Sustaining Southern Pine Competitiveness

Gary Peter

Southern Pines: The Renewable Biomaterial, Bioenergy & Chemicals Star

• Meets all sustainability metrics – Economically viable for multiple products – Top1-3 industries in most SE states – Positive energy & negative CO2 – Positive impact on environment

• Largest biomass supply chain in world • Largest source of virgin “long” fiber • Expansion of saw timber in region • Expansion of wood pellets • Potential for biochemicals & biofuels

Impact of Silviculture & Tree Improvement on Harvest Volume, Rotation Length & Markets

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Plentiful, Cost Effective Wood Supply Stimulates Processing Technology Innovation

• Kraft pulping • Recovery of wood hydrocarbons • Fiber cement • Packaging • Curve saws • Engineered wood • Wood pellets

• Torrified pellets • Biofuel from lignocellulosics • Nanocellulose • Lignin for carbon fiber

Southern Pine Markets BIOMASS BASED • Existing

– Poles – Solidwood – Chip-n-saw – Pulpwood – Pine straw

• Potential – Energy wood – Logging residues – Oleoresin

LAND BASED • Existing

– Hunting/recreation – Conservation easements – Minerals – Fill dirt – Real Estate

• Potential – Ecosystem services

Sustaining Increases in Productivity

• Good silviculture – Stand establishment

• Site prep, weed control

– Density management – Fertilization

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Fox, T.R., E.J. Jokela and H.L. Allen. 2007. J. Forestry 105:337-347.

• Good Genetics – Faster growing families – Better disease resistance

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Age 3 Height Fertilizer + Herbicide

IMPAC II Study Age 2

Subedi et al. 2014

Loblolly Deployment

• 95% deployed as OP, FS, clones

• OP families –still the current standard, 84%

• FS families –becoming more popular, ~8%

• Clones or varieties –~2%

• Seed orchard mix –almost none, ~ 5%

Forest productivity results from the combined effects of many factors

12 t/ac/y

Nutrient Management

Genetic Deployment

Competition Control

Density Management

CLIMATE

SOILS

Loblolly at year 14 Slash at year 14 Culture Planting

Density Total

(m3/ha) Pulp (%)

CNS (%)

Total (m3/ha)

Pulp (%)

CNS (%)

H N 415.9 78.9 20.6 377.0 68.5 30.8 H W 372.4 19.3 80.2 318.8 18.2 77.3 L N 284.2 95.1 1.5 349.1 95.5 3.0 L W 266.8 51.4 48.5 283.5 43.6 56.3

Landowner Growing System is a Central Decision that Depends on Local Markets

• Balancing costs with yields & local markets

• How to add flexibility while maximizing returns?

• Additional products earlier & later in rotation

Market priorities for different trees/ha

Generalist vs. Specialist Dilemma

Generalist • Characteristics OK for all

markets, but good for highest value market

• Additional products while main product grows to increase returns

Specialist • Characteristics maximized

for one primary product • Market size • Market value • Going to scale

• Create new “markets” without sacrificing ability to compete in current “best” markets • Need to identify alignment & synergies

What traits can justify investment? Challenge for Genetic Improvement

• Long development cycle + long rotation = focus on traits that are good for large and stable but inherently “local” markets

• Going to scale – Is value added to landowner and other business in the

supply chain? • Increased growth/yield/diameter of defect free

trees are only things that pay (now) – good for all markets – Wood quality not paid for directly (yet)

Examples

• Juvenile wood stiffness – Dimensional lumber from younger trees – Oriented strand lumber

• Lignin content & composition – Enhanced pulp & sugar yields – Enhanced bioenergy - biofuel yields – Lignin for new products?

