Heard on the Floor at ABLC 2016: $60 oil by year end, Circular Economy in focus

February 18, 2016 |

By Edward Dodge, special to The Digest

At the first day of the 2016 Advanced Bioeconomy Leadership Conference in Washington D.C., Pavel Molchanov, a markets analyst from Raymond James expects prices to rise back to $60 a barrel by the end of the year. Investment in new oil production capacity is down 30% two years in a row and excess supply is expected to be soaked up by strong demand. Hopefully survivors of this difficult chapter in the markets will emerge stronger and more competitive than ever.

Jennifer Holmgren, CEO of LanzaTech gave the Hot 50 Address where she discussed the imperative of moving society towards a Circular Economy and a carbon smart future. In the wake of the historic Paris Climate Talks nearly all of the world’s countries have committed to reducing their greenhouse gas emissions. LanzaTech is contributing to these efforts by pioneering technology that enables us to recycle carbon. LanzaTech uses microbes to ferment CO and CO2 from industrial exhaust into ethanol and other commodity chemicals. After years of development they finally have three commercial scale projects under construction.

LanzaTech’s platform has matured to where they can offer a high degree of flexibility, they can easily change out their microbes to produce different end products in response to changing market conditions without altering their hardware. LanzaTech’s ability to alter end products while using waste gasses as feedstock promises to help them transcend commodity pricing cycles that are traditionally plagued by boom and bust cycles that result from overinvestment sparked by high demand followed by price crashes as oversupply ultimately catches up to the market.

Bill Brown from the US Government’s Energy Information Administration spoke about how the venerable data gathering agency is working hard to update its methodology in collecting information about the growing ethanol and biofuels markets. In the past their data had not been granular enough to be very useful but the EIA will now report biofuel production in individual barrels rather than counting thousands of barrels which is the norm for petroleum. Better survey methods, new product categories and more accurate data reflects the growth in the industry from a marginal niche into a broad market.

Private equity investors Mario Portela of TPG and Denis Lucquin of Sofinnova Partners both spoke of the difficulties facing entrepreneurs in the bioeconomy but recognized that real progress has been made. The industry is finally showing signs of real maturity as projects are now reaching commercial scale after years of pilot and demonstration scale projects. First commercial plants represent an inflection point where ambitions and propositions turn into business realities.

Lee Edwards, CEO of Virent gave the Hot 40 Address spoke about some of the black holes that can sink start-ups in the bioeconomy: investor fatigue, scale-up challenges, focusing on the wrong thing and losing the hearts and minds of your staff. It is important to remember that your people and culture are your most important assets. You must be guided by your personal north star and have faith in your mission, but breed a culture of resilience and adaptability in your teams. An organization must be flexible in its approach to rapidly changing markets.

Many of the CEO’s spoke of the need to maintain patience in their pursuits. The bioeconomy has taken longer to progress than many people expected a decade ago. Investors need to take a long view while leaders need to inspire their people to keep up the hard work despite the slow progress. But progress is being made and profitable market niches have been emerging such as renewable butanol, butanediol, and bio-succinic acid.

Cellulosic ethanol, renewable jet fuel and biodiesel markets are all growing. Jim Macias of Fulcrum Bioenergy has an MSW to Jet Fuel plant under construction now. Rebecca Boudreaux of Oberon Fuels is producing DME as a diesel replacement. Honeywell’s UOP continues to expand their catalyst business and is producing biocrude as a direct replacement for petroleum crude in refineries among their many other products. Joule bought Red Rock Biofuels who will be using woody biomass to produce Fischer-Tropsch fuels using the Velocys gas to liquids process.

Special guest speaker Michael Talbot from the FBI gave a talk on the need for firms to protect their intellectual property from economic espionage. Some countries are very aggressive in their attempts to steal intellectual property and the FBI has an active task force working to address the problem. There are agents in every one of the FBI’s 56 field offices dedicated to IP protection and the agency likes to work proactively with firms to help educate them on how they can protect themselves. The FBI can give presentations and has films online that discuss some of their cases. For more information or to report a concern please reach out to Agent Michael Talbot at 202-278-2000 or [email protected].

Category: Top Stories

Thank you for visting the Digest.