Putting the Squeeze on Convention

Biodiesel Magazine talks with a California-based company about its unique reactor design and unconventional business plan that will lead to the construction of a model refinery on the East Coast.
By Ron Kotrba | January 17, 2008
Despite the qualitative and economic snafus riddling the biodiesel industry, small startups and new technologies continue to emerge. A biodiesel carve-out in the new Energy Bill's renewable fuels standard mandates a domestic methyl ester market, but without a blender's credit extension or the addition of meaningful incentives, low-cost production becomes more important than ever. Executives at Kreido Biofuels Inc. believe their technology and business strategy together possess the potential to make conventional biodiesel processing and financing obsolete.

Two chemical reactions that occur during biodiesel manufacturing are transesterification, and saponification. Transesterification, the desired reaction, is rapid whereas saponification, the secondary undesired reaction that produces soaps, is slow. "When you make biodiesel in a tank, there is a lot of time for both reactions to occur," says Ben Binninger, chief executive officer of Kreido Biofuels, a company whose investors aren't just banking on licensing royalties from its unprecedented reactor design. "In our reactors, because we get it in and out in seconds, we get the first reaction with only an insignificant amount of the second one. That's the magic of the technological innovation of our reactor. We get what we want without getting what we don't want and therein lies the advantage-higher utilization of raw materials, lower byproducts, which are wasteful and require energy, water washes, neutralizations, permits to get rid of water, and a run-up in the capital costs."

Lending institutions rarely finance debt packages to companies using unproven technologies, which is why investors in Kreido Biofuels are fully funding the design and construction of the premiere commercial-scale biodiesel refinery utilizing spinning tube-in-tube (STT) technology. "I am from the dark side," Binninger tells Biodiesel Magazine, referring to his years of experience working for major oil and chemical companies. "One thing I know is that you need a world-class plant equipped with in-line monitoring, fully integrated control systems, situated on a deep port with access to anywhere in the world. Our plant in Wilmington, N.C., will look more like a world-class chemical or oil company plant, than many of the biodiesel plants out there today."

STT Technology
The principle behind Kreido Biofuels' technology is what is known in fluid dynamics as Couette flow, or the steady laminar flow of a viscous fluid between two surfaces with constant sheer. The two surfaces consist of a stator, a stationary cylinder, and a spinning rotor inside. Between the mirror-polished finishes of the stator and rotor is a very small and uniform gap, through which raw materials flow and where chemical reactions can rapidly take place. "It comes out of the mixing for chemicals in the electronics industry-semi-conductor manufacturing," says Larry Sullivan, Kreido Biofuels chief technology officer. "It's very similar to pharmaceutical mixing. To sterilize it, you cannot heat the drug because that would destroy its properties. So they actually force drugs through filters that would take any bacteria out. In electronics chemicals it's the same thing. You need to mix them but can't afford to put any thermal energy into it because it would cause a change of chemistry. That's the origin of spinning tube-in-tube." As beneficial as Couette flow dynamics were, its use in manufacturing processes was precluded by its tendency to induce what's called Taylor vortices, prohibiting the intimate mixing needed for applications in which industrial Couette flow would be employed. Sullivan explains how Kreido Biofuels' STT technology overcomes this barber-pole phenomenon of fluid dynamics. "The key in the patents cover the gap between the stator and rotor," he says. "The gap is about 0.8 millimeters. The gap is the key. It allows the oil, methanol and catalyst to move in there as a film. A simple way to put it is, when you reduce the vortices down to nothing, then that energy goes into the mixing of the two without forming the vortices." And the reaction takes place quickly. "But at the end of the day, doing things fast is not good enough," Binninger says. "Yes, we have a very fast reaction time, but what really counts are two things: doing it fast, and making biodiesel without making any soap, and hence, without water."

