Biorefining deals underway, project financing picks up

By Ron Kotrba | April 20, 2011

Pulp and paper mills have long been thought of as ideal hosts for biorefining projects, but only a handful of these integrations have taken place in the past few years. Those in the industry say this is because biorefining technologies are expensive and the poor economy has crippled banks’ willingness to lend. Also, the black liquor and the so-called son of black liquor credits have incentivized pulp and paper mills to burn their spent cooking liquor for energy rather than find other outlets.

“The finance side has been the biggest hold-up,” said Mark Warner, vice president of Harris Group, an engineering firm with 45 years’ experience in the pulp and paper sector. “They’ve just not been able to finance the technology.”

He added, however, that this is beginning to change. “We’ve seen more uptick in the last 90 to 120 days,” Warner told Biorefining Magazine. “People believe money is going to start flowing again.”

Roman Wolff, president of Enhanced Biofuels, a Houston-based biorefining technology company, said he’s also seen more inquiries from potential customers interested in upgrading process technologies. “I’m seeing more from overseas though, than from here in the U.S.,” Wolff said. Enhanced Biofuels specializes in upgrading high-acid feedstock, specifically raw pyrolysis oil (bio-oil), mainly because it is inexpensive. “There are three or four pyrolysis methods,” Wolff said, “but if the fuel is not upgraded, it is extremely corrosive.”

The total acid number (TAN) for pyrolysis oil is about 100, which is extremely high. “If you are planning to put pyrolysis oil into a refinery process, the TAN has to be less than one,” Wolff told Biorefining Magazine. “It can be upgraded from 100 down to 10 or five, and then be blended down with crude.”

Wolff said his company is formalizing an arrangement with EPC major Foster Wheeler to effectively deploy Enhanced Biofuels’ acid reduction technology. Foster Wheeler supplies cokers to the refining industry. Cokers are units at the end of the refining process that take mostly spent crude and heat and pressurize it to release any trapped, lighter fractions such as naptha and gas oils, leaving dense carbon to be sold as fuel. While some biorefining techniques involve hydrogenation, which can be expensive, with a coker no hydrogenation would be required. 

There are two main approaches to integrating a pyrolysis process into a pulp and paper mill, Wolff said. One is to take the tall oil out of the black liquor and pyrolyze it. The other, what Wolff called “a true pyrolysis approach,” is to utilize scrap wood at the front-end of a pulp and paper mill, where bark and other wood waste is generated. 

In order to gain financing, biorefining project developers rely on securing long-term off-take agreements to assure the lenders they have buyers for their products. Couple a tough economy with rising but volatile energy prices, however, and it becomes much more difficult to get would-be customers to commit to any significant length of time. “Even the government is limiting off-takes on fuel to five years,” Warner said.

Warner and Wolff will both be in St. Louis May 2-5 at the International Biomass Conference & Expo, speaking on the Energy Production as a Renaissance for Pulp and Paper Facilities bonus panel. Warner will discuss biorefining integration into these mills, and what Harris Group sees the biorefinery of the future to be. Wolff will present opportunities for pulp and paper mills to integrate bio-oil production.