Arterran’s biofuel process starts with the same 35% to 50%
moisture content wood but we dry the wood by processing
it with a proprietary catalyst, a little heat, time and pressure
and end up with a solid biofuel that has a significantly higher
energy density of 10,933 to 12,200 Btu per pound
with a moisture content of only 2% to 4%.
Independent labs have verified that our process makes more of the energy contained in the wood available. Attached are reports from the independent testing performed by Powertech Labs and Gwil Industries, which show a significant 3,134 to 4,401 Btu per pound increase over the industrial pellet of the largest producer in Canada’s of industrial pellets.
The significance of this energy increase is that end users buy wood pellets and other solid biofuel based on the energy content. The energy they are buying is measured in Megawatt hours per tonne abbreviated as MWh/t.
As reported by Argus Market Reports in October a MWh fob Vancouver was valued at an average $30.18.
That energy content of coal, wood pellets and biofuel is calculated as follows:
3,412,124 Btu = 1 MWh = $30.18USD
CALCULATING ENERGY VALUES
To begin we will use the starting point of Megawatt hours per tonne (MWh/t).
One Megawatt hour is equal to 3,412,124 Btu and is valued at USD $30.18
Energy content of common wood pellets:
7,750* Btu/lb. = 17.0 million Btu/t = 5.00 MWh/t = USD $150.81 per tonne
8,500 Btu/lb. = 18.7 million Btu/t = 5.48 MWh/t = USD $165.40 per tonne
Energy content of Arterran Biofuels:
10,500 Btu/lb. = 23.1 million Btu/t = 6.77 MWh/t = USD $204.32 per tonne
12,200 Btu/lb. = 26.8 million Btu/t = 7.87 MWh/t = USD $237.52 per tonne
The markets for our production are companies in the Energy Production Sector that are burning coal and co-firing wood pellets to produce electricity. The main marketplace is in Europe, though any utility anywhere in the World that is burning coal to produce electricity is a potential client.
The EU Energy Sector is currently purchasing almost $5 Billion USD of Industrial Wood Pellets annually. Industrial wood pellets and compressed biomass with a moisture content of 5% to 8% and an energy density of +-7,500 Btu per pound or 17.4 GJ per tonne.
THE MARKET FOR SOLID BIOFUELS
The current global market volume of biomass pellets of around 16 million metric tons annually (mt/a) is projected by Pöyry to increase to 46 million mt/a by 2020, representing a total market value of up to $8 billion U.S.
According to Gordon Murray, executive director of WPAC, the world pellet industry has grown by a compound annual growth rate of 23% since 2000. A considerable amount of this growth is due to the voracious demand from Europe.
Canada has the largest potential as a wood pellet producer. The installed capacity was 2.1 million tonnes in 2010 and is expected to grow to 3.6 million tonnes in the 3 years. (Source: Bioenergy Insight, July 2011)
In 2012, Canada exported 1.6 million metric tons of pellets to Europe, most of that going to the United Kingdom. The increase in demand has put a strain on producers to meet this demand.
This “capacity gap,” or inability to meet current and future demand from existing capacity, has generated significant excitement in the Canadian pellet industry.
Fossil fuel costs and government policies and incentives will boost consumption within the next decade, with demand skyrocketing in Western Europe and China.
The conclusion from the market metadata is continued double digit growth for the next decade. It is and has been a seller’s market in Europe for a number of years. The demand curve is rising faster than production and is expected to continue through 2020.
Wood Pellets and Biofuels are commodities and as such the pricing is done on a Bid Ask basis as well as bulk sales being done by long term purchase order or spot market pricing.
We anticipate pricing exactly the same as the per MWh price of wood pellets. Our superior attributes will be an additional incentive for the end user.
FOB Spot Market Price: 7,750 Btu Industrial Wood Pellets (2nd quarter, 2014)
$ per MWh Bid Ask
Southwest CAN $31.77 $33.88 30.18
Northwest US $29.86 $30.71 30.50
Southeast US $31.13 $31.77 29.86
Northeast US $31.77 $33.88 33.25
Source: Argus Biomass Markets
PRICING & DISTRIBUTION
Using the market data we can calculate the current price per tonne based on the energy content (MWh/t).
Wood Pellets Arterran Biofuel
4.99 MWh/t 6.77 MWh/t
US$ FOB average
Southwest CAN $30.18 $150.81 $204.32
Northwest US $30.50 $152.41 $203.10
Southeast US $29.86 $149.21 $202.15
Northeast US $33.25 $166.15 $225.10
ARA $35.07 $175.24 $237.42
Wood pellets are hygroscopic and must be protected from the elements,
since any moisture becomes added weight and negatively affects the
energy content. Every percentage point of moisture negates an equal
percentage of Btu’s. Excessive moisture also causes wood pellets to
swell and lose integrity.
