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Meet the Experts

"Oberon Fuels focuses on the monetization of wasted resources. The small-scale, modular Oberon process can convert various methane-containing feedstocks to a higher value commodity. The ability to monetize waste streams, whether stranded gas or food waste, to produce a clean burning fuel such as DME is an exciting proposition."

Rebecca Boudreaux
President
Oberon Fuels


Oberon Fuels is leading commercial initiatives to enable the development of regional DME production in North America as well as driving the introduction of the necessary specifications, standards, and regulations at the federal and state levels for DME fuel applications.

Below, the company’s president Rebecca Boudreaux highlights the technology, strategy, and economics behind Oberon Fuels’ small-scale modular DME production technology and the important regulatory initiatives, in California and elsewhere, enabling DME’s introduction as a fuel in North America.

Click here for a recent interview with Rebecca by Virgin Unite, the non-profit foundation founded by Richard Branson that is responsible for market-driven low-carbon and climate initiatives such as the Carbon War Room. Last year, Rebecca met with Richard Branson at his Necker Island (British Virgin Islands) home and discussed DME and Oberon Fuels' plans to commercialize small-scale plants enabling distributed production of the fuel throughout North America. Branson is well known for pursuing environmental and renewable energy projects, and has invested time and money to promote the expansion and growth of companies and technologies in the sector through vehicles such as the Carbon War Room and the Virgin Green Fund.



Q: Where do you see the most interest for Oberon Fuels’ small-scale DME production units – is there a specific industry sector or area for which this appears to provide the most compelling business case?

Oberon Fuels focuses on the monetization of wasted resources. The small-scale, modular Oberon process can convert various methane-containing feedstocks to a higher value commodity such as DME. As you can imagine, this has generated interest across a wide range of industries including those engaged in oil production and waste hauling. The ability to monetize waste streams, whether stranded gas or food waste, to produce a clean burning fuel such as DME is an exciting proposition.

Q: What are some of the main drivers behind interest in DME from those interested in producing it themselves?

The main drivers behind interest from these industries are 1) the opportunity to create a higher value product from waste streams, 2) emissions regulations, and 3) landfill diversion regulations banning food and green waste from landfill disposal.

Q: What are the regulatory obstacles to DME’s introduction as a transportation fuel in North America, and how are they being addressed?

In order to evaluate the regulatory hurdles for launching a new fuel in the U.S., you must look at both federal guidelines under the Environmental Protection Agency (EPA) and state regulations. With respect to the EPA, under Title 40 CFR Part 79, fuels and fuel additives that are used and sold for commercial, on-road applications must be registered with the EPA, however, this registration does not presently apply to DME.

While most states follow EPA guidelines, California has stricter regulations. However, California requires a fuel waiver and eventual certification to legally sell and distribute a fuel in the state.

Oberon received a fuel variance for DME in June 2013. As a condition, the development of an international consensus standard such as ASTM specification was required. In January 2014, an ASTM specification for DME as a transportation fuel (D7901-14) was published and is now available. This specification provides guidance for DME producers, infrastructure developers, and OEMs on the fuel quality required.

In parallel with filing for a fuel variance, we started working with California Air Resources Board (CARB) to initiate a Multimedia Assessment of DME as a fuel as part of the CARB fuel certification. This study will evaluate the effect of DME on air, soil, and water. Tier 1 of this study is underway and will provide an initial report on publicly available data for DME and its environmental effects. Based on this report, a testing plan will be developed and executed to fill in the data gaps.

Q: Delegates at this year’s 6th International DME conference (DME 6) will be given an opportunity to visit Oberon Fuels’ DME production facility in the California desert. What will they see?

Oberon’s production facility is located in the Imperial Valley region, a two-hour drive east of San Diego. At the facility, you will see Oberon’s “Maverick” plant which produces DME from methanol, the last step of the Oberon process. The Maverick plant utilizes a novel catalytic distillation column to minimize footprint and fabrication costs. The first of its kind, the plant has a nameplate capacity of 4,500 gallons per day (2,400 diesel gallon equivalent/12.5 TPD of DME). It is producing DME that meets the ASTM fuel-grade specification and is being used in field test applications. The plant can operate as a stand-alone unit fed with methanol or as the final step in a full Oberon methane and carbon dioxide to DME plant.


