19th Annual BC Natural Gas Symposium
Vancouver, BC – October 25/26, 2016
Exploring domestic uses for BC’s Natural Gas
Michael Macdonald
Blue Fuel Energy CorporationTaniwha Consulting Limited
BC energy demand by major sector1:
Industry
Transport
Residential
Commercial
Other Pulp & paper represents ~60%
of “industry” and ~70% of pulp & paper energy demand is met from black liquor & wastes
Balance of pulp & paper and “industry” demand met mostly by natural gas and electricity
Transport demand is mostly met by petroleum products
Residential demand is met from natural gas & electricity
Commercial demand is met from natural gas, electricity & petroleum products
1 http://www2.cieedac.sfu.ca/media/publications/BC_2011_report__09_data__final.pdf
Electricity supply in BC:
Already >95% renewable & significant renewable resources (e.g. wind) yet-to-be developed
Thermal power generation seems unlikely in BC, and thus not a source of significant domestic natural gas demand
As an aside: BC’s large hydro-electric capacity seems like an excellent “asset” to allow firming of intermittent renewables such as wind and solar to add renewable electricity supply
Growing domestic natural gas demand:
Little-to-no scope in electricity
Other than pulp & paper, most all major energy demand supplied via electricity or natural gas; so no opportunity
Only major substitution opportunity for natural gas in BC is into the transportation sector
Other growth opportunity for natural gas is building a new sector for BC, such as petrochemical
Natural gas as a transportation fuel:
Directly (physical processes)
CNG – many “experiments”, but little up-take
LNG – an evolving opportunity in BC
LPG – from natural gas liquids
Indirectly (chemical transformations)
Gasoline – via synthesis gas / methanol
Diesel – via synthesis gas / “Fischer-Tropsch”
DME – via synthesis gas / methanol
Note: CNG & LNG require enhanced or new infrastructure,LPG infrastructure exists to some extent, and DME could be blended into LPG
Transport fuels demand in BC (20152):
Gasoline: 5.5 billion liters
Diesel: 1.7 billion liters
Gas-to-liquids gas consumption ~ 9 mscf/bbl
Total BC fuel demand via gas-to-liquids = ~0.4 tcf/year
1 million tonnes of LNG equates3 to ~0.048 bcf, meaning total BC transport fuels demand equates to ~8 million tpy LNG
2 http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/trade37c-eng.htm3 http://www.bp.com/en/global/corporate/energy-economics/statistical-review-of-world-energy.html
Traditional chemicals including methanol & ammonia
Methanol-to-olefins to produce ethylene & propylene
Methane is an “uncooperative” molecule
Potential to cannibalize current natural gas demand
Petrochemicals benefit from economies of scale & co-location
Petrochemicals need to have viable logistics to markets
Natural gas derivative chemicals examples/considerations:
Fuels & petrochemicals
Fuels & petrochemicals
Ethane, LPG, NGL’s &
condensate
Pipeline spec natural gas
MidstreamUpstream
Example of petrochemicals “cluster” around methanol:
MethanolSyngas CO/H2
Natural Gas
PTA PETEG
p-Xylene
Fuel SectorDME into LPGGasoline blend
Bio-Diesel
Acetic Acid
VAM
PVOH
Ethylene
CO
AceticAnhydride
CelluloseAcetate
CO
SolventAcetates
Opportunities around
Formaldehyde?
AmmoniaMethylAmines
AnimalFeeds
CropProtection
Solvents
Methanol-to-Olefins
?
?
