January 2017

Special Focus: LNG, NGL and Alternative Feedstocks

Commercialization of pyrolysis oil in existing refineries—Part 1

In Part 1 of this article, the incentives and information needed to relax the constraints of being O2-free are outlined. The authors hope that this perspective provides new directions for improving the economics of using pyoil to produce advanced biofuels (ABFs).

Arbogast, S., Bellman, D., Paynter, D., Wykowski, J., AOTA Energy Consultants LLC

The biofuels industry has been attempting to generate a product that is compatible with existing refining infrastructure. To date, the risk-adverse nature of petroleum refiners has driven pyrolysis oil (pyoil) researchers and manufacturers to produce an oxygen (O2)-free biocrude. This manufacturing process has little hope of becoming cost-competitive.

In Part 1 of this article, the incentives and information needed to relax the constraints of being O2-free are outlined. The authors hope that this perspective provides new directions for improving the economics of using pyoil to produce advanced biofuels (ABFs).

Meeting biofuels directives

Since the passage of the Energy Independence and Security Act (EISA, 2007),1 the biofuels industry has been looking for a product that could be processed and moved within existing infrastructure. EISA established a 6-Bgpy mandate for ABFs in gasoline by 2022. Such ABFs cannot be ethanol. The industry soon began asking what might fill this quota space, and what ABFs possessed economics promising enough to encourage investors to undertake expensive, time-consuming commercialization.

Nine years later, these questions remain unanswered. However, it is clear that expected volumes of cellulosic ethanol are not materializing. Cellulosic ethanol’s economics remain challenging, and the gasoline “blend wall” has proven resistant. If anything, this scenario enlarges the space for ABFs to enter the market.

ABFs resemble conventional gasoline and diesel chemically, and do not present the engine performance and warranty issues posed by expanded ethanol blending. Secondly, the early promise shown by “drop-in” fuels—e.g., gasoline made from sugars—remains unrealized. A number of companies with initially promising biofuels strategies are now struggling for financing after failing to produce motor fuels at competitive costs.2,3

Intensive efforts have taken place to identify the most economically prospective ABFs. One such effort was the National Advanced Biofuels Consortium (NABC).4 This 2012 effort, led by the National Renewable Energy Laboratory (NREL), examined six alternative pathways from biomass to conventional motor fuels. It concluded that pyoil offered some of the best prospects for achieving commercial economics.5

Pyoil is a viscous liquid produced by vaporizing and then quickly condensing biomass. The resulting liquid is highly oxygenated, acidic and unstable. However, technologies exist that can upgrade pyoil to intermediate feedstock capable of being finished and blended into gasoline and diesel.6 Pyoil also exhibits the most potential to achieve cost reductions sufficient to render it commercially viable.7

Having economic potential is not the same thing as being close to commercialization. The recent bankruptcy of a first-generation manufacturer/upgrader illustrates how perilous pyoil’s path to market remains.8 The causes of the manufacturer’s failure are complex, and this article does not intend to discuss them in detail. It is worth noting, however, that the company was required by its customer to deliver a fully deoxygenated product to the refinery gate.9 This requirement added complexity and cost to the manufacturer’s original process design. These conditions undoubtedly contributed to the manufacturer’s difficulties in operating its plant and generating positive margins when it was up and running.

In examining both this company’s failure and the general literature on pyoil, the authors are impressed by how much is not known about pyoil, and how little consensus exists on its best production pathway. Most of what is known is related to pyoil’s chemistry and characteristics, either in its raw state or when fully upgraded. Relatively little is known about how raw pyoil’s characteristics evolve as it is progressively deoxygenated, or how these characteristics vary by boiling-range fraction.

As for production pathways, considerable literature supports a decentralized approach, wherein small plants are distributed close to biomass sources.10 Other studies see more potential for commercialization by locating large-scale facilities close to existing refineries.11 It is unclear if the full-upgrade approach used by the aforementioned manufacturer is fundamentally non-viable or requires major modifications.

