Advance Australia Air: Byogy steps up in Australia in drive for low-carbon jet fuels

July 3, 2016 |

BD TS 070416 Byogy smFrom Australia comes the news that the country’s former Federal Resources and Energy Minister, Martin Ferguson, is now the chairman of the advisory board for Byogy Renewables, the California-based alcohol-to-jet fuel pioneer that has been working towards an Australia-based first commercial project.

Now, many people wonder: with spot ethanol prices at $1.60 and spot jet fuel prices at $1.33, why would anyone convert ethanol or any alcohol into a jet fuel? Isn’t that like buying two new BMWs, stripping them for parts, and making a Chevy? That’s the “Natural Law of Alternative Commodity Markets”, as described by ethanol pioneer Eric McAfee, CEO of Aemetis: “The value of any intermediate products produced in any process must be significantly exceeded by the value of the end product, or the end product will not be produced.”

You also might, accordingly wonder why Air New Zealand and Virgin Australia are jointly running an open market Request for Information, aiming to stimulate a renewable aviation fuel industry in Australia. Up to 200 million liters of biojet fuel per year.

Well, let’s get into that. First, let’s take a moment on jet fuels and blendstocks.

“Why is there so little HEFA fuel?” asks Byogy CEO Kevin Weiss, who spoke to The Digest last week. “After all this time, can it just be the economy? Or is it really about $8-$10 fuels and costs that are struggling to come down?”

True, HEFA fuels have been hard to find, but AltAir has been supplying renewable diesel in commercial-scale quantities to the Navy this year, and is starting to supply airlines with jet fuel. “If you look at the AltAIr deal, they had to do it CA because of the Low Carbon Fuel Standard, it was the only way to make it work, stacking the subsidies”

But there’s another way, says Weiss.

“The drop-in fuel definition is very confusing. All specs are based on blends and blend components. And there are drop-ins and drop-ins. Some are higher quality fuels and some are not, some have more carbon replacement and some do not. So when you are running your blending program, if you have a really high-quality. really low-carbon fuel, then you may have more flexibility with your other components and you can use cheaper fuels. Plus, some fuels and some geographies have [carbon assistance] available, and then you have the co-products. You can’t just look at the price-tag on the fuel.”

Bottom line, what could work with Australia? For the strategic investor, Weiss says that “$3.80 jet fuel of 100% fully replaceable premium product, with qualities better than petroleum-derived, is cost competitive today.”

Looking at the value chain from feedstock to sub-$4 fuels.

“It’s a 3-legged stool,” Weiss says. “You need abundant low cost feedstock, proven scalable tech, and chemical can be more useful than biological because of the scale-up risks. And you need a fuel that works in current infrastructure, and the higher quality the better. The costs of downstream logistics have been long underestimated, and now that people are looking at them, fully renewable fuels are looking better and better — moving beyond storage concerns, and the complexities of procurement of fossil and renewable components and all the accounting that goes with that.”

The Byogy projects

Right now, Byogy is in a process of defining a first commercial up to 300 ML per year, with under $100M price tag. Parallel with that they’re raising for a $10-$15M project “to aggressively finalize specifications for both ASTM commercial uses as well as strategic military uses. The company is evaluating potential production sites for the 1500 litre-per-day advanced fuel production and testing facility in Queensland, New South Wales, and South Australia. Bottom line, the recently revised ASTM ATJ spec focused on isobutanol as a feedstock and was limited to 30% blends.

Byogy’s planned advanced fuel testing project will be designed to produce 1500 liters per day of jet fuel from ethanol. This facility will be used to advance the ATJ ASTM specification to allow the use of full replacement fuels, and to develop military specifications for Byogy’s high performance aviation and diesel fuels. In addition, Byogy is now developing plans of establishing a commercial plant by 2019 that would produce up to 300 million liters a year at a construction cost of less than $100 million dollars.

The Byogy technology, again

A key part of Byogy’s technology was derived from a non-Fischer-Tropsch Gas To Liquids platform that originated more than 15 years out of Texas A&M, and has since been advanced by Byogy to convert any form of alcohols, including ethanol, butanol, iso-butanol, and mixed alcohols, into full replacement renewable fuels, including gasoline, diesel, and jet fuel. Unlike most processes that merely produce blending fuel products, Byogy is an industry leader in producing full replacement, premium fuels that do not require any infrastructure modifications or blending.

