Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Salinger, I don't think you could use lignin on its own, it comes in powder form, so it would have to be mixed with some sort of liquid, ethanol in the case of Maersk's LEO fuel. Trying to run a ship on lignin as a straight fuel itself would be like trying to run it on coal dust, probably not too successful. Although I'm sure the IMO would still allow it, even without a 4,000 hour LONO, just to p*ss us off.
https://www.liberate-project.eu/what-is-lignin-and-where-does-it-come-from/
https://www.youtube.com/watch?v=McCNMLE8Mw0
Interesting comment from Jason -
"He also believes that the same emulsifying techniques used for MSAR could also be used with renewable feedstocks such as lignin-based material, instead of refinery residue, to produce a 100% renewable fuel."
I had just read this, released earlier this morning -
https://ml-eu.globenewswire.com/Resource/Download/b6733b95-7047-4870-a4cc-8acb20c41dbf
From Page 30 -
Four primary fuels for net-zero shipping
Lignin fuels
A new biofuel based on biomass residue (lignin) and alcohols (methanol or ethanol)
Lignin fuel has the potential of being the most price-competitive carbon-neutral fuel with the lowest price estimates almost on par with fossil fuels
In the development stage, production needs to be scaled up to create a new value chain and infrastructure for supply
Engine requirements would be the same as for methanol, but additional handling of contaminants may be required
https://www.maersk.com/news/articles/2019/10/29/maersk-join-forces-with-industry-peers-and-customers-to-develop-leo
"The marine sector has very different fuel requirements than automotive or aviation. “Shipping requires bespoke low-carbon fuel solutions which can make the leap from the laboratory to the global shipping fleet. Initiatives such as the LEO Coalition are an important catalyst in this process,” explains Søren Toft, Maersk Chief Operating Officer.
Lignin is a structural bio-polymer which contributes to the rigidity of plants. Lignin is isolated in large quantities as a byproduct of lignocellulosic ethanol and pulp and paper mills. Currently, it is often incinerated to produce steam and electricity."
If we can mix refinery residue and glycerol to make bioMSAR, I wonder if we could also make an emulsion by mixing lignin and glycerol?
I was just about to ask the same question, there are dozens of pages which list the top 10 or 15 container shipping companies in order of size, be it total TEU, number of ships, revenue, whatever you want, but I've never been able to find anything similar for the bulk sector.
"The global merchant fleet exceeds 50,000 ships though, so container shipping is only a small percentage of an enormous market"
According to a QFI presentation 60 - 80 million tons of the Global Marine market will be HS fuel which is scrubbed. MSC and Maersk together will probably account for less than 10% of that total.
I always thought it would be Scorpio Bulkers or Star Bulk, probably more the latter now, they've got over 110 scrubbers installed and Scorpio seem to have put all their scrubber-installed ships up for sale, they're changing their business to become a renewable energy company, a bit strange.
With the first JDA company being MSC and not CMA CGM, it must have increased the chances of the Danes coming back to the table. Maersk spent 7 years working together with QFI to develop MSAR, they signed the JDA in March 2010. That's a lot of time and effort, it would be very kind of them to do all that work and then hand the whole lot on a platter to their biggest competitor. Yes they are in alliance with MSC, but they're also a competitor. The only reason they dumped us was their scrubber stance back in 2017, that has since changed significantly and 3 million tons of their annual fuel is still high sulphur. With another 30 ships due for retrofit this year, that will probably increase to 4 million tons of IFO380 by the end of 2021, a third of their annual fuel consumption will be scrubbed onboard. Not bad for a company which hates scrubbers so much.
bioMSAR might be the carrot which brings them back too. There are only two possible ways for shipping companies to meet the intermediary IMO 2030 emission targets, switch to LNG or incorporate some level of biofuels into your fuel consumption. Soren Skou reiterated just recently that they definitely wouldn't be considering LNG, so some sort of biofuels is probably their only option. Jason always said that if they came back to the table it would be for commercial roll-out, they had enough info from the initial LONO trial, they wouldn't need any more tests or trials. Maybe that's why Kirk was asking for 30% in Resolution 6 of last year's AGM. Major expansion like that might need significant CAPEX.
