Over the weekend, I watched the documentary King Corn. It was released in October 2007, but I just now got around to watching it online at Netflix. The premise is that a pair of college friends from the East Coast wanted to learn more about where our food comes from. When they learn about the importance of corn in our food supply, they move to Iowa and decide to grow an acre of corn over a growing season in order to better understand its role in the food chain.
As the movie progresses, U.S. farm policy with respect to corn is explored. It struck me during the movie that U.S. farm policy has many parallels to U.S. energy policy. Both systems have been set up with the goal of providing the cheapest prices to consumers. Both Big Oil and Big Ag work within the systems that have been created, but there are many negative consequences of these systems. I am grappling with the trade-offs.
On the one hand, the movie made a point that I often hear in relation to the oil industry: Consumers are now spending less of their disposable income on food (or energy) than they have in decades. So the consumer benefits from having extra money to spend on other things. But that also means that less money is flowing to the farmers, which drives vicious cost-cutting and has decreased the viability of the small family farm.
Cheap food and cheap energy also lower the financial penalty to consumers for over-consumption. Cheap, subsidized corn has led to cheap corn sweeteners, which can be found today in many of our foods. The rise of obesity and diabetes in the U.S. has been linked to the rise of high fructose corn syrup (HFCS) in our diets, which can be traced back to a farm policy that encourages over-production of certain crops. (I have to admit, if the choice is high fructose corn syrup or ethanol, I will choose ethanol).
King Corn implicates former President Nixon’s Secretary of Agriculture Earl Butz as the man responsible for sending us down this path of industrialized agriculture with a radical rewriting of U.S. farm policy in the early 1970′s. (For more details on Butz’s legacy, see A reflection on the lasting legacy of 1970s USDA Secretary Earl Butz by Tom Philpott).
Of course people are responsible for the choices they make. The government can’t be everyone’s mother. But they do put policies in place that influence choices. It is easy for me to choose not to over-consume if I can’t afford to do so. There is a reason most of us don’t eat lobster twice a week, and it isn’t because we don’t like lobster. But the calories from HFCS are much cheaper, so food dollars of those whose incomes are stretched gravitate in that direction.
Thus, I grapple with the dilemma of whether it is better that consumers spend more disposable income on food and energy in order to limit consumption. I don’t want to see people starving, but I also don’t want to see people dying from diabetes. The annual costs attributed to obesity in America have been estimated to be $100 billion, and the cost of diabetes at over $200 billion. That is $1,000 per year for every man, woman, and child in the country – and a loss of the quality of life for those afflicted. Those costs are at least partially attributable to the policies that have led to over-production of food.
I am both the product of an American farm, and a former employee of Big Oil. These experiences have shaped my views on and my interest in our respective agriculture and energy policies. I think these policies over the past few decades have led us to an unfortunate place: Fat, diabetic, and with a level of dependence of foreign oil that threatens to bankrupt the country. Further, there are entrenched lobbies that spend lots of money to maintain the status quo.
I certainly don’t blame the farmer for this. As one man said during the movie “I will produce what consumers demand. If they demand (leaner) grass-fed beef over corn-fed beef, that’s what I will produce.” That’s the same reason oil companies produce gasoline and car companies have produce SUVs.
But somehow we have to change what consumers demand before it kills us all.
From a CNN story this week, that graphic represents a landslide. To the person who asked in the recent Q&A (OK, the “A” is still pending) what they should study in school, might I suggest you put a lot of effort into your math classes, and consider engineering of some sort? The caveat of course is that the job market has tightened up significantly this year – even for engineers who were in such great demand a year ago.
There was an announcement this past week that Solix Biofuels has started oil production at a facility in Colorado:
Solix Biofuels begins production of oil made from algae
Solix Biofuels Inc. said Thursday it has started the production of oil made from algae at its Coyote Gulch Demonstration Facility, with full-scale commercial operation set for late summer.
“We are ready to prove to the world the viability of algae as an alternative to petroleum-based fuels,” Solix COO Rich Schoonover said in a statement.
Coyote Gulch is located on a two-acre site in the Durango area on land provided by the Southern Ute tribe.
Algal oil production began July 16, Solix said. It said Coyote Gulch is expected to produce the equivalent of 3,000 gallons per acre per year of algal oil by late 2009.
Yes, this is the same Solix whose co-founder admitted earlier this year that the costs of producing fuel from algae were $33/gal. And there’s the rub.
Never mind that “full-scale commercial” output refers to less than 0.4 barrels per day. (Sometimes I wonder if the people who write these stories ever bother to pick up a calculator). Never mind that they are going to require 20 full-time employees at the site to (hopefully) produce 6,000 gallons on the 2 acre site. OK, let’s do the math on that one just for fun. That works out to 300 gallons per year per employee. Let’s be conservative and say that the average salary is $30,000/yr. That is then $100 of salary for each gallon of algal oil that is expected to be produced (it’s actually more, because the site is supported by more employees off-site). And that’s just salaries. You quickly to start to see why John Benemann claims that you can’t even buy algal fuel for $100/gal.
