2nd Gen. Ethanol: Better Tech, Economics and Sourcing

Primus Green Energy is producing Octane (93) that really is a tiger in your tank. And they are doing it from wood waste in New Jersey*.

In 2010 the United States manufactured 13.2 billion gallons of ethanol, generating $825 million in export revenues. That's the good news. The not so good news is that the first generation relies on corn (important sources of fuel for people); has technological challenges; is reliant on federal and other subsidies; and hasn't been able to build industries in the non-farm states. George Boyajian, is VP of Business Development at Primus Green Energy, a company that is amongst the leaders meeting these challenges with the next generation of bio-fuels.

Cellulosic Waste

The next generation uses bio-waste as a source, not crops that can be used as food or feed. As Mr. Boyajian said, "Pellets are captured sunlight. Petroleum is just buried sunlight!"

Feedstock for ethanol includes wood waste from pulp, tops of trees left behind from wood milled for construction, grasses and other high cellulose crops that can be grown on land unsuitable for growing food, sugar cane waste or algae. The goal is a process that uses a source available in enough supply to consistently produce products in the millions of gallons. Primus" approach is to employ a range of dry waste from condensed pellets that use waste wood or grasses, like Miscanthus. Their process can be supplemented with natural gas, which means that Primus can reliably produce output, even during shortages arising from weather or market fluctuations.

Technology

Primus' Processes Primus Green Energy Process

 

One of the technological problems for corn ethanol is that it cannot be transported through pipes because it contains water that cannot be removed -- or is too costly to remove. That water content is one reason that ethanol is mixed with 70%-90% gasoline: the higher the ethanol content, the more an engine will have trouble starting in cold weather. Because much of the fiber used for cellulosic biofuel is high in water content, it is often used to produce a form of crude oil, referred to as bio-crude. The additional steps needed to refine bio-crude into fuel makes this process relatively uneconomical. As a result, a high percentage of bio-crude is used as a substitute for chemical processes that rely on petroleum crude as a raw material. This includes a wide range of plastics, polymers and textiles, a very large market. However, it does not address the need for a "home grown" fuel to meet the need for fuel security, nor as replacement for corn ethanol.

Primus's process, however, produces a high grade octane (93), which must be mixed with 20% gas to bring it down to high test. As Mr. Boyajian put it, "You can put it right in your tank, but it is such a high octane it doesn't produce enough vapor to start in a standard engine. But once it's going, you'll really cruse!"

Reducing the water content is a two-step process for Pimus. First, they begin with dry pellets. Primus plans to produce 500 pounds of gasoline from a ton of pellets: 25% output per mass. The goal is 33%, which Primus claims is considerably higher than the 12% produced from other processes. The second step is that the water that is produced, floats to the top of the high octane fuel as a greyish fluid within minutes. It is easily removed during the final phase and returned to the first phase as superheated steam used for breaking down cellulosic fibers into syngas.

Business Model

Dr. George Boyajian

 

Mr. Boyajian noted that "we all knew in the 90s that 1st generation ethanol wouldn't work without government subsidies." As new technologies bring the costs of production down, and as oil prices continue to climb, he believes that the next generation can compete on its own. A key differentiator for Primus, says Mr. Boyajian, is that the company is really smart about the industry. They look to de-risk development and deployment, often by milling their own parts on site. This saves time and is more efficient, cutting down costs of sending parts out to be fabricated, and then having to tweak them later, and keeps the expertise in house. Once the prototype is developed, Primus works with Bechtell to ensure that the model is scalable ti size and to pre-test any construction issues that might arise. Secondly, the 2nd generation is able to develop products working with seasoned engineers and technologists that have experience with the market, as well as with products, production and technology. Many who come out of retirement because they are intrigued by Primus's technology, are also invested in creating a country that's green, clean and secure for their kids and grandchildren. Mr. Boyajian noted that those who have come out of the armed forces see the economic benefits of not sending expeditionary forces into foreign lands in the hunt for fuel. Finally, they are entering into long term contracts, with companies like Aloterra, for supplies of miscanthus giganteus as it develops, and with pellet manufacturers. In addition, the company is starting plans now for new sites, as well as exploring leasing options, especially near producers of cellulosic waste such as wood millers, pulp plants and shellers with large quantities of nut casing waste, and pellet manufacturers who can use the heat generated by Primus's process to defray the costs of heat used for drying fiber.

Jobs

"I am very sanguine about the US, I think we can reduce our dependency on foreign oil by as much 40% in the next few years," summarized Mr. Boyajian. In investing in New Jersey, he notes that it has a history of technological innovation dating back to Thomas Edison, and including Bell Labs and the Princeton Plasma Physics Laboratory. "There's a lot of talent here," he added. "We find trained people whose families came from all over the globe."

He also noted that the United States has good intellectual property laws, which is very important to a company that has invested heavily in research and development. Primus itself began with a staff of 2 and are now up to 40. As they build, they will need pipe fitters, values, pumps, fire safety, and even fencing and basic construction on their first commercial facility which will start construction in 2013, with plans to be online in 2015. As important, the company is not planning to build a demonstration plant, cash out and start something else: they want to be around for the long haul.

* Update: In 2013, Primus Achieves Commercialization by Dancing With Partners