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Techno-economic and Market Analysis of Pathways from Syngas to Fuels and Chemicals

TC Biomass 2013 – Chicago, Illinois

Michael Talmadge, Abhijit Dutta & Richard Bain

September 4, 2013

2

Objective

Assess the economics of producing fuels and chemicals from

biomass-derived synthesis gas.

• Process economics based on literature (consistent TEA assumptions)

• Perform more rigorous TEA on promising pathways

o Biochemical conversion of syngas to ethanol and higher alcohols

o Ethanol and higher alcohols to infrastructure-compatible hydrocarbons

• Simple product market analyses

What can we do with syngas?

3

• Simplified TEA model

• Inputs from literature sources o Feedstock rate and properties (heating value) o Product yields o Operating costs (variable & fixed) o Capital costs

• Common scaling assumptions o Capital scaling exponents o Economies of scale for fixed operating costs

• Operating and financing assumptions for nth plant and pioneer plant

• Minimum Product Selling Price literature values average, standard deviation & 90% confidence intervals

Analysis Approach

4

nth Plant Assumptions Parameter Value

Basis year for analysis 2011

Feedstock processing capacity 2,000 Dry Tonnes / SD

Feedstock cost (woody biomass) $75 / Dry Tonne

Debt / equity for plant financing 60% / 40%

Internal rate of return (after-tax) for equity financing 10%

Annual interest rate and term for debt financing 8% / 10 years

Total income tax rate 35%

Plant life 30 years

Plant depreciation schedule 7-year IRS MACRS MACRS = Modified Accelerated Cost Recovery System

Reliability of operations / on-stream factor 0.90

Site development costs 4% of ISBL Installed Capital

Working capital 5% of Fixed Capital Investment

Indirect costs for capital project 60% of Total Direct Costs

Capital equipment capacity scaling exponent 0.70

5

• Internal Rate of Return (IRR): 10% – 25%

• Capital Costs: Pioneer Plant Escalation 210% of nth Plant Estimates (Merrow et al, Rand, 1981)

• Reliability of Operations / On-Stream Factor: Initial value of 0.5 (Merrow et al, Rand, 1981)

Increasing to 0.9 per experience curve (Heinen, SRI Consulting, 2001)

Pioneer Plant Assumptions O

n-St

ream

Fac

tor

Year of Plant Operation

0.0

0.2

0.4

0.6

0.8

1.0

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30

~

6

Fuel Pathways Explored

Ethanol & C3+ Alcohols

Hydrocarbons (FT Gasoline, Diesel,

Jet, Lubricants)

Synthetic Natural Gas

Dimethyl Ether (DME)

Syngas

Gasoline (MTG)

Triptyls Olefins (MTO)

Ethanol

Methanol

Syngas Fermentation Butanol

2,3-Butanediol

7

Chemical Pathways Explored

Hydrocarbons (FT Lubes, Waxes)

Acetic Anhydride

Propylene (MTO)

Formaldehyde

Ethylene (MTO)

Hydrogen

Ethyl Acetate

Formic Acid

Methyl Formate

Ethylene Glycol

Acetic Acid

Acetic Acid

Syngas Fermentation

PHA (Polyhydroxyalkanoates)

Syngas

Methyl-Amines

Methanol

Urea

Ammonia

DME Aldehydes (Oxosynthesis)

8

Major Pathway Categories Explored

• Synthetic Natural Gas via Methanation of Syngas

• Ethanol

o Catalytic Mixed Alcohol Synthesis

o Syngas Fermentation *

• Hydrocarbons

o Fischer-Tropsch

o Methanol to Naphtha Hydrocarbons

o Ethanol & Higher Alcohols to Hydrocarbons *

• Hydrogen via Steam Reforming, WGS & Purification

• Methanol via Catalytic Methanol Synthesis

* Pathways explored by NREL through Aspen modeling and rigorous TEA.

9

Synthetic Natural Gas • Methanation of Syngas

10

0

5

10

15

20

25

30

35

2000 2002 2004 2006 2008 2010 2012 2014

Pricing History

Synthetic Natural Gas 20

11 $

/ M

Scf

Historical Pricing Data Source: U.S. Energy Information Administration. U.S. Natural Gas Citygate Price (Dollars per Thousand Cubic Feet). Release Date: 7/31/2013.