People struggle with these sorts of concepts. They read a story like the one above, and they incorrectly assume that some alternative fuel technologies are at a stage of development that they most certainly are not. This sort of thinking – especially when it infects our political leaders – is dangerous because it creates unrealistic expectations and distorts energy policy.
Sometimes when I am trying to illustrate this point, I use the following example. There are an estimated 25 billion ounces of gold dissolved in the ocean, which is about 10 times the total amount of gold that has been mined throughout history. At current prices, that gold is worth many trillions of dollars. The fact that the oceans are full of gold has been known for over 100 years. That gold is there for the taking. And while people have been running scams related to the ocean’s dissolved gold for over 100 years, nobody has invented a commercial process for extracting it.
I could certainly start a company based on the idea of extracting gold from the oceans. I might even convince some people to invest in the company, if I am very aggressive with my cost projections, can convincingly exaggerate the status of the technology (actually I have the worst ever poker face, so that is unlikely), and I assure investors that technical breakthroughs are inevitable. After all, there is a multi-trillion dollar payoff. What’s a few million from each investor when we are all going to make trillions? (The funny thing is that I used this example with a businessman once, and he was ready to start a company – missing the entire point of the story).
The gold in the oceans and the gold in algal biofuel have much in common. You can develop a production process in each case, but the capital and operating costs for producing each are far too high for them to be commercially viable.
I don’t begrudge anyone trying in either case to improve upon the processes. But can we please do it with a minimum of fanfare and press releases? At some point the public and the politicians are going to become completely jaded at the repeated examples of over-promising and under-delivering (the ‘hype’), and the evaporation of taxpayer money that went into these schemes (the ‘fleecing’). When that happens the money is going to dry up for the hypesters and the promising technologies alike.
I am coming to the end of the most difficult week of my career, which is why I haven’t written much for the past few days. I had to sit across the table from some very good people and tell them they no longer had jobs. It wasn’t the first time I had to terminate people, but it was the first time I had to terminate people of this caliber, and for purely economic reasons. It was an experience I hope to never repeat, and I am determined to intervene in order to mitigate the impact on these individuals and their families.
The history here is that the company I have worked for over the past 1.5 years had built up an office in Dallas of about 30 people. The CEO of the company (Accsys PLC) had been based in Dallas, but stepped down at the beginning of this week. The new CEO will be based in London. In the aftermath of the change, a decision was made to restructure and shift certain functions back to Europe, which is where our first commercial plant is located. We lost a number of people, including several engineers who reported to me. These were people that I recruited and hired, and I feel personally responsible for them. As I indicated previously, I am relocating very soon to Hawaii, but before I go I want to help place those who lost jobs.
Given that we are in the midst of the most difficult economic conditions in decades, I thought I would do something unconventional here. I want to reach out to readers in the off chance that you currently know of an organization looking to employ someone with the skills of some of the people we lost this week. Of the following six, I personally interviewed four of them, and I can promise you my interviews are generally brutal. As a result, few of the people that I interview are offered a job. But because my screening process is so tough, I rarely make a hiring decision that I later regret. (Of course overly-restrictive standards also result in missing out on lots of good candidates). So all of the candidates below have my unqualified recommendation.
The following group includes 3 chemical engineers (representing Arizona State, Princeton, and Villanova), a mechanical engineer (Virginia Tech) who is a Six Sigma/lean manufacturing expert, a logistics expert with over 20 years of experience, and a business manager who excels at building and managing teams. All have international experience.
Here is a slightly more detailed synopsis, in no particular order:
1. First year chemical engineer out of Arizona State with a 3.6 GPA. Spent 8 years in the U.S. Army. Gets along very well with everyone, and established himself very quickly as a promising engineer in our Arnhem (Netherlands) plant. Ideally would like to work in process design or process engineering.
2. MS in Chemical Engineering from Princeton, with a BChE Summa cum Laude from the University of Delaware. Has been excellent in an R&D role for us. Interests are process design and improvement in the chemical, biochemical, pharmaceutical, or energy industries. Willing to relocate within US and Canada. Preferences within the following areas: Mid-Atlantic, New England, Pacific Northwest.
3. Chemical engineering graduate from Villanova. Enormous potential, but had barely started with us when the reorganization was announced. The all around best of a very good group of candidates I interviewed from the recent graduating Class of 2009.
4. Mechanical engineer by training; almost 20 years of experience with lots of management experience. Six Sigma/LEAN manufacturing specialist. Very good at building consensus, and superb at setting up and executing projects. Served as my stand-in when I was out of the office.
5. A natural salesman with an extremely smooth demeanor. BBA with almost 20 years of experience. Was responsible for commercialization efforts of one of our new product lines. Skilled at building, developing, and managing teams. Prefers to remain in the Dallas metroplex, but open to other opportunities.
