April 2008 Ethanol Producer Magazine

INSIDE: COSTLY, TIME-CONSUMING LAWSUITS STYMIE DEVELOPERS APRIL 2008

EPM

Project Finance In a Challenging Environment 2008 PROPOSED ETHANOL PLANT LIST FEATURES 118 PROJECTS

April 2008 WWW.ETHANOLPRODUCER.COM

Take advantage of GS Clean Tech’s turn-key, toll process oil extraction and biodiesel production capabilities Generate $6 million in additional income for a 50 million gallon facility and over $10 million for a 100 million gallon per year ethanol facility Capitalize by purchasing our Corn Oil Extraction System with Co-Located Biodiesel technology model to receive the greatest return on investment while increasing your renewable fuel production

GS CleanTech’s patent pending Corn Oil Extraction Technology safely recovers up to 75% of the corn oil trapped within the DDG. In addition, removing oil from the DDG can also be expected to reduce drying costs, reduce emissions of greenhouse gases and volatile organic compounds and to enhance the marketability of your remaining DDG.

Contact GS CleanTech for more information about the future of Renewable Fuel production.

GS CleanTech Corporation 12600 Deerfield Parkway, Suite 100 • Alpharetta, Georgia 30004 phone: 678.566.3588 • email: info@gs-cleantech.com

www.gs-cleantech.com

inside APRIL 2008 . VOLUME 14 . ISSUE 4

features 68 PROJECT DEVELOPMENT Proposed Plant List: 2008

106 LEGAL Ethanol’s Excedrin Headache

This year’s list includes 118 projects that represent nearly 8 billion gallons

Ethanol

of annual production capacity.

time-consuming lawsuits that seek to delay or derail plant development.

By Kris Bevill, Hope Deutscher, Timothy Charles Holmseth, Marc Hequet,

By Sarah Smith

plant

developers

are

increasingly

faced

with

costly,

Jessica Ebert, Bryan Sims, Susanne Retka Schill and Craig A. Johnson

86 INDUSTRY Back to Reality

114 INITIATIVE Building the ‘Minnesota Model’

Ethanol project development has returned to a more normal pace in light

High Octane: How Minnesota Led the Nation in Ethanol Development

of high corn prices and a tight financial market.

documents the historic rise of ethanol production in the state through the

By Ron Kotrba and Anduin Kirkbride McElroy

voices of those who helped develop the industry. By Kris Bevill

Pacific

Page 68

Page 106

Page 114

98 FINANCE Giving Them Credit

122 FEEDSTOCK The Risk of Biomass Invasion

Farm Credit Services was there in the early days when farmer-owned

Some in the scientific community warn that many of the traits that make ideal

ethanol cooperatives were looking for a hand to help jump-start the

biomass resources are shared by plants that are considered invasive in

fledgling industry. FCS would like to continue its role, but there are

some areas of the country. By Susanne Retka Schill

limitations that need to be addressed in Congress. By Jerry W. Kram

ETHANOL PRODUCER MAGAZINE APRIL 2008

7

The future of fuel Transforming corn and other grains into biofuels is a major industry today. But what about tomorrow? The future of biofuels will also rely on the next generation of raw materials – biomass. At Novozymes we’re taking a fresh look at all types of biomass, and © Novozymes A /S · Customer Communications · No. 2007-35469-02

considering how we can turn it into something useful. And you know what? Corn cobs and wheat straw are just the beginning.

Who knows what other types of waste we can transform into fuel?

Novozymes is the world leader in bioinnovation.

Together with customers across a broad array of industries we create tomorrow’s industrial biosolutions, improving our customers’ business and the use of our planet’s resources. Read more at www.novozymes.com.

Novozymes North America, Inc. 77 Perry Chapel Church Road · Franklinton, NC 27525 Tel. +1 919-494-3000 · Fax +1 919-494-3485 biomass@novozymes.com · www.novozymes.com

inside APRIL 2008 . VOLUME 14 . ISSUE 4

departments

contributors

11 Advertiser Index

154 COMPLIANCE Department of Homeland Security Regulations May Impact Ethanol Producers

14 The Way I See It

By Mike Bryan Media Puts Industry on Offense

20 Business & People 26 Commodities 28 A View From the Hill

By Bob Dinneen Turning Back the Tide

32 Industry News & BIObytes 40 Plant Construction List 52 Our Plant

By Craig A. Johnson Growing with the Industry

54 In the Field

By Susanne Retka Schill Compact Biomass Harvest

56 Up Front

By Anduin Kirkbride McElroy Local Talent

Due to a recent update in Department of Homeland Security regulations, many ethanol producers may find themselves designated a chemical facility in the eyes of the federal government. Those facilities are required to take several key protection steps to ensure compliance.

By Scott E. Hitch and Steven A. Burns

158 USE Additives Keep It Business as Usual with E85 As E85 and flexible-fuel vehicles become more prominent on U.S. highways, new engine operation challenges are arising that regular gasoline additives aren’t formulated to address. Multifunctional additive packages designed for E85 are entering the marketplace and offering solutions.

By Keith Corkwell

162 INNOVATION Synthetic Alcohols Could Provide a Fully Renewable Liquid-Fuel Future Hydrogen has long been hailed the ultimate fuel of the future. However, critical hurdles remain before it could feasibly enter the transportation fuel marketplace. Cellulosic ethanol and renewably produced methanol are the likely transitional fuels that will wean consumers off of fossil fuels.

By James Turner and Richard Pearson

166 RISK Sell or Merge: Options to Consider in Today’s Renewable Energy Industry As recent ethanol mergers and acquisitions attest, the industry is considering more consolidation ventures. Ethanol companies and facilities should keep several key items in mind in order to position themselves to buy or sell.

By Susan Wyka

58 Flex Factor

By Ron Kotrba GM, Coskata Choose Chicken, Not Egg

60 Business

By Bryan Sims Financial Ingenuity Over Conventional Wisdom

62 Finance

By Jesse McCurry Examining the New Energy Bill

64 Legal Perspectives

By John Eustermann and Randy Shefman Capturing the Vaue of Carbon Credits in Biofuels Projects

170 Events Calendar 172 EPM Marketplace

on the web EthanolProducer.com reader’s poll results ÍFor the week of Feb. 11 Will new demand in the southeastern United States lead to higher ethanol prices?

Yes—58.2 percent No—34.3 percent Not sure—7.5 percent

ÍFor the week of Feb. 4 Ethanol Producer Magazine: (USPS No. 023-974) April 2008, Vol. 14, Issue 4. Ethanol Producer Magazine is published monthly. 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.

Will crude oil prices reach $100 per barrel again in 2008?

Yes—83.8 percent No—16.2 percent Not sure—0 percent

BPA Worldwide Membership Applied for October 2006

ETHANOL PRODUCER MAGAZINE APRIL 2008

9

Ad Index 29 & 182 2008 International Fuel Ethanol Workshop & Expo 108 Abener Engineering & Construction Services LLC 81 ADI Systems Inc. 94 Advanced Trailer Industries 91 Aeroglide Corp.

180 Afton Chemical Corp.

42 Agra Industries Corp.

145 Agri-Systems 15 American Railcar Industries Inc. 6 Anhydro Inc. 103 Aqua Power Inc. 113 Aquatech International Corp.

109 Ascendant Partners Inc. 46 Baird Holm LLP 102 Barr-Rosin Inc. 23 & 143 BBI Project Development 156 Best Energies Inc. 82 BetaTec Hop Products Inc. 105 Biodiesel & Ethanol 101 DVDs 85 & 97 Biofuels Australasia 127 & 137 Biofuels Canada 75 & 163 Biofuels Recruiting 18,151 & 155 Biomass Magazine 55 Buckman Labratories Inc. 71 Buhler Inc. 12 Burns & McDonnell 47 Calbrandt 93 Cereal Process Technologies LLC 100 Check-All Valve 24 Chief Industries Inc. Agri-Industrial Division 38 Christianson & Associates PLLP 96 Chromalox Inc. 95 Clifton Gunderson LLP 104 Competitive Energy Insight Inc. 152 ConAgra Trade Group Inc. 31 Coverall Building Systems 101 Crown Iron Works/ Harburg Freudenberger 157 Davenport Dryer LLC 77 dbc SMARTsoftware Inc. 84 Delta-T Corp.

129 Eaton Corp. Filtration Division 73 Eisenmann Corp.

25 Electro Sensors Inc. 153 Emerson Power Transmission 17 Ethanex Energy Inc. 149 Ethanol 2008 Thailand 22 & 141 ethanol-jobs.com 30 Ethanol Promotion & Information Council 59 & 121 Ethanol Technology 3 Fagen Inc. 33 Frazier, Barnes & Associates LLC 92 FCStone LLC 63 Fermentis 67 Fremont Industries Inc. 159 GEA Ecoflex North America Inc. 57 Genencor International Inc.

147 4&5 160 2 61 66 112 161 35 136 65 83 10 43 110 48 164 165 19 133 130 167 168 148 80 7 124 74 37 126 120 111 49 184 51 128 34 118 181 183 50 16 45 119 44 135 138 131 90 88 & 89 116 39 125 169 139 36 117 79

ETHANOL PRODUCER MAGAZINE APRIL 2008

Greenberry Industrial GS CleanTech Corp.

Hurst Boiler & Welding Co. Inc. ICM Inc. Indeck Power Equipment Co. International Biomass '08 Conference & Trade Show Interstates Cos. Intersystems Inc. Kennedy & Coe LLC Larox Corp.

Layne Christensen Co. Louis Dreyfus MAC Equipment Management Recruiters of Atlanta Manly Terminal LLC Mapcon Technologies Inc. Martrex Inc. McC Inc. Metso Automation Mongan Bockman Munters AB Natural Resource Group Inc. Natwick Associates Appraisal Services Nebraska Public Power District Nexen Marketing USA Inc. Novozymes OPW Fluid Transfer Group Ortman Drilling & Water Services Paragon Enterprises LLC Paul Mueller Co. Perten Instruments Inc. Peters Machine Inc. PhibroChem Poet LLC Provista R&R Contracting Inc. RailWorks Track Systems Inc. Rev Tech LC Renewable Fuels Association Robert-James Sales Inc. Robinson Industries Inc. Ronning Engineering Co. Inc. Roskamp Champion SafeRack LLC Salco Products Inc. Screw Conveyor Corp.

Seneca Waste Solutions Smar International Co. Strongform Nationwide Industrial Builders Sulzer Chemtech USA Inc. TDC Dryers Trico TCWind Inc. U.S. Water Services Vaperma Inc. Victory Energy Operations LLC Vogelbusch USA Inc. Volkmann Railroad Builders Inc. W. Soule & Co.

Correction from our March 2008 issue: On page 18 of the Business & People section, it was incorrectly stated that Greenfield Project Management would be growing ethanol feedstocks on the site of the defunct Chernobyl Nuclear Power Station in Ukraine. Feedstocks will be grown on land affected by the radiation in Belarus.

11

Need refueling?

Build it better with Burns & McDonnell.

Ethanol? Gas-to-Liquid? Biodiesel?

Finding the right alternative energy source can be challenging. It takes more than a one-size-fits-all, Band-Aid approach. Burns & McDonnell — with more than 30 years of biofuels experience — will engineer the right energy-efficient, sustainable solution for your facility with the follow-through and support you need.

Comprehensive Services Project Development • Environmental Studies and Permitting • Engineering and Construction Front-End Planning • Engineering Design-Build (EPC) • Unit Operations

For more information: Darin Baugher 816-822-3074 biofuels@burnsmcd.com

Enhancing biofuel design since 1977.

E n g i n e e r i n g ,

A r c h i t e c t u r e ,

C o n s t r u c t i o n ,

E n v i r o n m e n t a l

a n d

C o n s u l t i n g

S o l u t i o n s

Atlanta • Chicago • Denver • Houston • Kansas City, Mo. • Miami • Phoenix • San Diego • St. Louis Chattanooga, Tenn. • Cincinnati • Dallas-Fort Worth • Minneapolis-St. Paul • New York • O’Fallon, Ill. • San Francisco • Wallingford, Conn. • Washington, D.C. • Wichita, Kan.

E D I TO R I A L

A RT

PUBLISHING & SALES

Kathy Bryan Editor-in-Chief kbryan@bbibiofuels.com

Jaci Satterlund Art Director jsatterlund@bbibiofuels.com

Mike Bryan Publisher & CEO mbryan@bbibiofuels.com

Tom Bryan Editorial Director tbryan@bbibiofuels.com

Sam Melquist Graphic Artist smelquist@bbibiofuels.com

Joe Bryan Vice President of Media jbryan@bbibiofuels.com

Jessica Sobolik Managing Editor jsobolik@bbibiofuels.com

Elizabeth Slavens Graphic Artist bslavens@bbibiofuels.com

Matthew Spoor Sales Director mspoor@bbibiofuels.com

Dave Nilles Contributions Editor dnilles@bbibiofuels.com

Jack Sitter Graphic Artist jsitter@bbibiofuels.com

Howard Brockhouse Senior Account Manager hbrockhouse@bbibiofuels.com

Rona Johnson Features Editor rjohnson@bbibiofuels.com

Clay Moore Account Manager cmoore@bbibiofuels.com

Ron Kotrba Senior Staff Writer rkotrba@bbibiofuels.com

Jeremy Hanson Account Manager jhanson@bbibiofuels.com

Anduin Kirkbride McElroy Staff Writer amcelroy@bbibiofuels.com

Chip Shereck Account Manager cshereck@bbibiofuels.com

Jerry W. Kram Staff Writer jkram@bbibiofuels.com

Tim Charles Account Manager tcharles@bbibiofuels.com

Susanne Retka Schill Staff Writer sretkaschill@bbibiofuels.com

Chad Ekanger Account Manager cekanger@bbibiofuels.com

Bryan Sims Staff Writer bsims@bbibiofuels.com

Marty Steen Account Manager msteen@bbibiofuels.com

Jessica Ebert Staff Writer jebert@bbibiofuels.com

Marla DeFoe Advertising Coordinator mdefoe@bbibiofuels.com

Sarah Smith Staff Writer ssmith@bbibiofuels.com

Jessica Beaudry Subscriptions Manager jbeaudry@bbibiofuels.com

Kris Bevill Staff Writer kbevill@bbibiofuels.com

Jason Smith Subscriber Aquisition Manager jsmith@bbibiofuels.com

Timothy Charles Holmseth Staff Writer tholmseth@bbibiofuels.com

Tim Greer Circulation Coordinator tgreer@bbibiofuels.com

Marc Hequet International Editor mhequet@bbibiofuels.com

Erika Wishart Administrative Assistant ewishart@bbibiofuels.com

Hope Deutscher Online Editor hdeutscher@bbibiofuels.com

Christie Anderson Administrative Assistant canderson@bbibiofuels.com

Jan Tellmann Copy Editor jtellmann@bbibiofuels.com Craig A. Johnson Plant List & Construction Editor cjohnson@bbibiofuels.com Amber Armstrong Administrative Assistant aarmstrong@bbibiofuels.com

HOW TO REACH US

LETTERS TO THE EDITOR We welcome letters to the editor. Send your letter to: Ethanol Producer Magazine Letters, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203 or e-mail to jsobolik@bbibiofuels.com.

Letters should include the writer’s full name, address and telephone number, and may be edited for purposes of clarity and space.

SUBSCRIPTIONS To subscribe, visit www.EthanolProducer.com 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.

Ethanol Producer Magazine is now free of charge to everyone with the exception of a shipping and handling charge of $49.95 for any country outside the United States, Canada and Mexico.

CUSTOMER SERVICE AND CHANGE OF ADDRESS For service, please use our Web site at www.EthanolProducer.com. You can also call (866) 746-8385, or write to: Ethanol Producer Magazine, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203.

BACK ISSUES AND REPRINTS Select back issues are available for $3.95 each, plus shipping. To place an order, contact Subscriptions at (701) 746-8385 or subscriptions@bbibiofuels.com. Article reprints are also available for a fee. For more information, contact Christie Anderson at (701) 746-8385 or canderson@bbibiofuels.com.

ADVERTISING For advertising rates and our editorial calendar, visit www.EthanolProducer.com or call (866) 746-8385.

COPYRIGHT © 2008 by BBI International

ETHANOL PRODUCER MAGAZINE APRIL 2008

13

The Way I See It

Media Puts Industry on Offense

I

find it interesting that the ethanol industry is getting criticized for its success. Those of us who have been involved in the industry for many years remember that one of the basic tenets of the industry was to help improve our rural economy. Voilá! We can certainly claim some level of success.

I wish the ethanol industry could take full credit for raising the price of commodities that farmers are now receiving for their crops. Unfortunately, we may only be playing a minor role in this success story. Drought in Australia and a reduced wheat crop in Canada are likely having a much greater impact than ethanol. On the other hand, it is time we stop apologizing for being successful. The increase in commodity prices that have contributed to the food-versus-fuel debate is nothing more than a contrived and well-planned attack on the biofuels industry. The media feeding frenzy is exactly what was intended from the onset, and unfortunately the media has fallen for it hook, line and sinker.

The old saying, “A rising tide carries all ships,” is clearly applicable to the current increase in commodity prices. A farmer used to be able to go to the local implement dealer and negotiate for one of a dozen new tractors on the lot. Today, they have to wait months to get a new tractor, and negotiations are pretty much related to how quick they can deliver rather than the price. What do high commodity prices mean? It means new homes, new businesses on Main Street, new cars, new trucks, new implements and more money in the bank, all of which translate into a stronger economy, not only for rural communities, but for the urban areas, as well. This is just Economics 101, which any clear-thinking person should be able to grasp in an instant.

Exxon made more than $40 billion in net profit after taxes in 2007, one of the largest profits for a single year of any company in the history of the world. Interestingly, we don’t see the same media frenzy over that. What we do hear is how ethanol is causing the price of food to go up, while $3-per-gallon gasoline has become the order of the day. How stupid is that?

It’s time the ethanol industry takes off the gloves and begins calling things as they are. This is a deliberate, well-planned and well-funded attack on the ethanol industry in an attempt to slow it or even stop it in its tracks. Anyone who believes otherwise is simply not thinking clearly.

The biofuels industry should be praised, not vilified, for any contribution it has made to a stronger economy. If we can claim even a small portion of success in creating higher commodity prices as a result of biofuels production, we should all stand up and take a bow.

That’s the way I see it!

Mike Bryan Publisher & CEO mbryan@bbibiofuels.com

14

ETHANOL PRODUCER MAGAZINE APRIL 2008

LEND US AN EAR AND WE’LL FULFILL YOUR ETHANOL SHIPPING NEEDS

Backed by decades of engineering and manufacturing expertise, American Railcar Industries should catch your ear for your shipping needs. ARI’s ethanol tank cars are produced to 30,000-gallon capacity and can be designed to your loading and unloading specifications. Our manufacturing facilities are some of the newest in North America, plus we provide a wide array of services from repair to fleet management.

Why ship ethanol in anything less than the most modern, well-engineered and highest quality tank car on the market?

AMERICAN RAILCAR INDUSTRIES, INC. ® 636.940.6020

100 Clark Street, St. Charles, Missouri 63301 •

FAX: 636.940.6100

•

www.americanrailcar.com

•

sales@americanrailcar.com

WE BUILD AND SERVICE THE WHOLE CAR Check out our “Online Services” section at www.americanrailcar.com

The Science of Dehydration 45 years ago Ronning

r 0VS %FFQ &YQFSJFODF XJUI #JPNBTT BOE $FMMVMPTJD 'FFETUPDLT – The push to make biofuels and energy out of alternative feedstocks may be just now heating up, but at Ronning, we’ve been working with customers to add value to biomass for as long as we’ve been in business. Whether it be our work with animal manure, alfalfa, or perennial grasses, Ronning’s dehydration know-how combines with our patented Three-Stage drying system to get the results you need.

began our business around one important notion: to build a team of engineers and scientists r #VJMEJOH UIF 1SFNJVN %%(4 4PMVUJPO – While we look to the future of biomass and cellulosic energy production, we are with a passion for delivering committed to provide the ethanol industry of today with the premium solution for DDGS production – a solution that delivers the world’s best ingredient the high-protein, good tasting light-gold feed that is so valuable in your markets. preparation and production systems. Five decades later, we’re r %FMJWFSJOH &OFSHZ BOE $PTU 4BWJOH 5FDIOPMPHJFT – We know that the future success of biofuels hinges on our ability to still pursuing that goal along deliver manufacturing systems with lower energy, water, and emissions needs. That’s why Ronning is focused on building the Waste Heat Evaporation solution of the future – one that can cut dehydration costs in your existing facility while integrating with a commitment to meet with a wide range of process technologies. For customers thinking of biomass-fired energy systems, Ronning has the field the unique challenges involved installations to prove that we know how to deliver cost savings without sacrificing quality, reliability, or safety. in converting diverse biomass r 4FSWJOH PVS $VTUPNFST – In the end, it all comes down to an attitude of service to our customers. Our goal is to lead your feedstocks into energy.

supply chain in delivering value with flexibility and a spirit of teamwork. We invite you to experience the Ronning difference on your next project.

7KH *ROG 6WDQGDUG LQ 'U\LQJ www.ronningengineering.com t 913.239.8118 t Toll free 866.RONNING

The road to tomorrow has demanding curves. Hang on. Our mission is to be the low cost provider of renewable energy today and to always pursue the energy of tomorrow.

Easy? No. But fueled by leadership with eighty plus years in the energy industry, we’re well on our way. Together with Buhler, our integrated fractionation process is boosting ethanol production while using less water and energy. That’s one curve out of the way.

What’s next? Follow us. ethanexenergy.com

Biomass Magazine is a trade journal serving companies that use and/or produce power, fuels and chemical feedstocks derived from biomass.

Collectively, these biomass utilization industries are positioned to replace nearly every product made from fossil fuels with those derived from plant or waste material. The publication covers a wide array of issues on the leading edge of biomass utilization technologies, from biorefining, dedicated energy crops and cellulosic ethanol to decentralized power, anaerobic digestion and gasification. It’s all here.

www.BiomassMagazine.com

For additional information please contact us at (701) 746-8385 or at advertising@biomassmagazine.com

Small valves can save you a small fortune.

Whether you are outfitting an existing or new ethanol plant, Metso Automation’s NELES R-Series control valves provide up to three and a half times the flow capacity of an eccentric plug valve, so smaller valves can be specified. And small is good when it leads to huge cost savings. Up to a $25K savings in control valves for a typical 115 million gallon ethanol plant. JAMESBURY® high-performance butterfly valves combine compact size with a higher flow capacity to significantly reduce processing costs and boost revenue. Their proprietary seat and sealing technologies deliver superior tight shut-off in a range of ethanol production applications. No wonder 2 out of 3 ethanol plants prefer JAMESBURY and NELES valves. Intelligent Reliability. Intelligent Choice.

NELES R-Series Segment Control Valve with Quadra-Powr® Acuator

JAMESBURY WAFER-SPHERE® High-Performance Butterfly Valve

MetsoEthanol.com/p6

BUSINESS&PEOPLE

Business& People Ethanol Industry Briefs PHOTO: HEATHER CRAIG, CARDINAL ETHANOL LLC

Business

VeraSun, U.S. BioEnergy move corporate offices In light of the merger between VeraSun Energy Corp. and U.S. BioEnergy Corp., which was announced in November, both companies will be moving their respective corporate headquarters to Sioux Falls, S.D. “Selection of the corporate headquarters location constitutes a milestone in the progress of closing the merger,” said VeraSun Chief Executive Officer Don Endres. At press time, the merger was scheduled to close by the end of March. The transition to the new headquarters should be completed by the end of summer.

U.S. BioEnergy was previously based in St. Paul, Minn., while VeraSun’s corporate office was in Brookings, S.D. EP

Greenbelt Resources selects Helmer Risk Management Minnesotabased renewable energy research and development company Greenbelt Resources Corp., which owns subsidiary Diversified Ethanol Corp., has selected Phoenix-based Helmer Risk Management LLC to handle all of its insurance and risk assessment needs. As part of those services, the company will provide contract reviews, and design and assist the implementation of contractor enrollment protocols and loss control measures, according to Scott Helmer, president and chief executive officer of Helmer Risk Management. Diversified Ethanol manufactures modular ethanol units that allow farming and/or dairy operations to utilize on-site feedstocks. EP 20

Construction continues at Cardinal Ethanol, a 100 MMgy ethanol plant near Union City, Ind.

Cardinal Ethanol to develop carbon credits Carbon Green LLC and Environmental Credit Corp. have announced an agreement with Cardinal Ethanol LLC to develop carbon credits for the ethanol plant's production.

Cardinal Ethanol is building a 100 MMgy facility near Union City, Ind., which will also produce 320,000 tons of distillers dried grains with solubles annually.

Ethanol, when blended with gasoline, reduces greenhouse gas emissions. Carbon Green and ECC are leaders in developing carbon credits for the greenhouse gas emissions markets. ECC is also a leading supplier of environmental credits to global financial markets. EP

Share your Industry Briefs To be included in Business & People, send information (including photos or illustrations if available) to: Industry Briefs, Ethanol Producer Magazine, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You may also fax information to (701) 746-5367, or e-mail it to jsobolik@bbibiofuels.com. Please include your name and telephone number in all correspondence.

Ace Ethanol manages price risk with Planalytics Wisconsin-based Ace Ethanol LLC has licensed the EnergyBuyer service offered by Planalytics Inc. to help monitor natural gas market prices, and identify when it’s a good time to buy or hedge natural gas. “With the volatile commodity markets we have today, we have to have the best information we can get,” explained Bob Sather, chairman of Ace Ethanol. “How we manage these commodity markets affects our bottom line.”

EnergyBuyer recommendations are derived from market fundamentals, technical analysis, future weather forecasts, and market trading factors that impact prices on both the New York Mercantile Exchange and CME Group’s Globex platforms. EP

Didion Ethanol partners to develop software Didion Ethanol LLC, a subsidiary of Didion Milling Inc., recently entered into a partnership with Christianson & Associates PLLP to enhance the accounting firm’s Intellego software, a program specifically designed for the biofuels industry that combines grain accounting functionality with commodity risk management tools. The enhanced software is intended to integrate an accounting package with an advanced controls package.

The result is a fully integrated system that will allow producers to monitor all factors of production, including natural gas usage, electricity usage, corn inputs and ethanol yields, said Chad Carter, assistant controller at Didion Ethanol. Being able to track changes in variables and make adjustments allows for the optimization of a lean, efficient process, he explained. EP

ETHANOL PRODUCER MAGAZINE APRIL 2008

BUSINESS&PEOPLE

Sponsored by

People

Business VeraSun promotes Nelson

R.J. O’Brien, Powerline Petroleum form division Chicago-based independent futures brokerage firm R.J. O’Brien & Associates LLC has partnered with commodity price risk management and brokerage firm Powerline Petroleum LLC to form the RJO Financial division. The newly created division aims to complement and expand R.J. O’Brien’s current offering of risk management tools and strategies for its customers. For example, the additional offering of over-the-counter hedging products will fill the void from R.J. O’Brien’s primary futures-only service, according to an R.J. O’Brien spokeswoman.

Services now include a broad array of commodity segments such as agriculture, energy (including biofuels) and financial markets.

Terms of the transaction weren’t disclosed at press time. EP

New services available for ocean freight markets Buyers and sellers of ethanol products via the global ocean freight markets now have a fresh resource. White Plains, N.Y.-based Evolution Markets Inc. has created a new division dedicated to the trade, called the Evolution Markets Ocean Freight division.

Freight Markets Director George Dyke said the new division will help to coordinate the tanker transportation of liquid products.

“Our dedicated brokerage team will provide essential freight services to the ocean markets,” added Chief Executive Officer Andrew Ertel. Dyke said the division will be able to answer questions that buyers and sellers have of these services, including vessel types and rates. It can be reached at (914) 323-0259. EP

VeraSun Energy Corp. has named a new director of commodities.

Jack Nelson will be responsible for overseeing the company’s grains managers, and coordinating natural gas and denaturant supplies for VeraSun ethanol plants. Nelson served as grains manager at VeraSun’s facility in Aurora, S.D., prior to accepting this promotion. EP

Central Illinois Energy hires chief restructuring officer Central Illinois Energy LLC, a 37 MMgy ethanol plant that has delayed construction in Canton, Ill., hired Brent King as the chief restructuring officer in January.

King is an experienced restructuring executive, and a 20-year veteran manager in the agricultural and manufacturing sectors. CIE filed for bankruptcy protection in late 2007, and King will work through the process of bankruptcy and get new owners in place by April 15. “After that, we have up to two months of construction work, and then it’s plant start-up,” he said. EP

Deputy secretary resigns U.S. Deputy Secretary of Energy Clay Sell resigned from his post at the U.S. DOE in late February. Prior to that position, which he held for nearly three years, Sell worked at the White House as a staff member for the National Economic Council, and the Office of Legislative Affairs. EP

ETHANOL PRODUCER MAGAZINE APRIL 2008

All Fuels & Energy board taps Leonard Commercial lender and cattleman Mark Leonard has joined the board of All Fuels & Energy Co., an Iowa development-stage ethanol company. he was the long-time director of the Iowa Agricultural Development Authority, overseeing farmer loan programs. He owns a cattle enterprise and commercial lending company, both based in Holstein, Iowa. EP

Corle plays for new team Tom Corle has founded G-team, a marketing and communications company serving the biofuels industry. It will assist biofuels companies in creating a strategy for growth and supporting that strategy through marketing, advertising, promotions, market research and media. Corle was previously the director of communications and marketing for Delta-T Corp. EP

Cline forms risk management firm Anne Cline, a long-time commercial insurer and former vice president of KMA Inc., has left KMA and formed Armor Companies Inc., a risk management and consulting agency catering to the needs of the renewable fuels industry. She has extensive experience in consulting with renewable energy projects throughout the United States. Her new company is based in Minnesota. EP 21

BUSINESS&PEOPLE

POST JOBS SEARCH JOBS POST RESUMES SEARCH RESUMES

om

www.ethanol-jobs.com www.ethanol-jobs.com www.ethanol-jobs.com www.ethanol-jo

22

s.com www.ethanol-jobs.com www.ethanol-jobs.com www.ethanol-jobs.com www.ethanol-jobs.com www.ethanol-jobs.com www.ethanol-jobs.com www.ethanol-jobs.com www.ethanol-jobs.c

bs.com www.ethanol-jobs.com www.ethanol-jobs.com www.ethanol-jobs.com www.ethanol-jobs.com www.ethanol-jobs.com www.ethanol-jobs.com www.ethanol-jobs.com www.ethanol-jobs.c

ob

om www.ethanol-jobs.com www.ethanol-jobs.com www.ethanol-jobs.com www.ethanol-j

People Schafer takes helm at USDA Ed Schafer was sworn in Jan. 28 as the 29th Secretary of Agriculture, replacing Deputy Secretary Chuck Connor, who had served as acting secretary since September when former secretary Mike Johanns resigned. Schafer was governor in his home state of Schafer North Dakota from 1992 to 2000.

His appointment was supported by the state’s Democratic congressional delegation and was confirmed by the U.S. Senate without controversy. EP

NCERC adds director Stephanie Regagnon has been named director of commercialization for the National Corn-ToEthanol Research Center (NCERC) on the campus of Southern Illinois University in Edwardsville, Ill. Regagnon will be responsible for developing marketing plans to promote the NCERC, and to assist with public policy and outreach. The NCERC offers its pilotscale, dry-grind ethanol plant process for research applications. EP

Verenium appoints chief legal officer Verenium Corp., which is building a cellulosic ethanol plant in Jennings, La., has appointed Gerald Haines to the newly created position of executive vice president and chief legal officer. His experience in business and legal matters with earlystage companies will be an asset to Haines Verenium, according to company President and Chief Executive Officer Carlos Riva.

Before joining Verenium, Haines was the executive vice president of strategic affairs and chief legal officer for a public network communications company. He holds a Juris Doctor degree from Cornell Law School and a Bachelor of Science degree in business administration from Boston University. EP

ETHANOL PRODUCER MAGAZINE APRIL 2008

Concept

to

Construction Why hire a project coordinator when you can hire a team of experts to develop your ethanol or biodiesel project?

Let BBI guide you down the project development path: Feasibility study

Develop feedstock and risk management plans

Organize your business

Develop a project financing strategy

Develop the business plan

Develop prospectus and offering documents

Select the right design/builder for your project

Conduct an equity drive

Select the best site

Secure project debt financing

Negotiate utility and product offtake agreements

Financial close and begin construction!

BBI International Project Development Adding Value to the Biofuels Industry 300 Union Blvd, Suite 325 Lakewood, CO 80228, (303) 526-5655 30 Duke St.W., Suite 701, Kitchener, Ontario N2H 3W5 CANADA, (519) 576-4500

®

The Titan of the Industry Introduces

The Giant of Grain Storage S CHIEF’ ITH A BIN W OVER T S E G LAR TY OF I C A P CA HELS S U B PEAK ILLION T) M E N O 0M (29,00

TITAN 1.1 Eave Height 53'1" (16.18M) Overall Height 94'9" (28.88M) Diameter 154'8" (47.14M)

Chief’s largest bin — the new Chief TITAN 1.1 — has the size and strength needed to safely store today’s record yields. As with all Chief TITAN bin, its corrugated sidewalls and roof panels are of G-115 galvanized steel, reinforced by Chief’s unique “W” stiffeners, which are almost twice as strong as the closest competing stiffener.

STANDARD 2-RING WALK-IN DOORS

Chief Agri-Industrial offers reliable and innovative grain storage, aeration, and material handling equipment to meet your total grain management needs.

OPTIONAL DRIVE-IN BOBCAT DOOR

of Chief Industries, Inc. MUSHROOM VENTS FOR EASY INSTALLATION

OPEN WEB-JOIST TRUSS SYSTEM PROVIDES ROOF SUPPORT

CENTER TOWER HELPS SUPPORT ROOF’S PEAK LOAD CAPACITY OF 40,000 LBS. (18,144 KG)

*°"°Ê ÝÊn{nÊUÊ i>À iÞ]Ê iLÀ>à >ÊÊÈnn{nÊ1- * iÊnää Îx ÇÈääÊ ÀÊÎän ÓÎÇ Î£nÈ ÜÜÜ°>}À °V iw `°V ÊÊUÊÊi > \Ê>}À JV iw `°V Ê

We Engineer Relationships ®

Predict 3 conveyor and elevator hazard risks with one easy solution.

Monitor shaft speed, belt alignment and bearing temperature with a single solution. Our new Electro-Sentry™ Hazard Monitoring System combines shaft speed, belt alignment and bearing temperature measurement all in one system— or as individual components.

With our 40 years of machine monitoring experience, reliable predictive maintenance for elevator or conveyed material applications isn’t left to chance.

Standard 4-20mA technology. Electro-Sentry™ utilizes standard 4-20mA signals, as opposed to proprietary software or “black boxes” which can be limiting or challenging to support. Two-wire, loop-powered 4-20mA temperature transmitters monitor belt alignment and bearing temperature. Shaft speed feedback sensor outputs a 4-20mA signal across the RPM range of the shaft.

Easy installation without calibration. With simple, straightforward installation and no end-user calibration necessary, components are ready to use right out-of-the-box, and compatible with standard PLCs, meters, I.S. barriers and data acquisition systems.

Call 1-800-328-6170 or go to www.electrosentry.com ©2008 ELECTRO-SENSORS INC. • 6111 BLUE CIRCLE DRIVE • MINNETONKA, MN 55343

The original machine monitoring experts

COMMODITIES REPORT Natural Gas Report

Can new natural gas demand be met?

Feb. 17—Coal-fired electric generation plants are getting increasingly difficult to finance. Apparently, lenders are concerned that carbon cap-and-trade legislation will be passed by the U.S. Congress that may dramatically increase the cost and decrease the economic viability of high-carbon sources. Lenders are expressing this concern through higher rates, higher equity requirements and/or tighter security requirements. As access to capital gets more challenging and more expensive, projects are getting delayed or cancelled.

In the intermediate to long-term natural gas marketplace, this means higher demand for natural gas than would be the case if

By Casey Whelan, U.S. Energy Services Inc.

more coal-fired electric generators were built. Higher demand will likely lead to higher prices. Approximately 50 percent of new-generation capacity additions from 2009-‘11 are forecasted to be coalfired, according to the Energy Information Administration. If 50 percent of those additions were instead natural gas-fired, natural gas demand would increase by more than 2.5 percent—a material increase in an already tight market.

Fortunately, natural gas supply is increasing to meet demand.

First, trapped Rockies gas is increasingly getting to constrained markets through pipeline projects such as Rockies Express.

Second, the United States is significantly increasing liquid natural gas vaporization capacity, and worldwide LNG liquefaction capacity is expanding. Third, some shale formations are beginning to produce significant supply. Finally, even the off-shore Gulf is beginning to see increased production levels. Collectively, these sources, along with existing supplies, should increase supply availability this year by approximately 1.5 percent and possibly more in the future.

Bottom line: We have growing supply and growing demand.

Only time will tell which will grow at a faster pace and whether prices will remain at current levels or continue to go up. EP Casey Whelan, vice president of strategic initiatives, can be contacted at cwhelan@usenergyservices.com.

Corn Report

Corn hits $5 as demand grows Feb. 15—The market has now experienced $5-plus corn and the move up from the previous dollar increment was rather abrupt. Despite a 1.4-plus billion bushel carry-out of corn, premium has definitely remained in the market place.

One of the bigger concerns as we approach spring is the much anticipated plantings report. The acreage estimate will have been released by press time. By this point the market is switching its focus to planting weather and ultimately penciling in yield figures. Therefore, the supply equation will remain volatile and debatable. The demand side of the supply-and-demand table may be more static. The USDA has already factored in corn demand from the ethanol sector at 4.1 billion bushels in the next crop year, nearly one-third of 2008’s expected production. This is compared to 3.2 billion bushels in the 2007-‘08 marketing year.

Exports are a likely catalyst that can affect the next U.S. supply-anddemand table. The weak dollar, price scenarios and overall global demand of feed grains will keep this figure uncertain. Other competing feedstuffs and feed grains will impact the demand factor from livestock and food producers around the world. Wheat will be another catalyst that keeps the corn market uncertain.

Corn was very volatile during the fall and winter and one can only

26

By Jason Sagebiel, FCStone

imagine the up-and-down days ahead during the growing season. One must be cautious as any summer weather doldrums will keep traders worried about any crop problems and the much-expected $6 per-bushel corn looms around one weather scare. EP

ETHANOL PRODUCER MAGAZINE APRIL 2008

COMMODITIES REPORT DDGS Report

By Sean Broderick, CHS Inc.

Price drop opens new doors Feb. 18—As the latter half of February began, the fears sellers had of keeping up with an increasing supply of DDGS heading into a seasonally declining spring and summer market are coming to fruition. Many of the plants that came on line in the first quarter of 2008 had only small amounts of tonnage sold, and as production ramps up they are bringing an inordinate amount of “spot” cars to the market. In and of itself, this would be bearish, but the fact that it coincides with rapidly declining feeding margins in most animal sectors is pushing the market down harder and faster than many plants anticipated.

The silver lining is that these lower prices are bringing DDGS into rations that had excluded them when they were priced at higher levels. Relative to other energy and protein sources, DDGS is a value and is

Regional Ethanol Prices (Monthly averages in cents per gallon)

BULK SPLASH/ TRUCK (rack) TOP OFF (rack)

REGION

SPOT

West Coast

231.472

231.23

248.067

Midwest

219.528

222.86

231.009

East Coast

237.875

----

242.59 Source: OPIS

being pulled into many different diets— hog diets being a prime example.

Monocalcium phosphate, which is an important source of digestible phosphorus, will increase in price by 50 percent at the beginning of March. This enhances the value of DDGS, as its phosphorous level is more available.

Another positive for DDGS sales is that ocean freight continues to be reasonably priced on a historical basis, which gives rise to the probability of moving bulk DDGS out of the gulf in cargo hold quantities. This would enhance the container export programs that are already successful but hampered by a limited availability of “cans” to go back to the Pacific Rim. Canada and Mexico continue to demand product as availability of local feedstuffs remains limited. EP

Regional Gasoline Prices (Monthly averages in cents per gallon)

REGION

SPOT

RACK

RETAIL

West Coast

242.25

248.56

324.821

Midwest

225.908

236.976

298.387

East Coast

232.961

239.354

205.527 Source: OPIS

DDGS Prices ($/ton) FEB. 2008

JAN. 2008

FEB. 2007

Minnesota

155

165

125

California*

190

215

162

Chicago, Ill.

140

165

128

Buffalo, N.Y.

145

165

140

Central Florida

185

201

LOCATION

148

*Central Valley

Source: CHS Inc.

Corn Futures Prices (March corn, $/bushel) HIGH

LOW

CLOSE

Feb. 15, 2008

5.17

5.10 1/2

5.14 3/4

Jan. 15, 2008

5.19

5.06

5.09

Feb. 15, 2007

4.12 3/4

4.05

4.07 1/2

DATE

Source: FCStone

Ethanol Report

By Spencer Kelly, OPIS

Ethanol market picks up as questions remain Feb. 15—Ethanol spot markets around the country moved higher heading into the latter half of February, gaining momentum from a hearty rebound in gasoline values as well as some logistical issues that started to crop up.

New York Harbor prompt barge ethanol moved into the middle $2.40s per gallon, with sellers talking up to $2.50 per gallon. The market was not very active, but it was very tight too, which underlined severe congestion at Sewaren, N.J., and ever harderto-find dock space over the next month.

Ethanol gains trailed gasoline. For example, harbor unleaded trading over $2.42 per gallon gained more than 22 cents on the week at midmonth. That gave ethanol, with the federal blending credit, a healthy 48-plus cents cost advantage versus unleaded.

Even with the blending advantage, ethanol may be weighed by gasoline demand growth that remained tepid at best. So far, 2008 gasoline demand growth only rated 0.4 percent, according to the U.S. DOE. Some retail chains have not even seen that much, claiming sales are off as much as 5 percent to 10 percent this year.

Still, economics continued to help ethanol make inroads into conventional markets. In the midst of slack seasonal driving demand, the DOE reported conventional blending with ethanol up 3.2 percent at midmonth February, a gain of nearly 48 percent versus the same time last year. EP For more information, contact OPIS Ethanol & Biodiesel Information Service at (888) 301-2645.

