biomass technologies & trends
TRANSCRIPT
Biomass Technologies & Trends:
Challenges and Opportunities in a Changing Forest Sector
Presented to the69th Annual Meeting of Members
Maritime Lumber Bureau
by
Peter Milley, CMCPartner, Halifax Global Inc.
June 5th, 2008
Presentation Overview• Context – Changing Forest Sector
– Changing patterns of demand for key products– Changing relative values of currencies and energy
• Biomass Technologies – Some Initial Observations
• Biomass Technologies – Brief Review of Current State
• Opportunities for Forest Sector– Incremental Improvement Opportunities– Transformational Change Opportunities
• Future Directions -- Conclusions
Major Trends –Changing Demand / Supply Relationship
• Decline in North American demand for newsprint accelerating – year over year drop was almost 13% in January – decline may be slowing
– Supply continues to exceed demand– Significant excess supply in North America
• NA Newsprint prices improving in Europe and Asia, but still soft in North America– Recent high of USD 650 / tonne summer 2006 – currently about <USD 600± today
• New newsprint capacity in growing markets – notably Asia – Individual machines ≅ 440,000 tonnes / yr– Most Eastern North American machines in range of 150,000 – 200,000 tonnes / yr– Opportunity for NA mills to shift surplus product to those markets constrained
• Newest pulp mills – in South America -- >2 million tpy eucalyptus pulp– Smooth Rock Falls, ON – recently closed by Tembec – 150,000 – 200,000 tpy NBSK
Market Trends – Changing Demand
Represents Full Year Decline of
>500,000 tonnes -- >4.5 million
tonnes since 2000
Major Trends – Declining Home Starts
• New home construction down by > 20% over past two years– Demand for S-P-F lumber down by nearly 20% over two years– Average S-P-F price down by approximately 40% past two years
• Renovation spending has remained reasonably buoyant – But softening US economy likely to lead to declines
• Sub-prime mortgage ‘rate resets’ -- > 1.5 million in 2008– Another 500,000 in 2009– Significant percentage will result in foreclosures – April inventory of foreclosed
homes in US 660,000, up from 493,000 in January and 231,000 in January 2007
• Optimists look for lumber market recovery late 2009– Could easily be well into 2010 before recovery takes hold
• Derivative impacts – mill shut downs, reduced harvesting, lower residual product output
Major Trends – Changing Relative Values
• Currencies –
– CAD vs. USD – ≈ 60% increase from low in 2003• Revenue loss > $20 million for 100 million fbm sawmill
– Revenue loss of $150 million for typical 400,000 tpy newsprint mill• Result – mill / machine downtime / shutdowns
– Harvesting activities / residual flows disrupted– At least two major integrated companies may need bankruptcy
protection
– CAD vs. Other Currencies (eg. £ €) – about 10 – 15% increase • Manageable change for producers shipping to those markets
– However, very large focus / dependency on US market
Major Trends – Changing Relative Values
Hydrocarbons more expensive –but Canadians have been cushioned by dollar, at least until this year.Change since 2003 in USD 430% -- in CAD 282%
Major Trends – Changing Relative Values
Forest sector – all segments – undergoing fundamental, strategic change
Values historically determined by directly competitive products / raw materials
NOW / FUTURE – values driven by energy / chemical components as
substitutes for hydrocarbons
BIOMASS PROCESSING TECHNOLOGIESkey to unlocking that value
Biomass Technologies
• Five ‘main’ technologies –– Combustion– Gasification– Pyrolisis / Flash Pyrolisis– Anaerobic Digestion– Fermentation / Distillation
• Two ‘minor’ technologies –– Densification– Steam explosion
But First – Some Initial Observations
Very little of this is ‘new’ –
mankind has been using ‘biomass’ for energy and chemical / medicinal use
since the beginning of time
But First – Some Initial Observations
And some of what seems ‘new’ –
has actually been in use for much longer than we
generally realise
1920’s – 30’s Ford Truck converted to
tractor powered by a wood gasifier
But First – Some Initial Observations
With oil >USD $100 / barrel,
and likely to stay there, the relative economic value of biomass changes and becomes a viable substitute for hydrocarbon based fuels and
chemicals
28.2% projected increase in daily consumption over next 20 years
Biomass Technologies – Overview
• Five ‘main’ technologies –– Combustion– Gasification– Pyrolisis / Flash Pyrolisis– Anaerobic Digestion– Fermentation / Distillation
• Two ‘minor’ technologies –– Densification– Steam explosion
Biomass Technology – Combustion• Primarily
energy generation
• CHP / Co-gen
• Refractory lined / fluidised bed
• Scalable from small to large
• In commercial use
Biomass Technology – Gasification
Process involves reaction of solid fuel (biomass) with hot steam and air (or oxygen) and production of gaseous fuel by partial oxidation
Primarily energy generation technology. But, also syngas / chemical production.