6. Logistics expert with more than 20 years of experience. Experience in China, South Africa, and the Netherlands. American citizen but speaks some Dutch and German.
If you are interested in talking to any of these people, send me an email (my address) and let me know. I can send you any or all of their resumes. Just say “Send me #4 and #6″, for instance. If you want to speak with me personally about any of them, let me know and I will call you. I will update this as needed, and perhaps bump it back up in the future.
Today a topical post the latest from Money Morning, which as I previously explained will be featured here whenever they have relevant material to offer. As always, normal caveats apply: I am not an investment advisor. I don’t endorse any specific stocks mentioned in the following story nor the ad at the end of the story.
China Tightens Grip on Africa’s Energy Resources with Stake in Offshore Field
By Jason Simpkins Managing EditorMoney Morning
CNOOC Ltd. (NYSE ADR: CEO) and Sinopec Corp. (NYSE ADR: SHI) have agreed to buy a 20% stake in an oil field off the shore of Angola for $1.3 billion, illustrating China’s persistent attempts to acquire resources for its economic expansion at a time of weakness for many Western oil majors.
CNOOC and Sinopec will form a 50-50 joint venture to buy the stake in the so-called Angola Block 32, which has 12 previously announced discoveries. The Chinese energy giants purchased the stake from U.S.-based Marathon Oil Corp. (NYSE: MRO), but the sale is still subject to government and regulatory approval.
Marathon’s existing partners in the block – France’s Total SA (NYSE ADR: TOT), Portugal’s Galp Energia SGPS SA, Exxon Mobil Corp. (NYSE: XOM), and Sonangal, Angola’s state-owned oil company – have a right of first refusal. Marathon will keep a 10% interest in the block.
The oil field “is a significant resource base with estimated recoverable light crude oil reserves of 1.5 billion barrels,” Goldman Sachs Group Inc. (NYSE: GS) analysts wrote in a report, according to MarketWatch. “The $1.3 billion consideration compares with our valuation of $1.4 billion to $1.65 billion and Marathon’s publicly disclosed offer of $1.8 billion to $2 billion.”
The acquisition will build on CNOOC’s “growing deepwater exposure” and values the recoverable reserves at $4.30 a barrel, the analysts said.
The acquisition will also build on two of Beijing’s broader objectives: Securing long-term energy resources and expanding its presence in underdeveloped, and riskier, countries in Africa and the Middle East.
Since last fall, China has been using the Western world’s financial crisis as an opportunity to stock up on commodities while prices are low.
Sinopec recently paid $7.22 billion to acquire the Addax Petroleum Corp., a Canada-based energy company with operations in West Africa and Iraq. Meanwhile, Sinopec’s rival, China National Petroleum Corp. (CNPC), made its own foray into Iraq, winning the first contract in more than 30 years to develop the Rumaila oil field.
China’s involvement in Africa has an even richer history. In 2006, Beijing hosted the China-Africa Cooperation Forum – an event attended by more than 40 African heads of state. At the forum, China unveiled $9 billion in preferential loans, export credits, and trade incentives – all part of a strategic plan to achieve a preferential status with key African nations.The meeting was more than a mere publicity stunt to play up Beijing’s humanitarian efforts. It was a symbolic acknowledgment of growing cooperation between the regions.China has invested tens of billions of dollars directly into African-infrastructure and social-development projects, all in an effort to tighten its grip on the continent’s resources. Some examples:
And Money Morning Investment Director Keith Fitz-Gerald says this is only the beginning.
“It’s a virtual certainty that China will maintain this policy going forward,” Fitz-Gerald said. “My contacts in China and Africa have told me point blank that China’s leaders ‘don’t care about human rights or nukes or hostile governments.’ What matters is anyone who provides oil to China no matter what the rest of the world thinks.”
[Editor's Note: In a market as uncertain as the one investors face now, it helps to have a guide. And the ideal guide is The Money Map Report, the monthly investment newsletter that's a sister publication to Money Morning. In fact, a new offer from Money Morning is a two-way win for investors: Noted commentator Peter D. Schiff's new book - " The Little Book of Bull Moves in Bear Markets" - shows investors how to profit no matter which way the market moves, while our monthly newsletter, The Money Map Report, provides ongoing analysis of the global financial markets and some of the best profit plays you'll find anywhere - including such markets as Taiwan and China. To find out how to get both, Check out our latest offer. ]
In my recent post – How Much Natural Gas to Replace Gasoline? – I mentioned that it is quite expensive to convert a gasoline-powered vehicle to natural gas. If you drive a tremendous number of miles each year – as many fleets do – the conversion will pay for itself relatively quickly. For most of us, the savings wouldn’t be enough to justify the conversion.
Today I received an e-mail from Marc J. Rauch, Exec. Vice President/Co-Publisher of The Auto Channel, who shed a bit more light on why the conversion is so expensive. I found this information quite useful, and I received his permission to post his e-mail, seen below.
