Crude oil from green biomass

At its pilot facility near Sydney, Licella has proven its technology which converts biomass to bio-crude oil and renewable chemicals.

The bio-crude can be refined into various fuels, including aviation fuel. Substituting these fuels for fossil fuel can reduce greenhouse gas emissions by more than 80%.

[November 2013]


Key points
  • The process uses water and heat to convert biomass to bio-crude oil that can be refined into various ‘drop-in’ fuels, including aviation fuel.
  • Because it can process lignin, the process is high-yielding. It uses less energy than competing technologies.
  • The biomass does not need to be dried before it is used.
  • The technology is a good fit for paper mills that are looking to produce something other than paper.



About Licella

Licella is an Australian-based company that has developed a process to transform renewable woody-waste materials into an array of biofuels.

The company aims to license its technology for others to use.

After 6 years of R&D at its pilot facility in Somersby, New South Wales, the company has proven its technology and, with funding from ARENA, is developing a de-risked feasibility study which will be ready for potential commercial investors in 2014.

Pilot plant
Licella’s pilot facility in Somersby, New South Wales.

The conversion process

Licella’s proprietary ‘catalytic hydrothermal’ technology uses water, pressure and heat to convert biomass to bio-crude oil. The biomass is made into slurry, continuously pressurised, heated, reacted and then cooled to create the bio-crude oil.

What differentiates it from other competing technologies is that:

  • it uses less energy
  • it is a continuous-flow process
  • you don’t have to dry the biomass first
  • it converts all parts of the biomass, including lignin, cellulose and hemi-cellulose, so the bio-crude oil yield is higher
  • water is a by-product and, suitably treated, can be reused.


Energy efficient ‘pressure cooker’

At the core of the conversion process is the behaviour of water as you increase its pressure and temperature.

At a certain point, water starts to behave differently, like a gas yet also a liquid, says Licella Project Director John Gulbis, a chemical engineer, who built the original pilot plant.

The water molecules start to ‘shake’ as the point known as the ‘supercritical’ point is approached, creating a highly reactive environment. Water becomes an agent for change that breaks down the biomass.

John likens the process to a pressure cooker.

“The more you approach the supercritical point, the stronger the behaviour. But it takes more energy to get there. So, through our pilot plant trials, we have developed our ‘recipe’ of optimal conditions which use just enough energy to achieve the desired outcomes.”

What happens to the biomass when it is put into this ‘pressure cooker’?

“This is an over simplification, but biomass is made up of polymers containing oxygen molecules”, explains John. “Licella’s Cat-HTR (catalytic hydrothermal reactor) process removes the oxygen – snips the polymer – without having to break the carbon-to-carbon bonds. It therefore uses less energy and that is one of our key differentiators.”

What you produce depends on the type of biomass.

“Wood is young biomass and has a lot of these snip points, so we get some gas, we get a lot of liquid and very little solids. With older biomass – lignite – nature has done some of that work so the process produces less liquid and more solid.”

The energy-efficient process removes oxygen without having to break carbon-to-carbon bonds.

Continuous flow process

The concept of using water and pressure to break down biomass is not new, but Licella has another edge.

“It’s like a lot of ideas”, says John. “They are old ideas combined to create something new. So hydrolysis and the use of supercritical conditions have been around for a while. But we are the leaders on a continuous-flow process. This is another of our differentiators.

“Rather than using a batch process, we continuously create a slurry, pressurise it, heat it, react it, cool it and release it as a product.”


Continuous flow process

Licella is a leader in the continuous flow process.


No need to dry the biomass

Removing moisture from biomass can be an expensive part of the bioenergy process.

The beauty of the Licella process, says John, is that the biomass can be processed as received. In fact, to create the slurry you need to add water to the biomass.
Water also comes out the end of the process and, subject to appropriate treatment, it could be reused.

The biomass

The process can convert a range of feedstocks. Licella has tested wood products (eucalypt, Pinus radiata), agricultural residue (bagasse, wheat straw), grasses and algae.

“We are not captive to one type of biomass”, says Sami Aoude, Licella’s Commercial Director.

“But we are concentrating on those that are available at a commercial scale because we want to start today. As other crops come on board we can use them.

“It will depend on what is available in the region. There are many eucalypt plantations which, because of many reasons, are looking for a home. And it will benefit some of these investors who ploughed their money in to find a way of processing it.”

Biomass types

Licella can process a range of biomass types.

Licella has tested wood products, agricultural residue, grasses and algae.


Higher yields from processing lignin

The ability to convert the lignin in woody biomass is another advantage that the Licella process has over competing technologies. It means lower costs and higher yields.

Sami Aoude: “Wood is composed of cellulose, hemicellulose and lignin. Some technologies can convert only the cellulose and hemicellulose. We use all three components, so we get high yields.

“Some of the competing technologies convert the cellulose and hemicellulose to sugar first and you simply cannot convert lignin to sugar.

