Techno‐economic and Market Analysis of

Pathways from Syngas to Fuels and Chemicals

Michael Talmadge, Abhijit Dutta & Richard Bain

IEA Bioenergy, Task 33 / IEA IETS Workshop on
System and Integration Aspects of Biomass‐based
Gasification – Gothenburg, Sweden
November 20, 2013
NREL is a national laboratory of the U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, operated by the Alliance for Sustainable Energy, LLC.
Objective
Assess the economics of producing fuels and chemicals from
biomass‐derived synthesis gas.

• Process economics based on literature (consistent TEA assumptions)

• Perform more rigorous TEA on promising pathways

o Biochemical conversion of syngas to ethanol and higher alcohols

o Ethanol and higher alcohols to infrastructure‐compatible hydrocarbons

• Simple product market analyses

What can we do with syngas?

2
Analysis Approach
• Simplified TEA model
• Inputs from literature sources
o Feedstock rate and properties (heating value)
o Product yields
o Operating costs (variable & fixed)
o Capital costs
• Common scaling assumptions
o Capital scaling exponents
o Economies of scale for fixed operating costs
• Operating and financing assumptions for nth plant and
pioneer plant
• Minimum Product Selling Price
literature values  average, standard deviation & 90% confidence intervals

3
nth Plant Assumptions
Parameter Value
Basis year for analysis 2011
Feedstock processing capacity 2,000 Dry Tonnes / SD
Feedstock cost (woody biomass) $75 / Dry Ton (€21.60 / MWh)
Debt / equity for plant financing 60% / 40%
Internal rate of return (after‐tax) for equity financing 10%
Annual interest rate and term for debt financing 8% / 10 years
Total income tax rate 35%
Plant life 30 years
Plant depreciation schedule 7‐year IRS MACRS
MACRS = Modified Accelerated Cost Recovery System

Reliability of operations / on‐stream factor 0.90

Site development costs 4% of ISBL Installed Capital
Working capital 5% of Fixed Capital Investment
Indirect costs for capital project 60% of Total Direct Costs
Capital equipment capacity scaling exponent 0.70
4
nth Plant Assumptions
Parameter Value
Basis year for analysis 2011
Feedstock processing capacity 2,000 Dry Tonnes / Day
Feedstock cost (woody biomass) $75 / Dry Ton (€21.60 / MWh)
Debt / equity for plant financing 60% / 40%
Internal rate of return (after‐tax) for equity financing 10%
Annual interest rate and term for debt financing 8% / 10 years
Total income tax rate 35%
Plant life 30 years
Plant depreciation schedule 7‐year IRS MACRS
MACRS = Modified Accelerated Cost Recovery System

Reliability of operations / on‐stream factor 0.90

Site development costs 4% of ISBL Installed Capital
Working capital 5% of Fixed Capital Investment
Indirect costs for capital project 60% of Total Direct Costs
Capital equipment capacity scaling exponent 0.70
5
Pioneer Plant Assumptions
• Internal Rate of Return (IRR): 10% – 25%
• Capital Costs:
Pioneer Plant Escalation ~ 210% of nth Plant Estimates (Merrow et al, Rand, 1981)
• Reliability of Operations / On‐Stream Factor:
Initial value of 0.5 (Merrow et al, Rand, 1981)
Increasing to 0.9 per experience curve (Heinen, SRI Consulting, 2001)
1.0

0.8
On‐Stream Factor

0.6

0.4

0.2

0.0
0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30
Year of Plant Operation
6
Fuel Pathways Explored

Hydrocarbons Ethanol & C3+

(FT Gasoline, Diesel,
Jet, Lubricants) Alcohols

Ethanol

Synthetic Syngas
Syngas Butanol
Natural Gas Fermentation

2,3‐Butanediol

Dimethyl Ether
Methanol
(DME)

Olefins
Triptyls
Gasoline (MTO)
(MTG)

