Heeding Hydrogenation

Neste Oil aims to become to biodiesel what Nokia is to mobile phones. The Finnish firm has developed a proprietary process that produces a premium diesel from animal fats or vegetable oils. Just what is NExBTL, and who is Neste Oil?
By Susanne Retka Schill | March 15, 2007
Neste Oil Corp. calls NExBTL a second-generation renewable diesel. The term "renewable" is used because it's made with the same feedstocks as traditional biodiesel-vegetable oil or animal fat.

It's called "second generation" because the proprietary process is different than the transesterification process used to produce methyl esters or ethyl esters (commonly known as biodiesel), and different from the Fischer-Tropsch process used in biomass-to-liquid (BTL) processes.

Interest in the new product has been high. "The only bottleneck is that we don't have the product available yet," says Kimmo Rahkamo, executive vice president of Neste Oil's new biodiesel division. That will soon change. Neste expects its first NExBTL plant to be in production by June. The 100 million (US $130 million) plant will produce 170,000 tons per year (60 MMgy) of biodiesel. The plant will require about 200,000 tons of raw materials, of which 10 percent will be animal fats. A second, identical plant is set to come on line in late 2008. Both are being built at Porvoo, Finland, on the site of one of Neste's two oil refineries.

"We are looking into building significantly larger plants than these first two," Rahkamo says. Neste is also working with Austrian oil refiner OMV Aktiengesellschaft to build a 200,000 tons per year (65 MMgy) plant using NExBTL technology at a site near Vienna. A second joint venture with French oil refiner Total was discontinued in mid-February. "All the cost elements that could go bad actually went bad," Rahkamo says. However, the OMV project and others that haven't been publicly announced are proceeding, he adds.

Traditional biodiesel producers should rightfully be concerned about a new process that can be scaled up to oil refinery dimensions. World-class oil-refineries range in size from 200,000 to 400,000 barrels-a-day capacity. In comparison, a 60 MMgy biodiesel plant produces about 1.5 million barrels a year, or roughly 4,000 barrels a day.

Rahkamo perfers to take a long-term approach to the issue. "I believe there is a market for both types of products," he says. "We are not saying their product [traditional biodiesel] is not good. We are saying there is room for a high-quality product like ours. As you know, most car manufacturers limit the use of [fatty acid methyl esters] to 5 percent by volume. If we want to achieve much higher biofuel targets, we need to have something other than traditional biofuels."

While some look for the B5 limit to be raised, Rahkamo says car manufacturers are skeptical, "especially the high-end diesel engine manufacturers like the German car companies. The heavy-duty truck engine manufacturers in Europe are welcoming the higher-quality product."

Stu Porter, a biofuels technical analyst with BBI Biofuels Canada, is following Neste's new product closely. "It is true that the original engine manufacturers (OEMs) have not yet endorsed B20 thus far," he says. "However, this is not because the product is inferior, but rather the OEMs are holding back on that endorsement until the quality concerns of the U.S. biodiesel industry have improved, and until an ASTM B20 specification has been put in place."

He also questions Neste's use of the word "biodiesel" as a generic term. "The term biodiesel in the United States is specific to methyl (or ethyl) esters," he says.

"'Biodiesel' is a good general word for renewable diesel, which is why we keep using it, even though it isn't 100 percent technically correct," Rahkamo explains. Using a technical approach, NExBTL would be called "something like synthetic diesel out of renewable sources," he says. "The French legislation is calling it synthetic biodiesel."

Time will tell how the nomenclature shakes out. In the meantime, traditional biodiesel producers will be watching Neste Oil's progress in introducing NExBTL to the market.

Neste Aims High
"Given the accelerated public discussion around climate change, and the potential biofuels offer for helping, I believe that we will move ahead on a number of NExBTL projects over the next few years," Neste Oil President and CEO Risto Rinne says. In a news release following the board of director's approval of the new strategy, he said, "We are aiming to be the world's leading [synthetic] biodiesel producer, which means production volumes of millions of tons annually."

Neste Oil expects to invest several billion euros in growth projects over the next 10 years, which includes enhancing its base oil-refining business. While construction proceeds on the NExBTL lines, the company is building a new 700 million (US $910 million) diesel line at Porvoo. "We have both the will and the financial resources to invest in growth in the areas where we are strong," Rinne says.

Neste Oil was started in 1948 after World War II as Finland's state-owned oil company. In the 1990s, it merged with Finland's power generating company, and in 2006, it was spun off on its own. It is still 50.1 percent owned by the government of Finland, and the remaining shares are publicly traded on the Helsinki stock exchange.

Neste Oil has two other divisions in addition to the refinery and new biodiesel divisions. The shipping division's ocean tankers supply the company's oil refineries and deliver fuels. The retail division has just over 1,000 outlets in Finland, northwest Russia, the Baltic states and Poland.

