Sustainable Bioenergy · Bioenergy Sustainable Development 26 ABENGOA Activity Report 2004 Ethanol...

Bioenergy SustainableDevelopment

Activity Report 2004ABENGOA18

• Production of ethyl alcohol fromvegetable products (cereals, biomass).The resulting alcohol (bioethanol) isused to manufacture ETBE (a petroladditive) or is blended directly withpetrol or gas oil. Thus, upon it being arenewable energy, net CO2 emissionsare reduced (greenhouse effect).Production of DDGS (Distillers’ DriedGrains with Solubles), a protein complement for animalsand CO2.

Bioenergy www.abengoabioenergy.com

Activity Report 2004 ABENGOA 19


Europe’s largest Bioethanol producer(installed capacity 340 million liters)and No. 5 in the USA(365 million liters)

Europe’s largest Bioethanol producer(installed capacity 340 million liters)and No. 5 in the USA(365 million liters)



Organization

During the year 2004, Abengoa Bioenergy completedthe integration of the Business Unit initiated in 2002-2003. The most noteworthy advances are thefollowing:

• Management Structure for the Business Unitimplemented.

• Leadership position in the market consolidated• Establish commodities risk management policy• Integrated Management System implemented• Corporate Identity established

Focusing on the main items, Abengoa Bioenergy hasaccomplished the following goals:

United States:

• Colwich Expansion (+6 MGPY) and has launchedthe Portales Expansion (+ 15 MGPY).

• Control of Ravenna Project (80 MGPY) and qualifiedfor the 22 MUSD state incentives.

• Closed the first phase of the York Operating Lease.• Implemented the working capital policy.

Europe:

• Initiated construction of Biocarburantes Castilla yLeón (200 Ml).

• Exports of 44 Ml of Bioethanol• Succesful start up of the ETBE Huelva facility• Registration ISO 9001, ISO 14001 and OSHA 18001

for Ecocarburantes Españoles and Bioetanol Galicia.

Research & Development:

• Complete staffing of R&D group• Construction of the pilot plant was completed in

March of 2003 and commissioning was completedin May.

• Develop and demostrate Residual Starchtechnology for corn

• Complete agreement with Novus for Coproductdevelopment and marketing.

• Complete preliminary design for the commercialdemostration of Biomass technology atBiocarburantes Castilla y León.

• Complete Hydrogen Fuel Cell ethanol reformingprototypes at 1 kW and 10 kW

• ISO 9001:2000 obtained

The Business Unit integrates the management of thefollowing companies:

Ecocarburantes Españoles, S.A.Ecoagrícola, S.A.Bioetanol Galicia, S.A.Biocarburantes de Castilla y León, S.A.ETBE Huelva, S.A.Abengoa Bioenergía, S.A.Abengoa Bioenergy CorporationAbengoa Bioenergy R&D Incorporation.Greencell, S.A.



Operations in Europe

Introduction

Abengoa Bioenergía is the No. 1 producer of fuelbioethanol in Europe. Current operations include twocereal-based bioethanol plants in Spain,Ecocarburantes Españoles, in Cartagena (Murcia) andBioetanol Galicia, in Teixeiro (Coruña). The first withan installed capacity of 150 million liters annually, andthe second with a yearly installed capacity of 176million liters.

In partnership with Ebro Puleva, Abengoa Bioenergiais developing a third plan in Babilafuente (Salamanca)with a capacity of 200 million liters annually, of which5 million liters is derived from the conversion ofbiomass from cereal crops by means of a newtechnology being developed by Abengoa BioenergyR&D.

We would also highlight the fact that ETBE Huelva,S.A., participated by Abengoa Bioenergia (90%) andthe Spanish oil company Cepsa (10%), started-up anew ETBE production plant, with an installed capacityof 40,000 tm, last June 2004.

This plant has been built at Cepsa’s Refinery of LaRábida (Huelva), and the bioethanol used as rawmaterial is produced in the plants of Bioetanol Galiciaand Ecocarburantes Españoles.

