Algae oil – Scaling, Breakthroughs and Costs of production

In my last post, I mentioned scaleable as a possible problem area in the algae oil sector. I also mentioned Robert Rapier, who has a great deal of experienceRenewable Fuel Pretenders, on The Oil Drum. Most “pretenders” sincerely believe that they have “cracked the code,” he writes, and that they are not pretenders, but contenders. But Rapier notes this: in fuel. He brings up the same point in his essay,

“What I have discovered in many of these cases is people often believe this because they have no experience at scaling up technologies. They might have something that works in the lab, but this can instill a false sense of confidence in those who have never scaled a process up.”

Scaling often requires the solution of a number of technological problems, some small and some large. In the same essay quoted above, Rapier also notes that “the potential for success falls rapidly as the number of needed [technological] breakthroughs pile up.” He asks us to imagine a new technology with “a 25% chance of achieving commercial viability in the next 20 years.” For all three hurdles to be cleared, there is only a 1.5% chance of success. Since algae fuel, he contends, has multiple technological hurdles, the chance for success, even in five or ten years, is not strong. Perhaps this explains the plethora of methods still being attempted. Not enough hurdles have been cleared to narrow the race track down to one or two, maybe three, lanes.

Many bets have, however, been placed on photobioreactors — a closed environment where CO2, nutrients and lights are controlled within glass (usually) tubing. The problem, like almost any prototype, is that the energy, or, in this case, the costs are still too high to produce a biofuel that can compete with fossil fuels. Rapier cites an analysis by PhD graduate Krasen Dimitrov in which he examines the technology and processes of GreenFuel Technologies (now defunct) and asserts that production costs (just production costs, mind you) for algae oil would be about $853/bbl or $20.31/gal. About eight or nine time where gas sells now.

In addition to Dimitrov’s analysis, Rapier cites a report commissioned by the British Columbia Innovation Council to assess the possibility of an algae fuel industry in B.C. The report looked at three methods of producing algae biofuel — photobioreactors, open ponds (called raceways because of their shape), and fermentors (that is, devices using fermentation). They came up with the following estimates for the cost of production:

  • Photobioreactors — $93.23/gal

  • Open raceways — $49.54/gal

  • Fermentors — $ 9.03/gal

Even at nine bucks a gallon, we’re not yet in the ballpark, because the estimate is just for the cost of production. No marketing, no distribution, no health insurance packages (in the U.S., anyway), no social security payments, and so on and so on. In short, none of the normal operating costs of a business — just production. And as for bioreactors, they are going to need an almost impossibly steep curve down to become viable in the near future. Rapier contends that there can be some cost improvements, some economies of scales, but that the main elements of production are basically fixed costs — things like building material, machinery, and land — and not subject to much in the way of improvement.But, all is not completely hopeless, as we shall see in the next post, as we just saw with fermentation in the BCIC study.

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MMS and New Jersey hold Offshore Renewable Energy Task Force Meeting

Last week the Department of the Interior’s Minerals Management Service (MMS) held its first meeting with officials from New Jersey to discuss renewable energy development on the Outer Continental Shelf (OCS). The MMS is establishing inter-governmental task forces to consult with states concerning renewable energy leasing and development on the OCS.

Governor Corzine designated Ken Esser, his Chief Energy Policy Advisor, to work with the MMS to establish the New Jersey task force. The task force includes state government officials, officials from affected federal agencies, elected local government officials, and tribal leaders. MMS is working with the task force to facilitate the commercial leasing process for OCS renewable energy development offshore New Jersey.

“The MMS New Jersey task force will work to ensure that future renewable energy projects off the coast of New Jersey are efficiently and effectively reviewed to support the Administration’s goal of broadening the energy resource portfolio for the nation,” said MMS Deputy Director Walter Cruickshank. “MMS looks forward to working collaboratively with the task force as we begin planning for safe and environmentally responsible renewable energy development activities on the Outer Continental Shelf offshore New Jersey.”

“New Jersey’s Outer Continental Shelf is a prime resource for environmentally-friendly energy alternatives such as wind power,” said Governor Jon S. Corzine. “The development of these renewable and energy efficient options is paramount to building a responsible energy future for New Jersey and our nation. Through the efforts of the Obama Administration, we are now on the path to achieve an affordable, reliable energy supply that will serve our citizens for generations.”

During the first MMS New Jersey task force meeting, the task force charter was presented and discussed. MMS officials explained the commercial leasing process for OCS renewable energy and discussed options for starting the process off New Jersey. The task force participants discussed specific actions and timelines required by MMS and the state to support New Jersey’s goal of developing offshore renewable energy.

