Natural Resources Research Institute

To foster economic development of Minnesota's natural resources in an environmentally sound manner to promote private sector employment

• Two CentersCenter for Applied Research and Technology DevelopmentCenter for Water and the Environment

• CARTDMining and Economic GeologyPeat/Environmental ProcessingForestry and Forest Products

NRRI CARTD Forestry Program

Program Purpose: Enhance forest productivity and wood supplies to industry through high quality research and development to support economic development in Minnesota - GROW TREES FAST

Research Areas:

• Hybrid Poplar - Genetic Improvement, Yield• Aspen Productivity and Silviculture• Plantation Production of Conifers• Biomass Energy

Minnesota Wood MarketsPresent and Future

• Present situation

• Harvesting 3.8 million cords of roundwood• Estimated 400,000 green tons of energy chips• Limited growth potential in additional roundwood

-Thunderhawk project, past that?• Energy markets are large and here to stay• All biomass on the table

• President’s recent remarks: mentioned conversion of cellulose to ethanol

Warning: Any mention of price is strictly an estimate for example purposes only

• Depends on:

• logging operation• “hot” processing of chips or grind from piles• species• part of tree• future stumpage and competition• location• silvicultural management goals (thinnings)• forest or brushland• land use policies – harvesting guidelines

Biomass Energy

Drivers

• High energy prices• Xcel Energy biomass mandate• Potential applications

• Laurentian energy• Taconite plants • Ethanol plants and other industrial

• Biomass resource in forest residues, brushlands• Local impact - reduced import of fossil fuels• No-net carbon dioxide increase using biomass• Relatively clean - low ash fuel

Biomass Fundamentals

• Relatively low energy density (14-17 MMBTU/dry ton)• Geographically-dispersed resource• Transportation/sourcing a critical factor• Moisture content relatively high• Ash content low (variable depending on material)

• Agricultural Residues – 5 – 15%• Wood (and Bark) – 2 – 4%

• Various physical forms• Seasonal variation in availability and characteristics

• Not as straightforward as other energy sources

Current Energy Prices

$/MMBTU Efficiency Real Cost

Natural Gas $7.00 0.9 $7.80

Heating Oil #2 $21.40 0.80 $26.75

Heating Oil #2 $21.40 0.65 $32.93

Propane $21.02 0.9 $24.03

Electric Heat $20.50 1 $20.52

Wood (round) $5.00 0.5 $10.00

Home Wood Energy

Cost Calculations:

• Cord of energy wood – $90.00 (for example)

• Approximately 20 MM BTU/cord

• $90/20 = $4.50 per MMBTU

• Transportable and Stores Easily

• If converted at 60% efficiency = $7.50 per MMBTU

• Comparable to natural gas, 30% of oil/propane

Home Wood Energy

Cost Calculations:

• $5,000 installation of new hot water system

• Burn 70 MMBtu per year (average home in MN)

• Potentially save $1,200 per year

• About 4 year payback

• Makes sense for many rural homeowners

• Loggers encourage/finance changeover and ensure wood price/supply?

Recent Natural Gas Price - Henry Hub

Historical Natural Gas PricesMinnesota Industrial

(source: US DOE-EIA)

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Natural Gas Price ($/mcf)

Gasification

• Replace natural gas in industrial applications

• Technology is understood

• Application in Little Falls

• More opportunity for growth

• May need other sources besides wood residues such as corn stover or wheat straw to ensure supply

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Potential for Biomass to Replace Natural Gas

Forest Harvest Residue

Corn/Wheat Residue

Electric Power

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Residential

Uses - Residential – 40%, Industrial – 28%, Commercial – 28%, Power – 4%Note: optimistic for both FHR and Ag Residues: Probably 60% of this total realisticFHR could replace roughly 10% of the industrial gas use

Example

• If chips are $22.00 per green ton (variable)

