1,000 keys

Iogen continues to improve its cellulosic ethanol process and signs indicate deployment is approaching.
By Susanne Retka Schill | October 14, 2010
The rather abstract concept of scalebench, pilot and demonstrationtakes on more meaning when one tours the Iogen Corp. campus. Nearly 300 people work at its facilities situated on the edge of the airport in Ottawa, where the company started up in the 1970s in an empty hangar. Today the campus covers almost 10 acres, and several additions have been made to that original brick hangar.

There's an inverse relationship of scale and people. Iogen says more than half of its personnel work in research and development, about one-fifth in manufacturing and the remainder in sales and administration. In the laboratories where enzymes are developed and processes are refined, several scientists are occupied in each section, running tests in tubes and flasks using expensive looking machines perched on benches. The scale can get even smallermicro tubes are used to test for the successful transfer of genes expressing desirable enzyme traits.

Moving from bench scale to pilot scale means moving up from one liter flasks to 1,500 liter tanks, and it is here that the individual pieces of the puzzle are put together in a continuous, albeit still small, process. The entire pilot plant at Iogen covers about the same amount of floor space as the boardroom upstairs.

So, it is not until one walks through the demonstration plant next door that it begins to resemble an ethanol plant. And it is here that the real challenges in scaling up a new process present themselves, as the tank sizes grow to 180,000 liters. "We don't go to the demonstration plant unless we've had bench and pilot scale validation," says CEO Brian Foody. "But when you build it bigger you have problems. We have issues with cost, issues with wear, we have issues with the overall operating chemistry. And in each, you have to go through and debug it slowly and steadily."

Foody's dad started the business in 1972 with the idea of finding a way to make low-grade cellulosic materials more digestible for cattle and sheep feed. The process he developed has become the leading pretreatment in the cellulosic ethanol industry, says his son. At the time it was called steam explosion. Today the general approach is referred to as dilute acid pre-hydrolysis. The company has developed a successful business producing industrial enzymes that are used in the pulp and paper, grain processing, brewing, textile, and animal feed industries. In 2002, its cellulosic ethanol work ramped up when it entered a joint venture with Royal Dutch Shell plc to build the demonstration plant and commercialize cellulosic ethanol. Iogen Energy Corp. started with $25 million in private investment and $10 million from the Canadian government. The demo plant is now at $65 million and counting, according to Jeff Passmore. Passmore, who began working with Iogen as a consultant, recently left the company as its executive vice president to return to the consulting world as Passmore Group, with Iogen his first client.

Foody has developed an apt analogy to provide an answer to the frequently asked questionwhat will be the key to success for cellulosic ethanol? It isn't one key, he says. "It's more like a big hotel and somebody says I want every room to be clean here. You have a thousand keys. You have to go into each room and clean it and fix it up and move on to the next."

Foody also compares the cellulosic development process to software, where each release has multiple improvements, some major and some minor. Iogen is now working on Releases 8 and 9 of its enzymatic hydrolysis process, with Release 8 focused on reducing water use and 9 on driving down costs. "I just heard today about one of our objectives to reduce variable costs over the past year by 35 percent," Foody adds. "The fellow who had this goal said at the beginning, I don't know how I'm going to make it,' but over the course of 12 months through well over 25 initiatives, he was able to make savings here and there that ultimately added up to the overall goal."

Perhaps one of the biggest indicators that Iogen is nearing the ultimate goal of leaping to commercial size is that the demonstration plant, which began operation in 2004, is now running continuously. "We're convinced that this is the crucial element for success," Foody says. When scaling up, the first phase in pilot and demonstration projects is to run the plant on an experimental basis, collecting data on component operations, he explains. "We feel like the next stage for everyone before we build large plants is to really have validated on a day in, day out basis that these systems operate effectively." Foody reports the hydrolysis systems in the demonstration plant have been running continuously for two years and although other units shut down periodically either for cleaning cycles or as they turn over batches, they are essentially running continuously as well. The Iogen production record posted to its website reports 115,862 gallons of cellulosic ethanol was produced this year through September. Last year, the plant produced 153,495 gallons, thrice that of 2008's production of 54,558 gallons.

The inventory of cellulosic ethanol has been put to use in company promotions such as being the first to sell cellulosic ethanol blends at retail for a month last year at a Shell station in Ottawa. Iogen and its partner Shell provided fuel for the limousines at the G8 summit in Scotland last year, as well as other events, giving the fuel exposure to politicians and the public. The company has touted its role in supplying high performance race cars, providing cellulosic ethanol to Drayson Racing for the American Le Mans series and to Ferrari for the Formula One season. Iogen even encouraged those racers to locate cellulosic ethanol supplies closer to the events to save on shipping costs, says Passmore. In the end, only Iogen had suppliesan indication that nobody else is really making much cellulosic ethanol yet, he points out.

