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Fully Integrated Agricultural & Forest Products Biorefinery in Southeast Arkansas • ARKANSAS GENERAL ASSEMBLY JOINT INTERIM COMMITTEES • Tommy Smith, Cypress Bend Mill Manager • Potlatch Corporation • February 27, 2006
Fully Integrated Agricultural & Forest Products Biorefineryin Arkansas Meeting Objectives • Enhance attendees understanding of • The fully integrated agricultural and forest products biorefinery • Potential opportunities and benefits for Arkansas • Next Steps • Partners and Supporters
Background The Energy Policy Act of 2005 has provisions to encourage the annual production of 1 billion GPY of biofuels from cellulosic sources by 2015. • Primary feedstocks - forest and agricultural residues and energy crops • Thermochemical (gasification) technology can effectively process biomass feedstocks, be built on a large scale, achieve high conversion efficiencies, and be rapidly replicated nationwide. • Working together, the agricultural, petrochemical, and forest products industries have the resources, infrastructure, and technical skills needed to produce, collect, and convert the target biomass at commercial scale.
Background(Continued) • Technologies currently exist to build a fully integrated biorefinery capable of producing transportation grade fuels from untapped sources of biomass. • Using thermochemical (gasification) technologies, virtually any biomass feedstock can be converted to higher value products. • Sufficient low cost biomass exists (agricultural residues, forest residues, pre-commercial thinnings, woody debris, and black liquor) to support numerous biorefineries in Arkansas and the U.S. • In addition, many more could be deployed in areas such as the Delta region using dedicated energy crops.
Agenda 2020: Integrated Forest Products Biorefinery (IFBP) Concept Recovery/ Power Plant Building Products Mill Paper, Board, Other Mills Pulp Mill Forest Pulp Energy Energy Chips Black Liquor Optimized Plantations Fuels/ Chemicals Fuels/ Chemicals Hemi Extraction and Conversion Gasifier Biomass Boards, Paneling, Etc. Ethanol, Polymers, Etc. Ethanol, DME, Others Paper, Boxes/Cartons, Tissue/Diapers, Specialties
National PerspectiveIntegrated Forest Products Biorefineries • Fully developed and commercialized, IFPB technologies have potential for significant national benefits: • Diversified, more secure national energy supply • Significant rural economic development • Geographically distributed supply source • Reduced environmental impacts • Improved energy efficiencies
National Perspective(Continued) • Quantified Potential Benefits • $9 billion/year new revenues throughout industry • 175 MM bbl/year in energy savings • 150 MM tons/year positive impact on carbon balance • 165,000 new jobs in primarily rural communities
Arkansas PerspectiveFully Integrated Agricultural & Forest Products Biorefineries (IAFPB) • Fully developed and commercialized, IAFPB technologies have potential for significant statewide benefits: • New markets for existing industries • Additional revenues for business and state • Improved economics for existing agricultural & forest industry • Significant rural economic development
A Fully Integrated Agricultural and Forest Products Biorefinery (IAFPB) at Cypress Bend • The thermochemical (gasification and gas-to- liquids technologies) and bioconversion (fermentation) pathways would be used to process biomass and black liquor. • The eventual biorefinery would be sized to convert up to 8,000 dry TPD of forest and agricultural residuals and 1,300 dry TPD of black liquor solids into higher value biofuels. • It is anticipated that the biorefinery would eventually include the equipment needed to extract hemicellulose from the wood chips prior to pulping and convert it to ethanol.
Potential Biorefinery Products • The fully developed biorefinery could produce up to 10,000 barrels/day of transportation grade biofuels (eg. FT diesel, ethanol, others). • Most of Cypress Bend’s energy needs would be met from biorefinery waste heat. • Some of the syngas would be used in the plant’s existing lime kiln. • This project would also indirectly reduce green house gas emissions by an estimated 2MM TPY. • The ash may be recovered and converted to higher value chemicals.
