Zilkha Black Pellets

Zilkha Black® Pellets
The Clean, Renewable
Alternative to Coal
CONFIDENTIAL
Company Overview
•
Zilkha Biomass Fuels LLC builds, owns
and operates manufacturing facilities
which
hi h produce
d
a proprietary
i t
“bl
“black”
k” wood
d
pellet
•
The proprietary Zilkha Black® pellet
seamlessly
l
l replaces
l
coall iin existing
i i coall
fired power plants without additional capex
required
–
Significantly reduces noxious emissions
emissions,
including SO2, NOx and mercury
2
Zilkha Track Record in Energy
Name
Position
Summary
y Biography
g p y
Selim K. Zilkha
Co-Owner
Director and 50% owner of Zilkha Renewable Energy (Horizon Wind
Energy) from 1998 to 2005
Director of El Paso Corporation from 1999 until 2002
CEO and sole director of Zilkha Energy Company from 1983 until 1998
Michael Zilkha
Co-Owner
President and co-owner of Zilkha Renewable Energy (Horizon Wind Energy)
from 1998 to 2005
Executive VP and co-owner of Zilkha Energy Company from 1986 until 1998
E&P
Zilkha Energy Co.
(1983-1998)
•Independent Oil and Gas Company;
Largest Acreage Holder on the shelf in
the Gulf of Mexico in 1997
•Sold to Sonat for
$1.2 Billion
WIND
Zilkha Renewable
Energy Co.
(1998-2005)
BIOMASS
Zilkha Biomass Energy
(2006)
•Largest Independent Wind Power
Developer in U.S.
•Manufacture and Marketing of Waterproof
“Black” Wood Pellets
•Sold to Goldman Sachs in 2005; Sold
to EDP in 2007 for
$2.7 Billion
•Patented Efficient Biomass Steam
Explosion Technology
•Will have invested $120 million by the end
of 2012
3
Zilkha Business Model
•
The market for biomass fuels is driven by emissions
–
In Europe and Southeast Asia, the focus is on CO2 reduction.
Mandates and incentives are in place today
•
Our target customers are European utilities who have experience
burning biomass in pulverized coal-fired units, and Japanese coalfired utilities due to new feed-in-tariffs
•
We are serving this market with a better product—Zilkha Black®
pellets
–
Patented Zilkha technology, NOT torrefaction
–
Hard, waterproof pellet with reduced dust
–
D
Drop-in
i replacement
l
t ffor coall with
ith minimal
i i l capital
it l iinvestment
t
t
4
Advantages of Co-Firing Black Pellets vs. Solar and Wind
• Biomass p
power is dispatchable
p
– can be base loaded
• Conversion/co-firing of black pellets in coal plants
requires minimum capital
• Power plants are already connected to the grid
• Permitting is usually not an issue
• Shorter lead time for conversion vs. new build
• Permanent jobs are created from forest to power plant
5
Biomass Options
Type
Requirements for Implementation
Chips
Build new plant with fluidized bed or grate boilers.
Capital costs $4
$4,000
000 to $5
$5,000/kW
000/kW(1)
Traditional White Pellets
Modify existing pulverized coal plants to handle
water sensitive
sensitive, fragile
fragile, dusty
dusty, hard-to-grind
hard to grind
pellets. Capital costs $500(2)-$900(3)/kW
Zilkha Black® Pellets
Transport, store, handle, grind and burn like coal.
Capital costs minimal
Source:
1)
Program on Technology Innovation: Integrated Generation Technology Options. Electric Power Research Institute. Palo Alto, CA. June 2011.
2)
Howard, Grant M., Biomass Generation: EPRI Biomass to Electricity Workshop. Ontario Power Generation. December 3, 2009.
3) Review of the Generation Costs and Deployment Potential of Renewable Electricity Technologies in the U.K.. Department of Energy and Climate Change. London, UK.
October 2011
6
Technology At A Glance
•
Manufacturing of Zilkha Black® Pellets is similar to the production of
standard white pellets, with the addition of our patented thermal treatment
process.
•
The current annual production of white pellets is 15 million tonnes
anticipated to grow to 50 million tonnes by 2020.