Oh yeah, well spotted dustofnations, my mistake. So maybe 0.2% would be possible, but it would be a struggle to get below that. I read a page somewhere that said WTI was only 0.21% sulphur, although others have it as 0.24% or higher, and Light Louisiana Sweet and a few others can be 0.15 - 0.2%, but it's difficult to find stuff that low.
elir71 might be right, the sulphur content at Asphalt Ridge is low, but maybe not low enough to make ECA compliant bioMSAR. I found one link which said it had virtually no sulphur, a few which said less than 0.5%, even one which said less than 0.42%, but that would probably still be too high. 40% of that mixed with 50% glycerol + 10% water would take it down to about 0.16% sulphur content, so still too high for ECAs.
There's not that much of a spread between VSLFO and MGO though, it's been averaging about $50 - $70 a ton, and I would think LS bioMSAR could be priced between the two of those. 30% less CO2, less NOx, not a Frankenstein fuel likely to sh@g your engine, 1 - 1.5% cheaper to use compared to VLSFO because it doesn't need to be heated to 100C, it will be 5 or 6% more fuel efficient because this stuff
https://upload.wikimedia.org/wikipedia/commons/2/24/Ship_Maneuvering_out_of_Port_S.Louis_du_Rhone%2C_near_Marseille.jpg
actually gets burned in your engine. It must sell at a premium to VLSFO, but maybe not as much as MGO as I envisaged. Still, by the end of the year when prices are back to normal, $550 - $600 a ton could be a fair price and when it's only costing $140 a ton to produce, that's still a huge profit.
I read that it would cost $180m for a 10,000 bopd plant. That's maybe oil (still with condensates included), but if it is residue then that's roughly 1,400 tons a day. Mix that with 1,400 tons of glycerol, you're looking at 1,000,000 tons of bioMSAR produced a year from one plant (I'll ignore the extra 10% water which we don't charge for anyway). Even at only $500 a ton leaving the plant, that's still crazy economics. The $180m CAPEX would be paid off in the first 6 months.
Post copied from QFI board, ref today's RNS, serious potential implications for the Utah project.
Could this not dramatically change the economics of the Asphalt Ridge project, in fact massively increase the potential profitability of QFI generally?
In the last Quorum article which dustofnations posted last July, he argued that MSAR technology could dramatically reduce the price of production in Utah, since the condensates which currently make up a large part of the costs would no longer be required to thin the residue. From Figure 1's data, if we remove the price of those condensates used, that would give us the price of the raw sweet residue extracted at about $14 a barrel, almost exactly $100 per ton of low sulphur residue.
From an article I posted last year -
https://farm-energy.extension.org/new-uses-for-crude-glycerin-from-biodiesel-production/
"Their crude glycerol is usually sold to large refineries for upgrading. In recent years, however, with the rapid expansion of biodiesel industry, the market is flooded with excessive crude glycerol. As a result, biodiesel producers only receive 2.5-5 cents/lb for this glycerol (Johnson and Taconi, 2007). Therefore, producers must seek new, value-added uses for this glycerol."
There are 2204 lbs in a metric ton, so at 2.5c a lb, that would make a ton of glycerol about $55, almost half the price of the residue, worst case scenario it's $110 a ton. There is a glut of the stuff on the west coast of the USA at the moment, many refineries in California which were to be mothballed have instead been kept open and turned into "bio-refineries".
For ease of counting, let's say the glycerol is the same price as the residue, so both the major input components of bioMSAR are $100 a ton. What else gets added, 10% water (free) and the special Nouryon chemicals, from memory they're about $35 for each ton of MSAR. So we should be looking at maximum production costs of $140 per ton of bioMSAR, but possibly up to 20% less than that.