Another indication that Iogen is nearing the ultimate goal is the addition of a Shell executive, Duncan Macleod, to the management team. He came onboard this summer as chief operating officer of the Shell/Iogen joint venture Iogen Energy Corp. and was to take the CEO reigns from Foody in October. Macleod is no stranger to Iogen. He was on the due diligence team that vetted Iogen's cellulosic technology when Shell was searching for partnerships to enter the advanced biofuels arena. He helped craft the Iogen Energy joint venture that began in 2002 and served on its board before moving to Shell Hydrogen as its vice president. With more than 30 years of experience at Royal Dutch Shell plc, Macleod brings global experience and an oil perspective to the Iogen offices at Ottawa.

"Shell realized that biofuels were going to be part of the energy systems as much because of customer and government need and less driven by technology optimization," Macleod says. While there were interesting debates with hydrocarbon scientists about the most efficient way to fuel combustion engines, he says, other societal goals have become important factors. "I think Shell got that early." Shell was keenly interested in partnerships to examine a number of pathways, and to learn. "One of the things that worried the board is that the hydrocarbon business works in the complete supply chain from source to output, working to control and manage and optimize. With biofuels, the front end is about agriculture and farming, and we knew nothing." Conversations with other oil executives echoed that concern, he says. "It was and still is a struggle for the big energy companies. The front end of the supply chain is the farming business. It is seasonal. Oil and gas pump out every day of the year. When energy companies have to deal with biofuels, all of a sudden it's not just understanding the mechanics or the chemistry of it, it's the seasonality. When I look at Iogen over the years, a lot of this detail, the nitty gritty understanding of that front end and how the agricultural cycle works is incredibly important."

Iogen's strategy has been built around first working with strawthe feedstock with established logistics for collection and ample supplies on the Ontario and Quebec farms surrounding Ottawa. The scientists have also run tests with corn stover, baggasse and multiple other feedstocks. "There are not first order differences, but second order differences," Foody says. "There are minor constituents in corn stover that are different." Iogen expects its enzymatic hydrolysis technology will be easily adaptable to any of the feedstocks being considered for cellulosic ethanol, with the exception of softwood.

Straw is the targeted feedstock for Iogen Energy's first commercial scale plant being planned for central Saskatchewan. While Iogen executives have given up naming a target groundbreaking date, due to having missed earlier targets, there are signs that construction will soon begin. Macleod's arrival at Iogen Energy is one indicator. While Iogen supplies the conversion technology, Shell is supplying its expertise in engineering and building large projectsnot to mention its bankroll.

Another indicator is that Iogen Corp. initiated a capital campaign in mid-September, retaining Goldman, Sachs & Co. as its exclusive financial advisor. (Goldman Sachs, along with Petro-Canada, were early investors in Iogen.) "Iogen Corp., a 50/50 partner with Shell in Iogen Energy, believes raising additional capital to allow Iogen Corp. to match Shell as an equal partner would be a positive for the technology commercialization schedule," Macleod explains. The project also has a $200 million commitment from the Canadian government.

That federal commitment is what triggered Iogen's withdrawal from a proposed project in Idaho that was a winner in the first round of U.S. DOE grants. "We were running three parallel tracks in Idaho, Saskatchewan and Germany. We reached the point where we had to decide which to push over the goal line," says Passmore. "We were most advanced in Canada, least advanced in Germany. At that time Canada committed for $200 million, whereas in the U.S. there was the commitment for the $80 million grant, and it looked like another year of negotiation for the loan guarantee." As it turned out, the decision hasn't set back the project, since the other awardees of the first DOE grants have struggled to meet the loan guarantee conditions.

It remains to be seen if a change in sites will be a setback. An agreement made in mid-2009 appears to have fallen through. Canadian paper maker Domtar has withdrawn its offer to Iogen Energy to build at the site of the idled Prince Albert, Saskatchewan, pulp mill. Iogen is still in discussions with Domtar, but will revisit other sites that had been considered earlier.

Another plant using Iogen technology is in early development in Brazil. Shell and Brazil's big ethanol producer Cosan S.A. have agreed to create a joint venture. Once regulatory approval is received, the details will be negotiated and planning will begin for deploying the new technology at one of Cosan's plants. "The addition of Cosan to our broader family creates a set of international opportunities that we need to be ready to exploit," Foody says. Macleod's addition to the management team is a sign Iogen is getting ready.

Susanne Retka Schill is editor of Ethanol Producer Magazine. Reach her at sretkaschill@bbiinternational.com or (701) 738-4922.