Page 1


THE ETHANOL WORKFORCE Salary and Personnel Trends from the 2017 Survey Page 20


Shining Light on Energy Efficiency

Page 28

Taming the Power-Hungry Beast Page 36

What is the point of obligation? Under the Renewable Fuel Standard (RFS), oil refiners are required to blend renewable fuel into our transportation fuel supply. This is called the point of obligation, and it is working as is. It is making sure that consumers have a choice of fuel at the gas pump.

WIDESPREAD SUPPORT FOR KEEPING IT WHERE IT IS: The biofuels industry stands united with farmers, distributors, retailers, and other market participants to protect the RFS, specifically keeping the point of obligation where it is today. Some have suggested that a change to the point of obligation would be an acceptable sacrifice if the EPA were to issue a Reid

Vapor Pressure (RVP) waiver to lift obscure and outdated regulatory barriers to the summer sales of E15. However, an RVP waiver is essentially meaningless if the point of obligation is changed because retailers would no longer have any incentive to sell higher ethanol blends.


Sheetz is the largest retailer of E15 and E85 in the U.S. today, so we know what it takes to sell higher blends of ethanol. We believe changing the point of obligation would be the death knell for the RFS. The current system works well and as intended. A change to the point of obligation will not improve the incentive to blend more biofuels into transportation fuel but would actually have the reverse effect.

Kum & Go opposes a shift in the obligated party. We believe the current point of obligation represents the most efficient, effective and transparent process for measuring and ensuring biofuel blending compliance. Any change would be detrimental to the biofuel industry and result in higher retail fuel prices.

Changing the RFS point of obligation would severely impact the economic incentive retailers have for offering higher blends of biofuels like E15. This change will impose dramatically higher costs on consumers or even result in the withdrawal of options from the marketplace. Rewriting the RFS now to benefit the refining sector would create a logistical nightmare for fuel retailers, raise costs, and threaten the expansion of biofuels like E15.

Learn more about the Point of Obligation and how it plays a key role in the success of the Renewable Fuel Standard at 701 8th St NW, Suite 450, Washington, D.C. 20001




















Fighting Misinformation One Fact at a Time By Bob Dinneen






To Win RFS Fights, We Must Stand United By Emily Skor


An Allegory on PoO By Ron Lamberty


Work in the Ethanol Industry




UAI Coalition Challenges Clean Air Interpretation By Dave VanderGriend






CARB Proposes LCFS Verification Program By John Sens


Plants focus on cutting costs, reducing emissions. By Ann Bailey


Taming the Power-Hungry Beast

LCFS to Drive New Advanced Biofuel Demand By Leticia Phillips


Survey reports salary and workforce trends. By Susanne Retka Schill

Shining Light on Energy Efficiency





Energy at Work By Tom Bryan





Electric motor efficiency poised for further improvements. By Ron Kotrba



Ensuring Pipeline Integrity Requires Multi-Tiered Approach

Financial and social pressures demand attention to avoid leaks, incidents. By Lars Larsson

42 TROUBLESHOOTING Getting Grounded

Case study at Red Trail Energy describes solution to premature bearing failures. By Adam Willwerth

Testing, Testing Ethanol Producer Magazine: (USPS No. 023-974) April 2017, Vol. 23, Issue 4. Ethanol Producer Magazine is published monthly by BBI International. Principal Office: 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. Periodicals Postage Paid at Grand Forks, North Dakota and additional mailing offices. POSTMASTER: Send address changes to Ethanol Producer Magazine/Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, North Dakota 58203.

4 | Ethanol Producer Magazine | APRIL 2017

Issues with new motors are uncovered in case study at Cardinal Ethanol. By Mike Schneider


Managing Margin, Risk, Financial Transparency in the Ethanol Industry Roadmap helps management and boards create appropriate systems. By Steve Rosvold



EDITORIAL President & Editor in Chief Tom Bryan Vice President of Content & Executive Editor Tim Portz Managing Editor Susanne Retka Schill Associate Editor Ann Bailey News Editor Erin Voegele Copy Editor Jan Tellmann

ART Art Director Jaci Satterlund Graphic Designer Raquel Boushee


2017 International Fuel Ethanol Workshop & Expo BetaTec Hop Products


3 14 26-27

Direct Automation


EISENMANN Corporation


Fagen Inc.


Fluid Quip Process Technologies, LLC


Growth Energy


Hydro-Klean LLC



J.C. Ramsdell Enviro Services, Inc.


Mole Master Services Corporation Nalco Water



Vice President of Operations Matthew Spoor Sales & Marketing Director John Nelson Business Development Director Howard Brockhouse Senior Account Manager/Bioenergy Team Leader Chip Shereck Circulation Manager Jessica Tiller Marketing & Advertising Manager Marla DeFoe


ICM, Inc.

Chairman Mike Bryan CEO Joe Bryan


2017 National Advanced Biofuels Conference & Expo

31 5

Premium Plant Services, Inc.


R.S. Stover




Syngenta: Enogen Tramco, Inc.


Vertex Railcar Corporation



EDITORIAL BOARD Ringneck Energy Walter Wendland Little Sioux Corn Processors Steve Roe Commonwealth Agri-Energy Mick Henderson Pinal Energy Keith Kor Aemetis Advanced Fuels Eric McAfee Poet Scott Teigen Western Plains Energy Derek Paine

Customer Service Please call 1-866-746-8385 or email us at Subscriptions to Ethanol Producer Magazine are free of charge to everyone with the exception of a shipping and handling charge of $49.95 for anyone outside the United States. To subscribe, visit or you can send your mailing address and payment (checks made out to BBI International) to: Ethanol Producer Magazine Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You can also fax a subscription form to 701-746-5367. Back Issues, Reprints and Permissions Select back issues are available for $3.95 each, plus shipping. Article reprints are also available for a fee. For more information, contact us at 866-746-8385 or Advertising Ethanol Producer Magazine provides a specific topic delivered to a highly targeted audience. We are committed to editorial excellence and high-quality print production. To find out more about Ethanol Producer Magazine advertising opportunities, please contact us at 866-746-8385 or Letters to the Editor We welcome letters to the editor. Send to Ethanol Producer Magazine Letters to the Editor, 308 2nd Ave. N., Suite 304, Grand Forks, ND 58203 or email to Please include your name, address and phone number. Letters may be edited for clarity and/ or space.

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6 | Ethanol Producer Magazine | APRIL 2017


Energy at Work

Tom Bryan

President & Editor in Chief

Every couple of years, this magazine conducts an ethanol plant salary and job satisfaction survey that routinely yields more than its name promises. The results of this biannual poll provide a representative snapshot of

industry compensation trends and conditions while, more broadly, placing a finger on the pulse of ethanol’s workforce. Organizing the data into easy-to-consume facts and figures, we often reveal more than just paychecks, but the strengths, vulnerabilities and general state of ethanol plant employment. In “Work in the Ethanol Industry,” starting on page 20, EPM Managing Editor Susanne Retka Schill—chief architect of this year’s survey—breaks down the results with a data-rich narrative framed by infographics. The story highlights both expected and unexpected information. It’s clear, for instance, that ethanol plants are still great places to work: They offer excellent salary and strong benefits, especially compared to other small town opportunities. However, while job satisfaction is high, attrition may be rising. The industry’s growing number of retirees and more normalized employee turnover, could signal a tightening of the niche ethanol workforce. Next, we turn to plant operations in “Shining Light on Energy Efficiency,” on page 28. In this story, EPM Associate Editor Ann Bailey shares ethanol producer perspectives on reducing energy consumption. For most, the cost of natural gas is the second highest plant expenditure after feedstock. Corn and natural gas are, of course, both commodities that can be hedged, but only the latter can be materially reduced through design engineering and power optimization. The adoption of new technologies can also reduce energy intake, but producers warn that the opposite can also be true. Among the more abundant power-consuming machines in an ethanol plant are electrical motors used to power fans, pumps, conveyors, compressors and the like. In “Taming the Power-Hungry Beast,” on page 36, BBI Senior Staff Writer Ron Kotrba looks at how updated federal regulations, along with advances in motor technology, are pushing electrical motor efficiency to new heights. Kotrba reports that original equipment manufacturers (OEMs) are making more efficient motors by using materials and configurations that allow the machines to run cooler, with less friction. And even though these motors are at or near theoretical maximum efficiencies, competitive OEMs keep clawing at gains.


TWITTER.COM/ETHANOLMAGAZINE APRIL 2017 | Ethanol Producer Magazine | 7


Fighting Misinformation One Fact at a Time By Bob Dinneen

In our industry, facts are sacrosanct. You cannot

fight misinformation, mistruths or alternative facts with anything other than the truth. And that’s where our “2017 Ethanol Industry Outlook” comes in handy. Our annual handbook, released at the 22nd Annual National Ethanol Conference in February, provides readers with statistics, insight and analysis on the latest facts of the U.S. ethanol industry. The handbook dives into specifics, providing hard-hitting facts to refute against inaccurate information. Some examples: • 200 operating ethanol biorefineries in 28 states produced a record 15.25 billion gallons of high-octane renewable fuel in 2016, along with roughly 42 million metric tons of high-protein animal feed. • The production of 15.25 billion gallons of ethanol supported 74,420 direct jobs in renewable fuel production and agriculture in 2016, as well as 264,756 indirect and induced jobs across all sectors of the economy. • Corn ethanol from a typical dry mill reduces greenhouse gas emissions by 43 percent compared to gasoline, according to a new analysis conducted for the USDA—even when hypothetical land use change emissions are included. Data from USDA and EPA show that agricultural land use is actually shrinking, undermining the indirect land use change theory. The USDA study found that by 2022, corn ethanol could reduce GHG by 76 percent compared to gasoline. • Net petroleum dependence was 25 percent in 2016, but would have been 33 percent without the addition of 15.25 billion gallons of ethanol to the fuel supply. Looked at another way, 2016 ethanol production displaced an amount of gasoline refined from 540 million barrels of crude oil. • U.S. ethanol and cellulosic ethanol production continues to expand. For example, Quad County Corn Processors, near Galva, Iowa, surpassed the 5 million-gallon threshold for cellulosic ethanol production in September 2016, while other ethanol producers, including Pacific Ethanol, Little Sioux Corn Processors and Flint

8 | Ethanol Producer Magazine | APRIL 2017

Hills Resources, adopted “bolt on” technologies in 2016 that will allow them to produce both starch-based and cellulosic ethanol from the same kernel. • The U.S. ethanol industry exported more than 1 billion gallons in 2016, the second-highest annual total on record. Canada and Brazil remained the U.S. ethanol industry’s top export customers in 2016, with the two countries combining to receive roughly half of total shipments. In the meantime, U.S. fuel ethanol imports hit a six-year low, registering at less than 40 million gallons. • One-third of every bushel of grain that enters the ethanol process is enhanced and returned to the feed market, most often in the form of distillers grains, corn gluten feed and corn gluten meal. Only the starch portion of the grain is made into ethanol. U.S. ethanol producers exported roughly 11.5 million metric tons of distillers grains in 2016, with China, Mexico and Vietnam the top three export markets. The handbook also provides valuable data and talking points on higher ethanol blends such as E15 and E85, ethanol’s octane benefits and the fallacy of the so-called “food versus fuel” argument. When Big Oil trots out falsehoods about ethanol, I want to make sure our industry is armed with the facts. Ethanol is the cleanest, lowest-cost, highest-octane source of fuel in the world. The facts trump empty rhetoric every time. When in doubt, go to the “2017 Ethanol Industry Outlook.” To view a copy of our handbook, visit RFA2017Handbook.

