Neste Oil: Biofuels Digest’s 2015 5-Minute Guide

January 29, 2015 |

5-Minute-Guide-logoNeste Oil is a refining and marketing company, with a production focus on premium-quality, lower-emission traffic fuels. The company produces a comprehensive range of major petroleum products and is the world’s leading supplier of renewable diesel. The company had net sales of EUR 17.5 billion in 2013 and employs around 5,000 people. Neste Oil’s share is listed on the NASDAQ OMX Helsinki.

Neste Oil is included in The Global 100 list of the world’s most sustainable corporations and has been selected into the Dow Jones Sustainability World Index for several years in a row. CDP Forest has listed Neste Oil among the best performers in the oil & gas sector. Also, Neste Oil monitors and measures greenhouse gas emissions across all its operations, and reported on them in succession as part of the Carbon Disclosure Project (CDP).

Rankings

50 Hottest Companies in Bioenergy: #23, 2014/15

Biofuels Digest Awards: Finalist, 2014 Transformative Technologies, “Plant or Integrated Biorefinery”

The Situation

Neste already has established substantial renewable diesel capacity, based originally on palm oil but targeting a wide range of feedstocks now.  To that end, Neste Oil has joined forces with DONG Energy to develop an integrated process to produce renewable diesel and aviation fuel based on agricultural residues. DONG Energy’s Inbicon technology will be used in the first part of the process to pre-treat biomass and produce cellulosic sugars that can be converted into microbial oil with Neste Oil’s technology.

Microbial oil can be used as a feedstock for premium-quality renewable fuels such as renewable diesel and renewable aviation fuel, but in 2014 Neste switched its emphasis from microbial oil research to other areas of technology for using forestry and agricultural waste. “Our microbial oil pilot plant at Porvoo has demonstrated that we have the technical capability for producing microbial oil,” says Neste Oil’s Senior Vice President, Technology, Lars Peter Lindfors. “The time is not yet ripe for a commercial-scale microbial oil plant, however. Lignocellulose material is not a financially competitive industrial feedstock for producing renewable diesel using the microbial oil process at the moment.

However, Neste continues to be high on algae oils, and has off-take agreements signed with Renewable Algal Energy (RAE) and Cellana.

Major Investors

Neste Oil’s share is listed on the NASDAQ OMX Helsinki. The company’s biggest shareholder is the Prime Minister’s office.

Type of Technologies

Neste Oil has developed a premium quality NExBTL renewable diesel production technology which allows flexible use of any vegetable or waste oil in the production of premium-quality renewable diesel and aviation fuel. Based on its technical qualities, NExBTL diesel is one of the best diesel fuels in the world. NExBTL is produced by hydrotreating vegetable or waste oils. As a hydrocarbon it corresponds to the chemical composition of traditional diesel.

Neste Oil’s major investment projects are linked to increasing the company’s NExBTL renewable diesel capacity. In 2011, Neste Oil started up the Europe’s largest renewable diesel plant in Rotterdam. The plant has a capacity of 800,000 t/a. Neste Oil already operates a renewable diesel plant in Singapore that came on stream in 2010 and two plants in Porvoo in Finland that came on stream in 2007 and 2009. All Neste Oil’s NExBTL plants are capable of producing both NExBTL renewable diesel and NExBTL renewable aviation fuel.

With the Rotterdam start-up, Neste Oil’s major €1.5 billion investment program aimed at increasing the renewable diesel capacity and the company is very well placed to meet world’s growing energy needs and demand for cleaner, sustainable bio-based fuels.

Feedstocks

Neste Oil’s NExBTL renewable diesel production technology allows flexible use of any vegetable or waste oil in the production of premium-quality renewable diesel without compromising on quality.

At the moment, Neste Oil produces NExBTL renewable diesel from a mix of palm oil, stearin and palm oil fatty acid distillate (PFAD) which are by- products of palm oil production, rapeseed oil, jatropha oil, camelina oil, soybean oil as well as waste animal fat produced by the food processing industry.

Widening the raw material base is one of the company’s main future goals. About 80% of the company’s R&D costs totaling approximately 40 million euros annually are directed to researching renewable raw materials. Progress continues to be made and in 2011 Neste Oil expanded the raw material feedstock with jatropha oil, camelina oil and soybean oil. In addition, research has shown that algae oil and microbial oil, together with wax derived from wood-based biomass, can all be used as feedstocks for producing NExBTL renewable diesel.

Notable successes in this area include: patented a waste-based microbial oil technology; progressed with research on algae oil and produced an initial trial batch; achieved good results at our pilot plant in producing biowax from wood- based biomass and started environmental impact assessments for a possible commercial plant; partnered with the world’s leading research institutes, companies anduniversities to find ways to produce renewable raw materials on industrial scale.

Products

NExBTL renewable Diesel

Based on Neste Oil’s proprietary technology, premium-quality NExBTL renewable diesel is the most advanced diesel fuel on the market today. It easily outperforms both conventional biodiesel and fossil diesel, and can be produced from a flexible mix of vegetable oils and waste animal fat sourced from the food industry. Neste Oil’s procurement chain ensures that all the raw materials it uses for NExBTL are produced responsibly. NExBTL renewable diesel has been shown to reduce greenhouse gas emissions by over 40% over the product’s entire life cycle when compared to fossil diesel. Its lower tailpipe emissions also make a valuable contribution to enhancing overall air quality.

