April 2009 Ethanol Producer Magazine

INSIDE: BIOFUELS SUPPORT EXPECTED TO CONTINUE UNDER OBAMA APRIL 2009

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April 2009

ETHANOL PRODUCER MAGAZINE

April 2009

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ETHANOL PRODUCER MAGAZINE

April 2009

contents

vol. 15 no. 4

features 48 POLITICS Obama’s Green Dream Team Ethanol industry leaders believe they will benefit under President Barack Obama’s leadership based on his energy plan and the people he’s chosen to help implement that plan.

–By Erin Voegele 56 TECHNOLOGY Concentrating on Coproducts MOR Technology LLC says its fractionation process creates high-yielding quality products typically seen in a corn wet mill, but with the capital and operating costs of a dry mill.

–By Anna Austin 64 PROJECT DEVELOPMENT Proposed Ethanol Plant List: 2009 United States & Canada This year’s proposed plant list is smaller, reflecting world economic woes, and suggests that there is a growing interest in producing ethanol from cellulosic feedstocks.

–By Megan Skauge, Ryan C. Christiansen, Anna Austin, Erin Voegele, Hope Deutscher, Susanne Retka Schill, Ron Kotrba, Rona Johnson, Dave Nilles, Jessica Sobolik and Bryan Sims

94 TRANSPORTATION The Ethanol Line Regional and short line railroads have made improvements and added infrastructure in response to demand from the ethanol industry.

–By Ryan C. Christiansen

102 ENVIRONMENT Coming Clean Should publicly traded ethanol companies disclose climate change risk in their U.S. Securities and Exchange Commission filings? Attorneys who specialize in climate change litigation weigh in on the debate.

–By Bryan Sims

48 ETHANOL PRODUCER MAGAZINE

April 2009

108 INDUSTRY RINs, Ethanol Blending and the 800-Pound Gorilla Rising prices for renewable identification numbers and Valero Energy Corp.’s interest in ethanol heat up speculation over potential buyers for distressed plants.

–By Ron Kotrba

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contents contributions

departments 8 On the Web 9 Advertisers Index 12 The Way I See It Industry Brims With Optimism at NEC

By Mike Bryan 16 Business & People 18 Commodities

114 114 FERMENTATION Identifying, Controlling the Most Common Microbial Contaminants Ethanol producers face a hefty list of hurdles to maximizing revenue.

Remove one obstacle—unwanted microbials—by implementing methods to control them.

–By Patrick Heist

20 View From the Hill Humpty Dumpty and the Blend Wall

By Bob Dinneen 21 RFA Update 22 BIObytes 24 Industry News 36 Plant Construction List 44 Finance Managing Ethanol Risk

By Jerry Gulke 46 Legal Perspectives New Form I-9 Rules to Be Implemented

By Britney Schnathorst 118 Events Calendar 120 Marketplace

116 116 EQUIPMENT Design Guide: Safe, Efficient Loading Racks While a daunting task, designing and constructing a loading facility provides the opportunity to improve efficiency and increase the bottom line, which is vital in today’s economic conditions.

–By Josh Baker

Ethanol Producer Magazine: (USPS No. 023-974) April 2009, Vol. 15, 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.

BPA Worldwide Membership Applied for October 2006

ETHANOL PRODUCER MAGAZINE

April 2009

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ON THE

web BLOG

PODCAST

TAKINGSTALK

Concentrating on

Assessing the Federal Stimulus Package The ethanol industry hasn’t been immune to the worldwide economic slowdown. Although some plants have shut down, others continue to churn out the nation’s most-used renewable fuel. In midFebruary, President Barack Obama signed the $787 billion American Recovery and Reinvestment Plan.

While its impact on the ethanol industry—and the rest of the U.S. economy—is still unclear, it does provide support to green energy efforts.

Coproducts

To view this blog and others, visit www.ethanolproducer. com/takingstalk/archive.jsp.

Fractionation of corn remains a hot topic within the ethanol industry. Staff Writer Anna Austin discusses one company’s unique fractionation technology in her April EPM feature, “Getting MOR Value From Fractionation.”

To listen to this podcast and others, visit www.ethanolproducer.com/podcast.

TOP 10 WEB EXCLUSIVES

Bankruptcies, Cellulosic Success and a Stimulus Package EthanolProducer.com’s most-read Web exclusive news stories for February

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Valero Energy offers bid to buy VeraSun assets

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Ethanol producers can emerge from bankruptcy

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ICM, Poet, Crescent Oil form NewGen Fuel

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Lignol, Suncor suspend cellulosic ethanol project

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Renew Energy files for Chapter 11 bankruptcy

VeraSun Energy Corp. signs an agreement in bankruptcy court with Valero Energy Corp. to sell some of its assets to the Texas-based oil refiner.

Rob Carringer of CRG Partners LLC gives the industry insight on how to avoid Chapter 11 bankruptcy.

ICM Inc., Poet LLC and wholesale fuel distributor Crescent Oil Co. form a joint venture to install blender pumps at 1,000 retail gasoline stations across the country.

Lignol Energy Corp. and Suncor Energy Inc. announce they will discontinue a previously announced cellulosic ethanol project in Colorado.

Wisconsin-based ethanol producer Renew Energy LLC files for Chapter 11 bankruptcy protection in late January.

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Congress passes stimulus package

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Praj cellulosic ethanol plant is successful

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Senate stimulus bill includes biofuels provisions

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Survey shows shift in Iowa corn movement

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The U.S. Congress passes the American Recovery and Reinvestment Act of 2009 in mid-February. President Barack Obama signs it days later.

Praj Industries Ltd.’s cellulosic ethanol pilot plant successfully produces ethanol from corn cobs and sugarcane bagasse.

The U.S. Senate passes its version of the American Recovery and Reinvestment Act of 2009. The bill, which had earlier passed the House of Representatives, was signed days later by President Barack Obama.

Researchers find that Iowa grain elevators are losing market share as more corn moves directly to ethanol plants in the state.

Trinity Industries defers railcar manufacturing Dallas-based Trinity Industries Inc. announces it will indefinitely defer an $800 million investment in approximately 10,000 railcars for multiple players in the ethanol industry.

► For up-to-date Web exclusives, visit www.ethanolproducer.com.

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ETHANOL PRODUCER MAGAZINE

April 2009

AdIndex

34 & 35 2009 International BIOMASS Conference & Expo 42 2009 National Ethanol Conference 43 Afton Chemical Corp.

