Gearing up for Bagasse

KL Energy Corp. is preparing to validate its modified process technology to turn sugarcane bagasse into ethanol.
By Kris Bevill | February 15, 2011

As the bitter winter turns to spring in the tiny town of Upton, Wyo., located on the northern edge of the Thunder Basin National Grassland in the northeast section of the state, workers at KL Energy Corp. will bring in a dose of the tropics. For the past year, KL Energy has been overhauling its 1.4 MMgy demonstration facility in preparation to produce ethanol from sugarcane bagasse and this month marks the first trial runs of the company’s new cellulosic process technology. It’s an expensive project, particularly when considering it’s likely to need further modifications, but the company has a backer with deep pockets.

Last August, Brazil-based integrated energy firm Petrobras, Latin America’s largest company, agreed to invest $11 million in KL Energy as part of a cooperative agreement to develop and commercialize sugarcane bagasse-to-ethanol technology. The deal was nothing if not the opportunity of a lifetime for KL Energy, a company of about 30 people that has been working since 2007 to commercialize cellulosic ethanol production technology using woody biomass, specifically ponderosa pine, as a feedstock. Leading the collaborative efforts was Peter Gross, a Brazilian who was introduced to KL Energy and its technological potential about two and a half years ago.

 “I liked KL’s technology, so we agreed that in Brazil we would develop market opportunities for KL,” he says. “I focused on Petrobras from the very beginning, being Brazil’s biggest and most important company. We started with the Petrobras R&D department because they were also developing their own technology in the area of second-generation ethanol. Basically, I called up the researchers and told them a bit about what KL was doing, our ideas and the technology and the possibilities of cooperation.”

Petrobras quickly realized the potential of KL’s technology and agreed to collaborate, Gross says, but it took two years before a contract was finalized, due mostly to the fact that Petrobras is an enormous international corporation and therefore has a slower decision-making process than smaller companies. In the meantime, Gross took on the role of KL Energy’s CEO and established an office in Brazil. Once an agreement had been reached, the companies established shared offices in Brazil, and a steady stream of Petrobras researchers began traveling to KL Energy’s demo plant in Wyoming and lab in nearby Rapid City, S.D., to assist in modifications to KL Energy’s process technology. Changes have been major, including the addition of a pre-pretreatment process called the bagasse conditioning step, which Gross says was learned from the pulp and paper industry. Modifications have been made to allow for the physical and chemical differences between bagasse and woody biomass and, most importantly, a new fermentation process has been designed. Gross says the process will utilize a yeast that allows them to process the C5 and C6 sugars. Ultimately, the plant will switch to a clear mash fermentation process that is used in Brazilian sugarcane mills.

Gross says KL Energy’s process technology has come a long way since the plant was first commissioned in 2008. “We have a much better process,” he says. “There are a lot of changes in the process to reflect the learning over the past three years, which affects the entire process. What we’re doing now is injecting our process technology in Upton from what we’ve learned in the past 12 months in our bench-scale lab experiments. Of course there’s also some input from the Petrobras engineering team.”

Sweet Process

Approximately 1,000 dry tons of sugarcane bagasse will be trucked from Louisiana for the 10-week industrial validation program at Upton. Gross realizes the feedstock situation is not ideal but “there are not too many options in the U.S.,” he says. “It will be the most expensive bagasse ever processed, but that’s OK.” As part of the collaborative agreement, data produced during the validation process will be shared with Petrobras and used for the engineering of its first commercial-scale bagasse-to-ethanol plant, which will be integrated at one of Petrobras’ Brazilian sugarcane mills. The early stages of engineering have already begun for that facility, which will have the potential to process 100,000 dry tons of bagasse annually and produce about 10 MMgy of ethanol. Production is slated to begin in 2013 and the goal is to immediately be able to produce at capacity at a cost which is competitive with Brazilian sugarcane ethanol.

This lofty goal will be helped greatly by the process validation beginning this month at the Upton plant. The demonstration-scale is a vital step in the commercialization process, as producers well know, and was a significant factor in Petrobras’ decision to invest in KL Energy in the first place, according to Gross.

The Upton facility has the ability to process 1 to 2 dry tons of biomass per hour. “That’s something very few companies have,” he says. “Petrobras does not have that in Brazil. They don’t have any demonstration facility. So rather than spend two or three years engineering and constructing their own demonstration facility in Brazil, as a shortcut we just upgraded our facility and prove the validation runs in the U.S.”