The olefin gas (i.e. bio-ethylene, bio-butene) is then converted into a wide spectrum hydrocarbon liquid in a multi-tube catalytic reactor. This process is known as oligomerization and has been in use since the early 1980’s at refinery scale and is a low intensity reaction with moderate temperature and pressure.  The significant difference to other industry processes is that Byogy has mastered this reaction over the past 10 years. This extensive experience has allowed Byogy to perform unique reaction tuning abilities. Byogy CEO Kevin Weiss explains that “Byogy can not only produce the matching aromatic type and distribution of aromatics in its jet fuel distillation, but it can also adjust the percentage of aromatic content from 0 % to over 40%.” Costs? A 15 Mgy Byogy plant costs just under $5 per installed gallon of fuel capacity, with a break-even at $3.25 per gallon for its mix of gasoline, jet fuel and diesel — and a 15% EBITDA return based on an average of $3.80 per gallon fuel price.

That advisory board expansion

Ferguson is joined on the new Byogy Australia board by agriculturalist David Travers, the founding chairman of Sundrop Farms and the former Head of University College London engineering department, the UCL School of Energy and Resources. The Australia advisory board also includes:

  • John Longhurst, an Estonia-based Briton, who was PIMCO’s first equity research director in London. The 20-year Capital Group veteran was a leading aerospace, defense and agri-tech buy-side analyst.
  • Mark Brownley, a Melbourne-educated chemical engineer and former Jet Star executive. He is a member of the Royal Flying Doctor’s Aviation Advisory Board and a group executive of CKI’s Adelaide-based Australian energy distributor, SA Power Networks.

“Being able to produce full replacement biojet fuel is the holy grail,” says David Travers, “The downstream logistics and added handling costs have yet to be determined with the blending fuel products that currently make up the industry”.

Working up the value chain with advanced feedstocks

With feedstock cost representing over 65% of fuels final cost, according to Byogy — it makes sense for aviation biofuels companies to take a strategic interest in it.  We reported in 2014 that Byogy Renewables had invested in a strategic partnership with AusAgave Australia, aimed at developing multiple feedstocks to develop low-cost sugars for the production of renewable fuels and chemicals. So, what’s the latest there?

“Agave is longer term for us and will take a while,” said Weiss. “The initial metrics are extremely exciting, even disruptive, but it needs a lot of work,and study also on the value of the co-products. For example, a program at Iowa State, a biopolymer project, working with Ford on driving different opportunities to use agave fibers. And in our  partnership with MIT where we have been looking at carbon fiber and even 3D printing. We’re also looking at wastewater from fermentation, and converting vinasse to high-value food and animal feed products, even human protein. So cane is absolutely on our radar. For now, we are absolutely going after the low hanging fruit, the existing sugars.

Why agave? How about ethanol yields of 10,000 liters per hectare (1070 gallons per acre, per year)?  That’s a start. Agave’s advantage can be summed up in three letters: CAM. “Crassulacean acid metabolism” is an alternative and important carbon fixation pathways — the stomata in the leaves remain shut during the day to reduce water loss, but open at night to suck down huge gulps of CO2. CAM plants have low water requirements and high photosynthetic efficiency. Pineapple is perhaps the best known; and, there’s agave. AusAgave has spent the last ten years developing intellectual property on the drought resistant agave genus by embracing plant propagation, agronomy, cropping, and harvesting techniques which result in “plantations affording at least a 50% yield per acre improvement over historic sugarcane productivity,” according to the firm.

Bottom line

As the old anthem almost put it, Advance Australia Air. Byogy makes points worth remembering — the added value in a high-quality blendstock component, the co-product work that might unlock agave economics, and the serious nature of ANZ and Virgin Australia’s carbon initiatives, especially coupled with the needs of the US Navy and the Royal Australia Navy going forward. The need for a biofuel depot is definitely there and ATJ might well be the pathway. So Minister Ferguson appears to think — and few would have seen more in terms of technologies and markets.

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