Hi Robert -
Thanks for the work you did on figuring out how much natural gas we actually seem to have (according to current knowledge) and for the related cost comparisons. It’s a great and value tool for those of us that believe in CNG (and propane) as a viable engine fuel alternative.
One thing that I would like to add (assuming that you didn’t already know this or learn it since posting your piece), is that the cost of CNG conversions for existing vehicles is as high as it is because of EPA licensing requirements. For an individual (or shop) to be licensed to do a conversion, the person must pay $10,000 per year, per engine type, per year of manufacture. So that if a conversion shop wanted to do conversions in 2009 for Camrys for the years 1995 to 2005, the shop owner would have to pay the government $100,000 in licensing fees. Then, if he wanted to do conversions on the same models in 2010, he would have to pay the $100,000 again, even though they are the exact same models and engines that he has been licensed on already. And if there is more than one engine involved, i.e., a 6-cylinder and 8-cylinder, the cost would double.
Therefore, if a shop owner wanted to do 10 model years of Camrys and Corollas and Celicas, and well as Honda Accords and Civics, unless there were common engines being used in these five models the licensing cost (for just one engine per) would be a half million dollars, which would have to be paid again in 2010. These fees are, needless to say, ridiculous and are only there to ensure that many don’t get done (thanks to the gasoline lobby). The cost of the conversion kits are actually relatively inexpensive. If there was a sensible licensing fee (or no fee) the cost for the work could be just a few hundred dollars.
To be fair, there is a second part of the cost equation that has to be addressed: trained CNG conversion mechanics. An argument is typically made by those that want to make argument against CNG that there aren’t enough trained mechanics. This is somewhat true, but of course there really is no shortage of new and old mechanics that would be willing to learn. So the issue is where can they be trained? The University of West Virginia has a great automotive program that they’ve “syndicated” to other colleges around the country. In California, two schools (Rio Hondo in So. CA and Yuba College in No. CA) teach the UWV curriculum. They can and do teach CNG conversions.
I hope the above wasn’t too redundant for you. If you have other information or newer information I would love to hear of it.
Marc J. Rauch
Exec. Vice President/Co-Publisher
THE AUTO CHANNEL
There is a good overview in today’s Guardian regarding the status of affairs with respect to electricity storage technologies:
So with grid parity now looming, finding ways to store millions of watts of excess electricity for times when the wind doesn’t blow and the sun doesn’t shine is the new Holy Grail. And there are signs that this goal — the day when large-scale energy storage becomes practical and cost-effective — might be within reach, as well. Some technologies that can store sizeable amounts of intermittent power are already deployed. Others, including at least a few with great promise, lie somewhere over the technological horizon.
I have used the “Holy Grail” term several times to describe cost effective storage of electricity. I have also given “energy storage” as an answer when people ask what we should be focusing more attention on. While this article is perhaps overly optimistic, it provides a good overview of what people are working on.
I also read a good article last night on renewable energy in India:
Despite the deepening energy crisis, renewable energy, predominantly wind and biomass, make up 3 percent of India’s total electricity production. Solar energy is not even a fraction of that, though India receives abundant sunshine throughout the year.
But India hopes to move from near-zero to 20,000 megawatts of solar electricity by 2020, as part of the National Action Plan on Climate Change. Announced in June 2008, the plan is a structured response to combat global warming and part of a proposal India intends to pitch at a climate change summit in Copenhagen this December.
If there is one thing the world desperately needs, it is for India and China to embrace renewable energy as their economies grow. If they do not, I think their growth is going to encounter fierce economic resistance as their growing energy needs start to put serious pressure on oil prices.
Today (July 17th) I spent some time on the phone with POET‘s VP of Science and Technology Dr. Mark Stowers. (I was invited up for a visit, but I couldn’t swing that just now). Dr. Stowers is in charge of company R&D, which includes corn and cellulose to ethanol, as well as the investigation of novel processes for utilizing waste to power their facilities.
Joining us on the call was Matt Merritt, POET’s Media Relations Specialist. We covered a lot of ground on the call. Along with the environmental impact, key interests of mine in assessing fuels of any kind are the energy inputs – what kind, how much – and the related topic of logistics. I probed the energy inputs in some depth, as I consider that critical when considering long-term commercial feasibility.
First a bit of background on POET. They are the largest ethanol producer in the world, producing more than 1.5 billion gallons of ethanol each year from 26 production facilities across the country (each with its own nuances, I was told). They recently started up a 20,000 gal/yr pilot-scale cellulosic ethanol plant, which uses corn cobs as feedstock. Plans are to commercialize the process in 2011. They have named this effort Project Liberty.
My questions and Mark’s answers below are paraphrased, but as I told them if they spot anything that I got wrong they can notify me and I will correct it. The format below includes questions, answers, and comments from me. Where the comment was part of the interview, it will appear as a prelude to a question or a comment in the follow-up as “RR: Comment…. Mark’s answers will appear as “MS: Comments…” To distinguish from additional comments I might interject, I will indicate those with [RR: Comment...]