In April 2009, President Barack Obama announced that the MMS finalized the framework for renewable energy development on the OCS. This framework establishes the process for granting leases, easements, and rights-of-way for offshore renewable energy development activities, such as the siting and construction of wind generation facilities on the OCS. The framework also provides for MMS to use task forces in carrying out its responsibilities for authorizing OCS renewable energy activities in partnership with state, local, and tribal governments, and Federal agencies. MMS recently held task force meetings with Delaware, Rhode Island, and Massachusetts. A task force is also being formed for Virginia.

Solray Energy opens new Algae to Bio-crude Oil Plant

This project is a great example of public-private partnership in action with Solray Energy, NIWA (National Institute of Water and Atmospheric Research) and the Christchurch City Council working together to make the project a success. Algae to biofuels at this scale is apparently the first in the world. The project uses NIWA’s 5ha demonstration high rate algae pond that gets CO2 pumped into it, which gets trapped and encourages algae to grow. The algae is constantly mixed so it grows in colonies and is then pumped across the road to Solray where it is heated to above 300 degrees celsius in a super critical water reactor (SCWR), which mimics the natural process of turning it into crude oil (very similified explanation!). To remove the algae from the bio-crude oil they use a solvent which is then recycled and the algae residue is used as fertiliser. The bio-crude oil is then separated into petrol (20%), diesel (45%) and bitumen (20%) plus a few others. The whole lifecycle is all on one site making it easier to manage and monitor.

The super critical water reactor (SCWR) is very innovative and inventive. It was designed and built in New Zealand by Solray Energy, which means NZ can reap the benefits of the technology. As well as providing a possible new way to make fuel this technology could also allow for small scale carbon capture and localised use of the technology. It is also a cheap and simple way to harvest the algae.

Read more: http://bit.ly/4JgZZG

Indian Oil to license PetroAlgae’s Micro-crop

PetroAlgae has signed a memorandum of understanding to enter into an agreement to license its proprietary micro-crop technology to Indian Oil Corporation oil from algae.

Under the agreement and the license agreement to be completed, Indian Oil will build a pilot facility to demonstrate commercial viability of producing renewable fuels from micro-crops in India.

A commercial production facility with 200,000 metric tons a year capacity would then be built under license.

Micro-crops include a range of microorganisms that can be harvested daily and yield between 25 and 100 times as much as macro-crops such as corn, soybeans and sugar cane, according to PetroAlgae.

These include algae, cyanobacteria, micro-angiosperms, and macro-algae and micro-algae. They can be grown on non-arable land, removing competition with the food supply. Micro-crop fuels are carbon-neutral, consuming nearly double their own weight in carbon dioxide.

PetroAlgae’s business model is designed to generate revenue from licensing its technology for production systems, micro-crop strains and process controls to well-capitalized companies or investors, enabling them to become high-volume algal oil producers.

“We consider our model to be the lowest-risk path to market strength in what can be a high-risk, emerging industry,” John Scott, PetroAlgae chief executive told shareholders. “We are selling the tools that will allow producers to operate with maximum efficiency in a price-sensitive, competitive environment.”

The company chooses the best microorganism for each specific location, indigenous to the region. Then it is scaled up to a high yielding micro-crop.

PetroAlgae is based in Melbourne, Florida, on the Atlantic coast. It operates a prototype production facility and research laboratories in Fellsmere, Florida, south of Melbourne.

New Reports on the Potential of Algae as one of the most Promising sources of Biodiesel

A new report released by Energy Business Reports (http://energybusinessreports.com/shop/?affillink=prl), a leading publisher in the energy industry, provides an in depth account of the potential of algae as one of the most promising sources of biodiesel. The report, “Biofuel from Algae Market Potential,” details the various aspects of producing, using and sustaining biofuel from algae. In addition, it offers an insight into the market’s economical and technological challenges, the newest research findings and an overview of the major players in the sector.

Driven by the rising cost of petroleum-based energy, dependence on imported oil and rising global climate change, Congress passed the Renewable Fuel Standard (RFS) in 2005 and reinforced it in 2007 with the Energy Security and Independence Act. The law requires the increase of biofuel production from 9 billion gallons in 2008 to 36 billion gallons in 2022. Producing biofuel from algae seems an attractive alternative to fossil-based energy. Algae, also referred to as third-generation biodiesel, is biodegradable and can be produced using ocean and waste water without depleting fresh water resources.

At the same time, producing biofuel from algae cost-effectively on a large scale is tremendously expensive. Additionally, there are other technological challenges, including understanding how to identify oil-rich algae and develop processes for extracting algae oil economically.

