Cellulosic Biofuels
Speech by Sue Ellerbusch, President, BP Biofuels North America at the Louisiana Energy Conference, in New Orleans, Louisiana, USA
Speaker: Sue Ellerbusch
Speech date: 23 June 2011
Venue: Louisiana Energy Conference, in New Orleans, Louisiana, USA
Speech date: 23 June 2011
Venue: Louisiana Energy Conference, in New Orleans, Louisiana, USA
Thank you for the opportunity to be here today and share my perspective on the opportunity and potential role that cellulosic biofuels can play in helping Louisiana to diversify both the energy and agricultural aspects of the state’s economy.
It’s important to note that while some might think that BP is entering into the biofuels business in Louisiana in response to last year’s oil spill, the reality is that BP began investing in biofuels in Louisiana in 2008 through what was then a joint venture with Verenium Corporation. Last year, we bought Verenium out and now have a 100% BP-owned facility in the state.
It is a 1.4 million gallon process demonstration facility in Jennings: a one-of-a-kind advanced biofuels technology demonstration unit designed and built to enable commercial-scale production of cellulosic biofuels.
Today I’d like to give you a quick overview of why BP is investing in biofuels and why we believe that biofuels could become an important component of the economic future of Louisiana and other states along the Gulf Coast. First, since many of you are more familiar with barrels of oil than biofuels, let me walk you through some of the basics.
It’s important to note that while some might think that BP is entering into the biofuels business in Louisiana in response to last year’s oil spill, the reality is that BP began investing in biofuels in Louisiana in 2008 through what was then a joint venture with Verenium Corporation. Last year, we bought Verenium out and now have a 100% BP-owned facility in the state.
It is a 1.4 million gallon process demonstration facility in Jennings: a one-of-a-kind advanced biofuels technology demonstration unit designed and built to enable commercial-scale production of cellulosic biofuels.
Today I’d like to give you a quick overview of why BP is investing in biofuels and why we believe that biofuels could become an important component of the economic future of Louisiana and other states along the Gulf Coast. First, since many of you are more familiar with barrels of oil than biofuels, let me walk you through some of the basics.
Biofuels Sector is Growing
The world of energy is changing – that much is obvious. Demand for energy continues to grow – perhaps by 45% in the next 20 years - and new sources for energy are becoming harder and more expensive to bring on line. Meeting this growing demand in a cost-effective and sustainable manner will be one of the key challenges of the 21st century.
At BP, we believe that what we are seeing today is the coming of age of a new energy sector that over the next 100 years will supplement traditional fossil fuels to create a more diversified energy mix. Notice that I said “supplement”, not “replace,” fossil fuels. In the U.S., one of the critical new energy technologies is biofuels.
Today, nearly 10% of this nation’s transport fuels are supplied by first generation biofuels made largely from U.S. corn. For us at BP, advantaged biofuels are those meeting 4 criteria. We use these to guide our investment.
First, biofuels must be low-cost. Our benchmark for success is $1 a gallon, so that the biofuels we make can compete with oil without any subsidy by 2022.
Second, biofuels must be low-carbon. We anticipate producing biofuels in the U.S. that meet the national goals of reducing the GHG levels in transport fuels by over 60% from current levels.
Third, biofuels must be scalable. There is no point in making boutique biofuels. Only mass production and mass distribution can turn the dial.
Lastly, biofuels must be sustainable. Sustainable from an environmental, social and economic perspective.
The world of energy is changing – that much is obvious. Demand for energy continues to grow – perhaps by 45% in the next 20 years - and new sources for energy are becoming harder and more expensive to bring on line. Meeting this growing demand in a cost-effective and sustainable manner will be one of the key challenges of the 21st century.
At BP, we believe that what we are seeing today is the coming of age of a new energy sector that over the next 100 years will supplement traditional fossil fuels to create a more diversified energy mix. Notice that I said “supplement”, not “replace,” fossil fuels. In the U.S., one of the critical new energy technologies is biofuels.
Today, nearly 10% of this nation’s transport fuels are supplied by first generation biofuels made largely from U.S. corn. For us at BP, advantaged biofuels are those meeting 4 criteria. We use these to guide our investment.
First, biofuels must be low-cost. Our benchmark for success is $1 a gallon, so that the biofuels we make can compete with oil without any subsidy by 2022.
Second, biofuels must be low-carbon. We anticipate producing biofuels in the U.S. that meet the national goals of reducing the GHG levels in transport fuels by over 60% from current levels.
Third, biofuels must be scalable. There is no point in making boutique biofuels. Only mass production and mass distribution can turn the dial.
Lastly, biofuels must be sustainable. Sustainable from an environmental, social and economic perspective.