7
Chemical Pathways Explored
Urea
Hydrocarbons
(FT Lubes, Waxes) PHA
(Polyhydroxyalkanoates)
Syngas
Ammonia Hydrogen
Fermentation
Acetic Acid

Syngas
DME Aldehydes
(Oxosynthesis)
Ethylene
Glycol
Methyl‐
Amines
Methanol Formic
Acid
Methyl
Formate
Propylene
Acetic (MTO)
Acid
Formaldehyde
Ethylene
(MTO)
Acetic Ethyl
Anhydride Acetate

8
Major Pathway Categories Explored
• Synthetic Natural Gas via Methanation of Syngas
• Ethanol
o Catalytic Mixed Alcohol Synthesis
o Syngas Fermentation *
• Hydrocarbons
o Fischer‐Tropsch
o Methanol to Naphtha Hydrocarbons
o Ethanol & Higher Alcohols to Hydrocarbons *
• Hydrogen via Steam Reforming, WGS & Purification
• Methanol via Catalytic Methanol Synthesis
* Pathways explored by NREL through Aspen modeling and rigorous TEA.
9
Synthetic Natural Gas
• Methanation of Syngas

10
Synthetic Natural Gas
Process Sources Min. Selling Price Range ($ / MScf)
Syngas to SNG via McKeough & Kurkela, 2007 nth Plant 16.52 – 19.13
Mozaffarian et al, 2004
methanation van der Drift et al, 2005 Pioneer 10% IRR 27.07 – 29.52
Pioneer 25% IRR 47.50 – 53.97

35
30
Pioneer 10% IRR $28 / MScf €133 / MWh
2011 $ / MScf

25
20
Europe Pricing History (EIA) nth Plant $18 /MScf €83 / MWh
15
US Pricing History (EIA)
10
5
0
2000 2002 2004 2006 2008 2010 2012 2014
Historical Pricing Data Source: U.S. Energy Information Administration.
11
Synthetic Natural Gas
• Techno‐economic Analysis
40
35 50.80 ± 5.30
2011 $ / MScf
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
30
25 28.29 ± 2.05
20
15 17.62 ± 2.23
14.80
10
5
5.50 IRR = 10% 25%
0
Market Price (5‐Yr) nth‐Plant MSP Pioneer Plant MSP

• Market Analysis U.S. Europe

Average Product Yield Scf / Ton 11,440 11,440
Consumption (EIA, 2012) Scf / Year 25.5T 19.0T
10% of Natural Gas Market Scf / Year 2.55T 1.90T
Equivalent Biomass Consumption MMTon / Year 223 165
Equivalent Biorefineries (2,000 Tonne / Day) 310 230
12
Ethanol
• Catalytic Mixed Alcohol Synthesis
• Syngas Fermentation *

* Pathways explored by NREL through Aspen modeling and rigorous TEA.

13
Ethanol via Mixed Alcohol Synthesis
Process Sources Min. Selling Price Range ($ / Gal GE)
Syngas to ethanol Dutta et al, 2011 nth Plant 2.87 – 4.83
Dutta & Phillips, 2009
via catalytic mixed Dutta et al, 2010 Pioneer 10% IRR 5.34 – 9.08
alcohol synthesis He & Zhang, 2011
Villanueva Perales et al, 2011 Pioneer 25% IRR 10.66 – 18.15

12

10
2011 $ / Gallon GE

8
Pioneer 10% IRR $7.60 / GGE €302 / MWh
6
Europe Pricing History (EIA) nth Plant $4.20 / GGE €165 / MWh
4
US Pricing History (EIA)
2

0
2000 2002 2004 2006 2008 2010 2012 2014
Historical Pricing Data Source: U.S. Energy Information Administration.
14
Ethanol via Syngas Fermentation
Process Sources Min. Selling Price Range ($ / Gal GE)
Ethanol via syngas Putsche,1999 nth Plant 3.67 – 5.08
van Kasteren & Verbene, 2005
fermentation Piccolo & Bezzo, 2007 Pioneer 10% IRR 5.77 – 8.50
Pioneer 25% IRR 8.92 – 16.12

