Producing Clean Fuel From Biomethane Building a small

Producing Clean Fuel From Biomethane Building a small scale Bio-LNG market Peter van der Gaag Holland Innovation Team – Anglo Dutch bio-LNG ‘Producing Clean Fuel from Biomethane' WTC-Rotterdam, 15 March 2012 1

Content of the presentation • What is LNG, what is bio-LNG? • Differences in quality • Advantages of bio-LNG in comparison with other fuels • Emissions of CO 2, PM, NOx • The impact of quality in practice • International developments • Pricing of bio-LNG and small scale LNG • Fulfilling the European Biofuel Obligation with Bio-LNG • Projects by Holland Innovation Team & partners • Latest: Zwijndrecht (bio)-LNG bunker terminal • New projects and cooperation • Conclusions and recommendations ‘Producing Clean Fuel from Biomethane' WTC-Rotterdam, 15 March 2012 2

LNG accepted worldwide LNG, liquid natural gas, consists for the largest part of methane, which is liquid at a temperature of minus 162 degrees Celsius. LNG is made from natural gas all over the world. All CO 2, H 2 S, particles, mercury have to be removed. Water freezes out. Depending on the source, the composition of LNG still varies. Methane content is between 80% and 99. 9%. Essentially we consider two types of LNG: • Rich LNG contains a relative large quantity of heavy hydrocarbons • Lean LNG contains few (no) heavy hydrocarbons. ‘Producing Clean Fuel from Biomethane' WTC-Rotterdam, 15 March 2012 3

Lesser known Bio-LNG: what is it? Bio-LNG is produced from biogas. Biogas is produced by anaerobic digestion. All organic waste can rot and can produce biogas, the bacteria do the work. Therefore biogas is the cheapest and cleanest biofuel without competition with food or land use. Bio-LNG (LBM, LBG) = liquid biomethane. Quality is always better than quality of fossil LNG, so: besides heavy and lean LNG there is the premium Bio-LNG ‘Producing Clean Fuel from Biomethane' WTC-Rotterdam, 15 March 2012 4

How much bio-LNG can be made? Source: http: //ecocomplex. rutgers. edu/Peter. Boisen. pdf Dutch government agency forecasts that 3 billion cubic meters of socalled ‘green gas’ can be produced from anaerobic digestion in the Netherlands, i. e. equivalent of over 2 million tons of bio-LNG. ‘Producing Clean Fuel from Biomethane' WTC-Rotterdam, 15 March 2012 5

Bio-LNG advantages Bio-LNG production does not compete with food Bio-LNG does not need blending, BUT CAN BE Bio-LNG can be produced in your own country Quality of bio-LNG is better than quality of fossil LNG Bio-LNG is much cheaper than other bio fuels per energy unit Bio-LNG is cleaner than all other liquid fuels Bio-LNG can be used to improve heavy LNG quality ‘Producing Clean Fuel from Biomethane' WTC-Rotterdam, 15 March 2012 6

CO 2 Emission well to wheel by Air-LNG 7

The quality issue Any introduction of a new fuel gives rise to questions about standards and quality, e. g. see the biodiesel controversy. Opponents use lack of standards for opposition. We divide the new LNG market into three qualities: 1) Heavy LNG 2) Lean LNG 3) Premium Bio-LNG Heavy LNG arrives at large terminals, often there are ethane, propane, butane and nitrogen present, methane is between 80 and 99%. Quality can vary strongly. Lean LNG: most heavy hydrocarbons have been removed, production comes from small scale LNG plants and peak shavers (the US, UK, Norwegian experiences). Premium bio-LNG: heavy hydrocarbons are not present (bacteria are not capable of production heavy hydrocarbons), methane >98 %. ‘Producing Clean Fuel from Biomethane' WTC-Rotterdam, 15 March 2012 8