"LPG infrastructure could be used to rapidly develop DME distribution with little investment required, given the scalable storage capacity and substantial and ever growing fleet of road and rail tankers already in service virtually anywhere a station is required to be located. This offers a tremendous advantage over the introduction of other fuel options."



Robin Parsons
President
Parafour Innovations


Robin Parsons is President of Texas based Parafour Innovations, a company providing innovative technologies to the growing alternative fuels market. With a combined experience of more than 75 years between its technical staff, Parafour specializes in numerous aspects of the industry including engine system development, fuel storage and distribution, refueling infrastructure and fuel management, and has extensive international experience.

Parafour engineers invented and patented the dual port injection rail system used on most new LPG applications and are working on an aftermarket solution for medium diesels to allow the use of DME. Parafour is also at the forefront of refueling dispensers and station designs, with the unique characteristics of these new fuels reflected in all design.

In this feature Robin shares insights into the technology and regulations behind DME refueling and dispensing equipment and the infrastructure required to enable DME’s introduction as a transportation fuel in North America.

Q: Given the similarities between DME and LPG, can equipment used with LPG Autogas vehicles be converted for use with DME?

From a refueling perspective, yes. DME is chemically different from LPG, however, and thus close attention must be given to the materials used in the construction of system components. Traditional seals and elastomers used for LPG are not compatible with DME above a minimum percentage, and must thus be changed. So functionally, other than the tank nozzle connection the equipment is the same but some internal materials must be modified. For the most part, the DME tolerant materials are completely compatible with LPG and therefore a “DME” station is actually compatible with LPG, which makes for some interesting possibilities in the near future.

Q: How could the existing LPG infrastructure and distribution network be leveraged for use with DME?

Given the minor modifications to equipment mentioned above to ensure chemical compatibility, the existing LPG distribution infrastructure could indeed be used for developing the market for DME. Not unlike pipelines or cargo tankers which can carry different products on different routes, so could LPG equipment potentially also be used for DME service.

Each alternative fuel has its own merits, but we have seen how the distribution and supply chain have limited CNG, E85, and B20 due to limited and specialized infrastructure. LPG infrastructure, on the other hand, could be used to rapidly develop DME distribution with little investment required, given the scalable storage capacity and substantial and ever growing fleet of road and rail tankers already in service virtually anywhere a station is required to be located. This offers a tremendous advantage over the introduction of other fuel options.

Q: What regulatory obstacles are there to the installation and use of DME refueling equipment in the United States right now? To the extent that there are obstacles, what action is being taken to address these?

Developing standards for DME’s use in North America is a high priority for the International DME Association, and its North American Affairs Committee is currently working with member companies and experts from the LPG industry to develop the necessary information and materials. The information already available and the relevant expertise from the LPG industry should enable efficient and rapid develop of robust safety-based standards tailored to the unique needs of the North American market.

In the absence of specific regulatory standards for DME we are currently relying on similar standards for hazardous areas electrical (e.g. UL 1238/1203) as well as existing standards for station design, equipment standards and metrology for similar fuels such as LPG (e.g. NFPA 58).

Q: What are the cost implications of installing DME refueling infrastructure suitable for a small fleet owner? How do these differ from those for other alternative fuels also being introduced for heavy-duty fleets, such as CNG and LNG?

Compared to CNG and LNG, the cost difference is remarkable. A station with a continuous filling capability of 10-15 gpm equivalent for CNG or LNG will cost upwards of $750,000 to $1 million. Furthermore, these stations will be limited to an installation area directly adjacent to a main natural gas line, or a liquefaction facility, whereas a DME station can be erected and put in service virtually anywhere. This offers not only a savings in the cost of infrastructure, but a savings through much more accessible and efficient refueling locations.

Compared with the cost of LPG infrastructure, there is a negligible difference. Our estimate is for a 10 – 15% premium on the overall cost of a typical LPG facility, where a properly designed and installed 2,000 gallon capacity LPG station (10 – 15 gpm filling capability) might cost $60,000 - $80,000. Companies such as Parafour are working to reduce that cost and better leverage asset investments for multiple uses.

Q: Are NTEP (weights & measurement accuracy) certification or product safety listings such as UL/ETL/FM required for DME refueling stations? If not, then why are they important?