12

10
2011 $ / Gallon GE

8
Pioneer 10% IRR $6.80 / GGE €269 / MWh
6
Europe Pricing History (EIA) nth Plant $4.30 / GGE €172 / MWh
4
US Pricing History (EIA)
2

0
2000 2002 2004 2006 2008 2010 2012 2014
Historical Pricing Data Source: U.S. Energy Information Administration.
15
Ethanol via Syngas Fermentation
NREL TEA Model
Flue Seed Train
Gas

Ethanol
Feed
Woody Biomass Syngas Syngas Product
Handling & Acetic Acid
Biomass Gasification Cleanup Fermentation Recovery
Preparation
C3+ Alcohols

Heat Integration, Power Generation & Other Utilities Power

• Design Report NREL/TP‐5100‐51400 utilized as basis through clean

compressed syngas from biomass.
• Yield structures based on publications from LanzaTech & INEOS Bio.
• Capital costs for fermenters, seed train and cell recovery developed by
Harris Group Inc.

16
 Ethanol
• Techno‐economic Analysis
12
14.91 11.95
2011 $ / Gallon GE

10 ± 3.88 ± 3.70
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ~~~~~~~~~~~~~~~~~
8
7.59
6
± 1.96 6.77
± 1.69
4
4.16 4.32
2 2.72 3.06 ± 1.06 ± 0.83
IRR = 10% 25% IRR = 10% 25% IRR = 10% 25%
0
Market Price (4‐Yr) Price Projection (4‐Yr) nth‐Plant MSP Pioneer Plant MSP nth‐Plant MSP Pioneer Plant MSP nth‐Plant MSP Pioneer Plant MSP
Mixed Alcohols Syngas Fermentation Syngas Fermentation
(Literature) (Literature) (NREL TEA)
• Market Analysis U.S. Europe
Average Product Yield Gallons / Ton 85 85
Consumption (EIA, 2013) Gallons / Year 13.0B 10.0T
50% of Fuel Ethanol Market Gallons / Year 6.5B 5.0T
Equivalent Biomass Consumption MMTon / Year 76 60
Equivalent Biorefineries (2,000 Tonne / Day) 100 80
17
Hydrocarbons
• Fischer‐Tropsch
• Methanol to Naphtha Hydrocarbons
• Ethanol & Higher Alcohols to Hydrocarbons *

* Pathways explored by NREL through Aspen modeling and rigorous TEA.

18
Fischer‐Tropsch Hydrocarbons
Process Sources Min. Selling Price Range ($ / Gal GE)
Hydrocarbons via Hamelinck et al, 2003
Larson et al, 2009 nth Plant 2.52 – 4.19
Fischer‐Tropsch McKeough & Kurkela, 2007
synthesis SRI PEP Yearbook, 2009 Pioneer 10% IRR 4.50 – 7.00
Udengaard, 2011
Byrne, 2011
Freeman, 2011
Pioneer 25% IRR 9.04 – 12.80
8
7
2011 $ / Gallon GE

6
Pioneer 10% IRR $5.30 / GGE €211 / MWh
5
nth Plant $3.10 / GGE €122 / MWh
4
Europe Pricing History (EIA)
3
US Pricing History (EIA)
2
1
0
2000 2002 2004 2006 2008 2010 2012 2014
Historical Pricing Data Source: U.S. Energy Information Administration.
19
Methanol to Hydrocarbons
Process Sources Min. Selling Price Range ($ / Gal GE)
Hydrocarbons via Phillips et al, 2011 nth Plant 2.61 – 3.84
Hindman, 2010
methanol synthesis SRI PEP Report 191A, 1999
Pioneer 10% IRR 4.42 – 6.12
and methanol Udengaard, 2011
Jones & Zhu, 2009
conversion Ahn et al, 2009 Pioneer 25% IRR 8.22 – 10.79
8
7
2011 $ / Gallon GE