NExBTL renewable aviation fuel

Neste Oil is a global pioneer in aviation biofuels. The company’s NExBTL renewable aviation fuel meets the very stringent quality standards demanded of aircraft fuel and can be produced in industrial quantities. Production of Neste Oil’s renewable aviation fuel is based on the company’s NExBTL technology.

NExBTL renewable aviation fuel can significantly reduce an aircraft’s greenhouse gas emissions compared to fossil fuel. In addition to a smaller carbon footprint, it also offers lower emissions of other pollutants such as NOx. Neste Oil’s NExBTL renewable aviation fuel is a pure hydrocarbon comparable to fossil-based aviation fuel. NExBTL renewable aviation fuel is fully compatible with all current aircraft engines and no aircraft-related investments or modifications are needed before it can be used.

Past Milestones

In December 2014, Renewable Energy Group and Neste Oil settled Neste’s US patent infringement lawsuit against REG and REG’s Singapore patent infringement lawsuit against Neste and REG has licensed certain Neste Oil NEXBTL technology and intellectual property rights for use at REG Geismar.

Also in December, the Finnish government granted Neste Oil EUR3.3 million for an add-on facility that will produce biofuel from tall oil pitch.

In June 2014, Neste Oil and Renewable Algal Energy (RAE), a US-based algae biomass producer, have signed a contingent commercial algae oil off-take agreement. Algae oil is one of the alternatives being researched by Neste Oil for use as a feedstock for producing NEXBTL renewable diesel in the future.

In November 2013, Neste Oil committed to a Dutch initiative aimed at the deployment of sustainable biofuel in the aviation sector. The signatories of the initiative include KLM, SkyNRG, Schiphol Airport, the Port of Rotterdam, the State Secretary of Infrastructure and the Environment, and the Minister of Economic Affairs.

In June 2013, Cellana announced that it has entered into a multi-year, non-exclusive, off-take agreement with Neste Oil for commercial-scale quantities of Cellana’s ReNew Fuel algae oil feedstocks for biofuel applications. Cellana expects to be able to produce algae oil on a commercial scale from late 2015 onwards.

In December 2012, Neste Oil said it will produce 4,000 metric tons per year of renewable jet fuel using sustainable Spanish camelina oil and used cooking oil under the EU-funded ITAKI project. The three-year project received $13.2 million and will feed into the 2 million ton renewable jet fuel initiative European Aviation Biofuels Flightpath. Overall, the company said it increased the use of waste and residue raw materials for renewable fuels refining by over 400,000 tons in 2012. A total of 742,000 tons of these raw materials were used compared to 330,000 tons in 2011. The use of waste animal fat in particular increased last year and fish processing industry waste fat was added to the company’s feedstock base.

Future Milestones

1. Generate profitable growth in the renewable fuels market by developing global customer base and supply chain, expanding the feedstock base, ensuring smooth operation of the new production plants and taking part in developing and planning new legislation.

2. Continue researching and introducing new raw materials. When selecting its inputs, Neste Oil prioritises suppliers that follow sustainable cultivation and production practices and have a good greenhouse gas balance. The final deployment decision is also affected by raw material availability and consistency of supply, as well as price.

3. Develop new applications, such as NExBTL renewable aviation fuel, that help customers to reduce greenhouse gas emissions and dependence on fossil fuels.

Business Model

Neste Oil is a refining and marketing company, that produces renewable fuels based on its proprietary NExBTL technology. The company owns and operates four production plants producing NExBTL renewable diesel. The output of the plants is sold to other oil companies in European and Northern American markets to be used as a premium quality bio- component.

Competitive Edge

Neste Oil’s strategy is founded on its unique ability to refine premium- quality fuels from a wide range of different, cost-effective feedstocks. Specialisation and in-depth expertise are central to enabling Neste Oil to succeed in the international marketplace, despite its small relative size.

Neste Oil’s strengths in renewable fuels business include: cutting-edge NExBTL technology and product, growing production capacity, and industry-leading operations based on sustainable raw material procurement. Additionally, Neste Oil’s expertise in research and technology is one of the company’s key success factors.

Research, or Manufacturing Partnerships or Alliances

NExBTL renewable diesel, for example, is the outcome of an intensive R&D effort.

Neste Oil and Stora Enso are collaborating on research into utilizing wood biomass. The partners will decide whether to go ahead with basic engineering on a 200,000 t/a plant when the question of public subsidy for the project is solved.

Neste Oil, Boreal Plant Breeding, and Raisio are developing high- yielding rapeseed varieties that could be used as a raw material for renewable diesel.

Neste Oil has researched waste-based microbial oil in cooperation with the Aalto University School of Technology.

Neste Oil takes part in international algae research projects in Australia and the Netherlands to test various methods for growing algae in outdoor conditions.

Neste Oil and the Finnish Environment Institute have launched a joint algae research program testing the lipid production capacity of different types of algae and analyzing how the quality and quantity of these lipids can be optimized by adjusting the conditions under which algae are grown.

Neste Oil cooperates with approximately 25 universities and research institutes worldwide.

Company website

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