-cost producer of sustainable biobased products – Feedstock flexible – Commercialized product – Strategic relationships – no subsidies or mandates required – Scale-up and signed customer contracts – Experienced team.
Strategy: developing drop-in and replacement products for large, existing addressable markets – leveraging and establishing partnerships – targeting drop-in applications to drive market penetration – securing customer contracts to support production capacity expansion – expanding internationally to markets with the greatest business opportunities – feedstock flexibility used to reduce costs.
http://biofuelsdigest.com/bdigest/2011/06/03/myriants-125m-ipo-the-complete-digest-analysis/
Petrobras investing US$400 million in biofuels research 2010-2014
// Green Car Congress
8 June 2011
Petrobras has earmarked some US$400 million for biofuels development research projects in the 2010-2014 Business Plan, according to Petrobras Biocombustível’s head of Technology Management, João Norberto Noschang Neto. Neto was speaking as a member of the panel on “Cellulosic Biofuels: has the future arrived?” during the Ethanol Summit in São Paulo, 7 June.
We are using a number of approaches in our research, including the reuse of glycerin (a byproduct of biodiesel production), rejuvenation of mature fields, and even cellulosic ethanol and aviation biofuel development.
—João Norberto Noschang Neto
Neto added that projects were already under way to exploit microalgae for producing oil feedstock for biofuels and to develop biotechnology platforms. The company is also focusing on process sustainability and analyzing the biodiesel and ethanol life cycle throughout all production phases, he added.
He pointed out that one of the challenges facing the biofuels sector is vertical growth in productivity.
The company is also prioritizing the development of second-generation biofuels, including cellulosic ethanol produced from cane bagasse, with an expected increase in productivity of 40%.
http://www.greencarcongress.com/2011/06/petrobras-investing-us400-million-in-biofuels-research-2010-2014.html
Shell, Cosan close $12B JV – Iogen, Codexis holdings transferred to Raizen
//BiofuelsDiges
Jim Lane | June 3, 2011
Brazil, Shell and Cosan closed on their USD $12 billion joint venture to create Raízen, one of the world’s largest ethanol companies with over 2 billion liters annual production capacity, a retail network of 4,500 fuel stations, 24 sugar mills and an installed capacity of 900MW of electric energy from sugar cane bagasse.
Globally biofuels currently meet around 3% of road-transport fuel demand. Shell expects this to rise to about 9% by 2030.
As part of this agreement, Royal Dutch Shell plc has transferred its 15.7% ownership in Codexis to Raízen with the goal of deploying Codexis’ “super-enzymes” for the faster conversion of plant waste into transport fuels. As a result, Raizen is now Codexis’ largest stockholder. The deal includes part of Shell’s interest in the firm Iogen, which uses enzymes to break down plant waste into ethanol.
http://biofuelsdigest.com/bdigest/2011/06/03/shell-cosan-close-12b-jv-iogen-codexis-holdings-transferred-to-raizen/
Cargill, USJ form major Brazilian ethanol, sugar, power JV
// BiofuelsDigest
Thomas Saidak | June 3, 2011
Brazil, Cargill and the USJ Group announced a joint venture in the sugar, ethanol, and bioelectricity segment. Each party will have a 50 percent interest in the venture, and management will also be shared. Transaction figures have not been disclosed.
The transaction should be concluded within 60 days and is subject to regulatory approval. The new company will combine industrial assets of the USJ Group in the state of Goiás, which consist of the São Francisco mill and the Cachoeira Dourada mill, which is currently under construction in the same municipality. The joint venture will also inherit sugarcane supply agreements with local producers.
Part of the capital Cargill is investing in the joint venture will be used to conclude the Cachoeira Dourada mill, which is expected to enter operation for the 2013 harvest; resources will also be used to upgrade de São Francisco mill. The São João mill, in Araras, SP, will not be part of the new company.
After all upgrades, the two mills will have a joint processing capacity of 7.5 million metric tons of sugarcane per year. In addition to producing sugar and ethanol, they will also produce 120 MWH of electricity from sugarcane bagasse. One third of that will be used at the mills and the remainder will be supplied to the public grid.
http://biofuelsdigest.com/bdigest/2011/06/03/cargill-usj-form-major-brazilian-ethanol-sugar-power-jv/
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