The authors believe that further study of pyoil’s “unknowns” can reveal opportunities for process simplification, better production yields and operating cost savings. More specifically, pyoil’s developers have been taken “hostage” by the risk-averse posture of the refining industry. This risk-averse stance is understandable; no refiner is going to risk disrupting operations or damaging expensive equipment to experiment with an untested feedstock.

The aversion to risk is especially understandable when that feedstock, in its raw state, exhibits qualities that refiners consider toxic. Unfortunately, refiner risk aversion locks pyoil developers into an untenable business model, wherein refiners mandate fully deoxygenated material as feedstock, forcing manufacturers to adopt an overly expensive approach to pyoil upgrading.

Yield losses and hydrogen (H2) consumption accelerate as upgrading removes pyoil’s last O2, so backing off of O2 extinction looks economically promising. An alternative approach is to upgrade pyoil to a level short of O2 extinction and blend with petroleum, and then to complete any remaining needed upgrading utilizing existing refining equipment. This approach requires an accurate determination of the impact of partially upgraded pyoil (PUP) on refinery operations.

Here, however, the biofuels industry is blocked. As noted, little is known about PUP refining. For example, when does PUP become distillable? When does it become soluble with other petroleum streams? How corrosive is it to carbon steel at given levels of residual O2? How does corrosion vary as a function of the key refining boiling fractions? Virtually no data exist for any of these questions, and without comprehensive and convincing test data, no refinery should allow its operation to be used as a pyoil test facility.

Here, the authors seek to initiate a process to fill this data gap. Later in this article, more details will be provided about the economic challenges facing fully deoxygenated pyoil and the potential cost savings of the aforementioned PUP strategies. In Part 2, to be published next month, a summary is provided of what refiners must know before attempting to run PUP in their plants. Few of these criteria have made their way into biofuels industry literature. Part 2 will also discuss how refiners use blending to mitigate operating risks like corrosion and fouling. The series concludes with a focus on what is not known about PUP in terms of refining, and what new data are needed to fill this void. The discussion treats both whole PUP and the possibility that key pyoil characteristics may vary by boiling-range fraction. Limited comments will be made about PUP sourced from catalytic fast pyrolysis (CFP) as opposed to fast pyrolysis.

The refining industry has a history of accommodating itself to more challenging feedstocks and using test data to overcome its fears of operating disruptions. Pyoil, however, poses special challenges, as it is made from raw materials with which refiners are unfamiliar. Pyoil is chemically different from what refiners know. Given these facts and the dearth of test data, refiners cannot be expected to expose their operations to pyoil-induced upsets.

However, the biofuels industry can gain a basis for advancing PUP as a viable refinery feedstock by generating the data identified in the article. Availability of this new data could lead refiners to pilot plant testing, cautious introduction of dilute pyoil blends in full-scale plant tests and, eventually, base loading of PUP material into the refinery slate. New data on PUP might also provide pyoil manufacturers with alternative process schemes for significantly reducing costs.

Pyoil economies and PUP cost-savings potential

Pyoil research has successfully produced intermediate feedstocks that can be blended with petroleum streams to be refined into finished transportation fuels. However, efforts to commercialize pyoil research have foundered on economic shoals. Developmental plans have been aimed at facilities that are relatively tiny compared to those used to produce conventional transportation fuels. For example, a commercial plant in Columbus, Mississippi, operated by the aforementioned biofuels manufacturer, produced pyoil ABF using units less than 2% the size of similar equipment used in US petroleum refineries. ABFs like pyoil cannot incur such a disadvantage if they aim to achieve costs within striking distance of conventional motor fuels.

Unfortunately, existing upgrade designs for pyoil compound the scale issue with high operating costs. The refiner requirement for O2-free material has hamstrung pyoil manufacturing. In effect, refining customers have required pyoil manufacturers to add miniature refining facilities (i.e., hydrotreaters and hydrocrackers) to their plants. Not only do these facilities materialize as very sub-scale units, but they also lack the refiner’s flexibility to customize upgrading to the characteristics of individual boiling fractions and streams. The result is a “one-size-fits-all” approach to upgrading. This approach has proven inefficient in terms of yields and expensive in terms of unit cost of production.

