Project costs are most vulnerable during early stages

| September 19, 2011

The project life cycle for second- and third-generation biofuels and biobased chemical facilities has changed from the traditional model. That life cycle, which commonly begins at the pilot phase led by researchers, chemists or biologists and evolves into larger demonstration facilities before EPC contractors, process control managers and operators eventually enter the project for the commercialization phase, now requires the participation of engineering consultants or process control operators during the earliest phases of a project. This, at least, was the sentiment of the speakers during a general session panel at the International Biorefining Conference & Trade Show that brought together industry experts to speak on the topic of driving down the cost of biorefinieries. “The ability to influence the cost of the project,” Jacek Chmielewski said, “is the greatest at the beginning of the project.”

J. Chmielewski, the renewable energy and advanced biofuels business unit manager for capital projects at Novaspect Inc., explained to the crowd that he has had experience with a failed refining project, and one of the ways to succeed in lowering the cost of a project and avoiding failure given the current financial climate is through electronic marshalling, an idea he also said will allow for flexibility of electrical systems, inputs and output systems, and most of the other wiring at a facility.

Rich Chmielewski, the biofuels marketing manager at Siemens Industry Inc., shared the same perspective as Jacek, noting that project developers should not be afraid to bring in outside consultants earlier in the life cycle of a project to employ ideas such as electronic marshalling. “Sometimes best practices can be shared,” he said. And, traditional practices, he said, don’t always work in the biorefining industry. As an example, he pointed to the use of central control rooms that allow the facility operators to monitor operations by watching large screens and computer monitors. “We don’t have that luxury in the biorefining industry,” he said. “Operators need to be out in the field looking at things, smelling things,” and using wireless monitoring devices.

The use of wireless devices instead of a central control room represented one of the smaller aspects of a larger theme touched on by both Chmielewskis and Mark Warner, senior vice president of process industries for the Harris Group. All of the speakers explained that one of the biggest ways to reduce long-term costs revolved around a project’s understanding the importance of information. “As much as it is about making fuels or making chemicals,” R. Chmielewski said, “it’s really about the information.” As he explained, the use of commercial-grade instrumentation and monitoring equipment that will face fewer problems in the path to scale-up instead of small- or bench-scale equipment commonly used in research facilities allow project developers to avoid costs required to implement entirely new information-gathering equipment and approaches.

“Selection of instruments is where it (a project’s financial success) is won and lost,” Warner said. Because of that, R. Chmielewski told the crowd that a project developer or operator needs to know what information they want, who they want to see it, and even how to access more information in the future. “Automation is only 3 to 5 percent of original capex,” Jacek said, “but very important to overall success.” Using a specialized main automation contractor strategy that is implemented as a testing practice, even before the EPC stage, can result in 20 to 30 percent reduced costs to a project.

Having access to and understanding the information generated through advanced technologies today is not only necessary to satisfy the requirements of financiers who require increased project status reports, but it is also important as a project moves from small- to large-scale. During small-scale operations when researchers and chemists are developing a project, “We typically don’t have the same language,” R. Chmielewski said of engineers who are tasked with converting the biology into viable working processes. To alleviate that problem, he recommended finding a consultant or hiring an individual well-versed in both the lab setting and the engineering and design phase settings to effectively communicate how a process should evolve.

Doug Machon, business development manager for NAES Corp., also highlighted a number of areas ranging from safety precaution measures to human resource issues that need to be considered in any attempts to drive down the cost of a biorefinery. But, as R. Chmielewski put it during his presentation, there was one idea that resonated throughout the entire session. “If you try and go forward without knowing exactly what you want to do, it can be expensive.”