Oil Man’ Reflects on Biofuels

by Larry Sullivan (Lee Enterprises Consulting, Inc./Biofuels Digest) ... There is much common ground between Big Oil, Big Soy, and Big Corn. Minnesota Big Iron companies provided computing power to the early days of Big Oil’s seismic surveys, and Iron Range Minnesota steel built American refineries. Let us find that sweet spot between these giants of American industry.

The origins of the cellulose ethanol efforts started in WW2, and, before those days when Henry Ford figured the farmers buying his cars would divert a bit of the family’s moonshine to keep the car running. Then, Mr. Rockefeller’s Standard Oil in Cleveland found a home for volatile spirits leftover from his kerosene refining in the new horseless carriages traversing the new roads. This gasoline was ideal for internal combustion engines, and, in Germany, vegetable oils found a home with Mr. Diesel’s modern engines. Biofuels never left the scene, but petroleum sure found its home, especially in the war efforts of the 20^th Century.

Must incumbent industrial companies surrender to emergents? Or is the natural evolution the path as we saw IBM, once dominant in Big Iron, become a company able to fit into the world of Apple computers?

Fundamentally, the oil and gas companies and especially those with refinery assets or divisions, shy away from biofuel producers, developers, and production. There are many reasons: oxygen was not then fit for gasoline for engine designs in the 1970s, the oil refinery views oxygen as an alien species inside the process units, and, most importantly, it takes market share from refiners. It is one matter to sell a biobased chemical to a pipeline company to reduce corrosion but, a matter entirely different, to substitute ethanol for gasoline. Refinery processes rearrange hydrocarbons and not carbohydrates. These are fundamentally different processes requiring both academic and practical reality to come to bear on processes. Conoco did not like that Dupont put a DME process in their UK refinery in 1990. However, this is changing as refiners start to make more of their biofuels inside or near their refinery. One might recall, the compromise from the Clean Air Acts was for oxygen mandates inside the refinery. Refiners found MTBE fit more within their refinery skill base, and ethanol failed in the 1970s, only finding its technical fit with dehydration technologies like the molecular sieve. ASTM standards took many years to develop. MTBE lost its edge due to environmental impacts with groundwater. Even refiners fought among themselves as they reformulated gasoline for both unleaded fuels and oxygenated fuels. Refinery managers struggle with biofilms inside some units, so, again, bioprocessing is alien to refiners. Microbiology graduates were not greeted well when refiners visited colleges to recruit staff. Today, they head up the queue!

As we see with legacy and incumbent power generation companies, there remains a conservative ethos and capital-intensive structure that resists new technologies.

Today, most oil and gas companies are adopting technologies to mitigate their carbon exposure, and biofuels fit well now after stops and start from President Carter’s gasohol 1970s to President Bush’s warning that we “end our addiction to oil…” in the 2000s. We see today an over 40-year cycle that is yielding excellent progress. Many refiners are investing in projects Inside the Battery Limits (ISBL) using existing refinery units. Some exploration and production (E&P) companies are using biotech like biobased carbon dioxide with grants from the DOE and other sources. Some drillers welcome biotech companies for their ability to solve problems with corrosion, environmental impacts, and, most importantly, to show opponents as well as investors that sustainability is a significant concern.

Finally, the oil refiners grasped the message. They initiated a willingness to look more carefully at recruiting outside of engineers, accountants, and lawyers who typically dominated petroleum suites atop the office towers in Dallas and Houston, Los Angeles, New York, and San Francisco. Now one finds biologists, chemists, and even economists, starting to migrate up the corporate ladders in these petroleum giants, be they Rockefeller’s American progeny or the Signor Mattei’ ENI, Shell’s Samuel and Deterding. In the world of petroleum economics and geographic destiny, the skills these early leaders left do benefit today’s leaders.

So, sustainability drives company paradigms today regardless of the nature of their business, be it electricity, gasoline, or biofuels. Shareholders and their proxies wage battles over who will be the new Chief Sustainability Officer (CSO) in those suites in the suburbs of Dallas (Irving), San Francisco (Richmond), and this move away from the rarified suites to a CSO as the catalyst can now bridge the gap between the past and future. I always enjoy Dr. Brown’s response to Marty’s concerns for roads, “Roads? Where we’re going, we don’t need roads!” READ MORE

Excerpt from Iowa AgriBusiness Radio Network: “We talked about our usual things. Trade is one of our top issues, (and) the Renewable Fuel Standard,” (Incoming Iowa Corn Growers Association president Carl) Jordan says. Renewable fuel waivers are a concern, and one of the largest oil companies is still building MTBE factories, (which) we know cause cancer. Ethanol is the cheapest and best oxygenate we have, so I don’t understand why people are using MTBE. That’s just another hurdle we have to go over.” READ MORE