BP‘s Perspective on Future Fuels

Wolfgang Dörmer, GFT, Bochum

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Agenda

• What have been achieved in the past?

• Why again is bio an issue for fuels?

• Bio target of politics and today’s fuel standards are not aligned

• BP’s biofuels developments

• Summary

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Many challenges were yet solved in the past

In the past much effort on fossil fuels quality was made

• to reduce emissions from both gasoline and diesel vehicles.

• to allow introduction of improved vehicles technology with lower emissions and exhaust after treatment systems.

• to offer advantages for customers in many cases performance, fuel economy etc.).

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Improved fuels quality result in lower emissions

Measures Gasoline Diesel

Replacement of lead Lead free in most countries

-

Reduction of sulphur Down to max. 10mg/kg Down to max. 10mg/kg

Adjustment of distillation characteristics

Volatility; vapour pressure

End point

Reduction of Aromatics

Aromatics PAH’s

Increase of ignition quality

Higher octane numbers Higher cetane number

Introduction of FM and Lubrifiers

FM Lubrifiers

Introduction of performance additives

In the seventies 1987 in GY

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Key drivers in moving towards sustainable mobility solutions:

• Climate change issues

• Security of supply & Energy diversification

Biofuels address both of these issues

Drivers for change towards biofuels

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CO2

Water (vapour)

FCKW

Nitrous oxide

Ozone

Methan

etc. Bio Fuels

Biomass

PhotosynthesisCO2-Absorption

GHG‘s from other

sources

Absorption of CO2 by Plants results intobetter GHG-Balance of fossil Fuels

Both fossil and biofuels produce Carbon Dioxide (CO2) emissions. But plants, from which biofuels are often produced, have absorbed CO2 from environment for growing. So use of biofuels

can result in significant CO2 reductions.

Principle of a closed CO2 loop

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Methanol

How can biomass be used to manufacture renewable Fuels?

Energy fromseed engines

chemicals/fertiliser

A g r i c u l t u r e

Oil mills / Raffination

Production process

(distillation/dehydration)

rape sugar beets/wheat

processenergy

Esterification

Etherification

Hydro carbons

Otto engine

Use in crude refinery (Co-

processing) or in separate

process

Ethanol

or

ETBE

rape-oil

(refined)

FAME (RME)

diesel

Diesel engine

rape-oil

(pure)

HVO

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Politics push Biofuels Implementation (Example Germany)

0

1

2

3

4

5

6

7

8

9

2007 2008 2009 2010 2011 2012 2013 2014 2015

4.4%4.4%4.4%4.4%4.4% 4.4%4.4%4.4%4.4%

3.6%

2.8%

2.0%

1.2%

3.6% 3.6% 3.6%3.6% 3.6%

[Year]

6.25%6.75%

7.00% 7.25% 7.50% 7.75%8.00%

En

erg

y c

on

ten

t [E

C %

]

Combined quota*)

Diesel-quota

Gasoline-quota

In 2007 und 2008 single quotas for biofuels are mandatory for blending into Gasoline and Diesel fuels. Until 2009 a combined quota regulates the total content of biofuels.

Discussion on increase up to 17% EC from 2020 on !!

Topping of a specific single quota can not be used to complete other failed

quota

5.6% EtOH by volume

4.8% FAME by volume

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Today’s EN fuel standards do not allow to fulfill bio quota from 2009 on (example Germany)

Enhancement of biofuels can result in higher CO2 savings. To use this advantage adjustment of today’s fuel standards to allow higher bio blend rates is mandatory.BP is supporting both higher blend rates to achieve higher CO2 savings and excellent fuel quality to satisfy customers.

