BP and DuPont’s JV Butamax, acquires Nesika Energy ethanol plant, heads for commercial-scale biobutanol
In Delaware, the BP/DuPont joint venture Butamax has acquired the 10 million gallon annual capacity Nesika Energy ethanol facility in Scandia, Kansas. Butamax will now start the detailed engineering work to add bio-isobutanol capacity to the facility, while continuing to produce ethanol before and after adding this capacity.
Bio-isobutanol is a cost-effective alternative to isobutanol derived from fossil feedstock. Produced from renewable feedstocks, it offers both a valuable option for growing the renewable content of gasoline and a lower carbon alternative to fossil-derived isobutanol in existing chemical applications. As a fuel, it can be blended with gasoline in higher concentrations than ethanol without compromising compatibility or performance. Bio-isobutanol blends do not suffer from the water solubility issues of ethanol, which means they can be transported via existing fuel pipelines. In the chemicals industry, it is used both directly and as an important building-block for a wider range of products.
Why Now?
There are always technical milestone and market price reasons that typically dominate the decision-making process to buy an existing ethanol plant for an isobutanol conversion — clearly, the technology has to be seen as ready and the plant in question has to be available at a suitable price.
But there’s something else. We’re finally beginning to see some separation between the D5 advanced biofuel RIN price that isobutanol generally qualifies for, and the D6 corn ethanol RIN that would be generally earned by the traditional first-gen ethanol producer.
According to a report out last week from Progressive Fuels Limited, D5 RINs for this year are pricing at 99 cents, compared to 55 cents for the D6 RIN. Another important factor — isobutanol has high energy density and earns 1.3 RINs per gallon vs 1.0 RINs per gallon for corn ethanol. Putting the two factors together, that’s an extra 64 cents per gallon in value being given to isobutanol fuel — with ethanol pricing in the $1.50 range right now, there’s something like $1.95 in renewable energy value in isobutanol (using ethanol value as a baseline), owing to isobutanol’s higher energy density. Add to that the 64 cents for added support from RINs, and a presumed value for road transport isobutanol is in the $2.59 range — or $1.09 north of ethanol value.
Now, there are other ways to get to a D5 RIN using a conventional ethanol plant — for example, switching to a mix of sorghum feedstock and renewable natural gas for process energy. But that does not capture the higher energy value for isobutanol.
The isobutanol rationale
Aside from the economics of RINs and energy density, the underlying appeal of isobutanol is that it is a blend wall buster that creates a bigger renewable fuels market wherever deployed. DuPont has received a waiver in the past to blend isobutanol at up to 16 percent in engines that qualify for E10 fuels. So, the E10 ethanol saturation point simply vanishes when isobutanol is brought into the mix.
There are (as yet, not approved) opportunities for ethanol to blend up to 24 percent in engines that qualify for E15 fuels. In the long-term, a switch to isobutanol en masse would almost completely resolve, in itself, at those blend rates the pathway to 30 billion gallons or more of renewable fuels in the US.
That’s all for the “later on” rather than the “here and now” — but explains much of the underlying enthusiasm for the fuels.
The where and why of butanol
Last August, we surveyed the field in “Where’s butanol, or other substitutes for gasoline besides ethanol?” – covering everything from the chemistry of value to the marine opportunity and more.
Where’s butanol, or other substitutes for gasoline besides ethanol?
The Butamax plan
Butamax plans to license its proprietary bio-isobutanol technology beyond this first facility on a global scale. When the newly acquired facility in Kansas has bio-isobutanol production capability, it will be used as a demonstration facility for potential licensees to see the technology in operation and serve as a proving ground for future developments.
Where in the world is Scandia?
Just east of the Flint Hills (from which Flint Hills Resources takes its name) are the Smoky Hills, and smack in the portion drained by the Republican River, that’s Scandia in the north central section of Kansas roughly 20 miles south of the Nebraska border. The old Nesika plant adjoins a very good size cattle feedlot. It’s corn country, but sorghum too — along with a whole lot of wild tallgrass and mixed-grass prairie.
For those more familiar with Kansas via the Smallville television series on the early days of Superman, the plant is more or less straight north of the fictional boyhood home of the Man of Steel. Who knows, the Kent family might well have been corn growers supplying the Scandia feedlots.
The Butamax backstory
Butamax Advanced Biofuels was formed to develop and commercialize bio-isobutanol as a next generation renewable biofuel and chemical. The company benefits from the combination of DuPont’s proven industrial biotechnology experience and BP’s global fuels market knowledge. Butamax’s proprietary technology offers a cost-advantaged manufacturing process for isobutanol with value from field to end use.
In July 2015, Gevo and Butamax entered into worldwide patent cross-license and settlement agreements, ending a patent dispute related to technologies for the production of bio-based isobutanol.
Butamax said at the time that it would take the lead role in developing the market for isobutanol as an on-road gasoline blendstock. This will include progressing ongoing programs to gain required EPA approvals for mainstream use of 16% isobutanol as a gasoline blend component. Butamax has also conducted joint research with Underwriters Laboratories (UL), which has demonstrated that these blends can be used safely in fuel storage and dispensing equipment meeting current UL standards. It is expected that UL’s guidance will clear the way for state government agencies to consider and approve the dispensing of biobutanol-gasoline fuel blends in the U.S.