I first voiced my skepticism that cellulosic could ever make a huge impact, due to logistical issues and energy requirements. That was going to be a major thrust of the interview, but I started off with a related comment/question.
RR: Conditions in Texas have been really dry. [RR: See this story on the current drought in Texas.] We have had over a week with temperatures exceeding 100 degrees each day. There are a number of corn fields near my house, and the fields appear to be dead. How are conditions up north?
MS: Actually this will probably be one of the best years ever. We got rain when we needed it. Corn grew 6 inches overnight recently. In Sioux Falls right now the temperature is 70 degrees.
RR: OK, let’s move on to your process. Can you start by walking me through your cellulosic ethanol process?
MS: Our cellulosic process is based on corn cobs. We have harvested 25,000 acres over the past couple of years. We are currently still trying to work out harvesting and storage. The yield of cobs is 0.65 tons/acre, and we can collect them commingled with grain with a modified combine. Or we can collect them with stover coming out of the back of the combine. The bulk density for cobs is higher than for stover, and that makes them easier to separate. We store at the farm field edge currently and can collect over the following 6-9 months. We make sure sufficient stover is left on the field for erosion control and nutrition. We are focused on cobs because the bulk density for cobs is better than for stover, and cobs have 16% more carbohydrates than the stover. We believe that there is a nationwide potential for 5 billion gallons of ethanol if all cobs are collected and converted.
RR: OK, I am going to walk through some numbers here. As you may know, I have been skeptical about the potential of cellulosic ethanol to scale very well. I feel that there are niches in which it will work, but I don’t think it works well as a large scale solution.
As you mentioned, average cob yields are 0.65 bone dry tons (1300 pounds) per acre. I have a reference that says the heating value of cobs is about 7900 BTU/lb [RR: Mark agreed that this was correct]. So the total BTU value of the cobs on an acre is about 10 million BTUs/acre, which is also the energy content of 135 gallons of ethanol (ethanol has a heating value of 76,000 BTU/gal). That would seem to be an upper limit on a hypothetical perfect conversion process that could capture 100% of the BTUs. But of course enzymatic processes are not going to convert lignin, and there will be some inefficiencies. My guess is that you probably need 20 pounds or more of cobs to produce a gallon of ethanol (as opposed to 10 pounds for a perfect conversion process), putting the actual yield at around 65 gallons per acre. I saw someone (not POET) who recently claimed cellulosic from corn cobs would increase per acre yields by about 110 gallons per acre, but based on the BTU value I don’t think that’s possible.
MS: Yes, I think that 110 gal/acre number looks too high. The 20 pound number you came up with looks approximately correct. We can get 85 to 100 gallons per ton with our process but operate mostly in the high eighties and low nineties at present. We are drying and burning the lignin for fuel, but in addition to the cellulose we are also converting the hemicellulose to ethanol.
[RR: OK, so 85 gallons per ton is equal to 55 gal/acre, and 100 is 65 gal/acre - which is the number I had worked out. Incidentally, I think the difference between a skeptic and a cornucopian is that the skeptic will look at that range and say "OK, realistically speaking they probably get 85 gallons/ton on a good day, and they think they can push it to 100 gallons if they continue to push the envelope." The latter will claim matter-of-factly that yields are at least 100 gallons/ton.]
RR: OK, I did not know you were converting the hemicellulose. What is the percentage of cellulose and lignin in the cobs?
MS: The cellulose plus hemicellulose is upwards of 60%. Lignin is about 15%.
RR: One of the keys to success for a cellulosic ethanol process is to increase the concentration of ethanol in the crude product. Historically this has been in the 3-4% range for cellulosic ethanol, and I don’t believe that will be commercially practical. The energy required to purify a solution in that range would be comparable to the energy contained in the ethanol. [RR: Of course with waste heat or very cheap BTUs, you might be OK to do it anyway]. So can you discuss the sorts of ethanol concentrations you are getting?
MS: First of all, I agree with your comments on ethanol in the 3-4% range. While we have not released information on our cellulosic ethanol titers, they are lower than those for corn ethanol. On the other hand we have some of the highest corn ethanol titers in the business; we can achieve greater than a 20% ethanol solution from corn. But we are better than the 4-5% range for our cellulosic process. Also, there is sufficient energy in the solid waste stream and the liquid stream to provide more than enough energy to power our cellulosic process.
RR: Don’t you have problems with the enzyme activity diminishing at higher ethanol concentrations?
MS: We do not see enzyme activity as a rate limiting step with respect to ethanol tolerance.
RR: Beyond the energy required to process the cellulosic ethanol, there is the fuel required to gather and transport the corn cobs. Along those lines, one of my readers wondered about the radius to the plant in which the logistics are still economical. His comment was that he heard that shipping costs for cobs are twice as costly as the grain because they are so bulky.
MS: We can go out to a 25-35 mile radius; about the same as corn.