ETHANOL PRODUCER MAGAZINE APRIL 2008

Cash Sorghum Prices ($/bushel) DEC. 20, 2007 FEB. 27, 2007

FEB. 15, 2008

3.85 3.84 3.87 4.01 3.97 4.54

4.82 4.79 4.56 4.85 4.58 5.47

4.79 4.89 4.68 4.68 4.71 5.50

Superior, Neb. Beatrice, Neb. Sublette, Kan. Salina, Kan. Triangle, Texas Gulf, Texas

Source: Sorghum Synergies

Natural Gas Prices ($/MMBtu) FEB. 15, 2008

JAN. 21, 2007

FEB. 15, 2007

NYMEX

8.66

7.89

7.24

N. Ventura

8.85

9.92

8.73

Calif. Border

8.15

8.02

7.18 Source: U.S. Energy Services Inc.

U.S. Ethanol Production Output (barrels/day) November 2007

479,000*

October 2007

452,000

November 2006

343,000

*all-time monthly high

Source: U.S. Energy Information Administration

27

VIEW FROM

THE HILL

Turning Back the Tide As you read this column, it is quite likely that gasoline prices are beginning to climb.

The last I checked, the swallows still return to Capistrano.

As I write this column in mid-February, oil closed the day over $100 per barrel for the first time in history. Nothing significant happened. An oil refinery in Texas caught fire and there is concern that OPEC may keep production constant, but analysts will quickly say there is an ample oil supply on the world market. Yet, little seems to stop the seemingly unabated rise in oil prices.

With the growing demand for oil from emerging economies in China and India, it is quite likely the days of overpriced oil are here. However, America’s dependence on overpriced oil need not remain. Ethanol is helping break that addiction.

Dinneen

For the second consecutive year, the American Petroleum Institute estimates that all the growth our nation saw in gasoline demand was met by the increased use of ethanol. In addition, analysts and petroleum companies themselves see a day in the near future when ethanol is not only displacing oil imports but also imports of finished gasoline. This is based on our domestic ethanol industry averaging a little more than 400,000 barrels a day of production. That is the equivalent gasoline output of two to three medium-sized oil refineries.

That said, our industry is just getting started. The 2005 energy bill certainly provided the kick start our industry needed to achieve the kind of success API details in changing the way America fuels its future. However, the recently enacted 2007 energy bill provides the necessary stability to allow our industry to aggressively develop new technologies that will exponentially expand our ability to renewably fuel our nation. By requiring the use of 36 billion gallons of renewable fuel derived from sources ranging from grains to garbage, leaders in Washington, D.C., responded to the calls of the American people to begin stemming the tide of increasing reliance on oil.

Today, like the little Dutch boy, America’s ethanol industry has its finger firmly in the dike, precariously preventing our nation from truly being awash in gasoline, both foreign and domestic.

Tomorrow, America’s ethanol industry will be able to stand proudly on that dike and see the gasoline tide receding.

Until then, much work remains.

Bob Dinneen President and CEO Renewable Fuels Association

28

ETHANOL PRODUCER MAGAZINE MARCH 2008

Spring Sales Event on now! Save10% on select building models (Limited Time Offer)

building stands up well ‘‘The to the harsh environment.

We are very happy with the performance of our Cover-All building. It is very functional as it keeps our materials dry and out of the elements. It also makes a safer work environment and keeps our people happy. During the day we don’t have any lights on and it’s still like daylight in our building.

‘‘

Ken Boyd, Support Services Engineer City of Winnipeg Public Works Department Winnipeg, MB 100' x 220' TITAN® building

1.800.268.3768 • www.coverall.net COVER-ALL AND TITAN ARE REGISTERED TRADEMARKS OF COVER-ALL BUILDING SYSTEMS INC

Widths up to 300' 165' and wider supplied by Summit Structures

Ethanol News Briefs Bateman Litwin approves capital injection for Delta-T European energy contractor Bateman Litwin NV approved a $30 million working capital injection for Delta-T Corp., the U.S.-based ethanol engineering and construction firm that it acquired last year.

After September, Delta-T is expected to generate positive working capital and repay the $30 million advance in approximately 18 months. The injection loan comes amid Bateman Litwin’s civil action against DeltaT, alleging that its former owners Bibb and Rob Swain mispresented the financial status of the company.

John Deere offers ethanol crop insurance Corn growers with delivery contracts for ethanol plants can now purchase insurance for yield shortfalls if a harvest falls below contracted amounts and the replacement price exceeds the farmer’s underlying insurance coverage. The plan will be available through a multi-peril insurance policy offered

by John Deere Risk Protection. It also requires that the ethanol plant procure the replacement bushels of corn, so farmers don’t need to find replacement grain themselves. The coverage will be available in 10 Midwestern states.

Ethanol tariff remains intact Reports that the 54-cent-per-gallon tariff on imported ethanol would be modified or scrapped were proven incorrect when the proposed 2009 federal budget was released in early February with no changes to the measure. Energy Secretary Samuel Bodman stirred controversy by advocating an end to the tariff in a speech to the U.S. Chamber of Commerce in late January. The current tariff is set to expire Dec. 31.

Bush budget boosts cellulosic research The Bush Administration released its 2009 budget proposal Feb. 4, which included a $1 billion increase in the U.S. continued on page 34

32

BBI International Media becomes carbon-neutral The carbon footprint that is left by printing BBI International’s publications has been neutralized. Joe Bryan, vice president of media, said the company has implemented an environmentally friendly, carbon-neutral printing process.

BBI addressed the carbon-neutral issue in 2007 and was surprised at the difference some basic changes can make, Bryan said. The company prints its magazines and directories at R.R. Donnelly. Just a change in the type of paper had positive results.

“The carbon output in the production of the paper that BBI was originally using per issue (one individual magazine) was 49,102 pounds of carbon dioxide,” said Timothy Portz of R.R. Donnelly. “The carbon output for the new paper is 32,155 pounds.

The savings is 16,947 pounds, the equivalent of taking two cars off the road for a year.”

Bryan said when Portz explained the effects of this change, he was stunned. “It was unbelievable,” Bryan said. “For one publication, it was enough energy to power four houses for a year, just by changing the weight of our paper.” As a publisher of six trade magazines (three monthly, two bimonthly and one quarterly), in addition to two annual directories and two biannual wall maps, BBI clearly views paper as an operational necessity, Bryan explained.

BBI’s carbon-neutral plan was first implemented for the printing of the 2007 directories. It served as the springboard for a complete printing overhaul. “Tim (Portz) explained to us that if we invested ‘x’ amount of dollars, we would be one of the very first publications in the country to be completely carbon-neutral,” Bryan said. “We knew right away we had to do it.”

Portz said the collaborative effort between R.R. Donnelly and BBI is the real deal and not just what he called “green-washing.” He said the unflattering title is used when companies try to hang a green marketing message on something that’s not truly worthy. “We spent a lot of time getting an accurate assessment of [BBI’s] carbon footprint as it stood before we took over,” he explained. “We drew a baseline and then developed real strategies to drive out real carbon. It wasn’t just, “Okay, here is the carbon footprint. Let’s buy offsets. See you

PHOTO: R.R. DONNELLY

BIObytes

INDUSTRYNEWS

R.R. Donnelly account representatives Timothy Portz, left, and Seth Porter run press checks before printing Biomass Magazine.

later.’ We came up with a manufacturing strategy that reduced [BBI’s] total cost [and] reduced the environmental footprint. We cut the carbon footprint nearly in half.”

Portz uses a special calculator (found at www.papercalculator.org) to determine paper reduction results and impact. For example, in order to print 7,800 copies of a 168-page issue of EPM on 70-weight paper, it requires 18,655 pounds of paper. BBI changed the weight of its paper to 50, and it increased the amount of recyclable content in the paper to 30 percent, he explained. “The total weight of paper (used for printing) becomes 13,325 pounds,” he said. The calculator also indicates how many trees were saved. Previously, one issue of the magazine used 24 tons of wood. After the paper change, that number was decreased to 13 tons.

“That saved 73 trees,” he said.

The calculator also determines the impact on total energy, purchased energy, sulfur dioxide, greenhouse gases, nitrogen dioxide, particulates, hazardous air pollutants, volatile organic compounds, total reduced sulfur, wastewater, biochemical oxygen demand, total suspend solids, chemical oxygen demand, absorbable organic halogens and solid waste.

Bryan said BBI is very pleased with the results of carbon-neutral printing, and the company will continue to seek viable and environmentally friendly solutions whenever possible.

—Timothy Charles Holmseth

ETHANOL PRODUCER MAGAZINE APRIL 2008

INDUSTRYNEWS

Study summarizes RFS impact The Food and Agricultural Policy Research Institute recently summarized the results of a study in which it estimated what impacts the enhanced renewable fuels standard in the Energy Independence and Security Act of 2007 would have on biofuel and agricultural markets. The detailed report is meant to serve as a snapshot of the estimated impacts of some of the provisions in the bill.

The analysis focused on just two provisions of the legislation: one that calls for 15 billion gallons of corn-based ethanol to be utilized by 2015 and another that says 1 billion gallons of biomass-based diesel should be used by 2012.

According to the report, if biofuel tax credits and tariffs are extended, the EISA will result in a 24 percent increase in cornbased ethanol production from 2011 to 2016. Biodiesel production would increase by 89 percent during the same time period.

Corn area will expand by 2 million acres, while soybean acreage will remain essentially unchanged. Corn prices are predicted to rise by 8 percent, and soybean oil prices will increase by 36 percent. Higher prices for corn will mean increased feed costs for cattle, hog and dairy farmers. However, a reduction in soybean meal prices may help to offset costs. Average crop receipts are expected to increase by $6 billion from 2011 to 2016, resulting in the average annual net farm income increasing by $3.4 billion.

The two provisions were determined to have a significant impact on biofuel and agricultural markets. Implications listed in the study ranged from the obvious—that mandates would result in more ethanol and biodiesel production than otherwise would occur—to more in-depth observations, such as: Impacts of higher mandates are very sensitive to the price of petroleum,

and assumptions regarding the extension of current biofuel tax credits and tariffs.

Lower petroleum prices are generally associated with lower biofuel prices and production levels when there isn’t a binding mandate. When petroleum prices are sufficiently high, corn-based ethanol production would likely exceed the levels specified in the EISA. Under the EISA, biofuel prices and production are less affected by the extension or expiration of tax credits and tariffs.

Tax credit and tariff policy choices have important implications for taxpayers, consumers and biofuel producers in other countries.

The use of waiver authority established in the EISA could prove very important. Study results suggest that biodiesel and soybean oil prices will be much higher if the mandate is met than if it is waived.

Provisions not considered in this study included the use of cellulosic ethanol and other “advanced biofuels.” The report said “this omission does not imply that the provisions are unimportant.” It was only a preliminary analysis, meant to provide a partial and tentative evaluation of the legislation.

The institute may explore other provisions in the future. The FAPRI has already begun compiling information for a report that will include recent market developments and will likely change both short- and long-run projections.

ETHANOL PRODUCER MAGAZINE APRIL 2008

—Kris Bevil

33

Ethanol News Briefs continued from page 32

DOE budget. Within that, $1.25 billion was requested for the Office of Energy Efficiency and Renewable Energy, a $1 million increase from 2008. The budget requests $225 million for biomass fuels and vehicles research out of a total $592.3 million for fuels and vehicles research and development. In the USDA’s budget briefing, officials said they’ve proposed additional funds for high-priority bioenergy research for converting cellulose materials into biofuels.

Marathon boosts ethanol blends in Southeast At the recent Credit Suisse Group Energy Conference in Vail, Colo., Gary Heminger, executive vice president of Marathon Oil Corp., announced that the company expects to be able to blend ethanol at all of its Southeastern terminals by early summer. This would expand the company’s blending capacity from 1 billion gallons per year in early January to 1.2 billion gallons per year by June 1. Marathon’s biggest hurdle is the different blending guidelines from state to state, including Florida, Georgia, Tennessee, North Carolina and South Carolina. continued on page 36

INDUSTRYNEWS

IBTI boosts biofuels training A new biofuels training consortium aims to meet the demand for new “green collar” jobs, expected to reach more than 240,000 full-time positions by 2015. Two Iowa community colleges received a U.S. Department of Labor grant to conduct extensive industry research and visit production facilities to develop job guides and curriculums. The two colleges—Kirkwood Community College in Cedar Rapids, Iowa, and Indian Hills Community College in Ottumwa and Centerville, Iowa—formed the Iowa Biofuels Training International consortium, which was unveiled in early February at the National Biodiesel Conference in Orlando, Fla. IBTI Executive Director Joe Brehm explained that the program will coordinate training programs using resources from multiple partners. “For example, it is possible that no individual training partner currently offers all the necessary training for a laboratory technician,” he said.

“However, all the training resources for this position might currently be available from three different training partners.” The IBTI would find the necessary training components and coordinate them. It would also develop regional training programs to reduce travel costs for participants.

Training will be provided for plant operators, supervisors, and laboratory and maintenance technicians. As the ethanol industry grows, new curriculums will be developed. The consortium’s long-term goal is to provide additional resources

PHOTO: NATIONAL BIODIESEL BOARD

BIObytes

Brehm, right, speaks with a reporter at a press conference in Orlando, Fla.

including online courses, according to Brehm.

The program aims to develop a training network, tapping into resources from community colleges, four-year academic institutions, and product and systems experts. Particular courses and programs will be certified and approved by the IBTI advisory board, which will consist of training partners, industry representatives, contracted trainers and other biofuel experts. The IBTI is recruiting training partners now. Industry representatives or product vendors will be recruited to become part of the IBTI network based on expertise and industry-training needs.

For more information, visit www .biofuelstraining.org.

—Susanne Retka Schill

INDUSTRYNEWS

Squeezing more ethanol out of a kernel of corn continues to be a goal for ethanol producers. Quad County Corn Processors in Galva, Iowa, will be testing technology from FCStone Carbon LLC that promises to do just that.

Called sonication, the technology will use sound waves to break down corn starch and make it more available for enzymatic hydrolysis. Sonication will be used on the cooked corn slurry prior to fermentation.

Research indicates that the process allows a more efficient breakdown of the corn starch, which means a higher conversion of corn into ethanol. According to Mike Kinley, vice president of technology for FCStone Carbon, the company has also demonstrated that sonication also makes enzyme activity more efficient.

While a great deal of attention is given to cellulosic ethanol, the traditional cornbased ethanol industry continues to innovate, Kinley said. “Far from remaining static, advancements in corn ethanol production technology continue to be realized,” he said.

“Our ultrasonic process is evidence of a new and innovative approach to making the industry more sustainable over the long run.

The ethanol industry is an industry constant-

PHOTO: QUAD COUNTY CORN PROCESSORS

Sonication technology debuts in Iowa

Quad County Corn Processors is teaming with FCStone Carbon LLC to install sonication equipment at its ethanol plant in Galva, Iowa, in order to increase the amount of ethanol it can produce from each bushel of corn.

ly seeking improvements.”

The sonication equipment is being manufactured and should be delivered to Galva by early spring, said QCCP General Manager Mike Jerke. He said it shouldn’t take long for the equipment to be installed and for testing to begin. “We are going to install the equipment in such a way that it can be scaled up,” he said. “It won’t be a plant-wide application of the system right off the bat. We will run it on a portion of our production until the kinks and bugs are worked out. We are hoping that scale-up

THE ROAD TO SUCCESS IS FILLED WITH TWISTS AND TURNS. FORTUNATELY, WE ALREADY KNOW THE WAY.

phase will be completed before we are very far into the summer.”

The new technology will be installed as part of the “cook train” between the slurry mixing and fermentation tanks. QCCP is currently installing some parallel loops, so the plant won’t have to be shut down while the equipment is being installed. “In the worst-case scenario, we may have to slow down or moderate our cook flow, but that won’t impact full production,” Jerke said.

The testing will indicate how the sonication technology affects production efficiency and enzyme use. “There is a lot of potential here and a lot of things we think can happen, but the actual application and running at a real-time pace will tell us what will bear fruit,” Jerke said. “The best-case scenario would be that because of the improved breakdown of starch, we’d see a better conversion rate (more gallons per bushel of corn used). We would certainly like to think there would be some reduced costs for enzymes. Those are the primary things we will be looking for.”

—Jerry W. Kram

The biofuels industry’s accounting, tax and various consulting needs can be nearly as complicated as the refining process itself.

Which is why Kennedy and Coe’s knowledge and experience in the industry can help you identify and capitalize on many opportunities that can add millions of extra dollars to your organization’s cash flow. Our expertise can help you navigate even the most confusing paths, so you can make the most of your operation’s potential.

Call 800-303-3241 or visit us at www.kcoe.com.

Not your average accountants.SM The “e” mark and the “stylized e” are registered service marks of the Ethanol Promotion and Information Council. Used with permission.

ETHANOL PRODUCER MAGAZINE APRIL 2008 KAC.9084_7.5x3.375_EPM_4C 1

35 2/18/08 5:28:55 PM

BIObytes

INDUSTRYNEWS

Ethanol News Briefs continued from page 34

DOE invests up to $114 million in four biomass projects Over the next four years, the U.S. DOE will invest up to $114 million for four small-scale biorefinery projects. ICM Inc. received up to $30 million for a proposed cellulosic ethanol plant in St. Joseph, Mo. Lignol Innovations Inc. received up to $30 million for a proposed cellulosic ethanol plant colocated with a petroleum refinery in Commerce City, Colo., and Pacific Ethanol Inc. received up to $24.3 million for a proposed cellulosic ethanol plant in Boardman, Ore.

Florida ethanol projects receive ag grants On Jan. 22, the Florida Department of Agriculture and Commerce announced 12 recipients of $25 million in grants as part of the “Farm to Fuel” program. Gulf Coast Energy of Walton LLC was awarded $7 million for the construction and operation of an ethanol and biodiesel plant in Mossy Head, Fla. U.S. Envirofuels continued on page 38

36

Xethanol sells cellulosic sites New York-based Xethanol Corp.’s recent announcements of buying and selling cellulosic sites, facilities and ventures have produced considerable industry buzz—but no ethanol.

In late January, the energy company scrapped plans to develop two cellulosic ethanol facilities in Georgia and North Carolina, and announced that it was losing money on its only operational cornbased ethanol plant in Iowa. It also received a $500,000 grant from the Florida Department of Agriculture and Commerce to produce cellulosic ethanol from orange peels, and invested in a Pennsylvania cogeneration ethanol plant.

What Xethanol hasn’t announced, however, is financial viability. In its third quarter 2007 filing with the U.S. Securities Exchange Commission, it admitted no timeline for profitability and “a net loss of $18.1 million for the nine months ending Sept. 30, 2007.” Shares of stock, once valued at around $15 in April 2006, are currently trading around 55 cents.

At its annual shareholder meeting in January, Xethanol announced that it would sell the Georgia site that it purchased two years ago with the intent to build a corn-based and cellulosic ethanol refinery there. Xethanol’s SEC filing for that day also indicated that plans for a similar facility in Spring Hope, N.C., would be scrapped to save additional money. The company’s corn-based plant in

“Blairstown, Iowa, is running at approximately 5.6 [MMgy] … and is operating at a loss,” the shareholder report stated.

While the company noted that corn-based ethanol may not be economically viable anymore, it then acquired a stake in Consus Ethanol LLC, a corn-based ethanol plant in Pittsburgh.

Xethanol announced in late 2007 that a classaction lawsuit was settled over alleged misrepresentations of company performance that boosted stock values. The complaint alleged that “Xethanol repeatedly assured investors that it could sustain itself on revenue from corn ethanol production while successfully commercializing biomass ethanol production. … It appears that it does not have the ability to commercialize biomass ethanol in the foreseeable near-term.”

A shareholder suit alleging stock fraud, misrepresentation and improper inducements to purchase common shares at artificially inflated prices is still pending.

—Sarah Smith

ETHANOL PRODUCER MAGAZINE APRIL 2008

INDUSTRYNEWS

Company offers biomass-based efficiency Kansas-based Midwest Process Solutions is marketing the use of cellulosic biomass to heat a corn-based ethanol plant’s rotary drum dryer, or produce steam for boilers or electricity generation.

Midwest Process Solutions, created in January 2005, isn’t seeking to build such a project. Rather, company President David Corley said it is willing to share its technical expertise with those in the ethanol industry.

“We have some collaborative relationships and ideas of how to use biomass to fuel the distillers grains dryer burner rather than using natural gas, and also how to use biomass for boilers to generate steam and use that steam to generate electricity,” he said.

“I wouldn’t say it’s proprietary, but I’d say we’ve got the capabilities to put together the system to do this.”

Most ethanol plants use rotary drum dryer systems, which have been around for years. A typical rotary drum dryer requires 1,500 to 1,700 British thermal units per pound of water removal. Systems vary in cost, depending on inputs and system design-layouts, but there are payback sce-

narios of one to three years when replacing conventional natural gas with solid fuel cyclonic burners, Corley said.

Solid fuel cyclonic suspension burners can be used in conjunction with waste-heatstyle recovery boilers to generate high-pressure steam utilizing biomass while offering significant savings and being carbon-neutral.

Using cellulosic biomass to heat a rotary drum dryer is a novel use, Corley said. “Nobody has done it,” he said. “There are a few plants [that have] been using coal rather than natural gas, and coal definitely has higher Btu values. The other issue to coal is that it’s a dirty fuel, and it’s not exactly environmentally friendly. One of our company’s focuses is grain, and we want to do things that are carbon-neutral, which has a lot of political support [worldwide] due to global warming. If we’re on the forefront of this or bringing this concept to biofuels, we’re hoping we can be a market leader.”

Midwest Process Solutions is currently involved in the construction of Show Me

Energy Co-op in Centerview, Mo. The business plan of the farmer-owned cooperative takes agricultural biomass from local producers and creates fuel pellets, which are sold to a local utility company that burns the pellets along with coal. They are also sold to the retail pellet-stove market.

The agricultural biomass includes straw, seed hulls and corn stover. At full capacity, the plant will produce approximately 100,000 tons of fuel pellets annually.

“We believe Show Me Energy is the first company to use very large amounts of straw or other agricultural products for pelletization for the utility market,” Corley said. “One of the big cellulosic ethanol puzzles is: How do you deal with this really light, low-bulk-density stuff, i.e., switchgrass, straw or corn stover? It’s just so light and bulky that it is hard to store, transport and handle. What sets us apart is that we have innovative process designs for grinding systems and material-handling systems by doing research with our pilot plants.”

—Hope Deutscher

BIObytes Ethanol News Briefs continued from page 36

LLC received $7 million toward construction of a $47 million ethanol plant in Highlands County, Fla.

NEVC, CFDC form E85 workshops The National Ethanol Vehicle Coalition and the Clean Fuels Development Coalition will team up with the Nebraska Ethanol Board this spring to advance E85 marketing. A $55,000 grant from Nebraska’s Department of Economic Development, and the Rural Development Commission will help create a series of workshops designed to advance the marketing of E85. “It will be three workshops in three days,” said Todd Snelling, administrator of the Nebraska Ethanol Board.

“We’ll be working with several other states.” A location was slated to be determined by early March. EP

38

INDUSTRYNEWS

BlueFire Ethanol tests cellulosic ethanol technology BlueFire Ethanol Inc., a California-based cellulose-to-ethanol company, recently completed vendor testing of three key process systems as part of the final engineering for the company’s full-scale waste-to-ethanol production process.

At press time, the company planned to break ground on a 3.1 MMgy municipal-solid-waste-toethanol plant in Lancaster, Calif., in mid-March and a 17 MMgy facility in Corona, Calif., by the end of the year. “We’re ready to go,” said Arnold Klann, chief executive officer and president of BlueFire.

“We ran these tests strictly to help the equipment suppliers finalize their designs on the equipment for the right sizing.”

The testing was carried out at the headquarters, and research and development center of B&P Process Equipment in Saginaw, Mich., the vendor for the decrystalyzer that BlueFire will use in its process. In addition to the decrystalyzer, BlueFire tested hydrolyzer and filter press equipment from separate vendors. “Every company that manufactures equipment has different performance characterizations,” Klann explained. “We set up a testing protocol at B&P and ran the feedstock that we will be utilizing at the Lancaster facility through their equipment using our process conditions.”

The three pieces of technology represent three early steps in the waste-to-biofuel process.

The decrystalyzer is the first piece of equipment that the cellulose feedstock comes into contact

with. It’s a kind of mixer that covers the feedstock with sulfuric acid. This initiates the early chemical reactions that will ultimately break the cellulose free from its lignin cage. From the decrystalyzer, the slurry goes into a hydrolyzer. Water is added at this stage to change the concentration of the sulfuric acid, and allow for the complete separation of the cellulose sugars and lignin. From there, the viscous solution is pumped into a filter press, and the sugary liquids are squeezed from the solids, which form a lignin cake. The resulting sugar/acid/water solution then goes into a chromatographic system for the separation of the sugars from the acid, which is then recycled. This step in the process is currently being tested at a separate vendor facility.

Based on information from a biorefinery in Izumi, Japan, which also uses an acid hydrolysis process, the results of these vendor tests show improved yields and better performance, Klann said. “The next step is to break ground and start building.”

—Jessica Ebert

ETHANOL PRODUCER MAGAZINE APRIL 2008

INDUSTRYNEWS

The gap between corn-based ethanol and cellulosic ethanol production became smaller when KL Process Design Group, a Rapid City, S.D.-based ethanol plant designer and marketing firm, brought the nation’s first demonstration-scale cellulosic ethanol facility on line in Upton, Wyo., in January.

The 1.5 MMgy facility, called Western Biomass Energy LLC and located one mile south of Upton, began production Jan. 5, according to Tom Slunecka, KL Process Design vice president of business development. The plant is a culmination of development efforts between KL Process Design, the South Dakota School of Mines and Technology, the Wyoming Business Council, and the Wyoming Department of Forestry.

It has the ability to operate intermittently, so while a feedstock is in the production cycle, the company can concurrently test different feedstocks in its research laboratory.

“Because it’s a small plant, we can afford to bring the plant on and off-line, and do various test runs of other feedstocks while in production,” Slunecka said. “If [the feedstocks] prove out efficient in the lab, then we would be able to run that particular feedstock at full-scale in the plant itself.”

PHOTO: KL PROCESS DESIGN GROUP

KL Process Design starts cellulosic ethanol production

Western Biomass Energy LLC began ethanol production from wood waste at the beginning of the year.

The plant is using ponderosa pine gathered from the Black Hills National Forest by forest thinnings operator Backer Timber Products. KL Process Design intends to test other feedstocks, such as hard woods, construction waste, corn stover and switchgrass, after the first year of operation, Slunecka said. “Though we’ve tested other cellulosebased materials in the lab from switchgrass to cardboard, the plant itself is focused on ponderosa pine,” he said. “There’s plenty of private ground thinnings to operate this small plant without ever entering into the national forest.”

To efficiently pretreat the various biomass feedstocks used, KL Process Design uses an acid-free method in its feedstock procurement process through specially designed enzymes supplied by Novozymes.

“It’s important that KL doesn’t use acids in its pretreatment process, not only from the environmental standpoint for the permitting of a plant such as this, but it also adds a great deal of value in the coproducts, making them organic in nature,” Slunecka said.

KL Process Design intends to market its own finished product. At press time, the fuel was to be officially introduced to the American Le Mans Series in the form of E85 for the season opener in Sebring, Fla., on March 15. “The American Le Mans Series cars are basically production-level cars that have been modified for the track, so it’s long been the desire for the ethanol industry to work with the auto industry to create engines that optimize the use of ethanol,” Slunecka said. “By us bringing ethanol to the track and at that level, that’s exactly what we hope will occur.”

—Bryan Sims

Rebuilding Clean Energy

ELECTRIC MOTOR SERVICE

● Electric Motor Sales ● 75k Sq/Ft Repair Facility ● Up to 10,000 HP Rewind ● UL Certified ● New Drives and Installation ● EASA Warranty Shop ● Ventilation Distributor ● Transportation Department

TM

REBUILDING CLEAN ENERGY

● ● ● ● ● ● ● ●

Gearbox Sales and Repair Pump Sales and Repair On-Site Laser Alignment On-Site Vibration Analysis On-Site Thermography On-Site Motor Maintenance Quality Assurance Program Engineering Department

Phone: 888.694.6200 (Answered 24/7) Fax: 320.693.0243 111 East 10th Street Litchfield, MN 55355 Website: www.tricotcwind.com Email: steveb@tricotcwind.com

ETHANOL PRODUCER MAGAZINE APRIL 2008

39

NEW PROJECT

PROJECT COMPLETE

PLANT EXPANSION

EXPANSION COMPLETE

INDUSTRY

Ethanol Plant Construction Are ADM’s Mega Plants a Sign of Things to Come?

This month’s plant construction list is being printed in the same issue as EPM’s proposed plant list (see page 66). Together, they are a snapshot of the future of the industry.

The North American ethanol industry is currently producing at a capacity of more than 8 billion gallons. Plants under construction now represent 5.2 billion gallons of annual nameplate capacity, thanks in part to some major additions this month. Archer Daniels Midland Co., the largest single producer of ethanol in the world, has ethanol plants under construction in Cedar Rapids, Iowa, and Columbus, Neb. ADM already operates two wet-mill plants: a 420 MMgy plant in Cedar Rapids and a 100 MMgy facility in Columbus. The new plants will be twin, 275 MMgy dry-grind plants that can be expanded to 400 MMgy each.

This kind of growth is atypical, and few producers expect to see 800 MMgy mega plants popping up all over the Corn Belt. According to one industry chief executive officer, “110 MMgy is probably the biggest we’ll see.

I don’t expect more than a few plants to exceed 200 MMgy at a time when [corn] is $5 per bushel.”

A company the size of ADM may be able to weather a “perfect storm” of high feedstock costs, escalating energy prices and slack in the ethanol market better than most. ADM is able to negotiate shipping and commodities prices with a leverage that most ethanol plants can’t even dream of.

EPM’s proposed plant list indicates additional industry growth. It highlights 118 projects that are mostly focusing their efforts on financing. While not all of these plants will start construction this year, the list does provide an interesting geographical map of ethanol project development.

T

Location Mina, South Dakota Ethanol marketer undeclared Design/builder Fagen Inc. Distillers grains marketer undeclared Process technology ICM Inc. Carbon dioxide marketer N/A Capacity 100 MMgy Broke ground November 2006 Feedstock corn Target start-up date 2008 Synopsis of progress Construction of the rail loop continues. Methanator tanks have been insulated, and structural steel work has begun on the water treatment building.

Absolute Energy LLC

Location Design/builder Process technology Capacity Feedstock Synopsis of progress The plant began grinding

40

St. Ansgar, Iowa Fagen Inc. ICM Inc. 100 MMgy corn

—Craig A. Johnson

EPM will remove seemingly inactive projects from this list if: 1. Our good faith attempts to contact project representatives go unanswered for three straight months.

2. Through exhaustive means, we are unable to verify the continued advancement of a project.

3. The Renewable Fuels Association, as well as project representatives, are notified and given a reasonable amount of time to verify the project’s current status.

To provide updates to this list, contact Craig A. Johnson at (701) 7468385 or cjohnson@bbibiofuels.com.

Project Complete

Aberdeen Energy LLC

Project Complete

Three plants leave the plant construction list this month. Absolute Energy LLC, a 100 MMgy facility in St. Ansgar, Iowa, began grinding corn in mid-February. Altra Coshocton Ethanol LLC began production at its 60 MMgy facility in Coshocton, Ohio, on Feb. 5. Castle Rock Renewable Fuels LLC, a 50 MMgy plant in Necedah, Wis., began production Feb. 1.

Altra Coshocton Ethanol LLC

Location General contractor Process technology Capacity Feedstock Synopsis of progress According to the company LLC!

Coshocton, Ohio The Industrial Co. Delta-T Corp.

60 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Start-up date

undeclared undeclared undeclared July 2006 2008

Web site, production began Feb. 5. Congratulations Altra Coshocton Ethanol

Altra Indiana LLC Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Start-up date

RPMG CHS Inc. N/A July 2006 February 2008

corn in mid-February. Congratulations Absolute Energy LLC!

Location Cloverdale, Indiana General contractor F.A. Wilhelm Construction Process technology Vogelbusch Capacity 88 MMgy Feedstock corn Synopsis of progress Electrical and piping work is underway.

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

undeclared undeclared undeclared October 2006 April 2008

ETHANOL PRODUCER MAGAZINE APRIL 2008

Construction Represents 5.2 Billion Gallons Annually

Altra Nebraska LLC Location General contractor Process technology Capacity Feedstock

Carleton, Nebraska undeclared Vogelbusch 113 MMgy corn

Biofuel Energy Corp.

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

undeclared undeclared undeclared undeclared spring 2008

Synopsis of progress Identical to the Altra Indiana facility in Cloverdale, Ind., the project is focused on electrical and piping work.

Location General contractor Process technology Capacity Feedstock

Greenville, Ohio ICM Inc. ICM Inc. 110 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

The Andersons Inc. The Andersons Inc. undeclared September 2006 first quarter 2008

Location Design/builder Process technology Capacity Feedstock

undeclared

undeclared 275 MMgy corn

Archer Daniels Midland

undeclared undeclared June 2007 third quarter 2009

Location General contractor Process technology Capacity Feedstock

undeclared

undeclared 275 MMgy corn

Archer Daniels Midland

undeclared undeclared July 2007 fourth quarter 2008

Location Design/builder Process technology Capacity Feedstock

The Industrial Co.

Delta-T Corp.

110 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Calgren Renewable Fuels

J.D. Heiskell & Co. N/A March 2007 May 2008

Union City, Indiana Fagen Inc. ICM Inc. 100 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Murex CHS Inc. N/A February 2007 summer 2008

Synopsis of progress Despite recent heavy rains and cold temperatures, construction proceeds on schedule. The final fermentation tank roof is being placed. The rail loop is substantially complete. Tunnels in the grain-receiving area are finished, and unloading equipment is being installed. Work on the water main line and electrical substation has begun.

Biofuel Energy Corp.

Fairmont, Minnesota

Pixley, California W.M. Lyles Co. Lurgi Inc. 52 MMgy corn

Cardinal Ethanol LLC Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Synopsis of progress This dry-grind plant will be adjacent to ADM’s existing ethanol facility.

Location General contractor Process technology Capacity Feedstock

undeclared undeclared undeclared September 2007 October 2008

Synopsis of progress All equipment has been placed, and some hydro-testing is being conducted. Plumbing, piping and electrical work continues.

Archer Daniels Midland Co. Columbus, Nebraska

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Calgren Renewable Fuels LLC Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Synopsis of progress This dry-grind plant will be adjacent to ADM’s existing ethanol facility.

Location General contractor Process technology Capacity Feedstock

Bridgeport, Nebraska ICM Inc. ICM Inc. 50 MMgy corn

Synopsis of progress N/A

Archer Daniels Midland Co. Cedar Rapids, Iowa

Cargill Inc. Cargill Inc. N/A May 2006 second quarter 2008

Bridgeport Ethanol LLC

Synopsis of progress Construction continues. No further information was available at press time.

Location General contractor Process technology Capacity Feedstock

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Synopsis of progress N/A

The Andersons Marathon Ethanol LLC Location Design/builder Process technology Capacity Feedstock

Wood River, Nebraska The Industrial Co. Delta-T Corp.

110 MMgy corn

Cascade Grain Products LLC Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Synopsis of progress N/A

ETHANOL PRODUCER MAGAZINE APRIL 2008

Cargill Inc. Cargill Inc. N/A September 2006 second quarter 2008

Location General contractor Process technology Capacity Feedstock

Clatskanie, Oregon JH Kelly Ethanol Delta-T Corp.

108 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Eco-Energy Land O’Lakes undeclared June 2006 May 2008

Synopsis of progress Electrical and piping work continues. The first shuttle train carrying corn is expected to arrive on-site in the last half of March. Grinding is expected to start in May with the plant's substantial completion scheduled for June 6.

41

Project Complete

Castle Rock Renewable Fuels LLC

Location Design/builder Process technology Capacity Feedstock

Necedah, Wisconsin Fagen Inc. ICM Inc. 50 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Start-up date

Ethanol Grain Processors LLC Murex CHS Inc. undeclared September 2006 February 2008

Synopsis of progress The plant began grinding corn Feb. 1. Congratulations Castle Rock Renewable Fuels LLC!

Location Design/builder Process technology Capacity Feedstock

Obion, Tennessee Fagen Inc. ICM Inc. 100 MMgy corn

Synopsis of progress Structural steel is being erected. All fermentors have been placed, and work on the beer well is underway. Concrete for the grain silos has been poured, and the energy center is finished. The company expects to immediately start the “cyclones,� a devise that spins the dried grain to force dust out and reduce the particulates released into the air.

Gases from the cyclones are then sent to the thermal oxidizer to be burned and released into the air.

Center Ethanol Co. LLC Location General contractor Process technology Capacity Feedstock

First United Ethanol LLC

Sauget, Illinois

Ethanol marketer T.E. Ibberson/McCarthy Industrial Distillers grains marketer Delta-T Corp.

Carbon dioxide marketer 50 MMgy Broke ground corn Target start-up date

Center Oil Co. undeclared undeclared October 2006 February 2008

Synopsis of progress N/A

Location Design/builder Process technology Capacity Feedstock

Camilla, Georgia Fagen Inc. ICM Inc. 100 MMgy corn

Keyes, California Harris Construction Praj Industries 55 MMgy corn

undeclared undeclared N/A July 2006 second quarter 2008

Location General contractor Process technology Capacity Feedstock

Lima, Ohio Alberici Constructors Inc. Benchmark Products Inc. 54 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

undeclared undeclared N/A September 2005 2008

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Commercial Alcohols

Synopsis of progress N/A

Didion Ethanol LLC

Synopsis of progress N/A

Eco-Energy First United Ethanol undeclared January 2007 summer 2008

Greater Ohio Ethanol LLC Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Synopsis of progress N/A

Location General contractor Process technology Capacity Feedstock

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Synopsis of progress N/A

Cilion Ethanol LLC Location General contractor Process technology Capacity Feedstock

Ethanol marketer Aventine Renewable Energy Distillers grains marketer CHS Inc. Carbon dioxide marketer undeclared Broke ground December 2006 Target start-up date fourth quarter 2008

Courtland, Wisconsin Agra Industries Delta-T Corp.

50 MMgy corn

GreenField Ethanol Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

undeclared undeclared N/A October 2006 March 2008

Location General contractor Process technology Capacity Feedstock Synopsis of progress N/A

Johnstown, Ontario SNC-Lavalin Group ICM Inc. 200 MMly (53 MMgy) corn

Commercial Alcohols

undeclared October 2006 fourth quarter 2008

Kansas Ethanol LLC

Hawkeye Renewables Location Designer/builder Process technology Capacity Feedstock

Menlo, Iowa Fagen Inc ICM Inc. 110 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Eco-Energy undeclared N/A July 2007 fourth quarter 2008

Location Design/builder Process technology Capacity Feedstock

Hawkeye Renewables Shell Rock, Iowa Fagen Inc ICM Inc. 110 MMgy corn

Eco-Energy undeclared N/A July 2007 first quarter 2009

Location Design/builder Process technology Capacity Feedstock

Levelland, Texas ICM Inc. ICM Inc. 40 MMgy corn/milo

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Lansing Trade Group Lansing Trade Group

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Murex CHS Inc. N/A September 2006 March 2008

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

undeclared undeclared N/A August 2006 early 2008

Chaparral Energy Inc.

January 2007 February 2008

Marquis Energy LLC Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target completion date

undeclared undeclared N/A July 2007 late 2008

Synopsis of progress N/A

Location Design/builder Process technology Capacity Feedstock

Hennepin, Illinois Fagen Inc. ICM Inc. 100 MMgy corn

Synopsis of progress N/A

Indiana Bio-Energy LLC Location Design/builder Process technology Capacity Feedstock

undeclared N/A January 2007 April 2008

Synopsis of progress N/A

Holt County Ethanol LLC O'Neill, Nebraska Adams Construction Vogelbusch 100 MMgy corn

Poet Ethanol Products

Levelland/Hockley County Ethanol LLC Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Synopsis of progress According to the company, progress is being made.

Location General contractor Process technology Capacity Feedstock

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Synopsis of progress Rain and ice have caused some delays while crews improve the site's drainage system.

Synopsis of progress According to the company, progress is being made.

Location Designer/builder Process technology Capacity Feedstock

Lyons, Kansas ICM Inc. ICM Inc. 55 MMgy corn/milo

Bluffton, Indiana Fagen Inc. ICM Inc. 101 MMgy corn

Marysville Ethanol LLC Ethanol marketer Aventine Renewable Energy Distillers grains marketer CHS Inc. Carbon dioxide marketer N/A Broke ground November 2006 Target start-up date July 2008

Synopsis of progress Structural steel erection is more than 95 percent complete. Duct work continues in the energy center. The construction of two large tank farms is substantially complete with only minor work on one of the tanks remaining. Buildings are being enclosed.

ETHANOL PRODUCER MAGAZINE APRIL 2008

Location Design/builder Process technology Capacity Feedstock

Marysville, Michigan Fagen Inc. ICM Inc. 50 MMgy corn

Synopsis of progress N/A

43

NEDAK Ethanol LLC Location General contractor Process technology Capacity Feedstock

Atkinson, Nebraska Delta-T Corp.

Delta-T Corp.

44 MMgy corn

Northwest Renewable LLC Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Eco-Energy Frahm and Deitloff N/A June 2006 first quarter 2008

Synopsis of progress N/A

Location General contractor Process technology Capacity Feedstock

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

U.S. Ethanol LLC Lansing Trade Group undeclared November 2006 fourth quarter 2008

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

undeclared undeclared undeclared undeclared fourth quarter 2008

Synopsis of progress N/A

Nesika Energy LLC Location General contractor Process technology Capacity Feedstock

Longview, Washington Makad Construction Corp.

Lurgi Inc. 55 MMgy corn

Scandia, Kansas

One Earth Energy LLC Ethanol marketer

Free Country Design & Construction Distillers grains marketer

ICM Inc. 10 MMgy corn

Carbon dioxide marketer Broke ground Target start-up date

Poet Ethanol Products Nesika Energy LLC N/A December 2006 February 2008

Synopsis of progress Minor piping and electrical work continues. The company recently finished work on its lab.

