16 March 2007

Finland’s Neste Oil signed an agreement with Stora Enso, a paper, packaging, and forest products company, to join forces to develop technology for producing new generation biofuels from wood residues. The first step will be to design and build a 14 million euro demonstration plant at Stora Enso’s Varkaus Mill in Finland. The plant, owned on a 50/50 basis by the two companies, is expected to start up in 2008 and will produce heat and electricity for use locally and crude diesel biofuel to be refined into commercial fuel at Neste Oil’s refinery in Porvoo.

Expertise from Neste Oil, Stora Enso, and VTT Technical Research Centre of Finland will be utilized to implement the development phase and commercialize wood-based biofuel production. The companies must solve the challenges related to generation of clean synthesis gas from wood before wood-based biomass can be used in biofuel production. The project will also focus on using Fischer-Tropsch process to produce crude diesel fuel from gas.

After the partners have gained sufficient experience from the demonstration plant, the joint venture intends to build a full scale commercial production plant at one of Stora Enso’s mills, also to be owned on a 50/50 basis by the two partners. Stora Enso will be responsible for supplying wood biomass and utilizing heat generated. Neste Oil’s responsibility will be the final refining and marketing of the biofuel.

The European Union has set a target of replacing 5.75% (18 million tons) of the fossil fuels used in transportation with biofuels by 2010 and 10% by 2020. This will mean replacing 30 million tons of fossil fuels and will require significant increases in biofuel production.

Neste Oil has also been developing the NExBTL renewable diesel— a second-generation biodiesel made through refinery hydrogenation of vegetable oil and/or animal fat feedstocks. The properties of the NExBTL diesel resemble those of premium synthetic diesel, rather than ester-based conventional biodiesel fuels. Neste is currently commissioning its first plant to produce 170,000 t/a of NExBTL diesel at its Porvoo refinery in Finland. A second similar plant is also under construction at Porvoo.

Source: Neste