The lowdown on Enerkem's landmark Edmonton advanced biofuels project

R_L Enerkem's President and CEO Vincent Chornet, Premier of Alberta Ed Stelmach, and the Mayor of Edmonton Stephen Mandel at the ground breaking ceremony for Enerkem's Waste-To-Biofuels plant in Edmonton, Alberta

In Canada, Enerkem broke ground on its 9.5 Mgy (36 million liter), $75M municipal waste-to-biofuels facility with its partners, the City of Edmonton and the Government of Alberta. Alberta Premier Ed Stelmach, Edmonton Mayor Stephen Mandel and Enerkem Chief Executive Officer Vincent Chornet participated in the event.

Enerkem’s advanced biofuels plant, which will be located in Edmonton, Alberta, is the first industrial-scale biofuels project to use municipal solid waste as feedstock.

Using Enerkem’s proprietary clean technology, the facility will produce enough biofuels to fuel over 400,000 cars per year running on E5 ethanol. It will be built, owned and operated by Enerkem Alberta Biofuels LP, a wholly-owned subsidiary of Enerkem. The City of Edmonton and Enerkem Alberta Biofuels have signed a 25-year agreement to convert 100,000 tonnes of the City’s municipal solid waste into biofuels annually. The garbage to be used cannot be recycled or composted.

The facility will create more than 180 direct and indirect jobs during the operations, construction and engineering phases. The plant is scheduled to commence operation by the end of 2011, and will reduce Alberta’s carbon dioxide (CO2) footprint by six million tonnes over the next 25 years.

Enerkem’s facility, by the numbers

The plant’s construction, at 10 Mgy scale, will cost $7.5 per gallon of capacity, or 10 percent lower than the low end of the construction range for advanced biofuels as projected earlier this summer by USDA. Significantly, the USDA projected its $8 per gallon capex on a standard 40 Mgy facility.

Enerkem confirms that it can reduce capex costs to $3.50 per gallon for a 38 Mgy facility – bolting together four of its Edmonton 9.5 Mgy modules, or $133 million per facility. The facility would produce, at today’s ethanol price of $1.938 (for the CBOT September contract), $73 million in ethanol revenues per year.

According to earlier analyses of Enerkem’s economics, the plant design is financially feasible at a zero feedstock cost, based on $80-$100 oil. http://www.siouxlookout.ca/files/03%20Climate%20Change%20Solutions%20(D%20Bradley)_0.pdf In the case of the Edmonton project, the construction of the facility enables the city of Edmonton to avoid construction of a new city landfill, and the city has contracted to supply 100,000 tonnes of MSW to the plant for an undisclosed tipping fee.

The waste to biofuels market size

According to Enerkem CEO Vincent Chornet, there are in excess of 500 municipalities that have sufficient MSW available to feasibly install an Enerkem solution, and the company has received “dozens of calls” from municipalities looking to investigate construction of an Enerkem facility.

Depending on the range of MSW available per facility, the potential production capacity of these systems as a whole would be between 4.7 and 19 billion gallons of ethanol capacity. At the upper limit, that’s 90 percent of the amount of advanced biofuels required under the Renewable Fuel Standard by 2022.

The long term feedstock outlook

While there have been other biofuels feedstocks available on a “tipping fee” basis, such as yellow grease in the biodiesel market, which went from a negative feedstock cost to 25 cents per pound in a few years, Chornet expects that MSW will remain available on  a tipping fee basis for 10 to 15 years.

“This is a more sophisticated technology,” he remarked, “and it will be quite a while before enough of these facilities can put pressure on these feedstocks, so that value can go up. For now, municipalities recognize this as a valuable alternative, because their citizens don’t want landfills or incineration.”

Enerkem’s expansion path

According to Chornet, “If we have a trademark, it’s that we have not skipped any step. We aim to be very disciplined, and we’ve been in it for several years. So we are focused on executing our Edmonton and Mississippi projects, and we try not to think too much about other expansion. Money is coming already, and we do expect that it will come in more abundantly as we complete projects, and continue on that natural approach.

Plant construction for a 9.5 Mgy facility (36 million liters) takes 16 months.

Enerkem’s Mississippi project

The company has landed a $50 million DOE grant for its project in Pontotoc, MS, which also features an initial capacity of 9.5 Mgy (36 million liter), and is expected to commence operation in 2012. The company has signed an agreement with the Three Rivers Solid Waste Management Authority of Mississippi (TRSWMA) for the supply of 190,000 tons of unsorted municipal solid waste (MSW) per year. The facility will be located on the Three Rivers’ landfill site and will convert approximately 60 percent of the MSW that crosses the Three Rivers landfill gate. A portion of the waste will be recycled and the other portion will be converted into ethanol.