Biomass Technology – PyrolysisProcess involves heating of biomass in near absence of air – newest technologies up
to 900° C – produces vapours / aerosols that
condense to bio-oil used for energy or chemical outputs.
Fuel value about half of conventional fuel oil.
Bio-oils also produced for food additive / pharma
applications.
Early stage commercial.
Biomass Technology –Anaerobic Digestion
Process typically associated with processing of
agriculture waste. But any organic material will
decompose in wet, warm, airless conditions.
Involves bacterial decomposition in absence
of air.
Outputs include methane / biogas and solids.
Commercially established.
Biomass Technology –Fermentation / Distillation
Process involves heating of biomass in hot water – 160° C – under moderate pressure to separate hemicellulose from
lignin / cellulose.
Hemicellulose – C6 and C5 sugars – processed to ethanol,
acetic acid, or PHA’s
Designed as ‘pre-treatment’ for hardwood pulp chips – with
lignin / cellulose continuing to pulping
Pre-commercial – limited to hardwoods
Biomass Technology –‘Minor’ Technologies
Densification most commonly seen as technology producing pellets / briquets
Steam explosion most frequently used as intermediate treatment – eg. after
extraction of hemi-cellulose, before remaining cellulose – lignin densified into
pellets
Incremental Biomass Opportunities
• Increased / more intensive use of CHP / co-gen applications
• Likely new ‘biomass-based’ markets for mill and harvest residuals– eg. pellet producers, 3rd party CHP, hemi-cellulose extraction
• Increased efforts / objectives to substitute biomass for externally purchased energy – electricity or petroleum fuels– power generation plants will convert to wood from coal
• announcement of such conversion yesterday will increase demand for wood fibre by 1 million tons in MI, MN
Transformational Biomass Opportunities
Integrated bio-refinery / biofuels
production will almost certainly be
part of future opportunities in
forest sector
Transformational Biomass OpportunitiesScience & Research –
leading to many new opportunities – things that can be made from wood
Acids Dyes
Fabrics
Explosives
Plastics
Pharmaceuticals Liquid Fuels
Emulsifiers
Gas
Essential Oils
Animal Fodder
Protein supplement
Vitamins Resins
Glues
Sugars
Food additives
Toys Diapers Furniture Dietary fibre
Films Filter tips Membranes Dust control
Fengel & Wegener, 1984Courtesy – Dr. Sally Krigston, UofT
Future Directions - Conclusions• Change in traditional forest industries is fundamental – not just cyclical downturn
• North American producers of traditional ‘forest products’ will have increased difficulty competing in ‘commodity’ grades– Scale needed for commodity competitiveness will be very difficult to achieve
• Time to start thinking about trees as something more than just furnish for pulp and S-P-F lumber– ‘Biomass’ uses of trees may be more valuable than pulp, paper or lumber– ‘Biomass’ energy uses viable way to reduce GHG’s
• We need to apply science and technology to –– Grow more and better quality trees / fibre– Extract significantly higher value from every tree– Develop better processing / extraction technologies
BETTERPLANNING
BETTERPERFORMANCE
Halifax Global Inc.
www.halifaxglobal.com
A copy of this presentation is available for download at our website – www.halifaxglobal.com