Process Sources Min. Selling Price Range ($ / MScf)

Syngas to SNG via methanation

McKeough & Kurkela, 2007 Mozaffarian et al, 2004 van der Drift et al, 2005

nth Plant 16.52 – 19.13

Pioneer 10% IRR 28.50 – 31.05

Pioneer 25% IRR 50.00 – 56.93

Pioneer 10% IRR 29.80 ± 2.10

nth Plant 17.62 ± 2.23

11

05

10152025303540

Market Price (5-Yr) nth-Plant MSP Pioneer Plant MSP

• Techno-economic Analysis

• Market Analysis

Synthetic Natural Gas 20

11 $

/ M

Scf

17.62 ± 2.23

5.50

Average Product per Ton Biomass 11,440 Scf / Ton U.S. Consumption (EIA, 2012) 25.5T Scf / Year

10% of U.S. Natural Gas Market 2.55T Scf / Year Equivalent Biomass Consumption 223 MMTon / Year

Equivalent Biorefineries 310 2,000 Tonne / Day Facilities

29.80 ± 2.10

53.50 ± 5.70

IRR = 10% 25%

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

12

Ethanol • Catalytic Mixed Alcohol Synthesis

• Syngas Fermentation *

* Pathways explored by NREL through Aspen modeling and rigorous TEA.

13

0

2

4

6

8

10

12

2000 2002 2004 2006 2008 2010 2012 2014

Pricing History

Ethanol via Mixed Alcohol Synthesis

Historical Pricing Data Source: U.S. Energy Information Administration. U.S. Total Gasoline Rack Sales Price by Refiners (Dollars per Gallon), EIA Table 5.22 (2011 AEO) and Table 112 (2009 AEO).

Process Sources Min. Selling Price Range ($ / Gal GE)

Syngas to ethanol via catalytic mixed alcohol synthesis

Dutta et al, 2011 Dutta & Phillips, 2009 Dutta et al, 2010 He & Zhang, 2011 Villanueva Perales et al, 2011

nth Plant 2.87 – 4.83

Pioneer 10% IRR 5.67 – 9.64

Pioneer 25% IRR 11.27 – 19.20

2011

$ /

Gal

lon

GE

Pioneer 10% IRR 8.05 ± 2.08

nth Plant 4.16 ± 1.06

14

0

2

4

6

8

10

12

2000 2002 2004 2006 2008 2010 2012 2014

Pricing History

Ethanol via Syngas Fermentation

Historical Pricing Data Source: U.S. Energy Information Administration. U.S. Total Gasoline Rack Sales Price by Refiners (Dollars per Gallon), EIA Table 5.22 (2011 AEO) and Table 112 (2009 AEO).

Process Sources Min. Selling Price Range ($ / Gal GE)

Ethanol via syngas fermentation

Putsche,1999 van Kasteren & Verbene, 2005 Piccolo & Bezzo, 2007

nth Plant 3.67 – 5.08

Pioneer 10% IRR 6.11 – 8.99

Pioneer 25% IRR 11.07 – 17.02

2011

$ /

Gal

lon

GE

Pioneer 10% IRR 7.14 ± 1.82

nth Plant 4.32 ± 0.83

15

Ethanol via Syngas Fermentation

NREL TEA Model

• Design Report NREL/TP-5100-51400 utilized as basis through clean compressed syngas from biomass.

• Yield structures based on publications from LanzaTech & INEOS Bio.

• Capital costs for fermenters, seed train and cell recovery developed by Harris Group Inc.

Ethanol

C3+ Alcohols

Acetic Acid

Power

Syngas Cleanup

BiomassGasification

Feed Handling & Preparation

Flue Gas

Woody Biomass

Syngas Fermentation

Seed Train

Product Recovery

Heat Integration, Power Generation & Other Utilities

16

nth-Plant MSP Pioneer Plant MSPnth-Plant MSP Pioneer Plant MSP0

2

4

6

8

10

12

Market Price (4-Yr) Price Projection (4-Yr) nth-Plant MSP Pioneer Plant MSP

• Techno-economic Analysis

• Market Analysis

Ethanol 20

11 $

/ G

allo

n G

E

Mixed Alcohols (Literature)

Syngas Fermentation (Literature)

Syngas Fermentation (NREL TEA)

Average Product per Ton Biomass 85 Gallons / Ton U.S. Consumption (EIA, 2013) 13.0B Gallons / Year

50% of U.S. Fuel Ethanol Market 6.5B Gallons / Year Equivalent Biomass Consumption 76 MMTon / Year

Equivalent Biorefineries 100 2,000 Tonne / Day Facilities

2.72

7.14 ± 1.82

3.06 IRR = 10% 25% IRR = 10% 25% IRR = 10% 25%

4.16 ± 1.06

4.32 ± 0.83

15.76 ± 4.11

8.05 ± 2.08

12.59 ± 3.93

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ~~~~~~~~~~~~~~~~~

17

Hydrocarbons • Fischer-Tropsch

• Methanol to Naphtha Hydrocarbons

• Ethanol & Higher Alcohols to Hydrocarbons *

* Pathways explored by NREL through Aspen modeling and rigorous TEA.