75 Agra Industries Corp.

59 Barr-Rosin Inc. 67 BBI Bioenergy Australasia 77 BBI Biofuels Recruiting 126 BBI International Community Initiative To Improve Energy Sustainability (CITIES) 70 BBI International Engineering & Consulting 113 BetaTec Hop Products Inc. 79 Bioenergy Canada 96 & 107 Biomass Magazine 26 Buckman Laboratories Inc.

14 & 15 Inbicon 29 Indeck Power Equipment Co. 93 Interstates Cos. 100 Intersystems 111 ITT Goulds 89 John Deere Agri Services 39 Kennedy & Coe LLC 10 Lallemand Ethanol Technology 61 Louis Dreyfus 104 Martrex Inc. 38 McC Inc. 45 MOR Technology LLC 33 Moyno 40 Natural Resource Group Inc.

47 Buhler 2 Burns & McDonnell 50 Centrisys Corp.

99 Cereal Process Technologies 28 Check-All Valve Mfg. Co. 58 Christianson & Associates PLLP 82 Clifton Gunderson LLP 91 Crown Iron Works Co. Inc. 63 dbc SMARTsoftware Inc. 71 Delta-T Corp.

97 Eisenmann Corp.

101 & 125 ethanol-jobs.com 106 ETS Labratories

69 Natwick Associates Appraisal Services 30 Nexen Marketing USA Inc. 62 North American Safety Valve 6 Novozymes 55 PhibroChem 128 Poet LLC 52 Primafuel 76 R&R Contracting Inc. 87 Renewable Fuels Association 27 Resonant BioSciences LLC 127 Robert-James Sales Inc. 83 Robinson Fans Inc. 51 SafeRack

3 Fagen Inc. 32 FCStone LLC

105 Salco Products Inc. 53 Spraying Systems Co.

13 Fermentis

90 Vaperma Inc.

85 Gavilon 73 Genencor International Inc. 41 Greenway Consulting LLC 98 HEMCO Industries 60 Hydro-Klean Inc.

ETHANOL PRODUCER MAGAZINE

4 & 81 ICM Inc.

April 2009

54 Vecoplan LLC 112 Vogelbusch USA Inc. 110 Wabash Power Equipment Co. 31 WINBCO

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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

EDITORIAL

PUBLISHING & SALES

Jessica Sobolik Managing Editor jsobolik@bbiinternational.com

Mike Bryan Publisher & CEO mbryan@bbiinternational.com

Dave Nilles Contributions Editor dnilles@bbiinternational.com

Kathy Bryan Publisher & President kbryan@bbiinternational.com

e-mail to jsobolik@bbiinternational.com.

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

SUBSCRIPTIONS Ethanol Producer Magazine is now free of charge

Rona Johnson Features Editor rjohnson@bbiinternational.com

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Tom Bryan Vice President of Communications tbryan@bbiinternational.com

Susanne Retka Schill Staff Writer sretkaschill@bbiinternational.com

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Kris Bevill Staff Writer kbevill@bbiinternational.com

Howard Brockhouse Sales Manager, Media & Events hbrockhouse@bbiinternational.com

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Clay Moore Account Manager cmoore@bbiinternational.com

Anna Austin Staff Writer aaustin@bbiinternational.com

Jeremy Hanson Account Manager jhanson@bbiinternational.com

Ryan C. Christiansen Staff Writer rchristiansen@bbiinternational.com

Chip Shereck Account Manager cshereck@bbiinternational.com

Bryan Sims Staff Writer & Plant List Manager bsims@bbiinternational.com

Tim Charles Account Manager tcharles@bbiinternational.com

Hope Deutscher Online Editor hdeutscher@bbiinternational.com

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to everyone with the exception of a shipping and handling charge of $49.95 for any country outside the United States, Canada and Mexico.

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ART

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COPYRIGHT Š 2009 by BBI International

ETHANOL PRODUCER MAGAZINE

April 2009

11

The Way I See It Industry Brims With Optimism at NEC

T

he 2009 National Ethanol Conference

Clearly, there are op-

in San Antonio was, in my opinion and

portunists scanning the ho-

I believe the opinion of most attend-

rizon for plants that can be

ees, a smashing success. Despite the

purchased at bargain prices.

predictions of doom and gloom, the ethanol indus-

While some may see the

try is not only alive but enthusiastically moving into

negative side of that, oth-

2009.

ers, myself included, look at

The agenda put together by the Renewable Fu-

it as a vote of confidence in

els Association was excellent, and the attendance of

the future of the industry.

more than 1,000 people demonstrated the industry’s

These investors are willing

commitment to growth. There have been plant clos-

to put their money in a mar-

ings, and there may be more closings or at least tem-

ket that they know has a long-term future and at a

porary shutdowns in the future, but the spirit of the

price that will allow them to be profitable. Today’s

ethanol industry is certainly not broken.

market entry prices will put new investors on a level

Life is all about timing, as they say. Plants built

playing field with the plants that have already paid

more than two years ago that have paid down debt,

down or paid off their debt. Unfair, you say? Well,

as well as older plants that are debt-free, are do-

I guess we all know that life isn’t fair, and we might

ing well. Admittedly, in today’s economy, plants that

as well get over it.

have a high debt load are struggling to make a profit

The type of people at the National Ethanol

with the current market conditions. At the confer-

Conference ranged from happy producers who are

ence, it was encouraging to see how producers are

making money to producers scrambling to keep their

coping with the economic downturn: reducing costs,

heads above water to those looking for a bargain.

making ethanol more efficiently and searching out

However, I think everyone left the conference with

new markets for coproducts, to name a few. In short,

renewed sense that the ethanol industry, while not

producers all across the country are turning lemons

particularly well under current market conditions, is

into lemonade on a grand scale.

clearly on the mend and there is great reason for renewed optimism.

That’s the way I see it!

Mike Bryan Publisher & CEO mbryan@bbibiofuels.com

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ETHANOL PRODUCER MAGAZINE

April 2009

Graphic design s Marie RIO

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For more information, visit www.fermentis.com or email fermentis@lesaffre.fr ETHANOL PRODUCER MAGAZINE

April 2009

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Introducing The New Ethanol .™

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ETHANOL PRODUCER MAGAZINE

April 2009

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,QELFRQ %LRPDVV 5HÀQHU\ 0DNLQJ HWKDQRO ZRUN IRU WKH ZRUOG ETHANOL PRODUCER MAGAZINE

April 2009

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Business&People PHOTO: PROPEL FUELS

Ethanol Industry Briefs

Propel’s Clean Fuel Point in Rocklin, Calif.