“The pyrolysis processes basically liquefies wood without increasing the energy content per tonne. The liquid that is produced is generally highly corrosive so there are handling issues. And because it contains a lot of water it is not stable in storage. None of these things are insurmountable—but they add to the complexity and cost.”


Particle size

The size of the biomass chunks that the system can handle is both an economic factor and a technology factor. The smaller the particle size, the more expensive it is to produce.

Particle size is also limited by pump size, which is related to plant capacity.

“We have found that even large, square centimetre size particles can be readily liquefied”, says John Gulbis. “Ultimately we want the larger scale plants to be able to use chips that are made in the field.”

The product

Energy content

Licella is working to maximise the energy content of the bio-crude oil it produces.

Sami Aoude: “Biomass is in the neighborhood of 16–17 megajoules a kilogram. Diesel or a jet fuel is around the 45. Licella’s bio-crude oil is in the 34–36 bracket. To get from 34–36 to the 44–46 bracket, you actually need to remove substantially all of the oxygen. This is what a refinery does.”

Refining the oil

A refinery typically removes all the non-carbon, non-hydrogen atoms and replaces them with hydrogen.

Licella has a research partnership with the Institute of Tecnologia Quimica, in Valencia, Spain, which develops the recipes that refineries need to process particular types of crude oil into various products.

“We have received the first report on the distillation of 100% of the bio-crude oil. It is pretty good news”, says Sami.

Blending the crude with a fossil crude and refining the mixture is also an option.

Once refined, Licella claims its bio-crude oil can be used as a ‘drop-in’ transport fuel, including jet fuel.

“When we say ‘drop in’, we mean it can drop into existing distribution infrastructure without any need for special alloys or seals. A part of our program is to test it in engines to demonstrate that claim.”

Licella’s bio-crude oil can be used as a ‘drop-in’ transport fuel, including jet fuel i.e. it needs no special alloys or seals.

The market for bio-crude oil

Licella has a memorandum of understanding with both Virgin Airlines and Air New Zealand.

“The airline industry sees the need to come up with a renewable fuel”, explains Sami.

“Virgin Airlines and Air New Zealand see their role as being the end product user pull in this market. They eventually want to get the aviation fuel at a price that is competitive with normal fuel, because they can’t afford to pay too much more on the bill. But they realise that the starting prices will be higher.”

The pilot plant

The pilot plant, located at Somersby, north of Sydney, demonstrates the continuous-flow process from slurry preparation, pressurisation, heating and reacting through to cooling and final separation of the bio-crude oil.

Heavily automated, partly for safety reasons, the pilot plant has the capacity to process 10,000 tonnes of slurried biomass per year.

“At this R&D facility, we are trying to reduce the risk of building a larger plant through appropriate scale up”, says Sami Aoude.

“What we don’t do here is repeat the processes that are readily available in the market place, like the grinding of wood. There are many suppliers that do that for us.”

The plant is designed to avoid reinventing the wheel as much as possible, so many of the components, such as pumps and valves, are standard off-the-shelf items.

“Our IP is not just about the chemical process, but about how we integrate these components in a way that reduces scale-up risk”, says Sami.

Scaling up – a typical plant

The economic size of the unit that the plant needs to operate is roughly the size of a medium-sized paper mill, according to Sami Aoude.

“That’s important because we know that, had it not been for the decline of the paper market, paper mills have been operating at a profitable rate. They have been able to aggregate biomass to one site at a competitive rate to be able to deal with it.

“Some technologies work well but the capital is so huge that you need something of the order of 1–1.5 million tonnes to come in and that, of course, increases the cost of aggregating the material and it limits you in practical terms to a few regions in the world that can handle that.

“Whereas, typically, the output of the paper mill is 400,000 to 600,000 tonnes. So I think the deployment of the technology will be easier because of this practical aggregation level.

“And then when you go from wood to lower bulk-density material—wheat straw, corn cobs etc—it becomes an even more critical factor because of how much you can fit in a truck and the cost of fuel to get the material to the processing plant.”

Scaling up from Licella’s pilot plant

The reactors at the pilot site are about one-third the size of those needed for a plant handling 50,000 oven-dried tonnes a year.

The radius that a Licella plant could service economically, says Sami, is probably around 100 kilometres, because of two factors:

  • economics – the cost of transporting the biomass
  • greenhouse gas implications – the more transport fuel you have to burn, the higher the emissions.

The Licella system is modular in that additional reactors can be installed while using the same front-end and back-end systems. The three large-diameter reactors at the pilot plant are about one third of the size of those required for a commercial plant handling 50,000 oven-dry tonnes.

The first commercial plant

Supported by government funding of $5.4 million from ARENA, Licella is developing a de-risked feasibility study for a commercial plant that can handle 400,000 green tonnes of wood.

The study includes selecting the plant location and the type of biomass, and signing up agreements with biomass suppliers and bio-crude buyers, essentially de-risking the business case for potential investors.