18

0

1

2

3

4

5

6

7

8

2000 2002 2004 2006 2008 2010 2012 2014

Pricing History

Fischer-Tropsch Hydrocarbons

Historical Pricing Data Source: U.S. Energy Information Administration. U.S. Total Gasoline Rack Sales Price by Refiners (Dollars per Gallon), EIA Table 5.22 (2011 AEO) and Table 112 (2009 AEO).

Process Sources Min. Selling Price Range ($ / Gal GE)

Hydrocarbons via Fischer-Tropsch synthesis

Hamelinck et al, 2003 Larson et al, 2009 McKeough & Kurkela, 2007 SRI PEP Yearbook, 2009 Udengaard, 2011 Byrne, 2011 Freeman, 2011

nth Plant 2.52 – 4.19

Pioneer 10% IRR 4.75 – 7.43

Pioneer 25% IRR 9.08 – 13.52

2011

$ /

Gal

lon

GE

Pioneer 10% IRR 5.63 ± 1.53

nth Plant 3.09 ± 0.96

19

0

1

2

3

4

5

6

7

8

2000 2002 2004 2006 2008 2010 2012 2014

Pricing History

Methanol to Hydrocarbons

Historical Pricing Data Source: U.S. Energy Information Administration. U.S. Total Gasoline Rack Sales Price by Refiners (Dollars per Gallon), EIA Table 5.22 (2011 AEO) and Table 112 (2009 AEO).

Process Sources Min. Selling Price Range ($ / Gal GE)

Hydrocarbons via methanol synthesis and methanol conversion

Phillips et al, 2011 Hindman, 2010 SRI PEP Report 191A, 1999 Udengaard, 2011 Jones & Zhu, 2009 Ahn et al, 2009

nth Plant 2.61 – 3.84

Pioneer 10% IRR 4.67 – 6.47

Pioneer 25% IRR 8.61 – 11.38

2011

$ /

Gal

lon

GE

Pioneer 10% IRR 5.37 ± 1.09

nth Plant 3.24 ± 0.81

20

Ethanol & Higher Alcohols to Hydrocarbons

NREL TEA Model

• Ethanol (and higher alcohol) intermediates for hydrocarbon fuel production.

• Eliminates constraints of renewable ethanol blend limits.

• Technology development taking place in academia, national labs and industry.

Co-Product(s)Syngas

CleanupBiomass

Gasification

Feed Handling & Preparation

Flue Gas

Woody Biomass

Alcohol Synthesis

Heat Integration, Power Generation & Other Utilities

Alcohol to Hydrocarbon Conversion

Hydrogen Plant Naphtha

Mid-Distillates

Mixed C4

Mixed C3

Light Ends

Hydrocarbon Product

Recovery

Natural Gas

Ethanol (and C3+ Alcohol)

Intermediates

Alcohol Separation

21

nth-Plant MSP Pioneer Plant MSPnth-Plant MSP Pioneer Plant MSP0

1

2

3

4

5

6

7

8

Market Price (4-Yr) Price Projection (4-Yr) nth-Plant MSP Pioneer Plant MSP

• Techno-economic Analysis

• Market Analysis

Hydrocarbon Fuels 20

11 $

/ G

allo

n G

E

Average Product per Ton Biomass 65 Gallons / Ton U.S. Consumption (EIA, 2013) 220B Gallons / Year

10% of U.S. Hydrocarbon Fuels Market 22B Gallons / Year Equivalent Biomass Consumption 338 MMTon / Year

Equivalent Biorefineries 440 2,000 Tonne / Day Facilities

2.72

5.37 ± 1.09

3.06 3.09 ± 0.96

3.24 ± 0.81

10.66 ± 2.56

5.63 ± 1.53

9.54 ± 1.87

Fischer-Tropsch (Literature)

MeOH to Hydrocarbons (Literature)

EtOH to Hydrocarbons (NREL TEA)

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ~~~~~~~~~~~~~~~~~

22

Hydrogen • Steam reforming, water-gas shift & purification

23

0

2

4

6

8

10

12

14

16

18

2000 2002 2004 2006 2008 2010 2012 2014

Pricing History

Hydrogen

Historical Pricing Data Source: SRI CEH Marketing Research Report, July, 2010 Projected values based on ratios to EIA natural gas projections.