Propel Fuels has installed four E85 pumps at retail gas stations in Elk Grove, Rocklin, Citrus Heights and Sacramento, Calif. The pumps also dispense biodiesel and hydrogen, with electric car chargers soon to follow. Prior to the installations, the company also unveiled its latest version of CleanDrive, which tracks and displays carbon emissions reductions from the use of biofuels, such as ethanol, purchased at Propel Clean Fuel Points. The company moved its headquarters from Seattle to Sacramento in order to better serve California’s biofuel demand.

Omaha, Neb.-based cellulosic ethanol development company NextStep Biofuels Inc. has signed a 20-year feedstock procurement contract with Arkansas-based wood processor The Price Cos. The agreement calls for The Price Cos. to 16

supply NextStep Biofuels with up to 500,000 tons per year of wood-based residues such as woodchips, bark, pulpwood and other tree-based waste products for conversion into cellulosic ethanol. NextStep Biofuels is evaluating sites in Mississippi, Alabama and Arkansas for the possible construction of cellulosic ethanol plants that will utilize The Price Cos.’ feedstocks, according to Russell Zeeck, chief operating officer for NextStep Biofuels.

A Charlottesville, Va.based Stop In Food Store became the nation’s 1,900th E85 fueling station, the National Ethanol Vehicle Coalition announced in January. The NEVC also elected five members to its board of directors: Shirley Ball of Ethanol Producers and Consumers, Don Borgman of Deere & Co., Tom May of MFS Oil Co., Dave Weber of Abengoa Bioenergy Trading and DeVonna Zeug of the Minnesota Corn Growers Association.

Milwaukee-based fermentation ingredients supplier Lallemand Ethanol Technology recently hired Carl Gandolfo and Craig Ammann as sales managers. Gandolfo will serve as Lallemand’s eastern regional sales manager. He previously worked Gandolfo as a national sales

manager at Bode Blue Corp. and ICOP Digital Inc. Ammann will serve as Lallemand’s western regional sales manager. He preAmmann viously worked for a biofuels project management and engineering company.

In their new roles, Gandolfo and Ammann will be responsible for leading regional sales teams.

The University of Minnesota Institute on the Environment named renewable fuels veteran John Sheehan Sheehan its scientific program coordinator for biofuels. He has much experience in renewable energy development, having spent nearly 20 years with the U.S. DOE National Renewable Energy Laboratory, conducting work on system dynamic models for strategic and policy decision-making related to ethanol and biodiesel.

In his new position, he will focus on the direct and indirect consequences of biofuels production on land use across the world.

Dayton, Ohiobased Rex Stores Corp., a consumer electronics and appliances retailer, will sell 39 of its stores and inventory to Appliance Direct Inc. and instead focus

on ethanol interests. Rex Stores is also negotiating to have Appliance Direct take over an additional 44 stores. “We have invested in several ethanol facilities, and we have previously announced that we are in the alternative fuels business and moving in that direction,” said Zafar Rizvi, vice president of Rex Stores. The company is part-owner in current producers Levelland Hockley County Ethanol LLC in Levelland, Texas; Patriot Renewable Fuels LLC in Annawan, Ill.; and Big River Resources LLC in West Burlington, Iowa.

It’s also part-owner of Big River Resources-Galva LLC in Galva, Ill., and One Earth Energy LLC in Gibson City, Ill. , both under construction.

The ethanol industry lost two valued members in the past four months. David Kelsall, 62, passed away Dec. 23. He first worked with alcohol production in the early 1980s as brewmaster for G. HeilKelsall man Brewing Co. in La Crosse, Wis. Later, he worked for Alltech before joining Lallemand Ethanol Technology in 2004, following the company’s acquisition of the Alltech Alcohol Division. Kelsall helped start the Alcohol School.

ETHANOL PRODUCER MAGAZINE • April 2009

Sponsored by

Danish enzyme developer Novozymes A/S reported strong financial results for 2008 and expects satisfactory sales growth in 2009 despite market uncertainty. The company reported revenue of approximately 8.14 billion krones ($1.4 billion), compared with 7.43 billion krones ($1.29 billion) in 2007. Net profits for 2008 were 1.06 billion krones ($185 million), and assets totaled 9.92 billion krones (approximately $1.72 billion).

In early February, Novozymes and Chinese partner COFCO Ltd. announced they had signed an agreement with Chinese oil and energy company Sinopec to develop a commercial-scale process that converts agricultural waste such as corn stover into ethanol. Novozymes expects to have cellulosic ethanol enzymes ready for largescale production by 2010.

DuPont Danisco Cellulosic Ethanol LLC announced four additions to its expanding management team. Kyle Althoff has become director of feedstock development. He will assist in plant siting and develop grower delivery busi-

ness models, as well as help formulate feedstock strategies.

Most recently, he managed client projects at BBI International Inc. Barbara Fatina was named chief financial officer. She most recently served as vice president of operations and CFO of Verety LLC. Stuart Thomas is now director of technology development. Previously, he was business development manager for DuPont Clean Technologies.

Keith Brazzell was named site manager of DuPont Danisco Cellulosic Ethanol’s pilot-scale cellulosic ethanol plant under construction in Vonore, Tenn.

Most recently, he served as plant manager of Tate & Lyle in Loudon, Tenn.

Ethanol producer Green Plains Renewable Energy Inc. has acquired majority interest in Houston terminal operator Blendstar LLC from Bioverda U.S. Holdings LLC for $9 million. GPRE operates four ethanol plants in Iowa, Indiana and Tennessee with a combined production capacity of 330 MMgy, along with an ethanol marketing service. The terminal acquisition will provide GPRE with more than 200 MMgy of throughput capacity for biofuels in four states. Bioverda is an affiliate of GPRE’s largest shareholder NTR PLC. ZeaChem Inc. announced the raising of $34 million in initial Series B financing led by venture capital investors

ETHANOL PRODUCER MAGAZINE • April 2009

Globespan Capital Partners and PrairieGold Venture Partners.