Intake
Drying & Milling
Sawdust, wood chips, pulp
and other
fib
fibrous
waste
Reduce moisture content
from ambient (~50%) to
~15%
15% while
hil grinding
i di iinto
t
fine dust
Proprietary
Patented Zilkha
Thermal Treatment
Pelletizing
Feedstock passes
through dies to create
Black pellets
Source: IEA Bioenergy Global Wood Pellet Industry Market and Trade Study, 2011
7
“White Pellet”
“Whit
P ll t” Issues:
I
Pellet
P ll t D
Dustt iis E
Explosive
l i
Serious Fire Risk in Ship Loading and Storage
•
Fines = dust = very real explosion risk
•
Explosion mitigation takes capital beyond that required to
handle coal
•
Venting during transportation
•
Off-Gassing of CO, CO2, and CH4
Source: Staffan Melin.
S f t in
Safety
i Handling
H dli W
Wood
d
Pellets. 2008.
8
Black Pellets vs. White Pellets
•
Black pellets are waterproof, white pellets are not.
•
Higher energy content per tonne, 19.50 Gigajoules(GJ)/tonne vs. 17.0
GJ/tonne.
•
Higher bulk density (750 Kg/m3 vs. 630 Kg/m3).
•
Resulting in 30% more GJ/m3 and lower equivalent transportation cost per GJ.
•
Reduced losses due to dusting between delivery port and burner tip.
•
Lower operating cost due to reduced dusting, fewer safety issues.
•
Significant avoided capital costs vs. white pellets conversion cost.
9
Black Pellets Cost Less Than White
Burner Tip Cost White Pellets vs. Zilkha Black Pellets ($/GJ )
$16.00
Energy
Cost
Delivered
To the
Burner
Tip
(US$/GJ)
$14.00
$12 00
$12.00
All-In Cost
To the Burner Tip
10% Lower for
Black Pellets
Vs. White Pellets
$10.00
$8.00
$6.00
$4.00
$2.00
$‐
White
Wood
Pellet
(FOB)
Ship
Dust
Capex
Opex
Fiber∆
Margin
Black
Wood
Pellet
(FOB)
Ship
10
Zilkha Black® Pellets Perform Like Common Coals
Parameter
Zilkha Black®
Pellets(1)
Russian Coal #1,
G Grade(2)
Central
Appalachian (Long
Fork)(3)
Powder River Basin
Coal-Eagle
Coal
Eagle Butte(4)
Moisture %
1.44
7.37
7.16
23.92
Ash, Dry %
0.72
14.1
11.52
4.65
Volatile, Dry %
78.53
35.92
31.23
33.95
Sulfur, S, Dry %
0.03
0.229
1.07
0.29
8,447
11,218
12,114
8,966
19,647
26,093
28,117
20,854
54.42
69.38
66.93
53.46
Hydrogen, H, Dry %
6.03
4.69
4.43
2.71
Nitrogen, N, Dry %
0.15
2.25
1.34
0.58
Mercury, ug/g
0.01
0.52(5)
0.15(7)
0.08(7)
Calorific Value, BTU/lb
Calorific Value, kJ/kg
Carbon, C, Dry %
Source:
1)
Analysis Report 0089_C1_SWPELLET_10-3-11. SGS North America Minerals Services Division. South Holland, IL. October 18, 2011.
2) LQSi Data Statistical Results By Program. SGS Minerals Services Division. 2010.
3) Tillman, David A., Duong, Dao N. B. Fuel Selection for Cofiring Biomass in Pulverized Coal and Cyclone Fired Boilers. Foster Wheeler North American Corp. Clinton, NJ. 2009.
4) Testing of Biomass/Coal Blends in WRI’s Combustion Test Facility. Western Research Institute. May 9, 2011.
5) Yudovich, Ya E., and M. P. Ketris. "Mercury in Coal: a Review." International Journal of Coal Geology 107-134 62 (2005): 117.
6) Leaner, J., James Dabrowski, R. Mason, P. Ashton, K. Murray, T. Resane, M. Richardson, M. Ginster, R. Euripides, E. Masekoameng, and G. Gericke. Mercury Emissions from
Point Sources in South Africa. Council for Scientific and Industrial Research, 2008. PPT.