In addition, Abengoa Bioenergia’s business plan callsfor the construction of two new cereal-basedbioethanol plants in Europe. Following the recentguidelines approved in the European Directives forthe Promotion and Taxation of Biofuels, these plantswill be built in countries where the demand andlegal framework make it possible to quickly andeffectively initiate bioethanol production. Feasibilitystudies and collaboration agreements with localpartners are now being developed for both facilities.

Abengoa Bioenergía’s production plants in Spain,Ecocarburantes Españoles and Bioetanol Galicia, haveample capacity to produce cereal-based bioethanolfor export to European countries, which supplymarkets more rapidly, less expensively and cheaperthan any other source. This will allow for thedevelopment of necessary infrastructures for theexpansion of biofuels in Europe, prior to the start upof new production plants in those markets with agrowing demand.



Main milestones achieved (market, legislationand internally)

Market:

• Bioethanol exports to Sweden (1 Ml), Germany (34Ml) and France (11 Ml).

• Agreed development for E85 and FFV with BP andFord.

• Agreements with new EU partners (AGPM, KWST,Roquette, BP Chemical, Lyondell, …)

Legislation:

• New legislation approved in Spain to allow directblending of bioethanol with gasoline and its use ingas stations.

• Coming into force of Taxation and Promotion ofUse of Biofuels Directives, and its transposition todifferent Members States (Spa, UK, Fr, Ger, Pol,Swe, Che, …)

• Mercosur-EU negotiations on bioethanol tradingwith Brazil and other countries.

• New European CAP legislation with regard toenergy crops.

• New legislation about CO2 emissions trading.• Development of bioethanol standards in the CEN of

the EU.

Internally:

• Start-up of the ETBE facility in Huelva.• Construction of the Biocarburantes de Castilla y

León plant in Salamanca.• Signating of the financing agreement for

Biocarburantes de Castilla y León project and firstlayout plan.

• Continuation of wine alcohol bids from the EU,used as a raw material for EcocarburantesEspañoles and Bioetanol Galicia plants.

• Implementation of an Integrated ManagementSystem.

• Development of a Risk Management Policy incompanies subject to commodity volatility

• Holding of the World Biofuels Conference for thethird consecutive year.

Production Ecocarburantes Bioetanol Galicia ETBE Huelva Total

Bioethanol (m3) 119,156 135,000 0 254,156DDGS (Tm) 85,855 73,384 0 159,239Electricity exported (Mwh) 145,335 173,661 0 318,996ETBE (Tm) 0 0 22,516 22,516

Plant Operation Results (bioethanol, DDGS andelectricity production)



Ethanol contract highlights:

Last 2004, Abengoa Bioenergía has achieved acontract bioethanol supply to PCK, a German refineryowned by BP, Shell, Total and Agip, for 43 millionliters .This supply has been executed jointly with KWST, andthe bioethanol, has been used for ETBE production.

Abengoa Bioenergy has recently executed a supplycontract with Ruhr-Petrol, a trading company based inGermany, for the delivery of 10 million liters ofbioethanol to the Miro refinery in Karlsruhe,Germany. This bioethanol is to be consumed by Exxonand Conoco to produce ETBE.

Another significant contract has been to supply 10.5million liters to Lyondell for ETBE production at its Fosfacility (France).

Finally, last may, Abengoa Bioenergía spot-supplied1 million liters of bioetanol to Preem oil, a company inSweden, to be used in direct blending.

New projects:

The Business Plan for Europe also includes thepromotion and construction of two new bioethanolplants to be located in countries in which the demandand legal framework enable a quick and effectivedevelopment of bioethanol, following the recentguidelines approved in the European Directives for thePromotion and Taxation of Biofuels and itsimplementation in Member States. Collaborationagreements with local partners and feasibility studiesare now being developed for these facilities in keycountries such as Germany, France, Holland andPoland.

