Guided Tour ~
Implementing the Forest Biorefinery
(FBR) at a Pulp
P lp and Paper Mill
V. Chambost1, J. McNutt2 and P.R. Stuart1
1 -NSERC Environmental Design
g Engineering
g
g Chair in Process Integration,
g
Department of Chemical Engineering, École
É
Polytechnique (Montréal)
2 -Center for Paper Business and Industry Studies (CPBIS) at the Georgia Institute of
Technology (Georgia Tech) (Atlanta)
Presentation Outline
Presentation Context
 Purpose
 Complexity of the Situation & Key Questions
 Types of Enterprise Transformation
Forest Biorefinery
y ((FBR)) p
platform
definition
Product Portfolio and method for its
determination
Phased Approach ~ FBR implementation
Takeaways
Presentation Purpose
To demonstrate how forestryy companies
p
should
consider a market-driven product selection
while establishing their FBR strategies, and
characterize the implied company
transformation
Identifying the Right Biorefinery
Configuration is Complex…
Key Questions to be Addressed
Related to Implementing the FBR
What are the key factors regarding biorefinery product
selection, that will provide a sustained return over the
short and long terms?
 What supply chain management changes are implicated for
product delivery and the targeted new market(s)?
 Who
Wh are the
th b
bestt partner(s)
t ( ) for
f a winning
i i business
b i
strategy?
t t
?
What biochemical, thermochemical and chemical
biorefinery processes enable product diversification, while
providing the targeted return on investment?
How will the mill/company transformation to the forest
biorefinery impact the day-to-day pulp and paper
operations,
p
, at each step
p of implementation?
p
Enterprise Transformation ~
Definitions
2 transformation concepts ~
 Inside-out ~
• Transform the enterprise by changing processes
within the existing organization, including changes
in manufactured products
p
 Outside
Outside-in
in ~
• Core vision, mission and strategies are changed to
create a new focus to outside markets that is
sustainable,, using
g new and integrated
g
delivery
y
techniques and with vastly improved bottom-line
results
Transformation to the forest biorefinery
implies both types of transformation
Can Forestry Companies Adopt this
Enterprise Transforming Culture?
Core business
transformation ~ by
204 Years of Innovation
product portfolio
adjustments related to
Maturity
market evolution
Maturity
Cyclical adaptation to
reinvent the business
and transform the
enterprise ~ while
g declining
g
avoiding
revenues
3
Maturity
G th
Growth
Growth
Birth
Growth
Birth
Birth
Chemistry,
Ch
i t
Energy
Chemistry,
Biology,
M t i l Science
Materials
Si
Explosives
1802 1830 1850 1900 1925 1945 1990 2000 2050 2090
19 Sept 06
Biorefineryy opportunity
pp
y for
the forestry industry
Biorefinery Platform Definitions
Co--products or wastes?
Co
Waste
Chips
Biomass
Pulp
and
Paper
Mill
P&P
Products
Yield?
Yield?
B ildi
Building
Block
Yield?
Derivative
Derivative
Reducing Volumes, Flexible Throughputs…
Increasing Process Complexity
$$
‘Product Portfolio’
$$$
Product Portfolio Definition
Process Product
Platform Platform
FBR Product
Portfolio
structure
1
A
2
B
3
C
Product
Families
Market
Segment
g
…
…
…
…
…
…
…
Considering Existing Pulp and Paper
Product Portfolio
Value Chains need to consider long term biorefinery sustainability ~
 Unique supply chain is key for competitive position over the longer term
 Production flexibility (supply/demand)
 Margins stability and risk mitigation challenges must be systematically
addressed ~ while diversifying the product portfolio incrementally
Establishing the Product Portfolio ~
Management Considerations
Typical product
portfolio
structure
Process
Platform
Product
Platform
1
A
2
B
3
C
Product
Families
…
…
…
…
…
Market
Segment
How to establish a sustainable product portfolio structure?
Process Design
Market
Requirements
F
Functionalities
ti
liti
Technological
g
Viability
Process
Flowsheets
Solution
So
ut o
Architecture
Process
Processocess-Product
oduct
Platforms
Product
Opportunities
Multi-Product
MultiStrategy
Product Structure
Product Strategy
Inspired by Ref: M. Muffatto & M. Roveda, Product architecture and platforms: a conceptual framework
Product Portfolio for the FBR
Innovation
Novel
CHALLENGE
For product
selection
Technology
Push
P h
Process-centric
Processdesign
Substitution
S b tit ti
Substitution
Market
Pull
P ll
Replacement
R l
t
Product-centric
Productdesign
Adaptation
Guided Tour ~ Implementing
the FBR
 Objectives
j
~
 Present ~ a Methodology for determining
the mill-based p
product p
portfolio,, including
g
building block chemicals and derivatives,
while considering product/process design
 Present ~ a Phased Approach for
incrementally implement biorefinery
activities
ti iti while
hil setting
tti a bi
biorefinery
fi
strategy
t t
Example based on Ethanol to Ethylene and
Polyethylene value chain ~ Other Major Options Exist
Proposed Methodology To Drive The
Product Design ~
Chambost, V., Eamer, B., Stuart, P., ‘Systematic Methodology’ PAPTAC 2007
Market,
M
k t Economic
E
i &
Technology Risks
Overall
Product/Process
Opportunities
Product/Process
Details Analysis
Outcome ~ Product
Value Chain
Opportunities by region
and by priority
Business Plan &
Biorefinery Decision
Decision-Making
Implementation Considerations
Selecting the Most Promising
Building Block Chemical
Today!
