Carbon dioxide from flue gas v. Concentrated by-product chemical sources; and the impact of distribution costs on economic feasibility

May 31, 2017 |

By Sam A. Rushing, Special to The Digest

At this time, it could be a great opportunity for the right source to take a look at the possibilities of making money with CO2 production and distribution on their own; or even reevaluate the current production / supply arrangement with a current gas company supplier, before the contracts renew. There may be a gold mine available for co2 which is not currently recovered and sold to the right markets, via implementing the right strategy.

Concentrated by-product sources such as ethanol v. Lean flue gas fermentation is a critical part of the merchant co2 supply network in north america, particularly in the united states. The lion’s share of carbon dioxide which is used in markets for everything including a cryogen in food freezing to large pipeline delivered product used to enhance the recovery of oil, is sourced from chemical by-product (and natural geological reserves); then a very small percentage in north america is from flue gas. In summary, the chemical by-product forms of raw feedstock are generally highly pure, up to 99% and greater (by volume), saturated in water v. Flue gas co2 content only being from about 3% to maybe 15%. This distinction as to sourcing from predominantly concentrated chemical by-product forms and geological sources represents over 95% of these source types v. Under 5% flue gas borne co2 for the merchant markets in the u.s.

The reason for this disparity is economics, with respect to the physical and chemical act of concentrating the (lean) raw co2 content in flue gas; which requires a whole additional, more expensive plant (up front of the co2 facility), for the recovery of the co2 via a solvent technology, in most cases; which utilizes amines as the chemical agent. There are also membrane separation forms of recovery from flue gas; which have some claim as well in the process, rather than amines (solvents), which are more commonly used. The predominant solvent is mea (monoethanolamine).

When liquefying and purifying a raw gas stream from a concentrated source such as ethanol (which is america’s predominant source type, accounting for over 40% of source types in the u.s.), the two main components behind the cost of production are amortization and power; which are sometimes relatively close in value. The cost of labor, maintenance, overheard, cooling water, and chemicals, for example, are the other major factors in the overall cost of production, which, as a grand total, can range from $25 to $40/ton in various cases; plus, distribution costs. Scale is another driver with respect to merchant co2 plant size; where most of today’s new plants in north america tend to average 450 short tons per day (tpd) in capacity.

Next, is the case of flue gas, which can be from twice this cost range to much more, depending upon which process is used, and what the scale of the project happens to be. For example, this cost can be $100/ton and beyond, depending on variables. Many of the flue gas projects tend to be in developing world markets such as latin america, asia, africa, and the middle east. In these cases, there is usually not a concentrated so-called traditional source nearby, thus the case for using this low content raw co2 for commercial supply. Further on flue gas sources for co2 supply, most of these plants which serve the merchant markets are relatively small v. The typical u.s. concentrated chemical by-product case of 450 tpd. These small flue gas plants are often 25 to 50 tpd.

On the other hand, two flue gas projects sourced from coal fired cogeneration plants sized about 250 tpd have been operating in the us for decades. However, under the original financial configuration, these plants were subsidized by inclusion of the capital for the co2 plant into the power facility, under a former energy law, which expired long ago. An example of a large flue gas source for enhanced oil recovery (eor) can be also be found in saskatchewan; sourced from coal fired power owned by sask power. The canadian example is made possible by a government which fosters greenhouse gas reduction schemes; therefore subsidized. Therefore, in many developed economies, for the supply of co2 to the merchant market from flue gas, there must be a form of subsidy, such as the canadian example, in order for flue gas to be economically viable. The smaller flue gas plants (25 – 50 tons per day) in the developing world markets, often supply into very expensive co2 merchant markets, thus, the higher cost of production is economically feasible in such markets.

Distribution costs are a major part of supplying the co2 merchant market

In some u.s. markets, for example, the cost of distribution can sometimes exceed the cost of producing a food and beverage grade co2. In many cases, the u.s. sources, numbering over 100 at this time, are planned to be relatively close to the points of co2 consumption. Some estimates indicate an average cost of distribution for liquid food and beverage grade co2 is near $30/ton; and of course, many of the actual customer deliveries are much less in cost; and a few are more. On the other hand, there is rail transportation, probably under 30% of all tonnage is delivered or transported via rail to depots; which incrementally can be cheaper on a cost per ton basis. In the co2 industry, the product is delivered up to 200-250 miles from the plant as a typical maximum distance via over the road transports, which haul from 18-24 tons of liquid product per trailer.

Grand total cost basis

If flue gas, once again, this is an expensive means of producing a very lean (by content) raw co2 product into a viable food and beverage liquid commodity; and usually delegated to developing economies, with high prices and small markets. When flue gas is a source for the merchant liquid product in a very competitive, large co2 market, it must be subsidized via a government led greenhouse gas reduction scheme, or another mechanism, to bring the cost closer to the concentrated by-product form of liquid co2, such as from fermentation.

Then, the concentrated forms of co2 by-product from fermentation, natural wells, anhydrous ammonia, and reformer sources, for example, are the cheapest and most abundant type of source found. This is clearly the way to go, until, such as in the u.s., there are national carbon credits, greenhouse gas reduction schemes, etc., which actually subsidize the cost of producing co2 from flue gas. In many cases, flue gas from combustion of fossil fuels, such as power plants, can be the most strategically located form of source to demand centers, however, they cannot compete economically with concentrated by-product sources, unless there are subsidies.

Further, when adding distribution costs, this can sometimes equal or even exceed the cost of production, if the distances significant enough. On the other hand, many merchant customers are closer to the source, thus transportation costs along with production costs represent a healthy profit margin for the co2 supplier. Prices across the u.s. vary significantly; thus, distance from the source, plus the cost of transportation do not represent a similar profit margin across the country. The co2 suppliers have merged to the point that few in number exist today, and there are no significant independent producers (and suppliers) remaining in the us any longer; and prices are bound to rise, giving a stronger bottom line for the suppliers. This could also signal new opportunities for start – ups which want to enter the industry.

When thinking about how far the product can be moved economically, over the years, some of the lower cost sources, this product was moved via rail from the southeast to the northeast via rail to depots, and further distribution occurred via truck. Further, a similar long distance arrangement occurs from the midwest to the east coast. With the right mix of rail, and/or over the road trucks, distribution can be affordable; as a function of the cost of production and local selling prices.

Many scenarios are possible; however, these scenarios must be evaluated along with the cost of production, and feedstock costs. In the end, new and improved profits are entirely possible from ethanol today, given the right conditions occur with respect to the sources, markets, and the cost of distribution. This is a way to raise new or improved income streams from the co2 source; including ethanol of course.

About the author

Sam A. Rushing is president of Advanced Cryogenics, Ltd., a major CO2 consulting firm, offering a full range of CO2 and cryogenic gas consulting expertise; and allied equipment. The company has decades of experience in both the consulting and merchant gas industries; and is here to support your projects, and help you improve operations and profits via CO2 consulting expertise. Rushing can be contacted at 305 852 2597, via www.carbondioxideconsultants.com or at [email protected]

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