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The New Syngas: New catalysts, opportunities for advanced biofuels

| November 26, 2012

The Motunui Synthetic Fuels Plant, opened in 1986 in New Zealand

Primus Green Energy looks to an improved syngas-to-gasoline process as a renewable fuel game-changer.

Back in the 1970s energy crisis, the Brazilian government now (famously) marched down their path towards energy independence via ethanol produced from sugarcane – but it is less well known that the New Zealand government embarked on a unique program of its own. They fostered the building of the Motunui Synthetic Fuels Plant, which opened in 1986 with a goal of converting natural gas to gasoline, via an intermediate conversion steps into syngas and then methanol.

Combined with investments in liquefied petroleum gas and compressed natural gas, New Zealand at one point reduced its dependency on imported oil from 85 percent to under 50 percent. When crude oil prices dropped dramatically in the mid-1990s, the Synfuel plant stopped making gasoline from natural gas for economic reasons.

The bottom line: there’s a known path from syngas to gasoline, that makes sense economically in given price conditions.

In the biofuels revolution, the primary focus has been not on producing methanol (and, ultimately, gasoline) from syngas, but primarily on the production of ethanol. Three of the major names in the field- LanzaTech, INEOS Bio and Coskata – developed pathways for fermenting syngas using proprietary micro-organisms. INEOS Bio’s first small commercial plant was completed this year in Florida, while LanzaTech and Coskata have completed demonstrations of their technology. ZeaChem developed a hybrid system that included thermochemically converting biomass to ethanol via syngas, too.

When interest in drop-in renewable fuels began to increase in the late 2000s — given the costs of infrastructure change that ethanol required to reach high blend rates with gasoline — syngas continued to appear in the technology paths of companies like Rentech and Velocys (using modified F-T technologies).

Then, in the past two years, Sundrop Fuels and Primus Green Energy emerged from stealth with technologies that produced renewable gasoline from wood biomass, by first making syngas, then methanol, then gasoline — and ultimately embraced a flexible feedstock strategy that included natural gas. Primus is expected to complete its demonstration-scale plant by the end of Q1 2013.

By now, we’ve gone full-circle with the technologies – back to the same ideas that drove the New Zealand project in days gone by. XTL technologies that utilize biomass, coal or gas to produce syngas – and thence a pathways to affordable fuels – are very much in vogue at the moment.

But as Robert Rapier pointed out recently in the Digest: “The two major problems with any of the XTL technologies are that capital costs are extremely high, and a long-term, cheap feedstock supply must be secured. Shell’s initial estimate for the [Pearl GTL] plant was $5 billion, but by the time the project was completed the costs were estimated to be around $20 billion.”

So, what can be done? One, in the US and Canada there is the startling differential between the cost (per MMBTU) or natural gas, compared to crude oil. Two, critical improvements in processing technology – in most cases, moving beyond traditional Fischer-Tropsch technologies – that make projects work economically at a more flexible range of scales (and thereby, reduce capex) as well as reducing the operating costs.

Primus Green Energy

Take Primus as an example. “a difference between us and FT,” notes CEO Robert Johnsen, one of the co-founders of Mascoma before moving to Primus last year, “is that we are competitive at 25 million gallon scale. Also, modularization could be an option.”

Last March in New Jersey, Primus announced that it has completed its third round of funding with the recent $12 million investment by IC Green Energy Ltd, the renewable energy arm of Israel Corp. Ltd. This latest investment brings the total of funds raised since 2007 to $40 million.

 Primus already has a pilot test plant in operation at its Hillsborough complex, and the company hopes to break ground in early 2013 on its first commercial plant.

The company says that, at scale, it can produce gasoline at a price competitive with gasoline produced from petroleum at $60-$70 per barrel, based on a scale of 25-27 million gallons for its first commercial plant, and designs for up to four units with a capacity of 100 million gallons.

Feedstock flexibility

LanzaTech’s Jennifer Holmgren once warned the Digest. “it’s important not to marry a feedstock.” That’s also the essence in Rapier’s warnings about the attractions of GTL technologies – going all-in on a feedstock whose price may flip into an unsustainable relationship to crude oil. So, it’s important to see the extension of technologies like Coskata, Primus and Sundrop into natural gas as a hedge against biomass prices rather than an abandonment of biomass.

The PGE technology

Conceptually, its not a difficult technology to understand.

First, biomass is gasified into syngas. If using natural gas, the NG is steam reformed into syngas using known technologies. Syngas is converted into methanol using known methanol synthesis and distillation technologies that companies like Johnson Matthey have provided for years. Finally, a variant of the ExxonMobil MTG (methanol-to-gasoline) process is used to make the final product.

Their secret sauce lies, as with many companies in the thermochemical space, in the proprietary catalysts and other improvements made in the basic process to make reactions faster and more efficient.

Greenfield or co-locate?

In the case of PGE, there are existing sources of syngas that might be tapped. “There is a whole menu of syngas options and sources I didn’t know about when we first set out to look at it,” said PGE’s Johnsen. “There’s waste syngas from industrial process, methane gas from MSW, syngas from coal. So, there’s an investigation that goes on to determine whether its better to purchase syngas over the fence, and achieve lower capex costs – or do a greenfield plant and produce syngas on site using known technologies.”

Geographies

In part, the decision rests not only on the geographies of syngas as a feedstock, but on the availability and cost of wood biomass and natural gas. In particular, its notable that Israel has had some startling natgas discoveries and Israeli investors are behind PGE.
“we have had some discussions re Israel,” Johnsen said, “and the issue is the sequence of building plants more than anything else. If I had my druthers, our first commercial would be one car ride from our facilities here [in New Jersey]. We’ve looked at Louisiana, Texas, the Upper Midwest and Pennsylvania, among other locations. Ideally, we’d like to have as many options to tap into natgas pipelines or any source of syngas available, and those industrial gases that become available to us.”

Capex

One of the compelling claims of the PGE technology is its low capex. “In this space,” said Johnsen, “costs for first plants between $10-$20 per gallon of capacity are common. But, the capital efficiency of this design gives us a capex of $10 per gallon or less. And, anyone in the alternative fuels space assumes that the 2nd and 3rd plant, even with same capacity, will cost 10-20 percent less. The first plants are burdened by redundancies , and with experience you can cast off some costs and get to a leaner, more realistic process design.”

The bottom line

There’s syngas, and the new syngas. The sources appear to be widespread, and the minimum scales for commercial viability appear to have come down sharply – and the emergence of low-cost natural gas has added new investor interest as well as a solid hedge against upside down biomass vs crude oil economics. The technologies are heading for commercial scale now – so we can expect to see them emerge by mid-decade, proven at scale, if they are able to convert investor interest into commitment, and prove out the technology at scale.

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