US Operations

Introduction

The focus throughout 2004 was on building for thefuture. This focus was evident in all companyactivities from the expansion of the Portales, NewMexico plant, to improvements in internal businesssystems, to the acquisition of controlling interest ina project company developing an 88 million gallonper year ethanol plant in Ravenna, Nebraska.

Everyone in Abengoa Bioenergy Corp. has focusedon their specific activities supporting these buildingfor the future initiatives. Through these collectiveefforts, Abengoa Bioenergy Corp. has successfullycompleted the foundation necessary to embark onthe aggressive growth strategy developed in thestrategic plan. Abengoa Bioenergy Corporation hasmaintained its position as one of the 5 largestethanol producers in the United States with anoverall annual capacity of more than 95 milliongallons. Abengoa Bioenergy Corporation operatesthree plants in the states of Kansas, Nebraska andNew Mexico.



Throughout 2004 the world experienced dramaticincreases in all fossil fuel prices. Oil exceeded $55/bbl in U.S. futures trading, and gasoline futures alsoreached record levels. Seven additional statesbanned MTBE in 2004 bringing the total number ofstates banning MTBE to 25. All of these factorscombined to support strong ethanol prices in 2004.Offsetting the strong ethanol prices was a dramaticincrease in corn prices, exceeding $3.20/bu, for thefirst 9 months of 2004. As the 2004 corn cropmatured, corn prices returned to normal levels inanticipation of the largest corn crop in U.S. historyof more than 11.5 billion bushels. These combinedexternal market forces, coupled with steadyoperational performance led to improved financialperformance in 2004 compared to 2003.

Milestones Achieved

Industry:

The U.S. industry continued its rapid expansion,with 81 plants having installed capacity in excess of3,400 million gallons per year. This represents anincrease of 600 million gallons for 2004, comparedto 2003. An additional 14 plants with 630 milliongallons per year capacity are currently underconstruction, with expected commissioning in 2005or early 2006. The farmer owned cooperativescontinue to represent the majority of all newlyconstructed capacity in both the 2004 and 2005capacity currently under construction.

Legislation

For the second consecutive year, the U.S. Congressfailed to pass an Energy Bill. On several occasionsthe Energy Bill appeared to have the necessary

support, only to fail at the last minute. The mainissue surrounds MTBE liability limitations for pastproducers of MTBE. However, with the Novemberelections dramatically increasing the Republicanmajorities in both the U.S. House ofRepresentatives, and the U.S. Senate, it is now verylikely an Energy Bill will be passed immediately afterthe new Congressional session begins in 2005.

Favorable legislation was passed during 2004 in theform of the Volumetric Ethanol Excise Tax Credit(VEETC), which extends the ethanol tax incentivefrom 2007 to 2010 and eliminates any impact ofthe ethanol program on the Highway Trust Fund.

An additional 8 states passed laws prohibiting theuse of MTBE in 2004, bringing the total number ofstates with MTBE bans to 20.



Ethanol and Co-Product Market Overview and ABC market share & strategy

Production York, NE Colwich, KS Portales, NM Total

Bioethanol (millions/gallons) 55.8 23.8 16.6 96.2DDGS (dry, tons) 165,000 71,775 51,235 288,010CO2 (tons) 58,500 38,000 0 96,500

Internal

Many key internal milestones were achieved in2004. Most importantly the R&D facility at Ravenna,Nebraska was successfully constructed andoperated, qualifying the larger project for theNebraska Ethanol Production Credit. Engineeringwas completed for the Portales, New Mexico plantexpansion from 15 to 30 million gallons per year.

Many internal management systems were developedor improved in 2004.

Some of these systems include, rail fleetmanagement, customer service, commoditymanagement, and various human resource systems. A

particular company-wide human resource initiativeincluded the development and implementation of apersonnel competency program designed to identifyopportunities for individual skill improvement and todevelop individual career development plans for allemployees.