Celanese used to operate some of the “orange” in Edmonton
Blue Fuel Energy…
…converting natural gas to low carbon intensity gasoline with a renewable component
The genesis of the BFE opportunity
BC has abundant resources
Electricity in BC is >95% renewable
Western Canadian gas being backed-out of US market
Growing demand for renewable fuels, which are technically feasible…but often economically challenging in today’s market
BFE retains option to increase renewables as market demands
Ability to reduce carbon intensity via feedstock & technology
Low gas prices & high oil prices = arbitrage opportunity
Reduced carbon intensity (CI) fuels requirements in BC & Ca
Use conventional feedstock to establish a scalable platform
Select process technologies to enable renewables opportunity
Build a cornerstone of “social license”
Room in the BC fuels market for BFE’s low CI gasoline
332,911 0
443,843
0
296,349
594,347
150,000
150,000
609,980
Estimated 2020 CO2 emissions reduction by fuel component[tonnes CO2 equivalent]
At 900 million litres per year and minimum 10% reduced CI,BFE gasoline achieves ~280,000 tonnes CO2 reduction
Base (10%) ethanol
Additional ethanol
Base (5%) biodiesel
Additional biodiesel
Base (5%) HDRD
Additional HDRD
Excess credits
Credit agreements
Shortfall
BFE produces 16,000 bpd vehicle-ready gasoline from ~140 mmscfd of gas
Analysis based on current required 10% CI reduction
BC raised target to 15% CI reduction by 2030 & BFE has a pathway to >15%
Blending wall issues for ethanol and bio-diesel
California continues to progress similar standards
California’s “ILUC” rules reduce ability of ethanol and biodiesel to meet CI
Gas supply for BFE
Dry gas from Spectra
Warm gas from TCPL
Hot gas from Montney
Liquids egress from BFE
Gasoline
Rail to market or coastal port
Pembina West / Trans Mountain
LPG & NGL’s
Pembina Peace / North
Diluent
Pembina Peace
Dehydration& reassembly
to gasoline
BFE’s proven & deliberate technology selections
All core process steps already in commercial operation
Purposeful technology selections differentiate outcomes
Unique opportunities with British Columbia resources
Renewables imbedded at the “synthesis gas” step
Conversion to methanol
Reforming to “synthesis gas”
Core process steps
Multiple internal recycle streams to enhance efficiencies, reduce capital and simplify operations
Electricity
Gas
Water
Gasoline
Heat
Air/oxygen LPG
Renewables
The “core” of BFE’s natural gas conversion process
The first gas-to-gasoline plant started-up in NZ in 1985
Gas-to-MethanolMethanol-to-Gasoline
Gas-to-Methanol Methanol-to-Gasoline
The NZ gas-to-gasoline plant looking from the coast
Dehydration & reassembly
to gasoline
Conversion to methanol
Reforming to “synthesis gas”
Reforming: CH4 (methane) + H2O + O2 = a mixture of H2 + CO + CO2
Methanol synthesis: CO + 2H2 and CO2 + 3H2 = CH3OH (methanol) + H2O
Overall reforming & methanol synthesis: CH4 + ½O2 = CH3OH
Methanol dehydration: CH3OH – H2O = CH2 + H2O
Reassembly to gasoline: (4-11)CH2 = gasoline
Gasoline weight yield from methanol is ~38% versus ~44% CH2 yield
Gasoline selectivity ~38/44 = 86%, LPG is ~12% and the balance “fuel”
Water production is ~56% of the methanol fed to gasoline
The underlying chemistry of gas-to-gasoline
Dehydration& reassembly
to gasoline
Conversion to methanol
Reforming to “synthesis
gas”
Core process steps
Multiple internal recycle streams to enhance efficiencies, reduce capital and simplify operations
Electricity
Gas
Water
Gasoline
Heat
Air/oxygen LPG
Founder & early equity
Johnson Mattheytechnology
license
ExxonMobiltechnology
license
Lump-sum, turn-key
EPC contract
Project funding
Project execution
Pre-FIDequity
Post-FIDequity
Non-recourseproject financing
Owner project & operations organizations
Renewables
Permits & SocialLicense
Outline of a typical project commercial construct
Commissioning & Operations
Indicative timeline for a gas-derivative project
ConstructionEngineering, gas/off-take, & financing
Refine scope & execution strategy
201XOnce funded1 year duration
3 year duration
As early as 201X+4
Aggressive targets
BFE could achieve FID in 2018 starting today
Cost to develop project & reach FID circa US$60m
Michael Macdonald: [email protected] (BFE)www.bluefuelenergy.com
[email protected] (non-BFE)+1 778 870 6619
