Ethanol – Zeachem’s highest margin product

Why focus on ethanol? This has always been a question that lingers in my mind every time companies such Zeachem and even Gevo, LanzaTech and Amyris talk about their activity progress in the biofuel space.

Well, I bluntly asked this question to Zeachem CEO and president Jim Imbler, and his answer is just what the title says: “Given the subsidies for ethanol right now in the marketplace, this is our highest margin product.”

Colorado-based Zeachem can now produce sugar-based acetic acid and ethyl acetate with the startup of the core operations at its 250,000 gal/year biorefinery facility in Boardman, Oregon. The intermediate chemicals can be used for applications including paint, lacquers and solvents, or the ethyl acetate can go through further processing (via hydrogenation) to manufacture ethanol at the back-end of the biorefinery.

Zeachem’s 250,000 gal/year demo biorefinery

Ethyl acetate is also an extremely high margin product in the chemical space, but compared to the $60bn ethanol market, ethyl acetate (valued at a couple of billion dollars worldwide) coming from a biorefinery still requires chemical companies to test it and get the product qualified and approved. That will take a longer process.”

Imbler said the demo biorefinery will provide both ethyl acetate and acetic acid to various chemical players for them to test the chemicals in their own product chain.Customers will be getting their samples later on in the year as Zeachem optimize their processing units.

“The primary purpose of the integrated demo plant is to prove out the design and metrics for the first commercial plant [with a capacity of 25m gal/year] that we are starting to work on right now, next door to this biorefinery. 

We already have the feedstock agreement with GreenWood Tree Farm Fund in place. With fuels, if you make the specification, you can sell them. With chemicals, you need first to provide people enough volume to run their own internal testing through their own product processing….” 

The blog is also curious how this biorefinery works. So we have this flowchart from their website:

For further explanation of this, Zeachem is working with the US Department of Energy (DOE) on the front-end (cellulosic to sugar) and back-end (ethyl acetate to ethanol) of the biorefinery. The biorefinery will be flexible enough to produce 100% cellulosic ethanol if needed or varying volumes of ethanol, ethyl acetate or acetic acid, whichever product is in demand.

Zeachem did not give the investment amount for the core operation but for the book-end project, the DOE is shelling out $25m (20% cost-share), which will pay for the design, installation, construction and operation of the equipment.

The cellulosic ethanol project that will be produced in the demo biorefinery is expected to be completed this year. The blog is really not familiar with how the chemistry works on converting cellulose to sugar but according to Zeachem, the demo biorefinery will use about 2,500 bone dry tonne of feedstock (100 gal ethanol per bone dry tonne). For the 25m gal/year commercial plant, the company expects to produce  about 110 gal/bone dry tonne of feedstock and ultimately increasing to 135 gal/bone dry tonne.

While waiting for the DOE, Zeachem is also looking to run potential cellulosic hydrolysates through the core processing, although Imbler said, they are already talking to a number of people wanting to try out different cellulosic feedstock on the front end as soon as the DOE project is in place.

Another recent development is their collaboration with the US Department of Agriculture (USDA) on a $40m grant to produce bio-based jet and diesel fuels and bio-based gasoline at the demo biorefinery. Production of test quantities for biojet diesel is expected in 2013 and for biogasoline in 2015.

Regarding their planned 25m gal/year commercial biorefinery, Imbler said their are starting to “put the financial elements together for the project.” Zeachem hopes to start construction next year and to start operations in late 2014. The commercial facility will be an exact replica of the demo plant.

Longer term, Zeachem said it is concentrating on identifying potential sites for ethanol plants both in the US, Canada and Australia. As far as South America is concern, the business model is more likely in terms of joint venture opportunities, while licensing opportunities could work out if looking at Asia, said Imbler.

With regards to Zeachem’s collaboration with Procter & Gamble, their project of developing an entirely new platform beyond C2 is said to be going forward very well, which can be applied on a number of P&G’s packaging and products.

PS

It was fortunate that I had my interview with Jim Imbler on the day that my speech class had an assignment for me to interview a stranger and present my findings to the class. Jim was kind enough to share his private life to me and to the blog:

Background: Jim was born in Wichita, Kansas, in 1957. Ran away to University of Kansas and spent 25 years getting his bachelor’s degree in Chemical Engineering and MBA.  After that Jim worked for Koch Industries [for 11 years] and became president of the company where he was responsible for the refining, pipeline, energy and petroleum, asphalt and trading businesses. Finally, he moved to Denver, Colorado.

“I’m very much a Midwestern boy, very much a Kansan and very proud of Kansas.”

Family: Jim was born among 6 brothers and sisters. He is now a proud parent of 2 boys, ages 20 and 17, and his little girl, age 14. He said something about a 3-year plan…=)

“My daughter thinks I work too much and travel too much, which she is probably right. I’m very precise. I love mathematics. My daughter will tell you that I constantly test her on math and science skills, and she loves it.”

Hobbies: Being a Colorado boy, Jim said he likes to go biking, hiking, fishing skiing. This Zeachem head honcho also has an obsession to read anything.

Likes: Sunny days and blue sky. Snow. Being with the younger crowd whether it’s scouting or in University setting.

Dislikes: Rain

What he wants to be when he grows up: To be a grandparent and spoil his grandkids like crazy.

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