Author: Bob Dinneen President and CEO, Renewable Fuels Association 202-289-3835

ICM_23rdsV_3_2_EPM.pdf 1 3/3/2017 10:32:31 AM

EVENTS CALENDAR 2017 International Biomass Conference & Expo April 10-12, 2017 Minneapolis Convention Center Minneapolis, Minnesota Organized by BBI International and produced by Biomass Magazine, this event brings current and future producers of bioenergy and biobased products together with waste generators, energy crop growers, municipal leaders, utility executives, technology providers, equipment manufacturers, project developers, investors and policy makers. It’s a true one-stop shop—the world’s premier educational and networking junction for all biomass industries. 866-746-8385 |

AOCS Annual Meeting April 30- May 3, 2017 Rose Shingle Creek Orlando, Florida The AOCS Annual Meeting is a premier international science and business forum on fats, oils, surfactants, lipids, and related materials. Known world-wide for its extensive C technical program, the Annual Meeting features more than 650 oral and poster presentations within 13 interest M areas. In addition to the three days of technical sessions, the Annual Meeting features a Hot Topics Symposia,Y Industry Showcases, a variety of networking events, and the CM Awards Plenary and Business Meeting. 217-693-4821 | MY

2017 International Fuel Ethanol Workshop & Expo June 19-21, 2017 Minneapolis Convention Center Minneapolis, Minnesota




From its inception, the mission of this event has remained constant: The FEW delivers timely presentations with a strong focus on commercial-scale ethanol production— from quality control and yield maximization to regulatory compliance and fiscal management. The FEW is the ethanol industry’s premier forum for unveiling new technologies and research findings. The program covers cellulosic ethanol while remaining committed to optimizing existing grain ethanol operations. 866-746-8385 |

2017 National Advanced Biofuels Conference & Expo June 19-21, 2017 Minneapolis Convention Center Minneapolis, Minnesota Colocated with the International Fuel Ethanol Workshop the National Advanced Biofuels Conference & Expo is tailored for industry professionals engaged in producing, developing and deploying advanced biofuels, including cellulosic ethanol, biobased platform chemicals, polymers and other renewable molecules that have the potential to meet or exceed the performance of petroleum-derived products. 866-746-8385 |

Selective Milling Technology™ is Protected by US Patent Number 9,012,191. © 2017 ICM, Inc. All Rights Reserved. |

APRIL 2017 | Ethanol Producer Magazine | 9


To Win RFS Fights, We Must Stand United By Emily Skor

An important debate is happening in the nation’s capital, and it revolves around the efforts by biofuel critics to rewrite a key element of the Renewable Fuel Standard—the point of obligation. Under the RFS, the point of obligation defines which participants in the fuel supply chain (currently oil refiners and importers) are responsible for ensuring that biofuel blends reach consumers. To comply with the law, refiners that don’t add biofuels to the mix must purchase credits from other market participants. These credits are known as renewable identification numbers (RINs), and the current system creates strong financial incentive for retailers to sell higher biofuel blends. In turn, this has allowed us to rapidly expand the market for affordable consumer options such as E15. Now, a small group of refiners are working to secure an exemption from the RFS by shifting the obligation to retailers and fuel distributors. This would not only eliminate the incentive to sell higher biofuel blends, it would create a logistical and regulatory nightmare in fuel markets. Hundreds, if not thousands, of retailers would suddenly be required to demonstrate compliance—demanding new rules, new staff, new infrastructure and years of recalibrating a program that already works. The three-year delay we experienced in biofuel targets before 2016 from the U.S. EPA is just a sample of what could occur. Worse, the savings that consumers now enjoy thanks to homegrown biofuels could evaporate, raising costs and depressing the market for renewable fuels. At a time when rural communities are suffering and grain surpluses are rising, this is a regulatory scheme that cannot be allowed. Farmers are already facing a fourth straight year of declining income, down nearly 50 percent from 2013, according to the USDA. The sales pitch by refiners is hardly new. They’ve attempted to make this change for years. And, as always, the biofuels industry has stood united with farmers, distributors, retailers and other market participants to protect the RFS. Just recently, Growth Energy rallied

with a broad coalition of trade groups representing everyone from the American Highway Users Alliance to the National Association of Convenience Stores to oppose changes to the point of obligation. Even other refiners like Tesoro agree. The reason our critics are wrong is simple—the RFS is working, exactly as intended. In fact, the flexible system for trading RINs was originally created at the behest of the oil companies. Infrastructure is being deployed, and the number of stations selling E15 doubled last year, thanks to our efforts with programs like Prime the Pump. The small band of refiners seeking to change the rules are the same group that have worked for over 11 years to gut the RFS. More recently, the owner of CVR refining, Carl Icahn, has even sought to convince biofuel advocates that sacrificing the RFS should be acceptable in exchange for a long-sought waiver from an unnecessary and outdated regulatory barrier that limits summer sales of E15. But without any incentive to sell higher biofuel blends, those sales would never take place, and retailers that have worked hand-in-hand with ethanol producers to offer new consumer options would be left at the mercy of oil refiners. To capture these summer sales, we need a functional RFS and a real fix for Reid vapor pressure (RVP) limits, such as the bill recently introduced by our biofuel champions in Congress, including Sens. Deb Fischer, R-Neb., Joe Donnelly, D-Ind., and Chuck Grassley, R-Iowa, as well as Reps. Adrian Smith, R-Neb., and Dave Loebsack, D-Iowa. To win these fights, we must stand united. This industry is strongest when we all work together. Our critics are too well-financed and too sophisticated for anything less. I’ve seen this first-hand since taking the helm at Growth Energy almost a year ago. In that time, Growth Energy has worked side-by-side with dedicated champions from across our industry to strengthen the RFS and protect the growth of our industry and the jobs it provides. It hasn’t always been easy, but if we stand strong, we can ensure that fuel retailers have the certainty they need to invest in growth and help consumers gain access to cleaner, more affordable choices at the pump.

10 | Ethanol Producer Magazine | APRIL 2017

Author: Emily Skor CEO, Growth Energy 202-545-4000


An Allegory on PoO By Ron Lamberty

Once upon a time, in a land not far away and not so very different from our own, there lived many people who owned many, many dogs. Some had a

small dog or a large dog, and others had several dogs in various combinations of sizes. As one might expect of a place with a burgeoning pet population, dog-originated waste had become a problem. While most people responsibly picked up after their pets, too many did not, and “poo-lution” had to be addressed. The people of the land passed a law requiring all dog owners to clean up after their pets and prove they did so by filling specially designated bags with dog droppings, and periodically turning them in at the community compost pile. Pet owner obligation was based on estimated animal output according to dog size and population. Big dogs are bigger producers than small dogs, and owners of many dogs had to turn in more filled waste bags than those who had only one. While some with large obligations complained and did little else, others saw financial opportunity in the new standard. People with little or no obligation started walking other owners’ dogs at discounted prices, and lawn care companies offered special rates for pet owners who let them sell extra filled doggie dropping bags. Both groups realized that if they cleaned up more than required by law, they could clean-up financially by selling their extra bags to dog owners who couldn’t or didn’t bother to clean up what they were supposed to clean up. With so many folks going beyond the call of “doody,” dog “poo-lution” was virtually eliminated, the cost of several services dropped, and a source of cheap fertilizer was created by the program. In fact, the town was so clean, folks with large pet owner obligations began to complain loudly about their inability to obtain “approved” clean-up bags, and the cost of buying filled bags from those who cleaned up more than the law required. One of the largest poo producers argued that since the dog walkers, lawn care companies and independent pooper-scoopers

were making money from the program, they should be the ones responsible for cleaning up the mess and turning in the bags. He, and the other big dog owners, said there was no way for them to comply with the law after others took all the bags and picked everything up. The people who started new businesses based on the opportunity presented by cleaning up the town pushed back, but big dog owners said it wasn’t fair that other people were getting discounted services at their expense, and they shouldn’t be expected to provide cheap fertilizer for the town. Others pointed out those with large obligations would pay nothing, if they merely cleaned up their own mess. But the big dog owners prevailed. As a result, most small dog owners went back to walking (and cleaning up after) only their own dogs, and most of those who had recently started walking dogs, closed shop. Those who continued raised prices, required customers to pay the increased cost of the new clean-up obligation, and lost a lot of customers. Lawn service companies quit picking up dog droppings, did away with poo-funded discounts, and laid off workers to offset the loss of clean-up revenue. Meanwhile, big dog owners couldn’t find anyone to walk their dogs or clean their yard. In fact, townsfolk made sure to return ALL of the big dogs’ droppings… right to their owners’ yards. The moral of the story: If you think people will appreciate having their opportunity turned into an obligation, you might end up full of… their opportunity. Author: Ron Lamberty Senior Vice President American Coalition for Ethanol 605-334-3381

APRIL 2017 | Ethanol Producer Magazine | 11


LCFS to Drive New Advanced Biofuel Demand By Leticia Phillips

California’s Low Carbon Fuel Standard, America’s second-largest driver of biofuels consumption after the federal Renewable Fuels Standard, could soon dramatically increase demand for low-carbon fuels under a proposed statewide decarbonization plan. The California

Air Resources Board’s proposed scoping plan to reduce greenhouse gas emissions 40 percent below 1990 levels by 2030 sets one of the most ambitious targets in North America. This action is part of the state’s overall effort to reduce emissions 80 percent by 2050, as mandated by state legislation, and low-carbon transportation is key to reaching the goal. Transportation, primarily on-road travel, generates 40 percent of total California greenhouse gas emissions—the single-largest source of statewide carbon dioxide emissions. The LCFS was originally adopted in 2009, amended in 2011, and readopted in 2015. Under the LCFS, fuel producers are required to reduce the carbon intensity (CI) of their products 10 percent from a 1990 baseline by 2020, reducing petroleum dependency and reducing emissions and other air pollutants. CI evaluates greenhouse gas emissions from producing and consuming fuel, measured in carbon dioxide equivalents, and is based on a complete lifecycle analysis including the direct effects of fuel use and production and the indirect effects associated with crop-based biofuels. The LCFS has worked well so far. The University of CaliforniaDavis’ Institute of Transportation Studies estimated the 10 percent CI target displaced roughly 2.14 billion gallons of gasoline and 77 million gallon-equivalents of diesel with low-carbon transportation fuels through 2013. Under the proposed scoping plan update, California’s transportation fuel CI would become much more stringent. One alternative proposal would increase the LCFS target to an 18 percent CI reduction by 2030, which CARB says would avoid between $55 million and $340 million in economic damages related to climate change. The new demand for advanced biofuels is potentially 400 million gallons. In the initial scoping plan discussion draft, released in December,

CARB’s 18 percent CI scenario assumes an LCFS credit price of $80 per ton in 2030 and 980 million gallons of advanced biofuels in the transportation sector, including cellulosic ethanol. These assumptions are significantly higher than the 10 percent scenario, which assumes an LCFS credit price of $10 per ton in 2030 and 580 million gallons of advanced biofuels in the transportation sector, including cellulosic ethanol. The final 2017 scoping plan update won’t be released until late March or considered by CARB until late April. Advanced biofuels like sugarcane ethanol are important to achieving the LCFS goals. Advanced biofuels reduce greenhouse gas emissions up to 90 percent compared to conventional gasoline and ethanol is the only fuel available today at commercial scale to contribute to the LCFS. CARB’s transportation fuel life-cycle analysis boosts the need for advanced biofuels capable of providing more energy with fewer emissions. Sugarcane ethanol has one of the lowest carbon intensities of all the fuels that are commercially available in California, and the commodity’s designation as a low-carbon fuel under LCFS lifecycle CI assessments is an important attribute for increased supplies. Sugarcane fields store roughly 60 tons of carbon and produce around 7,000 liters of ethanol per hectare. These fields only need to be replanted every six years, reducing tillage operation and the amount of carbon released from soil. Additionally, the Center for Cane Technology predicts sugarcane ethanol’s productivity will grow from 7,100 liters per hectare today to 24,500 liters per hectare by 2025. Sugarcane ethanol has played a modest, but important, role supplying California with clean renewable fuel. Since 2011, Brazil has exported nearly 300 million gallons of sugarcane ethanol to California. Brazil is making investments to increase fuel production. Since 2004, Brazil’s sugarcane ethanol industry has invested more than $30 billion in production and capacity, and will produce an estimated 7 billion gallons of ethanol during the 2016 harvest season. Regardless of the ultimate LCFS emissions reduction and CI targets set by CARB, it’s clear higher volumes of renewable fuel, particularly advanced biofuels, are necessary to meet California’s decarbonization goals. Brazil’s sugarcane ethanol industry remains committed to reducing transportation sector emissions through reliable biofuel supplies. Author: Leticia Phillips North American Representative Brazilian Sugarcane Industry Association, UNICA 202-506-5299

