Wednesday, March 16, 2011

Cobalt Technologies Targets $7 Billion n-Butanol Market, More

Another advanced biofuels company that is targeting the high-value chemicals market for a revenue "jump-start," is Cobalt Technologies. CEO Rick Wilson looks at the different markets for his company's possible products and co-products:
“The markets, for us, are the $7 billion n-butanol market, for acetates, acrylates, and glycerol esters, where the current pricing is $2300 per metric ton. Compare that to diesel or gasoline, both under $1000 per ton. Also, we have the OXO derivatives, such as butyric acid or 2-ethyl hexanol. That’s a $9 billion market trading at $2600 per ton. There are also the butene derivatives, such as isobutene, a $17 billion markt trading at between $1200 and $1500 per metric ton. There are paints, solvents, plasticizers, paint dyes, stabilizers, preservatives and more in those markets.

“The markets are very small, compared to the fuels marekts, where you have $250 billion in jet fuel, $980 billion for gasoline and $1040 for diesel. Those are a great story, but its hard to make money, and the first goal of any company should be to make money.

...“Some of you know that there is normal butanol and isobutanol. Isobutanol, which is made by companies like Butamax and Gevo, has a higher octane rating and generally makes a better fuel blendstock. The advantage of normal butanol is that you can take normal and isomerize it, but you can take an isomer and mornalize it. So, with n-butanol you have advantages as a platform for a wider variety of chemicals.

“For us, we like wood, bagasse and glycerol as feedstocks. We see costs there in the $60 per ton for wood biomass, $40 for bagasse and $20 for glycerol. Those change, but there’s a significant enduring advantage compared to the cost of sugarcane or corn, which are well over $200 per ton. That’s lower than the cost of crude oil, but when you take into account the amount of energy you can access in corn or cane, the cost advantage can be minimal unless you have very high oil prices sustained for a very long time. _BiofuelsDigest
In other words, for Cobalt and other advanced biofuels makers to compete head-to-head with petroleum, the cost of oil must be sustained at a very high level. As long as oil markets continue to fluctuate up and down with political instability and speculative fevers, it is much safer for these companies to tarket high value chemicals which provide a higher profit margin, and early revenues.

In the long-term, oil will become more expensive until microbial fuels and chemicals make petroleum obsolete. The name of the game for high-powered advanced biofuels companies is to survive and improve efficiencies until they can hit the "sweet spot" that gives them the long term economic advantage over oil.



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