As there are currently no specific standards for DME, there are no state or national requirements in the U.S. for such certifications and approvals directly. Yet indirectly there are requirements. From an accuracy point of view, the NCWM (National Conference of Weights and Measures) is the only U.S. recognized entity that can both certify and validate, through the NTEP certification process, that a dispenser is providing acceptable accuracy to the person purchasing the fuel. No gasoline, diesel, E85, etc… dispenser can be legally placed in service in the U.S. without first obtaining a certificate of conformance from NCWM/NTEP as well as confirmation of accuracy by the state weights and measures authority. The dispenser must then be tested periodically throughout the life of the equipment in service. Likewise for safety listings.

As seen in recent years in the LPG Autogas industry, local inspectors are increasingly requiring that the entire dispenser assembly be listed by UL/ETL or other recognized laboratory, to validate that it is safe for installation and use. This has limited growth in the LPG industry to a certain extent, as reluctance to pay for costly certifications has led to a lack of equipment in some states. Parafour has invested heavily to address these challenges for both DME and LPG, and will be the first and only company to have dispensing products which are both listed and certified by NCWM.



"Over time, our expectations and estimations of the opportunity for these trucks have grown significantly, and we have confidence in DME’s viability as a legitimate diesel substitute in the North American market."


Emmanuel Varenne
Director
Alternative Fuels Product Platform
Volvo Group



As Director of Alternative Fuel Platform Management for the Volvo Group, Emmanuel Varenne is leading efforts to deliver a DME-powered heavy-duty truck to the North American market. Emmanuel is a principal contributor to Volvo’s DME rollout strategy including evaluation of technical solutions and collaboration with fuel suppliers. Emmanuel is an active participant in the IDA’s North American Affairs Committee.

Below Emmanuel outlines the fundamentals of Volvo’s strategy for the introduction of heavy-duty vehicles running on DME, where DME fits within the company’s range of alternative driveline vehicles, and key drivers for interest from Volvo customers.

Q: What was the basis for Volvo’s decision to begin commercial production of heavy-duty trucks running on DME?

Volvo started to test DME on HD trucks as early as 2006. In 2009, a BioDME evaluation program was established in Sweden in collaboration with Chemrec and Preem. We launched a large-scale field test, running 10 trucks powered by a 13-liter Euro5 engine under normal conditions. The tests, originally planned to last only 3 years, were extended twice and are now scheduled to end in 2014, after accumulating more than 1.2 million kilometres (750,000 miles). In short, these are tried and proven trucks.

These tests helped demonstrate that DME was one of the most promising alternative fuel solutions, as it combines CO2 neutrality (when obtained from biomass) and diesel-like performance and operating procedures.

Over time, our expectations and estimations of the opportunity for these trucks have grown significantly, and we have confidence in DME’s viability as a legitimate diesel substitute in the North American market. We will continue to evaluate opportunities to commercialize the technology in other markets as well, particularly upon gauging the success in our launch markets.

Q: Where does DME fit in Volvo’s alternative driveline product range, and where does the company see DME being most relevant?

Volvo is convinced that there is no silver bullet when speaking about alternative drivelines. Each customer is specific in regards to access to the alternative energy, energy cost, and capacity of the customer to adapt its operation to the alternative considered. As such, DME will be part of the complete Volvo alternative driveline offering, from electro-mobility to biodiesel and natural gas, either compressed or liquefied. Electro-mobility will likely be the preferred customer alternative for urban applications (buses or delivery) with CNG as a complement. For more demanding haulage capacities and distances, LNG and DME will likely be the technologies of choice.

DME can be applicable to virtually all the demanding haul applications where fuel consumption is high enough to secure return on investment. Initially, Volvo is targeting regional haul as it seems to be the application that will most benefit from the advantages of DME. Further, these return-to-base applications limit concerns for expanded fueling infrastructure during the early phases of this initiative.

Q: How is a DME truck different from a standard diesel truck?

Honestly, this is one of the benefits of the technology which we are most excited about. The DME truck behaves very much like a diesel truck, due to the limited variation between the DME truck and the corresponding diesel truck. We hear regularly from customers that they would like the economic and regulatory benefits of an alternative fuel vehicle with the performance of a diesel engine, and DME can begin to achieve some of those ends.

The DME base engine is effectively identical to the diesel counterpart. The main difference comes in the fuel injection system where a specific high pressure pump and injectors are required to deliver the fuel to the engine. Likewise, the exhaust after-treatment system is very similar to the one used on modern diesel trucks with the notable exception of the diesel particulate filter (DPF), which isn’t needed with DME. In other words, under the hood, the DME experience is almost the same as diesel, but simpler.