12 | Ethanol Producer Magazine | APRIL 2017


UAI Coalition Challenges Clean Air Act Interpretation By Dave VanderGriend

For decades, the U.S. EPA has insisted that it gets to decide how much ethanol can be used in gasoline. If ethanol producers want higher ethanol blends

sold to ordinary (nonflex-fuel) vehicles, they must ask EPA for permission. Until recently, EPA said no more than 10 percent. In 2011, EPA said 15 percent in some vehicles, but not others. But EPA has no legal authority to impose these caps on ethanol’s concentration. Urban Air Initiative, along with a coalition of environmental organizations, ethanol producers and farm organizations, recently filed comments telling EPA that its regulatory ruse has gone too far. Contrary to EPA’s assumption, Congress did not intend for EPA to stand guard over every added drop of ethanol in gasoline. The occasion for Urban Air Initiative’s comments was EPA’s latest bittersweet bargain for ethanol, the proposed Renewable Enhancement and Growth Support rule. In the REGS rule, EPA agreed not to impose certain compliance burdens on ethanol used in flex-fuel vehicles. In exchange, the ethanol industry would have to accept a slew of new fuel regulations, including a cap that would limit ethanol to no more than 15 percent in all but flex-fuel vehicles. If this seems like a raw deal for ethanol, that’s because it is. Flex-fuel vehicles account for only 6 percent of the vehicle market, and their share is not growing. EPA starting phasing down flexfuel vehicle credits in 2015, replacing them with generous credits for electric vehicles. While the market for flex-fuel vehicles steadily declines, EPA could continue to block midlevel ethanol blends in all other vehicles. Thus, although the REGS rule’s goal is to “facilitate further expansion of ethanol blended fuels,” in the long-term, the rule will probably have the opposite effect. That is why Urban Air Initiative and its partners are going on the offensive. Urban Air Initiative’s comments explain that EPA’s asserted authority to control the concentration of ethanol is based on a misinterpretation of the “sub-sim” law, section 211(f) of the Clean Air Act, which requires the individual components of market fuel to be “substantially similar” to the components of a test fuel used to test new vehicle emissions. And, since ethanol is already a component of a test fuel used to test new vehicle emissions, EPA’s

interpretation ignores the clear language of the statute and fails to further the REGS rule’s purported goals. EPA’s misinterpretation of the sub-sim law turns the statutory scheme designed by Congress upside down. In section 211(c) of the Clean Air Act, Congress allowed EPA to control the concentration of existing additives, but only after using scientific evidence to determine if they pose a health risk or damage emission controls. By focusing on the sub-sim law, EPA has ignored 211(c). Under that section, EPA bears the burden of proving that ethanol is harmful, but EPA has instead placed the burden of proving the safety of every added drop of ethanol on the ethanol industry. This defies the will of Congress and the courts’ past admonishment against interpreting the sub-sim law to circumvent the requirements of section 211(c). Correcting EPA’s interpretation of the sub-sim law would provide immediate relief for the ethanol industry. EPA would no longer wield the Clean Air Act to deter the sale of midlevel ethanol blends. And while EPA could control ethanol based on evidence of environmental harm, such evidence is unlikely to be forthcoming— the evidence overwhelmingly demonstrates that ethanol reduces vehicle pollution and increases efficiency. The widespread availability of higher ethanol blends would also encourage the development of vehicles optimized to take advantage of ethanol’s high octane value. The production of these vehicles would foster a competitive and sustainable path for future growth of the ethanol industry. The stakes couldn’t be higher. Our industry, the auto industry and EPA all know that higher blends of ethanol work well, providing performance, lower emissions, reduction in greenhouse gases, local jobs and energy security. It’s time to resist EPA’s control on the market with its random regulations that do not follow the intent of the law. Author: David VanderGriend President, Urban Air Initiative, CEO, ICM Inc. 316-796-0900

APRIL 2017 | Ethanol Producer Magazine | 13







ACE names 2017 executive committee members The American Coalition for Ethanol Board of Directors elected its officers and executive committee members for 2017. Reelected to serve as officers are: Ron Alverson (current president), representing Dakota Ethanol LLC; Duane Kristensen (current vice president), general manager of Chief Ethanol Fuels; Dave Sovereign

People, Partnerships & Projects

(current secretary), representing Golden Grain Energy; and Brian Wilcox, of Nebraska Public Power District, who will serve as treasurer. Two additional directors were elected to round-out the executive committee: Troy Knecht, representing the South Dakota Corn Growers Association, and Greg Krissek, CEO of the Kansas Corn Growers Association. Knecht operates a diversified farming enterprise in Houghton, South Dakota, and serves as president of the SDCGA. Krissek has nearly 30 years of experience in agriculture and ethanol. “ACE is fortunate to have strong leaders on our executive committee who are committed to representing the interests of our grassroots members,� said Brian Jennings, ACE executive vice president. “We welcome the addition of Troy Knecht and Greg Krissek. Their voices will be pivotal as we work to grow demand for ethanol.�

Fletcher joins ACE as communications director Former bioenergy magazine editor Katie Fletcher has Fletcher joined the American Coalition for Ethanol staff as communications director in Sioux Falls, South Dakota. “We are excited that Katie Fletcher is bringing her exceptional communication skills, experience in agriculture and biofuels, and enthusiasm for ethanol to the ACE team,� said ACE Executive Vice President Brian Jennings “Katie is going to develop a stronger and more recognized communications strategy for ACE and our membership.� Fletcher joins the ACE after three years with BBI International publications including Ethanol Producer Magazine, Biomass Magazine and Pellet Mill Magazine.








14 | Ethanol Producer Magazine | APRIL 2017


Lincolnway Energy hires new process engineer

RFA releases 2017 Ethanol Industry Outlook

Mike Nepple has joined Lincolnway Energy LLC, in Nepple Nevada, Iowa, as process engineer. Nepple grew up on a small farm outside Carroll, Iowa, and attended Iowa State University where he earned a chemical engineering degree. Following an internship with Bunge in Council Bluffs, he spent five years working as a process engineer at Penford Products in Cedar Rapids. At Lincolnway, Nepple will join a team responsible for the plant’s process systems. He will contribute to the staff’s process optimization efforts, working to improve product quality, lower costs and maximize throughput. “I am thrilled to be a member of the team and excited about the opportunities here at Lincolnway Energy,� he said. Lincolnway Energy is a 50 MMgy ethanol plant that’s been in operation for nearly 11 years.

The Renewable Fuels Association’s annual summary of production and markets is now available. Included in the 2017 Ethanol Industry Outlook are data on ethanol and coproduct production, capacity and trade. The report also includes overviews of ethanol’s economic impact, its octane and energy security value, and a special focus on the 2016 election. As a convenient counterpart to the report, the RFA has made available a Pocket Guide to Ethanol, an abridged reference tool. Both publications provide readers with facts and analysis on last year’s record-breaking production, the expansion of E15 and higher blends, exports and more. The publications are available online. To order hard copies, contact Matt Stuckey at

Neil Koehler receives RFA’s Industry Award Pacific Ethanol CEO Neil Koehler received the Renewable Fuels Association’s 2017 Koehler Industry Award at the trade group’s annual gathering in February. Koehler, who is also vice chairman of the RFA board of directors, accepted the award at the 22nd Annual National Ethanol Conference in San Diego. Before launching Pacific Ethanol, Koehler cofounded and managed Parallel Products, California’s first ethanol production company, which made ethanol from beverage waste. He also founded Kinergy Marketing, an ethanol marketing company. Pacific Ethanol, founded in 2003, is now comprised of eight ethanol plants in five states with a combined production capacity of 515 MMgy. The company is known as a progressive, early adopter of technologies associated with clean energy and cellulosic ethanol.








_'HV0RLQHV_0DQNDWR_5RJHUV_6LRX[)DOOV_:DWHUWRZQ APRIL 2017 | Ethanol Producer Magazine | 15


Growth Energy honors Vilsack Growth Energy awarded former Secretary of Agriculture Tom Vilsack with its Vilsack highest honor, the America’s Fuel Award, at the eighth annual Executive Leadership Conference in Miami. Past winners of the award include Growth Energy Cochairman Tom Buis, Iowa Gov. Terry Branstad (now U.S. ambassador to China), retired Gen. Wesley Clark, and Richard Childress. “We are thrilled to recognize Secretary Vilsack with the America’s Fuel Award for his remarkable commitment to the nation’s most successful energy policy, the Renewable Fuel Standard,” said Growth Energy CEO Emily Skor. “We thank Secretary Vilsack for his unwavering dedication to the growth and success of the American ethanol industry throughout his time as Secretary of agriculture and governor of Iowa.

16 | Ethanol Producer Magazine | APRIL 2017

E15 Reid vapor pressure bill introduced

Two major gasoline retailers join Growth Energy Two leading U.S. fuel retailers, Kum & Go and Thorntons, have joined Growth Energy as associate members. Kum & Go, one of the first major gas station chains to adopt E10, has been an active participant in the Prime the Pump program to expand the use of both E15 and E85. Thorntons has introduced E15 at more than 40 of its stations in the Chicago area alone. Both retailers say the cost advantages and environmental benefits of higher ethanol blends deliver improved value and more customer options at the pump.

Legislation has been introduced in the U.S. Senate that would extend the Reid vapor pressure (RVP) waiver to ethanol blends above 10 percent, a move that would give E15 year-round market presence. Sens. Deb Fischer, R-Neb., Joe Donnelly, D-Ind., and Chuck Grassley, RIowa, introduced the Consumer and Fuel Retailer Choice Act in early March. The bill would allow retailers across the country to sell E15 and other ethanol blends year-round. Currently, the EPA regulates RVP for gasoline and ethanol-blended gasoline from June 1 until Sept. 15. During these months, the EPA restricts the retail sale of fuels with ethanol above 10 percent. Only fuel blends that go through extra refining may be sold to consumers during this time. The proposed law would allow retailers to sell E15 all year.


The D3MAX pilot plant, shown here, will demonstrate the conversion of corn fiber and residual distillers grains starch to cellulosic ethanol.

ACE Ethanol installs D3MAX pilot plant in Wisconsin ACE Ethanol LLC is installing a pilot plant capable of converting corn fiber and residual distillers grains starch to cellulosic ethanol. At press time, the D3MAX pilot facility was being installed at the 48 MMgy plant in Stanley, Wisconsin. Installation was expected to be complete by April, or sooner, with startup and testing taking place over the ensuing two months.

Operation of the skid-mounted unit, constructed by Ohio-based AdvanceBio Systems, will help narrow operating parameters such as pretreatment time, temperature and pH. Upon completion of testing and data collection, D3MAX intends to complete a full detailed commercial design, and then license the technology across the United States and Canada. “We are very excited to take this next step in developing the D3MAX technology,” said Mark Yancey, chief technology officer for D3MAX. “ACE Ethanol has been an excellent partner in the lead-up to the installation and running of the pilot facility.” Neal Kemmet, president and general manager at ACE Ethanol, said the technology offers a clear path forward for cellulosic ethanol. “Of course, much will be determined during the next phase of pilot testing,” he said. “However, if successful, we feel the D3MAX process will be key in allowing current producers to lead the way for the next generation of ethanol production.”