LNG quality: impact on engines For gas engines the methane number is important. The methane number tells you about the knocking resistance, but also about the achievements of the engine. Heavy hydrocarbons decrease the methane number, CO 2 and N 2 increases the MN In certain countries, a standard transportation quality of LNG exists (>97% methane) Most engine manufacturers demand a minimum methane number of 80 -85 (Dutch KEMA recommends 85), Volvo wants MN of 90 for their dual fuel heavy duty trucks ‘Producing Clean Fuel from Biomethane' WTC-Rotterdam, 15 March 2012 9

Example 1 Dual-fuel (low pressure) engine characteristics Dual Fuel low gas pressure supply (4 -5 bar) High energy efficiency at high load Low emissions, meets IMO tire III Challenge on methane slip, limited possibility to combustion process control Reduction of GHG is dependant on level of methane slip Sensitive to gas quality Flexibility in fuel mix Possible for conversion of existing engines (extensive rebuilding) Wärtsilä 6 L 50 DF ‘Producing Clean Fuel from Biomethane' WTC-Rotterdam, 15 March 2012 After Per Magne Einang Research Director MARINTEK, March 2011 10

Example 2 Spark Ignited Lean Burn gas engine characteristics Single fuel, low pressure gas supply (4 -5 bar) High energy efficiency, at high load higher than the diesel counterpart Low emissions, meets IMO tire III Challenge on methane slip, minimized by design and combustion process control GHG reduction potential in the range of 30% ref. to HFO (incl. methane) Sensitive to gas quality Not suitable for conversion of existing engines Rolls-Royce C 26: 33 L 9 ‘Producing Clean Fuel from Biomethane' WTC-Rotterdam, 15 March 2012 After Per Magne Einang Research Director MARINTEK, March 2011 11

Example 3 Dual-Fuel (high pressure) engine characteristics Wartsila High pressure gas injection (300 -350 bar) 4 -stoke and 2 -stroke Maintain diesel engine performance. No methane slip, GHG reduction in the range of 30% ref. to HFO Need NOx reduction techniques to meet IMO tier III Not sensitive to gas quality Pumping LNG to 350 bar and evaporate is simple and with low energy requirement Flexibility in fuel mix Suitable for conversion of existing engines (simple rebuilding) Per Magne Einang Research Director MARINTEK, March 2011 Small Scale Conference Schiphol-Amsterdam, 14/15 dec 2011 12

Qualities from large LNG terminals 13 Report to Dutch Parliament 2011: range of possible GATE qualities

Position on quality Holland Innovation Team wrote a position paper about LNG quality after consultation of experts from a. o. gas engine manufacturers http: //www. bio-lng. info/blog/wp-content/uploads/2011/08/Position-paper. LNG-quality-versie-30 june 11. pdf We conclude that • Designing engines to run on almost anything is possible but reduces achievements especially compared to next generation high-performance gas engines • Many heavy LNG qualities will not be good enough for direct use in engines, so should be improved at the terminal site. • Boil off, transport and storage of heavy LNG (aging) will deteriorate quality • There is a need for standardization of LNG quality Bio-LNG will always fulfill minimum demands and will improve LNG quality, so future bio-LNG producers are happy with worldwide LNG developments ‘Producing Clean Fuel from Biomethane' WTC-Rotterdam, 15 March 2012 14

Developments worldwide Yangtze prepares for LNG bunkering Taken from: LNG World Shipping May/June 2011 “News that both Fortune Oil and Kunlun Energy are pressing ahead with waterway and bunkering trials of their respective dual-fuel engine technologies is the latest indication that there could soon be a network of LNG fuelling stations for Yangtze River vessels and literally hundreds of LNG-powered craft navigating the waterway. ” ‘Producing Clean Fuel from Biomethane' WTC-Rotterdam, 15 March 2012 15

Developments worldwide LNG-Powered GT 1 Locomotive Sets New World Record September 14, 2011 | Russia, Moscow “The Russian-developed GT 1 -001 gas turbine-electric locomotive has successfully undergone further field tests in Moscow. The 300 tonne two-section GT 1 combines a turbine and power unit with a separate section containing the 17 tonne liquefied natural gas (LNG) fuel tank. ” ‘Producing Clean Fuel from Biomethane' WTC-Rotterdam, 15 March 2012 16