Plant Operations Results

EthanolEnd of year 2003 robust ethanol market valuescontinued into the first and second quarters of 2004.The third and fourth quarters of 2004 saw even morestrengthening as gasoline values reached new all-timehighs. These record gasoline values were fueled by anall-time high crude oil value on the heals of continuedun-rest in the Middle East, hurricanes in theSoutheastern United States, the Russian Yukos OilCompany financial issues and Nigerian Oil Companylabor strikes. 2004 saw ethanol values ranging from$1.45 - $1.90 in the spot railcar market, with muchof the year seeing values above $1.60.

The spot truck market value reached an all-time highaverage of $2.03 during the first week of November.



Abengoa continued is strong presence in theCalifornia market with over 70% of our contractedproduction being delivered into various destinationmarkets. Abengoa was however contracted withevery major US Refinery/Marketer for ethanol supplyin the year 2004.

Co-product Marketing StrategyAbengoa Bioenergy Corporation’s Feed Marketinggroup received high customer satisfaction ratings inrecent customer surveys. This commitment tocontinued customer satisfaction is essential to ourbusiness and demonstrates this focus by buildingstrong customer relationships through commitmentto improving customer service and through theproduction and delivery of consistent feed products.In order to guarantee a high level of customersatisfaction, Abengoa Bioenergy Corporationcontinues to market directly to its customers, ratherthan using third-party brokers to interact with ourcustomers. This greatly enhances the responsivenessto customer needs and provides more rapid responsesto changing customer and market needs. To ensurethis commitment to our customers is met, each U.S.facility employs experienced grain and feedmerchandisers dedicated to providing customers withthe most up-to-date market information and logisticsprofessionals to ensure accurate and timely productdelivery, on a plant specific basis.

Abengoa Bioenergy Corporation strives to provide itscustomers with the highest quality feed productsavailable in the U.S. marketplace. This is accomplishedthrough providing consistent product quality througha consistent commitment to research anddevelopment. Abengoa Bioenergy Corporationcontinued the extensive research and developmentinitiatives from 2003 throughout 2004 throughpartnerships with the University of Nebraska, KansasState University, and Texas Tech University. Theseresearch initiatives are focused on the development offeed products which will meet the nutritionalrequirement for various feed markets such as cattle,dairy, swine, poultry, aquaculture and companionanimals. These internal and external research projectsdemonstrate ABC’s commitment to livestocknutrition.

New Projects

Several new projects were initiated or continued in2004.

Abengoa Bioenergy of RavennaAbengoa Bioenergy Corporation completed theacquisition of the controlling interest in a projectcompany developing an 88 million gallon per year dry-mill ethanol plant located in Ravenna, Nebraska. Thisproject included the design, construction and operationof a research and development facility at the plant site,to meet a minimum production requirement and allowqualification for the Nebraska ethanol producerincentive program. The 88 million gallon per yearfacility is scheduled to be operational by mid-2006.

Portales, New Mexico ExpansionThis project required the design and construction of a15 million gallon per year expansion of the existingfacility in Portales, New Mexico. This expansionincluded a complete re-engineering of all productionprocesses. The full expansion is scheduled to beoperational in mid-2005.

E-85 SupplyAbengoa Bioenergy Corporation supplied the ethanolfor individual E-85 stations in 2004. An overall E-85supply strategy was also developed withimplementation scheduled for 2005. E-85 has a largepotential for growth through captive fleet utilizationand as a general fuel as the major automobilemanufactures continue to increase production offlexible fuel vehicles. Abengoa Bioenergy Corporationis ready to support the growth of this emerging fuel.



Research and Development

Introduction

The mission of Abengoa Bioenergy R&D, Inc. is todevelop and demonstrate new technology solutionsthrough science and innovation to achieve AbengoaBioenergy’s Strategic Business Plan Objectives.

Main Strategic Milestones Achieved

In the year 2004, many milestones were achieved.

