ZeaChem signs long-term feedstock agreement for poplar residue

By Kris Bevill | May 17, 2011

ZeaChem Inc. has signed a long-term feedstock agreement with GreenWood Tree Farm Fund LP for its first commercial-scale cellulosic biorefinery. Poplar tree residuals provided from GTFF, which is managed by GreenWood Resources Inc., will provide the majority of the feedstock required for ZeaChem’s 25 MMgy facility, which will be located at Boardman, Ore. Construction of the facility is expected to begin in late 2012 or early 2013, depending the progress of a USDA loan guarantee application, according to ZeaChem CEO Jim Imbler. When complete, the plant will produce cellulosic ethanol and a variety of bio-based chemicals, including acetic acid and ethyl acetate.

Imbler said the agreement with GTFF marks an important milestone for his company, which aims to become a world leader in low-cost advanced biofuels and biobased chemicals production through the use of a hybrid biochemical-thermochemical process to utilize biomass-derived sugars. “We are proud to have GreenWood Resources as a partner in our commercial operation,” he said. “The model we have developed provides a significant strategic advantage and is something that GreenWood Resources and ZeaChem will seek to replicate around the world.”

ZeaChem is currently constructing a 250,000 gallon per year demonstration plant in Boardman. The project is more than halfway complete and is expected to be partially operable by the end of this year. Last May the U.S. DOE’s Office of Energy Efficiency and Renewable Energy Biomass Program awarded ZeaChem a $25 million grant for the cellulosic ethanol portion of the project. Those operations are expected to commence early next year.

GreenWood has also agreed to supply up to 100 percent of the feedstock needed to operate the demonstration-scale facility, but Imbler said a variety of other feedstocks will also be experimented with, including corn stover, wheat straw and switchgrass. ZeaChem also expects to utilize agricultural residues from area farmers at the commercial-scale facility, but woody biomass is the preferred feedstock so far and will supply the majority of the plant’s requirements. “We really like a lot of the characteristics of the woody biomass in terms of density, growth rate, sustainability and cost factors,” he said. Specific details on the amount of feedstock being supplied and price paid per ton are not being disclosed, but Imbler said the financial considerations are in line with the company’s long-term feedstock pricing goals and that Boardman has proven to be a desirable location for ZeaChem’s operations.

GTFF currently owns 35,000 acres of sustainable tree farms in the Columbia River Basin in Oregon and Washington. Its business strategy includes supplying saw logs for GTFF mills, pulp logs for pulp and paper mills, and residual feedstock for bioenergy markets. Jeff Nuss, president and CEO of GreenWood Resources, said the agreement with ZeaChem offers an opportunity for his company to enter a new market in a significant fashion. “We believe hybrid poplars are the ideal feedstock for advanced biofuels and biobased chemicals and look forward to continuing to grow with ZeaChem,” he said.

Imbler said ZeaChem’s process will have the ability to produce fuel and chemicals that will be competitive with oil priced as low as $50 per barrel. The technology is expected to produce cellulosic ethanol for less than $1 per gallon. With oil prices high on many people’s agendas, Imbler said interest in ZeaChem’s project has recently increased somewhat, more noticeably for the potential renewable chemicals aspect than the ethanol aspect. “You would normally think the chemical industry would be last to enter a new space like this. They’re more conservative than the oil industry,” he said. “But because of the volatility, I think you’ll see chemical players move in earlier. We really like that because our platform is fuels and chemicals.” For traditional ethanol producers, Imbler said now is the time to branch into cellulosic feedstocks. “When you look at the sugar cost, when corn was at $7.60 a bushel, it was 18 cents a pound of sugar. We’re at 4 cents a pound; sugarcane is about 9 or 10 cents a pound. You’ve just got to be cellulosic. That’s the future.”