Optimization Outlays

Learning while producing, KiOR plans to invest another $10 million to maximize production at its commercial-scale cellulosic biofuel plant in Mississippi. The company is building a foundation of operational and R&D experience for long-term success.
By Ron Kotrba | March 06, 2014

In a world where Big Oil thinks of cellulosic biofuel as imaginary “pixie dust,” KiOR Inc. is among the few companies proving early, and convincingly, that the fuel can be made at commercial scale. 

The Pasadena, Texas-based company produces commercial volumes of not ethanol but cellulosic gasoline and diesel fuel from Southern Yellow Pine at its 15 MMgy refinery in Columbus, Miss. It’s the first of several plants the company hopes to replicate with its “copy exact” strategy.

Before construction was complete on the Columbus facility in 2012, KiOR signed offtake agreements with Hunt Refining, Catchlight Energy—a joint venture between Chevron Corp. and Weyerhaeuser Co.—and FedEx Corporate Services. KiOR and Catchlight Energy also have a feedstock supply agreement for the facility. The engineering, procurement and construction firm in Columbus was KBR.

While KiOR’s drop-in fuels are not directly subject to the highly contentious ethanol blend-wall debate, the company does find kinship with corn ethanol producers and cellulosic project developers in its stance against the U.S. EPA’s 2014 renewable volume obligation (RVO) proposal under the federal renewable fuel standard (RFS). “The EPA’s 2014 RVO proposal is one of the biggest obstacles our industry currently faces when it comes to expansion and development,” says Fred Cannon, KiOR’s president and CEO. “The EPA’s current proposal has the potential to significantly hamper the industry’s ability to obtain affordable capital to grow and compete with conventional fuels. A stable regulatory policy is of vital importance for the continued growth and advancement of the renewable fuels industry.”

It’s not just the investment-blocking regulatory uncertainty that impedes the progress of KiOR, not to mention every other advanced biofuel project under development. Technical obstacles encountered on the commercial scale-up learning curve abound as well. This story is all too familiar to cellulosic ethanol producers, whose commercial realization perpetually seems just a few years away. But these kinds of hindrances can be expected when working to revolutionize the world’s energy production paradigm.

On a recent operational update conference call, Cannon spoke about his company’s plan to increase the performance and operational output of the Columbus facility. He opened the call with an overview of KiOR’s 2013 biofuel production. During the fourth quarter of 2013, Cannon said KiOR produced 385,000 gallons of fuel, 41 percent of which was cellulosic gasoline, 37 percent cellulosic diesel, and 22 percent fuel oil. Total fuel production for 2013 was 597,000 gallons—far less than the plant’s 15 MMgy nameplate capacity. To boost performance, the company plans to complete a series of optimization projects and upgrades. KiOR will also continue its research and development efforts aimed at increasing yields while improving operational efficiency and operational economics.

KiOR’s technology works similarly to an oil refinery, which involves catalytic cracking and hydrotreating, but instead of using petroleum crude as feedstock, it uses woody biomass. “KiOR’s biomass fluid catalytic cracking unit (BFCC) is similar in concept to the fluid catalytic cracking (FCC) unit in a refinery, but has been modified to accommodate a solid feed rather than a liquid feed,” Cannon tells EPM. “KiOR has a proprietary catalyst with physical properties similar to a typical FCC catalyst to promote the desired reactions needed to convert the solid biomass into a liquid fuel.” According to Cannon, the biomass contacts a hot catalyst, vaporizes and forms coke and both noncondensable and condensable gases. “The coke stays on the catalyst and is burned off in the regenerator to provide heat for the process,” he explains. “The noncondensable gases are burned in a waste heat boiler and turn a steam turbine generator to provide electricity for the process. The condensable gases are separated and result in renewable crude, which we upgrade into our cellulosic fuels.”

The optimization projects to be made this year include making changes to the BFCC unit, hydrotreater and wood yard to eliminate bottlenecks. The Columbus facility can currently process between 250 and 300 tons of biomass daily, yielding around 30 gallons per ton. When operating at nameplate capacity, the facility should be able to process 500 bone-dry tons daily with significantly higher yields.

Optimization to the BFCC unit will include integration of next-generation catalysts. “We have relationships with multiple catalyst suppliers and work closely with them to manufacture our catalyst while guarding our intellectual property,” Cannon says. “Our world-class team of scientists works around the clock on different types of catalysts along with tweaks on existing platforms.”

At KiOR’s research and development facilities in Pasadena, the company has multiple hydrotreaters that it uses to conduct research. More specifically, Cannon says, KiOR is building optimization know-how that yields minimum volumes of fuel oil and off-spec product.

Furthermore, the company intends to reduce its natural gas consumption at the Columbus facility through more heat integration throughout the plant and, in the case of natural gas used for hydrogen generation, reduced consumption of hydrogen at the hydrotreater itself. “More broadly, wherever natural gas is solely used for heat duty, it can be replaced with biomass, like in the case of biomass-powered dryers and other sorts of technology present in the forest products industry today,” Cannon says.

He continues, “We expect the various projects—which we have determined are necessary to optimize the facility based on our operating experience and learnings over the last year—will require approximately $10 million of capital investment over the course of 2014. We are actively pursuing a number of ways to finance this project.”

The successful execution of KiOR’s optimization efforts in Columbus is critical to getting future plants financed, including the Columbus II project, which seeks to replicate the optimized Columbus facility at the same location. Bigger yet, KiOR is looking at developing its flagship facility, scaled at three times the size of its Columbus plant, in Natchez, Miss.

“KiOR’s process works, and it works well, based on thousands of hours of research and development at our lab, pilot- and demonstration-scale facilities in Pasadena,” Cannon says. Since its inception, KiOR’s pilot facility has accrued more than 10,000 hours of operation and evaluated more than 250 catalyst systems. Its demonstration plant has 400 times the processing capacity of its pilot plant and produces 15 barrels of renewable crude a day.

The company’s “copy exact” strategy is not quite what it seems, though. Rather than duplicating the Columbus facility, which contains the BFCC technology to convert woody biomass to renewable crude and hydrotreating to upgrade the crude oil to diesel and gasoline, the “copy exact” strategy intends to develop multiple BFCC facilities that deliver renewable crude oil to a centralized upgrading processing plant.

 “Developing a new technology is always a challenge, and we are learning more about our technology every day,” Cannon says. “Our commitment to innovation and research and developments has been, and will continue to be, what drives our progress and success.”

When asked what advice he could share with other cellulosic biofuel project developers from experiences gained in commercial scale up, Cannon says he has nothing to add. “Let them learn the hard way like we have,” he says. As for what the company has learned in its commercial experiences to optimize its own production, Cannon says, “We’ve learned that creating a strong foundation is the best way to generate sustainable, long-term success. We’ve learned that continued research and development efforts are a great way to improve yields, operational efficiency and the economics for our existing and future commercial facilities.”

Author: Ron Kotrba
Editor, Biodiesel Magazine
[email protected]