Norwegian sawmilling- and wood processing major Bergene Holm AS has announced that it and global oil, gas, and energy major Royal Dutch Shell plc (Shell) have entered into a second Contribution Agreement with advanced biofuel developer Biozin AS. This new agreement includes increased long-term financial support from Shell, contributing US$3 million, which is in addition to a previous contribution of US$3 million in 2019 towards a bio-crude oil plant.
Bergene Holm operates seven wood production facilities and other businesses in southern Norway accounting for around 25 percent of the country’s sawn wood production. Biozin AS is a wholly-owned subsidiary of Bergene Holm established to produce renewable fuels from Norwegian sawmilling- and forestry residues.
Biozin Holding AS (BZH), originally formed by Biozin and Swedish oil refiner Preem AB, is developing a first full-scale production plant for advanced bio-crude oil planned to be located adjacent to Bergene Holm’s Nidarå sawmill in Åmli, Norway, with a final investment decision scheduled for the second half of 2023.
Exercise buyout option
In June 2019, BZH was awarded NOK 30 million (≈ EUR 2.97 million) from Innovation Norway for the preliminary plant design. This new agreement includes increased long-term financial support from Shell that is contributing US$3 million, which is in addition to a previous contribution by Shell of US$3 million in November 2019.
For us in Biozin, it is very positive that Shell and Bergene Holm, with this Contribution Agreement, confirm a long-term commitment in this project. Shell has the technology and resources, together with Bergene Holm’s extensive experience with feedstock, make us confident that we will be able to realize a full-scale production plant for bio-crude oil in Åmli, said Thomas Skadal, CEO of Biozin.
In connection with the new Contribution Agreement, Bergene Holm has exercised the option to buy Preem’s shareholding in Biozin Holding and provided additional equity to the company while making it the sole owner.
We are now further strengthening our involvement in this project. For us, this project is important as it will contribute to sustainable forestry in the region and safeguard raw material supply for the sawmill in Åmli. We have in this sawmill invested more than NOK 300 million (≈ EUR 29.55 million over the last 10 years, said Erland Løkken, CEO of Bergene Holm.
Deploy Shell’s IH² technology
The Biozin plant in Åmli will convert feedstock from forest residues and sawmill by-product streams into an advanced biocrude oil – a light hydrocarbon bioliquid product containing C4-C20 hydrocarbons to be used in all petrochemical products.
Already in 2017, BZH was granted a package license agreement for Shell’s “IH²” conversion technology, an advanced hydropyrolysis technology that uses catalyst processes to remove oxygen from biomass to produce hydrocarbon products from the remaining material.
Shell has acquired exclusive rights to use and develop the technology, and since the previous Contribution Agreement in 2019, the technology has been further developed and continuously tested by Shell in several international research centers.
The final technology qualification remains, which has been delayed due to the ongoing coronavirus (COVID-19) pandemic.
According to Shell, this investment is an important step to scale and de-risk the technology as there are still technical and project risks to overcome, and this investment is an important step to scale and de-risk the process.
Bergene Holm’s forestry expertise alongside Biozin’s longstanding leadership within the biofuels sector makes them perfect partners as we work to scale IH² technology. Together, we can ensure the project has access to the sustainable wood wastes and sawmill residues it needs while respecting Norway’s forests. The Norwegian regulatory environment supports biofuels and advanced bio-crude oils projects like this one, and the local authority is actively promoting industrial development. While we still have technical and project risks to overcome, these supporting factors give us a good chance of deploying Shell’s IH² technology at a commercial scale in Åmli. We know that if successful, this project will help our customers decarbonize their journeys, said Andrew Murfin, General Manager for Advanced Biofuels at Shell.
First bio-crude production in 2026
Once fully scaled, the IH² technology has Shell says, the potential to significantly contribute to decarbonizing road journeys, marine and aviation by producing renewable gasoline, renewable diesel, renewable marine distillates, and sustainable aviation fuel (SAF).
The technology also produces biochar which is a valuable product aiding in carbon capture. The use of this high-value advanced bio-crude oil and biochar can reduce the carbon dioxide (CO2) footprint by up to 90 percent compared to fossil crude oil.
In full operation, the plant will convert around 1 000 tonnes of dried biomass per day into bio-crude oil that will be sold and further processed into advanced renewable fuels.
A final decision to invest about NOK 4 billion (≈ EUR 394 million) for the realization of the Biozin Åmli plant is expected in the second half of 2023 with the first production of bio-crude oil planned for early 2026.