Obviously the fuel tanks resemble propane tanks more than diesel tanks, and they require specific seals and material. This simple tank solution further allows us to limit the incremental cost of the DME truck, which customers will appreciate.

Q: What are the key attractions of DME for Volvo customers interested in running alternative fuel vehicles in their fleet?

The first thing customers will seek is obviously a positive business case compared to alternatives on the market. If a customer is going to forego a diesel engine in favor of DME, we want to make sure their payback period is as brief as possible. Now, it’s too early to discuss pricing of the truck or the fuel, but I can assure you that we’re talking with everyone involved in this proposition to ensure a compelling business case for the customers.

Secondly, customers are going to enjoy the simplicity of the DME truck versus a comparable diesel truck. Because DME produces no particulate matter, we’re able to confirm that the DME truck will have no DPF. This completely removes the need for regeneration and significantly reduces maintenance requirements. The DPF has historically been a headache for various reasons to truck owners, and we’ve received many positive reactions to its removal.

Third, and I referenced this previously, the DME customer gets the approximate horsepower, torque, and overall engine efficiency of a diesel truck. Imagine that – a customer can convert to an alternative fuel without sacrificing their diesel performance.

Finally, DME’s properties mitigate many of the concerns related to natural gas fuels. Unlike CNG’s requirements for high-pressure storage (3600 psi), DME can be stored at a low 75 psi, eliminating the requirement for expensive compressors. Furthermore, DME doesn’t require cryogenics, doesn’t vent, and doesn’t deteriorate over time like LNG.

Q: From a driver’s perspective, how is operating (driving, fueling, maintaining) a DME truck different from what they are currently doing with a diesel truck?

The driver will not feel any difference while driving DME trucks compared to the diesel trucks with which they’re familiar. Our Volvo I-Shift automated manual transmissions will be available as a base offer. The power and torque will be the same as that of diesel. In fact, we recently received remarks from a driver in one of our demo trucks that he loved the fact that he was passing other trucks on the road in a particularly mountainous region. Fueling will be similar to that of propane trucks with relatively low pressures (75 psi) and no cryogenic liquid handling. We don’t foresee the need for specialized equipment.

Q: How and where will the first DME trucks be introduced?

We plan to offer a limited production starting 2017, but it’s too early to comment beyond that. What I’ll say is that we are mindful of the presence of available fuel feedstock, the right regulatory environments, and eager early adopter customers. I think it is a fair expectation that fueling will largely be done “behind the fence” on customer sites in the early days. This lends itself nicely to the regional haul, daycab operations for which we are engineering the product.

Q: Does Volvo have plans to introduce heavy-duty trucks running on DME in other markets outside North America?

We prefer not to discuss future product plans in detail, so let me just say that we believe DME has the potential to be an exciting alternative fuel for heavy trucks in a variety of applications and markets.



"As DME moves up in the value chain from LPG to replace products like naphtha for olefins production, or diesel for transportation and power generation, the potential value and market size for DME is expected to grow."



Ben Iosefa
Director
Energy Applications
Methanex




Ben Iosefa, the Director of Energy Applications at Methanex, has recently assumed the chairmanship of the International DME Association's board of directors and is actively involved in a number of initiatives worldwide related to DME and its use as an ultra-low emission alternative fuel. In this feature Ben looks at some of the principle drivers behind new investments in DME, and how the foundation for new opportunities are being laid in North America, Asia, Europe and elsewhere.

Q: What are the drivers behind the growing interest in DME today?

DME is a fuel used primarily for transportation, home cooking and heating that is produced directly or indirectly from biomass, natural gas, coal and many other carbon feedstocks. With the increasing price of crude oil and relative weakness in natural gas prices, this has opened up an opportunity for DME to take advantage of the difference in feedstock costs.

In a world that is increasingly short of diesel, DME offers an alternative to take relatively abundant natural gas and relieve some of the pressure on diesel supply chains. China, which regularly faces diesel and gasoline shortages, has been first to commercialize the use of DME as an LPG replacement on a mass scale but is now working on demonstrating the value of DME as a diesel substitute. DME has a high cetane number (measure of a fuel’s combustion quality), which makes it an excellent substitute for diesel.

In addition to replacing refined products like Liquid Petroleum Gas (LPG), diesel and even naphtha, DME has a number of safety and environmental benefits that give it additional value beyond its energy content. DME is clean burning, non-toxic and helps eliminate or reduce emissions such as particulates, SOx and NOx.

