US swapping oil security for fertiliser insecurity and higher farm and food costs

Agrifuels do not come without a price - diversion of food products to fuel raises the cost of animal feeds and so on to meat, eggs, milk, corn syrup and products that contain, them and even the humble tortilla...as a trip to Wal Mart will confirm.

The unexpected prosperity of the Mid West corn growers has seen corn acreages rise at least 9% this year - which means higher fertiliser inputs. In the US this means high nitrogen urea fertilisers produced directly from natural gas. As natural gas use expanded for heating, prices rose and the fertilizer industry headed overseas where new plants utilising the most recent technology were built close to the source of the gas in Qatar, Saudi, Brazil, Egypt, India, Venezuela and Australia.

A typical plant is the one built by Snamprogretti (costing A$500Mn) on Burrup Peninsula north of Perth near Port Dampier using gas from extensive local gas fields which came on stream in 2003 and is jointly Australian / Indian owned and run. This site was preferred to one based in Darwin using gas from the Timor Sea - Snamprogretti (part of State owned ENI) have built over 90 urea plants around the world.

The plant will produce approximately 760,000t/yr of granular urea and 190,000t/yr of excess saleable ammonia. The ammonia production plant uses Halder Topsoe technology and the urea plant using its own technology. The Haldor Topsoe technology is used by 60% of ammonia plants being built around the world. The urea granulation is developed using the Hydro Agri process identical to another Snamprogetti plant in Venezuela.

The ammonia is produced by mixing natural gas and water with a catalyst to form oxides and hydrogen. These react with air to produce nitrogen, hydrogen and carbon monoxide. The nitrogen and hydrogen is combined to form ammonia (NH3). The carbon monoxide is converted to dioxide and used in the urea plant.

Ammonia and carbon dioxide are reacted to form ammonium carbamate. The urea is formed by dehydrating the carbamate. The urea has impurities removed and is then granulated by being sprayed onto urea granules in a fluidised bed.

The world's larger urea fertiliser plants is the Fertinitro petrochemical complex at Jose Anzoategui in Venezuela - Koch Industries the huge privately owned US oil products company has alarge interest in the plant. Costing US $1.1 billion, the plant was completed in November 2000 and is the largest nitrogen-based fertiliser unit in the world to date. The project consists of two ammonia plants and two granulated urea plants, with operating capacities of 1.2 million tonnes per year for the ammonia and 1.5 million tonnes per year for the urea. Of this, 240,000 tonnes of the ammonia and 1.5 million tonnes of the urea are intended for export. It is expected that overall production at the site will rise from 1.9 million tonnes per year to 4.6 million tonnes per year.

One of the principal advantages of the Jose site is that it has ample supplies of cheap natural gas and through more centralised control flare gas (gas extracted along with oil) cannot be burnt and wasted. Hence feeding the gas to a fertiliser plant becomes more economical.

The result is that the US and Canada increasingly rely on imports from lower cost suppliers but have seen domestic prices climb. Typically priced at US$270 a tonne in 2006 they may reach US$400 later this summer - which reflects the fact that 90% of all urea imports go into the US - from a position of self reliance ten years ago - currently there are two major sources, Qatar and Saudi who supply probably 25% of the US needs.

The major Saudi plant is the Sabic complex at Al Jubail which uses BASF / Uhde technology who have recently installed a 4th plant and their total urea output will rise to 2.6 million tonnes per annum while ammonia capacity will reach 2.3 million tpa. This increase in production has neatly coincided with an increased international demand.

QAFCO founded in 1969 and owned by the State of Qatar, now has 4 plants in operation and after recent completion of QAFCO-4 plant, QAFCO has emerged as the world’s largest single site producer of urea and ammonia with an annual production capacity of 2 Mn tons of ammonia and 2 Mn tons of urea.

So US reliance on foreign oil, through a huge switch to ethanol now relies heavily on the Middle East for nitrogen fertiliser, a low cost commodity which costs a great deal to ship and haul - to feed the nation.

Mr Chavez it appears likes to ship his to his friends in South America.

Bio - fuels, Southern Hemisphere market growing fast

The world's largest biodiesel plant which will eventually produce 1.8 million metric tonnes of biodiesel a year, is being put up in a US$130Mn project by Australian renewable energy firm Natural Fuel Australia Ltd on Jurong Island in Singapore. Based on refined palm oil as feedstock, it will serve markets in Japan, Korea, Taiwan and the west coast of the US. Part of what is projected to be worth globally, US$1 trillion by 2020.