The U.S. EPA has been working with Kreido Biofuels' STT technology under an expanded cooperative research and development agreement, for the process intensification of STT technology. Michael Gonzalez, primary investigator for EPA's Green Chemistry and Engineering for Chemical Synthesis project at the National Risk Management Research Laboratory in Cincinnati, Ohio, has an entire lab dedicated to the use of STT reactors making ionic liquids and conducting nano-mixing for polymer, pharmaceutical and chemical companies. "In our broad experience in the areas of chemical reactions and pollution prevention, we have found that the unique mixing pattern of the STT system can dramatically improve reaction rates and product selectivity under process intensified conditions," Gonzalez says.

A Model Future
Pilot work with STT technology was carried out at Foothills Bio-Energies, a biodiesel producer in western North Carolina. Across the Tar Heel State to the east is where Kreido Biofuels' commercial demonstration plant is being situated, in the deep-water port of Wilmington. "We have a lease with the port of Wilmington," Binninger says, adding that storage, tankage, docks and much of the permitting process are taken care of. He expected permitting to be final in January, after which construction would begin. Its plant design is modular based. Kreido Biofuels is headquartered in Camarillo, Calif., which is where its reactors are built as well. Certified Technical Services, a general industrial contractor, is building Kreido Biofuels' modular units near the Houston Ship Channel in Texas. "Each reactor produces about 13 MMgy," Binninger says. The plant in Wilmington is rated initially as a 33 MMgy plant even though Binninger says four 13 MMgy reactors are ready for installation on-site, which would allow production of up to 52 MMgy. "I expect we'll start at 33 MMgy and ramp it up as quick as we can," he says. The permits however allow for up to 100 MMgy. "The site is actually laid out for two plants-it's permitted for two, has the infrastructure for two, so we're going to build the structure, lab and tank farm to get ready for the second plant." The first 33 MMgy plant will cost between $22 million and $28 million, which includes about $4 million in costs to prepare the site for the addition of the second modular refinery.

The company anticipates installation of its modular units to begin soon, with operations underway late in 2008. Binninger believes any challenges he thought might arise in demonstration of the technology scale-up have all been accounted for. "We put in four reactors when we only needed three, and we got the highest grade centrifuge we could get to ensure good separation; we went to bubble-cap towers because, that way, we can turn the plant down from 100 percent to 25 percent productive capacity; and we put in an ion exchange resin even though we don't think we are going to need it," Ninninger says. "Our theory is that, we are lower in capital because we have so much less equipment than everyone else, so we could afford to be generous and put in these other toys and redundancies just to be sure that we don't have any surprises." Something Binninger wouldn't discuss is the sophisticated methanol column. "It's one of our tricks," he says. "Unlike most other plants, we will emit no methanol. Anybody who's got an open system, some methanol escapes because of the vapor. Secondly, some people leave methanol in the glycerin and the water, but we don't do that. Remember, we have no water discharge because we don't water wash. There's only one way methanol goes out the door from our plant, and that's as methyl esters."

While Binninger says these technical provisions should help keep any operational surprises at bay, Sullivan speaks to other challenges in Kreido Biofuels' commercialization of STT technology. "There are two parts to that, one has been solved and one is still out there," he tells Biodiesel Magazine. "No one would be able to fund the plant, the debt portion, because it would not be a proven technology. Before I came on board, the company through its investors made the profound decision to raise the equity, not debt, and commit the money to building a commercial-scale plant. That, in the biodiesel environment of today, is next to impossible." Sullivan, a man who often gets his points across through effective analogies, says this plant in Wilmington, N.C., is to Kreido Biofuels what a model home is to builders selling property in a new housing development. "You've got to show them what you can do, how it all works," he says.

The remaining challenge to be addressed is how interested parties will respond to the showcase refinery. "A potential investor might say one of two things," Sullivan says. "I want a license and will pay a royalty for the use of the technology, or that I want you to duplicate that plant in Brazil or Oklahoma, and I would like you as a partner." A royalty assumes payment regardless of profitability, which sounds good but, if the licensee of the technology is not making money, the likelihood of payment to the licensor is slim. n

Ron Kotrba is a Biodiesel Magazine senior writer. Reach him at [email protected] or (701) 738-4962.
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