• Wood terpene – Extractable pine chemicals & drop-in biofuels

Conifer Oleoresin Canal System • Oleoresin flows out of stem

after wounding, typically by boring insects – Constitutive resin under

positive pressure in resin canals

• The wood resin canals form a 3D network for synthesis & storage of mono- & diterpenes

• Thin walled resin canal epithelial cells line the canal and synthesize and secrete terpenes into the lumen of the canals or duct

Loblolly pine resin canals

Longitudinal RC

RC epithelial cells

History of Southern Pine Terpene Industry Extract Main

ERA Species Collection Products Chemical

Composition Main Uses

Material Separation

Gum turpentine & rosin

1700s – 1940

Slash & longleaf Tree tapping Turpentine, Pine tar

Monoterpenes Diterpenes

Sealing ships, turpentine Living trees Fire, batch &

continuous still distillation

Wood turpentine

1900 - 1940s

Slash & longleaf Destructive distillation

Pine oil, Turpentine, pine tar, dipentene, Charcoal

Monoterpenes & cyclic terpene alcohols α-pinene only

Paints, varnish, floor wax…

Lightwood Batch & continuous still distillation

Wood turpentine & rosin

1940 - today

Slash & longleaf Solvent –steam extraction

Rosin, turpentine, pine oil, dipetene

Monoterpenes Diterpenes Fatty acids Sterols

Soaps, paints, rubber Lightwood Vacuum

distillation

Crude tall oil & crude sulfated turpentine

1960 – today

Loblolly & slash Kraft pulp mill Rosin, pitch, turpentine

Monoterpenes Diterpenes Fatty acids Sterols

Large diversity of products

Pulpwood Vacuum distillation

Pine Terpenes: A $3 Billion Global Industry • Pine Terpene collection 3 million tonne/yr

– Turpentine (monoterpene) rosin (diterpenoids) – Gum terpene (60%), crude sulfated turpentine &

crude tall oil (35%), wood naval stores (5%) • Gum terpenes collected by tapping living trees >

850,000 tonne/yr – China, Portugal, USSR, Brazil, Indonesia, Mexico, India – China >500,000 tonne/yr [60% of global supply but

little is exported] • Pulp & paper industry collects terpenes as a co-

product – Crude sulfated turpentine & Crude tall oil (CTO) – US south 450,000 tonne/yr of CTO

Pine Chemicals A $3 Billion/Y Industry

• Global pine oleochemical industry refines gum terpenes, CST & CTO into a large number of chemical products – Focus of industry on mono &

diterpenes (rosin/resin acids) • Flavors, fragrances, chemicals,

pharmaceutical, food….

• Current pine extractives sold as biofuel – UPM Kymmenye, SunPine

• Renewable diesel – Az Chemicals, MWV

• Pitch fuel – mix of triglycerides and other hydrocarbons

Pine Chemicals Industry Supply

2014 estimated production Gum

(MMT/Y) CTO

(MMT/Y) CST

(MMT/Y)

Global 1.2 – 1.4 1.5-1.6 0.15

N. America 0 0.82 0.098

SE US 0 0.80 0.090

Predicted change in global supply -2% to + 2%

In 2010, US industry shipped $1.92 billion in products & spent $940.8 million (49% of shipment value) on raw terpene supplies

Economic Benefits of the Pine Chemicals Industry, 2011, Am. Chem. Council

Global Rosin Production

Source = A. Cunningham – Pine Chemicals Association 2014 Intl. Meeting

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Growth of Pine Chemicals Industry is Supply Limited

• Supplies of raw terpenes constrain industry growth not market demand – Decline in US pulp mills limit CST &

CTO supplies • Since early 90’s, CTO supply has

decreased by >15% • Competition for pine pulpwood for OSB,

pellets, biofuels? – Change in pulping processes affecting

CST & CTO yields – Variable available supply from China – Chinese labor costs & number of

“tappable” trees negatively affecting oleoresin supply

– China building internal processing capacity

– In Finland, UPM Kymmenne is using CTO for biodiesel production

P. elliottii, Angatuba, Brazil A. Cunningham

Pine Chemicals Industry Supply 2014 estimated production CTO

(MMT/Y) CST

(MMT/Y) Oleoresin(MMT/Y)