Location General contractor Process technology Capacity Feedstock

Gibson City, Illinois Fagen Inc. ICM Inc. 100 MMgy corn

Synopsis of progress N/A

Nexsun Ethanol LLC Location Design/builder Process technology Capacity Feedstock

Ulysses, Kansas ICM Inc. ICM Inc. 40 MMgy corn/milo

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

undeclared undeclared undeclared August 2007 late 2008

PHOTO: NEXSUN ETHANOL LLC

Synopsis of progress Dirt work is substantially complete with weather being the only holdup as the company prepares to pour concrete in the spring.

Northeast Biofuels LLC Location General contractor Process technology Capacity Feedstock Synopsis of progress N/A

Volney, New York Lurgi Inc. Lurgi Inc. 100 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Noble Americas Corp.

Perdue Farms BOC Gases July 2006 2008

Nexsun Ethanol LLC

Otter Tail Ag Enterprises LLC Location General contractor Process technology Capacity Feedstock

Fergus Falls, Minnesota Harris Mechanical Delta-T Corp.

57.5 MMgy corn

Patriot Renewable Fuels LLC Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

RPMG CHS Inc. N/A October 2006 March 2008

Synopsis of progress N/A

Location Design/builder Process technology Capacity Feedstock

Burley, Idaho Parsons RCI Inc. Delta-T Corp.

50 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Kinergy Marketing Pacific Ag Products LLC

undeclared February 2007 second quarter 2008

Location Design/builder Process technology Capacity Feedstock

Stockton, California W.M. Lyles Co. Delta-T Corp.

50 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Provista UBE Ingredients N/A November 2006 August 2008

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Poet Ethanol Products

Poet Biorefining-Alexandria Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Kinergy Marketing Pacific Ag Products LLC

undeclared April 2007 third quarter 2008

Synopsis of progress Construction continues. No further information was available at press time.

Location Design/builder Process technology Capacity Feedstock

Ethanol marketer Aventine Renewable Energy Distillers grains marketer Panda Ethanol Carbon dioxide marketer undeclared Broke ground August 2006 Target start-up date first quarter 2008

Synopsis of progress N/A

Alexandria, Indiana Poet Design & Construction Poet Design & Construction 65 MMgy corn

Poet Nutrition N/A February 2007 second quarter 2008

Synopsis of progress Construction continues. No further information was available at press time.

Plant Expansion

Panda Hereford Ethanol LP Hereford, Texas Lurgi Inc. Lurgi Inc. 115 MMgy corn

Arthur, Iowa Fagen Inc. ICM Inc. 110 MMgy corn

Synopsis of progress Electrical and piping work continues.

Pacific Ethanol Stockton LLC

Location General contractor Process technology Capacity Feedstock

Murex undeclared undeclared February 2007 spring 2008

Platinum Ethanol LLC

Synopsis of progress Construction continues. No further information was available at press time.

Location General contractor Process technology Capacity Feedstock

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Synopsis of progress N/A

Pacific Ethanol Magic Valley LLC Location General contractor Process technology Capacity Feedstock

Annawan, Illinois Fagen Inc. ICM Inc. 100 MMgy corn

Poet Biorefining-Chancellor

Location Design/builder Process technology Capacity Feedstock

Chancellor, South Dakota Poet Design & Construction Poet Design & Construction from 50 MMgy to 100 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Start date Target completion date

Poet Ethanol Products

Poet Nutrition N/A October 2006 third quarter 2008

Synopsis of progress Construction continues. No further information was available at press time.

Hammermill

HAMMER IT OUT WITH CPM Champion Hammermills are built on a solid foundation with the standard features you need. Features that are optional from them come standard from us. Bearing temperature monitor probes, vibration switches, trap key interlock and dynamically balanced rotors are all standard equipment. AR235 abrasion-resistant wear liners come standard too. Raise your standards. Call 800-366-2563 or visit us on the Web to get the right machine for your job.

800-366-2563 | 319-232-8444 | WWW.CPMROSKAMP.COM WATERLOO, IOWA ETHANOL PRODUCER MAGAZINE APRIL 2008

45

Poet Biorefining-Fostoria Location Design/builder Process technology Capacity Feedstock

Show Me Ethanol LLC

Fostoria, Ohio Poet Design & Construction Poet Design & Construction 65 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Poet Ethanol Products Poet Nutrition N/A August 2007 fourth quarter 2008

Synopsis of progress Construction continues. No further information was available at press time.

Carroll County, Missouri ICM Inc. ICM Inc. 55 MMgy corn

Plant Expansion

Marion, Ohio Poet Design & Construction Poet Design & Construction 65 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Poet Ethanol Products Poet Nutrition N/A May 2007 fourth quarter 2008

Synopsis of progress Construction continues. No further information was available at press time.

North Manchester, Indiana Poet Design & Construction Poet Design & Construction 65 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

undeclared undeclared undeclared February 2007 May 2008

Siouxland Energy & Livestock Co-op

Location Design/builder Process technology Capacity Feedstock

Sioux Center, Iowa ICM Inc. ICM Inc. from 25 MMgy to 55 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Start date Target completion date

C&N Ethanol Marketing Farmers Co-op Society

N/A October 2006 2008

Synopsis of progress N/A

Poet Biorefining-North Manchester Location Design/builder Process technology Capacity Feedstock

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Synopsis of progress With a projected corn-grinding date in late May, most construction efforts are focused on electrical, piping and instrumentation work. All major structural work is complete, and hydro-testing was finished at the end of January.

Poet Biorefining-Marion Location Design/builder Process technology Capacity Feedstock

Location Design/builder Process technology Capacity Feedstock

Southwest Iowa Renewable Energy LLC Poet Ethanol Products Poet Nutrition N/A third quarter 2007 fourth quarter 2008

Synopsis of progress Construction continues. No further information was available at press time.

Location Design/builder Process technology Capacity Feedstock

Council Bluffs, Iowa ICM Inc. ICM Inc. 110 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Lansing Ethanol Group

Bunge undeclared November 2006 August 2008

Synopsis of progress The grain-receiving area is 80 percent complete, and structural steel is being erected in the process area.

Route 66 Ethanol LLC

Standard Ethanol Cambridge LLC

Location Tucumcari, New Mexico General contractor APS/United Stainless Process Technology Process technology United Stainless Process Technology Capacity 10 MMgy Feedstock corn/milo

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

undeclared undeclared N/A October 2007 April 2008

Synopsis of progress Renovation of an existing facility is underway.

Location General contractor Process technology Capacity Feedstock

Cambridge, Nebraska The Industrial Co. Delta-T Corp.

44 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Noble Americas Corp.

The Scoular Co. N/A April 2006 2008

Synopsis of progress N/A

With our experience in renewable fuels, this team is anything but green.

Baird Holm provides counsel to Midwest ethanol suppliers and producers at federal, state and local levels. We’ve earned a reputation as a go-to law firm for securities, tax and other

(402) 344-0500

bairdholm.com

issues in the ethanol industry. Protect your investment by contacting us today. We’ll put our experience to work for you.

Ta x L a w 46

•

Securities Law

•

Environmental Law

•

Finance Law

•

Litigation

ETHANOL PRODUCER MAGAZINE APRIL 2008

Superior Ethanol LLC Location General contractor Process technology Capacity Feedstock

Superior, Iowa Agra Industries Delta-T Corp.

50 MMgy corn

U.S. Bio Hankinson Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

RPMG undeclared N/A July 2006 March 2008

Synopsis of progress N/A

Location Design/builder Process technology Capacity Feedstock

undeclared undeclared undeclared September 2006 2008

Location Design/builder Process technology Capacity Feedstock

Casselton, North Dakota Wanzek/Valley Engineering Vogelbusch 100 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Provista UBE Ingredients N/A January 2007 third quarter 2008

U.S. Bio Marion Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

undeclared undeclared N/A June 2007 December 2008

Synopsis of progress Construction of the rail loop, boiler building, pipe rack and fermentors is underway. Work on the cooling tower is substantially complete, and the administrative building is complete

Location Design/builder Process technology Capacity Feedstock

Marion, South Dakota Fagen Inc. ICM Inc. 110 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Archer Daniels Midland Archer Daniels Midland

N/A October 2006 February 2008

Synopsis of progress According to the company Web site, construction continues. No further information was available at press time.

U.S. Bio Dyersville Dyersville, Iowa Fagen Inc. ICM Inc. 110 MMgy corn

Janesville, Minnesota Fagen Inc. ICM Inc. 110 MMgy corn

Synopsis of progress According to the company Web site, construction continues. No further information was available at press time.

Tharaldson Ethanol LLC

Location Design/builder Process technology Capacity Feedstock

Provista UBE Ingredients N/A August 2006 second quarter 2008

U.S. Bio Janesville

Belle Plaine, Saskatchewan Ethanol marketer EllisDon/VCM Contractors & Engineers Distillers grains marketer Delta-T Corp.

Carbon dioxide marketer 150 MMly (40 MMgy) Broke ground wheat Target start-up date

Synopsis of progress Minor electrical and piping work is all that remains. The company is hiring staff and continues to train employees for start-up.

Location General contractor Process technology Capacity Feedstock

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Synopsis of progress According to the company Web site, construction continues. No further information was available at press time.

Terra Grain Fuels Inc. Location General contractor Process technology Capacity Feedstock

Hankinson, North Dakota Fagen Inc. ICM Inc. 110 MMgy corn

VeraSun Bloomingburg LLC Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Provista UBE Ingredients N/A November 2006 second quarter 2008

Synopsis of progress According to the company Web site, construction continues. No further information was available at press time.

ETHANOL PRODUCER MAGAZINE APRIL 2008

Location Design/builder Process technology Capacity Feedstock

Bloomingburg, Ohio Fagen Inc. ICM Inc. 100 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Cargill Inc. Cargill Inc. N/A November 2006 February 2008

Synopsis of progress According to the company Web site, construction continues. No further information was available at press time.

47

VeraSun Hartley LLC Location Design/builder Process technology Capacity Feedstock

Hartley, Iowa Fagen Inc. ICM Inc. 110 MMgy corn

Verenium Biofuels Louisiana Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

VeraSun Energy VeraSun Energy N/A November 2006 first quarter 2008

Synopsis of progress According to the company Web site, construction continues. No further information was available at press time.

Location General contractor Process technology Capacity Feedstock

Welcome, Minnesota Fagen Inc. ICM Inc. 110 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground sugarcane bagasse/energy cane Target start-up date

undeclared N/A N/A February 2007 first quarter 2008

Synopsis of progress Electrical and piping work remains.

VeraSun Welcome LLC Location Design/builder Process technology Capacity Feedstock

Jennings, Louisiana Cajun Constructors Inc. Verenium Biofuels 1.4 MMgy

White Energy Plainview LLC Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

VeraSun Energy VeraSun Energy N/A November 2006 first quarter 2008

Synopsis of progress According to the company Web site, construction continues. No further information was available at press time

Location Design/builder Process technology Capacity Feedstock

Plainview, Texas Fagen Inc. ICM Inc. 100 MMgy corn/milo

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Murex The Scoular Co. undeclared October 2006 first quarter 2008

Synopsis of progress Work continues, but no further information was available at press time

MAPCON MAPCON “In my eyes, maintenance is equal to maximizing production.�

-Dwayne Braun (Plant Manager-Platte Valley Fuel Ethanol) Platte Valley Fuel

E t h a n o l, L L C .

For over 25 years, MAPCON has been producing high-yield results in facilities like Platte Valley (left) as well as many other ethanol plants.

Mature Maintenance Management Software for the Growing Ethanol Industry www.mapcon.com

48

800.922.4336

LDAR Inspections

Inventory Management

Preventative Maintenance

Work Order Management

Asset Management

Project Management sales@mapcon.com

ETHANOL PRODUCER MAGAZINE APRIL 2008

www.lactrol.com

LACTROL

®

The only antimicrobial with a “No Objection” letter from the FDA. LACTROL antimicrobial has an outstanding track record of maximizing ethanol production efficiency. It might even improve the marketability of your distiller’s grains.

LACTROL antimicrobial targets only Gram-positive bacteria which negatively impact ethanol production, so it’s a superb ethanol processing aid. In addition, LACTROL antimicrobial is the only antimicrobial with an FDA “No Objection” letter for the use of co-products in animal feeds that were derived from ethanol fermentation.

LACTROL antimicrobial is the de facto standard for ethanol processing efficiency and for regulatory compliance of your distiller’s grains. Call your PhibroChem Ethanol Sales Specialist at 800-223-0434 and ask about LACTROL antimicrobial.

The animals don’t object either.

A division of Phibro Animal Health Corporation. © 2007. LACTROL is a registered trademark. All rights reserved.

8& /&7&3 #&-*&7& */ -&"7*/( 8&-- &/06() "-0/&

ÌÊ ÕÃÌÊ LiÊ Ê ÕÀÊ L `°Ê / iÊ i Ì ÀiÊ , L Ã Ê Ìi> Ê qÊ vÀ Ê ÕÀÊ`ià } iÀÃÊ> `Êi } iiÀÃ]Ê ÕÀÊ > Õv>VÌÕÀ }ÊÊ > `Ê ÃiÀÛ ViÊ ÃiVÌ ÀÃ]Ê > `Ê > Ê Ì ÃiÊ Û Ûi`Ê Ê Ì iÊÊ >ÃÌ }Ê > `Ê ÀiÊ ivwV i ÌÊ > À Û }Ê Ã ÕÌ ÃÊ v ÀÊ ÕÀÊ VÕÃÌ iÀðÊÊ Êv>VÌ]Ê ÕÀʵÕ> ÌÞÊÃÌ> `>À`ÃÊ>ÀiÊÃiÌÊÃ Ê } ]ÊÜiÊÀiVi Ì ÞÊ>V iÛi`ÊÊ -"Ê ää£ÊViÀÌ wV>Ì ]ÊÌ iÊ`ià } >Ì ÊÀiÃiÀÛi`Êv ÀÊV «> iÃÊÜ ÃiÊ µÕ> ÌÞÊ > >}i i ÌÊ ÃÞÃÌi ÃÊ iiÌÊ VÀ Ì V> Ê ÌiÀ >Ì > Ê ÃÌ> `>À`Ã°Ê Ê >ÌÌiÀÊÜ >ÌÊÞ ÕÀÊ `ÕÃÌÀÞÊ ÀÊÞ ÕÀÊ> À Û }Ê ii`Ã]Ê iÌÊ, L Ã Ê i «Ê Þ ÕÊ w `Ê >Ê Ã ÕÌ Ê Ì >ÌÊ Ü Ê Ü À Ê >À`Ê v ÀÊ Þ ÕÊ Ì `>ÞÊ > `Ê Üi ÊÊ Ì ÊÌ iÊvÕÌÕÀi°Ê > ÊÇÓ{ {xÓ È£Ó£Ê ÀÊÛ Ã ÌÊÜÜÜ°À L à v> ðV °

7 Ê 8

Ê"1,Ê 1-/" ,-½Ê 8* / / " -°

^ ÓääÇÊ, L Ã Ê `ÕÃÌÀ iÃ]Ê ÊÀ } ÌÃÊÀiÃiÀÛi`°

Ài«> ÀÊ> `ÊÀiLÕ `Ê«À ViÃÃÊqÊÃÌ>ÞÃÊv VÕÃi`Ê Êw ` }ÊLiÌÌiÀ]Ê }iÀ

bringing together renewable fuels producers and blenders isn’t rocket science. it ’s chemistry.

From production plant to fuel pump, the flow of ethanol and biodiesel depends on secure relationships and logistical expertise. Our highly efficient marketing solutions supply a critical link between renewable fuels producers and blenders. Supported by resources from our owners, CHS and US BioEnergy, we bring you extensive marketing experience and broad industry relationships. This allows us to supply biofuels producers with a steady market outlet, leading to financial success. For blenders, our know-how, flexibility and established network deliver quality renewable fuels where and when they are needed. Locally, regionally or nationally, we’ve got the energy to deliver.

To learn more, call 651-355-8528 or visit www.provistafuels.com.

©2007 Provista

the energy to deliver.

:OU R P L A N T 52

Growing with the Industry As the ethanol industry takes on new challenges in the form of increased fuel mandates, thinning margins at the pump and ever-increasing competition, Conestoga Energy Partners LLC moves forward with its newest plant.

B

etween 1888 and the 1920s on the banks of the Cimarron River, the town of Arkalon, Kan., struggled with the sandy soil that made horse traffic difficult and the floods that took a toll on everything else. When the railroad changed its route in the 1920s, the southwestern Kansas town disappeared, leaving behind little more than a deserted stretch of prairie where cattle graze and locals occasionally go to fish. Today, a steady wind pushes past the oil pumps that slowly leach oil out of the ground. The only thing that seems to outnumber those pumps are the 3 million head of cattle stocked in the counties that surround Seward County, the home of Arkalon Energy LLC. On Christmas Eve in 2007, the plant began grinding corn and milo. “A great way to finish up the year,” says Tom Willis, chief executive officer of Conestoga Energy Partners LLC, the company that owns and operates the 110 MMgy ethanol plant, along with its twin Bonanza BioEnergy LLC in Garden City, Kan.

ARKALON ENERGY LLC LOCATION DESIGNER/BUILDER PROCESS TECHNOLOGY CAPACITY FEEDSTOCK ETHANOL MARKETER DISTILLERS GRAINS MARKETER CARBON DIOXIDE MARKETER BROKE GROUND START-UP DATE

Construction of Arkalon Energy began near Liberal, Kan., in August 2006. Colwich, Kan.-based ICM Inc. was the design/builder and process technology provider. According to Willis, not enough can be said of ICM’s commitment to completing the project. “We experienced no delays, and everything came in on time.” As margins began to shrink in 2007, this became increasingly important to the team at Conestoga.

The plant sends out a majority of its distillers grains as wet cake even though it has the ability to dry up to half of its coproduct. This helps avoid steep energy costs. “We have 3 million head of cattle on feed in this area,” Willis says.

“Being able to send out distillers wet

Liberal, Kansas ICM Inc. ICM Inc. 110 MMgy corn/milo Murex Conestoga Energy Partners LLC undeclared August 2006 December 2007

grains and having the feedlots so close is quite a savings to us.”

Site selection is important in the evolving ethanol marketplace. Most producers choose to be close to their feedstocks, while others choose to be closer to user markets. Willis feels Arkalon enjoys an advantage in having local feedstock and distillers grains markets, which will reduce transportation costs.

The plant will source 70 percent of its corn and milo locally.

In addition to this cost savings, Willis also points to the advantage of using unit trains. “We feel we have very competitive freight rates going into the Texas, Arizona and California markets,” he says. Arkalon Energy is located on a Union Pacific rail line, and has the ability to shuttle between 80 and 110 cars per unit train. The plant’s rail loop can accommodate up to 110 inbound or outbound cars.

Arkalon Energy is one of three projects for Conestoga Energy. In October, it began ethanol production at Bonanza BioEnergy, a 110 MMgy plant 70 miles

ETHANOL PRODUCER MAGAZINE APRIL 2008

—Craig A. Johnson Photos by Craig A. Johnson

ETHANOL PRODUCER MAGAZINE APRIL 2008

:OU R P L A N T

north of Liberal. Now that Arkalon Energy is complete, Conestoga will focus on Boot Hill Biofuels LLC in Wright, Kan., also a 110 MMgy design. With the success of the first two projects, Boot Hill’s expectations are high.

Arkalon Energy did present some challenges, however. Even with a good business model, a record of achievement and strong talent in the facility’s board of directors, financing was difficult.

Any plant looking for funding in the past 18 months has seen equity drives last longer, and banks are less willing to finance projects. The team at Conestoga was able to overcome these challenges but acknowledge that the situation isn’t likely to improve in the short term. “The strength, experience and diversity of our management team, and board of directors, was a big plus,” Willis says.

The Arkalon facility is “the dream of a group of people who believe in biofuels,” Willis stresses. Though the town of Arkalon exists only in memory and a few crumbling foundations that are slowly being reclaimed by the Kansas prairie, Arkalon Energy exists as a testament to the vision of Conestoga Energy Partners.

More information about Conestoga Energy Partners can be found at www.conestogaenergy.com.

53

T

he module building system developed in the 1970s, which enabled compacted, truck-sized bales to transform cotton harvest in the South, may provide a solution to the challenge of handling the mountains of biomass required for cellulosic ethanol production.

The system, developed with the help of Texas A&M researchers, includes special wagons that transfer cotton from the picker working its way through the field to a module builder parked on the field’s edge. The load of cotton is dumped over the top of the module builder, which has a hydraulic tamper traveling along the top edge to compress the fluffy cotton bolls into a solid bale that measures about 8 feet wide, 8 feet tall and 30 feet long. When full, the back door of the module builder is opened, the side walls lift up on wheels, and a tractor pulls the machine away from the bale. The bale is Cotton is compacted into truck-sized bales, and the biomass-to-energy industry is considering left sitting on the ground, covered with a similar ways to collect forage sorghum and other cellulosic ethanol feedstocks for ethanol tarp if it will be in the field for any length of production. time. When the gin needs more supplies, age sorghum is shrink-wrapped and cov- pallets, gravel or ground. Outside storage a module truck backs up to the huge ered with a tarp. “When you wrap it and will be compared with switchgrass bales bale. The truck bed tilts to slide under the treat it correctly, you don’t have the large stored under cover. “The whole logistics leading edge of the cotton bale, and the heat gain you would expect,” Avant says. challenge is up in the air,” English says. live bottom on the truck bed helps to draw “We have some in storage now and will "We hope we will be able to answer the bale onto the truck as it backs up. be opening them up soon to look at how some questions in the next couple of Loading the approximately 30,000-pound they behaved over a four- to five-month years.” bale of cotton takes just a few minutes, period." Normally, green-chopped bioAvant believes the module builder and the truck can travel at highway mass that is left for any amount of time system will be adaptable to using dry speeds to the cotton gin. begins to heat and ferment naturally, turn- feedstocks such as switchgrass, Texas researchers are revisiting ing into silage. Ensiling systems may be although determining the ideal fiber their 30-year-old compression trials to yet another approach to dealing with length and moisture content will be critical test how well forage sorghum and other green biomass, Avant says, although he to getting a module compressed tightly cellulosic ethanol feedstocks will compact suspects it will require too many handling enough to hold together during handling. into modules. Bob Avant, bioenergy pro- steps to make it an economical system.

The module size will also need to be gram director for Texas AgriLife Research The University of Tennessee has adjusted to match the differing weights of (formerly the Texas Agricultural plans to study cotton modules for switch- feedstocks with the truck’s weight limits, Experiment Station), says the concept grass harvest next year, says Burt he adds. “There’s a good body of work being developed would support “just-in- English, professor of agricultural eco- going on in Alabama, Tennessee and time” biomass harvest. Given the South’s nomics and one of the lead researchers here in Texas,” he says. “Over the next long growing season, forage sorghum in UT’s switchgrass project. The project is year, we will have a good indication of plantings and harvests could be stag- moving from a series of studies on best what will work and won’t work.” gered throughout the year, he says. practices for growing switchgrass to studGreen-chopped sorghum could be har- ies on harvesting methods. This winter, a vested, compacted and delivered to a number of harvest methods were being —Susanne Retka Schill biorefinery for immediate processing. studied using square and round bales, However, a biorefinery would have to covering some with tarps and leaving othplan for rainy spells when field operations ers exposed, and setting the bales on cease, he adds. A research trial is now testing what happens when a compressed module of green-chopped for-

ETHANOL PRODUCER MAGAZINE MARCH 2008

PHOTO: ROD SANTA ANA III, TEXAS AGRILIFE RESEARCH

:INTHEFIELD 54

Compact Biomass Harvest

When it comes to treating your water problems ... we don’t kid around.

When you need experience, you need Buckman. For over 60 years, we have been solving water-related problems for our customers. We are committed to delivering solutions that are uniquely designed to help you increase productivity, improve quality, and give you a return on your investment. Other suppliers have chemicals.... only Buckman adds experience and knowledge for a total system approach.

BECAUSE IT’S NOT JUST CHEMICALS YOU WANT – IT’S RESULTS. Buckman Laboratories will excel in providing measurable, cost-effective improvements in output and quality for our customers by delivering customer-specific services and products, and the creative application of knowledge. International Headquarters at 1256 North McLean Blvd., Memphis, TN 38108 U.S.A. ©2007, Buckman Laboratories International, Inc. (901) 278-0330 /Fax (901) 276-5343 or call 1 800 BUCKMAN in the U.S.A. www.buckman.com / knetix@buckman.com

:UP FRONT

Local Talent

I

n the past two and a half years, Eric Mosbey went through some major life changes as he became a husband, father and general manager of Lincolnland AgriEnergy LLC in Palestine, Ill. His new job, which he started in February 2007, was certainly a change from his previous work at a nearby oil refinery, which has a capacity many times greater than that of the ethanol plant. Though he says the learning curve was steep, he notes there are a lot of similarities between the jobs. The agricultural component of this industry has also kept him busy. Mosbey is fairly new to the ethanol industry, yet he sounds like many other general managers when he confesses that corn prices keep him up at night.

Q: How did your background prepare you for this position?

A: I feel like this job is a unique and perfect combination for me because of my farming background and petroleum industry experience. Prior to joining the ethanol industry, I worked in the oil-refining industry for more than 10 years in engineering and project management fields. Most of my career in refining was spent as a project manager on multimillion-dollar capital projects, either revamping existing processing units or installing new units.

In many ways, my work as general manager of an ethanol plant isn’t that much different than my past work. I had many years of experience working with multidiscipline project teams, engineering contractors and construction contractors. I was also responsible for managing budgets, engineers, cost accountants, contract analysts, and other technical and business issues. Managing budgets and resources

to the best bottom line possible is the goal regardless of the project, plant or industry.

I also have an understanding of the agricultural community. I grew up farming, and my parents still operate a farm today, just 25 miles away. This is an obvious benefit in operating an ethanol plant.

Lincolnland was built by local farmers to aid the local farming community, and I am excited about the opportunity to be involved in an industry with a positive impact on agriculture. This position really brings my experiences together.

Q: What is going on at Lincolnland?

A: Things have been changing at our plant the entire time I’ve been here, and I have been very much involved in all of it. We have added more grain storage each year the plant has been in operation. The added corn storage has allowed us flexibility in corn procurement. It gives us a better chance to buy corn when basis levels are wide.

We also worked hard during the past year on strengthening our overall environmental, health and safety program, including process safety management; improving company management policy in several areas; and instilling a culture of communication and “proactiveness.”

Looking forward, Lincolnland is going ahead with a corn-oil-extraction project.

We hope to get that in place this year.

We’re also investigating several other plant

upgrade projects to improve efficiencies, lower costs and grow the overall integrity of the plant.

Q: How does your job align with your personal goals?

A: I enjoy variety and learning in my life, and the challenges of operating a modern processing facility provide plenty of variety and learning opportunities. Working toward continuous improvement and being able to see the positive results of my efforts is fulfilling. Plus, the Lincolnland employees are a talented group to work with, and I am proud to be a part of this organization.

Q: Do you have any advice for the ethanol industry?

A: I am still new in the industry, so I should probably be taking advice instead of giving it. I know the industry is new, and there are countless things left to accomplish in terms of technology and efficiencies. However, I think the industry is going to have to work together and share information more widely to preserve the competitiveness of the industry compared with other industries.

—Anduin Kirkbride McElroy

Name Eric Mosbey Title General Manager Plant Lincolnland Agri-Energy LLC in Palestine, Ill. Hometown Robinson, Ill. Education Bachelor of Science in Mechanical Engineering from the University of Illinois at Urbana-Champaign Experience Engineering and project management at Marathon Oil Co., 1997-2006

56

PHOTO: ANDUIN KIRKBRIDE MCELROY, BBI INTERNATIONAL

ETHANOL PRODUCER MAGAZINE APRIL 2008

introducing A C C E L L E R A S E ™ 10 0 0 e n z y m e ACCELLERASE™ 1000 is the f i r s t commercially available biomass enzyme specifically developed to provide biorefineries with an enzyme solution to help in the scale up from the laboratory to pilot and demonstration plants. This new breakthrough enzyme reduces complex lignocellulosic biomass into fermentable sugars. ACCELLERASE™ 1000 fills a large unmet need for a reliable biomass enzyme supply and offers the f i r s t true biomass enzyme solution for cellulosic ethanol production available today.

© 2007 Danisco US Inc. Genencor® is a registered trademark and ACCELLERASE™ is a trademark of Danisco US Inc. or its affiliates in the United States and/or other countries.

www.genencor.com

:FLEXFACTOR 58

GM, Coskata Choose Chicken, Not Egg

G

eneral Motors Corp. did something in January that it hadn’t done in almost 20 years. It took a strategic ownership stake in a nonautomotive company: Coskata Inc. Before this unlikely partnership was formed, Coskata was a small and relatively obscure biotech company founded in 2006, working to improve clostridia strains from the University of Oklahoma to more efficiently ferment ethanol from synthesis gas. GM’s partnership with Coskata, which was announced at the 2008 North American International Auto Show in January, has brought this unknown company into the public spotlight.

GM could have partnered with any second-generation ethanol technology conversion company it wanted to, says Wes Bolsen, Coskata’s chief marketing officer and vice president of business development. Bolsen joined Coskata in early 2007, only weeks before the company began talks with GM. He came from ICM, where he worked as chief financial officer. ICM has subsequently become Coskata’s partner in process design and commercialization.

Bolsen says he approached GM after a foreign automaker expressed serious interest in Coskata’s second-generation ethanol technology. “I reached out to my

contacts at GM with this in mind and asked, ‘Would you be interested in talking with us?’” Bolsen explains. “Well, it turned out to be an eight-month venture. We waited until the final days before the auto show to work out the details of the many millions of dollars [GM was] putting in.” He couldn’t disclose the final amount but says GM chose Coskata after looking at the best available conversion technologies in the world. “[GM] saw that our plans aren’t based on inventions that are needed or something we can do in the future,” Bolsten says. “It’s now. It’s like, ‘Oh. All you need to do is build a plant?

Holy cow.’”

Coskata states it can produce cellulosic ethanol for “under a buck a gallon.” It has 16 patents issued or in development, and states its design can achieve more than 100 gallons of ethanol per dry ton of input material. Since moving its microorganism from the University of Oklahoma labs to Coskata’s, company scientists have increased the strain’s ethanol productivity rate by 50-fold. Argonne National Laboratory gave Coskata’s ethanol a 7.7to-1 net energy balance compared with corn-based ethanol’s 1.3-to-1 ratio.

“What we have is a process that uses no enzymes and no catalyst," Bolson says.

"It's biological, and we can use any input material. Others use gasification on the front end, but they use a chemical catalyst they had to buy to produce mixed alcohols.

Then you have to sell all those various products, or you have to recycle them back through.” These processes require the synthesis gas to be highly pressurized before making it through the catalyst, but Bolsen says the Coskata process uses low tem-

peratures and pressures. “We recover all the energy from between 1,600 degrees Fahrenheit syngas down to 100 degrees, like in a steam generator.”

GM has a zero-landfill waste policy, and its tool-and-die plant in Flint, Mich., became GM’s 10th landfill-free facility in late 2007. It will recycle 180,000 pounds of polystyrene per year, the equivalent of 42 million disposable coffee cups. Also, vehicles retained by the company at their end of life are 84 percent recyclable, and the Coskata process could turn that 16 percent nonrecyclable material into ethanol. “The coolest phrase I heard was, ‘The car eats itself,’” Bolsen says.

A 40,000-gallon-per-year demonstration plant will be complete in late 2008.

Afterward, the plan is to begin quickly building commercial plants. Coskata will build its own plants and license its technology to other companies.

By 2012, half of GM’s new vehicle fleet will be flexible-fuel vehicles (FFV), doing its part in solving the tiresome chicken-and-egg analogy so often given to the FFV and E85 availability dilemma. “It really opens up the dynamic and says ethanol is no longer a blending fuel,” Bolsen says. “It’s a primary fuel in the United States. You have the biggest automaker in the world stepping up and saying, ‘You know what, it’s not a chicken and egg problem anymore. We’ll pick chicken.’”

—Ron Kotrba

Wes Bolsen, vice president of business development with Coskata, was instrumental in developing relations with the world's largest automaker General Motors to expedite the commercialization of Coskata's cellulosic ethanol conversion technology.

PHOTO: COSKATA INC.

ETHANOL PRODUCER MAGAZINE APRIL 2008

:BUSINESS 60

Financial Ingenuity Over Conventional Wisdom

H

The days of easy financing for greenfield ethanol projects are rapidly igh corn prices and low fading, according to May. To help a ethanol prices in relation to reformulat- project secure financing, it should look ed blendstock for oxygenate blending at alternative strategies for a developer or operator to employ to (RBOB) prices are causing mitigate a lender’s perceplenders to think twice when tion of risk in order to secure assessing an ethanol plant’s a unique competitive advansurvivability. In addition to a tage over others vying for a perceived ethanol “glut,” this slice of the same financing concern has some in the pie. “I think the big problem lending community wonderwith greenfield development ing why more plants should May now is that in order to obtain be financed this year.

The passage of an expanded financing or equity, you have to differrenewable fuels standard (RFS), part entiate yourself from other projects,” of the Energy Independence & he says. “However, there are only a Security Act of 2007, could change the finite number of strategies you can ethanol plant financing landscape. employ to achieve that differentiation.”

One strategy would be to employ However, it’s going to take some time for the RFS to affect ethanol blending fractionation technology, which sepaand, in turn, ethanol prices, according rates corn kernels into parts that can to John May, vice president of Stern be used to create additional products.

Brothers & Co., a St. Louis-based This isn’t new to the industry, but sevfinancial services company that advis- eral ethanol producers have begun to es ethanol producers and developers. patent their own unique processes, When lenders perceive that those which could lead to commercializaprices are sustainable, the ethanol tion. “The view that lenders take is industry could see more money com- going to be changed if you employ ing from the lending community. As a fractionation because revenues are result, the new RFS could elicit inno- higher, expenses are lower and the vative financing strategies that could coproduct corn oil is a major revenue give future projects the ability to with- driver,” May says. “It’s important stand the ever-changing dynamics of because these coproducts from fractionation offer the promise of a true the market.

May says funding is still available partial hedge against corn costs. That if developers and operators have a begins to solve the dilemma that has realistic and viable plan to survive vexed the sector from the beginning lean economic times. “The output from a finance perspective.”

Another strategy would be to price problem with the whole ethanol model is going to continue to be a challenge for lenders,” he says.

“They’re going to continue to perceive risk. The best you can hope for is that the new RFS, the state mandates and blending specifications are going to create a sustained period of higher ethanol prices or at least a rational price behavior in relation to an index that’s going to give lenders more confidence.”

employ a unique offtake and/or tolling agreement. Tolling agreements have existed in the industry for some time.

Currently, a tolling agreement is being recognized as a feasible means for spreading out operational costs to offset slim margins. For example, the price of ethanol would be defined as an average corn cost plus a portion of energy costs plus a processing fee for a portion of the plant’s production capacity.

Yet another strategy would be to buy existing projects or sites, if the price is right, and use existing cash flow as a means of attracting capital.

This move could lead to consolidation, which could eventually build the industry’s equilibrium. “In the end, if you acquire and expand, that’s one way of meeting the mandate, aside from building from scratch,” May says. “It may end up being an easier way, not just in terms of lower costs, but because financing isn’t available any other way—at least for the time being.”

—Bryan Sims

ETHANOL PRODUCER MAGAZINE APRIL 2008

Create Synergy.

And add great dividends to your Ethanol Plants.

Indeck has the in-house expertise to permit, design, install and commission steam generating equipment for todays ethanol plants using tomorrows technology. Whether it is the destruction of VOCs or the firing of coal and cellulostic fuels, Indeck can deliver it all.

Your Single Source For: • Thermal Oxidizer Boilers • Heat Recovery Generators • Package Boilers • Multi-fuel Boilers using stoker and fluidized bed technology.

• Rental Boilers

CALL (800) 446-3325 or (847) 541-8300 www.indeck.com

Your Single Source for Steam Generating Needs.

:FINANCE

Examining the New Energy Bill

By Jesse McCurry

I

Cellulosic biofuel—renewable fuel derived from any cellulose and achieves a 60 percent greenhouse gas emission reduction

n late December President George W. Bush signed the Energy Independence and Security Act of Grants 2007 into law. Many know the act Authorizes $500 million includes an expanded renewable annually for fiscal years 2008 fuels standard to 36 billion gallons through 2015 for the production of by 2022. It also raises Corporate advanced biofuels that have at Average Fuel Economy standards least an 80 percent reduction in to 35 miles per gallon by lifecycle greenhouse gas 2020. However, a closer emissions relative to curanalysis is needed, rent fuels especially of Title II, to Authorizes $25 see what other biofuels million annually for fiscal provisions exist for years 2008 through 2010 ethanol producers. for research and devel“Congress is incenopment and commercial tivizing alternative feedapplication of biofuels stocks, production and production in states with distribution,” according low rates of ethanol and to Donna Funk, manager cellulosic ethanol producMcCurry of the biofuels group at tion Kennedy and Coe. “This provides Authorizes a $200 million opportunities for producers espe- grant program for fiscal years 2008 cially when we know more about through 2014 for the installation of implementation. Our firm is exam- refueling infrastructure of E85. ining the impacts on our clients and how we can be of most value to Studies them as we move toward cellu Directs the secretary of lose.” energy, in consultation with the The new law includes goodies secretary of transportation, to ranging from grants, infrastructure report on the feasibility of conimprovements, studies, added structing dedicated ethanol authority for the secretaries of pipelines energy and transportation, and Directs the secretary of expanded EPA authority. While the energy to study whether optimizing RFS program begins expansion flexible fuel vehicles to run on E85 this year, the other provisions won’t would increase their fuel efficiency take effect until Jan. 1, 2009.

Requires a report on the Notably, there are no biofuels adequacy of railroad transportation tax provisions included in the new of domestically produced renewlaw. The RFS requires 21 billion able fuel gallons of advanced or cellulosic Directs the National fuel.

Academy of Sciences to study the impact of the RFS program on

each industry relating to the production of feed grains, livestock, food, forest products and energy.

The regulations will now be promulgated by the relevant agencies. Greg Krissek, director of government affairs for ICM Inc., expects a rule-making process to occur, primarily with EPA for implementation of the RFS and the provisions concerning carbon reduction requirements of the various categories of biofuels: conventional, advanced and cellulosic.

“I expect that U.S. EPA will begin describing the process they will use sometime late winter or early spring of this year,” Krissek says. “The legislation also creates a number of additional research programs primarily through the U.S. Department of Energy. The federal appropriations process will ultimately determine the amount of resources available and timing for implementing these programs.”

Producers should tune in through their trade associations, professional service providers, and Ethanol Producer Magazine to stay up to speed on qualification, especially with the hidden costs of regulations in the RFS, as noted by Clayton McMartin in the February issue of EPM.

Jesse McCurry is a business development specialist at Kennedy and Coe LLC. Reach him at jmccurry @kcoe.com or (316) 691-3758.

RFS definitions Conventional biofuel— ethanol derived from corn starch that achieves a 20 percent greenhouse gas emissions reduction Advanced biofuel—renewable fuel other than ethanol derived from corn starch and achieves a 50 percent greenhouse gas emissions reduction

62

ETHANOL PRODUCER MAGAZINE APRIL 2008

:LEGALPERSPECTIVES 64

Capturing the Value of Carbon Credits in Biofuels Projects

By John Eustermann and Randy Shefman n the early days of renew- able fuels face an analogous sitable power development, uation with regard to carbon generators knew that, in credits. A carbon credit is typiaddition to producing elec- cally considered to be a tradable right that represents tricity, their techthe environmental nologies also generatbenefits gained by ed significant environcapturing, consuming mental and social or displacing 1 metric benefits (especially in ton of carbon dioxide terms of reduced that would otherwise greenhouse gas emisbe released into the sions), which quickly atmosphere. became known as Both formal and renewable energy Eustermann informal markets are credits. quickly developing to However, before enable the exchange markets evolved for of credits between trading these credits, the owners of the power generators and facilities that produce their investors, them and purchasers lenders and cuswho seek to acquire tomers often did not credits as a synthetic address them in their offset of their own facility contracts. As emissions. formal and informal As new techmarkets developed for Shefman nologies lead to the exchange of renewable energy credits, sub- reductions in carbon dioxide stantial uncertainty (and a fair bit emissions associated with the of litigation) arose among these biofuel production process, proparties over the rights to the ducers are well-advised to keep credits just as they were becom- carbon credits in mind.

To avoid the pitfalls experiing a valuable commodity.

Today, producers of renew- enced by pioneers in power generation, developers must first understand the areas of their operations that are likely to give rise to credits.

Technologies that reduce car-

I

bon dioxide emissions (e.g., by using biomass for plant energy), sequester emissions (e.g., underground storage), or consume carbon dioxide (e.g., photosynthesis in an algae bioreactor) are all candidates.

Once the potential for credits is understood, developers should look to clearly address their ownership in facility contracts in order to avoid disputes over title.

While it is difficult to forecast exactly how carbon markets will evolve, forward thinking and a few appropriately placed words should minimize the potential for history to repeat itself.

John Eustermann is an attorney with Stoel Rives LLC, a full service U.S. business law firm. Reach him at jmeustermann@stoel.com or (287) 387-4218. Randy Shefman is an attorney with the Denver office of international law firm Hogan & Hartson LLP, where his practice focuses on renewable fuels and energy. Reach him at rshefman@hhlaw.com or (303) 899-7338.

This article is only a general summary for information purposes and does not constitute legal advice. Consult a qualified and experienced legal advisor for your specific situation or particular questions.

ETHANOL PRODUCER MAGAZINE APRIL 2008

Explore the Opportunities, Experience the Technology

.

15 -17 April 2008

Minneapolis, Minnesota, USA

The objective of the

International Biomass ‘08 Conference & Trade Show is to act as a catalyst for the sustainable advancement of biomass utilization on a global scale.

The program will focus on technological advancements, commercial scale manufacturing, and near term research and development.

Technical sessions will include:

. . . . . .

Biopower Gasification Feedstock Processing Pretreatment for Cellulosic Ethanol Policy and Project Implementation Biopower: CHP Technologies International Perspectives on Biomass Utilization

. . . . .

Permitting and Lifecycle Assessment Alternative Bio-syngas Production Water Issues for Biomass Utilization Feedstock Alternatives Alternative Biofuels: Biobutanol, Green Diesel, and Jet Fuel

REGISTER TODAY! www.biomassconference.com Presented by

In partnership with

BBI INTERNATIONAL

green event Conferences & Events

. 719-539-0300 . conferences@bbibiofuels.com

. . . . . .