Brunsbüttel Ports and Gasnor (Norway) agree on bunkering LNG at Brunsbüttel as of November 2011 “On 18. 10. 2011 Brunsbüttel Ports Gmb. H and Gasnor AS agreed on bunkering vessels with LNG in the Elbehafen at Brunsbüttel, Germany. They are leading the way in offering LNG fuel at Brunsbüttel and the Northern German area, at the crossing of the river Elbe and the Kiel-Canal. In the context of generally increasing demands in environmentally conscious acting, also in shipping, eco-friendly fuel is a forward-looking issue. ” ‘Producing Clean Fuel from Biomethane' WTC-Rotterdam, 15 March 2012 17

Developments worldwide LNG in Canada – Blue Road and Blue Water November 11, 2011 “Quebec’s Robert Transport intends to roll out a fleet of 180 LNG-fueled heavy-duty trucks. Canada’s Gaz Metro is stepping up its activities with liquefied natural gas as a transportation fuel, noting work with heavy duty trucks, with ferries, and with locomotives. Gaz Metro last month celebrated the first of three “Blue Road” LNG stations. They are to support nearly 200 LNG trucks operated by Robert Transport. ” ‘Producing Clean Fuel from Biomethane' WTC-Rotterdam, 15 March 2012 18

Bio-LNG: USA May 2011: Jim Merriam, Praxair, Inc. (center), accepts the Environmental Recognition Award for the company's Altamont Bio-LNG Facility • • • Altamont Landfill & Recycling, Recovery and Utilization of Biomethane Landfill Gas for transportation Fuel 13, 000 Bio-LNG Gallons/day ‘Producing Clean Fuel from Biomethane' WTC-Rotterdam, 15 March 2012 19

Getting the market off the ground Achievements 2011 Founding of Anglo Dutch bio-LNG by Holland Innovation Team and Chive Fuels UK, which offers 2 types of LNG, bio-LNG and fuelling stations ‘Producing Clean Fuel from Biomethane' WTC-Rotterdam, 15 March 2012 20

Getting the market off the ground Achievements 2011 First intermediate results in project: design/building of bio-LNG distribution vessels for short sea and inland navigation. Lead partner is VEKA Group / Bijlsma Shipyards, builder of Pioneer Knutsen. SANDFIRDEN T E C H N I C S LNG Rivers Shipping Grant awarded by the “Clusterregeling” of the province of Zuid-Holland ‘Producing Clean Fuel from Biomethane' WTC-Rotterdam, 15 March 2012 21

Inland short sea shipping becomes "green" by Bio-LNG E-Energy Market by Erik Groen “LNG (Liquefied Natural Gas) is cleaner than gasoline, diesel and fuel oil. "But it's still a fossil fuel", says Peter van der Gaag. Bio-LNG is truly "green gas". BER BV wants to build a bio-LNG plant in Delfzijl, and a bunkering bio-LNG terminal to be built in Zwijndrecht together with Nobel close to Rotterdam. "The bio-LNG must be transported between these locations and to other terminals and distribution centers, " Van der Gaag. "We are creating a whole chain. This vessel is indispensable. A bio-LNG plant would produce between 40 -150 tons of bio-LNG daily. Distribution can be done by bio-LNG tankers of 1100 -4000 cbm. ” ‘Producing Clean Fuel from Biomethane' WTC-Rotterdam, 15 March 2012 22

Latest achievements Bunkerworld News - Latest News - A. Nobel & Zn Bunkerservice 22 November 2011 'First movers' integral in LNG bunkering future. . . part of trials to acquire permit for construction of bio. LNG bunkering terminal A grant of the ministry of infrastructure and environment was awarded in November – the ministry gave additional scores to bio-LNG bunkering above LNG bunkering See movie of test bunkering at youtube: http: //www. youtube. com/watch? v=UG Zg. KI_f. J 14 ‘Producing Clean Fuel from Biomethane' WTC-Rotterdam, 15 March 2012 23