Global 1.5-1.6 0.15 1.2 – 1.4

N. America 0.82 0.098 0

SE US 0.80 0.090 0

• Options for rapidly increasing supply – Capture more monoterpenes (need cost effective

technology/changes to processing) • Improve recovery in pulp mills (avg today is 15%) • Start capturing in engineered wood and wood pellet facilities (avg

today is 0%); SE uses 25 million tons of pulpwood y-1 for engineered wood alone

– Oleoresin collection from live trees • Domestic production from existing slash pine plantations

– Induce resinosis to more than double tree terpene content in conjunction with or independent of oleoresin tapping

FL Office of Energy Project Objectives

Develop more cost effective method to collect pine terpenes for renewable chemicals and biofuel production from live slash pine trees Assess stand management, tree characteristics and age on oleoresin yield Assess feasibility and impact of expanding collection of oleoresin and terpene based jet fuel production in Florida

Borehole Tapping Borehole tapping method developed by Dr. Alan Hodges involves drilling holes into pine trees to reach resin ducts in the xylem and collect oleoresin

Taken From: Rodrigues et al. 2011

Advantages of borehole tapping over conventional resin production method (Hodges 1995) : Reduce tree stress Improvement of product quality Increased labor productivity Decreased insect pest problems Minimum damage to harvestable

timber

Drilling boreholes with Stihl portable drill

Borehole Oleoresin Tapping System

Worker installing spouts in boreholes

Collection in HDPE or nylon bags Utility vehicle with barrels for oleoresin

collection

15 Y Site: Effect of Pine Straw Treatments

• Significant effect (p=<0.0001) of pine straw raked site – PS 944 g/tree vs. No-PS

726/tree (avg of 30% increase across all treatments)

• Best treatment with pine straw raked site was 1.5 kg/tree

Tukey HSD

C C B AB AB B A AB

Automated Drilling Method

15 year old thinned site 539 trees drilled Two Treatments

Treatment 1 2

High Gum Slash Pine Trees

Group Average of DBH (in)

Average of Yield (g)

Max of Yield (g)

1 10.6 2,618 3,800 2 10.1 2,672 4,050 3 10.7 1,730 3,800

Grand Total 10.4 2,546 4,050

22 y

Scenariosb Description Site Indexa

(m)

Planting density

(trees ha-1)

Baseline Timber production 21.4 1500

R1 Timber and oleoresin production 21.4 1500

R2 Timber and oleoresin production with two-fold increased oleoresin yield and higher tree growth through genetics

22.8 1500

R3

Timber and oleoresin production in high forest productivity sites

25 1500

R4

Timber and oleoresin production with decreased planting density

21.4 1000

R5c

Timber, pinestraw and oleoresin production. Pinestraw raking between age 8 and 15.

21.4 1500

R6 Timber and two-fold increase in production due to genetics

21.4 1500

a Height reached by the stand's dominant and codominant trees at a reference age of 25 years. bAll scenarios: weed control prior establishment, banded weed control at age 1, fertilization at ages 5 and 15.c Weed control at ages 7,11 and 15. Fertilization at age 11.

Likely Scenarios for Oleoresin Tapping of Slash Pine Plantations

• Growth and yield models for slash pine stands reported by Pienaar et al. (1996) and modified to allow fertilizations (Bailey et al. 1999) and thinnings (Bailey et al. 1982, Pienaar, 1995) were used to determine the merchantable volume of sawtimber (st), chip-and-saw (cns) and pulpwood (pw). The stem diameter at breast height and merchantable top diameter used to define the three forest products were 29.2 and 17.8 cm for st, 19.1 and 15.2 cm for cns and 11.4 and 7.6 cm for pw.

• Based on Hodges and Johnson (1997) and Hodges (2000) the annual borehole oleoresin production is calculated as function of the diameter at breast height:

– 𝑣𝑣𝑟𝑟 = 𝑛𝑛(0.086𝑑𝑑𝑑𝑑𝑑 −0.826)

• In this equation, 𝑣𝑣𝑟𝑟 is the oleoresin yield in kilograms (kg) per hectare (ha), 𝑑𝑑𝑑𝑑𝑑 is the average tree diameter measured at breast height (cm) and 𝑛𝑛 is the number of trees per ha. The expression between parentheses on the right hand side represents the oleoresin yield per tree.