Cellulosic ethanol as the most promising building block?
 Large market ~ supply/demand structure
 Technology
T h l
know-how
k
h
is
i relatively
l ti l well-developed
ll d
l
d
 Processing costs need to be lower compared to the conventional
process
 Fierce volatility on the market…
Ethanol Price Volatility
Peak at ≈ $3/gal
Source: Gulf Ethanol Corp
In 6 months: ethanol prices dropped
byy more than 50%
Price is not the challenge, price
volatility and competition are
How can we stabilize
H
t bili operating
ti
margins in a context of volatility
and market uncertainty?
Choosing ethanol as a building
block for the FBR implementation?
Benefit
B
fit from
f
increasing
i
i ethanol
th
l
market ~ there will always be a
demand ~
Reduce the impact of volatility on
biorefinery activities by diversifying the
ethanol product family
14th January <$1.25/gal
Source: Gulf Ethanol Corp
Ethanol to Polyethylene
A Potential Product Family
Co--products strategy?
Co
Waste
Chips
Biomass
Pulp
and
Paper
Mill
Ethanol
Ethylene
P&P
Products
Commercial, economic and
technical issues?
Polyethylene
Ethanol Product Family
Opportunities Screening
Ethylene
value chain
Competitive
advantages
Economic/Commercial drivers
- Healthy value chain
- Large market volume
- Interesting price point ($1,06/kg)
- Polyethylene market offers valuable
perspectives (LLDPE, LDPE, HDPE)
Technical drivers
-Ethanol to ethylene:
catalytic dehydratation
- Ethylene to PE ~ well
known technology
- Ethanol to P ~
*JV D
Dow ~ C
Crystalsev
t l
*Braskem operation
Challenges
- Imbalances in production by region
- 85% of PE production cost =
ethylene cost
- Need for securing feedstock supply
production cost will be a
- Ethanol p
driver
- First-to-market for securing the
green market segment for PE
- Ethylene = simple molecule
from petrochemical platform
~ Ethanol to ethylene
technical pathway is not
obvious
Key Issues
Market-based Value Chain Analysis ~
identification of potential partners along the
value chain and assessment of the product
family commercial potential
Supply Chain synergies, with gradual
implementation
p
of the FBR ~ are critical for a
viable business model
Risk assessment of the product family ~ ii.e.
e
process, techno-economic issues should be
identified and mitigated
Proposed Methodology To Drive The
Product Design ~
Chambost, V., Eamer, B., Stuart, P., ‘Systematic Methodology’ PAPTAC 2007
Market, Economic &
T h l
Technology
Ri k
Risks
Company-based
&Technology-based
Data for Value Chain
Opportunities
Mill/Company
Transformation
Overall
Product/Process
Opportunities
Product/Process
Details Analysis
Outcome ~ Product
Value Chain
Opportunities by
region and by priority
Outcome ~ Information
needed for business
plan development
Business Plan &
Biorefinery DecisionDecisionMaking
Outcome ~ Biorefinery
Strategy & Go/No Go
Decision
Implementation Considerations
Phased Approach for
Implementing the FBR
Implementation ~ compete with all capital spending
Phase I
Lower Operating
Costs ~
 Replace fossil
fuels at mill
(natural gas,
Bunker C), and/or
 Produce “building
block” chemical
 Minimum risk
technologies
Compete
internally for
capital
Phase II
Increase Revenues ~
 Exportable green
energy, and/or
 Manufacture of
derivatives
 Market
development for
new products
 Higher
Hi h process
complexity and
technology risk
 Partners essential
Phase III
Improve Margins ~
 Knowledge
Knowledge--based
manufacturing and
production
flexibility
 Business flow
transformation
 Product
development
culture
 Off
Off--shoring,
Outsourcing, etc…
Select the most
sustainable
product platform
and
d partner(s)
t
( )
Core business
transformation
SCM key to
success
Strategic Vision ~ Phase II must determine Phase I & III
Phased Approach for
Implementing the FBR
Implementation ~ compete with all capital spending
Phase I
Lower Operating
Costs ~
 Replace fossil
fuels at mill
(natural gas,
Bunker C), and/or
 Produce “building
block” chemical
block
 Minimum risk
technologies
Phase II
Increase Revenues ~
 Exportable green
energy, and/or
d/
 Manufacture of
derivatives
 Market
development
p
for
new products
 Higher process
complexity and
technology risk
 Partners essential
Phase III
Improve Margins ~
Knowledgeg -based
 Knowledge
manufacturing and
production
flexibility
 Business flow
transformation
 Product
development
culture
 Off
Off--shoring,
Outsourcing etc…
Outsourcing,
etc
Margins improve with Enterprise Transformation
Strategic Vision ~ Phase II must determine Phase I & III
Take-Away Messages
Both inside-out and outside-in transformations are
implied
p
by
y the FBR p
product p
portfolio
The definition of a FBR product portfolio is critical ~
and needs to consider both market and technical
perspectives
These product
product-centric
centric analyses are followed by
process design ~ partner identification ~ and other
key considerations concerning supply chain changes
With the overall strategy defined ~ transformation to
the FBR is best achieved using a phased
i
implementation
l
t ti
Guided Tour ~
I
Implementing
l
ti the
th Forest
F
t Biorefinery
Bi
fi
(FBR) at a Pulp and Paper Mill
Thankyou/ Merci!