• Theoretical maximum energy = 8.5 MM BTU/green ton

• Deduction for driving off water – approx. 25%

• 8.5 MMBTU * 75% = 6.375 MMBTU

• $22.00 / 6.375 = $3.45/MMBTU ($3.50 differential from natural gas)

• Need to recoup equipment investment

• Worth it ? … depends on scale, investment cost and fuel costs

Statewide Residue Estimate

• 3.8 million cords X 2.3 green tons/cord = 8.7 million green tons harvested statewide

• 8.7 X 15% residue = 1.3 million green tons residue (no cull included)

• 1,300,000 X 75% = ~ 1,000,000 green tons

• 300,000 green ton/year operation not out of the question

• Statewide – could support 3 or 4 projects

Cellulosic Ethanol

• U.S. and the world undergoing dramatic shift

• All options are going to have to be used

• Cellulosic ethanol represents next major leap to supply transportation fuels

• Commercially ready to go – Iogen, pilot plant in Canada, commercial project starting in Idaho using wheat straw

• Ethanol yield – 80 gallons/ton now, shooting for 94 – white rot, termite guts

Reducing the Cost of Cellulosic Ethanol(NREL, 2006)

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State of Technology Estimates

Feed $53/ton

2005 Yield65 gal/ton

Feed $30/tonYield 90 gal/ton

Feed $30/tonYield 94 gal/ton

10,000 TPD

Costs in 2002 Dollars

EnzymeConversionFeedstockCurrent DOE Cost TargetsPresident's Initiative

Transportation Fuels and Cellulosic Ethanol

• U.S. annual gasoline use: 150 billion gallons/year

• MN estimated consumption: 2.5 billion gallons/year

• 50% of the current corn crop for ethanol would produce 50% of our fuel needs

• Cellulosic ethanol - wood harvest – 4.0 million cords plus all residue = 20% of MN transportation fuel needs

• NRRI’s hybrid poplar program – dedicated energy crops such as poplar and switchgrass, Miscanthus

Biomass Crops

Corn grain$2.50/bushel = $89.00/ton, $6.37 / MMBTU

Corn/Wheat Straw$40.00/ton delivered, < $3.00 / MMBTU

Hybrid Poplar• higher yields in northern MN than corn• lower input agriculture• easy to store – unlike most other materials• may apply even on soils in S. MN

New directions in existing poplar research – shorter rotations, harvesting technology (bundling), cooperate with the Forest Service

Laurentian Energy Project

• Municipalities of Virginia and Hibbing

• Serving 5,000 customers – heat and electricity

• Aging system – either upgrade or everyone has to install new systems - residential and commercial

• Developed PPA agreement under Xcel Energy Biomass Mandate

• Woody biomass is the primary source

• NRRI cooperating on the $1.3 million project with LEA

Laurentian Analysis

Location affects:

• species mix• stand volumes• transportation• logging infrastructure• competition• land policies• environmental concerns

Brushland Harvesting for Energy

• Shearing – technology and cost known• Forwarding – unknown, needs testing• Grinding/Chipping – technology and cost known

Brushland Resource Evaluation

How much is available?At what price?Where is it?

NRRI Brushland Study

GAP – 1.3 million acres in the LEA 100-mile zone

• average site: 120 acres• average fully stocked: 32 acres• 28% stocking

• average of 561 dry tons/site• 13 tons in fully stocked areas• 45 truckloads per site

• Could be managed on 10 to 15 year rotation

Brushland Harvesting Equipment

Best collection system?

Biomass density too low – can’t get full load without compression

USDA/UC-Davis help – evaluating equipment and design of new equipment

Bandit Beast Recycler

Bandit Beast Recycler

THE FUTURE

• Energy perhaps the #1 national issue behind homeland security – not unrelated

• Cellulosic ethanol is going to happen

• All biomass is going to be used, rapidly economical

• Energy markets dwarf anything we’ve seen so far

• USDOE Energy Assistant Undersecretary Karsner - “This is War”