Further “follow-on” investments were made by MDVMohr Davidow Ventures, Firelake Capital and Valero Energy Corp., the major U.S. petroleum refiner that made a $280 million bid on five of Verasun Energy Corp.’s ethanol plants in early February (see pages 26-27 for more information). ZeaChem, a biorefinery developer, plans to begin construction in 2009 on its first cellulosic ethanol plant to be located in Oregon.

It will incorporate a hybrid process that merges thermochemical and biochemical conversion platforms.

to-ethanol plant being built by Praj Industries Ltd. will produce 420 million liters annually (110 MMgy). British Sugar and KW Trident are part of Associated British Foods PLC, which also jointly owns Frontier Agriculture with Cargill PLC.

PHOTO: VIVERGO FUELS

Gary Vermeer, 90, founder of Vermeer Corp., passed away Feb. 2. In 1948, he launched Vermeer Manufacturing Co., which manufactures agricultural, construction, environmental and industrial equipment with dealerships in more than 60 countries.

Fermentation tanks are under construction at Vivergo Fuels’ 110 MMgy plant in Hull, England.

Vivergo Fuels, a joint venture company created by BP Amoco PLC, British Sugar and DuPont, signed exclusive contracts with grain marketer Frontier Agriculture Ltd. to procure wheat for an ethanol plant under construction in Hull, England, and with feed supplier KW Trident to market the facility’s distillers grains. Slated to begin production in 2010, the wheat-

Danish biotechnology firm BioGasol ApS was recently awarded 78 million krones ($13.36 million) from the Energy Technology Development and Demonstration Program under the Danish Energy Agency for the construction of a demonstration-scale cellulosic ethanol project in Denmark. Working with an organism found in Icelandic hot springs, BioGasol said it’s achieving ethanol conversion rates close to 86 percent of the C5 sugars contained in cellulosic feedstocks, made possible through an effective microorganism whose ability to produce acetic acid and other byproducts has been removed. BioGasol expects to complete construction of its demonstration facility in 2009. Project partners include Siemens AG, Grundfos AS, Agro Tech AS and Alfa Laval AS. BioGasol’s work was recently recognized in the Red Herring Global 100 list. 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@bbiinternational.com. Please include your name and telephone number in all correspondence.

17

Business&People PHOTO: PROPEL FUELS

Ethanol Industry Briefs

Propel’s Clean Fuel Point in Rocklin, Calif.

Propel Fuels has installed four E85 pumps at retail gas stations in Elk Grove, Rocklin, Citrus Heights and Sacramento, Calif. The pumps also dispense biodiesel and hydrogen, with electric car chargers soon to follow. Prior to the installations, the company also unveiled its latest version of CleanDrive, which tracks and displays carbon emissions reductions from the use of biofuels, such as ethanol, purchased at Propel Clean Fuel Points. The company moved its headquarters from Seattle to Sacramento in order to better serve California’s biofuel demand.

Omaha, Neb.-based cellulosic ethanol development company NextStep Biofuels Inc. has signed a 20-year feedstock procurement contract with Arkansas-based wood processor The Price Cos. The agreement calls for The Price Cos. to 18

supply NextStep Biofuels with up to 500,000 tons per year of wood-based residues such as woodchips, bark, pulpwood and other tree-based waste products for conversion into cellulosic ethanol. NextStep Biofuels is evaluating sites in Mississippi, Alabama and Arkansas for the possible construction of cellulosic ethanol plants that will utilize The Price Cos.’ feedstocks, according to Russell Zeeck, chief operating officer for NextStep Biofuels.

A Charlottesville, Va.based Stop In Food Store became the nation’s 1,900th E85 fueling station, the National Ethanol Vehicle Coalition announced in January. The NEVC also elected five members to its board of directors: Shirley Ball of Ethanol Producers and Consumers, Don Borgman of Deere & Co., Tom May of MFS Oil Co., Dave Weber of Abengoa Bioenergy Trading and DeVonna Zeug of the Minnesota Corn Growers Association.

Milwaukee-based fermentation ingredients supplier Lallemand Ethanol Technology recently hired Carl Gandolfo and Craig Ammann as sales managers. Gandolfo will serve as Lallemand’s eastern regional sales manager. He previously worked Gandolfo as a national sales

manager at Bode Blue Corp. and ICOP Digital Inc. Ammann will serve as Lallemand’s western regional sales manager. He preAmmann viously worked for a biofuels project management and engineering company.

In their new roles, Gandolfo and Ammann will be responsible for leading regional sales teams.

The University of Minnesota Institute on the Environment named renewable fuels veteran John Sheehan Sheehan its scientific program coordinator for biofuels. He has much experience in renewable energy development, having spent nearly 20 years with the U.S. DOE National Renewable Energy Laboratory, conducting work on system dynamic models for strategic and policy decision-making related to ethanol and biodiesel.

In his new position, he will focus on the direct and indirect consequences of biofuels production on land use across the world.

Dayton, Ohiobased Rex Stores Corp., a consumer electronics and appliances retailer, will sell 39 of its stores and inventory to Appliance Direct Inc. and instead focus

on ethanol interests. Rex Stores is also negotiating to have Appliance Direct take over an additional 44 stores. “We have invested in several ethanol facilities, and we have previously announced that we are in the alternative fuels business and moving in that direction,” said Zafar Rizvi, vice president of Rex Stores. The company is part-owner in current producers Levelland Hockley County Ethanol LLC in Levelland, Texas; Patriot Renewable Fuels LLC in Annawan, Ill.; and Big River Resources LLC in West Burlington, Iowa.

It’s also part-owner of Big River Resources-Galva LLC in Galva, Ill., and One Earth Energy LLC in Gibson City, Ill. , both under construction.

The ethanol industry lost two valued members in the past four months. David Kelsall, 62, passed away Dec. 23. He first worked with alcohol production in the early 1980s as brewmaster for G. HeilKelsall man Brewing Co. in La Crosse, Wis. Later, he worked for Alltech before joining Lallemand Ethanol Technology in 2004, following the company’s acquisition of the Alltech Alcohol Division. Kelsall helped start the Alcohol School.

ETHANOL PRODUCER MAGAZINE • April 2009

Sponsored by

Danish enzyme developer Novozymes A/S reported strong financial results for 2008 and expects satisfactory sales growth in 2009 despite market uncertainty. The company reported revenue of approximately 8.14 billion krones ($1.4 billion), compared with 7.43 billion krones ($1.29 billion) in 2007. Net profits for 2008 were 1.06 billion krones ($185 million), and assets totaled 9.92 billion krones (approximately $1.72 billion).