• We consider that the borehole oleoresin tapping is conducted for a period of three years, and the initial age of tapping 𝑡𝑡𝑡𝑡 is set when the 𝑑𝑑𝑑𝑑𝑑 ≥ 23 cm.

Present Value of Tapping Pine Trees for Oleoresin with Current Costs & Prices

Scenario Site index

Stocking Age of tapping

Rotation age

Timber mass at harvest

Oleoresinmass

Present values over one rotation Land expectation

value

Increase in 𝐿𝐿𝐿𝐿𝐿𝐿 from oleoresin tapping

Oleoresin Timber Pinestraw Total

𝑡𝑡𝑡𝑡- 𝑡𝑡𝑡𝑡 R 𝑃𝑃𝐿𝐿𝑟𝑟 𝑃𝑃𝐿𝐿𝑓𝑓 𝑃𝑃𝐿𝐿𝑠𝑠 𝑃𝑃𝐿𝐿𝑡𝑡 𝐿𝐿𝐿𝐿𝐿𝐿

m Tree ha-1 ..……years……. Mg ha-1 Mg ha-1 ..…………………..US$ ha-1……………… %

Baseline 21.4 1500 n.a 23 327 n.a n.a 1796 n.a 1796 2692 n.a

R1 21.4 1500 21-23 23 341 3.0 190 1826 n.a 2016 2950 9.6

R2 22.8 1500 19-21 22 371 3.05 213 2384 n.a 2597 3892 8.9

R3 25 1500 17-19 22 420 3.11 240 3391 n.a 3631 5447 7.2

R4 21.4 1000 17-19 22 275 2.15 166 1703 n.a 1870 2802 9.7

R5 21.4 1500 20-22 23 366 3.04 202 2176 727 3105 4544 4.6

R6 21.4 1500 21-23 23 341 6.00 379 1826 n.a 2208 3228 19.9

The average stumpage prices for southern pine sawtimber, chip-and-saw, and pulpwood between 2008 and 2012 were assumed as $35 m-3, $21 m-3, and $12 m-3, respectively (Timber Mart South, 2008-12). The price of pinestraw was assumed to be $0.5 bale-1 (Susaeta et al. 2013). Oleoresin prices for landowner $0.19 – 0.40 kg-1 (Hodges, unpublished). Table above reports values at $0.19 kg-1

Oleoresin Tapping More than Offsets Reductions in LEV Incurred by Extending the Rotation Past

Optimal Harvest Age • Optimal rotation age occurs when LEV is maximal. Returns decrease when harvesting is

delayed. • Modeled the ability of oleoresin tapping to offset declines in LEV from loss of timber

value when the rotation is extended • LEV declines by 10% 3-4 years after optimal harvest age due to loss in timber revenue

and increased interest (discount rate) costs

2672 2423

3574 3225

5078 4580

3184 2588 2672 2298

278 495

319 724

369 1010

296 668 555 1112

1064 981

0100020003000400050006000

LEV

($/h

a)

Scenario-Harvest Age

LEVf LEVr LEVps

Advantages to Landowner for Terpene Enhanced Pines

TEP

New product with large market

Early revenue

Greater management flexibility

Synergy with existing market

• Existing pine chemicals industry in SE • High demand for terpene feedstock • Limited global supply • Efficient conversion of pinene to jet fuel

• Living trees tapped before harvest • Install taps or sell tapping rights • Synergy with pinestraw raking