The potential for scale

At the height of the first-generation ethanol boom, the industry was able to handle more than a dozen simultaneous construction projects. Using Enerkem’s 16-month construction timelines and that “dozen project” limit, we expect a maximum construction rate of 340 Mgy in capacity, with that kind of capacity available no earlier than 2014. In total, the Enerkem process could result in a capacity of as much as 3.1 billion gallons of capacity by 2022, the final year of the current Renewable Fuel Standard.

That’s a significant dent in the RFS, though about 14 percent of the overall advanced biofuels capacity required. Good news in that: the USDA, in its RFS plan released this June, did not account for a single gallon of capacity through MSW, so this would take significant pressure off crop-based feedstock requirements. Not to mention $13.85 billion savings in capacity construction costs compared to the USDA projections, plus shiny happy local communities avoiding new landfill construction or incineration programs.

Enerkem’s process

Enerkem’s process combines green gasification and catalytic synthesis. It involves heat, pressure, advanced chemistry and the use of catalysts. Enerkem’s extensive gas conditioning produces a tailored syngas that is converted first into methanol, then upgraded to ethyl acetate and then to ethanol.

Enerkem’s product line up

In addition to ethanol, Enerkem can produce:

Methanol is an ingredient used in a variety of compounds. Around 40 percent of methanol is converted to formaldehyde, and, from there, into products such as plastics, plywood, paints and textiles. Methanol is also used as a solvent and antifreeze, as well as a transportation fuel. According to SRI Consulting, world demand for methanol is projected to grow at an average annual rate of 7.8 percent from 2008 to 2013. Today, methanol is generally produced synthetically from natural gas. By converting residual biomass into methanol, Enerkem offers a unique product, biomethanol.

Acetic acid is an important chemical raw material. It is mainly used for the production of vinyl acetate monomer (VAM), but its fastest growing use is for its second largest derivative, purified terephthalic acid (PTA), which is driven by the demand in polyethylene terephthalate (PET) bottle resins and polyester fibre. According to SRI Consulting, Asia is expected to account for over 57 percent of acetic acid consumption in 2011 and the United States is expected to remain a major player, accounting for an estimated 19 percent of demand in 2011.

Acetates, such as ethyl acetate and methyl acetate, represent a large market. Ethyl acetate is used in a variety of coating formulations, such as epoxies, urethanes, cellulosics, acrylics and vinyls. Applications for these coatings are numerous, including wood furniture and fixtures, agricultural, construction and mining equipment, auto refinishing, maintenance and marine uses. Methyl acetate is mainly used as a chemical solvent for cleaning/coatings, and in its high-purity form, as a solvent for the pharmaceutical industry.

The company confirmed that it is in discussion with offtake partners for all three products, and Chornet emphasized that “Mississippi gives us access to the gulf coast, where we can access markets for acetates and methanol, and are in discussion with a number of potential partners.”

Chornet also confirmed that, at an early R&D stage, the company is working with “all the major catalyst companies” and are looking at, for example, gasoline from methanol, as well as different renewable chemicals. But Chornet emphasized that those efforts are an R&D effort and characterized them as “on the periphery.”

The reaction from Alberta

“Alberta is an energy province,” said Premier Ed Stelmach. “This project is another example of how our government is helping develop leading-edge renewable and non-renewable energy technology. I applaud the vision and dedication the partners have shown to make this pioneering project a reality.”

“Edmonton’s environmental leadership has us continually looking to set the bar higher,” said Edmonton Mayor, Stephen Mandel.  “As a result of this facility, we will become the first major city in North America to see 90 per cent of residential waste diverted from landfill by 2013. This is a major achievement, and a big step towards a greener Edmonton! Thanks to all our partners whose innovation and commitment to sustainability are helping to reduce our carbon footprint.”

“Each project is different,” added Chornet. “Edmonton is a world leader in recognized pioneer in waste management practices. For example, they have the world’s largest compost facility. It was natural for them and us to combine our efforts.”

The Digest’s take

This is a major milestone for advanced biofuels. Enerkem has not only broken through the financing barrier on a commercial-scale installation, it has a rapid build-out schedule owing to its modular design, and breaks through on what, conceptually, is the most attractive feedstock of all, municipal solid waste.