In early February, Novozymes and Chinese partner COFCO Ltd. announced they had signed an agreement with Chinese oil and energy company Sinopec to develop a commercial-scale process that converts agricultural waste such as corn stover into ethanol. Novozymes expects to have cellulosic ethanol enzymes ready for largescale production by 2010.

DuPont Danisco Cellulosic Ethanol LLC announced four additions to its expanding management team. Kyle Althoff has become director of feedstock development. He will assist in plant siting and develop grower delivery busi-

ness models, as well as help formulate feedstock strategies.

Most recently, he managed client projects at BBI International Inc. Barbara Fatina was named chief financial officer. She most recently served as vice president of operations and CFO of Verety LLC. Stuart Thomas is now director of technology development. Previously, he was business development manager for DuPont Clean Technologies.

Keith Brazzell was named site manager of DuPont Danisco Cellulosic Ethanol’s pilot-scale cellulosic ethanol plant under construction in Vonore, Tenn.

Most recently, he served as plant manager of Tate & Lyle in Loudon, Tenn.

Ethanol producer Green Plains Renewable Energy Inc. has acquired majority interest in Houston terminal operator Blendstar LLC from Bioverda U.S. Holdings LLC for $9 million. GPRE operates four ethanol plants in Iowa, Indiana and Tennessee with a combined production capacity of 330 MMgy, along with an ethanol marketing service. The terminal acquisition will provide GPRE with more than 200 MMgy of throughput capacity for biofuels in four states. Bioverda is an affiliate of GPRE’s largest shareholder NTR PLC. ZeaChem Inc. announced the raising of $34 million in initial Series B financing led by venture capital investors

ETHANOL PRODUCER MAGAZINE • April 2009

Globespan Capital Partners and PrairieGold Venture Partners.

Further “follow-on” investments were made by MDVMohr Davidow Ventures, Firelake Capital and Valero Energy Corp., the major U.S. petroleum refiner that made a $280 million bid on five of Verasun Energy Corp.’s ethanol plants in early February (see pages 26-27 for more information). ZeaChem, a biorefinery developer, plans to begin construction in 2009 on its first cellulosic ethanol plant to be located in Oregon.

It will incorporate a hybrid process that merges thermochemical and biochemical conversion platforms.

to-ethanol plant being built by Praj Industries Ltd. will produce 420 million liters annually (110 MMgy). British Sugar and KW Trident are part of Associated British Foods PLC, which also jointly owns Frontier Agriculture with Cargill PLC.

PHOTO: VIVERGO FUELS

Gary Vermeer, 90, founder of Vermeer Corp., passed away Feb. 2. In 1948, he launched Vermeer Manufacturing Co., which manufactures agricultural, construction, environmental and industrial equipment with dealerships in more than 60 countries.

Fermentation tanks are under construction at Vivergo Fuels’ 110 MMgy plant in Hull, England.

Vivergo Fuels, a joint venture company created by BP Amoco PLC, British Sugar and DuPont, signed exclusive contracts with grain marketer Frontier Agriculture Ltd. to procure wheat for an ethanol plant under construction in Hull, England, and with feed supplier KW Trident to market the facility’s distillers grains. Slated to begin production in 2010, the wheat-

Danish biotechnology firm BioGasol ApS was recently awarded 78 million krones ($13.36 million) from the Energy Technology Development and Demonstration Program under the Danish Energy Agency for the construction of a demonstration-scale cellulosic ethanol project in Denmark. Working with an organism found in Icelandic hot springs, BioGasol said it’s achieving ethanol conversion rates close to 86 percent of the C5 sugars contained in cellulosic feedstocks, made possible through an effective microorganism whose ability to produce acetic acid and other byproducts has been removed. BioGasol expects to complete construction of its demonstration facility in 2009. Project partners include Siemens AG, Grundfos AS, Agro Tech AS and Alfa Laval AS. BioGasol’s work was recently recognized in the Red Herring Global 100 list. 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@bbiinternational.com. Please include your name and telephone number in all correspondence.

19

COMMODITIES REPORT Natural Gas Report

By Casey Whelan and Drew Pederson, U.S. Energy Services Inc.

Natural gas, ethanol prices: The natural hedge effect Feb. 13—Ethanol and natural gas markets are part of the broader hydrocarbon marketplace. As such, it is reasonable to assume that to some degree price movements for each commodity may be related. Relative price movements between natural gas and ethanol are important to consider because natural gas is a significant input to the production cost of ethanol.

If the relationship between natural gas and ethanol prices is strong enough, one can assert that there is natural hedge. The practical meaning when a natural hedge condition exists is that no forward pricing for either commodity is required to cover price risk or price exposure. The increase or decrease in natural gas costs are offset by increases or decreases in ethanol revenues. Therefore, forward pricing of one commodity without the other actually increases margin volatility.

The chart shows weekly ethanol and natural prices over the past year. Clearly, natural gas and ethanol price movements are strongly related over this period. In order to assess the strength of the relationship, we developed a linear regression model specifying ethanol prices as the dependent variable and natural gas as the independent variable. We specified the model in this manner since ethanol prices are more likely influenced by the fossil hydrocarbon complex, which includes natural gas, than ethanol prices driving the fossil hydrocarbon complex.

The analysis shows that more than 80 percent of changes in the ethanol prices can be explained by the change in natural gas prices.

More than 70 percent of changes in ethanol prices can be explained by the change in natural gas prices over the past two years.

If this statistical relationship holds in the future, it may be prudent to only hedge significant natural gas volumes for deferred months when and if forward ethanol prices are also set. To do otherwise jeopardizes the value of the natural hedge between natural gas and ethanol prices. EP Casey Whelan, vice president of strategic initiatives, can be contacted at cwhelan@usenergyservices.com.

Corn Report

By Jason Sagebiel, FCStone

Concern arises over basis levels Feb. 17—Despite the USDA making no changes to February supply and demand compared to January, corn and beans have been focused on other components. Outside financial markets, weather in South America and China’s wheat country, and overall acreage concerns will linger into the spring. Despite a 1.79-billion bushel carry-out, corn has been reluctant to move throughout the U.S. The producer is hanging on to corn inventory for an anticipated rally.