Process Sources Min. Selling Price Range ($ / MScf)

Syngas to H2 via steam reforming, water-gas shift & purification

Spath et al, 2005 McKeough & Kurkela, 2003 Williams et al, 1995 Hamelinck & Faaij, 2001

nth Plant 5.33 – 8.84

Pioneer 10% IRR 10.46 – 15.63

Pioneer 25% IRR 20.93 – 29.07

2011

$ /

MSc

f

Pioneer 10% IRR 12.52 ± 3.62

nth Plant 6.67 ± 2.48

24

02468

1012141618

Market Price (5-Yr) nth-Plant MSP Pioneer Plant MSP

• Techno-economic Analysis

• Market Analysis

Hydrogen 20

11 $

/ M

Scf

6.67 ± 2.48 5.95

Average Product per Ton Biomass 37,300 Scf / Ton U.S. Consumption (EIA, 2013) 4.1T Scf / Year

10% of U.S. Hydrogen Market 0.41T Scf / Year Equivalent Biomass Consumption 11 MMTon / Year

Equivalent Biorefineries 14 2,000 Tonne / Day Facilities

12.52 ± 3.62

24.23 ± 5.72

IRR = 10% 25%

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

25

Methanol • Catalytic Methanol Synthesis

26

0.0

0.5

1.0

1.5

2.0

2.5

2000 2002 2004 2006 2008 2010 2012 2014

Pricing History

Methanol

Historical Pricing Data Source: IHS CEH Marketing Research Report, 2013.

Contract Spot

Process Sources Min. Selling Price Range ($ / Gal)

Syngas to methanol via catalytic synthesis

Tarud & Phillips, 2011 McKeough & Kurkela, 2007 SRI PEP Yearbook, 2009 Williams et al, 1995 Hamelinck & Faaij, 2001

nth Plant 0.96 – 1.32

Pioneer 10% IRR 1.63 – 2.13

Pioneer 25% IRR 2.97 – 3.91

2011

$ /

Gal

lon Pioneer 10% IRR 1.93 ± 0.39

nth Plant 1.15 ± 0.26

27

• Techno-economic Analysis

• Market Analysis

0.0

0.5

1.0

1.5

2.0

2.5

Market Price (5-Yr) nth-Plant MSP Pioneer Plant MSP

Methanol as Chemical Intermediate 20

11 $

/ M

Scf

1.15 ± 0.26 1.16

Average Product per Ton Biomass 170 Gallons / Ton U.S. Consumption (SRI / IHS, 2010) 1.9B Gallons / Year

10% of U.S. Methanol Market 0.19B Gallons / Year Equivalent Biomass Consumption 1.1 MMTon / Year

Equivalent Biorefineries 1.4 2,000 Tonne / Day Facilities

1.93 ± 0.39

3.41 ± 0.64

IRR = 10% 25%

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

28

• Techno-economic Analysis

• Market Analysis

Methanol as Fuel Intermediate

Average Product per Ton Biomass 65 Gallons / Ton U.S. Consumption (EIA, 2013) 220B Gallons / Year

10% of U.S. Hydrocarbon Fuels Market 22B Gallons / Year Equivalent Biomass Consumption 338 MMTon / Year

Equivalent Biorefineries 440 2,000 Tonne / Day Facilities

0.0

0.5

1.0

1.5

2.0

2.5

Market Price (5-Yr) nth-Plant MSP Pioneer Plant MSP

2011

$ /

MSc

f

1.15 ± 0.26 1.16

1.93 ± 0.39

3.41 ± 0.64

IRR = 10% 25%

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

29

Conclusions • Hydrocarbon, ethanol and methanol economics can be

competitive for nth-plant.

• Pioneer plant economics are challenged overall.

• Market capacities do not constrain bio-product pathways in

major hydrocarbon fuel markets (natural gas, petroleum fuels).

• With fixed ethanol blend limit, cellulosic pathways and grain-

derived product will compete for limited market.

• Market capacities for methanol-derived chemicals are

constraining.

• Syngas fermentation is potentially competitive, depending on

CO / H2 conversion to product(s).

• Methanol and ethanol are attractive intermediates for

production of infrastructure-compatible hydrocarbons.

30

Future Work

• Develop design reports for selected biomass-to-hydrocarbon

fuel pathways under DOE-BETO directed efforts.

• Apply simplified TEA and market analysis on emerging

pathways to identify economic feasibility in early stages of

development.

• Explore opportunities to improve Pioneer Plant economics

o Biomass co-feeding opportunities (NG-Biomass to Liquids)

o Utilizing inexpensive feedstocks

o High-value co-products

o RIN credits

31

Acknowledgements

• Abhijit Dutta and Richard Bain (co-authors)

• Matt Worley and Ben Fierman of Harris Group Inc, Atlanta, Georgia.

• Bioenergy Technology Office (BETO) of the United States Department of Energy

• NREL Biorefinery Analysis and Thermochemical Platform Teams

32

References

For a complete list of references utilized in this

analysis, please contact Mike Talmadge

(michael.talmadge@nrel.gov / 303-275-4632)