Understanding the causes of this inefficiency is useful for spotting more cost-effective alternative strategies. Two factors render the one-size-fits-all upgrading approach costly. The first has to do with yields. Driving the last O2 molecules from pyoil requires high temperatures and high pressures. These operating conditions are required to remove the resistant O2 compounds; however, this has the effect of causing carbon compounds to crack. The result is a conversion of material that would be valuable as liquid fuel into lower-value gases. Final yields of liquid pyoils are correspondingly reduced. These yield losses can approach 12%–20% of reactor input volumes as the last O2 is extinguished.

Fig. 1. H2 consumption vs. PUP O2 level.

The second factor for the high cost of the one-size-fits-all upgrading approach involves H2 consumption. Experience shows that extinguishing pyoil’s last O2 traces involves an exponential increase in H2 consumption (Fig. 1).

Consuming this amount of H2 is expensive upfront. In small-scale pyoil plants, it compounds the inefficiency. Either the plant must get into the H2 manufacturing business, essentially reforming natural gas into H2 on a small scale, or it must somehow contract merchant H2. What the plant cannot do is access H2 already committed to an existing upgrading process, or forego hydrotreatment as unnecessary simply because a certain level of O2 can be tolerated in a refinery feedstock. Pyoil manufacturers cannot pursue such strategies, as they do not have large-scale existing facilities, and they cannot dictate product specifications to their customers. These approaches are only available to the refinery customer for the pyoil.

The incentives to conduct some portion of pyoil manufacturing inside existing petroleum refineries could be substantial. It would involve blending intermediate biofuel streams with petroleum-based streams and coprocessing them in existing refining units. For example, a study the authors conducted in 2010 identified potential cost savings of ≥ $0.50/gal of gasoline from the combination of greater scale and coprocessing.12 The coprocessing benefits come from using integration with refined product logistics and processing options that are better tailored to various intermediate pyoil streams.

Just how large are the incentives for carrying out some portion of pyoil manufacturing inside existing petroleum refineries? What are the incentives for relaxing the refining O2 extinction constraint? The answers to these questions are explored in the following sections.

Incentives for relaxing pyoil refining O2 constraint

Only a rough estimate of the incentive for relaxing the pyoil O2 level to the refinery is possible, given (1) the current state of the technology, (2) the lack of detailed, publicly available data on the impact of upgrader severity on liquid yield losses in the product low-O2 range (0%–5%) and (3) the impact of PUP on refinery operations/costs.

The approach taken here is to make some key assumptions that demonstrate the potential range of cost savings, depending on how the pyoil material actually responds to progressive upgrading. Also, rather than presenting incentives in absolute terms of $/bbl, the results are expressed as a percent reduction in value-chain costs. Based on the assumptions made, the cost incentives could be as high as 25% of total costs, or as low as 10%. The size of the possible incentives and the magnitude of the range reemphasizes the need for a next-stage research program to confirm whether or not PUP holds promise as an intermediate refinery feedstock.

Key assumptions made in this screening study are outlined here. The base case economics used for this analysis are from the mature industry case summarized in a recent study by the authors.12 This case is for a very large, integrated, fast-pyrolysis and upgrader plant located on the lower Mississippi River, near an existing refinery that uses wood chips as feedstock. This case takes maximum advantage of economies of scale, high concentration of biomass, availability of low-cost transportation and location in a region of high concentration of refining capacity. This case should provide the most favorable production economics for sourcing low-O2 pyoil volumes.