[RR: I suspect if you did the analysis for cobs by themselves, collecting cobs and transporting them from 35 miles away might not be worth the fuel value of the subsequent ethanol produced.]
RR: Do you have a feel for how many BTUs is required to produce a BTU of cellulosic ethanol?
MS: We have some idea of those numbers, but haven’t released them. [RR: I think he said they are waiting for more results from their pilot plant, and they are working on getting better numbers.]
RR: Another question from a reader: “Will they contract with producers and what will the terms be?” I think I know the answer to this, because I read an article yesterday in which Poet spokesman Nathan Schock said that this hasn’t been fully determined. [RR: Here is the article: Iowa plants to offer farmers cash for corn cobs.]
MS: Nathan was correct; we have contracted with some farmers for fall harvest but we don’t know where the economic sweet spot for everyone involved is going to be.
RR: I would think you would hold those numbers close anyway, or all farmers will be holding out for the highest published price.
MS: Yes, that is a key point.
RR: (I asked if another reason for focusing on cobs over stover was related to concerns about soil depletion. I also incorporated another question from a reader): “Ask POET what they think of cellulosic from corn stover. They seem to say that stover has too many collection and handling problems (dirty, low density, etc), and that is one reason they are concentrating on cobs only. Many others assume corn stover will be the primary source of cellulosic feedstock.”
MS: We don’t have to leave all stover in the field necessarily over soil depletion issues; we have just chosen to focus on cobs. How much one can remove depends on soil type, location, and tillage practice. Cobs take those variables away.
RR: Is your ethanol purification compatible with existing corn ethanol infrastructure? I would think that with a higher water concentration you could go into your corn ethanol distillation system, just at a lower feed location.
MS: A cellulosic plant will be a bolt on to an existing corn ethanol plant. But we will have a better efficiency if we don’t intermingle the streams with corn ethanol because we don’t want to get things like lignin in our corn ethanol distillation train. So it is better to have separate distillation trains. The infrastructure will be more of what you see in common (utilities, logistics in and out, etc.).
RR: Why not just use the cobs to produce steam for the corn ethanol process? Have you done comparative studies on that?
MS: We are doing that today as well. We are using other renewable biomass to fuel a solid fuel boiler at Chancellor, South Dakota. This is a 100 million gal/yr facility. We are also using landfill gas in a multi-purpose boiler.
RR: What is the quality of the methane from your digestor? Do you have to clean it up?
MS: We have two applications for our biogas. One is for overall energy, and the other is fuel for the dryers. We are just finishing up our 3rd month of operation. The boiler that we have developed can handle the biogas that is produced.
RR: How many engineers are working on Project Liberty?
MS: Between the lab and pilot plant, we probably have 25 scientists and engineers.
RR: Is your pilot unit fully integrated? Is the pilot process fully connected?
MS: We are completely integrated from cob collection through ethanol production and recycle streams. We have a 24/7 operation with 4,000 data points collected. The pilot plant has been running since about Nov 18, 2008.
RR: One of the things that I strongly believe is that if the corn ethanol industry is ever going to break free from endless subsidies, you have to get the fossil fuels out of the process to the greatest possible extent. The sugarcane ethanol producers are more immune to the ups and downs of fossil fuel prices because of the large role bagasse plays in providing fuel for their process. So it feels like you are headed down the right path here, even though natural gas prices aren’t exactly a pressing concern for ethanol producers right now.
However, it might be that you have enough waste energy to fuel your process, but most of the BTUs are used up in the conversion, leaving very little ethanol. So in a case like that the question becomes, “Are you left with a small net amount of ethanol, or a very small net amount of ethanol?”
[RR: For example, if you had one BTU of biomass, and consumed 0.9 BTUs to produce 0.1 BTU of liquid fuel, you could say that you have gotten the fossil fuel inputs out, but you have produced very little fuel and were very inefficient with the utilization of the BTUs. In that case you could ask if there might have been a better use for that BTU of biomass.]
MS: The energy from our waste streams should be sufficient to power the 25 million gal/yr cellulosic plant and nearly power the 50 million gal/yr starch plant next door.
[RR: To me this was the most significant statement he made during the interview. If an added benefit is that you are also powering your corn ethanol plant with the energy produced from the cellulosic process, you have a very powerful synergy. But I admit that I have a bit of a hard time with this one. I would like to really dig into the energy balance, because it doesn't seem to me like there are enough BTUs. If I go back to my analysis of 10 million BTUs/acre available from the cobs and you back out 65 gallons of ethanol produced from the cobs, that would only leave you with about 5 million BTUs per acre to power both a cellulosic plant and a corn ethanol plant. If I make a couple of reasonable assumptions, it looks to me like they are assuming only 30,000 BTUs of energy input per gallon of ethanol production. This seems on the low side, but is perhaps reasonable when the ethanol yields from the cobs are on the low end of the range - leaving >30,0000 BTUs/gal for running the process.]