Feedstock Supply Commercial Applications Anaerobic Digestion Project Finance Bioproducts Biorefining

ETHANOL PRODUCER MAGAZINE APRIL 2008

67

PROJECT DEVELOPMENT

Pacific

By Kris Bevill, Hope Deutscher, Timothy Charles Holmseth, Marc Hequet, Jessica Ebert, Bryan Sims, Susanne Retka Schill and Craig A. Johnson

E

ach year, the EPM staff compiles the most comprehensive list of proposed ethanol projects—those between conception and construction—that we can verify. Over the years, some of these projects have disappeared, some have been on the list several times and others are producing ethanol. In 2008, the list’s fifth year, EPM offers updates on 118 projects representing nearly 8 billion gallons of annual capacity.

This year’s list comes at a time when many in the industry are dealing with an uncertain economic landscape and possibly an uncertain future. Raising equity has been a large concern for future producers, and a number of the projects listed here reported significant delays and challenges associated with funding their respective plants.

There are indications that with the passing of the Energy

68

ETHANOL PRODUCER MAGAZINE APRIL 2008

PROJECT DEVELOPMENT

Canada

New England

Mountain

North Central-West

Middle Atlantic North Central-East

South Central-East

South Atlantic

South Central-West

ETHANOL PRODUCER MAGAZINE APRIL 2008

69

PROJECT DEVELOPMENT

Independence & Security Act of 2007, investors and bankers may begin to view the market with optimism instead of skepticism.

The increasing cost of building materials is another major concern for future producers. Steel and copper prices are rising, and some contractors are receiving letters from steel suppliers announcing increased prices for structural and reinforcing steel. “AK Steel (Corp.) has upped its spot selling price for hot-rolled coil $30 per net ton, effective immediately, thereby bringing prices to $700 for April shipments,” according to Institute of Scrap Recycling Industries Inc. Price increases are blamed on increases in the cost of raw materials and energy.

Since 2004 when EPM first compiled a proposed ethanol plant list, there has been one constant: the North Central-West region—North Dakota, South Dakota, Nebraska, Kansas, Minnesota, Iowa and Missouri—has the largest number of proposed plants relative to other U.S. regions. Likewise, of all the plants currently producing, 69 percent (98 plants) are operating in that region.

Conversely, the areas with the least amount of ethanol production are the South Central-East and South Atlantic. Currently, the South Central-East region represents 1.25 percent of U.S. ethanol production, or 98 MMgy from three plants. There is one ethanol plant in the South Atlantic: First United Ethanol LLC, a 100 MMgy facility under construction in Camilla, Ga. A not-so-surprising change for those in the industry has been the increase in plant capacity over the years. In 2004, the average proposed project was roughly 44 MMgy. In 2008, that average number increased to more than 72 MMgy per facility. However, if history is any guide, fewer than one in 10 will break ground in the next 12 to 24 months.

As EPM does each year, it is important to stress the subjectivity of the data compiled with this list. From the time one list is published to the next, our staff and various industry players will forward news of proposed plants to our plant list and construction editor, who manages an internal plant list database. Each year, writers attempt to contact every project in the database. Some projects choose not to be included. Some don’t respond at all. Every project on this list has been verified by a company representative or affiliate, a third party involved with the project, or official public documentation. Statistically, this proposed plant list is a useful projection of the future ethanol industry.

70

ETHANOL PRODUCER MAGAZINE APRIL 2008

Standards for tomorrow.

We see food, feed, and fuel.

What do you see?

Fractionation makes it all possible.

s at al u t i Vis nation r Con Inte the ss ’08 de a ra Biom nce & T oth fere w - Bo Sho 105

www.buhlergroup.com 1-800-745-6777

Buhler has the equipment and process know-how to make it happen: sç Material Handling: truck, train, or ship sç Grain Cleaning sç Fractionation & Milling sç Grinding & Mixing sç Pelleting of Feed & Biomass sç Bulk Loading & Bagging

PROJECT DEVELOPMENT

Treasure Valley Renewable Resources LLC Location: Ontario, Oregon Target groundbreaking: spring 2008 Feedstock: wheat/barley/corn Capacity: 30 MMgy Design/build team: Bratney Cos. Synopsis: This $75 million facility will use fractionation technology, separating protein for food ingredients and starch for ethanol production.

“We’re taking all the value out of the grain for human consumption,” says company manager John Hamilton. Equity has been raised for the project, and permitting and zoning are complete.

Inland Pacific Energy Center LLC Location: Stanfield, Oregon Target groundbreaking: spring 2008 Feedstock: corn Capacity: 120 MMgy Design/build team: Bratney Cos. Synopsis: This $1 billion project, which includes biodiesel facilities, is expected to take 10 years to develop, although groundbreaking for the first ethanol plant and first biodiesel plant is expected this spring. In its entirety, the project will consist of three 40 MMgy ethanol plants adjacent to three 32 MMgy biodiesel plants, which will use canola oil as a feedstock. A feed mill will also be located on-site, blending several feed ingredients and coproducts to make a complete livestock feed. A biopower facility will create steam and electricity from the gasification of biomass, 72

wheat straw and demolition waste. After initially looking for funding from local investors, the company abandoned that strategy to court major sources. “That’s looking very definite,” says Project Manager Bob Doughty. The company expected to complete its equity and debt funding in February.

American Ethanol Inc. Location: Santa Maria, California Target groundbreaking: late 2008 Feedstock: multigrain Capacity: 110 MMgy Design/build team: Praj Industries Ltd./C.J. Schneider Engineering Co./Austin AECOM Synopsis: American Ethanol has raised the initial seed capital for the project, which is expected to cost $2.10 to $2.50 per gallon of ethanol, according to President Dave Baskett. The company is currently raising bridge capital, which will keep things running while the institutional financing is secured, he explained. “Strategy No. 1 is to mitigate commodity risk,” he says. “No. 2 is to show that we are one of the top-tier projects.”

To that end, this destination plant will use treated wastewater in the process and is expected to have the “lowest [British thermal unit] and energy consumption on the planet,” Baskett says. The company plans to use corn as the initial feedstock, and branch out into wheat and other grains later.

ETHANOL PRODUCER MAGAZINE APRIL 2008

PROJECT DEVELOPMENT

CE&P Imperial Valley I LLC Location: Brawley, California Target groundbreaking: January 2009 Feedstock: sugarcane Capacity: 55 MMgy Design/build team: Washington Division of URS Corp./Dedini Industrias de Base Synopsis: CE&P is currently raising equity for this Imperial Valley project and has opened discussions with senior lenders and potential equity providers. “Strangely enough, we haven’t had any problems raising up-front equity,” says Jeff Lee, president of CE&P. “The fundamental economics, logic and politics of building plants that use sugarcane is that much stronger.” The plant will process sugarcane supplied by Batley Farms. The stalks will be shredded to release the juices, which will be converted to ethanol. The remaining fiber will be burned to produce electricity.

Cilion Inc. Location: Famoso, California Target groundbreaking: second quarter 2008 Feedstock: corn Capacity: 55 MMgy Design/build team: Praj Industries Ltd. Synopsis: Cilion is in the final environmental permitting stages for the $100 million project, including the drafting of an environmental impact report. Steam from certain processes will be diverted and run through a turbine to generate electricity. In addition, the plant will recycle its water and isn’t expected to have any discharge, according to Karri Hammerstrom, Cilion’s manager of environmental permitting and legislative development. To date, the project hasn’t been challenged by roadblocks to raising equity. “We have a huge amount of capital and haven’t had to pull down debt,” Hammerstrom says. “We’ve put a great team together, and they’ve done a really good job with that.”

Genahol LLC Location: California Target groundbreaking: undeclared Feedstock: municipal solid waste Capacity: 10 MMgy Design/build team: Genahol LLC Synopsis: The company is currently in the process of selecting a site. Genahol’s technology is based on the gasification of municipal solid waste (MSW) and the subsequent conversion of that syngas into ethanol using a catalyst designed in-house. “This project has been on the radar for a number of years, but until California gets its regulations set up for conversion technologies, it’s going to be a long process,” says Don Bogner, president of Genahol.

reality is... satisfied customers

Given EISENMANN’s strong reputation in the industry we asked for it by name. We have been very happy with that decision as the RTO has performed very well.

The EISENMANN support staff was great to work with and performed on all of their commitments with great follow up.

Jeff Zueger, General Manager Blue Flint Ethanol

Maximize Your Capacity.

Visit www.eisenmann.com Great Valley Ethanol Location: Hanford, California Target groundbreaking: summer 2008 Feedstock: corn/milo Capacity: 60 MMgy Design/build team: undeclared Synopsis: This project is waiting for final approvals at the city level, according to Brian Pellens, chief operating officer for Great Valley Energy, owners of Great Valley Ethanol. The air permits are ready for public review, and the environmental impact review has been completed. The company is in the early stages of procuring equity. “Really what we’re looking at is being on line in 2010, so that’s pretty far out,” Pellens says. “We think things are going to be quite a bit different then.”

ETHANOL PRODUCER MAGAZINE APRIL 2008

815.455.4100 es.info@eisenmann.com

73

PROJECT DEVELOPMENT Rose City Renewables Location: Wasco, California Target groundbreaking: fall 2008 Feedstock: corn/milo Capacity: 60 MMgy Design/build team: undeclared Synopsis: Also owned by Great Valley Energy, Rose City Renewables is waiting for final approvals at the city level. The air permits are ready for public review, and the environmental impact review has been completed.

The company is preparing for an equity drive with an expected start-up date in 2010.

ClearFuels Technology Inc. Location: Kauai, Hawaii Target groundbreaking: undeclared Feedstock: sugarcane bagasse Capacity: undeclared Design/build team: undeclared Synopsis: This project will be located adjacent to Kauai Ethanol LLC’s plant in Kaumakani. The bagasse fiber will be produced at Kauai Ethanol and transferred to a storage facility from which it will be metered directly into this plant. ClearFuels has procured enough venture capital investments to cover the engineering and design phases of this project, says Chief Technology Officer Robert Shleser. The company is currently in the permitting phases.

Kauai Ethanol LLC Location: Kaumakani, Hawaii Target groundbreaking: September 2008 Feedstock: sugarcane/molasses Capacity: 12 MMgy Design/build team: undeclared Synopsis: “This is probably going to be the first sugar-based ethanol plant in the United States,� says Scott Matsuura, vice president of public and government affairs for Kauai Ethanol. The project site has been secured, and the feedstock for the plant will be supplied by the Gay & Robinson Sugar Plantation. The company is in the process of obtaining building permits and has secured equity, Matsuura says.

Pacific Biofuels and Energy Corp.

Location: Oahu, Hawaii Target groundbreaking: undeclared Feedstock: switchgrass Capacity: 15 MMgy Design/build team: undeclared Synopsis: According to project spokesman Sam Monet, plans are moving forward, albeit slowly. “All the big players are on the sidelines watching,� he says. “When the value of ethanol becomes greater than the value of sugar, we’ll get off the ground.�

-%%4).' 9/52 %4(!./, &!#),)49 3 7!4%2 3500,9 .%%$3 /. 4)-% !.$ /. "5$'%4 4IGHT CONSTRUCTION TIMELINES AND SUFFICIENT CONTINUOUS WATER SUPPLY FOR LONG TERM PRODUCTION HEADLINE THE CHALLENGES IN LAUNCHING YOUR ETHANOL PLANT /RTMAN %THANOL 7ATER 2ESOURCES STANDS READY TO DELIVER ON BOTH 7E BRING EXPERTISE EXPERIENCE AND mEXIBILITY TO THE JOB CUSTOMIZING OUR SERVICES TO MEET YOUR NEEDS 7E HANDLE EVERY DETAIL FROM LOCATING THE BEST WELL SITES TO DESIGNING AND INSTALLING EFlCIENT DEPENDABLE WATER SYSTEMS

)

)

)

)

.ORTH 7EST +OKOMO )NDIANA TORTMAN ORTMANETHANOL COM

BBI International

Biofuels Recruiting Staffing the Biofuels Industry

General Managers

Plant ManagersDistillation

Experts

Executives Grain Merchandisers Plant Commodity Specialists Laboratory Managers Operators erts Fermentation Experts Operations Managers Construction Managers Process Engineers Project Managers ngineers Plant Engineers R&D Scientists LabQCTechnicians Managers

nagers

Safety Managers Environmental

Specialists

Maintenance Managers Maintenance Personnel Operator

Sales

Shift Supervisors

Controllers Safety

Nobody is more connected to the biofuels industry www.biofuelsrecruiting.com

PROJECT DEVELOPMENT

American Ethanol Inc. Location: Butte, Montana Target groundbreaking: undeclared Feedstock: corn Capacity: 100 MMgy Design/build team: undeclared Synopsis: The project has received the necessary permits and at press time planned to have a pilot plant on line by April. The success of the pilot plant will help to determine future plans, which may include cellulosic ethanol production. According to project spokesman Andy Foster, future feedstocks won’t be “one or the other.” He also says his company is optimistic about grant proposals that the company has submitted.

Montana Ethanol Co. LLC Location: Great Falls, Montana Target groundbreaking: undeclared Feedstock: wheat/barley Capacity: 125 MMgy Design/build team: undeclared Synopsis: According to company spokesman Gary Hebener, land has been procured and is fully permitted. Right now, the company is reviewing technology providers, and engineering, procurement and construction (EPC) contractors.

76

Great Western Ethanol Location: Evans, Colorado Target groundbreaking: May 2008 Feedstock: corn Capacity: 108 MMgy Design/build team: Delta-T Corp./Austin AECOM Synopsis: The financial package and EPC contract were being finalized in February. All site and permit requirements have been completed, and the company intends to begin construction as early as May 1.

Genahol LLC Location: Chandler, Arizona Target groundbreaking: June 2008 Feedstock: MSW Capacity: 26 MMgy Design/build team: Genahol LLC Synopsis: This proposed facility is designed to handle as much as 2,000 tons of MSW per day, including paper, plastic and lumber residue. At press time, the company was finalizing a site for the plant and planning to start the permitting process in early March. A grant from the Arizona Department of Environmental Quality will aid in the procurement of feedstocks, says Genahol President Don Bogner. The company is pursuing a combination of private equity and tax-exempt bonds to finance the $65 million project.

ETHANOL PRODUCER MAGAZINE APRIL 2008

A NEW ERA OF OPPORTUNITY

Enterprise Software for

Commodities &Biofuels

dbcSMARTsoft® unites all of your physical and financial transactions for Biofuels into a single, integrated platform. The system’s trading, scheduling & logistics, settlement, financial accounting and risk management solutions give you world-class competitive power and agility. dbcSMARTsoft helps you gain business intelligence for better decision making, streamlined operations, renewable fuel (RIN) compliance, audit control, the ability to measure & manage market risk, as well as evaluate performance.

Contact us to find out why dbcSMARTsoft has been the choice of the largest Commodity and Biofuel companies for over a decade.

www.dbcsmartsoftware.com

800.361.2114 www.dbcsmartsoftware.com Copyright © 2007 dbc SMARTsoftware inc. All rights reserved. dbcSMARTsoftware, the dbc SMARTsoftware logo and dbcSMARTsoft logo are trademarks of dbc SMARTsoftware inc. All other company and product names are trademarks or service marks of their respective owners

PROJECT DEVELOPMENT

North Dakota Ethanol Complex LLC Location: Williston, North Dakota Target groundbreaking: undeclared Feedstock: corn Capacity: 15 MMgy Design/build team: Makad Construction Co. Synopsis: Tawni Camarillo, a project director with Makad Construction, says this project will be pursued once the company makes progress on its project in the northwestern United States. It is currently building Northwest Renewable LLC in Longview, Wash., which is expected to come on line in the fourth quarter of 2008.

Yellowstone Ethanol Location: Williston, North Dakota Target groundbreaking: spring 2008 Feedstock: corn Capacity: 55 MMgy Design/build team: ICM Inc. Synopsis: According to Project Coordinator Mike Daly, the plant has applied for permits and is awaiting approval while getting financing in place. The facility will cogenerate 14.5 megawatts of power, which will be sold to Basin Electric Power Co-op.

78

Wagner Native Ethanol LLC Location: Wagner, South Dakota Target groundbreaking: spring 2008 Feedstock: corn/milo Capacity: 50 MMgy Design/build team: Fagen Inc./ICM Inc. Synopsis: This facility, located in the Yankton Sioux Tribe region of southeastern South Dakota, will be minority-owned by Native Americans.

Company founder Charlie Columbe is also a member of the South Dakota Rosebud tribe. The plant will be fired with biomass, such as corn stover, rather than coal and natural gas, says Project Coordinator Bill Riechers.

He says the company decided to use biomass because there isn’t a natural gas line close to the plant. Plus, the plant can receive energy tax credits through 2012 by using nonfossil fuels.

American Ethanol Inc. Location: Sutton, Nebraska Target groundbreaking: undeclared Feedstock: corn Capacity: 100 MMgy Design/build team: undeclared Synopsis: This American Ethanol plant has all of its permits, and the company will be carefully observing the operation of its pilot plant in Butte, Mont., which aims to be on line by April. Information gleaned at the

ETHANOL PRODUCER MAGAZINE APRIL 2008

PROJECT DEVELOPMENT

pilot plant will play a role in determining future plans for this sister facility, which may include cellulosic ethanol production. Some grant funding is outstanding, but the company is confident of its arrival.

Central Bio-Energy LLC Location: Chase County, Nebraska Target groundbreaking: undeclared Feedstock: corn Capacity: 110 MMgy Design/build team: undeclared Synopsis: According to spokesman Brett Frevert, permits are in hand, and institutional investors are being secured. As soon as equity funding is in place, dirt work will begin, he says. This will be the second of three plants built by Central Bio-Energy. Proposed plants are also located in Howard and Seward counties, Neb. Central Bio-Energy LLC Location: Howard County, Nebraska Target groundbreaking: undeclared Feedstock: corn Capacity: 110 MMgy Design/build team: undeclared Synopsis: According to spokesman Brett Frevert, the company has secured permits and is looking to raise equity. As soon as funding is in place, dirt work will begin, he says. This will be the first of three plants built by Central Bio-Energy.

Proposed plants are also located in Chase and Seward counties, Neb. Central Bio-Energy LLC Location: Seward County, Nebraska Target groundbreaking: undeclared Feedstock: corn Capacity: 110 MMgy Design/build team: undeclared Synopsis: According to spokesman Brett Frevert, land has been procured, and the feasibility study is complete. Central Bio-Energy will build

plants in Howard and Chase counties prior to ramping up efforts at this site.

DeWeese BioFuels LLC Location: Fairfield, Nebraska Target groundbreaking: undeclared Feedstock: cellulose Capacity: 20 MMgy to 50 MMgy Design/build team: Fagen Inc./ICM Inc. Synopsis: With the EISA's demand for 21 billion gallons of advanced biofuel by 2022, the company intends to use cellulosic materials to produce ethanol to meet the mandate, says member manager Clay Rawhouser.

The company originally planned to use corn as a feedstock.

E Energy Auburn Location: Auburn, Nebraska Target groundbreaking: undeclared Feedstock: corn Capacity: 100 MMgy Design/build team: Fagen Inc./ICM Inc. Synopsis: E Energy Group is partnering with Rawhide Management LLC to build two plants in Nebraska, according to E Energy Group Copresident Bud Olsson. At press time, Rawhide Management was raising equity for both plants. Olsson says the project will advance quickly once financing is in place.

E Energy Broken Bow Location: Broken Bow, Nebraska Target groundbreaking: undeclared Feedstock: corn Capacity: 100 MMgy Design/build team: Fagen Inc./ICM Inc. Synopsis: E Energy Group is partnering with Rawhide Management LLC to build this plant and another in Auburn, Neb., according to E Energy Group Copresident Bud Olsson. At press time, Rawhide Management was raising equity for both plants. Olsson says the project will advance quickly once financing is in place.

It doesn’t take an Einstein to know that Quality, Service, and Experience make a difference.

Call us today, we have what you want!

Process Piping Installation Piping Fabrication ASME Tanks Stacks and Columns Millwright Services Sheet Metal Fabrication Plant Maintenance

For over 60 years, making a difference.

Midwest Operations: 1.269.324.7001 Southeast Operations: 1.407.858.0123 w w w . w s o u l e . c o m ETHANOL PRODUCER MAGAZINE APRIL 2008

79

PROJECT DEVELOPMENT Hallam Ethanol LLC Location: Lancaster County, Nebraska Target groundbreaking: undeclared Feedstock: cellulose Capacity: 20 MMgy to 50 MMgy Design/build team: Fagen Inc./ICM Inc. Synopsis: With the EISA's demand for 21 billion gallons of advanced biofuel by 2022, the company intends to use cellulosic materials to produce ethanol to meet the mandate, says member manager Clay Rawhouser.

The company originally planned to use corn as a feedstock.

Panda Ethanol Inc. Location: Wallace, Nebraska Target groundbreaking: undeclared Feedstock: corn Capacity: 100 MMgy Design/build team: undeclared Synopsis: According to Bill Pentak, Panda Ethanol director of communications, this facility has acquired air permits and is waiting for the financial environment to improve. Pentak stresses that Panda Ethanol will remain committed to all of its proposed projects.

Panhandle Ethanol LLC Location: Bayard, Nebraska Target groundbreaking: undeclared Feedstock: cellulose Capacity: 20 MMgy to 50 MMgy Design/build team: Fagen Inc./ICM Inc. Synopsis: This project is moving forward with plans to use cellulosic feedstocks to produce ethanol, says member manager Clay Rawhouser.

The company originally planned to use corn as a feedstock.

Plymouth Ethanol Location: Jefferson County, Nebraska Target groundbreaking: undeclared Feedstock: cellulose Capacity: 20 MMgy to 50 MMgy Design/build team: Fagen Inc./ICM Inc. Synopsis: This project is moving forward with plans to use cellulosic feedstocks to produce ethanol, says member manager Clay Rawhouser.

The company originally planned to use corn as a feedstock.

Republican Valley Ethanol LLC Location: Superior, Nebraska Target groundbreaking: undeclared Feedstock: cellulose Capacity: 20 MMgy to 50 MMgy Design/build team: Fagen Inc./ICM Inc. Synopsis: This project is moving forward with plans to use cellulosic

The Ethanol Industry’s Leading Supplier of Denaturant.

MARKETING

We recognize the value of reliable supply and ensure that your plant will never run out of denaturant.

Our logistics professionals manage every aspect of the transportation – from the pipeline movements to the cargo ships to the trucks and railcars.

We Deliver!

Roger Wittig 620.245.0052 USA Supply

Mike Corbus 620.245.0005 USA Supply

Simon Di Marzo 403.215.7455 Canadian Supply

www.nexeninc.com 80

ETHANOL PRODUCER MAGAZINE APRIL 2008

PROJECT DEVELOPMENT feedstocks to produce ethanol, says member manager Clay Rawhouser.

The company originally planned to use corn as a feedstock.

Rosalie Area Ethanol LLC Location: Rosalie, Nebraska Target groundbreaking: spring 2009 Feedstock: corn Capacity: 100 MMgy Design/build team: Fagen Inc./ICM Inc. Synopsis: The plant will be within the boundaries of the Omaha Indian Reservation but located on fee-simple land, says Project Coordinator Bill Riechers.

Boot Hill Biofuels LLC Location: Wright, Kansas Target groundbreaking: undeclared Feedstock: corn/milo Capacity: 55 MMgy Design/build team: ICM Inc. Synopsis: A company spokesman says the project is attempting to raise equity, and a change in the industry’s financial environment may jumpstart development in 2008. The company hopes to move forward by the end of the year.

Dial Ford County Bio-Renewable Fuels LLC Location: Dodge City, Kansas Target groundbreaking: 2008 Feedstock: corn/milo Capacity: 113 MMgy Design/build team: Kiewit Energy Co./Delta-T Corp.

Synopsis: Dial Bio-Renewable Fuels is the managing partner in this Dodge City venture, says company President David Wehner. The project will be built in three stages: The first stage is a 113 MMgy ethanol plant, the second stage is a 60 MMgy biodiesel plant, and the third stage will double the ethanol plant’s capacity, depending on market conditions.

Panda Ethanol Inc. Location: Haskell County, Kansas Target groundbreaking: undeclared Feedstock: corn Capacity: 105 MMgy Design/build team: undeclared Synopsis: According to Panda Ethanol Director of Communications Bill Pentak, this facility has received its air permits, but it is waiting for the industry’s financial environment to improve before moving forward.

PROJECT DEVELOPMENT Agassiz Energy LLC Location: Erskine, Minnesota Target groundbreaking: early summer 2008 Feedstock: corn Capacity: 55 MMgy Design/build team: KL Process Design Group Synopsis: Agassiz Energy President Don Sargeant says he expects the review of permits to be finished in March. If permitting is accepted, then a capital solution will begin.

IsoStab

Cannon River Clean Fuels Location: Hampton Township, Minnesota Target groundbreaking: undeclared Feedstock: corn Capacity: 40 MMgy Design/build team: undeclared Synopsis: The Hampton Township Board turned down this project, citing township zoning rules. An equity drive has been suspended, and Project Coordinator Lynnea Sjoquist says the group is taking a wait-and-see approach.

TM

is composed of acids that appear naturally in hop plants Benefits:

Controls lactic and acetic acid formation Optimizes plant efficiency Active at a wide pH range, thermally stable

IsoStab™…a naturally derived acid to combat resistant bacteria during fermentation.

BetaTec Hop Products 5185 MacArthur Blvd. NW, Ste. 300 Washington, DC 20016-33441 202.777.4800 • Fax 202-777-4895 www.bthp.info

Glacial Lakes Energy LLC Location: Madison, Minnesota Target groundbreaking: undeclared Feedstock: corn Capacity: 50 MMgy Design/build team: undeclared Synopsis: According to Project Manager Todd Emslander, the project is on hold due to the industry’s changing market.

Glenville West Ethanol Location: Glenville, Minnesota Target groundbreaking: undeclared Feedstock: corn Capacity: 65 MMgy Design/build team: Poet Design & Construction Synopsis: This facility will be built near Poet Biorefinery-Glenville East, which currently produces 45 MMgy near Albert Lea, Minn.

Highwater Ethanol LLC Location: Lamberton, Minnesota Target groundbreaking: spring 2008 Feedstock: corn Capacity: 50 MMgy Design/build team: Fagen Inc./ICM Inc. Synopsis: All permits and funding are in place, and plant officials are waiting for the ground to thaw before starting dirt work, according to company spokesman Brian Kletscher. “We look forward to becoming part of the ethanol industry,” he says.

MinnErgy LLC Location: Olmstead County, Minnesota Target groundbreaking: fall 2008 Feedstock: corn Capacity: 55 MMgy Design/build team: Fagen Inc./ICM Inc. Synopsis: At press time, an equity drive was slated to begin in March. “We’re finalizing our permitting with the state of Minnesota,” says Chairman Dan Arnold.

ETHANOL PRODUCER MAGAZINE APRIL 2008

PROJECT DEVELOPMENT Amaizing Energy Atlantic LLC Location: Atlantic, Iowa Target groundbreaking: 2008 Feedstock: corn Capacity: 100 MMgy Design/build team: Fagen Inc./ICM Inc. Synopsis: Forms have been filed with the U.S. Securities and Exchange Commission, and construction of the $195 million plant should begin sometime in 2008. According to Plant Manager Sam Cogdill, the biggest obstacle that the company faces right now is correcting public perceptions that ethanol plants lose money. He also says the passage of the EISA gives his project a greater chance of success, but the price of corn is still an issue.

Big River Resources Grinnell LLC Location: Grinnell, Iowa Target groundbreaking: undeclared Feedstock: corn Capacity: 100 MMgy Design/build team: Fagen Inc./ICM Inc. Synopsis: The project has been suspended until litigation regarding land usage between the county and the company is settled.

Chief Energy Co. LLC Location: Sergeant Bluff, Iowa Target groundbreaking: undeclared Feedstock: corn Capacity: 100 MMgy Design/build team: Delta-T Corp.

Synopsis: Vice President Roger Lloyd says the company is having trouble financing this $193 million project. “We think we are dangerously close to opening, but we thought that at this time last year, too,” he says, adding that permits are in place, and progress has been made since last year, but there is still a long way to go.

Dexter Ethanol LLC Location: Dexter, Iowa Target groundbreaking: spring 2008 Feedstock: corn Capacity: 108 MMgy Design/build team: Agra Industries/Delta-T Corp.

Synopsis: This $200 million project is “very close to financial close,” says Chris Miller, owner and chief executive officer of Alpha Holdings LLC, a major partner in this project and another in Tama, Iowa. He says the facility has employed nontraditional strategies to raise funds, and has been working with private investors and insurance companies.

Floyd Valley Ethanol LLC Location: Hinton, Iowa Target groundbreaking: fall 2008 Feedstock: corn Capacity: 100 MMgy Design/build team: NewMech Cos. Inc. Synopsis: Craig Conner, vice president of finance for Baard Renewables, a partner in this $200 million project, says the company continues to raise funds. “Like all the other ethanol plants, we’re waiting for equity,” he says. The biggest obstacle right now in raising

ETHANOL PRODUCER MAGAZINE APRIL 2008

Fueling the Future Kcpaf_lbgqgle _lb Rp_bgle Dgmak <j]q^mk ;geeg\ala]k `Yk Z]]f gf] g^ l`] d]Y\af_ e]j[`Yf\ak]jk Yf\ ljY\]jk g^ _jYafk$ gadk]]\k Yf\ ja[] af afl]jfYlagfYd Y_ja[mdlmjYd [geeg\alq eYjc]lk kaf[] )0-)& Af Y\\alagf lg ]phgjl Yf\ \ge]kla[ \akljaZmlagf Y[lanala]k$ o] g^^]j [mklgear]\ jakc eYfY_]e]fl kgdmlagfk lg eYfY_] [geeg\alq hja[] jakck& @gmdscjq Mncp_rgmlq D<;geeg\ala]k `Yk Y _jgoaf_ hj]k]f[] af l`] Zag^m]dk k][lgj& L`] _jgmh ak ]phYf\af_ alk ]l`Yfgd hjg[]kkaf_ gh]jYlagfk af :jYrad Yf\ `Yk [gee]f[]\ gh]jYlagfk Yl alk ]l`Yfgd Yf\ Zag\a]k]d hjg\m[lagf ^Y[adala]k af l`] Mfal]\ KlYl]k& Al ak [gfkljm[laf_ Y\\alagfYd ]l`Yfgd [YhY[alq af l`] Mfal]\ KlYl]k Yk o]dd Yk Y\\alagfYd Zag\a]k]d [YhY[alq af 9j_]flafY& ?pmslb rfc Umpjb G^^a[]k Yf\ ^Y[adala]k af :]abaf_$ :m]fgk 9aj]k$ ;Yd_Yjq$ <]d`a$ ?]f]nY$ @gmklgf$ CYfkYk ;alq$ E]eh`ak$ HYjak$ Hgjl%;Yjla]j$ K g HYmdg$ K]Ylld]$ Kaf_Yhgj] Yf\ Oadlgf _an] mk Y eYbgj hj]k]f[] af gn]j -( [gmflja]k lg k]jn] gmj [mklge]jk& uuu,JBAmkkmbgrgcq,amk

83

PROJECT DEVELOPMENT

money is the high cost of corn, and the company has expanded its equity search to include possible international funding due to equity drying up in the United States.

Global Ethanol LLC Location: Belmond, Iowa Target groundbreaking: undeclared Feedstock: corn Capacity: 110 MMgy Design/build team: Fagen Inc./ICM Inc. Synopsis: Board Chairman Dave Nelson says this $200 million project is on hold until the industry’s “market straightens out.” In other words, the board would like to see corn prices stabilize before moving forward. For now, Nelson says the company is focusing on a $30 million expansion at its existing facility in Riga, Mich.

Harvest BioFuels LLC Location: Galbraith, Iowa Target groundbreaking: fall 2008 Feedstock: corn Capacity: 110 MMgy Design/build team: undeclared Synopsis: Permits and corn suppliers are in place, says Chief Executive Officer Bob Payne. Financing is being completed, and construction will begin immediately after that. Payne says the company couldn’t have gotten this far without the passing of the EISA. This plant will be the first of three identical ethanol plants to be built by Harvest BioFuels.

Harvest BioFuels LLC Location: Garner, Iowa Target groundbreaking: fall 2008 Feedstock: corn Capacity: 110 MMgy Design/build team: undeclared Synopsis: Permits and corn suppliers are in place, says Chief Executive Officer Bob Payne. Financing is being completed, and construction will begin immediately after that. Payne says the company couldn’t have gotten this far without the passing of the EISA. This plant will be the second of three identical ethanol plants to be built by Harvest BioFuels.

Harvest BioFuels LLC Location: Gilmore City, Iowa Target groundbreaking: fall 2008 Feedstock: corn Capacity: 110 MMgy Design/build team: undeclared Synopsis: Permits and corn suppliers are in place, says Chief Executive Officer Bob Payne. Financing is being completed, and construction will begin immediately after that. Payne says the company couldn’t have gotten this far without the passing of the EISA. This plant will be the third of three identical ethanol plants to be built by Harvest BioFuels.

>> Projects continued on page 130

MAGAZINE Biofuels Australasia is the first trade journal of its kind to cover the developing ethanol and biodiesel industries of Australasia.

The magazine covers ethanol and biodiesel project development, finance, policy, construction, engineering, research and development, marketing, infrastructure development, transportation, use and more.

MAGAZIN

www.BiofuelsAustralasia.com.au

ETHANOL PRODUCER MAGAZINE APRIL 2008

85

INDUSTRY

In October, VeraSun Energy Corp. suspended construction of a 110 MMgy ethanol facility on this site in Reynolds, Ind. This project was one of several across the nation that was suspended, idled or cancelled because of market conditions.

PHOTO: ANDUIN KIRKBRIDE MCELROY, BBI INTERNATIONAL

86

ETHANOL PRODUCER MAGAZINE APRIL 2008

INDUSTRY

to Back

Reality

After the gold rush mentality of 2006, ethanol project developers are facing the harsh realities of fluctuating commodity prices, a struggling economy and scarce capital.

Some proposed projects are dropping out, but excellent projects are still getting funded.

By Ron Kotrba and Anduin Kirkbride McElroy

ETHANOL PRODUCER MAGAZINE APRIL 2008

87

INDUSTRY

D

uring the peak of ethanol project financing two years ago, the deep-pocketed French investment bank Societe Generale won Project Finance magazine’s ethanol deal of the year by arranging a $160 million debt package for Panda Ethanol Inc. Before $177 billion investment firms were writing out checks to large untraditional projects, predecessor plants were painstakingly developed under the farmer-owned co-op model where equity came from producer-investors, and the remainder from a farm bank loan. Despite more recent but now restricted options from large investment firms relatively new on the scene, financing an ethanol plant will remain a challenge much like it always was.

“People who’ve been in this business for a long time, know we are now back to what is more normal,” says Mark Yancey, vice president of project development for BBI International. He’s referring to a veritable spending freeze in project financing where equity investors and lenders alike are holding out for that special project with big merits and an ultra-sound balance sheet. “It’s going to be difficult raising equity, lenders are going to be very critical of projects and will select only a few per year to finance,” he says. It was tough in the late 1990s and early in 2000 to get projects off the ground, and even though much in the industry has changed since then, project development is going back to its

difficult financial roots—with some modern twists. “The issue today is the financial markets,” Yancey continues. “With all of the turmoil in the banking industry, capital is scarce.” And while Societe Generale is still making headlines in 2008, it’s not as the heralded purveyor of capital for ethanol investments. Instead, it’s trying to figure out how Yancey one of its traders managed to lose $7 billion in bad futures.

Whether the United States is already in a recession or on the verge, there’s been a clear economic downturn marked by declining dollar values, trade imbalances and mortgage foreclosures. Economist Don Reynolds explains that the steady devaluation of the U.S. dollar (40 percent over the past four years) along with the more recent burst of the housing bubble together affects the entire lineage of investments straight up the chain—starting with the homeowner to the mortgage brokers, banks, corporate investment firms and insurance companies—eventually making it back down the chain to renewable fuels investments. Some say the renewable fuels industry is the next bubble to burst. Others disagree.

“There’s still a small amount of profit to be made in ethanol, but it’s slim,” says Jack Mount, an accountant with Kennedy and Coe LLC. “So as you look at that, and take that

INDUSTRY

in conjunction with the fact that the mortgage industry and the financial sectors are going through a tough time and taking pretty big hits, they’re tightening their reins and closing their doors with who they’re letting through and willing to finance.” Whether the discussion revolves around mortgages or financing an ethanol plant, “it all comes Mount from the same pool of money,” he says.

There’s still money available in the economy, but the mindset of investors has changed, says Jeff Kistner, vice president of project finance for BBI International. “When we face recession fears in our economy, people invest in commodities. That’s why corn, gold and wheat are up. This is complex—you can’t just blame one thing for what’s going on.” While the slowdown in ethanol project financing cannot be extricated from the downturn in the U.S. economy and the scarcity of capital as a whole, there are more industry-specific details to consider in the broader context of a tightening in capital markets.

What a Bank Wants “In 2006 when ethanol was at its height, we saw the ability to have 25 percent or maybe 30 percent equity,” Mount says. Now banks are requiring up to 60 percent equity for

fixed asset financing. “The right project can get financing right now but you better be prepared to have a lot of equity because it’s hard to raise right now,” he continues. Yancey’s ratio of equity to debt exceeds 60 percent. “It’s really down around 85 to 90 cents a gallon the banks will lend,” he says.

This means a 55 MMgy plant costing $130 million today would require $46 million in debt and $83 million in equity— that’s 64 percent equity versus 36 percent debt. This scenario is not only undesirable because it takes a lot of cash upfront, but it also reduces the return on that equity because it’s less leveraged with debt.

Global factors have made banks less able to jump in as aggressively as they once did. “Before the slowdown, some of the bank syndicates were looking at multiple plant financing,” says Ed Portaro, vice president of consulting services at Harris Group Inc. With the crunch due to global factors, that’s dropped down. There’s more of a desire to go after plants on a one-by-one basis, rather than go after the higher dollar financings.”

At the same time, some of the Wall Street lenders have put up loan requirements that make it much more difficult to finance ethanol projects, according to Mark Hanson, an attorney at Stoel Rives LLP. He predicts the high finance models will likely fall by the wayside as projects return to regional lenders.

INDUSTRY

Specializing in industrial structural concrete construction; rebar placement, millwright services, steel buildings, & structural steel erection.

Q

Q

Q

Services to industries include alternative energy, agriculture, mining, cement, fertilizer, food and beverage, power, and other industrial projects.

Excellent workmanship on aggressive schedules.

Top safety standard.

P.O. Box 315 208 Baker St. N. Deer Creek MN 56527 Ph: 218-462-2607 Fx: 218-462-2508 www.strongform.net 90

Mark Erickson, president and founder of project development firm CharMark International LLC, questions how quickly banks will come back to the business. “I’m hearing rumors of two or three years before they’ll come back because their portfolios are full,” he says. “My feeling is maybe no one will ever go back to the traditional form when we get a Erickson taste of this ‘new’ financing. We’re talking to hedge funds and European funds. It’s unique, we have the possibility of different financing coming in, they look at it differently than a bank would, and I think it may be positive for the industry. A lot of them are looking more on the merit of the project itself, not necessarily that they like biofuels. They’re looking at the return on investment.”

In the past two or three years, Kistner estimates that $15 billion was invested in the ethanol industry.

“There are a number of plants under construction that have not received a return on that investment yet,” he says. Popularity may direct new investment to cellulosic ethanol, especially because it’s mandated by Congress. But it has to prove itself first.

“Everyone that we’re in touch with—lenders and equity sponsors— all want to talk about cellulosic ethanol, especially Kistner now that corn ethanol has gotten some negative publicity,” Portaro says. “But I think when it comes down to where they’re going to put their money,

when they start looking at risks and high capital requirements, it’s going to be different.”

In many ways, the changes in the industry are happenThompson ing so fast, it can be difficult to diagnose and react to them. “We’ll probably be reacting in hindsight for the next three or four years,” Hanson says. His colleague at Stoel Rives, Joe Thompson, agrees.

“Everyone is kind of stepping back and assessing the situation,” he says.

This goes for equity investors, farm banks and large corporate investment firms. As far as Wall Street money goes, Thompson tells EPM, “They haven’t gone away—they’re just looking for the right project with the right feedstock supplies and the right off-take agreements.”

Nevertheless, “People who want to get into it will do so, whether that’s with Wall Street money or the farmer,” Yancey says.

Back to ‘Normal’ Clearly, the industry is still coming down from its high in 2006, which affected all aspects of project development. “Project development went at a breakneck pace—almost faster than the industry could absorb it,” Hanson says. “You heard about developers starting construction on the first plant and had plans to build three or four more plants when they hadn’t even operated one.

From a critic’s standpoint, the industry expanded extremely rapidly and didn’t regulate itself toward capacity and market limitations.”

Another project development veteran agrees. “Back in 2006, there was a gold rush mentality,” says Larry Ward, vice president of project development for Poet LLC.

ETHANOL PRODUCER MAGAZINE APRIL 2008

INDUSTRY

“There were a lot of people coming into the industry who didn’t have a lot of experience. I think they were attracted by very high margins, by the enthusiasm and excitement in the industry and frankly, those times are gone. I think we’ve seen some realities dealing with margins getting back into more normal types of structures, or in some cases, margins getting very weak. I think for the newcomers who may have not had much experience and weren’t familiar with commodities, that drove them away.”

Construction costs were another big factor in slowing down the rush to build. This pace will slow down and get back to “normal construction” of 13 to 16 plants per year— the average construction rate before 2006, Kistner says. “I don’t think you’ll ever see 60 plants under construction in one year again.”

Ownership Trends Yancey and Kistner suggest that financing and construction may get back to “normal,” but there may not be a return to normal for other aspects of the business. Ownership models are changing from the farmer cooperative model, although that model is far from dead. In fact, Thompson says co-op law in the northwestern states was a big topic of discussion at the Harvesting Clean Energy Conference held in Portland Ore., in January. “These folks in the Northwest, they wanted to know more about the performance and structure of the cooperative model, and whether or not it makes sense for them,” Thompson says. Part of the farmer co-op model’s viability resides in the ability to secure feedstock.

