Companies plan to tap La.’s forests for energy

17th January 2012   ·   0 Comments

By Susan Buchanan
Contributing Writer

You’ve tripped over the roots of huge oaks pushing up through the city’s sidewalks and noticed that trees in the metropolis often tower above nearby buildings. But many New Orleans residents probably don’t know that nearly half the state is covered with forests and that the southern U.S. is considered the nation’s wood basket. Louisiana is a top oil-and-gas producer, but companies—including the state’s utilities—may soon start using forest residue for energy.

An out-of-state company plans to break ground on its first gasoline-from-wood plant later this year near Alexandria, La. Sundrop Fuels, Inc. in Colorado chose that timber-rich site because of its access to feedstocks and natural gas, its qualified workers and supply-line infrastructure, along with support from the state’s economic-development authorities, the company said.

“We’re building the nation’s first, mass-production, green gasoline facility,” said Steven Silvers, spokesman for Sundrop Fuels. “We can use any cellulosic material as feedstock and have chosen woody biomass because it’s plentiful, especially in and around Louisiana.” The facility should cost $450 million to $500 million to build, and is expected to employ 150 workers and produce over 50 million gallons of green gasoline a year.

For the plant’s feedstock, Sundrop Fuels will use branches, bark, tops of trees and leftover wood from tree processing. Hydrogen from natural gas will be combined with the woody matter to make tank-ready gasoline. By using high-temperature gasification, the facility will convert wood into a renewable synthesis gas. The final, green-gasoline product can be used by auto engines that run on petroleum-based fuel.

Sundrop Fuels plans to sign agreements with wood waste suppliers. “Because it’s a competitive commodity market, it’s likely that our woody biomass feedstock will come from several states,” Silvers said. Under other agreements, the company will send its renewable gasoline to various blenders and refiners in Louisiana, then out to the nation’s gasoline consumers. Oklahoma-based Chesapeake Energy, a top natural gas producer with interests in Louisiana, is a 50-percent owner in Sundrop Fuels, Silvers noted. Last summer, Chesapeake announced a partnership with Clean Energy Fuels to build 150 natural-gas filling stations for truckers across the country.

Sundrop Fuels hasn’t received any federal or state tax dollars for construction of its Louisiana plant or its technology developments, Silvers said. The facility will be financed partly through the sale of tax-exempt, private activity bonds — which carry no financial obligation from state or local authorities. Buyers of the bonds receive tax exemptions.

“Our Louisiana plant will produce a cellulosic, advanced biofuel, which by Environmental Protec­tion Agency standards must represent at least a 60-percent reduction in greenhouse gas compared with the production of petroleum-based transportation fuels,” Silvers said. “Compared with corn ethanol, our process is far more efficient economically and environmentally. Each gallon of our green gasoline will contain considerably more energy value that a gallon of ethanol.” Petroleum-based gasoline also has more energy value than ethanol.

Interest in wood for energy has grown because of a Con­gres­sionally mandated, renewable fuel standard, passed in 2005 and then modified in a 2007 energy bill, requiring that more renewable fuel be blended into gasoline. Use of renewables in the nation’s gasoline supply is required to expand from 15.2 billion gallons this year to 36 billion by 2022. Corn ethanol accounts for most of the biofuel produced in the U.S. now, and Washington wants to encourage use of wood, grasses and other non-food sources.

Crescent City residents have a stake in what Entergy New Orleans, which keeps our appliances running, does in the renewables arena. “Entergy utilities don’t use biomass as a fuel source now,” said Michael Burns, Entergy spokesman. However, “as part of a 2010 Renewable Request for Proposals, Entergy Louisiana and Entergy Gulf States Louisiana received multiple bids from resources that planned to use biomass — including agricultural resi­dues and woody biomass.” Entergy is negotiating long-term contracts with entities that intend to use biomass fuel sources, he said.

A Renewable Energy Pilot Program, adopted by the Louisiana Public Service Commission in mid-2010, will drive what the state’s utilities do with wood. The program was designed with an eye to deciding if a renewable portfolio standard—used by other states to make utilities seek a minimum percent of power from renewable resources — is right for Louisiana. Thirty U.S. states and a number of European countries have portfolio standards.

Under the LPSC’s pilot program, utilities have issued requests for proposals or RFPs for long-term, renewable resources that will come online between 2011 and 2014. In- and out-of-state producers of renewable electricity were allowed to ”bid” into RFPs mandated by the LPSC. The pilot program aims to create up to 350 megawatts of long-term renewable power within three years, or enough to supply two percent of the state’s energy needs, and is intended to spur development of biomass, geothermal, solar, wind and hydro energy.

Louisiana’s three, investor-owned utilities — Entergy, Cleco and SWEPCO — are participants in the pilot program. “Entergy’s RFP is ongoing, and Cleco is currently conducting a RFP for fuel to be used at its Madison 3 facility” in Boyce, La., said Colby Cook, LPSC spokesman.

Each utility’s portion of the 350 megawatts is based on 2009 retail sales. Contracts awarded through the RFPs will have terms of 10 to 20 years. For instance, Shreve­port-based SWEPCO recently an­nounced a 20-year power agreement, approved under the pilot, between it and a Kansas wind farm being built by BP. The state’s pilot program allows an array of power sources, including a paper-plant byproduct called black liquor that can be burned to produce steam. Another eligible source is waste-to-energy or incineration of waste to create electricity.

At Pineville-based Cleco, spokeswoman Robbyn Cooper said “our participation with biomass is strictly through the LPSC pilot program.” Based on its 2009 retail sales, Cleco’s portion of the program’s 350 megawatts of renewable capacity is 43 megawatts. “It’s just too early to say whether we’ll be using wood chips at Madison 3,” she said. Cleco’s Madison 3 power-generating unit, built two years ago at Boyce in Rapides Parish, uses petroleum coke in its boilers but can also rely on biomass for fuel. The company will know more about its possible wood use by year-end.

In another initiative, Wisconsin-based Point Bio Energy, LLC intends to build a plant in Baton Rouge this year, producing 400,000 tons of wood pellets for export to Europe. Northern European nations, the UK and Italy are brisk importers of pellets for fuel.

Biomass fuels from wood, grass, waste and other organic matter provided four percent of all energy used in the U.S. in 2010, according to the U.S. Energy Information Administration’s latest data. About 46 percent of that was from woody biomass — including chips and sawdust. Globally, biomass accounts for an estimated 10 percent or more of all energy use.

This article was originally published in the January 16, 2012 print edition of The Louisiana Weekly newspaper