The result is basis levels have been relatively narrow, leaving concern about what they can do going forward either just before spring field work or into the summer—potentially positive for the end-user.

Corn supply is not as concerning. However, demand can still be altered by exports, ethanol and livestock feed demand. The USDA lowered the February soy crush by 15 million bushels but did not make any changes to corn via feed demand. It is noteworthy that the USDA did reduce sorghum demand by 10 million bushels. Consequently, the food/seed/industrial sector is expected to consume 40 million more bushels from milo in the current crop year. The demand stemmed from ethanol. With the current spread between milo and corn, ethanol economics are much better with that commodity consumed. There may be both an efficiency and coproduct drag, but it seems that the economics are still prudent.

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The graph depicts U.S. milo usage since 1995-‘96. It reveals the switch in milo exports versus usage in the food/seed/industrial sector for this year. Feed and ethanol demand picked up this year due to the wider spread (cheaper input versus corn). EP ETHANOL PRODUCER MAGAZINE • April 2009

COMMODITIES REPORT DDGS Report

By Sean Broderick, CHS Inc.

Prices pulled in several directions Feb. 16—As the National Ethanol Conference approached, DDGS prices were getting pulled in many different directions. The container market, which had been steady for the past couple of months, ratcheted up approximately $25 per ton in the past three weeks, going from a low of $115 in Chicago to $140 for product available in the nearby slot. Plant issues at a container-focused facility also pushed exporters to scramble for supply out of the normal channels.

Barge prices also charged higher, as ice jams on the Illinois River caused Gulf loaders to bid up for product.

Corn prices have gotten high enough to make DDGS competitive in the world market.

Prices in the West Coast and panhandle market are higher, but not to the same degree as the export markets. The profitability of animal feed-

ing, particularly the dairy sector, has many dealers concerned about credit, and trades that normally get done in three- to 12-month chunks are now short term, making the logistics management issues acute on a week-toweek basis.

Plants that are for sale are also the “elephant in the room.” By press time, a lot of questions will have been answered with regard to the VeraSun Energy Corp. sale and several of the other plants that have slowed production or closed. Additional supply in the spring into summer market will weigh heavily on prices, which traditionally fall as the weather warms.

More operational plants will disrupt the current price equilibrium in the market. Futures and spring planting will definitely be a factor, but impending supply is going to be the feature in the next few weeks. EP

Ethanol Report

Regional Ethanol Prices ($/gallon as of Feb.13)

RACK

REGION

SPOT

West Coast

1.66

1.782

Midwest

1.59

1.7028

East Coast

1.70

1.8389 SOURCE: DTN

Regional Gasoline Prices ($/gallon as of Feb.13)

REGION

SPOT

RACK

West Coast

1.527

1.7454

Midwest

1.37

1.4162

East Coast

1.2854

1.4215 SOURCE: DTN

DDGS Prices ($/ton) LOCATION

FEB. 2008

JAN. 2008

FEB. 2008

Minnesota

130

135

155

California*

173

175

190

Chicago

140

120

140

Buffalo, N.Y.

145

135

145

Central Florida

168

157

185

*Central Valley

SOURCE: CHS Inc.

Corn Futures Prices DATE

(May corn, $/bushel)

HIGH

LOW

CLOSE

Feb. 13, 2008

3.80 1/2

3.72 3/4

3.73 1/4

Jan. 13, 2008

3.89 3/4

3.72 3/4

3.73 1/4

Feb. 13, 2007

5.11

5.05

5.09 3/4 SOURCE: FCStone

By Rick Kment, DTN Biofuels Analyst

Can seasonal demand add support to a struggling market?

Feb. 13—Ethanol and RBOB gasoline markets seem to have become uneasily stable over the first two months of 2009. At press time, prices have moved in a narrow range in the ethanol market as well as in relatively flat movements in the RBOB gasoline market on a daily and weekly basis level.

Since the start of 2009, seasonal buying has provided the market’s major support. Traders and retailers continue to rely on the seasonal tendencies of the market and expect additional demand to build through the April, May and June contract months as increased driving is expected domestically and internationally. However, the weakness in the economy is likely to put a damper on a portion

of the consumer driving activity, although right now it is unclear exactly how this will affect the market.

The big shift over the past couple of months is the separation of the movements in the RBOB gasoline price to the price of crude oil. For the first time in many months, RBOB gasoline prices seem to be driven by their own fundamentals. Additional buying has been seen recently due to low gasoline prices, but buyers’ hopes continue to rest on the fact that traditional buying patterns will prevail.

The challenge in this pre-buying strategy is that if overall demand does not follow previous patterns, over supply concerns could spark additional sell offs in the futures market. EP

ETHANOL PRODUCER MAGAZINE • April 2009

Cash Sorghum Prices ($/bushel) FEB. 13, 2009 JAN. 16, 2009 FEB. 15, 2008 Superior, Neb. Beatrice, Neb. Sublette, Kan. Salina, Kan. Triangle, Texas Gulf, Texas

2.86 2.79 2.81 3.02 2.74 3.69

3.04 2.96 3.07 3.18 2.98 3.91

4.79 4.89 4.68 4.88 4.71 5.50 SOURCE: Sorghum Synergies

Natural Gas Prices

($/MMBtu)

FEB. 2009

JAN. 2009

FEB. 2008

NYMEX

4.49

4.80

8.43

N. Ventura

4.41

5.65

8.59

Calif. Border

3.94

4.43

8.01

SOURCE: U.S. Energy Services Inc.

U.S. Ethanol Production Output November 2008

686,000*

October 2008

647,000

November 2007

479,000

*all-time monthly high

(barrels/day)

SOURCE: U.S. Energy Information Administration

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VIEW FROM THE HILL

Humpty Dumpty and the Blend Wall In Washington, D.C., much of the debate surrounding renewable fuels and ethanol is taking place inside President Barack Obama’s administration and not on Capitol Hill. Near the top of the talking points list is the arbitrary and outdated cap imposed on how much ethanol can be blended into a gallon of gasoline and used in all internal combustion engines in operation. Known as the blend wall, the regulatory cap imposed on ethanol blending is 10 percent per gallon. It is in desperate need of modernization.

The mechanisms by which the blend rate can be increased are reasonably straightforward. One, the U.S. EPA could raise the level to 12 percent or 13 percent by determining that the level of ethanol content in a gallon of gasoline is substantially similar to 10 percent blends. The second mechanism is for EPA to consider and grant a waiver request, complete with all the necessary documentation and supporting evidence, to raise the legal limit of ethanol content to something higher than 10 percent. Therein lies this industry’s challenge.