ICM releases new details about showcase biorefinery ICM Inc. plans to build a state-of-the-art biorefinery—dubbed ICM Element—next to its headquarters in Colwich, Kansas. The facility would feature the company’s cutting-edge technologies including its patented gasifier and its patent-pending Generation 1.5 Grain Fiberto-Cellulosic Ethanol Technology. It would also employ ICM’s selective milling and fiber separation technologies. The proposed corn and sorghum ethanol plant would have a capacity of 70 MMgy and cost $175 million to build. ICM is in discussions with project investors but will likely retain majority ownership. As planned, the facility would add more than 50 new jobs to the Colwich community and significant construction employment during its construction. A substantial volume of the ethanol produced at the facility would qualify for D3 RINs, cellulosic tax credits and California Low Carbon Fuel Standard credits.

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Prices & Market Analyses

Natural Gas Report

Record February warmth brings unprecedented winter storage build March 7—In the latest of a long line of firsts experienced by the natural gas market in recent years, during the week ended Feb. 24, natural gas storage inventories increased by 7 Bcf. In the 23-year history of weekly government storage reports, inventories had never posted a net increase during the month of February. The implication is that heating requirements for the fuel were so low during that week that supply across the country was greater than demand by about 1 Bcf per day. For context, on average for that same week, 132 Bcf is withdrawn from natural gas storage, meaning that normally during that time of year, supply lags demand by about 19 Bcf per day. This 20-Bcf-per-day looseness compared to the five-year average was driven by historically low usage by the residential and commercial sectors, with lackluster demand from industry and power generators also contributing. Indeed, gas-weighted heating degree days—the quantitative measure of how temperatures affect heating needs for natural gas—were at the lowest levels on record by far for that week, or any other week in February, for that matter.

by Andy Huenefeld

In early March, unseasonable warmth continues to keep a lid on market pricing, holding nearby NYMEX futures deliveries under $3 per MMBtu. Storage levels appear poised to go into the summer near or above 2 Tcf. While this still represents a deficit to the 2016 end-ofwinter level, the natural gas market has at least temporarily avoided an overtly bullish storage situation. Generally mild weather so far this winter has helped to mask otherwise bullish natural gas market fundamentals. At a time when production of the fuel is stagnant at best, the U.S. is teetering for the first time on record as being a net natural gas exporter. The combination of flat to falling production and rising exports will come to the forefront as the market emerges from the winter. As the traditional injection season ramps up in April, this could call into question the ability of the market to refill storage throughout the spring and summer.

Corn Report

As planting begins, talk suggests lower corn acres March 7—Acreage is the talk as planters have begun rolling in the southern U.S. and early comments were voiced at the USDA Ag Forum conference. In advance of the first planting intention report released March 31, Ag Forum projections put corn acreage at 90 million acres, down from 94 million acres planted in 2016 as projections for soybean plantings jumped to 88 million acres. With this type of acreage projections beginning to be released, traders will implement various yield scenarios to start predicting alterations to the U.S. supply-demand tables. In the February supply-demand report, the USDA made only minor changes to the corn demand table. Industrial corn usage increased by 10 million bushels while corn use for ethanol increased by 25 million, reflecting robust weekly ethanol production figures. Nonetheless, the current carryout-to-use ratio is 15.9 percent, the highest level since 2005-’06. Ultimately, one would envision this could limit upside opportunities in price action, but there are new and different dynamics in the market today that were not present 10-plus years ago, such as commodities being used for investment purposes. Global corn production is expected to increase as we await current production data from South American countries. Despite corn production increasing in the February report, global stocks decreased. China increased its domestic usage by 4 mmt, with China’s growing pork industry 18 | Ethanol Producer Magazine | APRIL 2017

by Jason Sagebiel

supporting the increase in corn feed demand by 2 mmt. Overall, China’s carryout declined from 106.31 mmt to 102.31 mmt. Overall global corn carryout declined from 220.98 mmt in January to 217.56 mmt in February. This compares to 210.4 mmt and 209.7 mmt the past two years, respectively. Carryout has increased year on year, but ultimately carryoutto-use has declined, indicating rising global demand. Comments in this column are market commentary and are not to be construed as market advice.

Regional Ethanol Prices ($/gallon) Front Month Futures (AC) $1.477

DDGS Report by Sean Broderick

are in the past. The Vietnamese market is still not open to DDGS due to fumigation issues and Chinese buying is still slow because of the antidumping tariff. Prices are nearly low enough, however, for Chinese buyers to be able to pay the tariff and still have it work in their rations. It’s truly remarkable. There has also been good demand from Thailand. Mexican buying has been quite strong, with the added bonus of much improved rail logistics resulting in fast turns. One challenge has been the strong dollar, especially in Mexico. While down a bit in recent weeks, the news of NAFTA renegotiation being opened in mid-March is sure to present more volatility.

Ethanol Report







East Coast



Regional Gasoline Prices ($/gallon)

Front Month Futures Price (RBOB) $1.651 Region



West Coast






East Coast



DDGS Prices ($/ton) Apr 2017


Mar 2017

Apr 2016









Buffalo, N.Y.




Central Calif.




Central Fla.




Corn Futures Prices (MayFutures) Date

close, bu.

close, ton

Mar 3, 2017



Feb 3, 2017



Mar 3, 2016



Anticipated summer demand shifts focus in ethanol, RBOB markets March 7—The focus in early March is shifting away slightly from ethanol market moves and back to the recent shifts in RBOB gasoline prices. With spot-month contracts rolling from March to April, the RBOB gasoline futures price rallied 22 cents per gallon. This price spread between the two contracts represents traders turning their focus to growing consumer demand during the upcoming summer driving season. A portion of this market premium is expected to continue to hold through the early spring months, though April RBOB gasoline futures have turned sharply lower over the previous week. There is growing uncertainty over whether expected upcoming buyer support


West Coast


Soft prices, strong dollar affect DDGS markets March 7—As March (and springtime) begins, prices have been softening. DDGS production has been strong, and the world has an ample supply of grains. As a result, new distillers trades that are happening are not moving the market as much as earlier. There were a lot of plants that locked in production margins when they were better back in November and December, that have been living off those DDGS sales made for January and February. All along, for March and deferred months, plants were seeing spot DDGS values versus corn prices at historically low percentages, and elected not to sell. Now, there are lower prices trading, particularly in the spot time frames. Internationally, Chinese New Year and the accompanying Asian logistics challenges


by Rick Kment

will be able to offset the growth in overall supplies. Crude oil supplies remain the center of this “watch party” as prices remain stuck in a narrow trading range. The main concern in the energy market isn’t the amount of demand expected to develop over the coming weeks and months, but rather whether production and storage levels can be held in check. Ethanol prices have seen minimal pressure over the past month, falling just 3 cents per gallon. But the growing concern in the RBOB gasoline market that additional pressure may develop between now and May is severely limiting buyer support in ethanol trade.

Cash Sorghum ($/bushel) Location

Mar 2, 2017

Jan 20, 2017

Feb 19, 2016

Superior, Neb.




Beatrice, Neb.




Sublette, Kan.




Salina, Kan.




Triangle, Texas




Gulf, Texas





Natural Gas Prices ($/MMBtu) LOCATION


Mar 6, 2017

Jan 20, 2017

Mar 7, 2016




NNG Ventura




Calif. Citygate





U.S. Ethanol Production (1,000 barrels) Per Day


End Stocks

Dec 2016




Nov 2016







Dec 2015


APRIL 2017 | Ethanol Producer Magazine | 19


Wo r k i n t h e

ETHANOL INDUSTRY Ethanol Producer Magazine’s 2017 Salary and Job Satisfaction Survey By Susanne Retka Schill

Maintaining a well-trained workforce is the goal of every ethanol plant. After all, while automa-

tion and precision controls facilitate the clockwork precision of 24/7 operations, it’s people that make plants hum along efficiently in all departments. Keeping and finding the right people means staying competitive and staying on top of employment trends. With that in mind, every two or three years, Ethanol Producer Magazine surveys ethanol producers in its database to get a glimpse of workforce demographics, asking about salaries, benefits, job satisfaction and more. The 2017 survey was sent to nearly 2,000 individuals with a 15 percent response rate—a healthy return by survey standards. The profile of respondents by plant capacity is very close to the industry’s size distribution indicated in Ethanol Producer Magazine’s plant maps. About half of the survey respondents work at midsize plants between 40 MMgy and 69 MMgy and another 40 percent at larger plants. While all job functions are represented in the sample, it is heavily weighted toward top management with 18 percent being CEOs, general managers or chief operating or financial officers, and another 12 percent plant managers. A quarter of the 38 questions in the survey were directed at the senior managers, asking questions about salary ranges for various positions, benefits, recruiting methods, and more.

An earlier survey indicated widespread concern across the ethanol industry regarding plant staffing, and for good reason. While about a quarter of senior managers report no turnover in the past year at their plants, 75 percent have seen turnover. By far, most turnover was from employees leaving for a job outside the ethanol industry, while about a third moved to another plant or to a position elsewhere in ethanol industry. Retirement claimed another 14 percent. When filling open positions within the plant, top management reports the most effective method, by far, is to promote from within. Relying on word of mouth is also ranked as being quite effective. Other methods that get mostly neutral or high marks include personally recruiting from related industries, and using headhunters. Recruiting from other ethanol plants is considered mostly effective, although quite a few find it ineffective. Using internet job sites, newspaper classified ads, job service and job fairs are mostly given neutral marks. Senior managers report their workforces’ primary background before joining the ethanol team is in industrial manufacturing, followed closely by agriculture. Construction trades, laborers and the ethanol industry itself form the next tier of background experience. When asked about plans for staffing changes, about a quarter of senior managers report they will be adding positions at their

plants and nobody reported they would be cutting. The vast majority don’t expect to make changes in staffing levels.


Benefit packages at ethanol plants are extensive. All in senior management report their facilities offer health insurance. Dental and life insurance are part of the package in around 90 percent of the respondents’ plants. Flexible spending accounts and disability insurance are offered at about 70 percent of plants. Long-term care insurance is not as common, although offered by 40 percent of respondents’ plants. For the first time we asked about health club memberships as a benefit, and 19 percent of respondents indicated that’s part of the company benefit plan. Offering 401(k) plans is a standard benefit at 96 percent of the plants, while pension/retirement plans have fallen out of favor for many with just 21 percent checking that off as a benefit. While 85 percent of plants give bonuses, just 25 percent offer incentive pay or profit sharing and 20 percent offer stock options. Job training is considered a benefit at 45 percent of plants and continuing education is offered at about a third. Offering cell phones as a benefit is rather common at two-thirds of plants, while less than 20 percent offer company vehicles.

APRIL 2017 | Ethanol Producer Magazine | 21



65 or older

55 years and up

60 – 64 years old

(15% in 2015)

55 – 59 years old


50 – 54 years old 45 – 49 years old


40 – 44 years old 35 – 39 years old

WORKED in the ethanol industry

30 – 34 years old 25 – 29 years old

30% 25% 20%

Under 25 years old








2017 US Energy and Employment Report Corn Ethanol Workforce


28,613 jobs 3 in 10 workers are women (24% women in fuel sector, 47% in national workforce) 25% 55 years or older (28% in fuel sector, 22% national workforce average) 20 % veterans 8 % union


Very or extremely satisfied



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Opportunities to advance

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Good benefits package

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What’s important to job satisfaction? When viewing the weighted average of factors rated on a 1-5 scale, as the bar chart shows, all factors are considered relatively important. When looking at those given 4s and 5s, some priorities emerge. Competitive salary comes on top, followed closely by good benefits and job security, with positive atmosphere just three points lower. Next in importance is challenging work and opportunities to advance.

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Corporate management

(owner, partner, president, CEO, COO, etc.)