The big difference now is what price do we sell it at? This is no longer a synthetic version of HFO, or in the case of Asphalt Ridge with its sweet residue, a synthetic version of VLSFO, this is a synthetic diesel, a green bio-diesel if you like. It has to be if the results of the tests on the Cummins engine are to be believed. The current price of MGO is averaging about $500 a ton, but that's still much lower than the pre-Covid prices, when things get back to normal hopefully by the end of the year, MGO could be back to its usual average of between $600 and $700 a ton. If you can produce something at $140 a ton and sell it at those prices, that's one hell of a profit, a money-making machine.
The CO2 reductions are in the region of 25% we've been told, but the well-to-wake figure would be even higher, there is no refinery process, it comes out of the ground, gets stuck through a colloid mill and voilà. What is the CO2 footprint of an oil refinery? Gamechanger inde
Could this not dramatically change the economics of the Asphalt Ridge project, in fact massively increase the potential profitability of QFI generally?
In the last Quorum article which dustofnations posted last July, he argued that MSAR technology could dramatically reduce the price of production in Utah, since the condensates which currently make up a large part of the costs would no longer be required to thin the residue. From Figure 1's data, if we remove the price of those condensates used, that would give us the price of the raw sweet residue extracted at about $14 a barrel, almost exactly $100 per ton of low sulphur residue.
From an article I posted last year -
https://farm-energy.extension.org/new-uses-for-crude-glycerin-from-biodiesel-production/
"Their crude glycerol is usually sold to large refineries for upgrading. In recent years, however, with the rapid expansion of biodiesel industry, the market is flooded with excessive crude glycerol. As a result, biodiesel producers only receive 2.5-5 cents/lb for this glycerol (Johnson and Taconi, 2007). Therefore, producers must seek new, value-added uses for this glycerol."
There are 2204 lbs in a metric ton, so at 2.5c a lb, that would make a ton of glycerol about $55, almost half the price of the residue, worst case scenario it's $110 a ton. There is a glut of the stuff on the west coast of the USA at the moment, many refineries in California which were to be mothballed have instead been kept open and turned into "bio-refineries".
For ease of counting, let's say the glycerol is the same price as the residue, so both the major input components of bioMSAR are $100 a ton. What else gets added, 10% water (free) and the special Nouryon chemicals, from memory they're about $35 for each ton of MSAR. So we should be looking at maximum production costs of $140 per ton of bioMSAR, but possibly up to 20% less than that.
The big difference now is what price do we sell it at? This is no longer a synthetic version of HFO, or in the case of Asphalt Ridge with its sweet residue, a synthetic version of VLSFO, this is a synthetic diesel, a green bio-diesel if you like. It has to be if the results of the tests on the Cummins engine are to be believed. The current price of MGO is averaging about $500 a ton, but that's still much lower than the pre-Covid prices, when things get back to normal hopefully by the end of the year, MGO could be back to its usual average of between $600 and $700 a ton. If you can produce something at $140 a ton and sell it at those prices, that's one hell of a profit, a money-making machine.
The CO2 reductions are in the region of 25% we've been told, but the well-to-wake figure would be even higher, there is no refinery process, it comes out of the ground, gets stuck through a colloid mill and voilà. What is the CO2 footprint of an oil refinery? Gamechanger indeed.
Our partners Aquafuel were working with the University of Greenwich to demonstrate commercial production of glycerol using algae. It might be worth sending a message to the guys there to see what happened with that project. If they could get enough of these glycerol bio-refineries set-up around the world in the next 15 - 20 years or so, it could become the answer to the IMO 2050 question, or one of the potential answers along with hydrogen, ammonia, ethanol, etc.
Then the chain could be MSAR (until 2030) => bioMSAR (until 2050) => Glycerol (after 2050)
This article is from Autumn 2017 -
http://www.worldbunkering.net/justin_interview/bio_fuels/
This article is from 2016 -
https://www.fiaformulae.com/en/news/2016/june/insight-formula-e-s-emission-free-charging/
and it says "But within the next three to five years, the production of glycerine from salt water alga will be commercially demonstrated. This would create a fully sustainable production process."