Even though different entity structures can offer guaranteed feedstock over time, the most basic and guaranteed avenue to this is through the farmer co-op model and its produc-

er-investors. “They’re not only the source of their feedstock, they’re also investors and therefore have a vested interest in that project,” Thompson says. “It’s an option we talk about with every project that comes to us— it’s typically an LLC or a co-op model.”

The co-op model may not be dead, but it’s certainly changing. A changing trend for successful project development is the move towards stronger owners and stronger equity groups that have the depth to carry a project through the dips of the commodity market, Portaro says.

“Stronger owners are bigger companies that have more financial depth to them,” he says. “In equity groups, often that means a local developer will bring in a large equity fund to have a big part of the ownership of the plant. There’s still a place for the small owner, but we’re starting to see some asset transfers.”

While small owners are probably not building on their own anymore, Portaro notes that some of the bigger companies that developed early and had a global plan are probably still able to compete with Ward the new, larger, well-financed companies. One such company is Poet. Ward says project development hasn’t changed for his company. He credits this to Poet’s consistency and history. “Over time, Poet has grown at a pretty steady, consistent rate—almost in spite of what was going on in the marketplace,” he says. “We’ve had a long track record of success and that has really allowed us to continue with the development strategy that will probably keep going at a rate relative to what we’ve seen the past few years.

ETHANOL PRODUCER MAGAZINE APRIL 2008

Capture The Power

PERFECTING THERMAL PROCESSING WORLDWIDE Rotary Driers, Mixback Systems, Advanced Controls for DDGS Visit www.aeroglide.com/ethanol Raleigh, NC USA +1 919 851 2000 Philadelphia, PA USA +1 215 464 6070 England +44 1780 767 007 China +86-21-5132-1880 Malaysia +60 3 6411 9999

INDUSTRY

IF YOU SEE

R E N E WA B L E F U E L S , WE SHOULD TALK.

4HUHNL *VTTVKP[` 7YPJLZ HUK [HRL *OHYNL VM @V\Y )V[[VT 3PUL 9LZ\S[Z As the largest, independent risk management firm in renewable fuels, we work with ethanol and biodiesel plants to maximize operating profitability, expand merchandising efforts, and mitigate multiple risks in volatile markets. At FCStone, we provide unique market intelligence and industry expertise, which provides our customers with a competitive advantage.

West Des Moines, Iowa 2829 Westown Pkwy, Ste. 100 800-422-3087, ext. 3746 92

While debt markets certainly in general are tighter than before, we still maintain very strong relationships with those that have been with us in the past and working with those and others as we develop our projects for 2008, 2009 and beyond.”

Because of these successes, Ward says a number of independent, stand-alone facilities—both in production and under construction—have inquired about forming partnerships with Poet. “It doesn’t sound like there are a lot of single-plant, independent projects that are able to raise the capital they might need due to the change in times,” Ward says.

Part of Poet’s allure is that small-time investors are still welcome—the company hasn’t really changed its investment strategy. “Right now one of the benefits Poet still enjoys is we have more than 10,000 farmer and main street investors that have participated in our projects over time,” Ward says. “We’ve always been very aware of allowing and bringing in local participation for all of our plants. We continue with that model today. It has not limited us at all in the availability to find equity for all of our projects.”

While some companies will find increased potential for profit through the restructuring of entities to gain economies of scale through mergers—such as the VeraSun Energy Corp. deal with US BioEnergy Corp.— others may simply look the other way. “In talking with some, I’ve seen them scale back their plans,” Thompson says.

ETHANOL PRODUCER MAGAZINE APRIL 2008

INDUSTRY

“Maybe we should go back to the 40 MMgy or 50 MMgy plants, or maybe even smaller plants if we want to build community-based projects.”

Hanson predicts that new projects will be smaller, as a rule. “We were getting to a point where new plants were almost exclusively 100 MMgy,” Hanson says. “I don’t think we’ll see nearly as many 100 MMgy plants built by new owners. If it’s a new plant with a new group of owners, it will more likely be 50 MMgy. Hanson We’re going to see more locally-owned 50 MMgy because the financing and risk profile will be a bigger equation than profitability.”

There will continue to be 100 MMgy plants developed, but Hanson says they’re much more likely to come from the expansion of an existing plant. Existing plants have a lower risk profile, and are more likely to get a loan, because they have operating history, existing staff and feedstock agreements.

The conversation doesn’t end with the size or business structure of corn dry mills, especially when upcoming cellulose projects are also being developed. “I think with cellulose we may see a resurgence of farmer-owned projects either added to their existing dry mills or building a new cellulosic ethanol plant,” Yancey speculates. He says the biggest cellulose crop out there today is corn stover, and who owns that? The farmers do. “I think it’ll be in their best interest to be involved and be invested in those plants. It doesn’t exclude that

there’ll be large corporations involved— they’ll be building plants too. But at least there’ll be the opportunity for the farmers to get in on the ground level of a second wave of really farm-based projects.”

Successful Projects Obviously, successful projects must make money. “We tell our projects that they need a strong return on investment,” Erickson says. “We use a standard of 25 percent annual return. We tell our

ETHANOL PRODUCER MAGAZINE APRIL 2008

clients they should re-evaluate doing the project if it’s less than that.” He questions if some of the traditional, natural gas-powered plants can meet that number, given the cost of natural gas.

Erickson says energy cost is a great determinant of a plant’s financial success, which is why his company focuses on coal-fired facilities closer to the energy source.

The merits of a project have never been more important in order to proceed

93

INDUSTRY through the development stage to construction. Experts say projects need everything in order to move from a proposal on the drawing boards to a plant under construction. Yancey says location, rail and natural gas infrastructure remain the most important factors.

In many ways, nothing has changed in project development, according to Ward. “The fundamentals that were important one year ago, three years ago, five years ago, are the same fundamentals that are important today,” he says. “You need to have good sites. It’s location, location, location. During the gold rush, I think some people may have lost sight of the fundamentals. And frankly, a lot of the optimum sites are probably gone today relative to several years ago. But the reality is, those fundamentals still exist and you need to look at them.

What’s the right size, what’s the right corn supply, where are the right markets, how can you have a competitive advantage?

Those are things that we have looked at historically and they still drive our development strategy.”

Having all the ducks in a row is crucial, but these days, it may not be enough. Harris Group is an engineering company that serves five market sectors, including clients in their Process Solutions and Financial Consulting Units. The customers of the Process Solutions Unit are fairly balanced between traditional technologies and next-generation technologies, and the company still sees a lot of activity from people who want to build a plant. “What may be different versus the craze of the summer 2006 is that projects that come to us, as a rule, are better thought out,” says Manager of Process Solutions Doug Dudgeon. “Often, they have something that sets them apart from having a cookie-cutter approach.

Certainly in 2006, we saw a lot of people that just wanted to get in and get in fast. They didn’t have anything that would distinguish their business plan from the next guy.”

Differentiation is a big theme amongst project developers.

One increasingly popular way to differentiate is in how the feedstock is handled, whether through fractionation, corn oil separation or finding different users for the distillers dried grains. “If it’s just a plain, corn-to-ethanol plant, it’s going to have a hard time making it through the process unless someone has a lot of financial backing,” Portaro says. “The important factors we see are location, strong owner equity group, vertical integration or something different to the project that adds to the revenue streams.”

Kistner agrees that cookie-cutter projects don’t cut it anymore. “I’ve always said that good projects will get financing— both debt and equity—just follow the rules,” he says. “But today, excellent projects will get financing. It’s no longer just finding the right location, technology and developers. It boils down to management that truly understands the industry and teaming up with the right companies. Your management needs to be knowledgeable, work well with vendors and make sure the plant operates as it’s supposed to.”

94

ETHANOL PRODUCER MAGAZINE APRIL 2008

INDUSTRY Investors and lenders are paying extremely close attention to management experience and capabilities. Management is key—it’s the management team that is largely going to determine a project’s risk management strategy, which can make the difference between a profitable plant and one destined for failure. “The true producer is going to have an effective management schedule that tries to hedge and keep good, steady profitability and not try to ride out the highs and lows,” Mount says.

In an environment of scarce capital and choosy investors, projects hoping to close financing and break ground must incorporate skilled management who craft long-term contracts and hedging strategies into their business plan. “A lot more projects are going to have to optimize the performance of the plant,” Thompson says.

Market Capacity “The industry has gotten so large that in the not-to-distant future we’ll be bumping up against the E10 saturation and that is a situation we’ve never seen before,” Yancey says. With current production and gallons under construction (not including proposed projects), U.S. ethanol production exceeds 10 billion gallons a year. With U.S. gasoline consumption at 140 billion gallons a year, E10 across the board would require 14 billion gallons of production. And we’re getting close to it.

Many believe the United States can produce anywhere between 12 billion and 20 billion gallons in upcoming years without severe consequence to other markets or global trade.

This is addressed in the 36-billion gallon renewable fuels standard (RFS) within the 2007 Energy Bill passed in December; annual corn ethanol production is subject to an indirect mandate cap of 15 billion gallons. Even though that number leaves room for 100 additional 50 MMgy plants, the industry is already starting to see signs of intra-industry competition, such as low ethanol prices, idling plants and bankrupt projects.

When the market capacity is reached, the industry will have to compete against itself. “If there are sustainable profits, then the next 100 million gallons to be built will have to outcompete the existing 100 million gallons of capacity,” Hanson says. “So then you look at what needs to close down and what’s not profitable. There aren’t very many industries that have the discipline not to do that. But if we get to that point, that’s when the industry will compete against itself. Right now it’s competing against gasoline and capacity.”

Portaro and Dudgeon, however, withhold judgment until the plants under construction come on line. This would depress the cost of ethanol to the point where only the leastcost providers could continue operating. “I think that’s going to happen with ethanol, but we don’t know when,” Dudgeon says. “Then it becomes a balance of raw material supply and price, distribution and markets. Some of these plants just might not make it, so then there will be consolidation—that might be the next wave.”

ETHANOL PRODUCER MAGAZINE APRIL 2008

95

INDUSTRY Experts differ on the tools necessary to move ethanol beyond current market limitations. Kistner says sufficient distribution infrastructure will help. He says this is a reason for the current slowdown, and doesn’t think that we’re at market capacity right now. He points to markets within the United States and internationally that are as yet untapped. “Never underestimate the power of production agriculture,” Kistner says.

Others think the answer lies in increased fuel blends. “As we approach 14 billion gallons, there’s oversupply and

there’s literally no market,” Yancey says.

“Ethanol plants would have to shut down and I think there’ll be efforts to evaluate higher blends, whether that’s E12, E15 or E20.” For each percentage point blended above E10, an additional billion to billionand-a-half gallons can be absorbed into the U.S. marketplace.

In the end, it may be that those in Washington, D.C., determined the market capacity for ethanol when they tied it to the RFS. “The industry is very sensitive and they’ve seen what happens when you produce in excess of what the blenders need to

Tank Heating Replaceable-Element Immersion Heaters Direct-Immersion Heaters Mash Slurry Tanks • Syrup Tanks • Fire Protection Tanks Cooling Tower Immersion Heaters

Process Lines Heat Trace Cable, intelliTRACE Controls

Personnel Warmth & Equipment Freeze Protection Comfort Heaters Hazardous Area Heating Hazardous-Duty Convection Heaters Hazardous-Duty Forced-Air Heaters Distribution Lines Heat Trace Cable, intelliTRACE Controls

buy,” Hanson says. “There gets to be a lot of downward price pressure when that happens. As we see the RFS increase, that’s probably going to be a pretty good determiner of what the market is. There’s a significant risk of going above that.”

Experts say the RFS will provide a bit of a fervor, but not like some may have expected. “Yes it will help some plants’ development, but it’s not going to be an immediate effect,” Thompson says. “The plants I’ve talked to are trying to find debt financing and it’s going to take a little bit of time before we’ll see what these new standards will mean for the industry. Is it three or four months?

Maybe. Is it six to nine months? That’s probably more likely. It’s not going to bring project development back up to what it was in 2006, but it will help reinvigorate the industry.”

Mount contributes to this notion.

“Government mandates aren’t going to open up equity markets unless you have an extremely viable product. So until we get past this point of a tight equity market and some current issues like feedstock inventories and prices, we’re going to continue to see the equity markets and financing issues we’re seeing now.

This means there’ll be great reluctance to put money into biofuels in the short term. And in the long term? Biofuels will be here for a long time.” EP Ron Kotrba is an Ethanol Producer Magazine senior staff writer. Reach him at rkotrba@bbibiofuels.com. Anduin Kirkbride McElroy is an Ethanol Producer Magazine staff writer. Reach her at amcelroy @bbibiofuels.com. Reach both at (701) 738-4962.

Chromalox provides precision heat and control systems for more processes than anyone. And we’re ready to bring that experience and expertise to your ethanol fuel plant.

Since 1915, Chromalox has grown to become a global force in the design and implementation of electric heat and control systems that meet the requirements, certifications, codes, and standards of process industries around the world. Chromalox is vertically integrated in manufacturing capabilities and offers full design and virtually any electric process heat and control requirement in your plant.

All You Need Is Here

Chromalox

®

PRECISION HEAT AND CONTROL

www.chromalox.com

•

1-800-443-2640

•

sales@chromalox.com

© 2008 Chromalox, Inc.

96

ETHANOL PRODUCER MAGAZINE APRIL 2008

FINANCE

Giving Them Credit For most of its history, the ethanol industry was dominated by small plants owned by farmer cooperatives and limited liability companies. These pioneering efforts were boosted by the Farm Credit System, which looked at the industry as part of its mandate to help farmers expand their markets. When the industry began to boom, Wall Street and commercial banks started putting a lot of money into the ethanol industry. But with a looming credit crisis, is it time for the FCS to again take the lead in financing growth in the industry?

By Jerry W. Kram

98

ETHANOL PRODUCER MAGAZINE APRIL 2008

FINANCE

ETHANOL PRODUCER MAGAZINE APRIL 2008

99

FINANCE

n the early days of the fuel ethanol industry, many of the pioneering plants were built by farmers who formed cooperatives to get more and better markets for their grain. Starved for credit, the cooperatives staged equity drives where farmers invested their hardearned cash to build the plants with help from the Farm Credit System. In recent years, the boom in demand for ethanol made it more attractive to private corporations who funded their plants with investments from equity funds and commercial banks. With ethanol margins being squeezed and a possible credit crunch looming, not to mention a dramatically expanded renewable fuels standard (RFS), the FCS could re-emerge as a force in the ethanol industry.

A study commissioned by the American Bankers Association and the Independent Community Bankers Association indicated that the FCS provided just 8 percent of the development capital for the industry since 2004. According

I

to the study, commercial banks provided 56 percent of the funding and private equity sources such as individual investors and

hedge funds provided 36 percent. The study was conducted by New Energy Finance Limited of Alexandria, Va.

Ethanol project development capital provided by investors and lenders, 2004-present Commercial banks and other private lending Farm Credit System institution lending Equity from hedge funds, individual investors, others

8% 36% 56%

Note: The estimate is based on New Energy Finance transaction record data, which amounts to at least $15 billion in funding for new plants. The estimate assumes a 64 percent to 36 percent debt-to-equity ratio in the financings, which is based on historical averages.

SOURCE: NEW ENERGY FINANCE

SPEC IT AND FORGET IT. Check-All Valve is your one-stop supplier for the check valves you need in the materials you require. Better yet, every valve includes the experience, engineering, and application know-how you need for â&#x20AC;&#x153;spec-it-and-forget-itâ&#x20AC;? reliability.

After all, you have better things to do, and check valves are all we do.

Call us at 515-224-2301 or e-mail us at sales@checkall.com.

www.checkall.com 100

Since 1958 West Des Moines, Iowa USA

ETHANOL PRODUCER MAGAZINE APRIL 2008

FINANCE

Ken Auer, president and chief executive officer of the Farm Credit Council, says the study overlooks the role the FCS played in building and sustaining the ethanol industry through Auer most of its history. “We looked at the stories that were being written and they were mischaracterizing what the study was saying and trying to imply that the vast bulk of financing for the renewable fuels industry had come from community and commercial banks,” he says. “They were looking at a three-year period that really came after the industry had gotten up and running as opposed to who helped the industry get started.”

Auer objects to the study because it was based on an internal database of ethanol industry transactions maintained

by New Energy Finance. “It’s not a very good study,” he says. “You don’t often see a study where they did a cursory review of

‘The mission of the Farm Credit System is to be there and be supportive of agriculture and rural communities. The system viewed ethanol as a value-added business that farmers were getting involved in.’ their data without using or citing any specific data. It was like they used a proprietary set of data and didn’t make it available.”

Auer says the FCS continues to be a significant and growing source of capital for the ethanol industry. “As of the end of the third quarter of 2007, the outstanding loans and loan commitments to the industry was something like $4.2 billion,” he says. “That represented something like a $900 million to $1 billion increase over the end of 2006. So in 2007, the system continued to play a role in providing capital to the industry. We do that directly as

well as working with other financial institutions.”

Auer says a FCS study shows that to meet the requirements of the RFS in the Energy Bill the ethanol industry will need an additional $105 billion in capital over the next 15 years. He says the New Energy Finance study indicated that commercial banks and other private institutions only invested about $2 billion a year in the ethanol industry over the past four years—the period of ethanol’s fastest growth. “Our view has always been that that sort of increase in capital requirements was going to require a broad base

What’s the BIGGEST Secret in Biodiesel??

• More than 15 plants 30 million gallons or larger in operation or under construction

• Technology partner with REG • Designer and equipment

supplier to owner operators

PREPARATION DEHULLING EXTRACTION OIL PROCESSING BIODIESEL SOYA PROTEINS CO2 EXTRACTION PILOT PLANT

CROWN IRON WORKS COMPANY 2500 West County Road C Roseville, MN 55113 USA call us today 1-651-639-8900 or visit us at www.crowniron.com Additional offices in Argentina, Brazil, China, England, Honduras, India, Mexico, Russia and the Ukraine.

FINANCE

DDGS Drying

means more to us Capital and Financing Required to Achieve a 36 Billion Gallon RFS by 2022

Corn

Advanced Biofuels

Total

2007 Capacity (Mil gal)

6,923

0

6,923

2022 Capacity (Mil gal)

15,000

21,000

36,000

New Capacity (Mil gal)

8,077

21,000

29,077

Capital Cost (2007 $/gal)*

$2.25

$4.16

$3.63

Capital Requirement (Mil 2007$)

$18,173

$87,360

$105,533

Debt Share

60%

60%

60%

Financing Requirement (Mil 2007$)

$10,904

$52,416

$63,320

* B.D. Solomon et al. Biomass and Bioenergy. 2007 SOURCE: LECG LLC

Add value to your Ethanol Co-Products Our commitment to product quality, energy efficiency and reduced emissions has made Barr-Rosin the partner of choice for thermal drying technology.

Innovation, flexibility and depth of process experience allows us to offer a wide range of drying systems to match your exact requirements. We understand your process and that enables us to offer the optimum drying solution for DDGS, germ and other high protein value added products.

• • • •

Flash and Ring Dryers Superheated Steam Dryer (SSD) Rotary Dryers and Coolers Fluid Bed Dryers and Coolers

All drying and cooling systems are fully integrated with high efficiency thermal oxidation for VOC, CO and PM control.

Including direct thermal and regenerative thermal oxidation (RTO) technology.

Ongoing Technical Support, process optimization, retrofit of existing dryers, energy optimization of existing installations, these are some of the other services that we provide to the ethanol industry.

Barr-Rosin is a world leader in industrial drying with over 50 years experience and 2,000 installations.

Barr-Rosin Barr-Rosin Inc. 92 Boulevard Prevost, Boisbriand Quebec J7G 2S2, Canada Tel: 450-437-5252, Fax: 450-437-6740 255 38th Avenue, Suite G St. Charles, Illinois 60174, USA Tel: 630-659-3980, Fax: 630-584-4406 E-mail: bri@barr-rosin.ca Worldwide Representation: For local contact details and more information about Barr-Rosin, access www.barr-rosin.com

102

of financial institutions to participate in that marketplace,” he explains. “As of right now, Congress has not seen fit to expand the flexibility of the system. It is up to Congress whether they want to pursue that or not.”

2007 was a challenging year for the ethanol industry with higher feedstock costs and lower ethanol prices.

Without a change in economic conditions ethanol has the appearance of being a riskier investment than in the earlier years of the decade. Rumblings in the real estate markets have shaken credit markets, which have in turn impacted investment in many industries, including ethanol. “The commercial banks have said they can and would do it all,” Auer says. “That is a fine thing to say, but considering what has been happening in the credit markets lately, it’s kind of a fantasy land they will continue to extend themselves in a risky business.”

Changes Upon Changes The industry has evolved in impressive directions the past four or five years. Where 25 MMgy plants were once the rule, now 110 MMgy seems to be almost a “standard”

ethanol facility. Production has doubled and redoubled from 1 billion gallons to nearly 7 billion gallons per year. However, Auer argues, much of the underlying economic realities of the industry haven’t changed. “It’s not a matter of ethanol becoming big business,” he says. “It has always been a business. These folks were in business to produce a product, be successful and earn income from that product, whether it’s done through a cooperative or is privately owned or a limited liability company.”

In 1991, only a small fraction of the 865 MMgy of ethanol production was owned by farmer controlled cooperatives or limited liability companies. Today, with nearly 7 billion gallons per year of production, more than 40 percent of all plants qualify as farmer owned, according to a study by LECG LLC commissioned by the Farm Credit Council, a trade organization for FCS lenders.

That study showed that the FCS was the lead lender or a participant in financing 75 of the 131 ethanol plants in production in 2007 (57 percent).

“The mission of the Farm Credit System is to be there and be support-

ETHANOL PRODUCER MAGAZINE APRIL 2008

FINANCE

ive of agriculture and rural communities,” Auer says. “The system viewed ethanol as a valueadded business that farmers were getting involved in. The system was supportive of the industry as it grew.”

Some of the changes in the ethanol industry have made it more difficult for the FCS to become involved in ethanol projects. There are limitations in current law on who can receive loans from the FCS. Auer says there has to be significant farmer investment in an ethanol project to qualify for a FCS loan. “If an ethanol plant is owned more than 50 percent by farmers, and those farmers put their own corn through that facility, which is called throughput, then that entity would be eligible to borrow from the FCS,” Auer says. The ethanol company could be either a cooperative or limited liability company, as long the required level of farmer investment and throughput was met.

The legal organization of the company—whether as a cooperative, limited liability company or other business—isn’t as important as being able to prove that the plant has the required level of farmer participation.

“You may have a corporateowned plant that is actually a limited liability company that involves not only farmers but nonfarmers in a given area,” Auer says. “It could be a major corporation like Archer Daniels Midland Co. So there are all sorts of different types of ownership out there. The system works with those ownership models where we can and where they are eligible

CD B6II:G L=6I H:6HDC >I >H#

:kZg cdi^XZ ]dl \ddY ^i [ZZah l]Zc i]^c\h VgZ \ddY VcY XaZVc# Ndj YdcÉi \Zi i]Vi [ZZa^c\ l]Zc ndj _jhi higV^\]iZc je V W^i# Ndj \Zi ^i l]Zc ndj ]^gZ egd[Zhh^dcVah id WaVhi Vaa d[ i]Vi gZh^YjZ dji d[ ndjg hnhiZb# LZ cdi dcan bV`Z hjgZ i]Vi ndjg eaVci ^h gjcc^c\ Vi eZV` Z[Ò X^ZcXn! lZ \Zi ^i YdcZ hd fj^X`an i]Vi Ydlc i^bZ l^aa WZ b^c^bVa# <^kZ jh V ign VcY lZ l^aa Wg^c\ WVX` i]Vi [gZh] heg^c\ i^bZ hXZci! Vcn i^bZ d[ i]Z nZVg#

NDJG 8A:6G HDAJI>DC#

H^cXZ &.-&

IDAA ;G::/ &#-,,#))%#&&)) lll#VfjVedlZgjhV#Xdb :K:A:I=! BC IG68N! BC H>DJM 8>IN! >6

:K6EDG6IDGH G:7D>A:GH EGD8:HH ;6CH 9GN:GH HI68@H 8DAJBCH 9J8ILDG@ 8DDA>C< IDL:GH 8DC9:CH:GH K:HH:AH ;ADDGH

ETHANOL PRODUCER MAGAZINE APRIL 2007

103

FINANCE

‘We continue to be very interested in working with the industry. To the extent that the current law prevents that, we need help to convince Congress we need greater flexibility to provide credit to the industry.’

to borrow from the system. In that case the system is interested in competing to provide them credit.”

Bigger plants, which have been getting

more expensive per gallon of capacity to build, are making it harder for ethanol developers to gather enough farmer equity to allow the projects to qualify for FCS

financing. “What has become clear as the capital needs of these plants has increased, farmers have been saying they can’t put up the full capital,” Auer says. “They have to find additional outside investors. Where farmer ownership could once have been 55 percent, now it could be 30 percent.

When that happened, the FCS could no longer directly finance those projects.” There was a proposal in the House of Representatives to allow FCS to finance ethanol projects irrespective of the level of farmer ownership. That provision was included in the House version of the Farm Bill that came out of the Agriculture Committee. However, that provision was struck from the bill on the floor of the House.

If ethanol producers want the FCS to be more active in the industry, they will have to help persuade Congress that changes need to be made, Auer says. “FCS continues to be very supportive of the industry. We continue to be very interested in working with the industry. To the extent that the current law prevents that, we need help to convince Congress we need greater flexibility to provide credit to the industry.

Congress needs to be hearing from the industry if it would like the FCS to have greater flexibility.” EP Jerry W. Kram is an Ethanol Producer Magazine staff writer. Reach him at jkram@bbibiofuels.com or (701) 7384962.

104

ETHANOL PRODUCER MAGAZINE APRIL 2008

LEGAL

ETHANOL’S EXCEDRIN HEADACHE Where Have All the Good Sites Gone?

OK, so you’ve raised $100 million to build your ethanol refinery that was to be an outlet for struggling farmers, a boon to the local economy and a reducer of greenhouse gases.

You spent years fundraising. You sold your soul and your proprietary technology to lenders. You paid a fortune for lawyers to get you through the due diligence, permitting and political hurdles. You’re finally ready to break ground or you already have. Then, cue the music from “Jaws.” Here come the plaintiffs.

By Sarah Smith

106

ETHANOL PRODUCER MAGAZINE APRIL 2008

LEGAL

ETHANOL PRODUCER MAGAZINE APRIL 2008

107

LEGAL

cross the United States, from coast to coast, ethanol enthusiasts, regarded as the fair-haired boosters of the rural economy, are being plagued by lawsuits seeking to delay or derail plant development entirely. Plaintiffs swap strategies over the Internet, trade petition forms, success stories, failures, even going so far as to design T-shirts and coin the perfect acronym for their groups. Their reasons for filing causes of action are as myriad as the ethanol technology itself: not in my back yard, zoning board decisions, economic benefit, industry distrust, environmental concerns and water use issues. The view from the third tee box, listed in one cause of action, illustrates the lengths plaintiffs will go to halt a project in its tracks. After all, golf is life, isn’t it? Then there are the Trout Association’s objections to a Minnesota plant. Don’t try to interfere with a man and his floating Rapala. “Nobody wants to look out their window and see an ethanol plant,” says Nathan Schock, director of public relations for South Dakota-based Poet LLC. Even where courts have found their claims baseless, plaintiffs often still prevail. They’ve prolonged construction to the point where it’s prohibitive to continue. Or litigation costs have eaten significantly into the overall budget, which was scrawny to begin with.

Or they haven’t killed the project entirely, but just forced it to move on down the road and back to square one. It’s enough to make a project developer reach for the Excedrin bottle, or maybe something stronger.

“It’s a quandary,” says Steve Snyder, an Indiana development and zoning attorney. “Ethanol plants need rail access, reasonable access to truck transportation and some type of municipal services—water or sanitary service. With the abandonment of an awful lot of rail lines, those sites are becoming pretty limited. Site selection is the key but it’s very difficult.”

A

108

State-By-State Objections Currently, EPM has identified organized opposition in at least 14 states. It signals a change akin to having the welcome mat yanked out from under you, or the massing of a litigation army.

Rural communities that once heralded the arrival of an ethanol plant are now thumbing their noses at them. Here’s what’s happening:

Snyder

California Production at Cilion Inc.’s 55 MMgy facility, due to open sometime this spring, may be delayed by a lawsuit over the county’s decision not to require a formal environmental impact statement (EIS) prior to construction. Cilion plant spokesman Jeremy Wilhelm says the company won’t comment on pending litigation. The plant was 50 percent complete when the Valley Advocates issued a legal challenge in late 2007. The plant is located in Keyes, near Modesto. Valley Advocates have cited air pollution concerns resulting from manufacturing.

County supervisors gave the green light to plant construction in June 2007 despite objections at that time over the lack of an environmental report. Ground was broken two months later. A county attorney said the plant was properly located in an industrial zone, which doesn’t require an EIS. As of press time, the case was still pending.

In a second action, American Ethanol’s plans to construct a plant west of Santa Maria has run into opposition from residents concerned about odors and truck traffic. Santa Maria residents are tenacious. When a feedlot smell became intolerable a few years ago, residents voted to form a special district, taxed themselves and bought the offending business out. In mid-February, American

ETHANOL PRODUCER MAGAZINE APRIL 2008

LEGAL

Ethanol President Dave Baskett wrote an opinion column in the local newspaper addressing odor, water and energy concerns. He stressed the importance of “creating local renewable fuel.”

Florida A developer trying to build the state’s first ethanol plant was stymied by a lawsuit seeking to derail Port Sutton EnviroFuels from proceeding with an $86 million facility in Tampa’s port. Plans for the Tampa facility were first announced in 2005, and production was initially slated for fall 2007. EnviroFuels, after 16 months of litigation, finally got a judge to sign off on terms of a negotiated settlement in late November 2007. PEL Laboratories, an environmental testing firm, filed for an injunction because it contended that the plant, which surrounds PEL on three sides, would hamper its business and that plant emissions might undermine sensitive water and soil testing PEL conducts for military and commercial customers. A sealed agreement keeps the settlement terms confidential.

The settlement “will not cause us to do business any other way,” says EnviroFuels President Bradley Krohn. “This was a frivolous lawsuit.” EnviroFuels, which had to relinquish funding for the 44 MMgy plant, now has to start fresh trying to raise money to build.

The plant was fully permitted and financed when PEL filed suit.

Krohn remains optimistic the company will break ground this year but he admits to being frustrated that “the lawsuit kept plans in a holding pattern for 16 months.” PEL did not return calls seeking comment.

EnviroFuels halted plans to build a second plant near Port Manatee after land acquisition dealings stalled. Instead, it has turned its attention to defending the lawsuit over the Tampa plant.

Georgia A proposed plant in southern Georgia is in its third site choice,

near Sycamore, after initial land resources in two other counties were deemed inadequate. Georgia Alternative Energy Co-op needed land near railroad tracks, the availability of gas and a suitable sized parcel.

It has been granted a permit, but the siting process has already consumed a year—and opposition is mounting from Sycamore residents who voiced concerns at the permit hearing over diminished property values, traffic, water contamination, pollution and public safety.

Illinois Waverly Ethanol is mired in a zoning lawsuit with no end in sight. Opponents say industrial property is available rather than the proposed site near the county elevator for the 200 MMgy plant. No trial date has been set.

Indiana More than 200 Starke County residents petitioned to halt a 27 MMgy waste ethanol facility near San Pierre. Their objections are water consumption, pesticide discharge and truck traffic.

Kim Ferraro represents the Kankakee Valley-Stop the Ethanol Plant (KV-STEP) plaintiffs. Ferraro filed the petition Dec. 6, 2007, seeking judicial review of the Stark County Board of Zoning Appeals’ decision to grant the permit for the plant, being developed

by Bio-Energy Development Co. LLC. As of press time, the court had not ruled on its merit.

In another case, the proposed NuFuels LLC complex that would have been home to a biodiesel facility, ethanol plant, and research and development center near Huntington has been delayed nearly two years by citizens leery of the environmental impact.

NuFuels has expressed a desire to move forward. The lawsuit is still pending.

In 2006, residents of Milford successfully squelched a VeraSun

Creating renewable success one client at a time.

Ascendant Partners is dedicated to helping renewable energy, food & agribusiness companies succeed from concept to capital.

Capital services provided by Ascendant Financial Partners LLC, member FINRA/SIPC.

Consulting Services

Capital Services

0DUNHW $VVHVVPHQWV )HDVLELOLW\ 6WXGLHV %XVLQHVV 3ODQV 3HUIRUPDQFH ,PSURYHPHQW

,QYHVWPHQW %DQNLQJ 0HUJHUV $FTXLVLWLRQV )LQDQFLDO $GYLVRU\ 6HUYLFHV ,QYHVWPHQW (YDOXDWLRQV

Call 303-221-4700 or visit www.ascendantpartners.com ETHANOL PRODUCER MAGAZINE APRIL 2008

109

LEGAL

Energy Corp. proposal to build a plant nearby. Attorney Snyder was peripherally involved, although he didn’t represent VeraSun. He was, however, instrumental in getting the zoning changes to facilitate the plant’s location in Milford. Those changes were patterned after ordinances Snyder had drafted in southern Indiana to assist a biodiesel plant locating there. VeraSun didn’t enjoy the same success. “The residents got up on their hind legs and objected to it, essentially not knowing what they were objecting to,” Snyder says. “VeraSun just backed off and said, ‘If we’re not welcome we don’t want to be here,’ and they abandoned the site.” In December 2007, VeraSun Tilton LLC purchased multiple parcels of farmland in neighboring Illinois for construction of a plant there.

Iowa Plans for a proposed plant near Grinnell came to a screeching halt when opponents filed suit over various zoning issues. Residents near the plant claimed that their property values would suffer if the plant, a joint venture proposed by Big River Resources and US BioEnergy, were to be built. Site work had begun, Securities and Exchange Commission filings were complete but the 100 MMgy plant never materialized. The lawsuit is still pending. Neither side responded to calls seeking comments. US BioEnergy is in the midst of a merger with VeraSun and moving to new company headquarters in Sioux Falls, S.D. Kansas Nearly 500 residents of the semiarid town of Wright spent $100,000 to delay construction of an ethanol plant in a lawsuit they filed over water use, and lost. Their concerns were their water-intensive corn crops, depletion of rural aquifers and memories of the Dust Bowl. Developers of the 110 MMgy Boot Hill Biofuels plant

110

predicted a spurt in employment opportunities and development of new businesses. Construction was to begin in June 2007. But in November 2007 plant developers requested a one-year extension on permits. It was granted. Boot Hill officials expect groundbreaking in late 2008, and blamed poor economic conditions, lack of capitalization and the rising cost of stainless steel as reasons for seeking the delay.

Minnesota Jeff Broberg, president of the Minnesota Trout Association, in early 2008 requested that the state Department of Natural Resources support a petition for a general study on the impact of ethanol in the state. His group has partnered with the Olmsted County Concerned Citizens to oppose a plant near Eyota.

Broberg says he organized when he learned of a state goal to increase capacity to nearly 2 billion gallons per year in the next few years. Although Broberg wrote in his petition request that, “We need to question the madness,” he says he’s not anti-ethanol, but wants the state to find better sites for the plants that will not deplete groundwater, or have a negative residual effect on land, fish and wildlife.

Broberg may have prevailed. The 55 MMgy plant is on hold while the Minnesota Environmental Quality Board convenes a group to study the effects of ethanol on groundwater supplies.

Missouri Residents of Webster County successfully delayed a $185 million plant proposed by Gulfstream Bioflex Energy LLC, citing concerns about overextending water supplies, draining aquifers and dotting the landscape with sinkholes—even though company officials promised to dig affected wells deeper or drill new ones for residents near the plant.

ETHANOL PRODUCER MAGAZINE APRIL 2008

LEGAL

New Mexico Opponents of a proposed plant near Clovis successfully sent the ethanol developers packing in late January 2008. ConAgra planned to be a minority partner in the Clovis plant, located near a Peavey elevator operated by ConAgra Trade Group. Citizens retained legal counsel when they organized to oppose the site selection near a low-income, minority neighborhood. ConAgra, after a two-year process, decided not to build. In December 2007, the plaintiffs had successfully appealed a decision denying them a second hearing over the plant’s permit. ConAgra cited poor economic times as its reason not to build.

New York RiverWright Energy LLC’s plans are on hold for an $80 million ethanol plant while residents near Buffalo, the self-titled “Birthplace of the Grain Elevator,” seek reconsideration of a judge’s order allowing the plant to be located in some abandoned grain elevators.

Buffalo City Council President and opponent David Franczyk voiced concerns about potential odor, noise and pollution problems.

He suggested the city was rubber stamping the project when the permit was approved in May 2007. Although a large neighborhood group supported the project, three residents immediately took their concerns to the courthouse, citing odor and public safety issues. The case is pending.

ETHANOL PRODUCER MAGAZINE APRIL 2008

SOURCE: NORTHEAST ETHANOL

The lawsuit has only enriched the lawyers, geologists and hydrologists that have taken up lucrative positions on both sides. In October 2007, after hearing volumes of testimony about aquifer depletion, a judge ruled in favor of Gulfstream. The litigation had been ongoing for two years. The plaintiffs promptly appealed. The appeal was still pending at press time.

Northeast Ethanol site near Mayfield, Pa.

The 110 MMgy plant was heralded in 2006 as a solution to Buffalo’s economic slump since Bethlehem Steel left in 1983, and for bringing life back to a dormant area. Only two of the 17 surrounding concrete grain elevators are operational, and RiverWright planned on using four mothballed silos for its facility, with production to begin in the fall of 2007. It didn’t make that target. Craig Slater, RiverWright’s attorney says he doubts the appeal will succeed.

Pennsylvania Two plants are currently bogged down in this state. Northeast Ethanol is pitted against five unhappy residents of Mayfield challenging zoning changes in its favor. Plant attorney Michael Brier is

111

LEGAL

fighting back aggressively, asking the court to force the plaintiffs to put up a bond for delaying the project by a “frivolous” objection.

Plant Developer Richard Scheller has partnered with Delta-T Corp. to design a 60 MMgy facility that he says is odorless, noiseless and vaporless. The plaintiffs say the plant is too close to a heavily-concentrated residential area. Mayfield’s City Council has passed a new ordinance allowing the plant. In November 2007, plant opponents elected four write-in candidates critical of the council and refinery. In late February, the 38 acres zoned industrial to clear the way for the plant were zoned back to residential. Scheller says he will appeal the decision. At the first public hearing residents said an ethanol plant was more properly situated in Iowa.

A $100 million plant proposed on the Susquehanna River is on hold while Conoy Township’s Planning Commission debates the merits of a petition by Lancaster Biofuels. The council has attached a comprehensive list of conditions to a noncommital resolution that places several additional burdens on the plant developers, who could not be reached for comment.

Another hearing on allowing the plant is set for mid-March.

Virginia In late December 2007, Hopewell approved, by a 4-3 vote, building an ethanol plant on its outskirts after months of study and wrangling. Opposition to Osage Bio Energy LLC’s 55 MMgy plant immediately mounted from within. Mayor Steve Taylor wondered about the long-term effects. “Ethanol is a short-term solution to our country’s problems,” he told the local media. “What happens when we find another solution?” City Councilor and opponent Curtis Harris filed an appeal over the site selection after the vote to stall construction, contending the land sale was illegal. Residents had voiced concerns about protecting the city against construction prob-

II

lems, the uncertain ethanol economy and the construction timetable.

There was a movement to locate the plant on a different site father away from the city. In mid-February 2008, the State Supreme Court blocked the appeal. Plans to build are moving forward.

Wisconsin This state is the site of a long-running battle between Century Foods International, a dairy processor owned by Hormel Foods Corp, and Coulee Area Renewable Energy. Century objected because it contended that plant emissions from the nearby refinery would contaminate its milk-based products. Residents complained that an ethanol plant would spoil the view from the municipal golf course and unpleasant odors might waft across the tee boxes.

In October 2007, plant developers agreed not to build near the food processor. Century agreed to buy the land parcel and drop several lawsuits.

In late 2007, the investors sued Century, alleging the food processor reneged on the agreement and is trying to force Coulee Area from building on other properties it is eyeing. The case is still pending. The plant has been delayed two years.

Previously residents of Cambria mounted opposition to an ethanol plant on the outskirts of town proposed by Didion Milling.

Plaintiffs who trade links to various anti-ethanol Web sites pronounced Cambria’s “the most comprehensive single Web site on issues surrounding ethanol plants … This community group successfully blocked the establishment of an ethanol plant in Cambria…”

Hold the phone. The protracted wrangling over a 45 MMgy plant actually failed. Didion Ethanol is scheduled to go on line March 1, 2008. Didion Vice President of Operations Dale Drachenberg says at one point, plant supporters staged a tractor

ndustrial electrical systems can be extremely complex, but Interstates can be your bridge to simplicity. Let our experienced professionals help you find straight answers to complex problems.

800-827-1662 www.interstates.com Electrical Construction • Electrical Engineering • Automation • Instrumentation 112

ETHANOL PRODUCER MAGAZINE APRIL 2008

LEGAL parade down Main Street. Local politicians were running for city seats on proethanol and anti-ethanol platforms.

Drachenberg says Didion did everything possible to ensure forward progress during the litigation, including agreeing to use underground tunnels to transport materials. The six-year odyssey, which began in 2002, included a two-year dormant period where Drachenberg says they shelved plans to build altogether, and couldn’t even begin to estimate what all the litigation and delays have cost.

Synder also cautioned that rural zoning authorities need to be monitored for lapses.

Many looked the other way when farmers subdivided land into parcels for their children or sold parcels to people who wanted a rural lifestyle. That’s what happened to VeraSun in Milford. “All of a sudden the residential density on those farm tracts was considerably higher than 20 years ago and the zoning authorities are in a quandary to protect something they should never have allowed to occur—single family residences in an agriculturally zoned district,” he says.

“The number of lawsuits is amazing,” Krohn says. “People would rather keep shelling out their dollars to go overseas to the Middle East. I just don’t get it.”

Schock, of Poet, says “we have a commitment to do a thorough job of education with the public and clear up all those questions.” But luck may be the biggest part of the site selection equation. EP Sarah Smith is an Ethanol Producer Magazine staff writer. Reach her at ssmith @bbibiofuels.com or (701) 663-5002.