The proof of the pudding: what will be the cost of LNG and bio-LNG? LNG will cost between € 10. 40 and € 12. 80 per MMBTU (quote: TNO). This means 530 - 680 Euro per ton of LNG from a large terminal costs 550 Euro per ton at the gate (Nov 2011) Small scale LNG with distribution € 14 per MMBTU. Source: conference Helsinki 18 Nov 2011 In our view transportation quality LNG for trucks will cost 800 Euro per ton for the client (ex tax) First generation small scale bio-LNG will cost close to 1000 Euro/ton But things go rapidly… ‘Producing Clean Fuel from Biomethane' WTC-Rotterdam, 15 March 2012 24

The planned bio-LNG plant in Delfzijl Second generation bio-LNG plant leads to production costs below € 800/ton ‘Producing Clean Fuel from Biomethane' WTC-Rotterdam, 15 March 2012 25

Fulfilling the European Biofuel Obligation with Bio-LNG To fulfill the obligation of a certain percentage of bio fuels in their fossil fuels (EU regulation), fuel distributors have to blend biodiesel or bio-ethanol. If you do not blend these fuels physically, you have to buy so-called biotickets from companies which have put extra effort and have blended more biofuels than according to their obligation. There are two reasons why bio-LNG benefits: 1) bio-LNG is much cheaper than biodiesel and bio-ethanol even with prices above 800 Euro per ton 2) distributors of bio-LNG generate bio tickets and can sell these By using this mechanism, which exists in the Netherlands and other European countries, bio-LNG will be cheaper than small scale fossil LNG ‘Producing Clean Fuel from Biomethane' WTC-Rotterdam, 15 March 2012 26

Second generation bio-LNG production (with incentive) is cheaper than small scale LNG Presented at ships fuel and technology, Helsinki-Finland, November 18 th 2011 ‘Producing Clean Fuel from Biomethane' WTC-Rotterdam, 15 March 2012 27

Cooperation between Rijngas and Anglo Dutch bio-LNG We can deliver three kinds of LNG (including bio-LNG) We can deliver small scale fuelling stations of 2300 liters We can deliver 14000 liter LNG fuelling stations by Chive Fuels We can deliver extra large fuelling stations by Chart We provide the opportunity to order bio-LNG from the BER plant Rijngas is a leading distributor of propane in the Netherlands ‘Producing Clean Fuel from Biomethane' WTC-Rotterdam, 15 March 2012 28

Cooperation between Anglo Dutch bio-LNG and Solbus Poland is a producer of busses. Solbus manufactures LNG busses for competitive price: cheaper than CNG busses. Engine: Cummins Fuel tank: Chart Anglo Dutch bio-LNG to deliver mobile bio-LNG fuelling station for Poland Introduction of bio-LNG busses in the Netherland is planned in 2012 ‘Producing Clean Fuel from Biomethane' WTC-Rotterdam, 15 March 2012 29

Conclusions / recommendations 1) Worldwide LNG developments go rapidly 2) There is need for standardization of LNG quality for transportation 3) Bio-LNG is the cheapest biofuel and can be used to improve fossil LNG quality 4) 20% of our transportation fuels easily can be replaced by bio-LNG 5) Bio-LNG gets more and more interest all over the world 6) Second generation Bio-LNG will be cheaper than fossil small scale LNG 7) Holland Innovation Team and partners are paving the way for a bio-LNG infrastructure which can improve the small scale LNG chain ‘Producing Clean Fuel from Biomethane' WTC-Rotterdam, 15 March 2012 30

We are building a bio-LNG chain to improve the (fossil) small scale LNG chain now. Thank You also on behalf of our partners www. hollandinnovationteam. nl pvdgaag@hollandinnovationteam. nl A. Nobel & Zn Bunkerservice Stop talking, start acting Solbus ‘Producing Clean Fuel from Biomethane' WTC-Rotterdam, 15 March 2012 31