In estimating the cost impact of relaxing the zero-O2 pyoil requirement to the refinery, the following assumptions were made:

  • By far, the most important assumption in this analysis is how much yield loss occurs as a function of reducing the PUP O2 level. Based on the VEBA high-severity upgrading data,13 for a PUP O2 level of 0.2%, the upgrader hydrocarbon (HC) base case yield was assumed to be 45%, and the light ends HC yield equaled 16%. Under less severe upgrading and higher PUP O2 levels, it was assumed that the upgrader liquid loss to light HC gases was reduced in proportion to the upgrader reactor holding time. The alternative assumption—that losses vary in proportion to the amount of O2 retained—is further discussed here.
  • First-order kinetics are used in adjusting the upgrader reactor volume (and associated investment) for higher O2 levels in pyoil.
  • H2 consumption was adjusted using the VEBA data13 for upgrading levels other than the base case.
  • Within the refinery, it is assumed that all PUP O2 is eventually removed as a result of downstream processing. This study assumes that such removal directly translates to a refinery yield loss to water that is equal to the PUP O2 content. No additional yield losses to light HC gases are anticipated. A sensitivity to this optimistic assumption is discussed below.
  • Introducing PUP into refineries will increase refinery operating expenses—by how much is a significant unknown at this point. Based on the authors’ previous study, it was found that refinery operating costs increased approximately 10% when processing a 5% PUP feed. This increase estimate was based on proprietary refinery cost models, and it assumed that O2 was removed in the refinery as water and that the HC in the PUP behaved like petroleum. Consistent with these constraints, it was assumed that the refinery operating costs increased by 2% for every 1% of PUP O2. Note: Refining costs represent just 7%–8% of the total value chain costs; therefore, the overall results should not be too sensitive to this operating cost assumption.
Fig. 2. Incentive for relaxing PUP O2 content.

Using these assumptions and an alternate case where upgrading yield losses vary with O2 removal, PUP’s economic potential can be bracketed. Fig. 2 summarizes the incentive for relaxing the O2 level to the refinery. The results for two cases are shown. The upper curve is based on the base case assumption that the losses to light ends are proportional to the reactor holding time. This case suggests that value chain savings of about 20%–25% are potentially available if the PUP O2 level of 5% is targeted instead of totally O2-free pyoil. The lower curve makes an alternative assumption that the light ends make is proportional to the amount of O2 removed.

These two curves illustrate the importance of obtaining actual data on the overall upgrading yields in this low-O2 region. If the base case assumption is correct, then the incentive for relaxing PUP O2 concentration to the refinery is significant and worth exploring. Given the large number of assumptions in this analysis, the error band around these results is fairly large but provides a rough indication of the size of the incentive for relaxing the O2 limit for a refinery. The cost savings shown are largely derived from avoided liquid yield losses, upgrader capital cost reductions and associated H2 savings in the large high-pressure upgrader (over cracking of light liquids).

Fig. 3. Sensitivity to key assumptions.

Fig. 3 summarizes sensitivity cases for some of the key assumptions in this analysis. The figure shows the incentives for stopping the PUP upgrading at 5% O2 vs. O2 removal to 0.2% O2.

As previously discussed, the upgrader yield loss assumption is significant. The incentive drops to approximately 10% from 25% if the yield losses are proportional to O2 removal rather than to reactor holding time. While important, the assumptions associated with refinery costs and yields do not have as significant an impact on the results. For example, if the refinery yield losses are double the base case, then the incentive drops from 25% to 21%. Alternatively, if the refinery cost increase is 10% for each 1% O2 in the PUP instead of 2% in the base case, then the incentive decreases to 23% vs. 25% for the base case.

The yield losses within the refinery are more important than the operating cost impacts. This is because refining costs represent only about 7% of the overall value chain costs,12 whereas yield losses directly impact the cost per barrel of product. Again, to conduct an accurate assessment of the economic opportunities for allowing higher O2 levels of PUP into the refinery, extensive data on the impact of processing this material on refinery equipment and operations will be required. A more elaborate discussion on the nature of the data needed will be covered in Part 2, to be published next month.