6
Pioneer 10% IRR $5.20 / GGE €205 / MWh
5
4
nth Plant $3.20 / GGE €128 / MWh
Europe Historical Pricing (EIA)
3
US Pricing History (EIA)
2
1
0
2000 2002 2004 2006 2008 2010 2012 2014
Historical Pricing Data Source: U.S. Energy Information Administration.
20
Ethanol & Higher Alcohols to Hydrocarbons
NREL TEA Model
Flue
Gas

Co‐Product(s)
Feed
Woody Biomass Syngas Alcohol Alcohol
Handling &
Biomass Gasification Cleanup Synthesis Separation
Preparation

Ethanol (and
Heat Integration, Power Generation & Other Utilities C3+ Alcohol)
Intermediates
Light Ends
Mixed C3
Mixed C4 Hydrocarbon Alcohol to
Hydrogen
Product Hydrocarbon
Plant Naphtha
Recovery Conversion
Mid‐Distillates

Natural Gas

• Ethanol (and higher alcohol) intermediates for hydrocarbon fuel production.

• Eliminates constraints of renewable ethanol blend limits.
• Technology development taking place in academia, national labs and industry.
21
 Hydrocarbon Fuels
• Techno‐economic Analysis
8
10.10 9.18
2011 $ / Gallon GE

7
± 2.43 ± 1.65
6 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ~~~~~~~~~~~~~~~~~
5
5.33 5.16
4 ± 1.45 ± 1.02
3
3.06 3.09 3.24
2 2.72 ± 0.81
± 0.96
1

0
Market Price (4‐Yr) Price Projection (4‐Yr) nth‐Plant MSP Pioneer Plant MSP nth‐Plant MSP Pioneer Plant MSP nth‐Plant MSP Pioneer Plant MSP
Fischer‐Tropsch MeOH to Hydrocarbons EtOH to Hydrocarbons
(Literature) (Literature) (NREL TEA)
• Market Analysis U.S. Europe
Average Product Yield Gallons / Ton 65 65
Consumption (EIA, 2013) Gallons / Year 220B 160B
10% of Hydrocarbon Fuels Market Gallons / Year 22B 16B
Equivalent Biomass Consumption MMTon / Year 338 242
Equivalent Biorefineries (2,000 Tonne / Day) 440 310
22
Hydrogen
• Steam reforming, water‐gas shift & purification

23
Hydrogen
Process Sources Min. Selling Price Range ($ / MScf)
Syngas to H2 via Spath et al, 2005 nth Plant 5.33 – 8.84
McKeough & Kurkela, 2003
steam reforming, Williams et al, 1995 Pioneer 10% IRR 9.87 – 14.82
water‐gas shift & Hamelinck & Faaij, 2001
purification Pioneer 25% IRR 19.80 – 27.60

18
16
14
2011 $ / MScf

12 Pioneer 10% IRR $11.80 / MScf €188 / MWh

10
8
6
4
Europe Pricing History (IHS) nth Plant $6.70 / MScf €106 / MWh
2
US Pricing History (IHS)
0
2000 2002 2004 2006 2008 2010 2012 2014
Historical Pricing Data Source: SRI / IHS CEH Marketing Research Reports. Projected values based on ratios to EIA natural gas projections.
24
Hydrogen
• Techno‐economic Analysis
18
16 22.95 ± 5.50
2011 $ / MScf

14 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
12
10 11.84 ± 3.50
8
6
6.50 (EU) 6.67 ± 2.48
4
2 5.95 (US)
IRR = 10% 25%
0
Market Price (5‐Yr) nth‐Plant MSP Pioneer Plant MSP

• Market Analysis U.S. Europe

Average Product Yield SCF / Ton 37,500 37,500
Consumption (EIA, 2013) SCF / Year 4.1T 3.2T
10% of HydrogenMarket SCF / Year 0.41T 0.32T
Equivalent Biomass Consumption MMTon / Year 11 8.5
Equivalent Biorefineries (2,000 Tonne / Day) 14 11
25
Methanol
• Catalytic Methanol Synthesis