If a biofuels product can meet these four criteria, as we believe they must, then it can truly be said to be an advanced biofuel worthy of a strategic investment by an integrated energy company.And without getting into detail, these criteria have so far led us to three main strands of large-scale investment:
- Producing biofuels from sugarcane in Brazil
- Developing advanced fuel molecules such as biobutanol, which has a higher energy content than ethanol
- And producing cellulosic biofuels from dedicated energy grasses in the Southern United States.
The Case for Cellulosic Biofuels
We strongly believe that cellulosic biofuels technology sits in a sweet spot and large scale commercialization is just around the corner. This technology will deliver on the promise of low-cost, low-carbon, scalable, and sustainable transport fuel.
Simply put, no other form of biofuels has the potential to deliver the volume at the low cost of cellulosic biofuels. The cellulosic biofuels that we will produce will be made from dedicated energy grasses, converted into fuel using proprietary technology that extracts sugars from the cellulose in the plant and converts it into liquid fuel. The energy grasses we will use are 10-15 feet tall perennial grasses that grow in warm climates and have a very high fiber or cellulose content – so they’re very high yielding.
That means that higher volumes of fuel can be produced from each ton of feedstock, and each acre of land, in comparison with current generation biofuel feedstocks like corn. And they can be grown on lower-quality agricultural land – land that is not best suited to growing food crops economically. Using these feedstocks and our technology to make biofuels can yields 4 to 5 times that of corn ethanol on a per acre basis.
We strongly believe that cellulosic biofuels technology sits in a sweet spot and large scale commercialization is just around the corner. This technology will deliver on the promise of low-cost, low-carbon, scalable, and sustainable transport fuel.
Simply put, no other form of biofuels has the potential to deliver the volume at the low cost of cellulosic biofuels. The cellulosic biofuels that we will produce will be made from dedicated energy grasses, converted into fuel using proprietary technology that extracts sugars from the cellulose in the plant and converts it into liquid fuel. The energy grasses we will use are 10-15 feet tall perennial grasses that grow in warm climates and have a very high fiber or cellulose content – so they’re very high yielding.
That means that higher volumes of fuel can be produced from each ton of feedstock, and each acre of land, in comparison with current generation biofuel feedstocks like corn. And they can be grown on lower-quality agricultural land – land that is not best suited to growing food crops economically. Using these feedstocks and our technology to make biofuels can yields 4 to 5 times that of corn ethanol on a per acre basis.
BP Activity
BP has developed a very robust cellulosic biofuels business in the U.S. In addition to the 1.4 million gallon demonstration unit in Jennings, we also have our own biotechnology lab in California, as well as other university-based research investments; and we have a 36-million gallon commercial-scale project in Florida in the pipeline. We have already begun developing a 20,000 acre farm and we’ll be breaking ground on the industrial side of that project early next year.
We are confident about the partnerships and investments that BP has been able to form in order to develop this new energy value chain from end to end.
The plant in Jennings is a an integrated, continuous process center which is proving that the perennial energy grasses can be converted into cellulosic biofuels economically. One of the main activities of this facility is to produce data and samples for further testing and scale up decisions for future commercial scale operations.
The facility currently employs 75 individuals in “green” jobs, including qualified engineers. While the Jennings facility was designed as a demonstration plant, we believe there is great potential for similar facilities to be developed over the next decade in Louisiana and the southern United States, as the state has the perfect climate for producing the cellulosic crops that we want to feed our biofuel plants. But first, there are three issues that will need to be addressed:
BP has developed a very robust cellulosic biofuels business in the U.S. In addition to the 1.4 million gallon demonstration unit in Jennings, we also have our own biotechnology lab in California, as well as other university-based research investments; and we have a 36-million gallon commercial-scale project in Florida in the pipeline. We have already begun developing a 20,000 acre farm and we’ll be breaking ground on the industrial side of that project early next year.
We are confident about the partnerships and investments that BP has been able to form in order to develop this new energy value chain from end to end.
The plant in Jennings is a an integrated, continuous process center which is proving that the perennial energy grasses can be converted into cellulosic biofuels economically. One of the main activities of this facility is to produce data and samples for further testing and scale up decisions for future commercial scale operations.
The facility currently employs 75 individuals in “green” jobs, including qualified engineers. While the Jennings facility was designed as a demonstration plant, we believe there is great potential for similar facilities to be developed over the next decade in Louisiana and the southern United States, as the state has the perfect climate for producing the cellulosic crops that we want to feed our biofuel plants. But first, there are three issues that will need to be addressed:
- Identifying the right crops for the area
- Assembling the right land resources for those crops
- Developing the workforce required to build and operate a sustainable biofuels industry
On the land side, companies like BP will need to be able to assemble 50-60,000 acre tracts of land that can be devoted to growing energy cane and other potential biofuels crops. Currently, it is more difficult to assemble concentrated tracts in Louisiana than it is, for example, in Florida and Texas.