With its two oil refineries that together produce 250,000 barrels a day, Neste Oil is a medium-sized European refiner. Not able to compete on size and volume, Neste has long targeted the premium and specialty fuels market. Along with gasoline, Neste markets high-quality diesels, high performance base oils and components such as iso-octane, ethyl tertiary butyl ether, methyl tertiary butyl ether, and tertiary amyl ethyl ether. "We aim to be the most advanced company," Rahkamo says.

Neste was one of the first refiners to take the lead out of gasoline, the first to produce reformulated gasoline in Europe, and the first to phase out sulfur from both gasoline and diesel, Rahkamo says. Now, it is among the first oil refiners to enter the synthetic biodiesel market.

Solving Performance Issues
The company started investigating biofuels in the 1990s but concluded those esters weren't good enough for the fuels that the company wanted to market. "NExBTL has been a rather long development process," Rahkamo says.

The Neste process entails direct hydrogenation of plant oil or animal fat triglycerides into the corresponding alkane, thus removing oxygen from the oil. Unlike yellow transesterified biodiesel, NExBTL is a clear, colorless paraffin. Neste's proprietary process involves catalysts, high pressure, high temperature and hydrogenation. By-products include propane and gasoline.

Neste says the resulting fuel solves many of the shortcomings of biodiesel and petroleum diesel. According to Neste's promotional literature, NExBTL:

--Is 100 percent hydrocarbon-type biobased diesel fuel

--Is free of sulfur, aromatics and oxygen

--Reduces nitrogen oxides par-ticulate mattce, hydro carbons and carbon monoxide emissions

--Has no storage stability problems

--Has a high cetane number (85 to 99)

--Has cloud points that can be adjusted from 5 degrees below Celsius (23 degrees Fahrenheit) to 30 degress below Celsius (22 degrees below Fahrenheit)

--Has lower lifecycle carbon dioxide than fossil diesel fuel

The company describes NExBTL as a component that will function as an iso-octane for diesel. It is similar to ultra-low sulfur diesels, in which lubricity additives are recommended.

For oil refineries, there are other positives for the NExBTL process:

--The process can be scaled up to oil-refinery-sized production

The product utilizes refinery infrastructure as far as blending, logistics and quality control

--The process has no non-fuel coproducts

Wholesale fuel companies are interested in a premium-grade synthetic biodiesel that can be used to boost cetane levels, Rahkamo says. Others are interested in high-profile fleet use to highlight their green commitments.

"Municipal fleets want to improve their local air quality," he says. Both Helsinki and Stockholm have expressed interest in using NExBTL. "When you use NExBTL in high blends at 30 percent or higher, the tailpipe emissions go down," he says. "That's important when you plan to use it in big cities if you think of the diesel smoke you can reduce."

He continues, "The tests the truck manufacturers have done at 100 percent show the tailpipe emission will be reduced by between 10 [percent] and 20 percent. It is quite significant if you're thinking of the state-of-the-art diesel engines combined with this product."

Porter balances their product claims by commenting, "Although Neste claims the product has a similar carbon lifecycle analysis and emissions reductions as biodiesel methyl esters, the testing on methyl esters has been much more extensive."

Using Variable Feedstocks
One of the strengths of its process, according to Neste, is its flexible feedstock requirement. "Theoretically, we will use whatever feedstock is the cheapest, with the side note of being concerned with the sustainability of different feedstocks," Rahkamo says.

Rahkamo and Rinne visited Malaysian plantations to ensure palm oil supplies there were sustainably cultivated and not a threat to virgin rainforests. They also want to work with plantations that respect human rights, Rahkamo says. "We've put efforts into [research and development] to widen our feedstock base to nonfood plants," he adds. Neste is considering jatropha, as well as algae and bacteria. "We believe in the long run we should not be competing against food."

To realize its goal of becoming the world's synthetic biodiesel leader, Neste is looking toward the United States and the Far East. "The United States is a good market," Rahkamo says. The company's U.S. team has met with the U.S. EPA and others in Washington, D.C. "We are really hoping someday we can produce [NExBTL] somewhere in the United States. We hope to be part of improving air quality, and also helping the U.S. reach their targets in biofuels."

The Neste initiative may be a cause for concern to the American biodiesel industry, Porter says. "Although the Neste NExBTL process is more capital-intense than biodiesel (transesterification) processes, oil refineries are interested-and oil refineries have cash. The downside is that Neste's process could soak up the feedstock supply and offers no increase in refining capacity." He adds that the NExBTL process' capital costs and yields aren't fully known, unless an interested company has a confidentiality agreement in place.

Neste's NExBTL will have an impact on the future of biodiesel, Porter predicts. "The best defense for the traditional biodiesel industry is to produce a consistently good quality product. If they don't, they're leaving the door open to products like Neste's. If arguments from biodiesel producers persist-that testing of biodiesel is too difficult or too costly-companies such as Neste will offer a solution to that problem with production at the refinery."

Susanne Retka Schill is a Biodiesel Magazine staff writer. Reach her at [email protected] or (701) 746-8385.
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