Biomass--The next revolution in surfactants?
By Neil A. Burns
There is constant debate about when and how quickly the world will run out of oil, but there is no doubt that, at some point, it will. The term "peak oil" has passed into the popular lexicon to describe the point at which oil production reaches its highest historical level, a point beyond which, literally and figuratively, it is downhill for oil producers. Figure 1 uses Energy Information Administration (EIA; an agency of the US Department of Energy) data to illustrate various predictions of when, and at what point, global oil and natural gas liquid production reaches its peak. You will quickly see from this figure that most predictions are grouped around about now as the time that the peak is reached.
The issue of peak oil has implications, of course, for transportation and other essential areas such as heating. Not as widely discussed, at least in the mainstream media, are its implications for the chemical industry and surfactants in particular. Crude oil-based products end up as alcohol sulfates, ether sulfates, linear alkylbenzene sulfonates (LAB), alcohol ethoxylates, nonylphenol ethoxylates, softener, conditioner, antimicrobial quats, and amphoterics-that is, in essentially every major surfactant class used in every class of detergent, personal care, and industrial cleaning product. Try maintaining basic personal, household, and institutional hygiene for a day without oil.
If the prospect of an ultimately disappearing supply of oil does not keep you awake at night, then the recent trends in pricing and its volatility surely do, as illustrated in Figure 2. Since the early 1990s, oil prices have steadily marched up and the volatility has increased.
Since the oil embargoes of the early 1970s, the surfactant industry has looked to the oleochemical value chain as the counterbalance to a crude oil-based system. Since the early 1990s, the adoption of palm- and coconut-derived oleochemicals as "the answer" to a depleting and nonrenewable resource has accelerated. Although perfectly fine feedstocks, palm and coconut oils are not the answer. In recent years, as many supply chain professionals will attest, the vegetable oil market has started to behave increasingly like the crude market. Figure 3 bears an eerie resemblance to the last 15 years of the crude oil prices in Figure 2--which for better illustration, I have superimposed on the vegetable oil chart.
That there is a high degree of correlation between the crude oil and vegetable oil markets is now widely accepted. The reasons behind this are still debated, and the oft-touted food vs. fuel factor is clearly relevant. Products such as palm and soybean that can be used as food (as they have been for thousands of years) and fuel (as they have recently in biodiesel) are inevitably going to take some pricing cues from the major fuel, which is crude oil.
So where does this leave surfactant producers? Today, the pricing of key feedstocks such as lauryl alcohol is following, as one would expect, the vegetable oil markets, which in turn seem correlated with the crude oil markets. Figure 4 illustrates recent lauryl alcohol pricing trends. Petrochemical-derived alcohol is apparently offering little real alternative in current conditions, and the ability to substitute LAB for fatty alcohols has been tapped as far as it can go.
So, this leaves surfactant producers looking for a viable alternative feedstock source that is renewable and less tightly correlated with the petrol and oleo oils now supporting the industry. This is where biomass and the recent technology developed around energy and, more recently, chemicals, comes in.
Biomass, by many definitions, is biological material derived from living or recently living organisms. Clearly this leaves out coal and oil but includes palm oil and the other vegetable oils. For the purposes of this article we shall focus on emerging technology that is being used to convert traditional (e.g., palm, sugarcane) and new (e.g., algae) sources of biomass into chemicals, including surfactants.
In the last few years much time, energy, and money have been invested in trying to find a route from biomass to a gasoline substitute, given the overarching challenge posed by peak oil to the global economy. A number of companies have been formed for the original purpose of pursuing biofuel alternatives including Amyris, Gevo, Petroalgae, Codexis, Solazyme, Coskata, and Virent. Other major companies, such as ExxonMobil, have established business initiatives around biofuel (in the case of ExxonMobil, most notably from algae). More recently, however, a number of biomass companies have realized that a quicker and more profitable route to market may initially be via chemicals and not biofuel.
The reasons for a "chemicals first" strategy include, firstly, that the cost barriers are not necessarily so onerous for the production of certain chemicals for application in, say, cosmetics as they are for mass-marketed gasoline. Chemicals markets are also more fragmented and niched than the transportation fuels markets. This makes it easier for a company to start small, commercialize, and earn money at a scale that is often still that of a demonstration plant for fuels production. For example, a 10 million lb (4.5 million kg)/yr chemical plant can produce a number of products and be commercially self sustainable. Even a 1 million lb/yr chemical plant is viable for the right product mix-this is the equivalent of about 140,000 gallons (530,000 liters) of fuel-hardly a meaningful amount of gasoline or any other transportation fuel.
