Blog Archives

BP targets availability of two new biofuels by 2014

by Bloomberg

BP Plc (BP/) is testing two advanced biofuels that could be commercially available by 2014, said Philip New, chief executive officer of the U.K. petroleum company’s biofuels unit.

The company is planting energy grasses to feed a 36 million gallon-a-year cellulosic ethanol plant planned in Florida, he said in an interview in London today. A demonstration biobutanol plant in Hull, England, is operating, New said. A bioethanol plant in the same location should be producing by the end of this year, he said.

Biofuels could account for 9 percent of global transport fuels used by 2030, up from 3 percent now, according to BP. Drivers include climate-change targets in the U.S. and Europe, energy security concerns and the possibility the fuels may be a lucrative crop for ailing rural communities, New said.

“If you believe that demand for transport fuels is going to grow significantly, if you believe that for the foreseeable future we’re going to carry on using internal combustion engines and liquid fuels, then biofuels are going to be the only complement to crude oil that’s out there,” he said.

Cellulosic ethanol uses micro-organisms to break down fibrous plants, making it possible to produce fuel from energy grasses. Unlike sugar cane, which flourishes around the equator, the grasses can be grown anywhere.

Biobutanol is produced by fermenting plant sugars and can be blended with gasoline at higher concentrations. Existing bioethanol can be retrofitted to produce biobutanol, New said. Biobutanol is a type of alcohol that’s used as a fuel.

BP is looking at sites in Texas, Florida and Louisiana where it could farm energy grasses and build new plants, he said. The company is targeting a cost of $60 to $80 a barrel by 2024 from $140 to $150 a barrel today, New said.
The two fuels and a new sugar-to-diesel product will be trialled in 100 vehicles during the London Olympic Games.

Source

Oil Refiners Launch Counter Offensive on Obama’s ‘War on Fossil Fuels’

By Felicity Carus
Published: June 12, 2012

America’s oil refiners are preparing to intensify efforts to press the federal government to drop mandates to encourage the development of advanced biofuels and counter the Obama administration’s “war on fossil fuels.”

The Renewable Portfolio Standard requires that 36 billion gallons of renewable fuel be blended with petroleum-based products by 2022 under the Bush-era Energy Independence and Security Act of 2007.

Five years can be a very long time in US energy politics, said Charles Drevna, president of the American Fuel & Petrochemical Manufacturers, whose members include oil supermajors such as Shell, BP and Chevron.

“RFS2 was really conceived at a different time in the nation’s history even though it was only a few years ago. There was a thought permeating through Congress that we were eventually going to run out of natural resources.

Policy Tools not keeping Pace with Shifting Market Dynamics

“Since then, as a nation we fully understand we’re not an energy poor nation, we’re an energy rich nation with the advent of fracking and horizontal drilling.

“We’ve had this 4-5 year experiment going on which we believe has proved to be a failure.”

The RFS2 demonstrates how quickly the dynamics of the energy industry can outgrow policy, said Drevna, in an exclusive interview with AOL Energy.

“Policymakers haven’t kept pace [with change in the energy industry] and that’s always a problem when you have new technology and entrepreneurship being developed but when you’re forced to apply mandates and uneconomic solutions once they’re passed they’re very difficult to get amended.

“One of our major goals at AFPM is to have Congress and whatever administration it is to take a long hard look at the RFS and come to the epiphany that if we want to limit our reliance on foreign sources of crude oil the best way to do it is to develop our own resources and forget this totally anti-consumer anti-environment anti-common sense approach to national security which is mandating biofuels and renewables.”

At the end of May, Drevna warned the House Committee on Oversight and Government Reform: “The policies of the administration and EPA continue to support a war on fossil fuels that ultimately harms consumers, workers, the economy and our country’s national security.”

AFPM is a 110-year-old trade association which represents 98% of US oil refiners that process 18 million barrels of oil a day with a combined annual revenue of $725 billion.

In April, the US Energy Information Agency forecast that US gasoline demand this summer – usually a peak period – is expected to be the lowest in 11 years, partly due to rising gasoline prices at the pump and more fuel efficient vehicles.

Next month, Sunoco‘s Philadelphia refinery will become the latest in a number of refinery closures which have resulted in a 4% decline in refining capacity in the US since last year.
Overall, gasoline demand in the US declined since the 2008 spike at $147 a barrel and flattened since the subsequent global economic recession, said Drevna.

Biofuels Seen as a Small but Growing Threat

Although advanced biofuels are at de minimis levels of production this year, Raymond James equity research analysts forecast 800 million gallons of production by the end of 2013.

Meanwhile, the 133.93 billion gallons of gasoline consumed in the US last year contained about 12.87 billion gallons of ethanol, accounting for 9% of each gallon pumped into tanks.