General manager




Plant manager


Commodities manager


Lab manager Maintenance manager



16% 13% 6% 3%

Operations manager

11% 5%




31% 9%

Environmental, health, safety


Plant engineer



20% 17%


4% 16%

Energy/utilities manager



33% 34%




Lead operator




Lab technician Maintenance technician Accounting/HR Office/admin r more

$200,000 o


Senior managers reporting succession planning is in place for top management (up from half in 2015)

5% 3%


Salary Trends

150,000 $199,999-$

Two years ago, the survey found a big jump in the proportion of senior managers in the top pay categories, from 37 percent in 2013 over $200,000 to 59 percent in 2015. No such big shift was seen in corporate management in this round. General managers, however, experienced a shift higher. In 2017, 39 percent were in the top salary range, compared to 18 percent last time, which in turn, helped drop the next range of $150K to $200K from 56 percent in 2015 to 46 percent in 2017. General managers in the next salary range of $100K to $150K jumped a bracket, from 19 percent reporting that salary range in 2015 to just 5 percent this year.





With modest turnover and the average age creeping up in the ethanol workforce, it’s no surprise that all job positions saw salaries increase, as indicated by the percentages reporting salaries in each salary range. Only two positions jumped a bracket this time—operations manager and environmental, health and safety. To round out the salary chart, this year we added accounting/human resources and office/admin, so no comparison to previous years is possible.

72% have worked at just 1 facility

Salary Ranges for 17 Positions

$3.56M average payroll

As reported by 46 senior managers. The highest percentage in each range is highlighted for emphasis.

($3M in 2015)

3% 3% 10%


13% 22%


38% 17% 22% 11% 5% 20%

5% 11% 5% 5% 15% 9% 13%

3% 3%

11% 3%





21% 24%


9% 0,000 $74,999-$6


37% 18% 7%

48% 40%


9,000 $50,000-$5

5% 18% 30% 3% 16% 35%

0,000 $49,999-$4


3% 3%


Less than $


0,0 $39,000-$3


10% 55-59 hours

21% 50-54 hours

60-69 hours

Female Workers


Male Workers


70 hours or more


Experience, education, Guys and Gals job satisfactionwell-paying management years ago,for the men survey and analysis found positions dominated by the nearlyTwo identical women men and women reporting similar levels of education, job satisfaction, and other demographics. The big difference that emerged in 2015 was the proportion of women in lower salary categories was much higher than for men. That’s improved in the current survey. In 2017, the proportion of men paid less than $50,000 stayed the same as 2015’s survey at 4 percent, while a significant number of women moved up the pay scale. In 2017, 16 percent of women reported salaries under $50K, in 2015 it was 34 percent. It is difficult to make precise comparisons, as the survey sample is skewed towards


45-49 hours

HOURS Worked in

a typical week

98% work full time

guys. But in 2017, half the male respondents were paid between $50K and $100K, while 69 percent of women were in that salary range. The dominant salary range for women in 2017 was $60K to $75K, at 30 percent, with 20 percent on either side. For the guys, the dominant salary range was $100K to $150K at 30 percent, with a greater proportion of the remainder distributed across the lower salary ranges than higher.

Author: Susanne Retka Schill Managing Editor, Ethanol Producer Magazine 701-738-4922


41-44 hours

7% 40 hours 2%

17% 72%

Less than 40 hours

receive time-and-a-half not compensated for overtime

APRIL 2017 | Ethanol Producer Magazine | 25

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SHINING LIGHT on Energy Efficiency Ethanol producers seek ways to reduce emissions and cut costs. By Ann Bailey

Ethanol plants run on loads of energy—both the power used in the process itself and in the time and effort expended by managers.

Being energy efficient makes good sense both from an environmental standpoint, through reduction of plant emissions, and from an economic standpoint because it saves plants money. “Energy comes in at our second largest cost,” says Darrell Birck, Flint Hills Resources vice president of operations. “It makes up approximately 10 percent of our entire cost structure.” About 80 percent of that 10 percent is the cost of natural gas used to run plant dryers and thermal oxidizers at its seven plants, Birck says. The remaining 20 percent of the total energy cost is electrical use. Energy also is No. 2—after corn—on the list of expenses at Big River Resources and ac-

counts for about 9 percent of the company’s operating costs at its four plants, says Ralph Peel, Big River Resources Galva plant manager. At Green Plains, energy is a “significant expense” in terms of the profitability equation, says Jeff Briggs, chief operating officer. Company officials in Omaha, Nebraska, monitor the price of energy sources at its 17 plants and lock in prices similar to the way it locks in the price of corn, Briggs says. “We think of natural gas in terms of overall commodity exposure and do what we can to decrease costs on the operating side.” At Pacific Ethanol, energy costs are “always there” when the company considers capitalizing projects, says Patrick McKenzie, director of engineering. “If it’s not No. 1, it’s in the top three.” Whenever Pacific Ethanol is considering a new project at one of its eight operating plants, company officials consider how much energy will be consumed per gallon of


APRIL 2017 | Ethanol Producer Magazine | 29

‘The industry has really improved pretty significantly from a Btu-per-gallon standpoint. We’ve seen continuing improvements with different technologies.’ - Jeff Briggs, Green Plains

ethanol produced, McKenzie says. “So it’s always part of the equation.” The primary project goal may be yield improvement, he says, “but then No. 2 would be ‘What does it do to our energy platform?’ And it can kill a project—there’s no point in seeing a 1 or 2 percent improvement in yield, if you just took a 5 percent hit in energy. Your operating costs just squashed the project,” McKenzie says.

Reducing Energy

Saving energy can be considered the low-hanging fruit of cost reduction. “Energy is the biggest lever in our plants that we can actually pull,” Birck says. One way that Flint Hills reduces energy costs is to conduct periodic energy audits. “We’re tuning our boilers and dryers. We have people who are constantly taking a look to make sure we’re optimal as we can be. Flint Hills is fortunate that its plants were designed to be energy efficient from the get-go, Birck says. “We’re in a good position because the plants we run are ICMdesigned and they were designed to be very energy efficient. The energy that we use to dry the DDGS on the back end is the same energy we turn around to operate steam with, so we’re actually recovering heat, regenerating steam. We use the steam in other parts of our process, in our distillation and all.” Meanwhile, Flint Hills managers continually screen new energy concepts to see if they can improve plant energy efficiency even more. “We screen products on a monthly basis,” Birck says. “We’re

30 | Ethanol Producer Magazine | APRIL 2017


always looking at another energy opportunity, to find some way to reduce our costs.” Yeast and enzyme optimization is part of the equation as well. “We want to have the highest drop of ethanol we can, so that when we process it through, it’s not burning energy to drop water off because it didn’t get a good ethanol yield.”


Green Plains also is continually seeking ways to improve energy efficiency, Briggs says. “That can be done in a variety of ways. It can be done through better heat recovery processes in the plant so you have more efficient use of natural gas, or being more efficient at the process or dryer operations, or with variable speed pumps—anything we can do to use electricity more efficiently. “The industry has really improved pretty significantly from a Btu-per-gallon standpoint. We’ve seen continuing improvements with different technologies, and even within the existing technologies, through upgrade projects we have done. We continue to focus on improving our efficiencies for natural gas and electricity. If we can produce more gallons, typically we see those efficiencies improve, as well, and that helps overall cost structure. “ Green Plains ethanol managers also monitor their plants’ boilers to make sure they are running efficiently. “We repair them and keep them up to speed,” Briggs says. “All of our plants have people who can work on the boilers and repair boilers, but we also use outside venders and experts. We’re not afraid to go out and find experts who have the knowledge and understanding to make sure the boilers are operating properly.”

going to give us our largest return on investment? Some of them are very apparent. There are substantial projects with very fast pay-backs, sometimes less than a year.” Another key point is the ability to measure the gain, he says. “What do we look for? It has to be measurable so we can define it ahead of the project.” Once the capital improvements are installed, it’s important to

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At Pacific Ethanol, opportunities to improve energy efficiency have come with better design engineering, steam and electricity efficiency gains and as new technologies are integrated, McKenzie says. “You look for your best opportunity—what’s

measure the results and determine whether the plant received the intended benefit, McKenzie says. Reading is a good way to find energy efficiency improvements, he says. “There are a lot of good articles in trade journals on energy.” Pumps and any piece of equipment that rotates are candidates for improved efficiency, McKenzie says. He sug-

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‘Energy is the biggest lever in our plants that we can actually pull.’ - Darrell Birck, Flint Hills Resources


gests reading articles, for example, about variable frequency drives, and their application. “It’s a little more money and it takes more effort, so it didn’t lend itself well to initial construction, but it’s a perfect example of a retrofit you can do. A plant can see significant reduction in electricity demand.” Pacific Ethanol also monitors key metrics on its energy consumption per gallon of ethanol produced, plant by plant, on a monthly basis. “That forces you to look at why one is better than another, and if you have poor performance, you figure out how to move that plant to be in line with the others. It’s like a competition. “We have completed other audits in the ethanol process. Things like monitoring motor loads, thermal cycles, and thermal loading,” McKenzie says. “This is granular work where we get into the plant and gain understanding where most of our energy is consumed through the distillation and dehydration systems and are there means for us to use waste heat? That’s the progression, understanding it first so perhaps you can improve it. You can’t improve it until you understand it.” Pacific Ethanol also screens products. “We call that the ‘shiny object’ program,” McKenzie says. It is important that plant managers listen to salespeople promoting 32 | Ethanol Producer Magazine | APRIL 2017

their products. “The minute you hang up and not listen is the minute you may have walked away from an opportunity.”


Taking advantage of energy incentive programs, where available, can save plants money as well, notes Peel. “There are a lot of incentive programs from utility companies to help you offset costs. Illinois has a natural gas energy efficiency self-direct program,” Peel says. “There is a requirement that you keep $400,000 on your books for gas efficiency reductions to reduce your natural gas usage, and you cannot spend that money on other projects. So you do a natural gas reducing project and then you submit your documentation to the state and they say ‘Yes, you can utilize funds for those.’” Available energy efficiency upgrades for ethanol plants include installing energy efficient boiler controls, boiler tune-ups, installation of highenergy burners on furnaces and insulating steam pipes, Peel says. “Anything that is going to help you reduce energy. There is a large list of things.”


Poet is expanding its use of combined heat and power (CHP), which vastly im-

proves efficiency and reduces greenhouse gas emissions by using high-pressure steam to generate electricity to run the plant and recovering waste energy to meet additional energy demands in the ethanol process. Poet announced in October that six of its ethanol plants in Ohio and Indiana would be installing a new-generation CHP. “This is very exciting for Poet and renewable fuels. We are already much better than gasoline in overall emissions. Finding ways to make additional uses of steam is a great opportunity to improve our environmental footprint even more,” Jeff Broin, Poet CEO, said in a prepared statement when the company announced the CHP initiative. Besides installing the CHP systems, Poet also reduces energy use in its plants through its patented BPX process, which uses enzymes instead of heat in the fermentation process, along with sharing heat between processes such as distillation and evaporation to get maximum production with minimum energy use. Author: Ann Bailey Associate Editor, Ethanol Producer Magazine 701-738-4976

Sun Power for Ethanol Low carbon intensity scores rule the market in California, providing an incentive for Pacific Ethanol to be the first U.S ethanol plant to get part of its power directly from the sun through a 5 MW solar photovoltaic (PV) system to be installed at its Madera, California, ethanol plant. The solar PV system, designed and built by Borrego Solar Systems Inc., is expected to reduce Pacific Ethanol’s operating costs and improve its carbon score. Through the displacement of more than 30 percent of the grid electricity Pacific Ethanol uses, the company expects to reduce the annual utility costs at its Madera plant by more than $1 million and drive premium pricing on the ethanol produced due to improvements in its carbon intensity score. Meanwhile, the power system qualifies for the Energy Tax Investment Credit, further improving its investment profile. The integration of solar power at Pacific Ethanol’s Madera plant highlights the company’s commitment to optimize its plant assets, reduce the carbon intensity of its ethanol and decrease operating costs, says Neil Koehler, Pacific Ethanol president and CEO. “We are proud to build the first-ever solar electricity system

at a U.S. ethanol plant,” Koehler said in a news release announcing the project. “Pending the completion of interconnection agreements with our local utility, Pacific Gas & Electricity, we expect to being operating the PV system at full capacity in early 2018.” Pacific Ethanol represents the new generation of fuel companies—low-carbon fuel production powered by zero carbon energy, says Chris Otness, Borrego Solar project developer. “This will be one of the largest single-site, net metered projects in PG&E territory. Historically, these types of projects were limited to a single megawatt, but given the recent CPUC NEM 2.0 ruling, large energy users now are able to go above that threshold and offset a significantly larger portion of their overall usage.” Meanwhile, Pacific Ethanol will retain ownership of the system from day one and capture the tax incentives afforded to solar system owners. Pacific Ethanol financed $10 million of the expected $11 million cost of the solar PV power system through the CleanFund Solar PACE program for a 20year term, enabling immediate net cost savings and positive cash flow from the project. CleanFund, based in Sausalito,

California, provides long-term financing for energy efficiency, renewable energy, water conservation and seismic improvements to commercial, multifamily and other nonresidential purposes in the United States. CleanFund CEO Greg Saunders said in the news release that his organization is honored that Pacific Ethanol selected his company as its capital partner program to provide long-term financing for a state-of-the-art solar system. “The demand for commercial PACE financing continues to grow rapidly because it represents a large-scale opportunity to provide cost-effective, long-term financing for renewable energy, energy efficiency and water conservation measures for most nonresidential properties. “We are excited to partner with Pacific Ethanol as it leads the way in the deployment of renewable energy at its industrial facilities,” Saunders says. –Ann Bailey

APRIL 2017 | Ethanol Producer Magazine | 33

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Updated regulations, motor industry advances promise efficiency improvements in the full range of electrical motors. By Ron Kotrba

GREEN MACHINES: WEG produces electrical motors of all sizes and for all applications, including the three models shown here, which surpass NEMA-premium standards by two efficiency bands. The company call these SuperPremium motors. PHOTO: WEG ELECTRIC CORP.