Success Stories and Solutions Plaintiffs in Illinois were unsuccessful in stalling an ethanol plant in Hennepin and Marquis Energy LLC plans on opening in March 2008. Plant founder Mark Marquis refused to be bullied and he met the plaintiffs head-on.

“This was a sham lawsuit, it was just a union-busting ploy,” he says. Marquis’ tenacity paid off. He says the plant’s 100 MMgy capacity is on target.

An Ohio lawsuit initially delayed construction of Coshocton Ethanol LLC but was voluntarily dismissed by the plaintiffs with hopes of re-filing it. Contractors persisted and construction was successfully completed. Coshocton began grinding corn for the 55 MMgy facility in late January 2008.

Didion’s Drachenberg says he saw a tide of change in Wisconsin that he rode to complete Didion’s plant. It helped that another ethanol facility was successfully completed 15 miles away. “People could see that it was nice, clean, quiet—not a behemoth,” he says.

The Pennsylvania defense attorney involved in the Northeast Ethanol case may have a partial solution for developers, forcing plaintiffs to post a bond to cover delay costs. Generally courts only permit bonds if injunctive relief is sought but courts may be more receptive to enforcing the posting of a bond if developers can show that delays will cause irreparable harm

ETHANOL PRODUCER MAGAZINE APRIL 2008

113

INITIATIVE

PHOTO: SAM MELQUIST, BBI INTERNATIONAL INC.

114

ETHANOL PRODUCER MAGAZINE APRIL 2008

INITIATIVE

BUILDING THE ‘MINNESOTA MODEL’ The Minnesota Corn Growers Association produced a book about the rise of ethanol production in the state and what’s commonly referred to in the industry as the “Minnesota model.”

The book includes interesting anecdotes and insights into the behind-the-scenes activities that took place during ethanol’s early years.

By Kris Bevill

ETHANOL PRODUCER MAGAZINE APRIL 2008

115

INITIATIVE

innesota didn’t get its reputation as a leader in the ethanol industry by accident. It took years of hard work by highly motivated people who believe in the renewable fuel and its benefits. High Octane: How Minnesota Led the Nation in Ethanol Development details the rise of the ethanol industry in Minnesota, told from the perspective of those individuals who created the industry. The book is peppered with accounts of legislative battles and start-up struggles and tales of hard work, optimism and hope by people who were determined to get the state’s ethanol industry off the ground. “One of the highlights for me writFernstrum ing this book was just talking with the people who were behind this,” says the author Wendy Fernstrum.

“They’re passionate and intelligent people. It was just a joy to hear their stories and to talk about what they’d been through and what they’d achieved. And none of them are saying ‘it happened because of me.’”

Fernstrum had never set foot on a

M

‘We didn’t have any great vision. We just had a lot of little things that we thought were good ideas, and all the little things ended up being what is today known as the Minnesota model.’ farm, but the freelance writer decided to work on a book about ethanol two years ago at the suggestion of the Minnesota Corn Growers Association. Fernstrum was living in a rural town in southern Minnesota and had done some work for the MNCGA, but hadn’t delved into the history of ethanol until she began researching for the book. “It was a fascinating story to unravel,” she says. “The fact that it was a grassroots effort, and that farmers built the plants and put their resources toward them was impressive to me. I was really impressed with their leadership and their vision.”

Fernstrum witnessed firsthand the classic Minnesota humbleness and the can-do attitudes of those lobbying for the ethanol industry as she talked with some of the people who were featured in the book. “If they had sat down, thought

about how difficult it was and how risky it was they probably wouldn’t have done it,” Fernstrum says. “They had this naivety—they didn’t know they couldn’t do it. They did it because they had faith, they thought they could and they basically had nothing to lose. They had a pile of corn and it needed to be put toward a purpose. Nobody had a grand scheme as to how it would happen … it just all came together.”

The Early Days What is now referred to as the “Minnesota model” did come together, but it wasn’t easy. As the book demonstrates, it was a “one step forward, two steps back” dance between those in favor of a farmer-run industry and those who had a stake in the petroleum industry.

Among the people involved during

INITIATIVE

Kathy (Graf) Bryan, left, former Minnesota Commissioner of Agriculture Jim Nichols, in the background, and former Gov. Rudy Perpich, right, took part in a “fly around” to rural towns in Minnesota to promote ethanol in 1988. Bryan participated in the tour as part of her role as chairwoman of the Minnesota Ethanol Commission. Promotional tours were a large part of the ultimate success of the Minnesota model.

the early days were Ralph Groschen, senior marketing specialist for the Minnesota Department of Agriculture, Kathy (Graf) Bryan, president and cofounder of BBI International, and Larry Johnson, who owns an ethanol development consulting company called LLJ Consulting. Many others had a hand in the development of the Minnesota model and are mentioned in various instances throughout the book and in

conversations. Merle Anderson, a Climax, Minn., farmer and one of the founders of the American Coalition for Ethanol, for instance, is “the founder of ’ most everything ethanol in Minnesota,” Johnson says. However, Johnson himself has been referred to at times as the founder of the Minnesota model. The truth is any one of those involved in the rise of ethanol in Minnesota if asked can handily provide a whole list of people

ETHANOL PRODUCER MAGAZINE APRIL 2008

who they feel were vital to the development of the industry. “Bruce Stockman and the MNCGA had a tremendous impact on the success of the ethanol industry in Minnesota,” Bryan says. “It was their hardwork that made this happen.” After reading the book, it’s clear that such a monumental task could never have been achieved were it not for many different types of people coming together to support a common goal.

One of those people is Bryan, who spent many years as a struggling farmer and ethanol producer before BBI International, and says she never considered giving up on ethanol because she didn’t have “enough common sense to do that.” While banks were fairly willing to give money to farmers in the ’80s, they didn’t really believe the ethanol industry could succeed.

Bryan and her then husband, Rudiger Graf, persisted and became one of the first benefiJohnson ciaries of Minnesota’s producer payments. She also began working on behalf of the MNCGA, talking about ethanol’s benefits to anyone

117

INITIATIVE

‘Farmers were the ones who built up this industry and there’s a huge rural economic benefit to that. [Ethanol] created a value-added industry for the farmers. It’s awfully hard to make a living just growing corn.’ who would listen. “One of the biggest lessons I learned is what an impact you can make when you start getting involved in a topic and go talk to legislators,” she said in the book.

Then there was Johnson, who was a farmer in southwest Minnesota and was involved in corn grower groups at state and national levels before becoming the “Ethanol Answer Man” for the Minnesota Ethanol Commission in 1988. “A lot of people were just trying to get one small victory at a time, move ahead and then we’d move to something else,” he says. “We frequently laughed about it, in fact we had no idea what we were starting.”

So just what is the Minnesota model? “There never was a model until everything came together and was working and somebody said ‘Oh, that’s a model,’” Johnson says. “I don’t know who coined that phrase.

To begin with, there was just a number of people who thought ethanol was a good idea and was an answer to some of the world issues. We didn’t have any great vision. We just had a lot of little things that we thought

were good ideas, and all the little things ended up being what is today known as the Minnesota model.”

Vital Elements of Success The Minnesota model is essentially a partnership between private and public sectors that combined their efforts to keep funding for ethanol and profits from production in local economies. Local ownership was the key to success according to Fernstrum. “Farmers were the ones who built up this industry and there’s a huge rural economic benefit to that,” she says. “[Ethanol] created a value-added industry Groschen for the farmers. It’s awfully hard to make a living just growing corn.” It was the potential benefits to farmers that appealed to Groschen. “This is the most satisfying thing I’ve ever been involved in,” he says. “My main focus was the local farmers actually investing in and getting more of a return on their crops than they would by just selling them

Where to Find High Octane: How Minnesota Led the Nation in Ethanol Development www.bookstream.biz under the history tab www.amazon.com Cost: $14.95

118

ETHANOL PRODUCER MAGAZINE APRIL 2008

PHOTO: MINNESOTA CORN GROWERS ASSOCIATION

INITIATIVE

U.S. Sen. Amy Klobuchar, D-Minn., left, received an autographed copy of Fernstrum’s book after speaking at the Minnesota Ag Expo.

to the elevator. That was the whole idea for me.”

Johnson believes the Minnesota model was successful because of legislation that provided payments to producers. Without that, small plants might never have had a chance to get started. Getting information out about the benefits of ethanol was vital to getting legislators’ attention, but it wasn’t always enough. The book tells of the inventive tactics ethanol supporters used to combat the onslaught of negative information produced by oil companies. For example, in 1986 the MNCGA created an “orange card campaign” where two versions of orange business cards were delivered to gas stations.

One was a “shame on you” card that was given to station managers who didn’t have ethanol fuel available for their customers; the other was a positive card that members handed out at stations that were selling ethanolblended fuel. Another example of untraditional awareness campaigns created by the MNCGA involved yellow nickels. Nickels were spray paint-

ed on one side with yellow paint and the coins were handed out at gas stations to customers who fueled their vehicles with ethanol. “We had a lot of fun when the industry was small,” Bryan says. “We got to do the outrageous things. We had the attitude that we never thought something couldn’t be done. It didn’t always work, but that was the attitude we had.”

Those who worked to make ethanol a success story in Minnesota don’t take any of their victories for granted. They continue to look ahead at what advancements can be made in the industry. The last few chapters of Fernstrum’s book examines the future of ethanol in the state and, although the outlook is positive, there are a few questions yet to be answered.

Ethanol’s Future in Minnesota After writing this book, Fernstrum is convinced that Minnesota’s ethanol industry is here to stay as long as farmers continue to control the plants. “Farmers cannot

ETHANOL PRODUCER MAGAZINE APRIL 2008

JX]\IXZb C F 8 ; @ E > I 8 : B K < : ? E F C F > @ < J

/--%.-(%.)),

nnn%jX]\iXZb%Zfd .() 9LCKD8E ;I# JL@K< (# JLDK<I# J: )0(,'

119

INITIATIVE

‘I think the Minnesota model has dispelled dozens of myths that were held about using ethanol.’ make a living just by growing commodities,” she says. “They need value-added opportunities and ethanol plants are a great way to do that. The fact that these farmer-owned plants are bringing in

almost $5 billion to the state’s economy is important. What other grassroots industry contributes that kind of money to a state?”

Despite their success, the people who

You know how to get every drop of ethanol from your materials ...

... we’ll help make it more profitable 6 second analysis from the DA 7200 will increase your profitability, efficiency & ethanol production. With HPLC type results available in 6 seconds, you can perform realtime monitoring of the fermentation process. Analyze corn fractionation products, wet cake, syrups, and DDGs on the same instrument. The ease-of-use allows for 24 hour operation. Run your plant with knowledge based upon fast and accurate results.

To calculate how much you can save, please contact Perten Instruments at www.perten.com

SPECIALISTS IN QUALITY CONTROL OF GRAIN, FLOUR, FOOD AND FEED

www.perten.com

120

helped develop Minnesota’s ethanol industry will tell you that there’s a lot of work ahead. Groschen believes cellulosic ethanol is vital to the growth of the industry. “I think, as the NCGA says, 15 billion gallons of ethanol can be made from corn without significantly impacting food prices,” he says. “Let’s go there and then make sure it doesn’t stop there because it doesn’t have to. It’s going to take a lot of research to develop cellulosic ethanol, but if we want to go beyond here, we really should make cellulosic work. I think we hurt ourselves if we try to make people think that we’re going to make 36 billion gallons of ethanol from corn.”

In the meantime, Minnesota’s accomplishments in the ethanol industry haven’t gone unnoticed, Bryan says. “I have the chance to travel around to other countries and people talk about Minnesota and what the state has done,” she says.

“Their accomplishments are recognized around the globe. Mike (Bryan) and I went on a recent trade mission in central Europe and almost all the organizations that we met with were aware of Minnesota’s successes. I think the Minnesota model has dispelled dozens of myths that were held about using ethanol.”

Fernstrum says she wrote this book to provide information to anyone who may not know about ethanol in Minnesota and to document the historic rise of the industry in the state. People curious to learn more about ethanol will find this book informative and accurate.

Those who were involved in developing the Minnnesota model should enjoy looking back at their accomplishments. EP Kris Bevill is an Ethanol Producer Magazine writer. Reach her at kbevill@bbibiofuels.com or (701) 3730636.

ETHANOL PRODUCER MAGAZINE APRIL 2008

Toulouse Mercure Toulouse Atria

June 2â&#x20AC;&#x201C;6, 2008 A Tradition of Industry Education For 27 years, The Alcohol School has been educating fuel ethanol and distilled beverage producers in the science of alcohol production.

The week-long programme in Toulouse, France, is designed for lab, plant, and management personnel and is organized around a series of lectures and laboratory demonstrations presented by a faculty of academic, industry and Ethanol Technology Institute experts.

The programme will cover the process of ethanol and beverage alcohol production from milling and mash preparation through fermentation and distillation. Enzyme usage, yeast biology, bacterial contamination and control will also be discussed along with other issues currently affecting both industries.

For More Information Registration is limited, with preference given to fuel ethanol and distilled beverage producers.

Registration materials and additional information are available online at www.ethanoltech.com.

6120 W Douglas Ave | Milwaukee WI 53218 USA +1 414 393-0410 | Fax +1 414 358-8012

FEEDSTOCK

The Risk of

BIOMASS INVASION

Arundo donax, commonly known as giant reed, has tremendous potential as a biomass crop. It also illustrates the emerging issues around the potential for unintended weedy invasions.

By Susanne Retka Schill

Arundo donax growing along a roadside in July PHOTO: JAMES H. MILLER, USDA FOREST SERVICE, BUGWOOD.ORG

122

ETHANOL PRODUCER MAGAZINE APRIL 2008

FEEDSTOCK

ETHANOL PRODUCER MAGAZINE APRIL 2008

123

Providing Expert Solutions for the Safe and Efficient Handling of Ethanol in Production, Loading, Transporting, Unloading Applications Worldwide

PROCESSING

LOADING

UNLOADING

TRANSPORTING

Throughout the world, OPWFTG companies, products and systems are hard at work ensuring the safe and efficient handling and transportation of ethanol. OPWFTG products and systems safeguard against costly spills, overfills and fugitive vapor emissions. Whether your need is in the processing plant, at the terminal loading rack, or outfitting a fleet of rail tank cars, cargo tanks or dry bulk trailers, OPWFTG products and systems set the standard for safety, performance and peace-of-mind assurance in ethanol fuel-handling applications.

• Processing Valves • Sight Flow Indicators • Loading/Unloading Systems

• Cargo Tank Products • Rail Tank Car Products • Overfill Protection • Dry Disconnects

www.opwftg.com | +1 513-696-1798 | Fax: +1 513-204-5770

FEEDSTOCK outherners joke that kudzu is the plant that ate the South.

Initially introduced as a forage crop and once widely used for erosion control, kudzu has spread throughout the Southeast becoming a major invasive weed problem.

Johnsongrass is another infamous perennial grass initially introduced as a forage crop and now considered a noxious weed in 19 states. Some in the scientific community are sounding the alarm that the push for bioenergy crops could have the unintended effect of creating new biomass invaders potentially even more troublesome than kudzu or johnsongrass. The November 2007 commentary published by the Council for Agricultural Science and Technology, “Biofuel Feedstocks: The Risk of Future Invasions,” warns that many of the same traits making a particular plant an ideal biomass crop are shared by plants that become invasive. To make it potentially worse, efforts are underway to enhance new biomass crops to produce more biomass, improve their performance in poor soils and growing conditions, and reduce lignin content to make the conversion process more efficient—efforts that could compound the ecological impact if the biomass crops escape cultivation.

The nation has a huge conflict of interest says Jacob Barney, co-author of the CAST report and a post-doctoral scholar in the Department of Plant Science at the University of CaliforniaDavis. On the one hand, is the renewable fuels standard just passed in the new Energy Bill, which will rely upon cellulosic feedstocks for the fuels of the future. On the other hand, are the Invasive Species Act and other legislation trying to control invasive species.

Sorting out the competing goals will also be a challenge because a weed in one place isn’t a weed everywhere.

Growing Arundo donax as a biomass crop in California would be unadvised because it’s one of the state’s worst weeds, Barney says. “Taken to another

S

FEEDSTOCK place it has the potential to be grown safely,” he adds. Some people in California raise concerns about switchgrass, the widely touted model biomass feedstock, which is native to the states east of the Rocky Mountains but not to California and the Pacific Northwest. Rice growers are particularly concerned that switchgrass could create problems if it were to get established as a weed in rice fields, Barney says. “Now, we have no evidence to suggest it will, but it is a concern,” he says. Studies evaluating switchgrass’s potential as an invasive weed are beginning in California. “However, the assessment we conduct here in the Central Valley of California will not be applicable to other regions,” he adds.

Indeed, the scientists involved in the CAST report recommend that new biomass crops and even new genotypes be evaluated in every region before being introduced commercially.

The evaluations they recommend include: A weed risk assessment of each potential genotype targeted for cultivation within a particular region A climate-matching analysis to determine regions of agronomic suitability and identification of regions climatically suited to potential invasions Evaluation of cross-hybridization potential with related species to assess the risk of genetic invasion Determination of the susceptibility of native and managed ecosystems to biomass feedstock escapes from cultivation Multiyear studies in regions susceptible to weedy encroachments to evaluate the interactions between proposed feedstocks and native and agronomic species Establishment of management practices to eradicate unwanted stands prior to introduction

We take pride in offering complete turn-key solutions for the ethanol industry.

Our comprehensive consulting, innovative engineering, equipment offerings, and extended support come from extensive experience and leadership in the field of water treatment.

Skid Mounted Control Systems

Cutting Edge Filtration Systems

Custom Designed Automation

Cold Lime Softening Systems

Custom Platform RO Systems

Zero Discharge Process Design

Off Site Membrane Cleaning

Engineering Design

Water Softeners and Demineralizers

Equipment Installation

Promising Traits Arundo donax, commonly known as giant reed, is one of those crops being developed as a new energy crop 1-866-663-7632 www.uswaterservices.com

PHOTO: UNIVERSITY OF SOUTH CAROLINA

FEEDSTOCK

Laslo Marton, left, and fellow researcher, Mihaly Czako, are dwarfed by the Arundo donax canes they are studying for biomass energy and phyto remediation.

but is considered invasive in some areas.

Giant reed originated in India and was carried around the world for use as a windbreak, for construction cane and as the source of reeds for woodwind instruments. Brought to the United States 300 years ago by Spanish missionaries, giant reed looks like bamboo, but actually is a perennial grass that grows 20 to 30 feet tall.

University of South Carolina professor of biology Laslo Marton remembers using the long, strong canes as fishing poles when he was a child in his native Hungary. In central and southern Europe, giant reed was widely used to soak up excess water and nutrients from backyard septic systems, he says. At the University of South Carolina, Marton began studying giant reed for its potential to remove contaminants from the soil.

One test plot in South Carolina is being used to study the plant’s effectiveness in cleaning up sewage water and diluted sludge. For many sewage sludge disposal

projects, accumulations of phosphorus are becoming a problem, he explains.

“Arundo has the potential to remove 200 kilograms [485 pounds] of phosphorus per acre per year.” Giant reed also removes halogenated organic compounds, such as dioxin and agricultural pesticides, from contaminated soils. “In Arundo, most of these organic pollutants are metabolized, broken down to carbon dioxide or, in the worst case, hydrochloric acid which is neutralized by the soil,” he says. Using giant reed as a biomass feedstock solves one of the major limitations of its use for phyto remediation— what to do with the 20 to 50 dry tons per acre of biomass that’s produced.

Marton is enthusiastic about Arundo’s potential as a biomass crop.

“This is a plant which gives you high biomass, has very low maintenance and very high resistance to environmental factors and biological pests,” he says. “No known herbivore eats it. The literature says Indian elephants eat it, but it very

Custom is the standard at Mueller®.

Established in 1940, Mueller specializes in the design and manufacture of a full range of tanks and vessels, but we do more than tanks — we provide process solutions. We offer integrated systems, modular fabrication, field construction, and complete project execution.

Paul Mueller Company’s state-of-the-art shell-and-tube designs are built to last, minimize the effects of fouling, provide trouble-free start-ups, and increase your operation’s run times.

Contact us for your process solution.

©2008 Paul Mueller Company

126

391-4

ETHANOL PRODUCER MAGAZINE APRIL 2008

seldom happens that there are free Indian elephants roaming around the United States.” The plant has high energy content at 8,000 British thermal units per dry pound, and the cellulose is easily separated from the lignin so it can be digested with enzymes and converted to liquid fuel. Arundo stands stay productive for decades and can be eradicated by cutting and spraying the young shoots. “It’s a crop for the future,” he says.

Texas and California have areas where Arundo has become a significant weed problem, he admits. “Texas and California were human mistakes, which gave it a bad reputation as a potentially invasive plant,” he says. In both places, giant reed was planted along streams and irrigation canals to stop soil erosion. In flooding conditions, the canes and roots were dislodged and carried by the water to colonize new areas. When kept away from running water, Marton argues, the plant doesn’t spread. “How could [Arundo] be invasive when there are no

ETHANOL PRODUCER MAGAZINE APRIL 2008

seeds, its rhizomes aren’t running, and the major problem in planting required developing a special technology to plant it?” he asks. A sterile plant with no pollen and no seeds, Arundo has been limited to small commercial plantings worldwide because the roots must be dug up, split apart and hand planted. Marton developed a micro propagation technology which uses embryonic stem cells. The cultures of stem cells can be stored in a Petri dish, and when needed, treated with hormones to begin developing tiny propagules. Those are planted in greenhouse flats and tended until ready for transplanting with conventional tree or tobacco transplanting equipment.

South Carolina Targets South Carolina economic developer Joseph James is working to transform Marton’s work into an economic opportunity for South Carolina farmers. James helped form the South Carolina Biomass Council and chairs the feedstock com-

PHOTO: JOSEPH DI TOMASO, UNIVERSITY OF CALIFORNIA-DAVIS

FEEDSTOCK

An Arundo donax infestation crows out native vegetation in this photo taken near Escondido, Calif., where the grass is considered an invasive weed.

mittee, which is looking at a variety of feedstocks for the Southeast. “When you get out of the Midwest where you have these huge industrial-sized farms, you have multiple small farms and multiple ownerships,” he says. “You might need 50,000 acres of biocrops to supply a cellulosic ethanol operation. If so, you might have to have 300 to 500 farmers

127

R

C on

tractin gI nc

.

R&

FEEDSTOCK

Serving the railroad industry for 20 years

For All Your Railroad Needs Call Us First! ·New Construction ·Facility Design ·Rail Maintenance ·Rail Repairs ·Derailments ·Scales ·Quality Products R&R Contracting, Inc. 1 800 872 5975 www.rrcontracting.net

128

involved. The challenge becomes coordinating the crops that they grow, and the harvesting and shipping. That tends to put pressure on having the most productive biocrops in terms of tons per acre.”

James hopes to recruit farmers around South Carolina to plant Arundo this spring. With one eye on the invasive species concerns being raised, they intend to keep plantings on dryland fields with tilled borders to keep the planting contained, James says. “We would love to have federal funding to help us do that,” he adds. “There are plenty of grants to get switchgrass projects going, but executive order 13112 essentially prohibits the use of federal funds when you have any crop that has invasive potential unless the secretary that heads the agency deems the plant acceptable.” James has become quite frustrated in his attempts to get federal agencies such as the Agricultural Research Service and the Invasive Species Council to study the crop. “The leadership of the U.S. DOE and the USDA need to get moving on tests, growing a number of acres of these kinds of crops under controlled situations to get comfortable with them,” he says.

James sees great potential in Arundo crops for South Carolina farmers. He has sent samples to Iogen Corp., a Canadian ethanol producer, which has conducted preliminary tests and finds it promising for the company’s cellulosic ethanol program. The state’s paper industry is quite interested in using Arundo as a pulp source because the cane’s long fibers make particularly high quality paper, he says. A paper plant recently outbid a utility that wanted to cofire Arundo with coal using the limited Arundo supplies now available, he says. Another company is testing Arundo as a biomass source to complement wood in its production of fuel pellets for the European market.

Other State, International Projects There are other Arundo projects under development, says Michael Birch, managing director of Orapa Ltd., based in Athens, Tenn. He is working with the South Carolinans to license and commercialize the patented propagation and planting technology. A project in Florida is looking at planting 20,000 to 40,000 acres of Arundo for a biomass power plant using gasification technology, he says. A six-year evaluation of Arundo in Florida didn’t find invasive tendencies in any stand, he says.

However, Florida did add some safeguards. “Soon after the assessment Florida issued a new set of rules,” Birch says. “You have to apply and get approval for growing dedicated energy crops.” Progress Energy Florida, a utility company, signed an agreement in mid-2006 to purchase electricity from the proposed 130 megawatt biomass power plant in central Florida using a variety of Arundo trademarked as Egrass. The original agreement was with Biomass Investment Group Inc., which has since become part of the Innovative Energy Group with main offices in Dubai, United Arab Emirates.

Birch has also been involved in discussions with oil and chemical companies in Texas that are interested in exploring Arundo’s potential for phyto remediation of contaminated soils.

Several Central American countries are developing Arundo projects to grow biomass for power, many of which have high electrical energy costs due to a lack of local energy sources. Other projects are underway in Europe and Australia.

Birch expects to be making further announcements this spring on other projects in development. EP Susanne Retka Schill is an Ethanol Producer Magazine staff writer. Reach her at sretkaschill@bbibiofuels.com or (701) 738-4962.

ETHANOL PRODUCER MAGAZINE APRIL 2008

PROJECT DEVELOPMENT >> Projects continued from page 85

Monona County Ethanol LLC Location: Blencoe, Iowa Target groundbreaking: summer 2008 Feedstock: corn Capacity: 100 MMgy Design/build team: C.J. Schneider Engineering Co./Praj Industries Ltd. Synopsis: John Kant, director of public relations for Midwest Ethanol Producers LLC, says the company is seeking permission from county commissioners to shut down roads in preparation for Union Pacific Railroad to install a 9,000-foot acceleration/deceleration line next to the main track entering the plant.

Prairie Creek Ethanol LLC Location: Wesley, Iowa Target groundbreaking: summer 2008 Feedstock: corn Capacity: 55 MMgy Design/build team: Fagen Inc./ICM Inc. Synopsis: Gold Eagle Co-op in Goldfield, Iowa, is the driving force behind this project. Co-op General Manager Brad Davis says the equity drive for the $120 million plant is currently in limbo but should resume this spring when the group will focus on local investors. Recent downturns in the publicâ&#x20AC;&#x2122;s perception of ethanol, as well as concerns about corn origination, will make raising equity more challenging.

Red Rock Renewables Location: Pleasantville, Iowa Target groundbreaking: March 2008 Feedstock: corn Capacity: 100 MMgy Design/build team: Fagen Inc./ICM Inc. Synopsis: At press time, the company was in the middle of its SEC filing. Company Chairman Paul Lopez says the ethanol project is spearheaded by a group of local businesspeople.

River/Gulf Energy LLC Location: Buffalo, Iowa Target groundbreaking: undeclared Feedstock: corn Capacity: 50 MMgy Design/build team: undeclared Synopsis: Company President Rich Goldstein says this project is continuing to work on its equity drive, which may be aided by the passage of the EISA. However, he acknowledges that high corn prices and low ethanol prices are hindering financing. The company is actively seeking a partner for this project. River/Gulf Energy is part of a group of businesses that includes River Gulf Grain Co., a scrap metal business, a barge company and river terminals.

Tama Ethanol LLC Location: Tama, Iowa Target groundbreaking: spring 2008 Feedstock: corn Capacity: 108 MMgy Design/build team: Agra Industries/Delta-T Corp Synopsis: Financing is almost complete, and groundbreaking should occur this spring, according to Chris Miller, owner and chief executive officer of Alpha Holdings LLC, a major partner in this project. The $200 million plant is one of two projects being undertaken by Alpha Holdings.

The other plant is located in Dexter, Iowa.

130

ETHANOL PRODUCER MAGAZINE APRIL 2008

Number of Proposed Ethanol Plants By Region 30 25 20

Pacific

South Central-East/South Atlantic

Mountain North Central-West

Canada Middle Atlantic/New England

South Central-West North Central-East

15 10 5 0

2004

2005

2006

ETHANOL PRODUCER MAGAZINE APRIL 2008

www.smar.com

Ozark Ethanol LLC Location: Nevada, Missouri Target groundbreaking: undeclared Feedstock: corn Capacity: 50 MMgy Design/build team: Delta-T Corp.

Synopsis: The company is currently conducting an equity drive.

Smar International Corporation, Houston, TX, Ph: 800-762-7833, Fax: 713-840-2022, sales@smar.com

Bootheel Agri-Energy LLC Location: Sikeston, Missouri Target groundbreaking: undeclared Feedstock: corn Capacity: 100 MMgy Design/build team: Delta-T Corp.

Synopsis: A company spokeswoman says SEC Registration Form SB-2 was withdrawn, and the project is on hold.

Ethanol, Bio-Diesel, Nuclear Power, U.S. NAVY, Oil & Gas, Water & Wastewater, Food & Beverage, Pulp and Paper, Sugarâ&#x20AC;Ś

Vision Fuels Holdings Co. LLC Location: Des Moines, Iowa Target groundbreaking: undeclared Feedstock: corn Capacity: 110 MMgy Design/build team: undeclared Synopsis: Vision Fuels is in the process of raising equity for this facility after sister projects in Boone and Liscomb, Iowa, were discontinued. Chief Executive Officer and President Dan Cornelison says funding is difficult to obtain right now, but he is optimistic that the company will be successful.

Our people push process control and automation to the edge, from the field to the control room and to the enterprise network.

PROJECT DEVELOPMENT

2007

131

PROJECT DEVELOPMENT

Bionol Lake Providence Location: Lake Providence, Louisiana Target groundbreaking: undeclared Feedstock: corn/milo Capacity: 108 MMgy Design/build team: undeclared Synopsis: A site has been secured, and all permitting is complete. Initial dirt work has begun at the site, which is located on the banks of the Mississippi River. The company intends to complete funding soon.

LoneStar Ethanol Location: Port of Victoria, Texas Target groundbreaking: summer 2008 Feedstock: corn/milo Capacity: 100 MMgy Design/build team: undeclared Synopsis: The company has received a wastewater permit, and the air permit is in the “approval chain,” according to a company spokesman. A target completion date is slated for the first quarter of 2010.

American Ethanol Inc. Location: Allen Station, Texas Target groundbreaking: undeclared Feedstock: corn Capacity: 100 MMgy Design/build team: undeclared Synopsis: This American Ethanol project has all of its permits, and the company will be carefully observing the operation of its pilot plant in Butte, Mont., which aims to be on line by April. Information gleaned at the pilot plant will play a role in determining future plans for this sister facility, which may include cellulosic ethanol. Some grant funding is outstanding, but the company is confident of its arrival.

Panda Ethanol Inc. Location: Muleshoe, Texas Target groundbreaking: undeclared Feedstock: corn Capacity: 105 MMgy Design/build team: undeclared Synopsis: According to Panda Ethanol Director of Communications Bill Pentak, this facility has secured an air permit, but it is waiting for the industry’s financial environment to improve before moving forward.

132

ETHANOL PRODUCER MAGAZINE APRIL 2008

PROJECT DEVELOPMENT

ICM Inc. 6%

Proposed Ethanol Plant Design/Build Teams The

majority

of

Fagen Inc./ICM Inc. 16% Praj Industries Ltd. 5%

Undeclared 40%

proposed

ethanol projects donâ&#x20AC;&#x2122;t have, or have not announced, a design/build team at this time. Of those that have

Others 12% KL Process Design Group 2% Bratney Cos. 2% Genahol LLC 4% Delta-T Corp. 13%

named a design/build team, the names that top the list are familiar to the industry: Fagen Inc., ICM Inc., Delta-T Corp. and Praj Industries.

Fagen/ICM projects make up 27 percent of the proposed projects, with ICM alone responsible for another 11 percent. Fagen and ICM have built approximately 50 percent of the ethanol plants currently producing in the United States. Praj Industries is connected to 9 percent of the proposed

projects.

Delta-T

Corp.,

despite dealing with legal issues, doesnâ&#x20AC;&#x2122;t seem to be affected by the negative press, making up 21 percent of the plants on this list. The company has had a hand in 16 percent of the ethanol plants currently operating nationwide.

Panda Ethanol Inc. Location: Sherman County, Texas Target groundbreaking: undeclared Feedstock: corn Capacity: 105 MMgy Design/build team: undeclared Synopsis: According to Bill Pentak, Panda Ethanol director of communications, this facility has secured an air permit and is waiting for the financial environment to improve.

Pentak stresses that Panda Ethanol will remain committed to all of its proposed projects.

ETHANOL PRODUCER MAGAZINE APRIL 2008

133

PROJECT DEVELOPMENT

River Valley Energy LLC Location: Arena, Wisconsin Target groundbreaking: undeclared Feedstock: corn Capacity: 50 MMgy Design/build team: undeclared Synopsis: At press time, this project was in the process of finalizing all permitting issues, according to Karl Beth, spokesman for United Co-op, the managing member of River Valley Energy. Additionally, all zoning and conditional-use permits have been approved by the local township and county authorities.

Sharon Ethanol LLC Location: Sharon, Wisconsin Target groundbreaking: June 2008 Feedstock: corn Capacity: 108 MMgy Design/build team: undeclared Synopsis: This project, owned by parent company Global Renewable LLC, completed permitting and zoning requirements, according to Director Jeffery Knight. The 187-acre site will include three rail loops. In addition to rail, the company will use trucks to move feedstock and finished products to and from the facility. Knight says the company is considering fractionation on the front end of the ethanol production process and the integration of windmills as a secondary power source.

134

American Ethanol Inc. Location: Danville, Illinois Target groundbreaking: undeclared Feedstock: corn Capacity: 118 MMgy Design/build team: undeclared Synopsis: This project has all of its permits, and the company will be carefully observing the operation of its pilot plant in Butte, Mont., which aims to be on line by April. Information gleaned at the pilot plant will play a role in determining future plans for this sister facility, which may include cellulosic ethanol.

Some grant funding is outstanding, but the company is confident of its arrival.

American Ethanol Inc. Location: Dwight, Illinois Target groundbreaking: undeclared Feedstock: corn Capacity: 118 MMgy Design/build team: undeclared Synopsis: This project has all of its permits, and the company will be carefully observing the operation of its pilot plant in Butte, Mont., which aims to be on line

by April. Information gleaned at the pilot plant will play a role in determining future plans for this sister facility, which may include cellulosic ethanol. Some grant funding is outstanding, but the company is confident of its arrival.

ETHANOL PRODUCER MAGAZINE APRIL 2008

PROJECT DEVELOPMENT

American Ethanol Inc. Location: Gilman, Illinois Target groundbreaking: undeclared Feedstock: corn Capacity: 118 MMgy Design/build team: undeclared Synopsis: This project has all of its permits, and the company will be carefully observing the operation of its pilot plant in Butte, Mont., which aims to be on line by April. Information gleaned at the pilot plant will play a role in determining future plans for this sister facility, which may include cellulosic ethanol. Some grant funding is outstanding, but the company is confident of its arrival.

Midwest Agri-Energy Production LLC Location: Salem, Illinois Target groundbreaking: undeclared Feedstock: corn Capacity: 100 MMgy Design/build team: undeclared Synopsis: This project has been hindered in the financing stage but plans to continue. Project Developer Kevin Greene says the company is hoping to complete its financing package, but he acknowledges that without public financial support, it will affect scheduling to some degree.

American Ethanol Inc. Location: Stillman Valley, Illinois Target groundbreaking: undeclared Feedstock: corn Capacity: 118 MMgy Design/build team: undeclared Synopsis: This project has all of its permits, and the company will be carefully observing the operation of its pilot plant in Butte, Mont., which aims to be on line by April. Information gleaned at the pilot plant will play a role in determining future plans for this sister facility, which may include cellulosic ethanol. Some grant funding is outstanding, but the company is confident of its arrival.

Mt. Carmel Ethanol LLC Location: Mt. Carmel, Illinois Target groundbreaking: undeclared Feedstock: corn Capacity: 110 MMgy Design/build team: Lurgi Inc. Synopsis: A fractionation process supplied by Cereal Process Technologies LLC will be implemented at this facility. The location is ideal because it sits on the Norfolk Southern rail line. It is also near a coal mine, which could allow the facility to install a coal-fired boiler, according to company spokesman Joe Siegert. The site also has access to an aquifer and is surrounded by a 35-mile radius of corn.

SMART DESIGN SOLID CONSTRUCTION RELIABLE PERFORMANCE Screw-Lift®

The Andersons Ethanol Champaign LLC Location: Champaign, Illinois Target groundbreaking: undeclared Feedstock: corn Capacity: 110 MMgy Design/build team: ICM Inc. Synopsis: Neil McKinstray, general manager of the ethanol division of The Andersons Inc., says this facility will be adjacent to the company’s existing grain terminal.

Illini Ethanol LLC Location: Royal, Illinois Target groundbreaking: undeclared Feedstock: corn Capacity: 55 MMgy Design/build team: undeclared Synopsis: The site has been purchased, and all permits have been obtained. All necessary and associated environmental paperwork is complete.

The company still needs to complete financing, and an EPC contractor needs to be selected.

ETHANOL PRODUCER MAGAZINE APRIL 2008

Screw Conveyors

Bucket Elevators Never Operate Conveyors Without Covers.

Super-Flo®

Enduro-Flo®

Super-V™

For Over 75 Years We Have Been A Dependable Source For Performance Proven Bulk Material Handling Equipment. Put Our Experience to Work for You. For more information contact, Screw Conveyor Corporation, 700 Hoffman Street, Hammond, Indiana 46327-1894, Phone: 800-626-6629, Fax: 800-805-6527, sales@screwconveyor.com, www.screwconveyor.com

135

PROJECT DEVELOPMENT National Ethanol LLC Location: Vandalia, Illinois Target groundbreaking: undeclared Feedstock: corn Capacity: 55 MMgy Design/build team: undeclared Synopsis: According to Walker Filbert, president of parent company Heartland Ethanol LLC, development of this facility isn't moving forward “until the financial markets straighten themselves out.”

Waverly Ethanol LLC Location: Waverly, Illinois Target groundbreaking: undeclared Feedstock: corn Capacity: 55 MMgy Design/build team: undeclared Synopsis: According to Walker Filbert, president of parent company Heartland Ethanol LLC, development of this facility isn't moving forward “until the financial markets straighten themselves out.”

Western Illinois Ethanol Project Location: Griggsville, Illinois Target groundbreaking: undeclared Feedstock: corn Capacity: 55 MMgy Design/build team: Agri-Industries/Delta-T Corp.

Synopsis: This company had aimed to close on financing in October 2007, but then financing throughout the industry stalled. WIEP will proceed when market conditions improve.

Fulton Ethanol LLC Location: Fulton, Illinois Target groundbreaking: summer 2008 Feedstock: corn Capacity: 60 MMgy Design/build team: Benchmark Design USA Synopsis: According to a company spokesman, this project has obtained an air permit from the U.S. EPA. He admits the industry’s economic outlook isn’t ideal, but once there is fresh investment activity, this project intends to move forward.

Illini Cropland and Energy Location: Grayville, Illinois Target groundbreaking: June 2008 Feedstock: corn Capacity: 50 MMgy Design/build team: Delta-T Corp.

Synopsis: Company President Ed Bailey says this facility plans to produce ethanol and fertilizer. It will have access to both Norfolk Southern and CSX rail lines.

Natural Alternative Fuels Location: Flint, Michigan Target groundbreaking: fourth quarter 2008 Feedstock: corn Capacity: 40 MMgy

136

ETHANOL PRODUCER MAGAZINE APRIL 2008

PROJECT DEVELOPMENT Design/build team: Lipten Co. Synopsis: This project was finalizing its financing at press time. According to founder and Chief Executive Officer Kenneth Reed, the company has secured 90 acres in Genesee Township north of Flint. It intends to build a 15 MMgy biodiesel plant adjacent to the ethanol facility.

Advanced BioEnergy LLC Location: Argos, Indiana Target groundbreaking: undeclared Feedstock: corn Capacity: 110 MMgy Design/build team: Fagen Inc./ICM Inc. Synopsis: According to Chairman and Chief Executive Officer Revis Stephenson, this project was close to completing zoning and equity negotiations at press time.

Genahol Powers LLC Location: Indiana Target groundbreaking: June 2008 Feedstock: MSW Capacity: 150 MMgy Design/build team: Genahol LLC Synopsis: This Indiana plant will be able to process between 2,000 and 10,000 tons of MSW per day. “The funds are raised,” says Genahol President Don Bogner. “We’re just finalizing a contract with the public entity.”

Morningstar Energy LLC Location: Vermillion County, Indiana Target groundbreaking: second quarter 2008 Feedstock: corn Capacity: 110 MMgy Design/build team: ICM Inc. Synopsis: According to Manager Brian Paasch, this project “hit some stiff regulatory challenges” with regard to permitting, but new designs are in place.

Funding hadn’t been completed at press time. A grain origination contract has been signed, and ethanol and distillers grains marketing arrangements are pending.

Buckeye Biopower LLC Location: Toledo, Ohio Target groundbreaking: fourth quarter 2008 Feedstock: corn Capacity: 115 MMgy Design/build team: The Kokosing Group/Praj Industries Ltd./SSOE Inc. Synopsis: According to Chief Executive Officer Robert Foxen, this project’s air permit was being processed at press time. This facility will extract corn oil from its distillers grains to produce 7.5 MMgy of biodiesel in an adjacent facility. The site will be located near the Toledo Port Authority adjacent to Lake Erie, where it will have access to East Coast and Canadian markets. The facility will also have a 9,000-foot rail loop to bring in feedstock and send out the finished products.

We had a big idea.

SO WE BUILT A BIGGER TRUCK.

Seneca’s exclusive dual-unit blasting truck allows two crews to work simultaneously – effectively cleaning your facility more efficiently. The idea is to get big jobs done quicker – saving you down-time and offering cost savings.

- State-of-the-art high-pressure washing system - Two 300 horse-power blasting units - Exclusive to Seneca The latest technology, the experts on staff and the most responsive waste management solutions can be found at www.senecaco.com.