Sami Aoude is managing the feasibility study: “What is good about this project is that we are looking at the entire value chain. So it will have agreements for the feedstocks, the suppliers will be identified, and the costs established. We will have an off-take agreement for the bio-crude. So it is a complete case, not just one part of the jigsaw.”



Sami Aoude
Sami Aoude: “What is good about this project is that we are looking at the entire value chain.”

Licella does not see itself operating plants but is keen to help commission the first commercial plant. “We want to make very sure that it’s done to the best possible standard and in the shortest time” says Sami, “because the success of the first plant will be our success.”

The end-to-end business case will be ready to present to potential investors in September 2014.


Location

The first commercial plant will be located where there is a good capture area for biomass. Once the site is selected [expected to be by end of 2013], Licella will be looking to sign up commercial suppliers of the biomass.
They have already looked at:

  • Western Australia for plantation residue in the southwest, and cereal straw in the Bunbury area
  • the South Australia / Victoria ‘green triangle’ for plantation/sawmill residue
  • Queensland for bagasse
  • southeast Queensland and northern New South Wales for plantation/sawmill residue.

The site will have to support a plant that has an input of 200,000 oven-dried tonnes or 400,000 green tonnes of material.

Licella expects to have 3–4 suppliers to spread the risk, with long-term supply contracts for stability, possibly mixed with short-term contracts for portfolio balancing.

The feasibility study will consider noise, gas emissions and treatment of any wastewater, and all approvals and compliances will be part of the package.


Costs – capital and operating

The cost of constructing and commissioning a commercial plant is estimated to be around $114 million.

“When we complete the front-end operating design, we will have a better estimate of the capital expenditure required. But this reflects our current state of knowledge.”

The cost of biomass is by far the biggest component of the operating costs.

As part of the feasibility study, Licella will be proving the operating expenditure costs, including the biomass costs.

Jobs and skills

The mechanical, electrical and automation skills required to operate the plant are industry standard.

John Gulbis likes to source local people to do the work, partly because they understand the local conditions.

“Once a project moves out of feasibility into detailed design and construction, you are starting to see the shift of labour and employment opportunities to the local area.

“You need a combination of skilled engineering people to operate plants of this nature and maintenance people who can weld and do the clean up jobs. So there is a range of opportunities there.”

Retaining existing jobs is another aspect. Sami Aoude cites government actions to help transform the declining paper and forest products industry:

“If you look at what the South Australia government is doing, what New Zealand has done, what Canada has done. These states and countries see the forest product sector as one of the significant industries in their economy. They want to give it a boost. And they see the biofuel and biochemical markets as an important part of rejuvenating that sector. I think any serious primary industry, particularly a growing industry, sees it is a shot in the arm.”

John Gulbis: "We like to source local people to work at the plant."
John Gulbis: “We like to source local people to work at the plant.”

Reinventing the paper mill

With the global demand for paper dropping, Licella sees an opportunity for the paper industry to reinvent itself through bioenergy.

“What the paper industry does is it takes biomass and converts it to a product called paper. If they can convert the biomass to a product that is in higher demand, then they can use a lot of their competencies”, says Sami Aoude.

John Gulbis explains the advantage of replacing a paper-producing machine with an oil-producing machine:

“With a ‘greenfield’ site, you have to put in all the infrastructure, the harvesting, the roads for the trucks to travel on. In the case of a pulp and paper plant or a forest products plant, you already have that infrastructure. These ‘brownfields’ opportunities we see as being a key focus for us.”

Government support

Licella has enjoyed strong Australian government support to date:

  • In 2010 they received a second generation biofuels grant of $2.3 million to construct the pilot plant.
  • In 2012 they received a $2 million grant from Commercialisation Australia which helped them develop the pilot plant.
  • In 2013 they received an ARENA Biofuels Investment Readiness grant of $5.4 million dollars to complete the feasibility study.

They are matching half of that from their own funds, so the project is in the $8.2 million bracket.
Whether investors are passive investors, an active investor who is maybe looking to change their production from one part of the market to another, or a combination of both, the company believes strongly that investors need to see that there is continuing government support.

“What we are trying to do here is to start the first brick of an industry as opposed to just building a single project. To build an industry you need more than one project”, says Sami Aoude.

“And what’s good about converting biomass to biofuel is that it ticks the box for fuel security, it ticks the box for regional development, it ticks the box for diversifying the biomass markets for a producer, and it is green as well. So it is easy to see why it can attract funding.

“Some government programs are already in place but they vary among jurisdictions. The industry needs supportive policy and stability if we can hope to kick start and build a sustainable and thriving industry. And it is important that the investor sees there is government support.”

Contacts

Sami Aoude
Commercial Director, Licella
T: 02 9119 6050, 0408 449 093
Email: sami.aoude@licella.com.au

John Gulbis
Project Director, Ignite Energy (which owns Licella)
T: 02 4340 1903, 0412 704 341
Email: John.Gulbis@IgniteER.com