The amount of energy consumed by electrical motors in the U.S. is staggering. A 2006 U.S.

DOE report found that within the industrial sector, more than 62 percent of the total electrical energy use is for motor-driven equipment. This industrial sector motor use equates to about 17 percent of the total U.S. electrical energy use. More recent data from the U.S. Energy Information Administration show nearly half of the electric36 | Ethanol Producer Magazine | APRIL 2017

ity consumed in the manufacturing sector is used to power motors for fans, pumps, conveyors, compressors and other ancillary equipment. Such motors are ubiquitous in an ethanol plant, from 1,000 HP on down to the smallest. For more than three decades, federal law has regulated the efficiency of new motors. The Energy Policy and Conservation Act of 1975 required DOE to establish the most stringent standards that are both technologically feasible and economically

justifiable and to periodically update these standards as technology and economics evolve. The U.S. Energy Independence and Security Act of 2007, famous in the biofuels world as the legislation in which the second and current version of the Renewable Fuel Standard was passed, updated the EPAct standards starting December 2010 to NEMA-premium, including 201 to 500 horsepower motors. EISA assigns minimum, nominal, full-load efficiency ratings according to motor subtype and size. NEMA is the


National Electrical Manufacturers Association, and its standards are adopted by the federal government to establish efficiency regulations. As of last summer, an updated standard established by DOE in 2014 is broadening the minimum efficiency of a variety of new motors sized at 1 horsepower and up. “When regulations first moved to NEMA-premium, there were exceptions that didn’t necessarily make sense,” says Dale Basso, NEMA vice chairman and WEG Electric Corp.’s low-voltage motors product manager. “There are things in the NEMApremium requirements today that were not in the regulations in 2010—things like footless motors. It didn’t make sense really why those were exempt. So we were building two designs, one for footless and another for footed. But when the Round 2 changes came into effect in June, they moved that and other stuff into the regulations.” Round 2 regulations, also called the Integral Horsepower Rule, include motors sized as low as 1 horsepower and incorporate “almost everything except things like special shafts,” Basso says. The new rule means manufacturers cannot produce new motors for sale in the U.S. after June 1, 2016, that do not meet the NEMA-premium standards. Below the NEMA-premium rating is what’s referred to as high-efficiency. A NEMA-premium rating is two efficiency bands above a high-efficiency rating, according to Basso. The difference between each efficiency band, which is a fixed, nameplate assignment, is 10 percent loss. “You can’t do a 96 percent or 96.1 percent efficient motor,” Basso says. “But 96.2 is an efficiency band, and 95.8 is the next one down.” DOE’s analyses estimate lifetime savings for electric motors purchased over the 30-year period that begins in the year of compliance with new and amended standards to be 7.0 quadrillion Btu. The annualized energy savings—0.23 quadrillion Btu—is equivalent to 1 percent of total U.S. industrial primary electricity consumption in 2013.

BELLY OF THE BEAST: Induction motors turn electrical energy into mechanical movement and consist of electromagnetic stators, rotors and winding. PHOTO: WEG ELECTRIC CORP.

Inner Workings

Induction motors are basic creations that turn electrical energy into mechanical movement. Induction motors consist of a stator, which is the stationary component and made of electromagnetic iron or steel layers magnetized with copper winding and 2, 4, 6 or 8 paired poles, says Joe Hanna, marketing development manager for Toshiba International Corp. The stator features a bored center so the rotor—the rotating portion of the motor—can fit inside. The stack length of the motor is determined by how many layers of laminated, stamped steel are in the construction of the stator and rotor, says Patrick Standley, business manager of paper and forest products at Baldor Electric Co. The rotor also is outfitted with electromagnets with paired poles facing toward the stator poles. As the alternating current electricity passes through the copper winding, the stator poles alternate and the rotor poles move to catch up. This occurs several times a second and creates mechanical rotation energy to power almost anything needed. Toshiba designs its medium-voltage motors differently than the standard design, Hanna says. “We have a form-wound design. It’s not just standard wire. We use mul-

tiple wires and we put them all together and wrap with a certain insulation, like a cable. The cost of our form-wound designed motors is higher than the standard induction line.” The way manufacturers such as Baldor make motors more efficient revolves around material quality, contents and stack length, Standley says. “It’s about the ability to cool. When a motor is rated at 96.2 percent efficient, it means 96.2 percent of the electricity consumed is converted to mechanical energy, while the other 3.8 percent is lost as excess heat or friction. Therefore, the ability of a motor to keep cool means less loss to heat and greater efficiency.” When motors wear out, Standley says many industrial facilities have what’s called throw-away horsepower, meaning motors less than a designated horsepower are replaced while those that are higher are rewound, or otherwise repaired. “In rewinding a motor, you can lose efficiency in the process,” he says. “And if a motor is rewound several times, it’s not going to be close to the original efficiency.” While many of these larger motors in the field have a 20-plus year lifespan, certain wear items such as bearings and seals have shorter lifespans. “If you choose to repair, you need to APRIL 2017 | Ethanol Producer Magazine | 37


HYBRID EFFICIENCY: Baldor’s new RPM XE motor exceeds NEMA-premium efficiency standards through the use of hybrid technology. PHOTO: BALDOR ELECTRIC CO.

replace the bearings and seals,” Standley says. “And they need to be greased in dayto-day operations. Lube,” or the lack of, “is the biggest failure point.” When choosing a motor for a particu-

lar application, it’s important to look at the situation from all different angles, Hanna says. “One is the power line and what’s available for the motor to start,” he says. “The second is amps draw. We say, based



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38 | Ethanol Producer Magazine | APRIL 2017

on the application, we expect the motor to draw 200 amps. Then we look at voltage, load type, starting conditions, load inertia and how you are going to start the motor in order to select the right motor and design for that application. But it always depends on the voltage and the power line coming in.” Load capability is a relationship of speed and torque. “Horsepower equals torque times speed divided by a constant,” Standley says. The power factor, a function of load, is important, too, Basso says. Power factor is the ratio of the actual electrical power dissipated by an AC circuit to the product of the root mean square values of current and voltage. The difference between the two essentially represents wasted power. “When it goes down, the load goes down,” Basso says. “If you have a bad power factor, it looks like a bigger number than it is, so you size the equipment to match the kilovolt amps supplied to them. So you’re not just looking at kilowatts.” A good power factor, or the proper utilization of the electricity supplied through proper planning and equipment sizing, will benefit the plant. “You have a choice when buying a motor,” Basso says. “If you know you’ll only be running at 75 percent load, don’t worry about oversizing it.” What’s more important is the power factor, he says. “If you’re trying to size it close to the horsepower, then you need to look at load and size,” Basso explains. “Everyone has their own philosophy on how to operate, but if you size it right at the horsepower needed, there’s the risk of shutting down.” He says if a larger motor than the load requires is bought and installed, it costs more but, on the plus side, it will stay cooler and will have a longer life. And less load on an oversized motor shouldn’t affect the efficiency.

Beyond NEMA-Premium

Though NEMA-premium regulations went into full force last summer, manufacturers were already providing motors that surpass these standards. “WEG makes some models that are two more efficiency bands above NEMA-premium,” Basso says.


“We call it SuperPremium.” The downside, he says, is that it’s a Design A. Different motors with the same nominal horsepower may have different start current, torque curves, speeds and other variables. NEMA classifies motor designs into A, B, C and D. With WEG’s Design A SuperPremium, Basso says the purchaser should review the starter and cable sizing before installing so it doesn’t present problems because it draws more current. “A plant may already have Design A, but they have to know,” he says. “You can’t go blindly into it or you may trip the breakers since it’s got a high starting torque.” Also, direct-drive permanent magnet motors that eliminate the rotor and its inherent losses are advances that will help move motor technology forward into even further efficiencies, Basso adds. And unlike conventional induction motor technology, which usually requires larger sizes for increased efficiencies, direct-drive permanent magnet motors can gain efficiencies while decreasing in size.

STYLISH POWER: Toshiba’s line-up includes the Dura-Bull medium-voltage product (larger) and the EQP Global low-voltage motor. PHOTO: TOSHIBA INTERNATIONAL CORP.

Standley says efficiency in conventional motor technology is close to being tapped out. “At 95-plus percent efficiency, how much more can you drive out?” he asks. “New technologies in construction material or ways to remove friction forces are constantly being reviewed.”

“The motor industry is not glitzy, it’s not high-tech,” Standley says. “But we’re constantly looking for ways to improve.” Author: Ron Kotrba Senior Editor, BBI International 218-745-8347

The natural gas that powers the ethanol process gets delivered via pipeline. The responsibility for the pipelines




Prevention comes first, relying on proper design, construction, operation, maintenance, training and education. By Lars Larsson

inside the gate or fence typically is the plant’s, while the pipe on the outside of the fence is the responsibility of the gas supplier. In many cases where the ethanol plant is some distance from a larger gas transmission pipeline or connection point, the ethanol plant owner might create a subsidiary or something similar to transport the gas from the connection point on the transmission pipeline to the plant. In those circumstances, the operation of that pipeline might reside within the ethanol plant, but, essentially, be the responsibility of the pipeline company supplying the gas at the gate. Pipeline operators are under severe financial and social pressure to avoid incidents that cause natural gas leaks. While the pipelines inside the ethanol fence are very short, and the plant’s primary concerns are more related to safety and control systems, no company wants to see incidents inside or outside its sphere of responsibility. And, with regulators scrutinizing pipeline projects, the reputation of the entire industry is at risk. This is why pipeline integrity must become the focus of discussion. Pipeline integrity refers to a comprehensive program that works to ensure hazardous resources are not released from a pipeline while minimizing the impact in the event a release does occur. Although some may think prevention methods are one-size-fits-all, pipeline integrity encompasses a much broader definition and is comprised of three phases: • Prevention activities and solutions seek to avoid gas leaks from happening in the first place through proper design, construction, operation, maintenance, training and education. • Detection activities and solutions help pipeline operators quickly identify that a leak has occured. • Mitigation activities and solutions minimize the extent or impact of the leak and the damage that results. Leak prevention is most important and, as with most potential catastrophes, the best defense is a proactive offense. The good news is that the technology and tools needed to anticipate potential threats to pipelines and identify anomalies are available. The age-old expression, “an ounce of prevention is worth a pound of cure” holds true for pipeline integrity. The costs that come with preventing a leak are much less

CONTRIBUTION: The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Ethanol Producer Magazine or its advertisers. All questions pertaining to this article should be directed to the author(s).