Pyoil economics: Where to go from here

Pyrolysis oil research and development work has largely stopped at the refinery gate because it requires collaboration between biofuel developers and refinery operators. Crossing this frontier remains difficult, as there is limited understanding by both biofuel developers and refiners of the pyoil component streams that could be coprocessed in specific refinery units. Adding a new raw material like pyoil to a refinery operation brings with it the real possibility of operating disruptions due to fouling, corrosion or unexpected factors.

Operating disruptions due to lost production and unanticipated maintenance are extraordinarily expensive, as are repair costs. Therefore, although the national interest may see substantial economic advantages for producing biofuels via coprocessing at existing refineries, at this time no compelling incentives exist for refinery operators to take such a chance. Instead, most refiners are operating as if they hope the EISA 2007 ABF mandate will be waived in a manner similar to that done for cellulosic ethanol.

The pyoil ABF industry is confronting the classic “chicken-and-egg” problem. It could make meaningful progress toward commercializing pyoil if refiners would cooperate, but the latter will not cooperate so long as there is a chance that the EISA 2007 mandate will be repealed. The absence of reliable information about pyoil coprocessing provides a solid technical excuse for refiners not to cooperate.

However, some refiners understand that they could be disadvantaged by doing nothing, only to discover that the EISA mandate remains in force. These refiners may even see an advantage in being a first mover to gain access to lowest-cost ABFs. Cooperation from a few refiners is all that is needed to provide the ABF manufacturers with the learnings they need to optimize their value chains.

For this to happen, however, the technical barriers to PUP entering the refinery must be overcome. This will require the creation of a large database with information about how PUP responds to upgrading and how it impacts refinery units. These topics will be covered in Part 2 of this series. HP


  1. US Department of Energy, “Energy Independence and Security Act of 2007,” October 21, 2016, www.afdc.energy.gov/laws/eisa
  2. Arbogast, S., from comments made by Amyris representatives at the National Advanced Biofuels Consortium (NABC) convention, Phoenix, Arizona, January 2012.
  3. Bullis, K., “Amyris gives up making biofuels: Update,” February 10, 2012, www.technologyreview.com/view/426866/amyris-gives-up-making-biofuels-update/
  4. National Advanced Biofuels Consortium, 2013, www.nabcprojects.org
  5. Foust, T., Presentation at the National Advanced Biofuels Consortium (NABC) convention, Phoenix, Arizona, January 2012.
  6. “Products,” www.kior.com (redirects www.inaeristech.com); and “Products,” www.virent.com
  7. Anex, R., A. Aden, F. Kazi, J. Fortman, R. Swansonn, M. Wright, J. Satrio, R. Brown, D. Daugaard, A. Platon, G. Kothandaraman, D. Hsu and A. Dutta, “Techno-economic comparison of biomass to transportation fuels via pyrolysis, gasification and biochemical pathways,” Fuel, Vol. 89, 2010.
  8. McCartey, D. and J. Doom, “Kior Inc., biofuel company, files bankruptcy, plans sale,” Bloomberg, November 10, 2014.
  9. Jacobs, J., Chevron Biofuels, NREL Technical Review Panel Meeting, September 15–16, 2014.
  10. Gibbons, W. and S. Hughs, “Distributed, integrated production of second- and third-generation biofuels,” Economic Effects of Biofuel Production, Ch. 19, August. 9, 2011, www.intechopen.com/books/economic-effects-of-biofuel-production/distributed-integrated-production-of-second-and-third-generation-biofuels
  11. Arbogast, S., D. Bellman, J. D. Paynter and J. Wykowski, “Preferred paths for commercializing pyrolysis oil at conventional refineries,” UH-GEMI, December 2010.
  12. Arbogast, S., D. Bellman, J. Paynter and J. Wykowski, “Advanced biofuels from pyrolysis oil: The impact of economies of scale and use of existing logistic and processing capabilities,” Fuel Processing Technology, Vol. 104, 2012.
  13. Baldauf, W., U. Balfanz and M. Rupp, “Upgrading of flash pyrolysis oil and utilization in refineries,” Biomass and Bioenergy, Vol. 7, No. 1–6, 1994.

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