800-369-5500 138

|

www.senecaco.com ETHANOL PRODUCER MAGAZINE APRIL 2008

PROJECT DEVELOPMENT Buckeye Ethanol LLC Location: South Point, Ohio Target groundbreaking: summer 2008 Feedstock: corn Capacity: 110 MMgy Design/build team: ICM Inc. Synopsis: According to Chairman Dan Slane, all permits have been received, and equity was being gathered at press time. The site will be adjacent to Marathon Petroleum, an ethanol blender on the Ohio River, Slane says. This facility, which stemmed from a partnership between McGinnis Group and McNational Inc., an operator of tugboats and shipyards along the Ohio River, will utilize McNational barges to bring in feedstock and send out the finished products.

Genahol LLC Location: Canton, Ohio Target groundbreaking: spring 2009 Feedstock: MSW/construction waste Capacity: 27 MMgy Design/build team: Genahol LLC Synopsis: According to Genahol President Don Bogner, the company hasnâ&#x20AC;&#x2122;t started to raise funds for this project yet. It expects to complete permitting this year.

Green Harvest Energy LLC Location: Mahoning, Trumbull or Columbiania counties, Ohio Target groundbreaking: late summer or early fall 2008

ETHANOL PRODUCER MAGAZINE APRIL 2008

Feedstock: corn Capacity: 100 MMgy Design/build team: Delta-T Corp.

Synopsis: Green Harvest Energy President John Monroe says he is currently contacting a number of prospective investors.

Harrison Ethanol LLC Location: Cadiz, Ohio Target groundbreaking: undeclared Feedstock: corn Capacity: 20 MMgy Design/build team: undeclared Synopsis: This plant is in its due diligence period, according to a company spokeswoman. Permitting, zoning and all funding is complete, and the site is prepared for full construction.

Mercer Energy Inc. Location: Celina, Ohio Target groundbreaking: spring or summer 2008 Feedstock: corn Capacity: 50 MMgy Design/build team: undeclared Synopsis: According to Mercer Energy President Ryan Schwieterman, this project received its permits at the end of 2007. Mercer Energy will employ corn fractionation technology, and utilize the local highway and rail infrastructure to bring in feedstock and send out the finished products. The company intends to market its corn oil through a Illinois-based marketer.

139

PROJECT DEVELOPMENT

Bluegrass BioEnergy LLC Location: Fulton, Kentucky Target groundbreaking: second quarter 2008 Feedstock: corn Capacity: 110 MMgy Design/build team: undeclared Synopsis: Project organizers were awaiting word on financing at press time and have alternate plans in place if that financing package doesn’t materialize, says Jim Allen, a company founder and past president. The alternate plan is to return to the initial group of farmers and private investors to raise more equity and revert to the original 55 MMgy proposal for which the permits have been acquired. The property was purchased, an official groundbreaking held and site grading begun when rocketing construction costs kept raising the bar on finances. With construction costs a bit more stable, Allen says the project is back on track. Once financing is pinned down, construction will begin.

Buckeye Ethanol LLC Location: Calvert City, Kentucky Target groundbreaking: undeclared Feedstock: corn Capacity: 50 MMgy Design/build team: Delta-T Corp.

140

Synopsis: “A site has been secured, and the permitting process will begin once the plant in South Point, Ohio, has begun construction,” says Dan Slane, co-owner of The Slane Co. Ltd. Plans include putting ethanol on barges for shipment to Marathon, Fla., via the Ohio and Mississippi rivers, and the Gulf of Mexico. In Marathon, the ethanol will be blended and shipped elsewhere.

Mascoma/University of Tennessee Location: Vonore, Tennessee Target groundbreaking: fourth quarter 2008 Feedstock: switchgrass Capacity: 5 MMgy Design/build: Mascoma Corp.

Synopsis: Mascoma has teamed with the University of Tennessee to develop its biological platform for cellulosic ethanol. The state is supporting the project with $40.7 million for facility development and $8 million for farmer incentives to grow switchgrass. Another $27 million is earmarked for research and development. The site at the Niles Ferry Industrial Park has been secured, and permits have been submitted, according to Justin van Rooyen, director of business development for Mascoma. The 5 MMgy plant, when completed, will be the largest of its kind and will provide the operating experience to scale up Mascoma's process to 40 MMgy in future plants.

ETHANOL PRODUCER MAGAZINE APRIL 2008

PROJECT DEVELOPMENT Team P3 LLC Location: Tennessee Target groundbreaking: undeclared Feedstock: wood waste/MSW Capacity: 25 MMgy and 50 MMgy Design/build team: Team P3 LLC Synopsis: Team P3 has two cellulosic ethanol plants in development at undisclosed locations in the Southeast, says Chief Engineer Richard Molsbee.

“We’re pushing forward," he says. "Nothing has stopped, but we’re trying to stay under the radar." The projects will be using gasification and FischerTropsch technology.

Gulf Coast Energy of Sumter LLC Location: Livingston, Alabama Target groundbreaking: spring 2008 Feedstock: wood waste Capacity: 20 MMgy Design/build team: undeclared Synopsis: This is the first of three plants being developed by Gulf Coast Energy Inc. At press time, an agreement with a technology provider was nearly finalized. Scott Hazen, executive vice president of engineering, says the plant will be built at a former plywood manufacturing site, providing some of the necessary wood-handling infrastructure. The 20 MMgy ethanol plant will use gasification and Fischer-Tropsch technology to manufacture liquid fuel from wood waste. Other feedstocks will be considered in the future. A second plant will break ground in Florida this summer, and a third will follow at an undisclosed location. The three plants will be similar in design, starting with 20 MMgy of production and expanding to 60 MMgy.

ETHANOL PRODUCER MAGAZINE APRIL 2008

Tennessee Valley Agri-Energy LLC Location: Cherokee, Alabama Target groundbreaking: undeclared Feedstock: corn Capacity: 50 MMgy Design/build team: undeclared Synopsis: With a feasibility study and business plan completed, paperwork has been filed with the SEC, according to Jeff Kistner, vice president of project finance for BBI International, which is developing the project.

Number of Proposed Ethanol Plants Listed in EPM 150 120 90 60 30 0

2004

2005

2006

2007

2008

141

PROJECT DEVELOPMENT

Atlantic Ethanol LLC Location: Quonset Point, Rhode Island Target groundbreaking: early 2009 Feedstock: corn Capacity: 55 MMgy Design/build team: undeclared Synopsis: President and Chief Executive Officer John Hamilton reports the project is in the late development stage. The company will soon be applying for air permits and has retained Fieldstone Private Capital Group in New York as a financial advisor.

What Kind of Feedstock?

Corn is still the feedstock of choice for ethanol production. In this yearâ&#x20AC;&#x2122;s proposed plant list, 67 percent of respondents intended to use corn as the primary feedstock. Another 10 percent expected to use corn combined with another feedstock, such as milo or barley. Higher feedstock costs have pushed a few proposed projects toward alternative feedstocks with 7 percent of the proj-

Corn 67% ects looking to municipal solid waste (MSW), as one

All Others 3%

example. There arenâ&#x20AC;&#x2122;t any currently operating plants that Sugarcane 2% Wood 2% Switchgrass 2%

142

are using MSW as a feedstock.

MSW 7% Wheat 3% Corn & Other 10% Cellulose 4%

ETHANOL PRODUCER MAGAZINE APRIL 2008

PROJECT DEVELOPMENT

Orange Recycling and Ethanol Production Facility Location: Middletown, New York Target groundbreaking: undeclared Feedstock: MSW Capacity: 8 MMgy Design/build team: Harris Group Synopsis: This plant is now fully permitted as a waste facility.

Northern Ethanol Inc. Location: Niagara Falls, New York Target groundbreaking: late 2008 Feedstock: corn Capacity: 106 MMgy Design/build team: undeclared Synopsis: The company received approval in late December to construct a plant on a 77-acre brownfield site near Praxair Inc. Although plans to move forward with the companyâ&#x20AC;&#x2122;s Canadian facilities are temporarily delayed, Northern Ethanol is confident in building this U.S. facility and plans to start full production in 2010. The company anticipates that 10 percent to 15 percent of the facilityâ&#x20AC;&#x2122;s corn could be sourced from growers in northwestern New York. Corn will be drawn from Ohio and Ontario growers, as well.

144

RiverWright Energy LLC Location: Buffalo, New York Target groundbreaking: April 2008 Feedstock: corn Capacity: 110 MMgy Design/build team: KL Process Design Group Synopsis: The plant will be in a historic district that was once equipped with 10 million bushels of grain storage. One elevator is still functional with 850,000 bushels of capacity. The site is on the Buffalo River with access to the Great Lakes and St. Lawrence Seaway, and significant rail access, as well.

Bionol Clearfield LLC Location: Clearfield, Pennsylvania Groundbreaking: February 2008 Feedstock: corn Capacity: 100 MMgy Design/build team: Fagen Inc. Synopsis: The first ethanol plant under construction in Pennsylvania will colocate with a cellulosic ethanol pilot plant that will process switchgrass, sugarcane bagasse, wood waste and agricultural waste. The corn-based project has begun initial dirt work, and Fagen was slated to mobilize on-site in March or April at press time.

ETHANOL PRODUCER MAGAZINE APRIL 2008

PROJECT DEVELOPMENT Cilion Lancaster Location: Lancaster, Pennsylvania Target groundbreaking: fall or winter 2008 Feedstock: corn Capacity: 55 MMgy Design/build team: Praj Industries Ltd. Synopsis: Cilion Inc. has teamed with Lancaster Biofuels on this project, which is currently under environmental review. The proposed plant will be located next to a facility that produces electricity from biomass and will be using that energy, as well as natural gas, to power the plant. The company hasn’t encountered any obstacles in raising funds to date, says Karri Hammerstrom, manager of environmental permitting, legislative development and governmental affairs. “We’ve put together a great team, and they’ve done a really good job with that,” she says. “We have a huge amount of capital and haven’t had to pull down on debt.”

Green Holding Biofuels Location: Tremont, Pennsylvania Target groundbreaking: July 2008 Feedstock: corn Capacity: 120 MMgy Design/build team: Katzen International Synopsis: In addition to producing ethanol, the plant will process 10 MMgy of biodiesel from corn oil. It will use “waste coal” from nearby coalfields as an energy source. The plant has been permitted for up to 500 MMgy. Keystone Ethanol Energy Producers LLC Location: Mercer or Crawford counties, Pennsylvania Target groundbreaking: late 2008 Feedstock: corn Capacity: 25 MMgy Design/build team: undeclared Synopsis: KEEP will pursue financing once it has officially selected a design/build team. Plant owners also seek approximately $200,000 in grants or low-interest loans.

Sunnyside Ethanol LLC Location: Curwensville, Pennsylvania Target groundbreaking: third quarter 2008 Feedstock: corn Capacity: 80 MMgy Design/build team: Delta-T Corp.

Synopsis: Consus Ethanol LLC spokesman Brian Wallace acknowledges the company is having difficulty raising funds but says it has made significant progress.

ETHANOL PRODUCER MAGAZINE APRIL 2008

145

PROJECT DEVELOPMENT

Chesapeake Renewable Energy LLC Location: Sumerset County, Maryland Target groundbreaking: summer 2008 Feedstock: corn Capacity: 55 MMgy Design/build team: Praj Industries Ltd. Synopsis: Project Manager Mack Shelor says this project has the potential to be profitable because of its unique configuration. The site is in an agricultural area in Maryland, where the distillers grains will have a ready market among several large poultry producers. The facility will use wood waste to generate power and steam. The combined-heat-and-power plant will generate 19.8 megawatts of electricity, most of which will be consumed on-site, Shelor says, with approximately eight megawatts to be fed into the local power grid. The waste heat and excess electricity will also be used to power an on-site, 30acre greenhouse. The land has been purchased, the rezoning is approved, permits have been submitted, and the financing is presently being arranged, according to Shelor.

146

Bleckley County Biorefinery Location: Bleckley County, Georgia Target groundbreaking: fourth quarter 2008 Feedstock: wood waste/MSW Capacity: 20 MMgy Design/build team: undeclared Synopsis: The land is acquired, and the permitting process has begun for this cellulosic ethanol project under development by Allied Energy Services LLC, says Warren Oldham, vice president of Allied. Other partners in the project are Alliedâ&#x20AC;&#x2122;s parent and utility management company Cobb Energy Inc. and Integrated Environmental Technologies LLC. The facility will use a thermochemical process to convert the wood and MSW to fuel.

Georgia Alternative Energy Co-op Location: Turner County, Georgia Target groundbreaking: late 2008 Feedstock: corn Capacity: 50 MMgy Design/build: Delta-T Corp.

Synopsis: This farmer cooperative, formed in August 2006, has 234 members who will be tapped in the projectâ&#x20AC;&#x2122;s coming equity drive. Co-op Director and Project Manager Alan Whitehead says the county zoning is complete, and the project is presently in the permitting stage.

ETHANOL PRODUCER MAGAZINE APRIL 2008

PROJECT DEVELOPMENT Florida Power and Light Group Location: central Florida Target groundbreaking: late 2008 Feedstock: citrus waste Capacity: 4 MMgy Design/build team: Citrus Energy LLC Synopsis: Citrus Energy will use its enzymatic hydrolysis process to convert citrus waste into cellulosic ethanol at a plant to be owned by Florida Power and Light Group. The ethanol plant will utilize waste from a citrus processing facility, says Dave Stewart, chief executive officer of Citrus Energy. Developers are visiting with citrus processors in central Florida and have met with state officials to discuss permitting. Once the final location is determined, the permitting process will begin, Stewart says. Financing is in place.

Gulf Coast Energy of Walton LLC Location: Mossy Head, Florida Target groundbreaking: summer 2008 Feedstock: wood waste Capacity: 20 MMgy Design/build team: undeclared Synopsis: Gulf Coast Energy Inc. has three similar cellulosic ethanol plants in development, including this facility, one in Alabama and a third at an undisclosed location. At press time, the agreement with the technology provider was nearly complete. This plant, which will use biomass gasification and FischerTropsch technology, can be expanded to 60 MMgy, says Scott Hazen, executive vice president of engineering for Gulf Coast Energy. The facility will include a biodiesel plant. In addition to wood waste, other cellulosic feedstocks will be evaluated in the future. This winter, the Florida project received a $7 million

ETHANOL PRODUCER MAGAZINE APRIL 2008

Farm to Fuel Grant from the Florida Department of Agriculture and Consumer Services.

Highlands EnviroFuels LLC Location: Highland County, Florida Target groundbreaking: mid-2009 Feedstock: sweet sorghum Capacity: 20 MMgy Design/build team: undeclared Synopsis: U.S. EnviroFuels LLC received a $7 million Farm to Fuel Grant from the Florida Department of Agriculture and Consumer Services, which will be used for the buildings and equipment, according to U.S. EnviroFuels President Bradley Krohn. The company has begun the design and permitting process. U.S. EnviroFuels is also developing a project in Port Sutton, Fla. Liberty Industries Inc. Location: Lowry, Florida Target groundbreaking: first quarter 2009 Feedstock: wood waste/MSW Capacity: 7 MMgy Design/build team: Bioengineering Resources Inc. Synopsis: At press time, company President Sam Hatcher was awaiting final word on site studies for a proposed energy park. One site would be at Hatcherâ&#x20AC;&#x2122;s family-owned Liberty Chips Corp., which operates a 100-ton-perhour wood chip operation in Lowry. Another site would be near the Liberty County landfill and water treatment facilities. Hatcher says his vision is to combine several alternative energy projects in an energy park, starting with an ethanol plant that will use gasification and anaerobic digestion technologies. It

147

PROJECT DEVELOPMENT will also generate five megawatts of electricity. Once the final site is determined, the permitting process will begin. The project received a $4 million Farm to Fuel Grant from the Florida Department of Agriculture and Consumer Services.

Port Sutton EnviroFuels LLC Location: Port Sutton, Florida Target groundbreaking: mid-2008 Feedstock: corn/milo Capacity: 44 MMgy Design/build team: Delta-T Corp.

Synopsis: The Port Sutton project has been in a holding pattern for 16 months due to litigation with another tenant at the port in Tampa, Fla., says Bradley Krohn, president of U.S. EnviroFuels LLC. “We’re making progress on getting it resolved,” he adds. The project is fully permitted, and financing is in place, although final closing hinges on the resolution of the litigation. Krohn says the project may be built in two phases with the ethanol storage and distribution terminal being built first, and the ethanol production facility to follow.

U.S. EnviroFuels has begun design work on another sweet sorghum facility in Highland County.

148

Southeast Renewable Fuels LLC Location: near Lake Okeechobee, Florida Target groundbreaking: first quarter 2009 Feedstock: sweet sorghum Capacity: 20 MMgy Design/build team: undeclared Synopsis: The first of three sweet sorghum ethanol plants in the Lake Okeechobee area is in development, according to Chief Executive Officer Aaron Pepper. “We’re hoping to be the first sweet sorghum ethanol plant in Florida or even the United States,” he says. Sites have been procured for the first and second plants. “The first plant will work the bugs out,” he says. “We’ll do the field trials, and once everything is working smoothly, we’ll build the second.” The second and third plants are expected to produce 50 MMgy. Financing is nearly complete for the first plant, Pepper says, and farmers are being recruited to grow sweet sorghum for that project. Losonoco Inc. is helping with project development. In anticipation of potential expanded ethanol capacity, Southeast Renewable Fuels opened an ethanol distribution office at the start of 2008 to serve southern Florida. Pepper says the company is also looking for a port facility to handle domestic and imported ethanol to supply Florida's future renewable fuels market.

ETHANOL PRODUCER MAGAZINE APRIL 2008

Canada

PROJECT DEVELOPMENT

Growing Power Hairy Hill LLP Location: Hairy Hill, Alberta Target groundbreaking: spring 2008 Feedstock: wheat Capacity: 42 MMly (11 MMgy) Design/build team: undeclared Synopsis: Mike Kotelko, general manager of Growing Power Hairy Hill, is one of two brothers who own an Alberta ranch, a feedlot called Highland Feeders Ltd. and a technology company called Highmark Renewables Inc. The feedlot includes an anaerobic digester that has been in operation for three years. The digester will be expanded 40-fold to provide process heat to the ethanol plant, a move that will more than double its current electrical output to 2.4 megawatts. The biogas facility is slated to expand in February 2009, followed by the ethanol plant coming on line in June 2009. Fort Saskatchewan, Alberta-based Providence Grain Group, a producer-owned and -controlled grain company, is a major investor in the integrated biorefinery. PGG will procure the high-starch wheat needed for the plant.

Nipawin Biomass Ethanol New Generation Co-op Ltd. Location: Nipawin, Saskatchewan Target groundbreaking: mid-2009 Feedstock: wood waste/flax straw Capacity: 75 MMly (20 MMgy) Design/build team: undeclared 150

Synopsis: Approximately 500,000 tons of forestry residues such as logging slash, mill wastes (bark), shavings and sawdust, and agricultural wastes such as hay and straw will be generated from the Nipawin area each year. This ethanol facility will require 200,000 dry tons of feedstock per year, 25 percent of which will come from flax straw and 75 percent from wood waste. After eight years of development and looking at nearly 20 catalysts, the company enlisted the help of Fulcrum BioEnergy to design a process using the co-op’s technology. The facility will create 60 to 70 full-time and plant-related jobs.

Etoh Energy LLC Location: Russell, Manitoba Target groundbreaking: October 2009 Feedstock: wheat Capacity: 175 MMly (46 MMgy) Design/build team: ICM Inc. Synopsis: This company will process high-starch wheat, which is abundant within a 100-mile radius of the site, according to Curtis Sittenfeld, president of the company’s American managing partner Etoh Energy Marketing Corp. in Naples, Fla. Noble Americas will market the plant’s ethanol in Canada and the United States. Carbon dioxide will be recovered and compressed for use in exhausted, secondary and tertiary oil wells in Saskatchewan and Alberta. The distillers grains will be marketed locally by CHS Inc. as the area has more than 39,000 head of cattle. The facility is currently in the permitting stage.

ETHANOL PRODUCER MAGAZINE APRIL 2008

PROJECT DEVELOPMENT Turtle Mountain Sustainable Ventures Location: Killarney, Manitoba Target groundbreaking: January 2009 Feedstock: wheat Capacity: 150 MMly (40 MMgy) Design/build team: undeclared Synopsis: The initial plan was to produce cellulosic ethanol, but the company decided to use wheat as a feedstock instead. Currently, the company is in the permitting stage. It will take in 15 million bushels of wheat and produce 140,000 tons of distillers grains. The plant will create 35 jobs.

Biomass Magazine is a trade journal serving companies that use and/or produce power, fuels and chemical feedstocks derived from biomass. Collectively, these biomass utilization industries are positioned to replace nearly every product made from fossil fuels with those derived from plant or waste material.The publication covers a wide array of issues on the leading edge of biomass utilization technologies, from biorefining, dedicated energy crops and cellulosic ethanol to decentralized power, anaerobic digestion and gasification. Itâ&#x20AC;&#x2122;s all here.

www.BiomassMagazine.com

For additional information please contact us at (701) 746-8385 or at advertising@biomassmagazine.com.

ETHANOL PRODUCER MAGAZINE APRIL 2008

FarmTech Energy Corp.

Location: Oshawa, Ontario Target groundbreaking: spring 2008 Feedstock: corn Capacity: 55 MMly (15 MMgy) Design/build team: ICM Inc. Synopsis: This proposed facility will create 1,000 plant-related jobs during its estimated 20month building process. All corn will be supplied by local growers, and the facility will be owned by a co-op of community members. Start-up is slated for 2009.

Northern Ethanol Inc. Location: Sarnia, Ontario Target groundbreaking: 2009 Feedstock: corn Capacity: 400 MMly (106 MMgy) Design/build team: Delta-T Corp.

Synopsis: This project hasnâ&#x20AC;&#x2122;t been able to advance beyond the permitting stage, according to Natalie Horrell, director of corporate relations.

The company has submitted applications for air and noise permits to the Ontario Ministry of the Environment, and an application for site plan approval to the city of Sarnia. With CSX rail line and barge availability in Sarnia, the company has the ability to receive feedstock from other areas.

Atlantec BioEnergy Inc. Location: Borden, Prince Edward Island Target groundbreaking: May 2008 Feedstock: sugar beets Capacity: 85 MMly (22 MMgy) Design/build team: Diversified Metals Engineering Ltd. Synopsis: The original project developer Agritech Inc. was bought out by Atlantec BioEnergy in partnership with the Renewable Energy Growers Association. Atlantec will produce ethanol, as well as thermal and electric energy, and will be the first biofuels facility located in this province.

151

Manage inputs/outputs among 135 facilities Operators of 64 grain elevators Merchandise over 25 different feed ingredients Physically handle ethanol, denaturant, crude oil and natural gas

It’s about time we introduce ourselves.

We’re ConAgra Trade Group and we bring nearly 100 years of experience to the converging agricultural and energy sectors.

Our areas of expertise include procurement, marketing, logistics and risk management. When it comes to inputs and outputs, our clients call us invaluable. You will, too. conagratradegroup.com • 402-595-5678 Eric Watts, Director of Business Development

©ConAgra Foods, Inc. All Rights Reserved.

COMPLIANCE

Department of Homeland Security Regulations May Impact Ethanol Producers

By Scott E. Hitch and Steven A. Burns

T

here’s no question U.S. ethanol production helps to secure the nation’s fuel supply by shifting revenue streams away from foreign fossil fuel interests (often hailing from countries harboring deep resentment toward the United States) to our local farms and communities. However, unwary ethanol producers may find themselves caught in a different sort of homeland security issue: chemical facility regulations. This article briefly describes a new chemical facility regulatory program administered by the Department of Homeland Security, and explains why ethanol producers may be “chemical facilities” for purposes of the program.

Under this program, DHS requires regulated facilities to register and disclose detailed information about their chemical inventories.

Many ethanol facilities may be out of compliance if they have not already done so.

The chemical facility program had its start with a bill funding DHS operations for fiscal year 2007. Congress tucked a relatively brief provision into that legislation directing DHS to “issue interim final regulations establishing risk-based performance standards for security of chemical facilities and requiring vulnerability assessments and the development and implementation of site security plans for chemical facilities … .” According to the statute, DHS must regulate those chemical facilities that, in DHS’s discretion, “present high levels of security risk.” Facilities subject to DHS regulation must develop and implement “layered security measures” for site security plans that “in combination, appropriately address

the vulnerability assessment and the risk-based performance standards for security for the facility,” all subject to DHS approval.

DHS finalized regulations in late 2007 to Burns Hitch flesh out its chemical facility security program. Under those regulations, the agency’s first step is to identify “chemical facilities.” If you thought a chemical facility was a facility that manufactures, distributes or sells chemicals, you’d be wrong. It’s much broader than that. DHS defines a chemical facility not by what it produces but by the chemicals it uses onsite. Any facility which possesses any one of approximately 325 “chemicals of interest” in an amount that exceeds a “screening threshold quantity” set by DHS is defined to be a chemical facility and is subject to registration and reporting requirements.

DHS has identified chemicals and screening threshold quantities reflecting terrorism risks such as a release affecting the community, theft for use in a weapon, and sabotage or contamination. The DHS list includes chemicals that are commonly used in many industrial applications, as well as fertilizers and explosives. Some chemicals, such as anhydrous ammonia, are commonly used in the manufacture of ethanol. Examples of other common chemicals that

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).

154

ETHANOL PRODUCER MAGAZINE APRIL 2008

COMPLIANCE

made the list include chlorine, ethylene, hydrogen peroxide, nitric acid, nitric oxide, propane and sodium nitrate. Further, the

screening threshold quantities are low enough to capture many facilities that use a chemical of interest as a major component

ETHANOL PRODUCER MAGAZINE APRIL 2008

of their process. For example, larger commercial farm operations may be subject to registration requirements due to their stockpiles of relatively common agricultural chemicals like ammonium nitrate with a nitrogen content of 23 percent or more (screening threshold quantity: 2,000 pounds), potassium nitrate (screening threshold quantity: 400 pounds) and sodium nitrate (screening threshold quantity: 400 pounds). However, the screening threshold quantities for these chemicals apply only to quantities kept in transportation packaging like bulk bags, cylinders or tank cars. The screening threshold quantity for anhydrous ammonia is 10,000 pounds, kept in any mode of storage. That means a facility that measures its anhydrous ammonia consumption by the ton is almost certainly subject to the chemical facility program.

So what must a chemical facility do?

First, every chemical facility is required to submit information on the facility through a process known as the â&#x20AC;&#x153;Top-Screen.â&#x20AC;?

Completion of the Top-Screen requires

155

COMPLIANCE

registration with DHS followed by the preparation and submission of information including, among other things, an identification of the facility and its location, the number of persons at the facility (including contractors), and, of course, the inventory of chemicals of interest at the facility. Registrations and Top-Screens are made on a facility-by-facility basis, not company-wide.

Initial Top-Screens—that is, Top-Screens for facilities that already possessed a chemical of interest above the screening threshold quantity—were due Jan. 22, 2008. After that, a facility that acquires chemicals of interest above the screening threshold quantity has 60 days to submit the Top-Screen to DHS. After receiving Top-Screen submissions, DHS provides notice of which facilities are “covered” and which of four risk tiers applies, with Tier 1 being the highest risk and Tier 4 the lowest. A covered facility then has 90 days to develop and submit to DHS a security vulnerability assessment, which has five specific elements: 1) an asset characterization, including potentially critical assets, the facility’s surroundings, supporting infrastructure and existing layers of protection, 2) a threat assessment, including internal and external

Adding another layer of complexity, DHS has created a category of information that must be guarded from disclosure and is subject to special handling requirements.

156

threats, 3) a security vulnerability analysis, including potential vulnerabilities and existing countermeasures, 4) a risk assessment, and 5) a countermeasures analysis, including strategies and various options to address potential attacks and reduce risks.

Thirty days after submitting the security vulnerability assessment, the facility must submit a Site Security Plan. The Site Security Plan is where the risk-based performance standards come in. The agency has identified 18 standards in areas including securing assets, controlling access to the facility, managing shipments and storage, addressing various threats and risks, training employees, assuring “personnel surety” through background checks, identifying responsible officials, and reporting and recordkeeping. The Site Security Plan must address vulnerabilities identified in the security vulnerability assessment and explain how the facility’s security measures will “address the applicable risk-based performance standards and potential modes of terrorist attack.” That doesn’t mean every covered facility has to implement specific measures (such as background checks) for every performance standard. However, the Site Security Plan must demonstrate that the facility has satisfied each standard, given the risk tier and sitespecific considerations at the facility.

Adding another layer of complexity, DHS has created a category of information that must be guarded from disclosure and is subject to special handling requirements. “Chemical-terrorism vulnerability information” includes the Top-Screen itself, the letter from DHS informing a facility of its covered status and risk tier, the security vulnerability assessment and Site Security Plan, as well as many other documents. The only persons allowed to access chemical-terrorism vulnerability information are “authorized users.” Only people who have a need to know the information may become authorized, and they must complete a training

ETHANOL PRODUCER MAGAZINE APRIL 2008

COMPLIANCE

DHS regulations authorize civil penalties of up to $25,000 per day per violation. DHS can also issue compliance orders and orders to cease operations at a facility.

course, sign a non-disclosure agreement with DHS and receive DHS approval. A host of requirements govern how to mark chemical-terrorism vulnerability information, store it, track its whereabouts—including the use of unique tracking numbers— transport it—both physically (using multiple envelopes) and electronically (using encryption technology)—and train authorized users and maintain personnel’s awareness of chemical-terrorism vulnerability information requirements.

DHS regulations authorize civil penalties of up to $25,000 per day per violation. DHS can also issue compliance orders and orders to cease operations at a facility. Now that the deadline for initial Top-Screens has passed, some facilities may already be vulnerable to a potential enforcement action. As further implementation of the chemical security program continues, DHS has other investigation and enforcement powers which it may use to audit and inspect regulated facilities.

ETHANOL PRODUCER MAGAZINE APRIL 2008

The law authorizing the chemical facility program included a “sunset” date calling for DHS’s authorization to expire October 2009. However, the U.S. House Homeland Security Committee and the Senate Committee on Homeland Security and Governmental Affairs are busy writing legislation to make the program permanent. Their work will likely ensure that the chemical facility program will continue uninterrupted for the foreseeable future. Some of the details of the program may be subject to change, and there may be opportunities through the legislative process for alert members of the regulated community to have their say about how (or whether) this program should apply to them.

For now, existing ethanol production facilities may already be storing quantities of anhydrous ammonia and other chemicals in quantities that trigger the Top-Screen process. Those facilities must submit Top-Screens as soon as possible. If they haven’t already, they must also prepare to explain to DHS why their submissions are late. In any event, the Top-Screen is only the beginning of a process that requires a complete evaluation of security measures at the facility and a number of personnel issues, all under the supervision of DHS. That process applies not just to the chemical sector, but also to all major consumers of any of the chemicals of interest—including the ethanol industry. EP Scott E. Hitch is a partner and Steven A. Burns is an associate with the Environmental & Natural Resources Group at Balch & Bingham LLP, a southeastern-based full-service business law firm serving producers of renewable fuels and other industries. Reach Hitch at shitch@balch.com or (404) 962-3553. Reach Burns at sburns@balch.com or (205) 226-8736.

157

USE

Additives Keep It Business as Usual with E85

By Keith Corkwell

W

ith more than 7 million flexible-fuel vehicles capable of using E85 fuel (85 percent ethanol and 15 percent gasoline) on the road in the United States, industries along the E85 supply chain—oil companies, vehicle manufacturers and additive companies—have geared up to address the needs for the new fuel.

Companies entering the E85 arena are finding that it isn’t business as usual with this fuel and that all fuel for passenger car vehicles isn’t the same. In fact, with E85, challenges abound and production is loaded with complexities.

For years, the fuel industry has blended ethanol into gasoline at low levels (generally 5 percent to 10 percent but up to 25 percent in Brazil) and has blending and operational procedures. Some of this knowledge can be transferred to E85. However, although ethanol offers advantages in the areas of octane, energy independence and as a renewable energy source, there are new technical and operational concerns when higher levels are blended with gasoline. That’s where specially formulated multifunctional additive packages can play a role.

However, the move to higher levels of ethanol in fuel such as E85 has uncovered a host of new engine operation challenges that gasoline additives simply are not formulated to address. The problems that occur when gasoline additives are used in E85 shouldn’t be surprising since these additives were never formulated for use in E85.

Intake Valve Deposits Recent tests have shown that FFVs using E85 can produce engine deposits. In-depth research on the subject is discussed in a Society of Automobile Engineers technical paper published in October 2007 titled “A Comprehensive Examination of the Effect of Ethanol-blended Gasoline on Intake Valve Deposits in Spark-ignited Engines.” The

Additives Come into Play From a fuel additive perspective, ethanol-blended gasoline creates some unique challenges. While many traditional gasoline additives have been used for some time in low-level ethanol blends, the industry is just developing a better understanding of the special additive needs of these new higher ethanol blends.

Gasoline typically contains additive packages to improve performance and keep engines clean, and it is tempting to use them in E85.

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).

158

ETHANOL PRODUCER MAGAZINE APRIL 2008

USE

Ethanol – fuel to power our future Plate heat exchangers for the ethanol fuel industry

good news is that appropriate additives specifically formulated for use in E85 can address deposit problems. However, these additives are different from those used in gasoline.

A series of 5,000-mile tests were run on an FFV using varied mixtures of ethanol and gasoline. The results showed that with no additive present, ethanol impacts the amount of intake valve deposits formed in the engine. At lower levels of ethanol such as E10, intake valve deposits actually increase to higher levels than in gasoline alone.

However, in blends with higher levels of ethanol, the level of intake valve deposits actually decreases to the level found in gasoline, or even lower. Gasoline and E10 blends are commonly treated to reduce these deposits for improved emissions, performance and fuel economy.

Achieve more with less and you will be the winner. GEA PHE Systems gasketed and fully welded plate heat exchangers provide you with more output, less downtime and lower space and energy requirements while maintaining the quality standard.

Free Flow: blockage-free operation due to constant-width gaps Clean-in-place maintenance without need to open the plate heat exchanger Significantly reduced investment and operating costs as well as minimum space requirement as compared to shell-andtube heat exchangers

Process Equipment Division

GEA PHE Systems North America Inc. 100 GEA Drive · York, PA 17406, USA Phone 717 / 268 - 6200 · Fax 717 / 268 - 6163 E-Mail info@geaphena.com · Web www.geaphena.com

ETHANOL PRODUCER MAGAZINE APRIL 2008

159

USE

Biomass Fired Boiler Systems

When your ready to start saving money...We got the boiler.

E85, even with its lower deposit impact, should still be treated and does not normally contain sufficient levels of deposit-control additives (Figure 1).

Just as all gasolines vary in their severity and ability to form intake valve deposits, batches of E85 also show various levels of severity. In 5,000-mile tests, three separate batches of gasoline were evaluated for deposit formation. The results were compared to the deposit formation of three separate batches of E85 made from these gasolines. The tests showed that the higher the severity of the gasoline, the higher the severity of the E85 that used that gasoline as its hydrocarbon component. However, E85 produced roughly one-third to one-half fewer intake valve deposits than gasoline alone (Figure 2).

While E85 produced fewer intake valve deposits than gasoline in these tests, gasoline deposits are normally controlled with standard deposit-control additives. Solubility issues preclude using these same gasoline additives in E85. However, specially formulated E85 additives can be used. Figure 3 shows the results of using a properly formulated E85 deposit-control additive in the most severe batch of E85 tested.

Intake Valve Sticking Intake valve sticking is a possible, unintended consequence of using poorly formulated gasoline additives in gasoline. This occurs when some of the additive builds up in the annular space between the intake valve stem and the valve guide in the cylinder head.

At low temperatures, any build-up in this area becomes more viscous and inhibits valve movement. Under extreme conditions, the valve spring cannot close the intake valve, resulting in a loss of compression.

Consequently, the engine doesnâ&#x20AC;&#x2122;t start.

Modern gasoline additives are formulated to prevent this problem in normal gasoline.

However, recent research has shown that ethanol can make intake valve sticking even more severe and confirms the need to test gasoline additives in the full range of fuels in which they will be used, including the lowlevel ethanol blends widely available in the U.S. market. More importantly, in the more extreme case of E85, it points out the need for specific additives for E85 that are designed to treat the problems without causing unwanted side effects, such as intake valve sticking.

160

ETHANOL PRODUCER MAGAZINE APRIL 2008

USE Combustion Chamber Deposits Combustion chamber deposits are a secondary concern in gasoline use. Additive packages are formulated to minimize such deposits. Test results shown in Figure 4 indicate that the thickness of these deposits actually decreases as ethanol levels in the blend increase.

Keeping Clean In most of the world, gasoline contains detergent additives to keep critical engine parts clean. However, most E85 fuel contains very little to no detergent additive. What is worse, many existing gasoline additives are not fully compatible with E85. While they may appear to mix well with high-level alcohol fuels, the additive may not be completely soluble and could fall out of solution or become trapped on fuel filters.

New technology additives specifically formulated for fuels with high alcohol levels are capable of keeping clean the engines running on E85 fuel. They also aid in cleaning those engines. Additionally, the technology works in gasoline or low-level alcohol blends such as E10, so it can remove the deposits in an FFV whether they were created by E85 or gasoline.

Corrosion Corrosion is a concern with any fuel as it travels through the fuel tankage and distribution system and finally through the vehicle itself. Ethanol can create additional concerns about corrosion. While ethanol is relatively pure, certain contaminants such as acids and sulfates can contribute to corrosion. A properly formulated fuel additive for E85 can address this issue.

Itâ&#x20AC;&#x2122;s not business as usual when it comes to E85. E85 is not a traditional fuel, and it requires different additives than those used in traditional gasoline. Multifunctional E85 additive packages need to contain proven components that can keep critical FFV fuel system areas clean and reduce corrosion and deposits that can form on critical engine parts. Luckily, specially formulated E85 additive packages with these capabilities exist. EP Keith Corkwell is the regional business manager for gasoline additives for The Lubrizol Corp. Reach him at keith .corkwell@lubrizol.com or (440) 347-5963.

ETHANOL PRODUCER MAGAZINE APRIL 2008

161

INNOVATION

Synthetic Alcohols Could Provide a Fully Renewable Liquid-Fuel Future

By James Turner and Richard Pearson

I

t is difficult to assign much confidence to projections of how long fossil fuel reserves will last, but a shift away from a fossil fuel-based energy economy is inevitable, motivated in the short term by growing concern over the impact of greenhouse gases on global climate change and energy security issues resulting from political events. In response to this and following the failure of the Association of European Automotive Manufacturers’ voluntary agreement to reduce fleet average carbon dioxide emissions to 140 grams per kilometer by 2008, it looks increasingly likely that the European Union will mandate a tailpipe average of 130 grams per kilometer by 2015 as part of the process.

The intention is to force change in the near term. Longer term, molecular hydrogen has been suggested as the primary energy vector for transportation, the attraction being that as the energy is released by combination of the hydrogen with oxygen, water is the sole product. Provided the energy used to produce the hydrogen is renewable, no carbon dioxide impact results. However attractive this may be, though, molecular hydrogen has some severe drawbacks in terms of its transportation and distribution, notwithstanding the considerable issue of providing a sufficient quantity of renewable energy.

While hydrogen has a very high energy content per unit mass of 120 Megajoules per kilogram, it is also the least

dense of elements. At standard atmospheric temperature and pressure, its density is 0.09 kilograms per cubic meter (or 90 grams per cubic meter), meaning that 1 cubic meter under these conditions contains only 10.8 Megajoules of energy.

Compare this with gasoline under these conditions, which, with a density of 740 kilograms per cubic meter and energy per unit mass of 42.7 Megajoules per kilogram, contains 31,600 Megajoules per cubic meter—more than 2,900 times as much.

This illustrates the problem with hydrogen. Whereas gasoline (being a liquid) is easily transported and stored, a higher-energy-density method of handling hydrogen has to

Ethanol can readily be produced from sugars or other forms of biomass with the correct enzymes (lignocellulosic ethanol). Both routes permit high levels—up to 90 percent—of carbon dioxide to be trapped in the loop.

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).

162

ETHANOL PRODUCER MAGAZINE APRIL 2008

INNOVATION

be arranged. Those currently showing the most promise are compression (to 700 bar) or liquefaction (requiring minus-253 degrees Celsius or minus424 degrees Fahrenheit). Under these conditions the energy stored per cubic meter is 6,900 Megajoules and 8,496 Megajoules, or 22 percent and 27 per-

cent that of the cheaper-to-store gasoline, respectively. Further, in order to process hydrogen to these conditions, pressurization requires the equivalent of approximately 10 percent of the energy stored, and liquefaction between 30 percent and 40 percent.

To compound matters, in order to

encourage pressurized hydrogen to flow into a vehicle pressure vessel it must be pressurized to a still higher level, and liquid hydrogen suffers badly from boiloff—any heat input causes a loss of hydrogen from the system—meaning the complete loss of the energy contained and that used to put it into that state.

In any future where availability of energy is limited, minimizing energetic losses will be of paramount importance, and it is the energetic losses associated with storage and distribution which mitigate against molecular hydrogen as an energy carrier. This is before the costs associated with a completely new infrastructure are considered— some estimates for which are in the region of $1 trillion for the United States alone.

The alcohols ethanol and methanol, however, can 1) be made renewably, 2) are liquid at atmospheric conditions, and 3) while their energy contents per unit of mass are not as high as that of gasoline, can store significantly greater energy per unit volume than hydrogen—approximately 67 percent and 50 percent that of gasoline, respectively.

Furthermore, they share similar

Staffing the Biofuels Industry

Project Manag Plant Engineers BBI International R&D Scientists Lab Tech Safety Managers Environmental Specialists QC Man Maintenance (866) Personn 746-8385 info@biofuelsrecruiting.com w w w. b i o f u e l s r e c r u i t i n g . c o m Operator Sales Shift Supervisors

ngineers

Biofuels Recruiting Maintenance Managers

Controllers

ETHANOL PRODUCER MAGAZINE APRIL 2008

163

INNOVATION

physico-chemical characteristics and are both miscible with gasoline, meaning that they can be introduced via a single modified infrastructure and into existing vehicle architectures.

Ethanol can readily be produced from sugars or other forms of biomass with the correct enzymes (lignocellulosic ethanol). Both routes permit high levelsâ&#x20AC;&#x201D;up to 90 percentâ&#x20AC;&#x201D;of carbon dioxide to be trapped in the loop.

However, ethanol supply cannot satisfy the total energy requirement for transport.