The clock is ticking on the collaboration agreement, however. The mutual exclusivity rights to technology developed between the pair expire at the end of this year. Petrobras has the option to license the technology from KL Energy and Gross says having that option written into the agreement has benefited the partnership. “There’s absolutely no reason not to be 100 percent transparent with Petrobras and vice versa,” he says. “There’s no need to hide anything.” In the future, KL Energy’s business plan includes being owner/operator of a cellulosic ethanol plant as well as providing technology for other producers. “Customers like Petrobras and others won’t be interested in having us as a producer when they have their own business concept on how they want to do it,” he says. “We’re fine with that. That’s also our preferred approach for the next year, which will allow us to grow our business without requiring huge investments. At this stage, that’s why it was so important for us to team up with Petrobras. I think we need these big partners that are willing and capable of taking on certain initial perceived risk and build that first commercial plant, which will be the reference plant for our technology.”

International Partnerships

International partnerships have benefits and disadvantages, as do domestic collaborations, but Gross says working with Petrobras has been a very positive experience for the KL Energy team. “Petrobras is not a shareholder in the company, so we can maintain full flexibility and speed because KL is a small company,” he says. “I think we’re trying to take the best of both worlds. On the one side is Petrobras with all the assets, large R&D teams and financial resources. [On the other side] our small size [allows the] capability of developing our technology past taking some risk and also changing course when required. We would like to keep it this way.”

While KL Energy is so far Petrobras’ only U.S. collaborator for cellulosic ethanol technology, several U.S. companies have entered into the Brazilian market through other avenues with the goal of advancing biofuel production technology. Bioenergy crop developer Ceres Inc. has established a subsidiary to focus on expanding sweet sorghum as a regional crop, providing Brazilian growers with an alternative to the ever-popular sugarcane. Ceres is collaborating with California-based Amyris Biotechnologies Inc. to commercialize renewable diesel from sweet sorghum. Amyris also established a Brazilian subsidiary and recently announced a joint venture with Brazilian sugar- producing giant Cosan S.A. to commercialize renewable base oils, which would serve as a renewable alternative for petroleum base oils to produce such products as engine oils, gear oils and hydraulic oils. In January, Amyris added the former North American chief representative of the Brazilian Sugarcane Industry Association (UNICA), Joel Velasco, as its senior vice president of external relations.

Last August, Cosan also signed a $12 billion joint venture with Shell International Petroleum Co. Ltd. to produce and distribute sugarcane-based ethanol and other fuels throughout Brazil. According to Cosan, the joint venture has a production capacity of about 528 million gallons. Shell contributed its 50 percent interest in Ottawa-based Iogen Energy Corp. and its 15 percent interest in California-based biotechnology developer Codexis Inc. to the deal, which it said will enable the joint venture to commercialize second-generation ethanol in the near future.

Gross says the opportunity to develop second-generation biofuels in Brazil is unique when compared to the U.S. because Brazil offers virtually no subsidies or federal incentives of any kind. But what the country lacks in financial benefits, it more than makes up for with feedstock availability and market demand. “We don’t have any prospect of any grant money or other support becoming available,” Gross says. “On the other hand, we will enter the market with by far the best potential because of available biomass and a developed market. Ethanol in Brazil is already bigger than gasoline, so there’s a huge domestic market. All cars are using at least 25 percent ethanol, most much more. And there’s a well-developed industry—there are about 400 sugarcane mills and most of them offer an opportunity to integrate ethanol. We also have a huge, fast-growing pulp and paper industry.”

Gross believes that having a large partner such as Petrobras helps to validate his company’s technology, partly because the company conducted rigorous due diligence before agreeing to collaborate with KL Energy. “I think that is a very positive statement,” he says. There are many second-generation technologies on their way to commercialization and Gross says he’s convinced that second-gen fuels and biochemicals will be a reality in a few short years. While ethanol is a popular starting point, Gross emphasizes that the ability to produce sugar is the most important aspect of all of the emerging technologies. Once that is accomplished, the possibilities for end-product applications are wide-reaching. “As these new technologies kick in, and you start producing biodiesel from sugars or butanol and chemicals, there will be a tremendous increase in the demand for sugars,” he says. “With the limitations in expanding land for crops, naturally the market will turn to sugars from biomass like bagasse and others. That’s where we’re going to be. Maybe we’re not going to use all the sugars to produce ethanol. Maybe it’s going to be something else, but it almost does not matter.”

Author: Kris Bevill
Associate Editor, Ethanol Producer Magazine
(701) 540-6846
kbevill@bbiinternational.com