Biofuels from the Oil & Gas Perspective

The origins of biofuels can be found in the cellulose ethanol efforts of WW2 and even before early automakers learned that remote farmers might even divert some of the family’s moonshine to keep the car running.  But, in today’s world, how do oil and gas companies look at biofuels?  To answer this, we must first understand that there are only a select few experts who have enjoyed a substantial career in the oil and gas industry and are currently engaged in the bioeconomy, thus having insights into both.  Fundamentally, oil and gas companies, especially those with refinery assets or divisions, often shy away from biofuel producers. There are many reasons. First, as oxygen was a poor substitute for gasoline in engine designs in the 1970s, oil refineries were unable to make these fuels inside their units.  Probably, more importantly, biofuels were initially viewed as something that took some sliver of market share from refiners. In today’s world, this is changing as refiners are now starting to make more of their own biofuels, inside or near their refineries.

As with power generation companies, there remains a conservative ethos and capital-intensive structure that resists new technologies.  Dan Yergin, author of The Prize: The Epic Quest for Oil, Money, and Power and The Quest: Energy, Security, and the Remaking of the Modern World, cautions investors about disruptive technologies in capital-intensive industries with long technology development cycles and calls upon investors to avoid R&D under the guise of disruption, while always keeping an eye on how long it takes for such change to manifest itself.  In that vein, most oil and gas companies initially adopted technologies only as necessary to mitigate carbon exposure or comply with mandates.  After the gasohol stops and starts in the 1970s, President Bush’s admonition to “end our addiction to oil” in the 2000s, and the mandates today, we are now seeing the 40-year cycle yielding excellent progress. Many refiners are investing in projects “Inside the Battery Limits” (ISBL), using existing refinery units. Some exploration and production (E&P) companies are using biotech – like biobased carbon dioxide – with the assistance of grants from the DOE and other sources. Economist Mariana Mazzucato published works on an academic understanding of the early phases of novel technologies seeded by governments (EU, US, Canada). Her works show the importance of the role that the governments played in early-stage companies.  We remember that Google had its start with NSF funding, and Tesla featured DOE funds, just to name two well-known examples.

It is not unusual to see the slow uptake by petroleum companies as even today, there are resistant managers to artificial intelligence in the big oil and big data interfaces. We know that while oil and gas companies did not invent main frame computers, they nonetheless now use them for finding oil and gas.  From an oil man’s review, these slow adoptions are not unusual, as the $1 billion refinery or power plant does not become obsolete like the $500 smartphone.

Large renewable energy and biochemical consulting firms certainly have experts in biofuels and renewable fuels, and the more common areas like biomaterials, biomass and biomass power, feedstocks, and biotechnologies.  In these larger consulting groups, one may also find very specialized expertise like catalytic valorization, carbon intensity, polymer recycling, FSMA compliance, cogeneration, combined heat & power, formulation chemistry, cannabinoids, solvents, sludge, the solid-state fermentation, soil amendment, solid recovered fuels, RFS2, carbon fiber, GMPE, Polymer Pyrolysis, Polypropylene, fuel additives, biopharmaceuticals, renewable technology, oilseed processing or water treatment.  Lee Enterprises Consulting is the world’s premier bioeconomy consulting group, with over 100 highly qualified experts serving in all these areas.  Take a look at our experts and the services we provide.  Most of our experts are also available to advise and serve as expert witnesses in bioeconomy litigation matters.  We specialize in putting together full-service, interdisciplinary teams with one point of contact for larger projects.  Call us at 1+ (501) 833-8511 or email us for more information.