One recent example of the environmental benefits is DME’s ability to help Europe’s shipping industry meet more stringent environmental regulations. The Sulphur Emissions Control Area (SECA) in Northern Europe has tighter emissions regulations coming into effect in January 2015, requiring ships to meet lower SOx and NOx emissions targets. DME has been identified as one of the leading environmentally friendly, low cost fuels that allow shipping companies to achieve the new emissions targets. Methanex are working with companies such as Stena, Wartsila, Haldor Topsøe, Lloyd’s Register, SSPA and ScandiNAOS to demonstrate the use of DME as a marine fuel. Due to the potential for DME to help meet Europe’s goals, four government funded agencies have agreed to support this work and cover 50% of the project costs.

Q: In your opinion what are the major opportunities for DME today?

DME is a versatile and basic building block for many products which means there are a wide variety of potential growth paths for DME. Initially, DME's fuel value as a replacement for oil products like LPG, diesel, and natural gas was targeted but an emerging opportunity exists in the olefins business where DME can be used to make olefins and plastics.

Like LPG, DME can be stored and transported in cylinders and is often a lower cost option than installing a new natural gas pipeline or grid in areas with low population density or in outlying regions. This is partly driving the enthusiasm behind the use of DME in countries like China, Indonesia, and India.

As DME moves up in the value chain from LPG to replace products like naphtha for olefins production, or diesel for transportation and power generation, the potential value and market size for DME is expected to grow. DME is a relatively straightforward product to use as a substitute for LPG when blended in quantities of 20% or less because few changes are needed to infrastructure or equipment. This, along with DME's cost advantages, has led to the rapid growth of DME for LPG blending.

The next large and developing DME energy application is to replace diesel in modified on-road diesel engines. A great deal of research and road testing has been completed in this area in countries like Japan, Sweden, and China. Almost all of the technical hurdles have been overcome with next generation DME engines now being demonstrated. In addition, the costs to develop DME infrastructure for transportation are typically less than other alternative natural gas derived fuels such as CNG and LNG. DME not only helps to drastically reduce emissions from diesel engines, but it also helps countries achieve another common policy objective which is to reduce reliance on crude oil and to open up the transportation industry to fuels produced from alternative feedstocks such as natural gas and biomass.

Q: What are the key risks to growth and how can these be managed?

The main challenges to DME's ongoing growth are related to 1) ensuring there is an appropriate level of political support for the product and 2) ensuring safe handling procedures are well understood and followed by companies in the supply chain as well as end consumers.

While DME is a relatively safe product that is environmentally benign, it nevertheless requires that appropriate standards and regulations are in place and that safe handling procedures are followed. This is the case for all fuels and chemicals. In the early stages of introduction of a product like DME, there needs to be a laser-like focus on preventing health and safety incidents from occurring.

Politically, DME needs to be given the opportunity to compete on a level playing field with incumbent fuels and other alternative fuels so that the market decides on the fuel of choice. There are always competing interests that do not wish to see a new fuel introduced, regardless of the ongoing cost increases consumers face due to the rising price of crude oil and its products. However, in many countries the strategic driver to reduce dependence on crude oil and minimize the impact of fuels on the environment has grown and created an opportunity for DME to play a role in the fuels pool.

Q: How does the International DME Association promote and support the use of DME globally?

The IDA is an important forum for international experts, including companies producing or planning to produce DME to come together and help shape the industry. Members play an active role in progressing regional initiatives, allocating funds and monitoring key research opportunities, and recommending standards and regulations. An ethic of environment, health and safety underpins all of the work the IDA undertakes. Each of the core areas of focus is then translated into regional initiatives that draw on the global experience of member companies.

High priority items are identified by the board of directors with input from member companies and then plans are developed and implemented that support the IDA's overall goals. For example, the IDA has recently developed several important papers in collaboration with the World LP Gas Association, including safe handling guidelines, and a recommended DME/LPG blending standard for use in China. The IDA’s North American Affairs Committee (led by an executive from member company Oberon Fuels – the first company to market with fuel grade DME in North America) is leading the effort to establish the necessary standards and to ensure compliance with applicable regulations for transportation fuels in the United States, ahead of the introduction by Volvo and Mack Trucks of heavy duty vehicles running on DME.



http://www.aboutdme.org/index.asp?bid=577