In terms of workforce needs, we are beginning to work with local colleges and universities to more fully define the needs of this new industry in a variety of areas, including operations, feedstocks, fermentation technologists and other fields.
And, as always, there are a host of policy issues that will need to be addressed, ranging from what the state will require in terms of farming, water and air permits. Again, none of this is insurmountable but it will require commitment and cooperation from both the private sector and public sector. The good news is that our Jennings facility is doing exactly what it was designed to do: demonstrate the feasibility and sustainability of producing cellulosic biofuels in the southern United States.
Obviously, this won’t happen overnight. In fact, experience has shown us that future cellulosic biofuels facilities will take four to five years from land acquisition to production of first ethanol. That figure in based in part on our experience in Highlands County, Florida, where our first project is expected to become the first fully integrated commercial-scale cellulosic biofuels production facility in the United States when it opens in 2013.
Total investment in the facility and agricultural feedstock operation will be in excess of $400 million. As I said earlier, we believe there is great potential for Louisiana to play a major role in the future growth and development of the cellulosic biofuels industry.
In terms of workforce needs, we are beginning to work with local colleges and universities to more fully define the needs of this new industry in a variety of areas, including operations, feedstocks, fermentation technologists and other fields.
And, as always, there are a host of policy issues that will need to be addressed, ranging from what the state will require in terms of farming, water and air permits. Again, none of this is insurmountable but it will require commitment and cooperation from both the private sector and public sector. The good news is that our Jennings facility is doing exactly what it was designed to do: demonstrate the feasibility and sustainability of producing cellulosic biofuels in the southern United States.
Obviously, this won’t happen overnight. In fact, experience has shown us that future cellulosic biofuels facilities will take four to five years from land acquisition to production of first ethanol. That figure in based in part on our experience in Highlands County, Florida, where our first project is expected to become the first fully integrated commercial-scale cellulosic biofuels production facility in the United States when it opens in 2013.
Total investment in the facility and agricultural feedstock operation will be in excess of $400 million. As I said earlier, we believe there is great potential for Louisiana to play a major role in the future growth and development of the cellulosic biofuels industry.
While the Midwest has benefitted greatly from the surge in corn ethanol production, we believe Louisiana and other southern states could see significant and sustainable benefits from the development of the cellulosic biofuels industry as it brings in investments in the local economy, rural employment and the enhancement of the local community tax base.
In many cases, the farmers in these local Southern areas will be the true beneficiaries. Many forms of Southern agriculture are under production pressure, whether it be disease, pest, or international competition pressures. A long term lease for land and a contract to grow energy crops for BP on a portion of their land will be a wonderful opportunity for Southern farmers to reduce the risk in their existing operations and diversify into the energy industry.
These new partnerships between energy and agriculture also enable the parties to learn from each other and to share their best practices whether in jointly developing new delivery models or in their approach to operational safety for example.
As I mentioned earlier, we believe the momentum behind cellulosic biofuel is now building rapidly. The feedstocks are being grown. The conversion technology is ‘ready to go’. Partnerships are developing to address the perceived capability gap. And government policy must remain relatively stable.
BP is a company that is prepared to play its part in creating this future. We have put our shareholders’ money and our own intellectual capital on the table. We are not waiting for others to forge the way.
We are fully committed to this industry and we look forward to working alongside partners, industry, and governments to turn the promise of advanced biofuels into reality.
Thank you.
In many cases, the farmers in these local Southern areas will be the true beneficiaries. Many forms of Southern agriculture are under production pressure, whether it be disease, pest, or international competition pressures. A long term lease for land and a contract to grow energy crops for BP on a portion of their land will be a wonderful opportunity for Southern farmers to reduce the risk in their existing operations and diversify into the energy industry.
These new partnerships between energy and agriculture also enable the parties to learn from each other and to share their best practices whether in jointly developing new delivery models or in their approach to operational safety for example.
As I mentioned earlier, we believe the momentum behind cellulosic biofuel is now building rapidly. The feedstocks are being grown. The conversion technology is ‘ready to go’. Partnerships are developing to address the perceived capability gap. And government policy must remain relatively stable.
BP is a company that is prepared to play its part in creating this future. We have put our shareholders’ money and our own intellectual capital on the table. We are not waiting for others to forge the way.
We are fully committed to this industry and we look forward to working alongside partners, industry, and governments to turn the promise of advanced biofuels into reality.
Thank you.