Methanol, the simplest alcohol, can be made more easily from a much greater range of feedstocks than ethanol.

For example, it can be made from wood more easily than the lignocellulosic approach can yield ethanol. It can also be

164

synthesized from carbon monoxide or carbon dioxide and hydrogen. Indeed, the limiting factor over the years as been the availability of feedstocks. The carbon and oxygen chemically liquefy the hydrogen in an energetically efficient manner.

Note that once hydrogen is liquefied into methanol, the significant downstream energetic losses associated with pressurizing or liquefying it in its molecular form are eradicated, and therefore the total energy supply to the system is reduced. As mentioned above, this is of paramount importance when maximizing the proportion of energy supplied renewably.

An interesting concept is the coupling of the electricity and transport markets by using the carbon dioxide output from coal-fired power stations as a feedstock for methanolâ&#x20AC;&#x201D;the combined methanol and power approach, giving one more use for the carbon dioxide before its eventual atmospheric release. The reduction in power station output to achieve this has been estimated to be 1 percent, and the carbon dioxide mitigation of the order of 56 percent, which is better than ethanol from sugar beet. Similar approaches can be used for factory flues.

Unfortunately, the power and transport sectors have not historically been linked. The setting of a monetary value for carbon dioxide emissions will enable a financial argu-

ETHANOL PRODUCER MAGAZINE APRIL 2008

INNOVATION

ment for the production of methanol from such flue gases to be made, and at a sufficiently punitive level it could become compelling.

In the longer term, to ensure sufficient feedstock, the solution could be to scrub carbon dioxide from the atmosphere and combine it with renewable hydrogen, which would already have to be created for a hydrogen economy.

Removal of carbon dioxide from the atmosphere should be given financial credits by governments. In this case, the atmosphere becomes a resource and (if some of the methanol is used for petrochemicals instead of fuel) a form of “autosequestration” takes place. One hundred percent closure of the carbon dioxide cycle could theoretically be achieved, as shown in Figure 1.

While this perhaps sounds like science fiction, it is important to note that all of the science is in place and being researched. The University of Southern California has already achieved it. Consequently, this is a most exciting long-term opportunity because the whole process can be driven by the existing economics of supplying liquid fuel to the marketplace, since 1) gasoline, ethanol and methanol are all miscible in the same tank (minimizing costs), 2) suitable engines can be created cheaply, and 3) no one has to invest in a completely new fuel infrastructure or vehicle energy storage concept.

Indeed, the on-cost for flexible-fuel gasoline/alcohol operation in a vehicle is trivial. Creation of a suitable fleet to kick-start the process is effectively a stroke of the legislator’s pen. The future existence of such a fleet would draw greater investment in lignocellulosic ethanol production, and a later software change would effectively then be all the

ETHANOL PRODUCER MAGAZINE APRIL 2008

The future existence of such a fleet would draw greater investment in lignocellulosic ethanol production, and a later software change would effectively then be all the modification required to introduce renewable methanol into the then-existing fleet. modification required to introduce renewable methanol into the then-existing fleet.

If this could be arranged, one could foresee a process which both shifted the balance of power with respect to the holders of the world’s energy resources and provided a means of influencing carbon dioxide level in the atmosphere within a relatively short period of time, a process which could be encouraged by market forces. The collective nature of this, initiated by the mandating of flexible-fuel capability in all new spark-ignition vehicles from 2012 onwards, is shown in Figure 2.

We believe that this is an entirely workable solution to the problem of global warming associated with transport, and can be used to reduce the effect of carbon dioxide emissions from other areas as well. EP

James Turner and Richard Pearson are with the powertrain department of Norwich, Norfolk, U.K.-based Lotus Engineering.

The company's U.S. office can be reached at (734) 995-2544.

165

RISK

Sell or Merge: Options to Consider in Today’s Renewable Energy Industry

By Susan Wyka

T

he past year has been a volatile time in the renewable fuels industry. The increased demand for ethanol and biodiesel as alternative fuel sources has directly affected the cost of agricultural commodities such as corn and soybeans, which in turn has affected the profitability of renewable energy plants. As a result, business models not accounting for this relatively recent market pressure are struggling to keep pace in this rapidly changing environment.

Companies, start-up and mature, must leverage unique capabilities, reduce operating costs and diversify revenue streams in order to position themselves for market success. This most often requires a customized approach for each business and an in-depth understanding of their business and relevant markets.

As outlined in Figure 1, renewable success is the result of understanding how a company’s markets, business and capital needs interact.

A timely example of how these factors come together for the owners and managers of ethanol plants is the challenges and opportunities associated with mergers and acquisitions. The ethanol industry is experiencing merger and acquisition activity and many companies are being approached with regard to a merger or sale. This underscores the importance that the owners and board of directors understand the value of their business and, once understood, are positioned to maximize it.

Recent merger and acquisition activity has included Millenium Ethanol’s sale of its 100 MMgy plant to U.S. Bioenergy for $133 million and ASA Alliance Biofuels’ sale of its three 110 MMgy plants to

Figure 1.

SOURCE: ASCENDANT PARTNERS

VeraSun for $725 million. Most recently, VeraSun and U.S. Bioenergy have agreed to merge, subject to Federal Trade Commission and shareholder approval, driven by their record low public valuations. Some privately held ethanol companies have been pursuing mergers and sales as well. Valuations on a per-gallon basis have been wide, from $1.25 to $2.50 on actual or projected gallons, depending on the transaction.

Even if a company does not intend to entertain mergers or acqui-

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).

166

ETHANOL PRODUCER MAGAZINE APRIL 2008

sitions, the board must be able to articulate a clear vision to its investors and demonstrate the ways in which it is continuously focused on protecting and enhancing shareholder value. It is equally important that the board is 05_EthanolAdUpdate OL.ai 7/17/07 2:27:21 PM for the busialigned around a long-term vision ness. Without clarity and focus around the strategic intent of the company and defining

RISK

the means as to how business decisions will be made, the board will struggle with how to assess what options meet its strategic and financial requirements.

Therefore, when planning for the future, the board must address whether a sale or merger is an option. A sale or merger may make sense if a project is in financial distress

or the company is unable to survive on its own. Shareholders may also want liquidity or to be part of a bigger organization, or they simply want to maximize return on investment and feel the time is right.

If a sale or merger is being contemplated, what will the transaction look like? Several options exist, including a merger, an outright sale of the company either as an asset sale or a stock sale, or a partial sale of the company, which provides some liquidity and brings in a new investor/partner.

A merger is the combination of two companies into one larger company. The goal of the merger is to be accretive where the whole is greater than the sum of the parts.

Mergers often occur between similar sized companies, and they must have common values, goals and culture to succeed.

A merger allows the selling company to realize the appreciation potential of the merged entity, instead of being limited to the sale proceeds. It allows shareholders of the smaller company to own a smaller piece of a larger pie, possibly increasing their overall net worth.

The advantages of mergers include succession planning for shareholders and the security of owning a larger organization. No cash is needed as a merger consists of an exchange of stock of the two companies, and

RISK

The Specialist in Biofuels Plant Appraisals • Valuation for financing • Establishing an asking price • Expert witness testimony • Partial interest valuation Few certified appraisers in the United States specialize in ethanol plant and related biofuels properties. The firm of Natwick Associates offers more than 50 years of worldwide experience. Your appraisal will be completed by a certified general appraiser and conform to all state and federal appraisal standards.

Call us for a free, no-obligation consultation today.

it can be structured as a tax-free transaction.

On the negative side, many mergers fail due to clashing cultures and the inability to integrate the two firms. Projected synergies often are not realized. Only one management team survives and shareholders are diluted.

The sale of a company consists of one company—the buyer—acquiring another company—the seller. In making the decision to purchase an existing business, it is necessary for the buyer to determine whether he or she is going to seek to purchase the assets of the business or the stock of the business entity.

An asset sale involves selling the company's assets, including facilities, vehicles, equipment and inventory. The buyer buys some or all of the assets of the seller for cash. The seller uses cash to pay off its debt and returns remaining cash to shareholders.

An asset sale is usually a less favorable taxable transaction to the seller and is advantageous to the buyer. Several other key points should be considered in an asset sale transaction. 1) The buyer may be purchasing assets, not liabilities. 2) The buyer can pick and choose assets purchased. 3) An asset purchase protects the buyer from unseen liabilities.

4) There is a stepped-up basis for depreciation and allocation of purchase price to assets. If the purchase price exceeds the aggregate tax basis of the assets being acquired, the buyer receives a stepped-up basis in the assets. 5) The buyer may not experience dilution of ownership that

occurs in a merger. 6) Purchasing a business through an asset acquisition may be less complicated from a securities law perspective because the parties are not normally required to comply with state and federal securities laws and regulations. 7) The closing documents, including conveyance documents, can be more complex. 8) There is depreciation recapture by seller. 9) It does not qualify for tax treatment as a tax-free reorganization.

A stock sale involves the sale of only the selling company's stock. The buyer buys all of the outstanding shares of the seller for cash or stock and therefore has control over the company and its assets. The buyer replaces selling shareholders as the owner of the company. The seller is acquired intact as a going concern. Liabilities are assumed, which is added risk to the buyer (skeletons in the closet). Detailed due diligence is a must, and indemnification and escrows from the selling shareholders are common. A stock sale is generally more favorable to the seller.

Other key points exist when considering a stock sale. 1) It should avoid possible double taxation of the seller. 2) The buyer can walk into established credit lines of the seller’s corporation. 3) If the selling company does not have a large number of shareholders, a stock transaction will normally be less complicated.

4) In states that impose sales or transfer taxes on the sale of assets, a stock transaction can avoid some or all of these taxes that apply in the event of an asset transaction. 5) The buyer can normally obtain the

In states that impose sales or transfer taxes on the sale of assets, a stock transaction can avoid some or all of these taxes that apply in the event of an asset transaction.

1-800-279-4757 Natwick Associates Appraisal Services 1205 4th Ave. S., Fargo, ND 58103 168

ETHANOL PRODUCER MAGAZINE APRIL 2008

RISK

Once the business is positioned to go to market, the board would hire an investment banker to find potential buyers or investors for the plant, help the board evaluate the offers, assist in negotiations to maximize the value for the plant’s shareholders and be the owner’s representative in closing the transaction. selling company’s non-assignable contracts, permits and licenses without the consent of the other party. 6) Finally, the buyer assumes existing depreciation schedule of assets and the tax status of the corporation.

If the board or owners of the company are ready to consider a merger or sale, it must have a process to follow. The lynchpin for the process is having a strategic plan and intent to move forward with a merger or sale. First, the company must identify potential partners or buyers. Second, the company should put its own house in order. As a potential merger partner or seller it must present itself in its best light, emphasizing its competitive advantages and a value-added business case. This business case should emphasize the ability to: 1) generate earnings, 2) create a sustainable competitive advantage 3) manage risk and 4) execute. Third, the company needs to have financial controls in place and financial reports updated.

Lastly, it is important to have realistic business value expectations (today versus tomorrow) and be willing to keep an open mind when entering into merger or sale talks.

Valuation of a company is driven by existing and projected earnings as well as qualitative components that drive success such as management, facility location, feedstock prices, transportation flexibility, industry contracts and relationships. Equally as important are market conditions, which determine earnings multiples or, in the case

of an ethanol plant, gallons being produced.

Other valuation methodologies include discounted cash flow, internal rate of return targets, and public and private company comparables. In order to protect and enhance the value of the organization and entertain sale or merger opportunities, the board must first be able to define, quantify and support its value.

The board would position its business to maximize the value of the merger or sale by assessing the current state of business performance and making changes in which the company can add value to potential investors. Once the business is positioned to go to market, the board would hire an investment banker to find potential buyers or investors for the plant, help the board evaluate the offers, assist in negotiations to maximize the value for the plant’s shareholders and be the owner’s representative in closing the transaction.

The evolution of the ethanol industry sector continues to move rapidly.

Companies need to be positioned, both strategically and operationally, to succeed over time and take advantage of merger and acquisition opportunities as they occur. EP Susan Wyka is a partner with Ascendant Partners Inc. and Ascendant Financial Partners LLC (member FINRA) Reach her at, swyka@ascendantfp .com, (303) 221-4700 or www. ascendantpartners.com.

ETHANOL PRODUCER MAGAZINE APRIL 2008

169

Ethanol 2008 Australia April 8-10, 2008 Sydney Convention & Exhibition Center Sydney, Australia This third-annual event will continue to build Australia’s ethanol industry by discussing development opportunities. The agenda includes preconference seminars (Ethanol 101 and Lenders & Investors), an international update on ethanol, the food-versus-fuel debate, new technologies and an oil company perspective.

Australia: +61 7 3360 7000 U.S.: (719) 539-0300 www.ethanol2008.com

International Biomass Conference & Trade Show

The Operators’ School

April 15-17, 2008

Crystal Garden Banquet & Events Center and the National Corn-to-Ethanol Research Center Edwardsville, Illinois

April 22-24, 2008

Minneapolis Convention Center Minneapolis, Minnesota This event, which stemmed from the Energy & Environmental Research Center’s biomass conference last year in Grand Forks, N.D., aims to advance the near-term and commercial-scale manufacturing of biomass-based power, fuels and chemicals. Topics include biopower, bioproducts, biochemicals, biofuels, intermediate products and coproducts, which will be presented through general sessions, technical workshops and an industry trade show.

(800) 583-6484 www.ethanoltech.com

(719) 539-0300 www.biomassconference.com

EVENTS

This event’s three-day program is designed as a practical workshop for ethanol plant operators and will be organized around lectures and visits to the NCERC pilot plant facility. Lectures will cover the complete ethanol production process, following raw materials through distillation to ethanol and coproducts. Troubleshooting and case studies will also be discussed, along with the needs for proper documentation control and baseline studies.

CALENDAR

2008 Energy Conference May 15-16, 2008 Radisson Hotel and Conference Center Plymouth, Minnesota More than 200 key business decision-makers are expected to attend this annual event hosted by U.S. Energy Services Inc. Current energy issues, future trends and industry concerns that may affect future business will be addressed. Presentations and panel discussions given by industry experts will tackle critical topics and challenges surrounding energy management, including green energy management strategies.

(763) 543-4600 www.usenergyservices.com

Renewable Energy Finance & Investment Summit

12th Distillers Grains Symposium

May 19-21, 2008

May 21-22, 2008

FireSky Resort & Spa Scottsdale, Arizona

Westin Crown Center Kansas City, Missouri

This third annual event, themed “Exploring Key Deals & Developments in the Renewable Fuel & Renewable Power Markets,” will discuss state-ofthe-art finance structures, deal mechanics, tax incentives, investment trends, more efficient technologies, regulatory changes and creative financing solutions. Three tracks address renewable power, biofuels, and carbon and greenhouse gas emissions. A separate workshop will detail renewable energy project finance fundamentals.

This event will provide the latest information on issues for distillers grains marketing/merchandising, animal nutrition, processing technologies and governmental regulations. More information will be available as the event approaches.

(502) 852-1575 www.distillersgrains.org

(704) 889-1287 www.frallc.com

170

ETHANOL PRODUCER MAGAZINE APRIL 2008

World Congress on Industrial Biotechnology & Bioprocessing

Ethanol & Biodiesel Management University April 28-30, 2008

M a y 11 - 1 4 , 2 0 0 8

April 27-30, 2008

Caesarâ&#x20AC;&#x2122;s Palace Las Vegas, Nevada

Las Vegas Rio All-Suite Hotel Las Vegas, Nevada

This training course will teach biofuels businesses how to take advantage of the growing market.

Attendees will be taught how to buy, sell, store, hedge and plan for the expansion of biofuels.

Agenda topics include supply and demand, risk management, blending, tax incentives, cellulosic ethanol, the renewable fuels standard and renewable identification numbers, international markets and imports, and transportation and storage challenges.

This 14th annual event focuses on alternative fuels, alternative fuel vehicles, advanced transportation technologies, vehicle emissions and policy. The preliminary agenda includes discussions that will educate vehicle fleet operators and end-users on the options available in alternative fuels. The expo features auto manufacturers, technology developers, fuel suppliers and many others. There will also be a ride-and-drive event.

Hilton Chicago Chicago, Illinois This event is dedicated to industrial biotechnology and the most recent advancements in the field. The agenda includes plenary sessions, in which Jeff Broin of Poet LLC and David Morris of the Institute of Local Self-Reliance will speak, along with representatives of Dow Chemical Co., Ceres, BP and Novozymes. There will also be breakout sessions, an exhibit hall and networking opportunities.

(202) 312-9274 www.bio.org/worldcongress2008

(866) 620-5940 www.opisnet.com/ethbiomgmt

Corn Utilization & Technology Conference

The Alcohol School

June 2-4, 2008

Mercure Toulouse Atria Compans Caffarelli Toulouse, France

June 2-6, 2008

Kansas City Marriott Downtown Kansas City, Missouri The theme for this sixth annual event reflects the continued growing importance of corn as a keystone to a carbohydrate-based economy. Topics will include wet milling, dry-grind technologies, value-added products from corn, and new uses for distillers dried grains that will be of value to ethanol producers and livestock interests. A more detailed agenda will be available as the event approaches.

This program, presented in English, is designed for lab, plant and management personnel. A series of lectures and laboratory demonstrations will cover the process of ethanol and beverage alcohol production. Enzyme usage, yeast biology, bacterial contamination and control will also be discussed, along with other issues currently affecting both industries. Registration is limited, with preference given to fuel ethanol and distilled beverage producers.

(636) 733-9004 www.corntechconf.org

(800) 583-6484 www.ethanoltech.com

Alternative Fuels & Vehicles National Conference + Expo

(702) 254-4180 www.afvi.org/NationalConference2008

24th Annual International Fuel Ethanol Workshop & Expo June 16-19, 2008 Opryland Hotel & Convention Center Nashville, Tennessee This conference will follow the record-breaking 2007 event, in which more than 500 exhibitors participated and more than 5,300 people attended.

The preliminary agenda includes an Ethanol 101 preconference seminar, general sessions, concurrent technical workshops and various networking opportunities. Attendees will also have the chance to tour Commonwealth Agri-Energy LLC, a 33 MMgy corn-based ethanol facility in Hopkinsville, Ky. More information will be available as this event approaches.

(719) 539-0300 www.fuelethanolworkshop.com

ETHANOL PRODUCER MAGAZINE APRIL 2008

171

EPM MARKETPLACE Ag Products & Services Hybrid Corn Pioneer Hi-Bred International, Inc. 800-247-6803 www.pioneer.com

Associations/Organizations Ethanol Promotion & Information Council (EPIC) 402-932-0567 www.drivingethanol.org

Chemicals

Hydro-Klean, Inc. 515-283-0500

www.lactrol.com

Hydro-Klean, Inc. 515-283-0500 Inland Waters 313-841-5800

www.ferm-solutions.com

Fans Hydro-Klean, Inc. 515-283-0500

www.lactrol.com

Inland Waters 313-841-5800

CIP www.univarusa.com

Water Treatment

www.hydro-klean.com

www.inlandwaters.com

Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

PhibroChem Ltd. 800-223-0434

Gordon Technologies 570-279-8086

www.inlandwaters.com

Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

North American Bioproducts Corporation 866-342-7026 www.na-bio.com

Univar USA Inc. 402-733-3266

www.hydro-klean.com

Emergency Spill Response

Anti-Microbial Ferm Solutions 859-402-8707

Ductwork

Inland Waters 313-841-5800

Trade

PhibroChem Ltd. 800-223-0434

Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

www.hydro-klean.com

www.inlandwaters.com

Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

Filter Media www.gtsieve.com

Yeast

Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

North American Bioproducts Corporation 866-342-7026 www.na-bio.com

Hydro-Klean, Inc. 515-283-0500 Inland Waters 313-841-5800

www.hydro-klean.com

www.inlandwaters.com

Summit Industrial Products 800-749-5823 www.klsummit.com

Hydro-Blasting Hydro-Klean, Inc. 515-283-0500 Inland Waters 313-841-5800

Cleaning Dryer Systems

Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

www.hydro-klean.com

www.inlandwaters.com

Reach your customers www.hydro-klean.com

www.inlandwaters.com

Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

Smoke Stack Hydro-Klean, Inc. 515-283-0500 Inland Waters 313-841-5800

www.hydro-klean.com

www.inlandwaters.com

Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

Your Solution. Advertise Today.

172

www.hydro-klean.com

Railcars

Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

Inland Waters 313-841-5800

Hydro-Klean, Inc. 515-283-0500

Heat Exchanger

Fermentis-Division of SI Lesaffre 800-558-7279 www.fermentis.com

Hydro-Klean, Inc. 515-283-0500

Plate-Frame

EPM MARKETPLACE

Tank Cleaning Services Hydro-Klean, Inc. 515-283-0500 Inland Waters 313-841-5800

www.hydro-klean.com

www.inlandwaters.com

Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

ETHANOL PRODUCER MAGAZINE APRIL 2008

EPM MARKETPLACE Construction Fabrication Gortech Global Fabrication 570-279-8086 www.gortechglobal.com Macomber Welding & Fabricating, Inc. 616-698-0819 macwelding@triton.net VAL-FAB Inc. 877-482-5322

www.valfab.com

Grain Storage Coverall Building Systems 800-268-3768

www.coverall.net

Insulation Mavo Systems 763-788-7713

www.mavo.com

•

Industry Leading Career Learning & Development

•

Career Growth Opportunities

•

Innovative Benefit Programs

•

Culture of Ingenuity

•

Family-Owned Company

•

Exciting Project Opportunities

•

Building what’s next for over 50 years

Mechanical Gortech Global Fabrication 570-279-8086 www.gortechglobal.com

JIC

Build Your Career at Mortenson Contact Us Today!

1-877-MORTENSON (toll free) energyjobs@mortenson.com www.mortenson.com

JOULÉ Industrial Contractors

HIRING ALL POSITIONS NATIONWIDE

OVER 40 YEARS OF PROVIDING QUALITY COST EFFECTIVE SOLUTIONS TO THE INDUSTRIAL INDUSTRY. We provide: • Experienced Supervision • Multi-craft Staff • Logistical Support For: • Plant Outages • Plant Construction and Expansion • Relocations • Capital Projects • On and off site pipe Fabrication To: • Ethanol and Alternative Fuel Plants • Pharmaceutical Manufacturers • Food Plants • Building Material Facilities

Reimer Welding Inc. 218-773-0886

www.reimerwelding.com

Railroad Tracks

Toll Free: (800) 445-6853 email-bbosher@jouleinc.com

JIC

Reach your customers Your Solution. Advertise Today.

EPM MARKETPLACE

EPM MARKETPLACE

Agra Industries, Inc. 715-536-9584 Agri-Systems 406-245-6231

www.rrcontracting.net

Railworks 913-888-4091

www.railworks.com

Volkmann Railroad Builders, Inc. 262-252-3377 www.volkmannrr.com

Tanks Caldwell Tanks 502-964-3361

www.caldwelltanks.com

DCI, Inc. 320-252-8200 Eagle Tanks, Inc. 888-678-0698

www.dciinc.com

www.eagletanks.com

With all contact information placed in one convenient location, Ethanol

WINBCO Tank Company 641-683-1855

www.winbco.com

Producer Magazine not only contains top editorial content but also a useful

Consulting

directory in each publication. Whether a

Business Plans

first-time advertiser wanting to raise

Plant Construction

R & R Contracting, Inc. 800-872-5975

awareness of your business or a

ICM, Inc. 316-796-0900

www.icminc.com

frequent display advertiser looking for www.agraind.com

added exposure, EPM Marketplace is the perfect solution.

www.agrisystems.net

ETHANOL PRODUCER MAGAZINE APRIL 2008

Environmental Air Resource Specialists,Inc. 970-484-7941 www.air-resource.com 173

EPM MARKETPLACE ICM, Inc. 316-796-0900

Plant Optimization www.icminc.com

Seneca Companies 800-369-5500 www.senecacompanies.com TKDA 651-292-4602

www.tkda.com

Feasibility Studies Harris Group Inc. 206-494-9422

Optimize the Value of Your Co-Products

www.harrisgroup.com

Groundwater Services

Harris Group Inc. 206-494-9422

Leggette, Brashears & Graham, Inc. 651-490-1405 www.lbgweb.com

Terratec Biofuels of Solutia 800-742-1476 www.TerratecBiofuels.com

Personnel Recruiting

Project Development

SearchPath of Chicago 815-261-4403 www.searchpath.com/chicago

Ethanol Productions 813-968-6867 Harris Group Inc. 206-494-9422

www.harrisgroup.com

Grading, sampling, mycotoxins, proximates, residues, GMOs. QA / QC Consulting: HACCP, GMPs, SOPs, NIR calibration Co-products: Quality assurance testing; Lot certification; Export assistance 504-297-4330 ethanol@eurofinsus.com

jim.plautz@verizon.net

Regulatory www.harrisgroup.com

Air Resource Specialists.Inc. 970-484-7941 www.air-resource.com

Public Relations Lanser Public Affairs, LLC 262-797-7876 www.lanserpublicaffairs.com

Risk Management National Fuel Marketing 303-996-6781 www.NationalFuelMarketing.com

Education Iowa Lakes Community College 800-242-5108 www.iowalakes.edu

Employment Recruiting Hobbs & Towne 610-783-4600x108

www.hobbstowne.com

SearchPath of Chicago 815-261-4403 www.searchpath.com/chicago

Engineering Civil Antioch International, Inc. 402-289-2217 www.antioch-intl.com

Quality Assurance Eurofins Scientific, Inc. 551-580-9140

TKDA 651-292-4602 www.eurofinsus.com

Reach your customers Your Ad HERE Your Solution. Advertise Today.

EPM MARKETPLACE

174

Your Solution. Advertise Today.

www.tkda.com

Control Systems Bachelor Controls 785-284-3482

www.bachelorcontrols.com

Control System Integrators, Inc. 319-377-6538 x19 www.csystemi.com

EPM MARKETPLACE ETHANOL PRODUCER MAGAZINE APRIL 2008

EPM MARKETPLACE Design/Build Agra Industries, Inc. 715-536-9584

Computer Software www.agraind.com

Encore Business Solutions 204-989-4330 www.encorebusiness.com

www.agrisystems.net

Integrated Business Solutions 888-697-3060 www.ibsolutions-llc.com

www.deltatcorp.com

John Deere Agri Services 770-238-5100 www.johndeereagriservices.com

Ethanol Productions 813-968-6867

jim.plautz@verizon.net

dbc SMARTsoftware, Inc. 770-427-7633 www.dbcsmartsoftware.com

GS CleanTech Corp.

678-566-3588

www.gs-cleantech.com

Agri-Systems 406-245-6231 Delta-T Corporation 757-941-0188

ICM, Inc. 316-796-0900

Control Systems FeedForward, Inc. 770-426-4422

www.icminc.com

www.feedforward.com

Control Systems-Distributed

Process Design Agri-Systems 406-245-6231

www.agrisystems.net

ChemSim 781-248-5057

www.chemsim.com

Control System Integrators, Inc. 319-377-6538 x19 www.csystemi.com

Process Engineering Associates, LLC 865-220-8722 www.processengr.com Vogelbusch USA, Inc. 713-461-7374

www.vogelbusch.com

Equipment & Services Air Pollution/Odor Control Ceco Abatement Systems, Inc. 630-493-0624 www.cecoenviro.com/Abatement ICM, Inc. 316-796-0900

Analytical Instruments Anton Paar +1-804-550-1051

Conveyors—Enclosed www.anton-paar.com

Grisley Components, Inc. 303-756-6474

www.grisley.com

Blowers & Fans www.icminc.com

EPM MARKETPLACE

New York Blower Company 800-208-7918

Conveyors—Pneumatic www.nyb.com

Robinson Industries, Inc. 724-452-6121 www.robinsonfans.com

Blower Engineering 800-388-1339 www.blowerengineering.com

Decanters

Boiler System With all contact information placed in one convenient location, Ethanol

Factory Sales and Engineering, Inc. 985-867-9150 www.fsela.com

Producer Magazine not only contains top editorial content but also a useful directory in each publication. Whether a first-time advertiser wanting to raise awareness of your business or a frequent display advertiser looking for added exposure, EPM Marketplace is

Catwalks Lean Technologies LLC 701-352-9620 www.leantechnologiesllc.com

Centrifuge Repair Nosnhoj Services Inc. 317-887-6436

www.nosnhojinc.com

the perfect solution.

Combustion Equipment John Zink Company LLC 800-421-9242

ETHANOL PRODUCER MAGAZINE APRIL 2008

www.johnzink.com

175

EPM MARKETPLACE Distillation Equipment Gordon Technologies 570-279-8086

Evaporators www.gtsieve.com

Dryers—Fluid Bed

Fermentors

Aeroglide Corporation 919-851-2000

www.aeroglide.com

Gortech Global Fabrication 570-279-8086 www.gortechglobal.com WINBCO Tank Company 641-683-1855

Dryers—Other Davenport Dryer, LLC 309-786-1500 www.davenportdryer.com

www.winbco.com

Filters Larox 301-543-1200

Dryers—Rotary Drum Aeroglide Corporation 919-851-2000

HRS Process Technology, Inc. 623-915-4328 www.hrs-americas.com

www.aeroglide.com

www.larox.com/cpi

Filtration Equipment BWF America 800-733-2043

www.bwf-america.com

Fluid Engineering 814-453-5014

www.fluideng.com

W.S. Tyler 1-800-321-6188

www.wstyler.com

Fractionation-Corn Buhler Inc. 763-847-9900 Sturtevant Inc. 781-829-6501

www.buhlergroup.com/us

Incinerators www.sturtevantinc.com Gortech Global Fabrication 570-279-8086 www.gortechglobal.com

Gas Detectors UE Systems, Inc. 914-592-1220 ICM, Inc. 316-796-0900

www.icminc.com

Ronning Engineering Company, Inc. 913-239-8118 www.ronningengineering.com

Emission Monitoring Systems MonitorTech Corp.

866-682-6771

www.monitortechgrp.com

Continuous Emissions Monitoring Systems Easiest installation, operation and maintenance Meet or exceeds EPA requirements NOx, O2, CO, SO2 and others Turnkey systems for under $100,000.00 P.O. Box 9271, Columbus, Oh 43209 866-682-6771 sales@monitortechcorp.us

Emissions Testing & Reduction Lantec Products, Inc. 617-265-2171 176

Instrumentation www.uesystems.com

Gaskets

Instrument Associates 708-597-9880 www.instrumentassociates.com

Allegheny Coupling Company 814-723-8150 www.alleghenycoupling.com

Shimadzu Scientific Instruments 800-477-1227 www.ssi.shimadzu.com

Grain Handling & Storage

Jet Cookers

McC, Inc. 763-477-4774 www.mccormickconstruction.com

ProSonix Corporation 800-849-1130, x. 801

Sukup Manufacturing Co. 641-892-4222

Laboratory—Supplies

www.pro-sonix.com

www.sukup.com Midland Scientific, Inc. 800-642-5263

Heat Exchangers Gortech Global Fabrication 570-279-8086 www.gortechglobal.com

Your Ad HERE Your Solution. Advertise Today.

EPM MARKETPLACE

www.midlandsci.com

Laboratory—Testing Services Eurofins GeneScan, Inc. 504-297-4330 www.gmotesting.com Midwest Laboratories 402-334-7770

www.midwestlabs.com

SGS North America, Inc. 281-478-8234www.sgs.com/alternativefuels

www.lantecp.com

ETHANOL PRODUCER MAGAZINE APRIL 2008

EPM MARKETPLACE Trilogy Analytical Laboratory 636-239-1521 www.trilogylab.com

Pipe—Fittings Robert-James Sales, Inc. 800-666-0088

Loading Equipment SafeRack 866-761-7225

www.saferack.com

Safety www.rjsales.com

St. Louis Pipe & Supply 800-737-7473 www.stlpipesupply.com

SimplexGrinnell 800-746-7539

www.simplexgrinnell.com

Sensors Electro Sensors 800-328-6170

Maintenance Services

Pipe—Flanges

Joule’ Industrial Contractors bbosher@jouleinc.com www.jouleinc.com

Robert-James Sales, Inc. 800-666-0088

Maintenance Software

Pressure Vessels

Fluid Engineering 814-453-5014

Mapcon Technologies, Inc. 800-922-4336 www.mapcon.com

Gortech Global Fabrication 570-279-8086 www.gortechglobal.com

Puritan Magnetics, Inc. 248-628-3808 www.puritanmagnetics.com

Mills-Hammer

WINBCO Tank Company 641-683-1855

Steel Suppliers

CBT Wear Parts, Inc. 888-228-3625 Prater-Sterling 630-679-3254

www.cbtwearparts.com

www.prater-sterling.com

CPM/Roskamp Champion 800-366-2563 www.cpmroskamp.com

www.rjsales.com

www.winbco.com

Harris Group Inc. 206-494-9422

www.harrisgroup.com

Pumps

Vaperma, Inc. 418-839-6989

Outokumpu Stainless 847-517-4050

www.outokumpu.com

Storage-DDGS www.laidig.com

Structural Fabrication Cherokee Steel Fabricators, Inc. 903-759-3844 www.cherokeesteelfabricators.com

Tanks www.gtsieve.com Agra Industries, Inc. 715-536-9584

Molecular Sieves Gordon Technologies 570-279-8086

davidj@chapelsteel.com

www.agrisystems.net

Molecular Sieve Desiccant Gordon Technologies 570-279-8086

www.fluideng.com

Laidig Systems, Inc. 574-256-0204

Millwright Agri-Systems 406-245-6231

Separation Equipment

Chapel Steel 800-320-6042

Process Control

www.electro-sensors.com

Brown-Minneapolis Tank 281-252-9809

www.gtsieve.com

www.agraind.com

www.bmt-tank.com

Federal Equipment Company 800-652-2466 www.fedequip.com

www.vaperma.com

Motors

Gortech Global Fabrication 570-279-8086 www.gortechglobal.com

Trico TCWind, Incorporated 320-693-6200 www.tricotcwind.com

Paragon Trailer Sales 800-471-8769 www.paragontrailer.com

Packing & Tray Installation

WINBCO Tank Company 641-683-1855

Gordon Technologies 570-279-8086

www.gtsieve.com

Pipe American Stainless & Supply 800-845-5511 www.americanstainless.com Robert-James Sales, Inc. 800-666-0088

www.winbco.com

www.rjsales.com

Your Ad HERE Yamada America, Inc. 800-990-7867 www.yamadapump.com

Your Solution. Advertise Today.

EPM MARKETPLACE

RTO Media Lantec Products, Inc. 617-265-2171 www.lantecp.com

ETHANOL PRODUCER MAGAZINE APRIL 2008

177

EPM MARKETPLACE Thermal Oxidizers

Siemens Water Technologies 800-525-0658 www.siemens.com/water

Used Equipment

Ethanol Production Future Producers Syntec Biofuel, Inc. 604-648-2092

PROVEN RELIABILITY

www.syntecbiofuel.com

Finance

for VOC, CO & PM ABATEMENT

Accounting Christianson & Associates PLLP 320-235-5937 www.christiansoncpa.com

EISENMANN Corporation Crystal Lake, Illinois

Kennedy and Coe, LLC 800-303-3241

815.455.4100 es.info@eisenmann.com

www.kcoe.com

Appraisals Federal Appraisal & Consulting, LLC. 908-823-0607 www.federalappraisal.com Natwick Associates Appraisal Services 800-279-4757 www.natwick.com

ICM, Inc. 316-796-0900 Pro-Environmental, Inc. 909-989-3010

VOC Scrubbers www.icminc.com Lantec Products, Inc. 617-265-2171

www.lantecp.com

www.pro-env.com

Valves Central States Group 800-318-2747 www.centralstatesgroup.com

EPM MARKETPLACE With all contact information placed in one convenient location, Ethanol

Check-All Valve Mfg. Co. 515-224-2301 Metso Automation 508-852-0215

directory in each publication. Whether a first-time advertiser wanting to raise awareness of your business or a frequent display advertiser looking for added exposure, EPM Marketplace is the perfect solution.

Jordan, Knauff & Company 312-254-5900 www.jordanknauff.com

178

Insurance

www.biothane.com

Aquatech International Corporation 724-746-5300 www.aquatech.com

Gordon Technologies 570-279-8086

Equity Procurement

www.metsoethanol.com

Water Treatment

Fluid Engineering 814-453-5014

www.harrisgroup.com

Greenman Funding 888-802-7678 greenman.funding@verizon.net

Wastewater Treatment Services Biothane Corporation 856-541-3500x501

Harris Group Inc. 206-494-9422

www.checkall.com

Producer Magazine not only contains top editorial content but also a useful

Due Diligence

www.fluideng.com

www.gtsieve.com

Armor Companies, Inc. 612-501-5654 acline@armorcompanies.com Chubb Insurance 312-454-4250 ERI Solutions, Inc. 316-927-4294

chubb.com

erisolutions.com

Lender Representatives Agri-Energy Funding Solutions 402-895-5067 www.agri-energyfs.com

ETHANOL PRODUCER MAGAZINE APRIL 2008

EPM MARKETPLACE Greenman Funding 888-802-7678 greenman.funding@verizon.net

Risk Management R.J. O’Brien 800-621-0757

www.rjobrien.com

R.J. O’Brien 800-621-0757

www.rjobrien.com

Rail Consulting

Utilities

Antioch International, Inc. 402-289-2217 www.antioch-intl.com

Natural Gas

TKDA 651-292-4602

www.tkda.com

Railcar Moving Heyl & Patterson Inc. 412-788-9810

Software—Accounting

www.heylpatterson.com

RAILCAR MOVING

Encore Business Solutions 204-989-4330 www.encorebusiness.com

Contact Mark Rundle at marundle@integrysenergy.com or (608) 222-5170.

Legal Services Attorneys BrownWinick Law Firm 515-242-2400 www.biofuellawyers.com Dorsey & Whitney LLP 612-343-8275

The CUB™ is an electromechanical machine designed to move single railcars or groups of cars.

Some advantages of the CUB™ are:

www.dorsey.com

Faegre & Benson, LLP 612-766-6930

•Safety of Personnel •One Person Operation •Little Maintenance Requirements •Low Investment/Operating Costs

www.faegre.com

Ask about our complete line of Railcar Moving Devices

Marketing Distillers Grains

124 W. Broadway, Suite 300 Madison, Wisconsin 53716 www.integrysenergy.com

Utility Integrys Energy Services 608-235-2547 www.integrysenergy.com

www.heylpatterson.com

CHS, Inc. 651-355-6271

P

www.chsinc.com

412-788-9810

ConAgra Trade Group 402-595-4125 www.conagratradegroup.com

Shuttlewagon 816-767-0300

Hawkeye Gold, LLC 515-663-6429

Railcar Parts

www.hawkgold.com

F

412-788-9822

Salco Products, Inc. 630-783-2570

Fuel Ethanol

E

info@heylpatterson.com

Reach your customers www.shuttlewagon.com Your Solution. Advertise Today.

EPM MARKETPLACE www.salcoproducts.com

ConAgra Trade Group 402-595-4125 www.conagratradegroup.com Noble Americas Corporation 626-585-1705 www.thisisnoble.com Provista Renewable Fuels Marketing 651-355-8519 www.provistafuels.com

Your Ad HERE

EPM MARKETPLACE

Your Solution. Advertise Today.

With all contact information placed in

EPM MARKETPLACE

one convenient location, Ethanol Producer Magazine not only contains

Transportation

top editorial content but also a useful

Heavy Highway Transport

directory in each publication. Whether a

Landstar Carrier Group 920-487-3877

first-time advertiser wanting to raise awareness of your business or a

www.landstar.com

Rail Ameritrack RailRoad Contractors, Inc. 765-659-2111 www.ameritrackrailroad.com

Reach your customers

frequent display advertiser looking for added exposure, EPM Marketplace is

Your Solution. Advertise Today.

the perfect solution.

EPM MARKETPLACE

Blacklands Railroad 903-439-0738 www.blacklandsrailroad.com

ETHANOL PRODUCER MAGAZINE APRIL 2008

179

7i½ÛiÊ> Ài>`ÞÊ >ÃÌiÀi`ÊÊ Ì iÊ iÜÊÜ>ÛiÊ Ê«iÀv À > ViÊvÕi Ê>`` Ì Ûið )F YOU RE SERIOUS ABOUT ACHIEVING HIGH PERFORMANCE IN BIOFUELS YOU LL BENEFIT FROM !FTON S "IO4%#» ADDITIVE SOLUTIONS 3UPPORTED BY EXTENSIVE FIELD TESTING /%- PARTNERSHIPS AND STATE OF THE ART RESEARCH FACILITIES OUR "IO4%# ADDITIVES DELIVER LEADING EDGE SOLUTIONS BOTH FOR THE ENVIRONMENT AND FOR MAXIMUM PERFORMANCE IN FUELS FROM BIODIESEL TO ETHANOL 3O IF YOU RE LOOKING AT THE POSSIBILITIES LOOK TO !FTON FIRST FOR MORE OF THE ALTERNATIVES YOU NEED TO RIDE THE WAVE OF THE FUTURE ¹ !FTON #HEMICAL #ORPORATION IS A WHOLLY OWNED SUBSIDIARY OF .EW-ARKET #ORPORATION .93% .%5 WWW AFTONCHEMICAL COM

g " kin e of o 24 c Sto rang 1 /2" t in ull a f plex Du 05

22

EXPANDING? UPGRADING? Keep Your Plant Running with our In-Stock Stainless PVF Robert-James Sales—the leading distributor of in-stock stainless pipe, fittings, valves and flanges—got your new plant up and running when it was built. Now look to us to service all your continuing MRO requirements.

Over 80% of all orders are shipped the same day from our nine regional warehouses. We also ship the larger size products up to 54” in diameter demanded by the biofuel processing industry today.

Free Product CD

www.rjsales.com

Buffalo, NY Cleveland, OH Cincinnati, OH Chicago, IL Indianapolis, IN Minneapolis, MN South Plainfield, NJ Raleigh, NC Tavernier, FL

800-666-0088 800-777-0820 800-777-2260 800-777-2008 800-777-0510 800-777-1355 800-777-1858 866-493-8834 305-852-1694

Contact the Robert-James Sales location nearest you and ask for a free copy of our comprehensive, up-to-date CD. It outlines our stainless product line including reference charts, graphs and tables to help you calculate what your processing plant needs.

See for yourself. Visit www.wecanmakehistory.com and letâ&#x20AC;&#x2122;s begin.

poetenergy.com