Like Humpty Dumpty, the future of this industry with respect to growth and the development of next-generation technologies in large measure sits precariously on top of the blend wall. To ensure the forward-thinking goals of the Renewable Fuels Standard are achieved and the promising innovations that are being developed today are commercialized, the amount of ethanol in gasoline must increase. Yes, the continued deployment of flexible-fuel vehicles and infrastructure capable of handling ethanol blends up to 85 percent is critical. However, that development will take time and may not be achieved before this industry runs head long into the blend wall. In order to guarantee the success of new technologies and

Dinneen

our public policy goals, the ethanol blend level for all vehicles must be increased.

However, bravado is not a substitute for the sound science and data that must accompany any waiver request submitted by this industry. I firmly believe that the science will support our case. Preliminary data from a variety of tests give me great confidence. For instance, a University of Minnesota test conducted with the help of the Renewable Fuels Association tested 20 percent ethanol blends in 40 pairs of vehicles including a variety of makes, models and engine configurations (such as hybrids), found there were no show stoppers in the performance or drivability of the vehicles that would prevent further testing from moving forward. Additional testing by the U.S. DOE has shown preliminary results that support those found by the University of Minnesota.

However, more testing is likely needed, particularly focusing on the emissions and durability of engines using higher ethanol blends.

The RFA firmly believes that this testing should continue to move forward as rapidly as possible and that cooperation among all stakeholders is essential to getting the science and the regulations correct. I take great solace in the fact that Secretary of Agriculture Tom Vilsack has aggressively brought the issue to the forefront and is having discussion with EPA Administrator Lisa Jackson. Ultimately, the final decision is up to Jackson and her staff at EPA. The stakes in this debate are high. Our science and strategy to obtain a waiver must be consistent and sound. There is too much at stake. Unlike Humpty Dumpty, if we fail and fall off the wall, there are no king’s men waiting to put this industry back together again.

Bob Dinneen President and CEO Renewable Fuels Association

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ETHANOL PRODUCER MAGAZINE • April 2009

RFA UPDATE

w w w. e t h a n o l R FA . o r g

Consensus growing for North American biofuels

2008 distillers grains exports shatters record U.S. distillers grains exports nearly doubled in 2008, rising 91 percent from 2007 levels, according to data released by the Foreign Agriculture Service. The 4.51 million metric tons shipped last year nearly quadrupled 2006 export levels. Total U.S. distillers grains production in 2008 was approximately 22 million metric tons, meaning exports accounted for roughly 20 percent of total shipments.

“This increasing production and use of distillers grains is providing livestock feeders across the globe with a high protein source of feed that can partially displace the need for corn and soybean meal in feed rations,” said Geoff Cooper, Renewable Fuels Association vice president of research and analysis. “As a result, distillers grains are an important and often overlooked component of both the fictitious debate about food-versus-fuel and the ongoing discourse surrounding the science of land use change.”

For the third straight year, Mexico registered as the top market for U.S. distillers grains exports. Nearly 1.2 million metric tons, or 26 percent of total exports, were shipped to Mexico in 2008. Canada was the second-largest export market and Turkey third.

ETHANOL PRODUCER MAGAZINE • April 2009

The U.S. and Canadian Renewable Fuels Associations released a joint statement following President Barack Obama’s first meeting with Canadian Prime Minister Stephen Harper in mid-February. RFA President Bob Dinneen and CRFA President Gordon Quaiattini said they were “pleased that in both our countries there is a strong policy recognition of the need to substitute cleaner, renewable fuels for oil imports and other finite hydrocarbons.”

Dinneen and Quaiattini also touted renewable fuels’ positive effects on greenhouse gas emissions and the economy. “Renewable fuels offer a tremendous opportunity for our respective countries, the Western Hemisphere, and indeed the world to make tangible progress in replacing our fossil fuel use with cleaner, locally produced renewable energy,” the statement said.

RFA provides in-depth analysis of air emissions report Researchers at the University of Minnesota recently released a study comparing air emissions from ethanol and gasoline. Comments provided by the RFA shed additional light on the study, which is available at http://bit. ly/bhU8.

The RFA’s analysis pokes holes in the study’s evaluation of ethanol including emissions from unlikely land use changes, its failure to make appropriate comparisons to gasoline, the uncertainty of monetizing climate change effects, its ignorance of ethanol’s ability to reduce vehicular particulate matter, and the report’s selectivity in its discussion of ethanol’s impact on air quality.

For these reasons and others, the results of the study should be seriously questioned and require careful scrutiny, the RFA said.

23

BIObytes Ethanol News Briefs

PHOTO: POET LLC

Sustainability roundtable seeks input

Poet’s 20,000-gallon-per-year facility, colocated with its 9 MMgy starch-based ethanol plant in Scotland, S.D., utilizes corn cobs as a feedstock.

Poet pilot facility starts up smoothly Ethanol giant Poet LLC brought its 20,000-gallon-peryear cellulosic ethanol pilot facility in Scotland, S.D., on line without any hiccups, according to Chief Executive Officer Jeff Broin. The facility is performing above the company’s expectations, producing more than 1,000 gallons in the first 30 days of operation. The plant is

replicating the results that Poet achieved at its adjacent research facility, Broin said.

The facility, which utilizes corn cobs as a feedstock, began initial production in late November. Broin said he believes the company will have its process ready for commercialization by 2011.

Nebraska awards ag grants for ethanol The Nebraska Rural Development Commission, part of the Nebraska Department of Economic Development, has awarded $92,675 in Value-Added Agriculture fund grants for three ethanol-related projects. Nebraska Renewable Energy Systems in Oakland, Neb., along with Wayne State College in Wayne, Neb., received $8,000 to purchase technical reference materials and to market a hands-on renewable energy production training

24

program. The students will have the opportunity to learn from an NRES partner project run by Springfield, Neb.-based Tighe Biodiesel, which received $75,000 to build a farm-scale biorefinery to produce ethanol and biodiesel. Also, Energy Grains LLC in Kearney, Neb., received $9,675 to continue developing a closedloop supply chain model for ethanol producers to procure grain directly from on-farm supplies.