RR: When you are out front with a technology, there are always risk factors. What are some of the risk factors that you have identified that might keep you from meeting your goals?
MS: First is the absence of a market for cellulosic ethanol. The blend wall from E10 really limits the cellulosic market.
RR: OK, that’s market risk. How about technical risk?
MS: We must have farmers and equipment manufacturers engaged; we need a solution in which both sides can make money. We need programs early on to help biomass collectors overcome the risk. How many cobs can you get in a truck? The logistics become important. There is also the issue of inventory management. The annual supply of cobs for a 25 million gal/yr cellulosic plant would require a silo the size of the Empire State Building. We need to decentralize this, and we need as high a throughput into the reactor as possible.
RR: Gentlemen, that’s about all the questions I have, although I will probably come up with 10 more when I am writing this up.
MS: Feel free to contact us for any followups.
RR: Thanks guys. Appreciate you taking the time.
I just spent a fruitful week in Canada, learning about some of the biomass resources in Alberta. There are some interesting opportunities there for the right technology, and I expect that I will be making future trips up there.
One of the questions I was asked this week by one of my new Canadian friends was “Do you believe fossil fuels will still be the dominant power source in 20 years?” Without hesitation, I said “Absolutely.” Others around the table nodded their heads in agreement, and the questioner said “So do I.” It isn’t that this is what we want, but this is how we see it. Government agencies like the EIA see it the same way. While they show renewable energy growing, there is a very long hill to climb before they begin to challenge fossil fuels for supremacy.
I think the question was meant to gauge whether I am realistic about the potential contribution of biofuels in the years ahead. I believe that I am. While I believe that biofuels – or more appropriately renewable energy in general – will eventually become our predominant source of energy, that is going to take a long time. I also believe that it is going to happen by necessity – because of the depletion of fossil fuels – rather than a breakthrough that makes something like algal biofuel as cheap to produce as petroleum. Regardless, we need to pave the path to that potential future today, so when the need is pressing we aren’t scrambling to come up with solutions.
Speaking of algae, you may have seen the story on ExxonMobil plunking down $600 million for algal biofuel development. When I was in Canada, someone referred to this as “Dead Money Walking”:
Exxon, the west’s biggest oil company, has launched a new research programme into producing biofuels from algae, in a break from its general antipathy towards alternative energy.
At first sight, this looks a pretty bizarre thing for the company to be doing. Rex Tillerson, Exxon’s CEO, has been consistently sceptical about biofuels, even the advanced “second generation” variety. (Or, as Steven Chu, US energy secretary, described them to the FT, “fourth generation” biofuels.)
Incidentally, I did an interview in the airport yesterday on “4th generation biofuels.” I told the interviewer that I hate that term “4th generation biofuels.” Can we at least wait until we see what the 2nd generation really looks like?
But back to the ExxonMobil story. I am highly skeptical of the conventional paths to produce biodiesel from algae. In fact, John Benemann recently commented here that if you really want to know where algal biofuels stand, offer to buy some for $100/gal. He said you can’t get it. On the other hand ExxonMobil is certainly not stupid, so you have to wonder about their angle. The reporter I spoke with asked about algal biofuel, and I did say that I could see one circumstance in which it might work. If you could engineer/breed algae that excreted oil, you could potentially collect it by skimming it instead of collecting and pressing the algae. That would potentially be a much lower cost fuel, provided the production rates were decent.
Finally, it looks like I have 100 responses to the previous open thread, and I presume at least some of those are questions for me. I will try to work my way through those over the next few days. First, as indicated before I will speak with POET tomorrow about their ethanol work, and I will report on that conversation here in the next couple of days. If you have anything that you would like to ask them, let me know in the comments and I will try to get your questions answered.
I am flying to Alberta in the morning and will be there through the middle of the week, trying to learn more about the renewable energy opportunities there. I doubt I will put up anything new until I return. So I thought this might be a good time to solicit questions readers may have. I know that I don’t always address all questions in the comments, so if you have one that I have neglected, you can ask following this post and I will answer when I return.
The last time I asked readers for questions, I got 30 or so that I answered in the following two posts:
That’s been almost two years, though, and there have been lots of interesting developments since then. So ask away, and I will answer to the best of my ability. Other readers are certainly welcome to offer their own answers to questions, and in some cases I may use something from the comments when answering.
One thing I will throw out there is that on Friday, July 17th I am supposed to speak to POET about their cellulosic efforts (which I mentioned in a recent post). I have a list of things I want to ask them about, but if you have something you would like me to ask them, please post the question here and I will ask for you provided it is topical.
Until then, please behave yourselves.
- Accsys Technologies
- air pollution
- airline industry
- airplane transportation
- Al Gore
- algal biodiesel
- alternative energy
- American Coalition for Ethanol
- American Petroleum Institute
- auto industry
- avoided cost
- Barack Obama
- Barbara Boxer
- Bill Gates
- Bill O'Reilly
- Bill Richardson
- biomass gasification
- Black Swan
- blend wall
- blog statistics
- Bloom Energy
- Bob Dinneen
- book review
- Brazilian ethanol
- Brian Schweitzer
- Business Week
- car pooling
- carbon offsets
- carbon sequestration
- carbon tax
- cash for clunkers
- cellulosic ethanol
- Changing World Technologies
- Chevy Volt
- Chuck Schumer
- climate change
- combustion engine
- compression ratio
- conspiracy theories
- corn prices
- Craig Thomas
- credit crisis
- crude oil
- curriculum vitae
- Cyclone Gonu
- dan kammen
- Dan Rather
- deepwater drilling
- deficit spending
- Dick Cheney
- diesel engine
- distributed energy
- domestic production
- Doug MacIntyre
- due diligence
- E3 Biofuels
- Ed Markey
- electric cars
- electricity usage
- energy balance
- energy consumption
- energy crisis
- energy independence
- Energy Information Administration
- energy iq
- energy policy
- energy security
- energy storage
- environmental regulations
- ethanol mandate
- ethanol prices
- ethanol production
- ethanol separation
- ethanol subsidies
- Exxon Valdez
- farm policy
- farm prices
- Financial Sense
- fischer tropsch
- food prices
- Fox News
- free energy
- fuel cells
- fuel efficiency
- game wardens
- gas inventories
- gas prices
- gas shortages
- gas tax
- gas wells
- gasoline blending
- gasoline demand
- gasoline imports
- General Motors
- genetic engineering
- Global Energy Holdings Group
- global warming
- Goldman Sachs
- green building
- green diesel
- greenhouse gases
- Growth Energy
- guest post
- Gulf of Mexico
- Harry Reid
- health care
- heating oil
- Hillary Clinton
- Hirsch Report
- hubbert linearization
- hubbert peak
- huffington post
- Hugo Chavez
- Hurricane Ike
- Hurricane Katrina
- Jamie Court
- Jeff Goodell
- Jeff Rubin
- jet fuel
- Jim Doyle
- Jim Kunstler
- Jim Mulva
- john benemann
- John Dingell
- John Edwards
- John McCain
- john simpson
- Jon Stewart
- jon tester
- Joseph Kennedy
- Judy Dugan
- ken deffeyes
- Ken Salazar
- kidney stone
- Krassen Dimitrov
- land prices
- Larry Page
- law enforcement
- Lisa Margonelli
- Mark Edwards
- Mark Jacobson
- mass transit
- Matt Simmons
- Media coverage
- methane coupling
- Michael Wang
- Money Morning
- Morgan Downey
- Nancy Pelosi
- Nassim Nicholas Taleb
- national debt
- National Geographic
- natural gas
- new york city
- nitrogen fixation
- North Sea
- nuclear energy
- ocean currents
- ocean thermal energy conversion
- off topic
- oil companies
- oil consumption
- oil demand
- oil discoveries
- oil exploration
- oil exports
- oil imports
- oil inventories
- oil lease
- oil prices
- oil production
- oil refineries
- oil reserves
- oil rigs
- oil shale
- oil spills
- oil watchdog
- oil wells
- opinion survey
- osmotic power
- Pacific Ethanol
- palm oil
- Paul Sankey
- Peak Convenience
- Peak Demand
- Peak Lite
- Peak Oil
- personal finance
- peter maass
- plasma gasification
- population control
- posting etiquette
- price gouging
- price manipulation
- profit margins
- Prop 87
- Public Citizen
- PVT Solar
- pyrolysis oil
- Rahm Emanuel
- range fuels
- rate schedule
- Ray Kurzweil
- reader submission
- Red Cavaney
- refining margins
- renal colic
- renewable diesel
- renewable energy
- Renewable Fuels Association
- Robert Bryce
- Robert Cohen
- Robert Hirsch
- Robert Menendez
- Robert Zubrin
- Rolling Stone
- Ron Wyden
- Sarah Palin
- Saudi Arabia
- shale gas
- smart grid
- solar drying
- solar efficiency
- solar hot water heater
- solar power
- solar PV
- solar thermal
- Solix Biofuels
- South Africa
- speed limit
- Steven Chu
- Strategic Petroleum Reserve
- sugar subsidies
- sugarcane ethanol
- summer gasoline
- survival training
- T. Boone Pickens
- tar sands
- Ted Kennedy
- Tesla Motors
- The Daily Show
- The Guardian
- Thermal Depolymerization
- thin film solar
- tidal energy
- Tim Hamilton
- Titan Wood
- TMO Renewables
- Tom Cruise
- topsoil depletion
- Tyson Foods
- Tyson Slocum
- United Kingdom
- universal health care
- Venture Beat
- Vinod Khosla
- wall street journal
- Warren Buffett
- water car
- water usage
- wave power
- Web 2.0
- wheat prices
- wind power
- windfall profits
- Windows Vista
- winter gasoline
- Yellowstone National Park
- zero point energy