Cypress Bend as the First Site • Single line Pulp & Paper Mill • Produces 300,000 TPY of bleached coated food board • Consumes 550,000 dry TPY of wood chips • 350 employees • Two boilers • One gas-fired lime kiln • Technical skills exist to operate complex chemical processes • Potlatch has been developing and implementing energy conservation strategies to reduce costs.
Cypress Bend as the First Site (Continued) • The mill could utilize the waste heat from the biorefinery to reduce natural gas use. • There is adequate agricultural and forest based biomass available within 100 miles to support a refinery at Cypress Bend. • Cypress Bend is located on the Mississippi River in the Southeast corner of Arkansas, making fuel shipment and feedstock deliveries by barge possible. • The mill is also located in a sparsely populated, economically depressed area where local and state governments are eager for industrial development. • Cost models indicate ROI would be acceptable
Risk • Partners are needed to minimize financial and technical risk. • This would be a first-of-a-kind plant. No one has attempted to marry biomass gasifiers to a gas-to-liquid plant and integrate both units with a pulp mill. • Potlatch has limited expertise in operating gas-to-liquid technologies. • Potlatch has limited experience marketing liquid biofuels. • The project would be large and technically complicated.
Path Forward • Validate the preliminary system design and assumptions (a detailed assessment is in process) • Break the project into three major phases • Phase I is focused on producing biofuel from biomass • Phase 2 would focus on producing fuels from black liquor • Phase 3 would focus on extracting the hemicellulose from wood chips prior to pulping and converting it to ethanol • Target support / partnerships: • A company that has gas-to-liquids expertise (in process) • A company that has liquid fuelsmarketing expertise • Government support needed to off-set first-generation risks • Grant to offset biorefinery capital cost • Loan guarantee(s) for other debt
First Commercial Biorefinery Phase I Scope • Gasification and gas-to-liquids technologies would be used to process the biomass. • The gasifiers and GTL plant would be sized to significantly reduce the mill’s current consumption of natural gas. • Up to 1,500 dry TPD of forest and agricultural residuals will be converted into higher value biofuels. • Feedstocks analyses show agricultural residues could supply 40% to 50% of the feedstock. • The phase 1 plant could produce up to 2,000 barrels/day of transportation grade bio-fuels (e.g., FT diesel, ethanol).
Potlatch’s Intention • Potlatch’s full commitment to this initiative is subject to: • Positive outcome of the feasibility assessment • Engaging an experienced GTL partner • Identifying markets for biorefinery products • Securing funding to move forward • Including government support to off-set first-generation risks • Management approval
Public Policy Considerations • Incentives for landowners and farmers • energy crop production • field residue harvesting • Renewable fuel standard (state/federal) • Green power purchase incentives • Biomass transportation considerations • Strengthen SE Arkansas infrastructure • I-530, I-69, Great River Bridge, Yellow Bend Port, Wilmar Intermodal, Rail Options/Upgrades
FeasibilityAssessmentPartners • Potlatch • Arkansas Department of Economic Development • American Forest and Paper Association • Agenda 2020 Technology Alliance • Winrock International • University of Arkansas at Monticello • Price Industries
Supporters • Crossett Economic Development Foundation • Riceland Foods Foundation • McGehee/Dermott Industrial Corporation • Dumas Chamber of Commerce • Merchants and Farmers Bank of Dumas • McGehee Industrial Foundation • McGehee Bank • First National Bank of McGehee
Letters of Support • AR Congressional Delegation • Governor Huckabee • Delta Regional Authority • AR Farm Bureau Federation • Murphy Oil • Georgia Pacific, Crossett Operations • Chicot-Desha Metropolitan Port Authority • Pulp and Paperworkers’ Resource Council • Arkansas Association of Conservation Districts • Industrial Development Organizations • Bradley County • Monticello • Southeast Arkansas Cornerstone Coalition