This week’s announcement that the Air Force successfully tested a A-10C Thunderbolt “Warthog” plane on a 50:50 blend of petroleum jet fuel and camelina-based biofuel has brought the two disparate ways of producing aviation biofuels into the spotlight.
Though both produce essentially the same end fuel, the differences between biomass and oil-seed based aviation fuels are stark.
The idea of producing synthetic aviation fuel is hardly a new concept. Germany pioneered the production of “Fischer-Tropsch” (FT) synthetic fuels during WWII. Currently, South African airline Sasol produces approximately 150,000bbl per day at its coal-to-liquid facilities. (South Africa used FT during the era of apartheid as well.)
A number of companies are currently exploring the utilization of the Fischer-Tropsch process to transform biomass into aviation fuel.
Call this the synthetic biofuel camp.
FT is a four-step process that first involves gasifying biomass feedstock and reacting it with steam at moderate pressure and elevated temperatures in the absence of combustion. The resulting synthesis gas (“syn gas”) often contains impurities like sulfur and large amounts of C02, which requires that it be scrubbed. The third step involves passing the syn gas over a catalyst (usually iron or cobalt-based) to form a variety of hydrocarbons. Depending on the gasification process, one can alter the reaction conditions (pressure, temperature, time, or catalyst) and it will result in changes to the molecular structure of the hydrocarbons. Using well-established refining methods, the hydrocarbon is upgraded to the subsequent liquid fuel.
In recent months, companies like Choren, Rentech, and Solena Group have announced commercial projects that could result in hundreds of millions of gallons of production capacity coming online by 2014.
Synthetic aviation fuels created via a process known as biomass-to-liquids (BTL) have a number of benefits beyond the obvious one — namely, that they are not petroleum-based. FT fuels have lower carbon and particulate matter emissions, thermal stability, and can be derived from any type of biomass, as well as from coal and natural gas.
The drawbacks of BTL aviation fuels are economic. On an installed cap-ex basis, we estimate that a new plant costs around $1.27/gal. Additionally, from an op-ex perspective, biomass feedstocks such as woody biomass, agricultural and waste residues, etc. are expected to cost somewhere between $55-$70 per bone-dry ton compared to $30/ton for coal. While FT processes are theoretically feedstock agnostic and feedstock costs could get below the aforementioned $55-70/ton range if municipal solid waste streams are included, in the absence of a carbon tax, coal-to-liquids (CTL) processes are currently more economical.
Which brings us to the second thermo-chemical technology under consideration to produce aviation biofuels: hydroprocessing.
This process uses animal fats, waste grease, or plant oils as feedstocks and involves using a combination of pressure, heat, and catalysts to upgrade the oil into jet fuel. In geek terminology, the oil is first deoxygeneated and then isoparaffinic hydrocarbons are created via hydroisomerization. Hydrogen, carbon dioxide, and water are the main byproducts of hydroprocessing. Given that the resulting fuels are paraffinic, they are almost identical to FT jet fuel.
In the race to commercialization of aviation biofuel, hydroprocessing has a number of advantages over FT. First, anyone who has been following this space in the last two years already knows that every major airline that has tested biofuels has used jet fuel derived from hydroprocessing. For example, when Virgin Atlantic became the first commercial airline to oversee a flight partly powered by biofuels, it used a 25% blend of biofuels in one of its engines that included hydroprocessed coconut oil and babassu oil. In the last year, KLM, Air New Zealand, Qatar Airways, Continental Airlines, and Japan Airlines have also completed flights using biofuels like jatropha, algae, and camelina.
In 2014, 100 million gallons of camelina-based jet fuel is expected to be delivered to 15 airlines by Sustainable Oils and Alt-Air. The prospects for camelina and aviation biofuels in general are explained in great detail in a new report from Biomass Advisors.
There are a number of commercial hydroprocesing plants being built, most notably by Neste Oil and ConocoPhilips. By 2015, we anticipate production capacity via hydroprocessing could reach 900MGY.
While FT synthetic fuels generally come with higher cap-ex costs due to the gasification and clean-up equipment as compared to hydroprocessing equipment that leverages the pre-existing assets of a petroleum refiner, hydroprocessing is not feedstock agnostic. Given the fact that oil-based feedstocks currently make U.S. biodiesel uneconomical without subsidies, there are questions as to how much alternative oilseeds — such as jatropha, algae, and camelina — will cost at commercial scale.
For example, Neste Oil is building a facility that will have production capacity of 58.2 million gallons per year at an upfront capital cost of $135M. The plant will have a feedstock input rate of 555 tons of vegetable oil per day, which is the equivalent of 0.00347 tons per gallon. If the current spot price for soybean oil is $0.39/lb ($780 per ton), we find that the per-gallon cost of soybean feedstocks is $2.71/gal. While I realize that aviation fuel will not be created from soybean oil, this example is illustrative of how oilseed feedstock costs can add up to make hydroprocessing uneconomical compared to petroleum jet fuel.
Given the strategic importance for the military to obtain copious amounts of domestically sourced energy and the blank check the Department of Defense receives, it is clear that aviation biofuels are coming — whether from FT or hydroprocessing