40 | Ethanol Producer Magazine | APRIL 2017


than the costs of cleanup, fines and other civil liabilities, not to mention the cost to a company’s reputation. The process and planning that goes into the prevention of gas leaks is a multi-tiered strategy that can be split into three categories: design and construction, operation and maintenance, training and education.

Design, Construction

No two pipeline routes are the same, which is why gas leak prevention starts with specifying the technical requirements for each one. Advances in construction practices, such as more sophisticated testing prior to the pipeline’s fruition and increasingly protective technology help safeguard pipeline vulnerability. While it may seem like common sense to avoid areas that are susceptible to natural disasters and other geohazards, history has proven that one small mistake or lack of consideration of this detail plays a large hand in events that can lead to pipeline explosions. Critical to pipeline integrity, the geography of the terrain surrounding the pipeline must be evaluated, whether it be by topographical and geological maps, satellite imagery, aerial photography or surveys available in the public domain. All are suitable methods. In addition to natural disasters such as landslides and earthquakes, soft soils like swamps and bogs as well as underground cavities like coal mines and caves should also be of concern. In addition to thorough terrain assessment, correctly sized equipment is crucial. The pump or compressor must be sized correctly—a steady state pipeline simulation tool can validate the specified size of the pump or compressor through a computational model of the pipeline’s operating conditions. This simulation can also ensure that it is hydraulically feasible for the pipeline, as designed, to cross the terrain. Last, but certainly not least, surge suppression equipment must also be sized correctly. A transient pipeline simulation tool can model the pipeline hydraulics to determine the design criteria for the surge suppression equipment. Surge effects like water hammer can severely damage a pipeline, thus causing hundreds of thousands of dollars in repair.

Operation, Maintenance

Beyond the construction of the equipment, a major component of pipeline integ-

rity is implementing a proper operations and maintenance schedule. When a pipeline is in service, continuously monitoring the operational and structural conditions within the pipeline can identify circumstances that, if not mitigated, could lead to major problems. Inspection and monitoring technologies provide pipeline operators with the information and resources they need to accurately assess the functionality of their pipeline and perform proactive maintenance on areas at risk. Some of the more important aspects to monitor and inspect include: • Monitor operating pressure. • Inspect the integrity of the pipeline externally. • Inspect the integrity of the pipeline internally. • Monitor depth of cover. • Properly calibrate monitoring devices. • Monitor ground temperature and excavation activity.


Just as a pilot is in control of a flight, pipeline controllers are in charge of operating very expensive pipeline assets and should be required to have training or even certification. Teaching operators what to look for in a gas leak is an important step in prevention. In addition to operators, educating residents living along the pipeline also can help avoid problems. Operators and civilians alike can benefit from the various tools that are becoming increasingly available. Computer-based simulators can help improve operational safety and meet regulatory requirements. Enabling the most realistic training experience is essential in making sure the pipeline controller is exposed to both normal and abnormal operating conditions.


Detecting commodity releases is an important part of pipeline integrity. The many potential ways of detecting a pipeline leak can be divided broadly into two approaches: external and internal. External-based gas pipeline leak detection has been used since pipelines first began transporting fluids of all types. It involves surveying the external surroundings of the pipeline to detect any releases on the outside of the wall of the pipeline. External-based systems continue to rise in popularity due to their ability to

detect even the smallest of leaks and to locate gas leaks with a high degree of accuracy. Internal-based gas pipeline leak detection systems look at conditions inside the pipeline to discover gas leaks, typically based on measurement readings at specific locations along the pipeline. More commonly known as computational pipeline monitoring, this methodology has been around for only about 30 years and uses software and a variety of measurements to establish what is happening within the pipeline. It’s important to remember that no two pipelines are the same and that the specific detection methodologies used for one pipeline may not be useful for another. For example, a pipeline company operating pipelines in remote areas could rely solely on internal-based systems, while a pipeline company operating pipelines in what is classified as high consequence areas (HCA) could have both externaland internal-based systems installed for the same pipeline. All detection methodologies, whether external or internal, have pros and cons, and it is important to take into account several factors prior to selecting the methodology, including length, elevation, HCA, environment, cost, etc. From a business standpoint, gas leaks can be incredibly costly. A company could be out tens to hundreds of thousands of dollars in lost product, if there is a moderate or even minor leak. It may have little environmental impact, but it will be costly, if it goes undetected for a few days. While gas pipeline integrity can seem daunting, it is not something to be feared if proper steps of precaution are taken. The main goal of pipeline prevention, detection and mitigation activities and solutions is to avoid detrimental leaks down the road for pipeline operators—both inside the ethanol plant fence and for the outside supplier. Implementing a tiered methodology for pipeline integrity significantly improves a business’ chances of preventing leaks and improving detection. When paired with a high level of maintenance, it provides companies with peace of mind. Author: Lars Larsson Senior Product/Offer Manager, Schneider Electric 713-920-6859

APRIL 2017 | Ethanol Producer Magazine | 41


MOTOR TROUBLESHOOTING GETTING GROUNDED Proper shaft grounding solves motor bearing problems at Red Trail Energy. By Adam Willwerth

Something was destroying the motor bearings of the centrifuge and ventilation fans at the Red Trail Energy, 50 MMgy ethanol plant in Richardton, North Dakota. Plant maintenance

STRAY CATCHER: AEGIS Pro series ring using universal mounting brackets was installed on the 500 HP motor for a large ventilation fan. PHOTO: ELECTRO STATIC TECHNOLOGY

personnel realized that the bearings on these large motors were failing long before they should. And the high cost of replacing the bearings soon caught the attention of the plant manager, who called in a specialist, Scott Fisher of Sustainable Grounding Systems, to determine what was causing the damage. Fisher had worked at the Red Trail plant before when a North Dakota electrical contractor, Ystaas Electric Services, brought him in to evaluate the plantâ&#x20AC;&#x2122;s grounding systems. Ystaas enlisted Fisherâ&#x20AC;&#x2122;s services when plant workers discovered stray voltages on the cabinets of variable frequency drives (VFDs) that control the speeds of various motors in the production process. An expert on the causes and prevention of equipment damage that result from stray currents and inadequate grounding, Fisher is well-known for his work with major companies involved in oil exploration, drilling and refining, petrochemical

CONTRIBUTION: The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Ethanol Producer Magazine or its advertisers. All questions pertaining to this article should be directed to the author(s).

42 | Ethanol Producer Magazine | APRIL 2017


FAN POWER: Bearings on the 500 HP ventilation fan at Red Trail Energy were prematurely failing from what turned out to be inadequate grounding.

CARRY CAPACITY: Installed on the 500 HP ventilation fan motor at Red Trail, the pro series rings have six rows of conductive microfiber brushes providing the high current-carrying capacity needed to large low-voltage, medium-voltage and DC motors.



processing, grain elevators and even the Los Angeles train system. He learned his craft while working in Europe for a company that was involved with grounding systems for various applications including high-speed rail and military installations. “Without proper grounding, stray electrical currents can do tremendous damage. In fact, these types of currents are becoming a huge problem, and dealing with them is a highly specialized field,” Fisher notes. Because the problems are not maintenance oriented, most electrical contractors don’t know how to solve them. The contractors can get system resistance down to the 25 ohm level required by National Electric Code. Fisher was trained to get systems down to 5 ohms or less.

Diagnosing the Problem

When Fisher arrived, he took shaft voltage readings on the 30 HP and 150 HP centrifuge motors and the 500 HP ventilation fan motor. These motors exhibited bearing damage long before reaching the L10 lifespan. He knew right away that the culprit was stray currents—VFD-induced voltages that

were building up on motor shafts and discharging through motor bearings. And he knew just how to deal with them. Fisher knew that VFD-induced shaft currents discharge to ground along the path of least resistance. He also knew that without long-term shaft grounding, that path is typically through the motor bearings. He recommended installing AEGIS Shaft Grounding Rings on all motors controlled by VFDs to channel these harmful discharges away from bearings and safely to ground. Fisher installed split grounding rings on the 30 HP and 150 HP centrifuge motors. These rings come in mated halves that allow fast, easy installation on in-service motors without having to decouple the motor from attached equipment. After removing any dirt, corrosion and paint that might interfere with adhesion and conductivity, Fisher installed the rings using conductive epoxy. Because of its large size, Fisher recommended an AEGIS PRO Series Ring for the 500 HP ventilation fan motor. Designed for large low-voltage motors and medium-voltage motors, these rings have six rows of con-

ductive microfiber brushes that provide high current capacity. Fisher installed the larger grounding rings using universal PRO Series mounting brackets. Once the installations were completed, he took follow-up readings on the running motors to check shaft voltage levels. Readings that were as high as 19 volts before the grounding rings were installed, dropped to less than 1.3 volts—too low to cause premature bearing damage. In addition, Fisher recommended the added protection of electrically “bonding” all motors to an electrolytic deep-well ground rod system that would guarantee stable resistance through the changing seasons. “Red Trail has not had any problems since we installed the AEGIS Rings—no more high-pitched squealing from damaged bearings. And costly downtime has been minimized,” Fisher says. Author: Adam Willwerth Sales and Marketing Manager, Electro Static Technology/AEGIS 207-998-1232

APRIL 2017 | Ethanol Producer Magazine | 43



Troubleshooting unexpected equipment issues at Cardinal Ethanol with a de-energized motor testing instrument. By Mike Schneider

In order to produce 100 million gallons of ethanol per year, Cardinal Ethanol in Union City, Indiana, has to ensure its equipment operates reliably 24 hours a day, seven days a week. The inhouse maintenance team at the ethanol plant schedules shutdowns in the spring and fall for regular maintenance. During the fall 2015 shutdown, four new motors were installed to drive the conveyor belts that feed the corn into the ethanol processing plant. By December, the maintenance team noticed interruptions in grain flow. Mark Durr, maintenance project manager at the ethanol plant, investigated the grain delivery system

and determined that the interruptions in grain flow were being caused by intermittent shutoff of the conveyors. “I instructed my technicians to test all four motors, which ranged from 40- to 60-horsepower. Our meg-ohm meter showed the coils were fine, no short turns and nothing going to ground,” Durr said. “But when we used the All-Test Pro 33 IND, that motor testing instrument showed us the rotors were bad.” Durr contacted the general contractor who had installed the motors to inform him of the discovery. The contractor was curious about Durr’s conclusion that there was a problem with the rotors. The motors were brand new, and the contractor could not believe that all four motors would have rotor problems. When asked how he came to this conclusion about the rotors being the root cause of the

problem, Durr explained to the contractor that he had a de-energized motor testing instrument from All-Test that showed the complete condition of both the stator windings and the rotor. “I had purchased the AT33 motor testing instrument a little over a year before, shortly after I began working at this plant. We are focused on preventive maintenance to keep this plant up and running, and that means having the right tools to prevent plant shutdowns,” Durr said. “When you have a problem with a motor, a meg-ohm meter, multimeter, and LCR meter (L-inductance, C-capacitance, Rresistance) are not going to tell you if there is a problem with a rotor, but an AT33 will.” After the motor testing results were shared with the contractor, the contractor made arrangements to replace the motors that


were under warranty. The motors were sent to the contractorâ&#x20AC;&#x2122;s service center to be disassembled and inspected and the service center technicians confirmed that the rotors had, in fact, been the root cause of the motorsâ&#x20AC;&#x2122; inability to perform as intended. â&#x20AC;&#x153;The report from the service center, confirming the rotors were bad, was not a surprise to me,â&#x20AC;? Durr said. â&#x20AC;&#x153;We have used the AT33 quite successfully on several motors, because we know that more common testers donâ&#x20AC;&#x2122;t have the capability to show rotor health. This is one of the main reasons I bought the testing instrument, because of its ability to test the rotor. In this case, it really came in handy.â&#x20AC;?