There are also prospects of a world oversupply of glycerine as it will also produce 60,000 tonnes of pharmaceutical-grade Glycerin, which has uses in cosmetics and drugs production.

The plant represents one of Australia's largest single manufacturing investments in Singapore to date.

Richard Selwood, Managing Director of Natural Fuel, says of the bio - diesel market which is growing at 30% year on year

"At the moment, because it's grown from a very small base, the growth is quite spectacular, probably 30-plus percent per annum. I don't believe that a long term is sustainable. But the market, let's say, probably will be about 5 percent of the total fuel market."

The world's largest palm oil producers produce about 33 million tones of palm oil a year, or about 80 percent of the world's market. Natural Fuel says Singapore's easy and direct access to this crop as well as others from Australia (canola and soya) is a key part of its strategy to secure production feedstock.

Selwood says:

"We have long-term contracts with suppliers like ConAgra. They guarantee us the feedstock, which would be sourced out of RSPO (International Roundtable on Sustainable Palm Oil) members in Malaysia and Indonesia. And we're also experimenting with growing soy crops in the top end of Australia, northern Australia, which can also be used in the Singapore plant. And because Singapore is so well located, we can source from anywhere in the globe."

Natural Fuel says the plant becomes profitable with mineral oils priced above US$40 and currently plans to build 3 other biodiesel plants in Houston in the United States, and in Darwin and Sydney in Australia.

World's largest independent terminal operator Royal Vopak will provide storage, pipeline, equipment and logistic services for its Singapore plant.

The Bio-fuels Australia Conference will be held on 20 - 21 November 2006, Hilton Hotel, Sydney, Details are available here

Biofuels Finance and Investment World will be held on 28 - 30 November 2006, Royal Garden Hotel, London, United Kingdom . Details are available here

Honda / RITE announce a major development in bio-ethanol production.

Takeo Fukui, President and CEO of Honda reviewed the state of Honda and their position in the market for road vehicles on July 20th 2005. (*PS)

In a little noticed remark in his review he identified the Brazilian market where ethanol fuel has been used since the mid 19809's since when Honda has been offering motorcycles and then automobiles that accept ethanol-gasoline fuel. The percentage of ethanol has increased from 10% to 20% and 25%, and now 100% ethanol fuel, called E100, is also available in the market. Honda he announced will introduce a FlexFuel car that accepts ethanol contained fuel at any percentage, before the end of 2006.

He also quietly added as a rider that Honda will continue to pursue efforts to utilize various non-gasoline energy sources, which is expected to have a large impact on the reduction of CO2.

On September 14th 2006 in a joint statement with Research Institute of Innovative Technology for the Earth (RITE) , Honda announced that their cooperative research has resulted in ethanol production technology from soft-biomass, a renewable resource of plant-derived material. Even now few people have noticed the announcement.

Because Carbon dioxide (CO2) released by combustion of bio-ethanol balances the CO2 captured by plants through photosynthesis the total atmospheric CO" load does not increase. Bio-ethanol, therefore, a carbon-neutral fuel, but current production competes with food sources - sugar, corn, soya beans.

So like many others , RITE and Honda have focused on converting ethanol from cellulose and hemicelluloses, both found in soft-biomass- inedible leaves and stalks of plants, such as rice or corn straw.

The RITE-Honda process, combines bio-technology from RITE and the engineering technology of Honda.

The process consists of 4 stages;

I. Pretreatment to separate cellulose from soft-biomass
II. Saccharification of cellulose and hemicellulose
III. Conversion of sugar into ethanol using microorganisms
IV. Ethanol refinement


The largest obstacle to ethanol production with current technology is the inhibition of fermentation that disrupts the growth and function of microorganisms that convert sugar into alcohol, leading to extremely low ethanol yield. Honda and RITE have overcome this obstacle through using the patented RITE strain of micro-organisms and Honda's engineering to improve alcohol conversion efficiency.

Having developed the process they now intend to dvelop a mass scale continuous process.

A demonstration project is envisioned within a pilot plant.

RITE was established in 1990 as a joint investment of the Japanese government and private enterprises, with the goal of conducting fundamental research on countermeasure technology for global-warming, particularly climate change. Engaged in efforts to stabilize climate change through development of alternative energy research and CO2 sequestration technologies.

Process image (c) Honda / RITE

* PS It was of course the ocassion when he reported the progress on the Honda Jet which improves fuel efficiency by 40% compared to existing aircrafts in its class by combining excellent aerodynamic performance with the high fuel efficiency of Honda’s HF118 engine.