Environmentally friendly diluent?

CALGARY—Perry Toms says that in the past 25 years he has examined virtually every kind of bio-energy production method using biomass: gasification, waste energy, garbage-to-energy, pyrolysis, briquetting and torrefaction among them.

He even has a large investment in an Australia-based biochar company, so it’s not as if he doesn’t believe other methods have value, but when he got involved in hydrothermal upgrading five or six years ago, a light went on, he says, snapping his fingers.

“Risk abatement? Check. Scale? Check. We can produce for $35 a barrel, ex-feedstock,” Toms told a recent Petroleum Technology Alliance Canada lunch-and-learn in Calgary.

Toms is now president and chief executive officer of Steeper Energy Canada Ltd., a Calgary-based company whose hydrofaction process transforms organic matter to high-energy density liquids via a catalytic supercritical water technology platform.

“So if you can deliver me dry feedstock for $30 a tonne, we’re in business,” Toms told the luncheon. “The sky’s the limit for the value of biomass. In Europe, subsidies for burning fuel pellets have [made] biomass very expensive, $100 a tonne, but my thermal efficiency is so high that even if I have to compete with those alternative uses I’ll still produce the lowest-cost biothermal energy in a liquid form. And we’re not limited just to bio. We can use these other materials including sewage sludge, peat, muskeg, lignite coal, maybe even sub-bituminous coals.”

He says one dry tonne of biomass can produce about three barrels of oil, and that oil can be produced from about $51 per barrel from lignite to $78 per barrel from biomass, depending on the feedstock source.

Toms says that with a small amount of tweaking and a tiny amount of upgrading, the resulting oil can be utilized by oilsands producers as a cost-effective, environmentally friendly diluent—used to thin out semisolid bitumen to make it transportable by pipeline.

Hydrofaction uses supercritical chemistry and water technology to transform low-energy density organic materials such as biomass into a synthetic crude oil. This synthetic oil is closely related to a middle distillate. At 38–42 megajoules of energy per kilogram compared to crude oil, which has 41–42 megajoules per kilogram, it is at or just below the energy density of crude oil, says Toms.

Supercriticality is a state of matter achieved when a fluid, like water, is heated well beyond its boiling point while being contained and pressurized. Any moisture inherent in the feedstock subjected to supercritical conditions becomes an aggressive chemical and physical force that, in the presence of catalysts, helps transform it into synthetic crude oils.

The conditions allow for the selective removal of oxygen from the organic feedstock molecular structure, thus increasing the carbon-hydrogen ratio of the resulting fuel oil.

The company is able to produce CO2 within the reactor system and has a patented process to remove that CO2 as a liquid that can be sold. The process conserves all water used and cleans it to irrigation or potable standards, Toms says, adding that for every barrel of oil, the process makes about 550 kilograms of relatively clean, surface-disposable water.

“Our idea is to make that water available for irrigation or for surface disposal,” he says. “In a dry place like Alberta, that, I think, is another potential synergy and bonus.”

Steeper says its hydrofaction oil can be burned directly to produce electricity, used as a marine propulsion fuel or upgraded further to produce diesel, jet fuel or other petroleum by-products such as plastics and lubricants.

The hydrofaction technology, which is in the process of being patented, has been in the demonstration phase in Denmark for more than a year, and Steeper now wants to develop commercial- scale pilot facilities.

The company is proposing two projects. One is a 10-plus-barrel-per-day, continuous pilot-scale project planned for Alberta. The other is a 1,000-barrel-per-day, full-scale commercial facility possibly located at the Port of Frederikshavn in Denmark.

Toms estimates a first-of-kind, 1,000-barrel-per-day plant will cost about $90 million to build ($90,000 per flowing barrel) and subsequent modules of the same size to come down to $65,000–$70,000 per flowing barrel. A pre-¬commercial pilot project is estimated to cost $15 million to $20 million.

He says he conducted a feedstock delivery study for Westlock County, about an hour and a half’s drive northwest of Edmonton, using a combination of peat, straw and forestry residues. The forestry residues were from about 100 kilometres away, straw was from between zero and 20 kilometres away and the peat was from zero to five kilometres from the plant. The combined cost of oven-dried feedstock from real-life providers was about $40 per tonne at the plant’s gate, he says.

Steeper is working with Natural Resources Canada’s Canada Centre for Mineral and Energy Technology (CANMET) on upgrading to finished fuels and petrochemicals, and with Alberta Innovates – Technology Futures with fuel and lubricant laboratories on assay work.

Toms says the company intends to move beyond conventional biomass or renewable feedstocks—of which it has researched about 40 derivatives—and is starting to look at lignite coal, sub-bituminous coal, bitumen and bitumen derivatives, and combining its bio-oil directly into the hydrocyclone portion of a bitumen upgrader.

“Work done by CANMET suggests that will add some value to that process,” he says. Other organic wastes that present opportunities include urban organics and manure, he adds.

Last May, Toms, Steen Iversen, chief technology officer of Steeper Energy, and Aalborg University in Denmark announced construction of a new hydro¬thermal liquefaction facility designed to test feedstocks for hydrofaction in Aalborg.

Steeper Energy, started in 2010, is two separate legal entities. The technology development arm is headquartered in Denmark, where Iversen has been involved in the upgrading of low-energy density organic matter for most of his career. He has been working on hydrothermal liquefaction and hydrothermal upgrading for about 15 years, and has probably generated $30 million to $40 million in investment on development of the technology, says Toms. Steeper Energy is looking for partners—ideally an oil and gas company—that can help proliferate the technology.

“It’s not about a cheque book. That’s not really as interesting to us,” he says. “We’ve got lots of investors who are interested in getting involved with our projects. What we really need are opportunities to take feedstock, transform it into oil and make that oil available in a cycle that we can keep quite tight.”

Production of 100 barrels per day is enough oil to be marginally interesting, but too little to be commercial in Canada, says Toms. However, a plant that size, on its own, interestingly enough, represents a great little market opportunity in the developing world, he says.

“You can imagine places like Central America, South America and Asia would be very interested in that type of unit [in places like] palm and sugar plantations where there are naturally aggregated biomass materials. That project is pre-commercial and will not contribute to its own return on capital here in North America, but it may very well spawn a whole market opportunity for us.”