Navigating the Nuances of Integration

Experts discuss important considerations in co-location and retrofit projects
By Bryan Sims | January 30, 2012

Whether it’s co-locating a stand-alone biorefinery at an existing industrial asset to bolster supply chain dynamics, or retrofitting an existing industrial facility with new process technology to improve operational efficiency, each approach strengthens the host operations and mutually benefits all parties involved. Today, the advantages of co-locating or retrofitting are realized at a number of industrial facilities, including corn ethanol plants, biodiesel facilities and pulp and paper mills, and more assets are being targeted as potential biorefineries to produce advanced biofuels, biochemicals and green power. For the EPC firms facilitating these critical project activities, each respective approach may appear simple, but establishing this sort of project can be complex, says Ron Jones, director of biofuels development at Burns & McDonnell.

“There are a whole host of business and legal issues that have to be worked through, such as if the bolt-on or the co-located unit is going to be owned by somebody else or if it’s some form of a joint venture,” Jones tells Biorefining Magazine. “Even if it’s a third-party technology, there are acceptance issues in addition to liability concerns, ownership and the framework of the commercial deal have to be taken into consideration.”

Since June, Burns & McDonnell has been working with Colorado-based ZeaChem Inc. on the engineering, design and build of its 250,000 gallon per year integrated biorefinery located near Boardman, Ore. In January, Burns & McDonnell completed ZeaChem’s core technology on time and under budget. ZeaChem’s future commercial-scale facility, which will be co-located onsite of its demonstration plant in Boardman, is expected to have an annual production rate of about 25 MMgy. According to Jones, Burns & McDonnell is working on similar projects in the U.S., Asia and Europe, with even more in the queue. “We’re pretty bullish on this business,” Jones says.

A challenging aspect that every EPC firm confronts during a project—whether an “inside the fence” retrofit or an “outside the fence” co-location approach is taken—is that the host facility is being asked to do something that’s not core to what it already does, says Doug Dudgeon, vice president of process industries for Harris Group Inc.

“They don’t know the market, they don’t know the process and it’s pretty hard to come up with a good reason for them to say, ‘Yeah, I’ll take the risk,’” Dudgeon says. Harris Group has a respected reputation in the pulp and paper industry with successful integration of combined heat-and-power (CHP) technologies, but the company is also actively engaged in helping emerging biorefining companies, such as cellulosic ethanol and biochemical technology developer Coskata Inc., scale-up process technology for potential co-location or retrofitting.

“Even though [pulp and paper mills] have embraced CHP, that was a big deal to them,” Dudgeon says. “A lot of them know it now, but they didn’t at first. It’s the same thing if you try to bring in cellulosic ethanol into a pulp mill, for example. We can show people things on paper that make this look great, but they have a tendency to stick to doing what they were originally designed and built to do.”

While these types of projects have their risks and rewards, a successful co-location or retrofit understands the size and scope of the footprint considered for integration, says Chris Scott-Kerr, vice president of projects for global engineering and design firm Poyry Inc. With expertise in upgrading pulp mills by outfitting them with heat and power technologies, the company is also targeting existing corn ethanol plants to integrate cellulosic ethanol production technology. Poyry is providing design and engineering services for Canadian biorefining firm Lignol Energy Corp., which intends to co-locate or bolt on its novel cellulosic ethanol and biochemical conversion technology with existing industrial assets, when commercially ready.

“You want to start off with something that’s manageable and quite small at the demonstration scale,” Scott-Kerr says. “Some are coming in and what they’re doing has a massive impact on the host plant. You need to find a way to come in at a scale that allows them to integrate without completely disrupting everything.”

If a host facility is not receptive to the idea of a co-location or retrofit project, the interface between the EPC firm and host site is critical in order to communicate to host staff what should be done and how the EPC firm can complete the project as smoothly as possible, without disrupting ongoing operations.

“Our people work very closely with the host site,” Jones says. “They understand what the particulars of that operation are and what the client is looking for in terms of performance. Similar to the design itself, it’s an integrated approach with the existing staff on site to make sure everybody is on the same page, and so everyone knows what to expect during the development of the project.”

Things to Keep in Mind

As mentioned, several key business issues must be communicated between the EPC firm and host management staff before such a project can even begin. One item is to carefully examine contractual agreements between the licensee and the licensor of existing process technology at a host site when a retrofit activity, in particular, is considered, says Alan Propp, business development manager for Merrick & Co. In 1996, Merrick designed and built an ethanol production unit on the property of Coors Brewing Co.’s brewery in Golden, Colo. The plant recovers off-spec brewery residuals and, at an annual maximum production rate of 3 MMgy, serves as the prototype for Merrick & Co. to replicate similar projects at existing breweries, or at other first-generation biofuel assets.

Propp says he’s aware of contracts that have specific clauses in them that allow licensors of corn ethanol process technology, if a particular piece of equipment or process technology is installed, to have direct access to the technology for use anywhere they desire. “This is a complete nonstarter for most technology providers that want to integrate with an ethanol plant,” Propp says, adding that he’s aware of five or six existing corn ethanol technology providers that have clauses like these in their contracts. “In this case, it’s a requirement that you do it outside the fence. By doing that, the technology provider doesn’t incur any liability to their intellectual property.”

Additionally, Propp says it’s important to be on the lookout for provisions in a licensor contract that may prohibit certain engineering firms to partake in the project.

“If you’ve got your favorite engineering firm that you want to work with, you want to make sure before you go too far down the road that you’re not contractually prohibited from doing so,” Propp says.
When it comes to a retrofit, Dudgeon says it’s important to consider available space that might be required to install incoming biorefining equipment. “If you’re trying to fit in an existing facility, you may have some long piping runs, for example. Whatever you do, it’s going to be suboptimal and you just have to accept that.”

 Finally, according to Propp, it’s important to involve EPC firms like Merrick early in the front-end engineering and design (FEED)of a proposed co-location or retrofit project because they’re more likely to be corrected if they’re caught ahead of time, rather than later.

“Doing proper FEED is key in these projects because that’s when engineers can have the greatest positive impact on the cost, schedule and performance of the system,” Propp says.

Like No Other

While no co-location or retrofit project is easy, EPC firms recognize they simply can’t apply a “cookie-cutter” approach because each demands a certain degree of individualized planning, human and financial resources, partnerships and business acumen to make the venture mutually beneficial for all involved. While EPC firms may leverage their experience from prior projects on how to facilitate the project more efficiently, they all start on a clean sheet of paper, says Poonima Sharma, vice president of process technology and engineering for Technip USA Inc. In 2008, Technip Italy was awarded contracts by Neste Oil to act as the lead EPC firm to build its renewable diesel production plants in Singapore and Rotterdam, both of which are currently operating.

“We say the strength of a company like Technip is in customization to match the project drivers from the client side,” Sharma says.

 A good co-location or retrofit project cannot be accomplished without outside partnerships. “In all of these projects there are multiple entities involved,” Jones says, “and being able to manage that is a little bit different compared to traditional capital projects with a large owner where it’s basically the EPC contractor and the owner. In this case, you’ve got technology suppliers, module vendors and a whole host of different parties that come to play, so it’s really a team-based activity and one that requires a different mindset and a different approach to managing the effort.”

“The trick,” he adds, “is how to manage that to stay focused on a path, as opposed to letting it become a diversion. As long as you have good folks running the effort, it will happen.”

Author: Bryan Sims
Associate Editor, Biorefining Magazine
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