The cross-license agreement grants both parties patent licenses to all fields for isobutanol and is structured to develop robust and sustainable isobutanol markets. The license will be royalty bearing for Butamax in certain fields and royalty bearing for Gevo in other fields. There are also a number of fields that are royalty-free for both companies. Both parties can sell up to 30 million gallons per year royalty-free into any field.
The Butamax retrofit backstory
In October 2013, we reported that Butamax and Highwater Ethanol had begun to retrofit Highwater’s ethanol plant in Lamberton, Minnesota with installation of corn oil separation technology. The retrofit was completed in August 2014.
Highwater Ethanol CEO Brian Kletscher stated, “We investigated other options for corn oil recovery, but we had the advantage of seeing the Butamax system first-hand and we were impressed with what we saw. Not only was the production class leading, but the expertise Butamax assembled is unparalleled, including experts from BP, DuPont and Fagen. We are very excited to execute this stage and move to negotiations for biobutanol production.”
Butamax has been quick to point out the connection between the corn-oil separation project and an eventual conversion of the Lamberton plant to isobutanol production. The corn-oil separation technology is an integral part of a full retrofit to biobutanol production and can also be installed independently as a first phase of the conversion.
Highwater was more cautious at this time in its outlook, with CEO Brian Kletscher telling the Minneapolis Star-Tribune that “We are hopeful that [the conversion] can occur. The two companies first signed initial collaborative agreements two years ago to begin the process of evaluation that could lead to a plant conversion from ethanol to isobutanol.”
Highwater had become part of the Early Adopters Group (EAG), launched in December 2011 as a consortium of leading ethanol production companies interested in the potential biobutanol offers for long-term, sustainable biofuel production. EAG membership reached seven plants by June 2012, with ethanol production capacity of approximately half a billion gallons per year.
Isobutanol: A New Product from Revamped Ethanol Plants
In this September 2016 Thought Leadership column by Jess Hewitt and Kapil S Lokare of Lee Enterprises Consulting, we looked at the prospects for isobutanol as a fuel.
Hewitt and Lokare wrote: “Isobutanol costs more than ethanol (negative) but has more power and can be used in less costly gasoline (positive). Unfortunately, the positives do not yet outweigh the negatives, so an Isobutanol-blended gasoline cannot be cost competitive with ethanol-blended gasoline. This is why almost all refiners dropped consideration of an Isobutanol-blended gasoline.
At the time they pegged that “Typically, butanol production costs are at $1.56/gal based on $1.80 per bushel corn feedstock cost. If the feedstock were raised to $3.35 per bushel, the estimated butanol cost would be $2.10/gal. Whilst the economy of fermentation route is more sensitive to the price of the substrate than butanol yield; it is estimated that the process will not be feasible if the yields are less than 25% w/w.”
The competition
Out there in the marketplace, Gevo is pursuing a comparable strategy of converting ethanol plants to isobutanol, but focused primarily on marine and jet fuels. Global Bioenergies is getting close to a commercial-scale deployment with isobutanol as one of its targets although more focused on isooctene. Intrexon is developing a technology to convert low-price natural gas to isobutanol, and is at pilot stage with that.
Reaction from the stakeholders
Dev Sanyal, BP’s chief executive of alternative energy, said, “With the largest operated renewables business among the major oil companies, BP is committed to being a part of the global transition to a lower-carbon future. We invest in renewables where we believe we can build commercially viable businesses at scale, and this project, which brings together BP’s and DuPont’s complementary expertise, is another important step in that direction.”
“To drive growth in U.S. manufacturing, we must employ disruptive thinking and innovation to unlock the power of renewable raw materials,” said William F. Feehery, president, DuPont Industrial Biosciences. “With the purchase and planned build-out of the Nesika facility to include bio-isobutanol production, Butamax is taking the next step forward in advancing the bioeconomy, which supports economic growth and opportunity in rural communities.”
“We are pleased to announce the acquisition of the Nesika site and would like to welcome Nesika and its employees to Butamax,” said Stuart Thomas, Butamax CEO. “The Nesika facility will serve to demonstrate our technology at scale as well as validate process and biocatalyst improvements. Our plan is to broadly license our technology, and Nesika and the technology deployed at the site will play a key role in that activity.”
“We are pleased that Butamax has selected Kansas as the home of its first production facility,” said Kansas Secretary of Commerce Antonio Soave. “Kansas is a great state to locate for innovative, biobased businesses looking for a skilled workforce, locally grown feedstocks and bioeconomy expertise.”
“We see Nesika Energy’s future to be full of growth and opportunity as a result of this sale to Butamax,” said Jerry Stowell, president of the board of directors of Nesika Energy. “The board and all the investor owners are proud of Nesika’s past success and are excited that now, as a part of Butamax, Nesika will play an important role in the development of this new bio-isobutanol product while continuing to be an important member of this community.”