* Values by volume are higher

2009 Combined quota for all fuels [% Energy content *

6.25

Maximum achievable with current standards EN 228 and EN 590 allowing up to 5% Biofuels only

4.8

Maximum achievable with updated standards allowing higher Bio-contents up to 10%

6.5

Required quota by Biofuel law

Non compliance causes tax penalties

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Biofuels: future potential world wide

The International Energy Agency (IEA) estimates the global potential of biofuels up to 30% of the total demand of transport fuels in 2050:

source: IEA, BP

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20

40

60

80

100

120

140

160

180

200

2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Exajoules

Hydrogen Total

Biofuels Total

Electricity

CNG/LPG

GTL and CTL

Residual Fuel

Jet Fuel

Conventional Diesel

Conventional Gasoline

Ges

amtb

edar

fan

Kra

ftst

offen

(EJ)

According IEA estimates 30% biofuels possible in 2050

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Biobutanol for gasoline:

• Development of a new fermentation technology for the production of biobutanol from sugar together with our partner DuPont

• Biobutanol

On the way to 2nd generation biofuels

better molecules for gasoline

Biobutanol is a good alternative to Ethanol

- allows higher concentrations compared to ethanol without the necessity for vehicle adjustments.

- has much lower fuel consuption increase than gasoline mixtures with ethanol.

- Biobutanol used as cosolvent with ethanol provides positive effects on vapor pressure and better decomposition behavior in presence of water

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On the way to 2nd generation biofuels

better molecules for diesel

Co-Processing of vegetable oils in refineries to diesel fuel:

• Utilization of existing hydro treating units, feasibility demonstrated

• Conversion to straight chain hydrocarbons in refinery unit

Separate Hydro treating and Isomerization of vegetable oils:

• Conversion to branched hydrocarbons in new units

• Examples: Green Diesel (UOP), NexBTL (Neste)

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• Joint Venture with D1 Crops to develop Jatropha plantations (non food crop)

• One million hectares of Jatropha to be planted over the next four years, with 300,000 hectares per year thereafter.

• Plantation will generate 2.5 billion liters of Jatropha oil over the next four years.

• Crops to be planted in South East Asia, Southern Africa, Central America, South America and India.

• Also BP is investigating the feasibility of using algae oil (using our Energy Bioscience Institute) as a diesel feedstock.

• Jatropha and Algae oil can be used to manufacture both traditional molecules (FAME) and advantaged fuel molecules (HVO)

BP Activities – Better Feed Stocks

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BP BioFuels

• BP has entered into a partnership with the University of California Berkeley and the University of Illinois to establish the Energy Biosciences Institute (EBI). The EBI will focus itself on three key aspects of energy bio sciences:

Development of new, more efficient bio-components for fuels.

Improvement and acceleration of bio-conversion processes and increase of the portion of the biomass employment .

Utilization of modern biotechnologies for biofuel production for the development of those plants with a higher energy output - they are to grow also on land on which no useful plants for the food production can be cultivated.

•BP invested 500 million US-$ into the EBI (program start: July 2007)

•BP has recently founded the new business division BP BioFuels.

2nd generation biofuels EBI and BP BioFuels

BP recognized and invested the growth potential of Biofuels

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Summary (1)

• The utilization of biofuels is not new, but today sustainability is of more importance than in former times.

• Biodiesels made from vegetable oil, bioethanol & ETBE made of sugar are nowadays of importance. The trend to synthetic biofuels (e.g. BtL), bioethanol & ETBE from cellulose is clearly visible.

• Politicians in the US, Europe and other areas of the world support biofuels

• Oil and automotive industry want to implement fact-based realistic objectives instead of group-centered lobbying

• Biofuels avoid adding CO2 into the atmosphere, if the total CO2 balance is on the right side only.

• Biofuels can only deliver a limited contribution to security of supply

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Summary (2)

• Biofuels are currently not economic. The only exception today seems to be: bioethanol from sugar cane in Brazil.

• There are limited technical restrictions only that cannot be solved (ethanolate corrosion, engine oil dilution etc.)

• Biofuels are a growing market

• BP supports the development of biofuels with our own business and our own product line (biobutanol)

• BP has recognized the growth potential of biofuels and invests.

• The implementation of biofuels will not take place without substantial structural adjustments.

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Thank you very much for your attention.

Wolfsburg, 18th March 2008