AR Biofuel becomes hydrophobic as a result of processing thereby maintaining its’ integrity and reduces the need for any special (expensive) handling requirements.
AR biofuel has 2% to 4% moisture content compared to wood pellets 8% to 10%.
As noted, wood pellets require special storage and careful handling to retain their integrity. Our Biofuel is more robust, reducing breakage and dust when compared to wood pellets.
Further, while wood pellets are hygroscopic and need protection from the elements, our Biofuel can be stored in the open and will remain undamaged. This significantly reduces the expense of packaging, warehousing, shipping and handling.
* Our process is not reliant on wood and wood waste. Municipal Solid Waste is typically 40% cellulose. Animal Manure is suitable feedstock. Fast Food packaging, paper and cardboard, lawn and yard waste all have significant cellulose content.
Where ever there is wood waste, municipal solid waste, animal manure and or suitable waste with cellulose content our process is viable for the creation of a truly renewable solid biofuel from non food stock.
As industrial wood pellets decompose, they off-gas Carbon Monoxide, Carbon Dioxide and Methane in enough quantity to pose a potentially fatal hazard to workers involved in handling and shipping. This off-gassing requires a number of air sampling and monitoring devices in the production facility, the warehouse, during shipping and at the end users facility.
Some storage facilities require inert gas to mitigate the heat produced from decomposition and prevent spontaneous combustion. All these additional measure incur additional capital and operating costs.
Our process all but stops the process of decomposition and eliminates the need for a number of these costly special measures. Without decomposition the risk of spontaneous combustion is virtually eliminated and, being hydrophobic, no sealed storage before or during shipping is required.
The market is emerging, evolving and growing. From 2014 to 2020 the market is expected to grow more than 250%
The Canadian Manufacturers of wood pellets produced over 2.4 million tonnes last year with Pinnacle Pellets exporting the lions share. The pellets they export are industrial pellets with an energy density of 7,750 and a moisture content of 4% to 6% that have a net energy density of 7,285 Btu per pound.
The major players from the consumption side are the coal fired energy plants of which there are 1,400 globally. They are currently producing 1.18 terawatt hours. In the UK they produce 29.75 Gigawatts from burning coal.
The industry we will supply is the coal fired power industry in Europe. In Europe, wood pellets are used as fuel for utility, commercial and residential applications to produce electricity and heat. Effective policy drivers and a different mindset exist in Europe, while in the U.S. it's hard to compete with cheap coal.
The long term potential for the solid biofuel industry is exponential growth.
Consumption of pellets in the EU steadily increased from 3.8 million tonnes in 2005 to 9.8 million tonnes in 2010. It is expected to further grow to 24 million tonnes by 2020, with the EU importing 11 million tonnes.
The major power producers are large volume users of industrial wood pellets to co-fire with coal.
The 6 Largest European Co-firers annual wood pellet consumption;
Eletrabel 1.7 million tonnes
RWE 3.0 million tonnes
Dong Energy 0.6 million tonnes
Drax Energy 3.0 million tonnes
Vattenfall 0.6 million tonnes
2011 Total 8.9 million tonnes
The trends in the renewable fuels market are well known. Consumption is growing. Renewable Energy is accepted by the public in most countries. Government in many countries including Canada and the US are incentifying renewable energy.
In the next 10 years, look for a doubling of pellet production in North America, and major growth in Europe and China.
The current global market volume of biomass pellets of around 16 million metric tons annually (mt/a) is projected by Pöyry Management Consulting to increase to 46 million mt/a by 2020, representing a total market value of up to $8 billion USD annually.
Co-firing with coal is the lowest risk, least expensive, most efficient, and shortest term option for electrical power generation. Unlike coal or natural gas, wood pellets and Arterran Biofuels are renewable and carbon lean, meaning that CO2 released during combustion is offset by CO2 captured during subsequent plant growth.
This energy sector is currently purchasing $5 Billion USD of Industrial Wood Pellets annually. Industrial wood pellets and compressed wood with a moisture content of 6% to 10% and an energy density of +-7,500 Btu per pound or 17.4 GJ per tonne.
INDEPENDENT LAB REPORTS
Arterran Biofuel has been tested for energy content by 2 respected independent labs.
Powertech Labs in British Columbia and Gwil Industries in Alberta.
Both labs confirm a significant increase in the available energy over the wood feedstock.
Powertech - 12,200 Btu per pound 26.84 mmBtu per tonne
28.36 Mj per Kilogram 28.36 Gj per tonne
Gwil Labs - 10,933 Btu per Pound 24.05 mmBtu per tonne
25.42 Mj per Kilogram 25.42 Gj per tonne
These independent results of AR Biofuel as a 50/50 binder for Coal Fired Plants also reveal our solid biofuel to significantly reduce emissions when co-fired with coal.