• Terpene revenue offsets loss from late harvest

• Offsets revenue loss from lower initial stocking

• Potential for higher price for energywood and pulpwood

• Tree growth and terpene yield are positively correlated

• Tapping does not affect final yield and wood quality

Increasing Pine Terpene Supply

Plantation

Existing Facilities

New Facilities

Tapping

In-tree stimulation

Gum Turpentine

Rosin

CST CTO

Turpentine

Turpentine Rosin

FA

Improved recovery

Oleoresin

Genetics

Increased supply

5/18/2015 32

Future Pine Chemicals Industry TE-Pine

Pulp mill

Biosynthesis

Extraction

Crude Products

Final Products

Specialty Chemicals

Oleore-sin

CTO & CST

Wood Turpentine & Rosin

Industrial Biofuels

Flavors & Fragrances

Live Tree Biofuels

CTO & CT

VOC Condensate

Rosin mill Bioenergy

VOC Condensate

OSB mill

LVL mill

Aviation Biofuels

Wood Rosin

Distillation Products

Gum Turpentine

& Rosin

Tall Oil-FA Tall Oil-Rosin Sterols, Pitch

α-pinene β-pinene

Minor MTs

Biodiesel

Summary

• Well aligned with existing markets but adds value across the supply chain, but most importantly to the landowner – Ideally does not affect ability to sell trees into

current markets • High terpene wood to promote tapping and renewable

chemicals with existing infrastructure

Acknowledgements

COLLABORATORS • University of Florida

– John Davis, Chris Dervinis, Jennifer Lauture, Alejandro Riveros-Walker, Jared Westbrook

• ArborGen – Will Rottmann

• NREL – Mark Davis, Robert Sykes, Li z

Ware • University of California,

Berkeley – Jim Keasling, Jim Kirby, Blake

Simmons

FUNDING • DOE/ARPA-E • ArborGen • Cooperative Forest Genetics

Research Program – Arborgen, Foley, Florida Forest

Service, Georgia Forestry Commission, Packaging Corp of America, Plum Creek Timber, Rayonier, Weyerhaeuser

• Forest Biology Research Cooperative – Plum Creek Timber, Rayonier,

Weyerhaeuser, RMS, F & W • Univ. California, Berkeley • Univ. of Florida

Seedling Provider

Landowner/Grower

Stem harvest & Transport

In-tree terpene

collection

Short rotation

pine

High biomass

yield

Pulp/paper Chip-n-saw

Solidwood

Engineered Wood

Lignocellulosic Biorefinery

• Increased seedling sales • Higher seedling price

• Early revenue • Higher value product • Increased flexibility

• High efficiency harvesting

• Specialized collection

Oleochem. Refinery

• Increased co-products

• New co-products

• C & H rich fuel • Biomass to fuel

Terpene Enhanced Pine Supply & Value Chain

CST & CTO

Enabling New Markets

• Cost of production determines potential for new process and product development – Biomass rotations judged against optimal

BLV/LEV defined by current markets • Munsell & Fox, 2010 Biomass & Bioenergy 3 x 8 yr rotations need

stumpage of $11/grn ton & $19/grn ton biomass for similar value to one 24 yr integrated product rotation

Oleoresin Flow is Genetically Controlled: Estimated F1 genetic gains in oleoresin drymass under varying selection intensities in loblolly pine

site h2 Fold-increase breed top 10%

Fold-increase breed top 5%

Fold-increase

breed top 1%

CUT 0.137 1.618 1.736 1.977 NAS yr 6 0.303 1.856 2.051 2.409 NAS yr 7 0.239 1.801 1.977 2.333 PAL 0.118 1.536 1.614 1.768 ALL 0.117 1.608 1.717 1.918

h2: narrow sense heritability

Project Summary

Combinatorial engineering 20% wood terpene

Increased Resin canal

#/volume

Increased terpene

synthesis

Resinosis

Improved enzymes

Increased carbon flux

Five fold increase in

wood terpene

Discovery

Technoeconomic Modeling Forest tree growth Terpene recovery Fuel production

Value Chain Analysis & Proposition

Germplasm providers Landowners Harvesting/transport Wood processors Fuel synthesis

Commercialization Partners Pulp & paper Biofuel Producers Wood products Bioenergy Oleochemical Refiners Flavor & Fragrances