General

• Completed staffing of R&D group• Maintain an independent oversight committee• We are maintaining a group of three external

advisors to provide independent oversight over ourR&D activities.

• Obtain ISO 9001:2000 certification• Develop Aspen Models• Completed the development of the initial Aspen

models for starch and Biomass hydrolysis,gasification to ethanol and ethanol reforming.These models will be maintained, improved, andvalidated with relevant experimental results.

Residual Starch

• The construction of the pilot plant was completedin March of this year and the commissioning wascompleted in May.

• Develop and demonstrate Residual Starchtechnology for corn. The 2.9 gal/bu yield objectivewas achieved in September 2005. The validationwas completed in November 2004. We areinitiating the planning for the roll out of the newtechnology.

Background information on the residual starchproject:

In September, 2002 the Department of Energy of theUnited States (DOE) awarded Abengoa BioenergyR&D a project of 35.5 million dollars “AdvancedBiorefining of Distiller’s Grain and Corn Stover Blends:Pre-commercialization of a biomass-derived processtechnology” the Residual Starch Conversion is theproject contemplated in the first phase of theprogram.The objective of the first phase of this project iscentered on the development of the processes andtechnologies that allow improvement of the yields inthe production of bioethanol and the quality of theDDGS co-product to increase the protein content. Apilot plant has been constructed within AbengoaBioenergy Corporation’s York (Nebraska) facility, witha budget of 2.4 million dollars. The productioncapacity of the plant is almost 2 million liters (0.53million gallons) of bioethanol. The plant was designedto test different materials, such as corn, barley, andwheat.



Abengoa Bioenergy R&D’s strategic plan for the newtechnology developed at the pilot plant to beimplemented in the United States plants by the endof 2005 and by 2006 in the European plants.

Co-Products

• Completed agreement with Novus for thedevelopment and commercialization of new feedproducts.

• The University of Nebraska and Kansas State DGSfield trials completed.

• Baseline DGS product characterization completed.

Biomass Enzymatic Hydrolysis

• Complete preliminary design of Biomass pilot plant• The preliminary design was completed in

September 2004.

Background project information:

In 2002, the United States Department of Energy(DOE) awarded ABRD a $35.5 million cost-sharedfinancial assistance agreement for the two-phaseproject, “Advanced Biorefining of Distiller’s Grain andCorn Stover Blends: Pre-Commercialization of aBiomass-Derived Process Technology.”

One of the main objectives of the DOE project is todevelop cost effective technologies for convertingcellulosic biomass to ethanol and co-products andintegrate biomass conversion with existing dry grindethanol plant to improve the overall processeconomics. ABRD has formed alliances andpartnerships with companies and researchorganizations, who are recognized as leading expertsin the biomass conversion field, to ensure thesuccessful development of biomass ethanoltechnologies. Bench scale research and processevaluation are being carried out at the NationalRenewable Energy Laboratory, Novozymes NorthAmerica, SunOpta Inc., and Auburn University.

Biocarburantes de Castilla y León

• Complete preliminary design of BCyL• The preliminary design was completed in July 2004.

The revision of the BCyL design will be completedin December. As result of these efforts SunOptahad offered a turnkey contract for BCyL for thefinal design, construction and commissioning of thebiomass plant.

Background information on the BCyL Project:

The Biocarburantes de Castilla y León S.A. (BCyL)Project includes the design, construction andoperation of a 5 million L/year straw-to-ethanolcommercial demonstration plant. This plant will beinstalled next to a 195 million L/yr. cereal ethanolplant to share some of the utilities. AbengoaBioenergy R&D is charged with providing theprocess and engineering design, constructionsupervision, and start-up of this first of its kindturnkey plant.



Gasification and Catalysis

• Development of an ethanol catalyst initiated• The ACES catalyst development project launched at

ICP.