7) United States. Department of the Interior. U.S. Geological Survey. Mercury in Coal--Abundance, Distribution, and Modes of Occurance. By Susan J. Tewalt, Linda J. Bragg, and
Robert B. Finkelman. 2001. USGS Fact Sheet FS-095-01.
11
Testing Black Pellets as Coal
•
SGS a world recognized leader in coal analysis
SGS,
•
Testing Zilkha Black® pellets to coal standards
•
Input from various utilities requested for their unique requirements











Sample preparation
Proximate plus Ultimate analysis
Analysis of ash – 13 major and minor oxides
Trace elements lab preparation
Trace elements: Ba, Be, Cd, Cr, Cu, Pb, Ni, V, Zn
Trace elements: As, Se
Mercury
Chlorine
Fluorine
Fusion, (8-point, reducing and oxidizing on same sample)
H d
Hardgrove
G i d bilit IIndex
Grindability
d
12
Successful Black Pellet Co-Firing Trials
• Burned black pellets alongside PRB coal in varying
percentage for emissions and combustion testing at
Western Research Institute (WRI)
• Emission levels of SO2 and mercury were reduced with
increasing percentage of Black pellets blended with
coall iin ffuell mix
i
• NOx emissions showed direct correlation between
nitrogen content of fuel (<0.2%
(<0 2% for black pellets)
13
Reduced NOx and SO2
100%
Run
No.
Mesh Size
Pellets
Ratio Coal to Black
Pellets
1
200
100% coal
2
200
80% coal : 20% pellets
3
200
50% coal : 50% pellets
4
200
100% pellets
5
50
80% coal : 20% pellets
6
50
50% coal : 50% pellets
7
50
100% pellets
100%
100%
Coal ground to 200 mesh for all tests
14
Reduced Mercury
Run
No.
Mesh Size
Pellets
Ratio Coal to Black
Pellets
1
200
100% coal
2
200
80% coal : 20% pellets
3
200
50% coal : 50% pellets
4
200
100% pellets
5
50
80% coal : 20% pellets
6
50
50% coal : 50% pellets
7
50
100% pellets
Coal ground to 200 mesh for all tests
15
Black Pellets are Very Grindable
•
WRI tests show that Black p
pellets achieve complete
p
combustion and carbon
burnout at particle sizes larger than coal
–
The objective of grinding Black pellets is to achieve complete carbon burn out during
combustion, and no more
–
Due to high volatile content, Black pellets do not need to be ground as finely as coal to
achieve complete combustion in the boiler
•
Plant operators should consider the relationship between pulverizer settings and
combustion performance. For example, co-firing Zilkha Black® pellets could allow
utilities to burn a lower grade of coal
•
p y testing
g of Zilkha Black® p
pellets in a p
power station
Recent full-scale,, third party
indicate that Black pellets can be co-milled and co-fired with coal at a level of 70%
biomass
16
Zilkha Black ® Pellets and Grindability
•
Coal particles are milled to a size that allows them to burn out completely
completely. This particle
size is usually less than 0.1 mm.
•
Biomass particles contain a much higher fraction of volatile substances, and the general
consensus for biomass particle size is that complete burn out occurs at 1-2 mm.
•
Zilkha Black® pellets can be ground to appropriate size in traditional coal mills.
17
Black Pellets Grind like Coal
Particle Size, Mesh
65
50
40
30
20
18
16
Grinding Energy
y
200
75
297
18
Black Pellets Have Superior Ignition Potential
•
A ZWZ value (ignition potential) above 6 [kJ/kg fuel/°C] is seen as
satisfactory for producing a stable flame
flame.
•
Zilkha Black® pellets were found to do considerably better than all the
reference fuels, including white wood pellets and a number of commercial
coals,
l with
ith a ZWZ value
l off 16.28
16 28 [kJ/kg
[kJ/k fuel/°C].
f l/°C]
19
Zilkha Certified Sustainable Biomass
•
Zilkha Certified Sustainable Biomass (ZCSB) – Jointly developed with
Peterson’s Control Union, international recognized certification body
•
Based on EU RED (Renewable Energy Directive) Standard
Sustainable
Forestry
Practices
•
Supply Chain
Tracking
3rd Party
Certification
Auditing
Zilkha Biomass is committed to sustainable sourcing:
–
Certified forests (FSC, SFI, PEFC and others)
–
SFI Certified Sourcing
20
Where is there Biomass in North America?