Lessons Learned

It is critical to inspect new motors and stored motors before they are installed into a

system. Spending a few minutes to test a motor before installing it can save thousands of dollars in maintenance, and in some cases, shutdown costs. The de-energized motor testing instrument, which performs both static and dynamic tests, is a proven asset for revealing the complete condition of the motor rotor and stator windings and also helps the maintenance technician or operator understand if there are any issues with contamination, connections and ground faults. Author: Mike Schneider Regional Manager, All-Test Pro LLC 860-399-4222

CONTRIBUTION: The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Ethanol Producer Magazine or its advertisers. All questions pertaining to this article should be directed to the author(s).

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APRIL 2017 | Ethanol Producer  Magazine | 45


MANAGING MARGIN, RISK, FINANCIAL TRANSPARENCY IN THE ETHANOL INDUSTRY An outline of best-in-class elements for risk management policies and systems. By Steve Rosvold

When it comes to margin and risk management, ethanol producers have difficult and unique choices. In most commodity processing industries, the output price is highly correlated to input price. For instance, in the energy sector there is a strong price relationship in the crackâ&#x20AC;&#x201D;the spread between crude oil and gasoline or diesel; in the metals sector there is a strong price relationship in the conversionâ&#x20AC;&#x201D; the spread between iron ore and steel; in the

CONTRIBUTION: The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Ethanol Producer Magazine or its advertisers. All questions pertaining to this article should be directed to the author(s).

46 | Ethanol Producer Magazine | APRIL 2017

food sector there is a strong price relationship in the crushâ&#x20AC;&#x201D;the spread between soybeans and soymeal or oil. The accompanying graph shows the crude oil and gasoline price index for the past 10 years, with its very high correlation coefficient of .97 r. An r of 1 indicates prices move exactly in step with one another, 0 indicates no correlation and -1 indicates they move exactly opposite of one another. High correlation is a major success factor when hedging strategies are used to protect margins in volatile markets. Over the past 10 years the

crude oil annual average price change was 27 percent, with four years over 40 percent. Imagine the impact on the refining industry if the crack wasnâ&#x20AC;&#x2122;t highly correlated. The ethanol industry is different. The main raw material, corn, originates from the ag complex while the main output, ethanol, is sold into the energy complex. This creates nightmares for risk managers in the ethanol industry. The accompanying graph shows the corn and ethanol price index (2007=100) for the past 10 years. The price correlation, r of .59, substantially lower than for crude and

gasoline, increases the risk of profit margins fluctuating significantly over time. To further complicate matters, an ethanol plantâ&#x20AC;&#x2122;s customers are using ethanol as a substitute or additive to gasoline. They use gasoline, not corn, as a benchmark to determine how much to pay for ethanol. Their margin structure is independent of the ethanol producers. On the origination side, the ethanol producer is in double jeopardy. First, the corn producer has an annual option to grow a better returning crop, potentially leaving ethanol producers short on corn. Second,

APRIL 2017 | Ethanol Producer Magazine | 47

RISK MANAGEMENT corn producers have the option of selling their corn directly into the feed industry, creating a competitor for the ethanol producer whose economics are not tightly aligned with ethanol production. The absolute difference graph shows the annual percent price change between corn and ethanol over the past 10 years. Twice it was over 50 percent and in half the years it was over 20 percent, with an average of 23.5. The 10-year average simple gross margin (ethanol price less corn cost), shown in the accompanying graph, is less than the volatility between ethanol and corn prices. Welcome to the ethanol/corn margin roller coaster where, without strong risk management, oneyear price swings can put you out of business. With all of these extra factors, risk management in the ethanol industry requires the best-in-class people, systems and tools. The following roadmap will help management and boards of directors understand the risk, create an appropriate risk management system while developing the price risk tools and discipline to avoid the financial trauma that could occur from disjointed price moves in corn and ethanol.

Position Transparency

The initial step in managing price risk is to understand the exposure, which is dependent on the size of the position and magnitude of the price change. For example, if

48 | Ethanol Producer Magazine | APRIL 2017

buying 100,000 bushels of corn at $3.50 per bushel and the price goes up to $4, the position can be sold for a gain. If the price goes down to $3, a loss would be incurred. Bestin-class position reports are built around the following: • Contracts and trades are entered into the system in real or near real time. • A contract and trade confirmation process ensures key terms (quantity, price, quality, location and shipment period) are agreed to. • Position reports available in real or near real time. • Position reports are built within the company’s accounting software. • Time of shipment parameters are included to capture time spread risk. • Priced (flat-price risk), unpriced (exposure to basis only) and hedging instruments are reported separately to highlight both flat price and basis risk by time of shipment. • Net exposures are summarized.

Risk Management Policy

Developing a position report is only useful when the company has a clear vision on how it will merchandise the corn/ethanol crush in relation to its margins. A risk management policy involves setting limits on the potential financial exposure. For example, if the board set a $1 million price risk limit and used 50 cents per gallon as the per-unit risk

multiplier, a 2 million-gallon position limit would be imposed. Developing the position information in risk management is science. Creating the perunit risk multiplier figure is art. It depends on a number of factors, including personnel skills to manage the activity, systems to execute and monitor the activity and the risk tolerance of the board. Many companies use a historical price range or the current volatility priced into option contracts to determine an acceptable per-unit risk multiplier. Bestin-class risk management is built around the following: • A risk management policy approved by the board of directors. • Hedging strategies to manage price risk developed and communicated to those engaged in trading, administering and monitoring. • All products used to execute hedging strategies reviewed to ensure capabilities exist for trade execution and position management, administrative support for execution and monitoring and financial support. • Position reporting methodology explained and approved. • A mark to market methodology to determine exposure and monitor limits developed and approved. • Position limits based on hedging products and approved strategies cover flat price, basis and time spreads.

RISK MANAGEMENT Implementation

Effectively utilizing a risk management policy (RMP) requires highly skilled and disciplined professionals coupled with processes and systems that are effectively administered. Having a realistic understanding of the personnel capabilities and system functionality is important. An RMP that is simple (less hedging tools, fewer risk buckets) and can be administered is much more valuable than an RMP that is very sophisticated but beyond staff capabilities. Over engineering an RMP can cause a risk management system to implode. Best-in-class risk management systems include: • Explicit training programs to trade, administer and monitor positions and prices for ethanol plant product inputs, outputs and hedge instruments. • A formal risk management committee that includes executive management and board members. • A contract and market price capture system for all significant plant product inputs, outputs and hedge instruments. • A mark to market report that is realtime or daily, bringing all open commodity position to market, validating the price risk limit and identifying unusual market changes that may uncover risks not previously identified.

Link Buying, Selling

Risk management policies and systems are excellent for analyzing individual commodity risk and providing a measure of overall exposure, but they don’t identify timely margin structures. By overlaying current, historical and expected margins on top of the RMP, the raw materials origination and sales functions will become linked and focused on maximizing margins. Best-in-class margin management systems include a margin calculator for the corn/ethanol crush that includes all significant inputs, creates a crush margin curve by calculating deferred crush margins in addition to spot margins, uses current market prices and not historical costs. The system also includes a supply-chain diagram identifying volatile major inputs of suppliers, customers and intermediaries that is used to monitor the prices of their key inputs to determine potential impacts and create a plan should large price fluctuations occur.

A number of specific hedging strategies and actions can reduce commodity price risk in the supply chain and make financials more transparent. Supplier relationships and protocols help shift some price and volume risk either up or down the supply chain, including contracts that allow deferred pricing or flexible volume. With suppliers, terms can link purchase prices to ethanol, distillers or corn oil prices. Other strategies include: • Match the pricing time frames and price by dates on purchase and sale contracts. • Create real or near time links that connect sales quotes to raw material market prices—a major stepping stone to margin transparency. • Use replacement cost to price your inventory, not historical values. • Explore the use of third-party hedging tools such as forward contracts, futures, options, swaps. • Match the pricing dates for corn and ethanol contracts.

• Implement inventory systems that forecast usage, track and report purchase commitments and physical balances. • Develop an ethanol sales forecasting system to manage raw material needs. Include the storage and marketing of distillers grains. • Increase purchasing leverage through buying consortiums or increased bank lines to take advantage of quantity purchases. • Be creative in improving your suppliers or customers supply chain and take a share of the savings. For ethanol producers, making the right choices is all about margin management, managing risk and creating financial transparency. Author: Steve Rosvold Principal, KRM Business Solutions 360.695.8605

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APRIL 2017 | Ethanol Producer Magazine | 49


CARB Proposes LCFS Verification Program

By John Sens

California’s Low Carbon Fuel Standard aims to reduce greenhouse gas (GHG) emissions from transportation fuels by 10 percent by 2020. The LCFS

is implemented by the California Air Resources Board under AB 32. In September, AB 32 was extended with a total GHG reduction target of 40 percent by 2030. The LCFS program targets for 2030 have yet to be determined, although three have been proposed: 10, 18 or 25 percent GHG reduction below 1990 levels. Ethanol producers can participate in the California LCFS program, if they complete a pathway application using the CA GREET2.0 model for a Tier 1 or Tier 2 pathway. Selling into California allows ethanol producers to get both state and federal credits for biofuel sold in the state, which has spurred biofuels growth in and outside of California. CARB is creating a mandatory verification program to stabilize the LCFS that will go into effect in 2019 and holding a series of workshops and discussions this year to inform the public and solicit stakeholder feedback. The first public working meeting focused on ethanol was held Jan. 31. CARB staff discussed key changes to the mandatory verification program in development and the LCFS program. Meeting documents and the future meeting schedule can be found by searching for LCFS meetings at The mandatory verification program would validate the initial 24-month period of operations data needed when applying for a fuel pathway code (FPC) and would verify the average carbon intensity (CI) over a year’s compliance period for a facility to ensure it does not exceed the certified pathway CI value. The program would verify total ethanol production and volumes of ethanol sold using a mass balance and energy assessment and verify volumes claimed as imported or produced in California to ensure proper and accurate reporting. The program would also verify volumes exported out of California. Companies that participate in the verification program will need to confirm their initial CI score, review their operations and general characteristics of the facility. Ongoing third-party verification will be a central piece of the program. The required operational data and supporting records include: • Feedstock inputs such as meter records and feedstock purchase invoices. • Process energy inputs such as utility invoices, meter records, etc. • Ethanol production and sales volumes, adjusted to 60 degrees Fahrenheit, such as meter records, contracts and sales invoices.

50 | Ethanol Producer Magazine | APRIL 2017

• Coproduct quantities and moisture content data such as meter records, sales invoices. • Full mass balance and yield analysis. As part of the ongoing verification, third-party verifiers will review pertinent documentation, including product transfer documents, contracts, invoices and other documents that are related to the business activities around fuel sales. A number of program implementation details remain to be worked out. These include identifying which entities in the supply chain will be required to participate in a verification program, site visit frequencies and the verification time period and scope. Several other regulatory amendments are proposed. One would replace the current Tier 1 pathway application form with a simplified Excel form that contains key parameters of ethanol production, including starting inventory, ending inventory, purchases and sales, and the calculated production or input of materials at the facility. Another would allow the allocation of quarterly fuel volumes to the feedstock types used in production. Separate distillers grains coproduct pathways are proposed, which would allow ethanol producers to account for different types of DGS produced, rather than using a composite pathway with the average make-up of DGS produced. Verification would include determining the split of energy use for the different types of DGS produced—the primary purpose of this change. Also under consideration is the use of automatic holds for transactions that have not yet been reconciled in the LCFS reporting tool (LRT) among all applicable parties. It is important for LCFS program participants to watch developments in the LCFS program and prepare to meet the mandatory verification program requirements at their facilities. An important step in preparing for the coming verification program will be that key elements of plant operations are being documented clearly through metering, tracking and accounting systems and that they can be easily audited. Author: John Sens Regulatory Consultant, EcoEngineers 515-985-1267


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