Background project information:

Under gasification and catalysis research, the SixthFramework contract has been signed. The ACESProject is progressing with preparation of reactor andlaboratory conditioning.ACES is a research project that is being carried outwith the CSIC, in the ICP (Catalysis and PetrochemicalInstitute) facilities in Madrid, where are beingdeveloped other ABRD projects as well. The mainobjective of ACES is the development of a catalystready to produce ethanol from syn-gas, whichconsists essentially in a mixture of Carbon Monoxideand Hydrogen. This is the key step on the thermo-chemical pathway to ethanol synthesis from biomass.

E-Diesel/ FFV/ E95

• Agreement established to initiate e-diesel viabilityevaluation

• Profit agreement signed and viability evaluationinitiated in collaboration with Cidaut, and additivesuppliers.

Fuel Cell

• Complete ethanol reforming prototypes (1kW and10kW)

• The milestones were met and the deliverables tothe Spanish Navy have been accepted. We are innegotiations to sign a new contract for a 300 KWreformer.

Background information on the fuel cell researchproject:

Abengoa Bioenergy initiated the EOS Project threeyears ago. The goal of this Project is to demonstratethe viability of the bioethanol process as a hydrogen

source to feed fuel cells; and turn bioethanol into ahydrogen vector.

The EOS Project has been developed in collaborationwith the Catalysis and Petrochemical Institute (ICP) ofthe CSIC (Superior Council of Scientific Research). Allthe project’s experimental activities have been carriedout at their facilities. The project has receivedfinancial support from the CDTI, the Centre forIndustrial Technological Development of the Ministryof Science and Technology.

Energy Crops (Profit)

• Initiate development of energy crops• Initiated the development of sweet sorghum and

Jerusalem artichoke under the profit award incollaboration with the Escuela Superior deIngenieros Agrónomos of the UniversidadPolitécnica de Madrid, and the Instituto TecnológicoAgrario of Castilla y Leon.

The clone selection study by sugar content iscompleted in the energy crops arena.



New Projects

USC grant for wheat and barley:

Abengoa Bioenergy through its subsidiary BioetanolGalicia has been awarded, by the Headquarter ofInvestigation and Development of the Xunta ofGalicia, an R&D project for the study and optimizationof the production of bioetanol from cereals, such aswheat and barley.

The applied research activities will be developed atthe Technological Research Center belonging to thegroup of Chemical Biotecnology and Bioprocesses ofthe Engineering Department of the University ofSantiago de Compostela (IIT-USC).

Agrobiol Project (Profit):

The Spanish government awarded AbengoaBioenergy S.A. the Profit project to study the viabilityof producing bioethanol from sorghum and artichokecrops.The project will also demonstrate the suitability ofbioethanol as an alternative fuel, in both ethanol/gasoline and ethanol/diesel blends for conventionalvehicles, and to produce hydrogen for fuel cells.

Renew Project

The RENEW Project was awarded under the 6thFramework Programme of the European Commissionto develop, compare, (partially) demonstrate and trainon a range of fuel production chains for motorvehicles. This project is coordinated by VolkswagenAG (Germany) and Abengoa Bioenergy is one of thekey participating partners.

Alliances and Partnerships

AlliancesABRD entered into two strategic alliances this year:

(1) SunOpta for pretreatment, fractionation, andengineering services.

(2) Novus for product characterization, proof-of-concept, field validation and commercialization ofnew feed products.

PartnershipsABRD has entered into collaborations with thefollowing partners to develop and demonstratebiomass technology:

• Novozymes Enzyme application• Genencor Enzyme supplier• Auburn University Analytical support• NREL Pretreatment, AspenPlus Model, NIR Rapid

Analysis• Harris Group Engineering design.

Sustainable Bioenergy · Bioenergy Sustainable Development 26 ABENGOA Activity Report 2004 Ethanol...

Documents

Transcript of Sustainable Bioenergy · Bioenergy Sustainable Development 26 ABENGOA Activity Report 2004 Ethanol...