Advanced biofuel and ethanol production are unlikely to make too much of a dent in the US liquid fuel market which is expected to sell 186 billion gallons of gasoline and diesel this year.
But AFPM sees mandates on alternative sources of liquid fuels for transportation and chemicals as a direct threat to the industry – and the American economy.

“We don’t think [biofuels] should be mandated whether it’s corn ethanol, biofuels or biodiesel until such time as those products are as efficient, reliable and abundant as gasoline and diesel produced from petroleum,” said Drevna. “Until they are able to compete head to head then let the free market decide, let the consumer decide.

…E15 goes way beyond what makes sense.” – Drevna

“The RFS was based on ideology and political science rather than reality and real science. We believe it needs to be significantly modified to prevent harm to American consumers and the economy.”

But the RFS2 has not been without its problems. Earlier this year, the EPA had to revise down its quota for cellulosic ethanol from 500 million gallons to 10.5 million gallons as advanced biofuels are still at zero commercial production. But refiners were still fined $6.8 million by the EPA – part of what Drevna said was a “hidden tax” for the consumer as costs were transferred to the consumer.

US ethanol producers last year reached saturation point of production for its domestic market as a 10% blendstock in gasoline. EPA’s decision to raise the maximum percentage blend to 15% is potentially dangerous, said Drevna.

A recent Coordinating Research Council (CRC) study found that there are at least 5 million vehicles on American roads which are at risk of failure with 15% ethanol blended fuel.

“We don’t think the EPA has the authority to bifurcate the fuel system. How much corn are we going to use to blend when we have enough oil under our own feet and off our own shores? We’re not anti-ethanol but E15 goes way beyond what makes sense.”

Source

Current and Projected Costs for Biofuels from Algae and Pyrolysis

The presentation explored the question of whether the U.S. government is spending money on the right technology pathways. Costs were presented for biofuel produced from pyrolysis, algae, Fischer-Tropsch (FT), and methanol-to-gasoline (MTG) routes.

Read more: The Oil Drum | Current and Projected Costs for Biofuels from Algae and Pyrolysis.

Biofuel mandates could close more refineries, officials warn

image

WASHINGTON, DC, Apr. 27
04/27/2012
By Nick Snow
OGJ Washington Editor

Philadelphia area refinery closures will be only the beginning of shutdowns nationwide if the federal government does not change several key regulations, two oil industry officials warned on Apr. 26. Ethanol mandates in the 2007 Energy Independence and Security Act pose a particular threat, they told the US Senate-House Joint Economic Committee.

“The recent refinery closures that have occurred or are currently pending are the tip of an iceberg,” said Thomas D. O’Malley, chairman of PBF Energy Co. LLC, which operates refineries in Delaware City, Del. (190,000 b/d), Paulsboro, NJ (180,000 b/d), and Toledo, Ohio (170,000 b/d).

“If the fuel substitutions from 2012 to 2022 mandated under [EISA] are maintained, we will lose over that time period an additional 10% minimum of US capacity and the thousands of jobs this important industry provides,” O’Malley said.

Bob Greco, the American Petroleum Institute’s downstream and group director, said refiners face an impending “blend wall” where mandates to blend ethanol into gasoline will soon exceed motorists’ ability to safely use the fuels in existing vehicles.

“Moreover, refiners are also required to blend into the gasoline supply advanced biofuels that do not yet exist, or pay a fee when they cannot meet the mandates,” he noted. “This policy is regulatory absurdity, and effectively amounts to a hidden tax on gasoline manufacturers.”

Tier 3 as well

O’Malley said the US Environmental Protection Agency’s Tier 3 gasoline proposal also will close more US refineries. Refiners, including independents that control 60% of US capacity, will need to spend billions of dollars to lower sulfur content from 30 ppm to 10 ppm, he said.

“Under this plan, the total sulfur removed from PBF’s gasoline production of about 4.5 billion gal/year would less than one eighth of what one 300-Mw coal-fired power plant emits in a year,” O’Malley said.

Greco said EPA has yet to demonstrate any air-quality benefits from adopting Tier 3 limits. He cited an analysis by the Baker & O’Brien consulting firm, which API commissioned, that found that implementing the new requirements could increase refinery greenhouse gas emissions because of the use of energy-intensive hydrotreating equipment to remove sulfur from the gasoline.

“Existing refinery regulations and fuel requirements clearly contribute to a cleaner environment and safer workplace,” Greco said. “Unnecessary, inefficient, and excessively costly requirements hamper our ability to provide and distribute fuels to America, while also employing hundreds of thousands of people and enhancing our national security. We have already seen some refineries close, at least in part due to the cumulative impact of government controls.”

O’Malley said, “Refineries in Pennsylvania closed because they didn’t make money. The federal government took away some of their market and gave it to the agriculture industry. The insanity of cellulosic ethanol will take away another 10-15% and make refiners pay $120 million in indirect taxes. This whole system is a house of cards that’s collapsing. Unfortunately, it’s collapsing on the men and women who work in refineries.”