26
Methanol
Process Sources Min. Selling Price Range ($ / Gal)
Syngas to methanol Tarud & Phillips, 2011 nth Plant 0.96 – 1.32
McKeough & Kurkela, 2007
via catalytic synthesis SRI PEP Yearbook, 2009 Pioneer 10% IRR 1.54 – 2.03
Williams et al, 1995
Hamelinck & Faaij, 2001 Pioneer 25% IRR 2.82 – 3.71

2.5

2.0 Pioneer 10% IRR $1.83 / Gal €147 / MWh

2011 $ / Gallon

$3.72 / GGE
1.5
Europe Pricing History (IHS) US Contract
US Pricing History (IHS) US Spot
1.0

0.5 nth Plant $1.15 / Gal €93 / MWh

$2.33 / GGE
0.0
2000 2002 2004 2006 2008 2010 2012 2014
Historical Pricing Data Source: IHS CEH Marketing Research Report, 2013.
27
Methanol as Chemical Intermediate
• Techno‐economic Analysis
2.5
3.24 ± 0.60
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
2011 $ / MScf
2.0
1.83 ± 0.37
1.5

1.0 1.15 1.15 ± 0.26

0.5
IRR = 10% 25%
0.0
Market Price (5‐Yr) nth‐Plant MSP Pioneer Plant MSP

• Market Analysis U.S. Europe

Average Product Yield Gallons / Ton 170 170
Consumption (IHS) Gallons / Year 1.9B 2.2B
10% of Methanol Market Gallons / Year 0.19B 0.22B
Equivalent Biomass Consumption MMTon / Year 1.1 1.3
Equivalent Biorefineries (2,000 Tonne / Day) 1.4 1.6
28
Methanol as Fuel Intermediate
• Techno‐economic Analysis
2.5
3.24 ± 0.60
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
2011 $ / MScf
2.0
1.83 ± 0.37
1.5

1.0 1.15 1.15 ± 0.26

0.5
IRR = 10% 25%
0.0
Market Price (5‐Yr) nth‐Plant MSP Pioneer Plant MSP

• Market Analysis U.S. Europe

Average Product Yield Gallons / Ton 65 65
Consumption (EIA, 2013) Gallons / Year 220B 160B
10% of Hydrocarbon Fuels Market Gallons / Year 22B 16B
Equivalent Biomass Consumption MMTon / Year 338 242
Equivalent Biorefineries (2,000 Tonne / Day) 440 310
29
Conclusions
• Hydrocarbon, ethanol and methanol economics can be
competitive for nth‐plant.
• Pioneer plant economics are challenged overall.
• Market capacities do not constrain bio‐product pathways in
major hydrocarbon fuel markets (natural gas, petroleum fuels).
• With fixed ethanol blend limit, cellulosic pathways and grain‐
derived product will compete for limited market.
• Market capacities for methanol‐derived chemicals are
constraining.
• Syngas fermentation is potentially competitive, depending on
CO / H2 conversion to product(s).
• Methanol and ethanol are attractive intermediates for
production of infrastructure‐compatible hydrocarbons.
30
Future Work
• Apply simplified TEA and market analysis on emerging
pathways to identify economic feasibility in early stages of
development.
• Explore opportunities to improve Pioneer Plant economics
o Biomass co‐feeding opportunities (NG‐Biomass to Liquids)
o Utilizing inexpensive feedstocks
o High‐value co‐products
o RIN credits
• Evaluate infrastructure hurdle for methanol economy

31
Acknowledgements
• Abhijit Dutta and Richard Bain (co‐authors)
• Matt Worley and Ben Fierman of Harris Group
Inc, Atlanta, Georgia.
• Bioenergy Technology Office (BETO) of the
United States Department of Energy
• NREL Biorefinery Analysis and Thermochemical
Platform Teams

32
References
For a complete list of references utilized in this
analysis, please contact Mike Talmadge
([Link]@[Link] / 303‐275‐4632)

33