Given the keen interest of surfactant producers in a good alternative to the oleo/petro duopoly-and the realization by the biofuel companies that chemicals represent a shorter, quicker route to revenues and profits-we see the emergence of a very attractive area for both parties: biomass for the surfactant value chain.
This new potential third leg to the surfactant value-chain stool is much more than just conceptual at this stage. A number of companies have commercial or near-commercial activities focused in this area. A key question relating to any such serious initiative relates to the supply of sufficient quantities of biomass at the right price and in a timely manner. A biomass source that ends up being as tightly correlated in pricing to crude oil as vegetable oil has been is interesting, but not the sourcing revolution that the industry is looking for.
Algae represent just one such interesting source of biomass. It is an efficient crop, in terms of yield per acre, vs. others such as corn or sugar, and it does not have a competing food application (like both of the aforementioned alternatives). In an important paper published in Biotechnology Advances (25:294-306, 2007), Yusuf Chisti, a researcher at Massey University in New Zealand, outlines the case for microalgae as the only currently identified renewable source of biomass that potentially can be made available in sufficient quantity to represent a viable source of biomass for transportation fuel. This analysis provides, I believe, a logical underpinning for the use of algae-derived biomass as an alternative for the production of surfactant feedstocks.
Table 1, developed by Chisti, illustrates the efficiency of algae as a source of biomass for biodiesel production. It tabulates the acreage of commonly used crops that would be needed just to replace the current US consumption of gasoline with a biodiesel-based alternative.
Table 2 shows that the assumptions of either 30 or 70% oil content in microalgae species are not unreasonable.
The statistics in Tables 1 and 2, while meant to support the use of algae as a biodiesel source and thus a gasoline alternative, are also supportive of the broader concept of a crude oil and vegetable oil alternative in the surfactant value chain.
Commercial activity in the field of converting biomass to surfactants is well underway, and the biomass source is not confined to algae, as the following profiles show.
Headquartered in South San Francisco, California, USA, Solazyme (www.solazyme.com) was founded in 2003. A venture capital-funded company, it is well beyond the start-up stage. Solazyme's technology allows algae to produce oil and biomaterials. The company has partnered with Unilever in March 2010 to commercialize its technology in a range of consumer products.
Figure 5 illustrates the basic Solazyme technology.
Figure 6 indicates the range of surfactant-related products currently contemplated for the customized algal oils produced by Solazyme.
Headquartered in Bolingbrook, Illinois, USA, Elevance (www.elevance.com) uses metathesis technology to convert natural oils from a variety of sources (potentially including algal oil) to chemical feedstocks. Elevance recently formed a partnership with the sugar and palm plantation company, Wilmar, to build a biorefinery in Indonesia. The company also has a partnership with Stepan (Northfield, Illinois) to commercialize its technology in Stepan's range of surfactants and polyols. Figure 7 illustrates the basic Elevance biorefinery technology.
Figure 8 illustrates the potential of just one of the building block chemicals produced by the Elevance technology and a subject of some of the joint development work with Stepan in surfactants.
The field of biorenewables is fast moving, and chemical feedstock development is clearly a key objective of many of the formerly biofuels-only companies. As the need for additional options in surfactant feedstocks becomes more apparent, expect more companies to adapt their biomass technology to this area. Expect also further partnerships to be formed to accelerate commercialization. Such partnerships will go both downstream to consumer products (such as the Unilever/Solazyme arrangement) or upstream to the biomass sources themselves (as in Elevance/Wilmar).
Neil Burns is the managing partner of Neil A Burns LLC, an investment and advisory firm. The firm invests equity capital in specialty chemicals companies with enterprise value between $50 million and $1.5 billion. The firm also provides advisory services in the field of surfactants, oleochemicals, and feedstocks. Burns serves on the board of directors of SiVance, a specialty silicones manufacturer and on the operating advisory boards of GenNx360 Capital Partners and Linley Capital Partners. Burns has over 20 years experience in specialty chemicals, including terms as CEO at Oxiteno USA, VP US Operations at VVF Ltd and a board director at Pilot Chemical Company. His education includes a BS in Chemistry from the University of York and an MBA from the Wharton School.