Market concentration

A third witness, Diana L. Moss, vice-president and director of the American Antitrust Institute, said more refinery closures in the US Northeast could result in a market where three refiners accounted for 93% of capacity changing to one where two refiners represent 86%. More products coming by pipeline from the Gulf Coast could replace much of what is lost from closed plants, but proposals to convert some installations to terminals could raise new ownership concentration questions, she said.

The fourth witness, Michael Greenstone, an environmental economics professor at the Massachusetts Institute of Technology, said the federal government should encourage policies that recognize the health, environmental, and security costs associated with each form of energy. If this isn’t feasible, he said, research suggests that natural gas should be put on the same footing as renewable fuels under any federal standard and subsidies equal to those for electric vehicles should be offered to those using compressed natural gas.

Others submitted written statements. US Rep. Donna M. Christensen (D-VI) noted that Hovensa LLC’s chief executive, when he testified before the Virgin Islands legislature, said low demand and competitive disadvantages, such as having to fire its units with oil instead of gas, led to the decision to close the 500,000-b/d facility. “Our neighbors in Puerto Rico remain concerned about where they will be able to secure jet fuel that was supplied by Hovensa,” Christensen said.

Industry witnesses kept returning to regulatory problems refiners face. “The ethanol and biofuel mandates need to be adjusted to reflect what the vehicle fleet can use,” API’s Greco said. “As it is, even if E15 became widely used, it would extend the blend wall by only 1-2 years.”

EISA and its mandates were a bad idea in 2007, and a worse one now, American Fuel & Petrochemical Manufacturers Pres. Charles T. Drevna said following the hearing. “We’re seeing unintended consequence of rushing something through Congress without considering the impacts,” he told OGJ. “Keep corn on people’s tables, and gasoline in their vehicles’ tanks.”

Contact Nick Snow at nicks@pennwell.com.

Source

Navy Buys Biofuels for $15 Per Gallon From Stimulus-Linked Firm

image

Lachlan Markay
December 13, 2011 at 11:00 am

A California company has been hired to provide 450,000 gallons of advanced biofuels to the U.S. Navy – the “single largest purchase of biofuel in government history,” according to the Navy – at $15 per gallon, or about four times the market price of conventional jet fuel.

The Institute for Energy Research unearthed the purchase in a recent post on its website:

Last week, the Navy signed a contract with two biofuel companies to purchase 450,000 gallons of advanced biofuels at $12 million to assist in President Obama’s goal to establish a domestic biofuels industry and to advance it in ways that do not require Congressional approval. Of course, given the Navy’s mission, they claim to be pursuing biofuels to ensure adequate fuel in the future without relying on crude from the Middle East or other overseas sources that may be a threat to our national security. While this purchase is only a drop in the bucket compared to the Navy’s annual usage of more than 670 million gallons, their goal is to fuel a normal Navy mission with a 50-percent blend of biofuels and gasoline by 2016.

The company selling the fuel to the Navy is called Solazyme. The company’s corporate board includes “strategic advisor” T.J. Glauthier, who “advises companies dealing with the complex competitive and regulatory challenges in the energy sector today.”

Glauthier was the Deputy Secretary and Chief Operations Officer of the Department of Energy from 1999 to 2001, meaning he has experience dealing with energy issues on both sides of the regulatory equation.

Also of note: Glauthier served (pro bono) on President Obama’s White House Transition Team, where he specifically worked on the energy provisions of the stimulus package, according to Solazyme’s website. Solazyme itself landed a $21.8 million stimulus grant to build a biofuel refinery.

Now the company looks to have scored big once again. But the benefits extend beyond the immediate profit to be made from the sale. As Wired Magazine noted, “the often-struggling biofuels industry will be a lot closer to proving its viability” with Solazyme’s massive Navy contract.

“Our use of fossil fuels is a very real threat to our national security,” the Navy insisted in defending the purchase, apparently in reference to the supposed limits on fossil fuel availability. But as IER noted, the United States sits on enough oil and natural gas to power the country for hundreds of years – if only the federal government would permit expanded exploration and development.

The administration seems to be looking for ways to push alternative fuels without congressional action, and the military is the logical place to start. Heritage research fellow Jack Spencer noticed the trend earlier this year: “The Pentagon and the environmental movement seem to have found common cause by linking America’s national security to the basic tenets of the President’s green agenda,” Spencer noted. “Unfortunately, there are real costs for national security, energy technology, the taxpayer, and the American consumer.”

Government efforts to prop up favored industries also tend to benefit the politically connected. Solazyme certainly fits the bill.

(h/t J.E. Dyer and Whitney Pitcher)

Posted in Energy and Environment, Featured, Scribe

Source

%d bloggers like this: