By Eric Lindeman
Two U.S. biofuel producers last week announced memoranda of understanding with more than a dozen domestic and international airlines that are likely to lead to supply contracts for renewable jet fuel, while a third company said it has entered into a technology licensing agreement for jet biofuel production under an initiative funded by the Defense Department’s Defense Advanced Research Projects Agency.
The MOUs, with biofuels producers AltAir Fuels and Rentech Inc. are aimed at multi-year supply agreements with the group of passenger and cargo air carriers but are widely expected to lead to military contracts in the future. Both companies are using biorefinery technology developed by Honeywell‘s [HON]UOP, LLC, which has already produced biojet fuel for test commercial and military flights.
At the same time, a third producer, Accelergy Corp., said it signed a global licensing agreement with ExxonMobil Research and Engineering Co. for Accelergy to produce liquid fuels and chemicals from abundant coal resources using ExxonMobil technology. It also announced a strategic partnership with the Energy & Environmental Research Center (EERC) at the University of North Dakota which, under a recent $4.7 million contract with DARPA, is developing the first completely renewable JP-8 jet fuel.
The Air Force uses JP-8 in all its aircraft and has been researching alternative fuels to replace petroleum-based fuels. By far the largest energy consumer among the military branches and the largest single consumer of energy in the federal government, in fiscal year 2008 the Air Force spent $9 billion to fuel aircraft and ground vehicles and to provide utility services to installations.
Under a comprehensive energy plan issued Dec. 9, the Air Force said its supply departments should be “prepared to cost competitively acquire” 50 percent of its domestic aviation fuel requirement “via an alternative fuel blend in which the alternative component is derived from domestic sources produced in a manner that is greener than fuels produced from conventional petroleum.” Even before then, by 2011, all aircraft and systems should be tested and certified to use a 50-50 alternative fuel blend.
All three agreements were unveiled December 15.
Glenn Tilton, chairman of the American Air Transport Association and president and CEO of UAL Corp. said that discussions with additional alternative-fuel producers about other projects are progressing, as are discussions with the U.S. military on other cooperative opportunities.
“Our intention as an airline industry is to continue to do our part by supporting the use of alternative fuels. We urge the U.S. government and the investment community also to do their part to further support this critical energy opportunity,” Tilton added.
Twelve airlines from the United States, Canada, Germany and Mexico–Air Canada, American Airlines, Atlas Air, Delta Air Lines, FedEx Express, JetBlue Airways, Lufthansa German Airlines, Mexicana Airlines, Polar Air Cargo, United Airlines, UPS Airlines and US Airways–signed MOUs with both with biofuels producers AltAir Fuels and Rentech Inc. Alaska Airlines and Hawaiian Airlines signed the MOU with AltAir Fuels, and AirTran Airways signed the MOU with Rentech.
Rentech said its non-binding MOU with the air carriers is for certified jet fuel from its proposed synthetic fuels and power facility in Adams County, Mississippi, known as the Natchez project. The agreement contemplates a contract under which the carriers would buy the project’s entire synthetic jet fuel production of about 250 million gallons per year. The plant, with a design capacity of 400 million gallons annually, will also produce chemical feedstock.
“The MOU is the result of two years’ work with the airlines,” said a company spokeswoman. “The document contains general descriptions of pricing terms, and it contemplates a contract duration and fuel quantities. The next step would be a term sheet and then a contract.”
Hunt Ramsbottom, Rentech’s president and CEO, “We believe that successful relationships with our airline partners, suppliers and the government can advance what is expected to be the nation’s first large-scale synthetic fuels facility for environmentally superior alternative sources of domestic energy and significant new jobs that will help our economy grow.”
Rentech said it plans to file for environmental and construction permits early next year. But the timeline for construction depends on bringing in a financial partner to help with feed and construction costs. “Assuming we have a partner,” the spokeswoman said, “construction would begin in 2011, and late 2014 would be the earliest we could start operation.”
The project will be situation on a 450-acre property Rentech owns adjacent to the Mississippi River near Natchez. The site has access to multiple feedstocks and product distribution channels, including rail, pipeline, barge and roads. Feasibility engineering for the Natchez Project has been completed.
Rentech’s RenJetr, based on the Fischer-Tropsch process, is the only alternative jet fuel currently certified for use in commercial aviation at up to a 50-50 blend with traditional jet fuel. RenJet has a lower carbon footprint as well as lower regulated emissions compared to traditional jet fuel.
The Fischer-Tropsch process involves a catalyst reaction that converts a mixture of hydrogen and carbon monoxide–derived from coal, methane or biomass–to liquid fuels. It was discovered and developed by German scientists and used to make fuels during World War II. South Africa has produced liquid fuels from coal for 30 years, and oil companies such as Shell Oil, Chevron (Texaco), and Exxon Mobil have built pilot plants based on the process.
Rentech, Inc. and ClearFuels Technology Inc. were selected in early December to receive up to $23 million as a grant from the Department of Energy to build a biomass gasifier at Rentech’s Energy Technology Center (RETC) in Denver. The gasifier will be integrated with Rentech’s Product Demonstration Unit (PDU) for the production of renewable synthetic fuels from biomass.
The grant, subject to final negotiation with DOE, will be used to manufacture and install a 20 ton-per-day ClearFuels biomass gasifier at Rentech’s Denver center. Designed to produce synthesis gas (syngas) from sugar cane bagasse, virgin wood waste and other cellulosic feedstocks, the gasifier will be integrated with Rentech’s existing PDU, which produces renewable drop-in synthetic jet and diesel fuels at demonstration scale of 10 barrels per day. The joint demonstration of an integrated bio-refinery will lead to a final design for commercial facilities that are expected to use the combined technologies.
Rentech also holds a 25 percent strategic interest in ClearFuels, which has begun development of commercial-scale biomass-to-energy projects in the southeastern United States, Hawaii and internationally. Those projects are expected to use an integrated ClearFuels-Rentech design and will be co-located at sugar mills and at wood and other biomass processing facilities.
Rentech’s Natchez project will use coal and petcoke feedstock, with the goal of integrating biomass processed with the ClearFuels-Rentech biomass gasification technology. The company said it is evaluating several types of biomass feedstock but will probably use wood.
The plant will generate more than 120 megawatts of electricity. Water used to cool process equipment generates steam, which in turns generations clean power that Rentech plans to sell under power purchase agreements currently under negotiation.
The company is further along with plans to sell carbon dioxide captured during plant operation. “We capture about 80 percent of the CO2,” said the Rentech spokeswoman. “It’s inherent in the design of facility that we have to capture CO2 and separate it from our production stream.”
Denbury Onshore, LLC, a wholly owned subsidiary of Denbury Resources Inc., contracted in 2007 to buy all of the CO2 captured at the Natchez project and will use it for enhanced oil recovery to produce otherwise unrecoverable oil at Denbury’s Cranfield oil field in Southwest Mississippi as well as at the company’s oil fields within the greater Gulf Coast area.
A study conducted by DOE’s National Energy Technology Laboratory confirmed that carbon sequestration at Rentech’s Natchez facility will give the biofuels fuels it produces a life-cycle carbon footprint lower than that of petroleum-derived fuels.
The contract between Rentech and Denbury is long term and pricing terms are confidential, the spokeswman said. She did say that it “includes a sharing of the incremental value of carbon credits” and that Denbury will build an eight-mile pipeline from the Natchez project to the Cranfield oil field.
The Cranfield oil field is host to a DOE-sponsored CO2 sequestration project that is the first in the nation to inject more than 1 million tons of carbon dioxide into an underground rock formation more than 10,000 feet below the surface.
AltAir Fuels’ MOU with the airlines contemplates contract negotiations for supply of up to 75 million gallons of renewable jet and diesel fuels annually for 10 years from the company’s new production plant in Anacortes, Wash. The fuels will be derived from camelina oil and would replace about 10 percent of the petroleum-based fuels consumed annually at Seattle-Tacoma International Airport in Washington. That, the company estimated, would reduce carbon emissions by about 14 billion pounds over 10 years.
The new facility for converting camelina oil will be located at the existing Tesoro oil refinery in Ancortes and will have a capacity of 100 million gallons per year. Tesoro, an independent refiner and marketer of petroleum products, Tesoro operates seven refineries in the Western United States with a combined capacity of 665,000 barrels per day.
Camelina oil will be supplied by Montana-based Sustainable Oils, which operates one of the nation’s largest camelina research programs and has production contracts with numerous farmers and cooperatives.
Camelina, AltAir reported in a prepared statement, has a number of important advantages over other feedstocks. It is readily available today, with tens of thousands of acres currently under management and that much more planned for the near term, and camelina-based fuel can be used in unmodified jet and diesel engines.
The plant, which requires less water, fertilzer and herbicides than other bio-feedstocks, is grown in rotation with wheat and does not displace food crops, while providing new jobs for farmers. Camelina seeds have a high natural oil content and, because it is only used as a source of renewable fuel, it is relatively inexpensive. According to AltAir, “the oil can be competitive with crude oil at today’s prices and, potentially, even more so if crude oil prices rise.”
AltAir’s renewable jet and diesel fuels will be blended with petroleum-based fuels at Tosoro’s Ancortes refinery and transported to the Seattle-Tacoma airport and other locations via existing pipelines. It will require no special handling and will be used in planes operated by the MOU signatories and heavy machinery operated at Port of Seattle facilities.
Accelergy’s coal and biomass liquefaction process combines the company’s own catalytic process technologies with ExxonMobil’s Microcatalytic Direct Coal Liquefaction (MCL) technology. With that process, Houston-based Accelergy can produce a range of high-grade fuels, including advanced jet fuel, for a broad range of customers. By coupling MCL with biomass co-conversion, Accelergy can reduce greenhouse gases emissions, principally CO2.
“Accelergy’s license of ExxonMobil’s MCL technology is a strategic asset for Accelergy, allowing us to bring coal- and biomass-based fuels to market,” said Tim Vail, the company’s CEO. “By coupling the advanced MCL technology with advanced biomass conversion technology, Accelergy is uniquely positioned to convert low-value coal into specialty fuels at higher efficiencies than indirect conversion technologies. This reduces the environmental impact compared to current coal to liquids technology.”
Accelergy claims that bringing together “decades of experience” in catalytic materials and coal conversion technologies, including from ExxonMobil, has resulted in direct coal and biomass liquefaction technologies that yield higher overall thermal efficiency, lower CO2 footprint and lower unit costs than current coal-to-liquid options.” And the company’s process can directly produce a tunable range of fuels from gasoline to diesel to high-quality synthetic jet fuel.
Accelergy also announced that it is licensing EERC’s proprietary technology for its Coal Biomass to Liquids (CBTL) process to speed development of specialty liquid jet fuels used by the military.
“For decades, the EERC has been dedicated to creating cost-effective environmental solutions for our country’s energy challenges, and we have long recognized that smart public- private sector partnerships are key to commercializing promising technologies,” said Gerald Groenewold, EERC diretor. “We believe Accelergy’s integrated production process is paramount to the rapid adoption of domestically produced specialty fuels, and we fully expect to help drive this endeavor forward with our technology.”
Accelergy’s Vail added, “Partnering with a demonstrated leader in clean energy research and technology uniquely positions Accelergy to domestically produce high volumes of cleaner fuels to meet ever-increasing needs for our nation’s military aircraft. As global demand for transportation fuel grows, EERC’s scalable, feedstock-flexible process provides a crucial element to our hybrid process, enabling cost-effective, next-generation liquid fuels.”