‘Biofuel from Algae Market Potential,’ examines all these challenges in-depth to provide an understanding of the algae biofuel industry,” says Barbara Drazga, Publisher at Energy Business Reports. “It helps assess the potential of algae as a source of renewable energy, captures the landscape of the market and identifies its major leaders.” The report addresses every facet of the potential of biofuel from algae. It covers a wide array of topics providing a basic understanding of the concept and delving into the various issues involved.

For more information, visit: “Biofuel from Algae Market Potential” – http://bit.ly/4LJQxE

Louisiana’s Aquatic Energy moving from Pilot to Demo stage with Algae to Energy

In Louisiana, Aquatic Energy unveiled significant progress in its pilot algae-to-energy project in the Lake Charles-Lafayette corridor of the state. The company is now preparing to expand from a “couple of acre” pilot in Lake Charles, to an 30-acre demonstration project that will feature the company’s 1-acre open-pond system that is yielding 2500 gallons per acre without using an external CO2 source.

CEO David Johnston said that the company is able to support its yields with more than 70 percent of its CO2 coming from ambient CO2 in the atmosphere, with the remainder generated from the natural gas burned in the last stage of the algae drying process. The company said it is generating 32-34 tons per acre of algae biomass for the animal feed market, with a goal of 40 tons of meal per acre in the proposed expansion.

The company said it has funds identified to take it through the demonstration phase, but expects to raise $32 million for a 617-acre commercial-scale expansion, which will generate 1.5 Mgy in algal fuel and 24,500 tons of algae meal.

Johnston said that the 617 (250 hectare) acre size is the minimum scale necessary for a stand-alone operation. The company projects that it will reach 5000 hectares in production by 2016.

Biotech Rising to the Forefront

The recent revelations of a International Energy Administration whistleblower that the IEA may have distorted key oil projections under intense U.S. pressure is, if true (and whistleblowers rarely come forward to advance their careers), a slow-burning thermonuclear explosion on future global oil production. The Bush administration’s actions in pressuring the IEA to underplay the rate of decline from existing oil fields while overplaying the chances of finding new reserves have the potential to throw governments’ long-term planning into chaos.

Whatever the reality, rising long term global demands seem certain to outstrip production in the next decade, especially given the high and rising costs of developing new super-fields such as Kazakhstan’s offshore Kashagan and Brazil’s southern Atlantic Jupiter and Carioca fields, which will require billions in investments before their first barrels of oil are produced.

In such a scenario, additives and substitutes such as biofuels will play an ever-increasing role by stretching beleaguered production quotas. As market forces and rising prices drive this technology to the forefront, one of the richest potential production areas has been totally overlooked by investors up to now – Central Asia. Formerly the USSR’s cotton “plantation,” the region is poised to become a major player in the production of biofuels if sufficient foreign investment can be procured. Unlike Brazil, where biofuel is manufactured largely from sugarcane, or the United States, where it is primarily distilled from corn, Central Asia’s ace resource is an indigenous plant, Camelina sativa.

Of the former Soviet Caucasian and Central Asian republics, those clustered around the shores of the Caspian, Azerbaijan and Kazakhstan have seen their economies boom because of record-high energy prices, while Turkmenistan is waiting in the wings as a rising producer of natural gas.

Farther to the east, in Uzbekistan, Kyrgyzstan and Tajikistan, geographical isolation and relatively scant hydrocarbon resources relative to their Western Caspian neighbors have largely inhibited their ability to cash in on rising global energy demands up to now. Mountainous Kyrgyzstan and Tajikistan remain largely dependent for their electrical needs on their Soviet-era hydroelectric infrastructure, but their heightened need to generate winter electricity has led to autumnal and winter water discharges, in turn severely impacting the agriculture of their western downstream neighbors Uzbekistan, Kazakhstan and Turkmenistan.

What these three downstream countries do have however is a Soviet-era legacy of agricultural production, which in Uzbekistan’s and Turkmenistan case was largely directed towards cotton production, while Kazakhstan, beginning in the 1950s with Khrushchev’s “Virgin Lands” programs, has become a major producer of wheat. Based on my discussions with Central Asian government officials, given the thirsty demands of cotton monoculture, foreign proposals to diversify agrarian production towards biofuel would have great appeal in Astana, Ashgabat and Tashkent and to a lesser extent Astana for those hardy investors willing to bet on the future, especially as a plant indigenous to the region has already proven itself in trials.

Known in the West as false flax, wild flax, linseed dodder, German sesame and Siberian oilseed, camelina is attracting increased scientific interest for its oleaginous qualities, with several European and American companies already investigating how to produce it in commercial quantities for biofuel. In January Japan Airlines undertook a historic test flight using camelina-based bio-jet fuel, becoming the first Asian carrier to experiment with flying on fuel derived from sustainable feedstocks during a one-hour demonstration flight from Tokyo’s Haneda Airport. The test was the culmination of a 12-month evaluation of camelina’s operational performance capability and potential commercial viability.