• British Columbia – Pine Bark Beetle
Disaster
• US Southeast – Prolific Wood Basket
• Declining Markets for Timber, Pulp & Paper
21
B.C. Forest Industry Decimated by Bark Beetle
•
Cumulative area of British Columbia affected byy p
pine beetle is
43 million acres (1)
•
Recoverable biomass from BC is 322 million tonnes or >20 million tonnes
per year
p
y (2)
Source:
1) BC Ministry of Forests, Lands and Natural Resources
2) Assumes 15% recovery in 15 years at 50 tonnes/acre
22
New Supplies of Wood in North America
Wood Available From Pulp
Plant Shutdowns
Wood Resource
2005 Production
140 million tonnes*
2011 Production
-120 million tonnes*
Available for Pellets
20 million tonnes/year
Source: UNECE Timber Committee Market Forecasts, 2011
23
Biomass Supplier Relationships
• We have four experienced foresters on our team
• W
We have
h
d
developed
l
d relationships
l ti
hi with
ith mostt off
the large timber owners in North America
• We have term sheets with a number of them for
long term supply contracts as an element of
th i portfolio
their
tf li managementt
24
Crockett, Texas Plant
•
•
Commercial scale equipment
Produces large quantities of
Zilkha Black ® pellets for fullscale testing
25
Crockett Experimental Lab
• CPM Hammermill
H
ill
• Pilot Scale Thermal
Treatment Reactor
• CPM Pelletizer
26
Crockett Quality Control Lab
•
Smallll th
S
thermall ttreatment
t
t reactor
t for
f fast
f t
turn around
•
y
of treated biomass and
Lab analysis
pellet quality
•
Separate electric boiler
•
Full time lab team supervised by a
degreed chemist
27
Zilkha Pellet Storage
g in Beaumont,, TX
28
Bulk Black Pellet Shipments
• Multiple shipments have been sent from the
Port of Beaumont to European customers
• Pellets withstood heavy rain during prestaging and loading
• Pellets handled with dozers, front-end
loaders,, and conveyors
y
with no deterioration
• Minimal dusting at loading and unloading
locations
29
Loading During Heavy Rain
•
Pellets withstood heavy rain during pre
pre-staging
staging and loading
•
Vessel twice initiated closure of hatches due to rain while black
pellets were still able to be loaded
p
•
Trimmed pellets via dozer with no noticeable deterioration
•
Findings by Control Union sampling:
–
Net Calorific Value (AR) - 19,568 GJ/mt
–
Ash – 0.51 % (dry)
–
Fines <1mm – 1.5%
–
Temperatures between 7 – 23° C
30
Trimming the Load
31
Pellets Arriving in Europe
32
Unloading in Europe
• Unloaded via mobile quay
crane – half of cargo into
trucks and half onto dock
f further
for
f th shipment
hi
t via
i
barge
• P
Pellets
ll t were llow d
dust,
t
durable, and low
temperature
• Full-scale burns taking
place in six power plants
33
Zilkha Black ® Pellets Tested in Europe
Five full scale test burns in Europe
2 700 ttonne ttestt b
2,700
burn iin th
the N
Netherlands,
th l d M
March
h 2012
34
Long-term Durability Test
Helsingborg, Sweden – Pile outside since March 2012
35
How Many Black Pellets will Zilkha Supply?
• First large-scale
large scale plant
plant, Selma
Selma, AL – 275,000
275 000
tpy – Q4 2014
• 18 ttotal
t l plants
l t planned
l
d ffor N
North
th A
America
i
• Total Capacity ~ 4mm tpy by 2017+
• Additional volumes will be based on licensing
of technology
gy to third p
parties
36
Zilkha Biomass Selma
37
Zilkha Black® Pellet Project Development in North America
BC & Alberta
Pine Bark Beetle Infestation
Pacific
Northwest
U.S. Southeast
Ark-La-Tex
38