Send Paul Day an email at Aquafuel and ask him if this has been achieved yet.
https://www.motorship.com/news101/fuels-and-oils/nobodys-fuel...-yet
https://shipandbunker.com/news/world/685227-sb-analysis-the-widening-hsfovlsfo-spread-and-potential-for-a-second-wave-of-scrubber-uptake
Hugely positive article, the tide is definitely turning back in our favour again.
Bag of fag packet using the last Edison Report - KSA in licence model + Mexico in tolling model + 400 ships running MSAR would give us an EBITDA of about £500m a year. Other smaller projects could also be added, but those are the three biggest market opportunities we've got.
1m 13s into the video, that's the guy who commented at the bottom of the JDA RNS, Prabhat Jha.
Jason mentioned several times about future LONOs taking much less time than the previous one with the Seago Istanbul as transatlantic routes would be possible, so more chance of doing long runs of burning MSAR. I found this MSC brochure which highlights their routes, Page 45 onwards lists their Transatlantic Mediterranean routes which could be a possibility.
https://www.msc.com/global-document-library/pdfs/east-west-network/msc_2m_presentation_full_guide
Interestingly both the MEDUSEC and MEDGULF routes stop at Algeciras in both directions, eastbound and westbound. That would be very handy if Cepsa was to be producing the fuel once again. Gioia Tauro to Charleston and back round trip is 39 days, with 13 port calls, Gioia Tauro to New Orleans and back is even longer, a round trip of 48 days, with 17 port calls. A couple of the Asian routes, SILK and SWAN also stop at Algeciras.
Up until yesterday, I would have agreed with you grumpy, this LoadStar article was the general consensus -
https://theloadstar.com/still-no-return-on-the-horizon-after-carriers-billion-dollar-scrubber-investment/
Covid-19 seriously screwed up company's investments in scrubbers because of the serious narrowing of the spread. But this lot have played an absolute blinder, scrubbers probably paid back in less than 2 years, hats off to them.
https://shipandbunker.com/news/world/309195-star-bulks-scrubbers-may-pay-for-themselves-by-the-end-of-this-year
https://shipandbunker.com/news/am/341425-arq-fuel-to-make-bunkers-from-mining-waste-in-louisiana
Interesting fourth paragraph. I wonder if what they are producing will need a LONO? I bloody hope so.
Am I just hearing things, or at 3m 23s does he accidentally say Maersk before correcting himself and saying Most?
10 MMUs, if it's done using the tolling model, the same as Cepsa was, £34m a year EBITDA by my calculation. I'll let you decide what P/E ratio to use, but I would suggest 16 is a tad low.
Actually, thinking about it again, it might be because Bunker companies would be involved in Marine too, not so much for the Power market, certainly not in KSA, the fuel would be sold directly from the refinery to the end user, the electricity company. But in the Marine market any middle man would also need to get a cut, so that might explain it.
Did anybody else notice a disparity in the EBITDA figures at the bottom of that Edison report? At first, it seemed difficult to compare the two tables, the columns in the Power market are divided into Number of MMUs, but the Marine market splits the columns using Number of ships. But they must be the same, they must correspond for both markets, because the Capex figures are exactly the same in all cases. So 8 MMUs will supply 75 ships, 40 MMUs will supply 375 ships, etc.
So why is the EBITDA in tolling model for Marine almost exactly 10% less than it would be producing the same amount of MSAR for the Power market? I realise that there is a difference between the two products, the Marine MSAR had to be tweaked, slightly different chemicals maybe, but would that reduce the profit by 10%? The only other thing I can think of is the Royalty Fee that would probably still have to be paid to the Danes.
Even if Maersk don't burn another ton of MSAR in any of their engines, they would still make money from its commercial roll-out, ironically it now seems from their 2M partner using it instead.