As an alternative energy source, camelina has much to recommend it. It has a high oil content low in saturated fat. In contrast to Central Asia’s thirsty “king cotton,” camelina is drought-resistant and immune to spring freezing, requires less fertilizer and herbicides, and can be used as a rotation crop with wheat, which would make it of particular interest in Kazakhstan, now Central Asia’s major wheat exporter. Another bonus of camelina is its tolerance of poorer, less fertile conditions. An acre sown with camelina can produce up to 100 gallons of oil and when planted in rotation with wheat, camelina can increase wheat production by 15 percent. A ton (1000 kg) of camelina will contain 350 kg of oil, of which pressing can extract 250 kg. Nothing in camelina production is wasted as after processing, the plant’s debris can be used for livestock silage. Camelina silage has a particularly attractive concentration of omega-3 fatty acids that make it a particularly fine livestock feed candidate that is just now gaining recognition in the U.S. and Canada. Camelina is fast growing, produces its own natural herbicide (allelopathy) and competes well against weeds when an even crop is established. According to Britain’s Bangor University’s Centre for Alternative Land Use, “Camelina could be an ideal low-input crop suitable for bio-diesel production, due to its lower requirements for nitrogen fertilizer than oilseed rape.”

Camelina, a branch of the mustard family, is indigenous to both Europe and Central Asia and hardly a new crop on the scene: archaeological evidence indicates it has been cultivated in Europe for at least three millennia to produce both vegetable oil and animal fodder.

Field trials of production in Montana, currently the center of U.S. camelina research, showed a wide range of results of 330-1,700 lbs of seed per acre, with oil content varying between 29 and 40%. Optimal seeding rates have been determined to be in the 6-8 lb per acre range, as the seeds’ small size of 400,000 seeds per lb can create problems in germination to achieve an optimal plant density of around 9 plants per sq. ft.

Camelina’s potential could allow Uzbekistan to begin breaking out of its most dolorous legacy, the imposition of a cotton monoculture that has warped the country’s attempts at agrarian reform since achieving independence in 1991. Beginning in the late 19th century, the Russian government determined that Central Asia would become its cotton plantation to feed Moscow’s growing textile industry. The process was accelerated under the Soviets. While Azerbaijan, Kazakhstan, Tajikistan and Turkmenistan were also ordered by Moscow to sow cotton, Uzbekistan in particular was singled out to produce “white gold.”

By the end of the 1930s the Soviet Union had become self-sufficient in cotton; five decades later it had become a major exporter of cotton, producing more than one-fifth of the world’s production, concentrated in Uzbekistan, which produced 70 percent of the Soviet Union’s output.

Try as it might to diversify, in the absence of alternatives Tashkent remains wedded to cotton, producing about 3.6 million tons annually, which brings in more than $1 billion while constituting approximately 60 percent of the country’s hard currency income.

Beginning in the mid-1960s the Soviet government’s directives for Central Asian cotton production largely bankrupted the region’s scarcest resource, water. Cotton uses about 3.5 acre feet of water per acre of plants, leading Soviet planners to divert ever-increasing volumes of water from the region’s two primary rivers, the Amu Darya and Syr Darya, into inefficient irrigation canals, resulting in the dramatic shrinkage of the rivers’ final destination, the Aral Sea. The Aral, once the world’s fourth-largest inland sea with an area of 26,000 square miles, has shrunk to one-quarter its original size in one of the 20th century’s worst ecological disasters.

And now, the dollars and cents. Dr. Bill Schillinger at Washington State University recently described camelina’s business model to Capital Press as: “At 1,400 pounds per acre at 16 cents a pound, camelina would bring in $224 per acre; 28-bushel white wheat at $8.23 per bushel would garner $230.”

Central Asia has the land, the farms, the irrigation infrastructure and a modest wage scale in comparison to America or Europe – all that’s missing is the foreign investment. U.S. investors have the cash and access to the expertise of America’s land grant universities. What is certain is that biofuel’s market share will grow over time; less certain is who will reap the benefits of establishing it as a viable concern in Central Asia.

If the recent past is anything to go by it is unlikely to be American and European investors, fixated as they are on Caspian oil and gas.

But while the Japanese flight experiments indicate Asian interest, American investors have the academic expertise, if they are willing to follow the Silk Road into developing a new market. Certainly anything that lessens water usage and pesticides, diversifies crop production and improves the lot of their agrarian population will receive most careful consideration from Central Asia’s governments, and farming and vegetable oil processing plants are not only much cheaper than pipelines, they can be built more quickly.

To find out more, visit http://www.oilprice.com