In anticipation of impleWith a goal of publishing Version One principles in June, menting global sustainability certhe international Roundtable tification, the RSB made changes to its governance for Sustainable Biostructure in January. fuels gathered input The open memberfrom North Ameriship will be orgacan stakeholders in nized into 11 chama series of outreach bers representing meetings this winter organized by the new stakeholder groups, including farmers, RSB Americas CoorRudolf biofuel producers, dinator Matt Rudolf. biofuel distribuComments were sought on the principles outlined tors, the financial community, in Version Zero, which is also rights-based and environmental available for comment online at NGOs, rural development and www.bioenergywiki.net. “There’s food security organizations, clia real feeling internationally that mate change organizations, trade there’s a need for standards that unions, indigenous smallholder [nongovernmental organizations farmer organizations, and an (NGOs)], environmental groups 11th chamber representing govand the biofuels community will ernments, certifiers and consulfeel good about,” Rudolf said. tants. Each chamber will elect “If someone is going to claim two members to a governance this is a sustainably produced board that will be a decisionbiofuel, there is something to making body based on consensus. base that claim upon.”

UK misses sustainability targets for biofuel The U.K.’s Renewable Fuels Agency recently announced that only 20 percent of the biofuel supplied to U.K. gas stations in the first six months of the Renewable Transport Fuel Obligation met environmental sustainability standards. The government’s target is 30 percent. ConocoPhillips Co., Greenergy International Ltd. and Mabanaft Ltd. are three companies that surpassed the government’s sustainability targets during that time. According to the Renewable Fuels Agency, Chevron Corp., Esso, Murco

Ltd., Prax Petroleum and Topaz had so far failed to supply any fuel meeting sustainability standards, with Prax and Topaz failing to report any data on the origins of their biofuel. The Renewable Fuels Agency said that during that same time, Greenergy delivered its first batch of sugarcane-based ethanol from Brazil that meets the RTFO social sustainability standard. The Renewable Fuels Agency, a governmental nondepartmental public body, is the U.K.’s independent sustainable fuels regulator.

ETHANOL PRODUCER MAGAZINE • April 2009

Ag Processing Inc. optioned 13.5 acres adjacent to its rail-to-ship transloading station in Aberdeen, Wash., for a future expansion project.

AGP plans to expand Washington port

Omaha, Neb.-based Ag Processing Inc. purchased an option on 13.5 acres adjacent to its rail-to-ship bulk agricultural products transloading station in Aberdeen, Wash., for the purpose of expansion.

Expansion plans, for which no time line has been set, include on-site storage silos for whole grains and additional unloading

capacity to service unit trains delivering product from the Midwest. Additional development would include warehousing for distillers dried grains with solubles and corn gluten meal, among other agricultural products. AGP, which owns a 52 MMgy corn-based ethanol plant in Hastings, Neb., invested in Grays Harbor in 2004.

University of Milano to test ethanol fuel cell The University of Milano in Milan, Italy, has ordered an ethanol-powered GH2-5000 Energy System fuel cell from Helbio SA in Rio, Greece, to evaluate the system for Helbio’s Italian investors. The fuel cell can produce five kilowatts of electrical energy and five kilowatts of heat energy from ethanol. The ethanol is first converted to hydrogen using steam reformation and a catalyst within a reactor.

The Iowa Department of Transportation is investigating ways to increase revenue for infrastructure repairs, and in doing so is considering increasing the state’s E10 and E85 tax rates. Approximately $6 million could be garnered if the 19-cent-per-gallon (cpg) E10 and E85 fuels taxes were raised to 20 cpg, for example.

According to the Iowa Renewable Fuels Association, state E10 sales made up 75 percent of total in-state fuel sales in 2008, which is slightly higher than in 2007 and the same as

in 2005. Still, IRFA Executive Director Monte Shaw said 75 percent E10 consumption was “likely” below the national average. “Iowa should not be satisfied with being below average in ethanol use,” he said. In 2008, Iowa’s gasoline sales volumes totaled 397.25 million gallons, while E10 sales were 1.19 billion gallons. Iowa’s E85 sales in the third quarter of 2008 were also strong, with July through September sales hitting 2.21 million gallons, doubling 2007’s third-quarter numbers.

PHOTO: VTG AKTIENGESELLSCHAFT

PHOTO: MARC STERLING

Iowa DOT considers increase in ethanol tax

Testing completed by VTG Rail U.K. found that E5 caused no adverse effects on railcar lining materials.

VTG Rail UK tests effects of E5 on railcar linings The hydrogen is then fed to the fuel cell. The fuel cell was manufactured by Exergy Fuel Cells in Bologna, Italy. Both Helbio and Exergy are subsidiaries of Morphic Technologies AB, a fuel cell and wind turbine manufacturing company based in Kariskoga, Sweden. Morphic said the system is 90 percent efficient.

ETHANOL PRODUCER MAGAZINE • April 2009

VTG Rail U.K., one of Europe’s leading rail logistics and wagon hire companies, recently announced the results of a study that was aimed at determining the effects of E5 on the lining and components of railcars. The study was completed in partnership with two lining manufacturing

companies and concluded that E5 caused no adverse effects on railcar linings. To complete the study, the tank lining material was submerged in E5 for approximately six months. The company is also completing testing on other components of its railcars, such as seals and gaskets.

25

Genome sequencing to aid sorghum research Plant breeders looking toward sorghum as a next-generation ethanol feedstock have new insight into the genetics of the drought-tolerant plant following the publication of the sorghum genome by the U.S. DOE Joint Genome Institute and several partner institutions.

“This is an important step on the road to the development of cost-effective biofuels made from nonfood plant fiber,” said Anna Palmisano, DOE associate director of science for biological and environmental research. “Sorghum is an excellent candidate for biofuels production with its ability to withstand drought and prosper on more marginal land. The fully sequenced genome will be an indispensable tool for researchers seeking to develop plant variants that maximize these benefits.”

The comparative analysis of the sorghum genome appeared in the Jan. 29 edition of the journal Nature. “Sorghum will serve as a template genome to which the code of other important biofuel feedstock grass genomes—switchgrass, miscanthus and sugarcane—will be compared,” said

Andrew Paterson, the article’s lead author and director of the Plant Genome Mapping Laboratory at the University of Georgia.

Prized for its drought resistance and high productivity, sorghum is currently the second most prevalent biofuels crop in the United States behind corn. Grain sorghum produces the same amount of ethanol per bushel as corn with one-third less water needed for crop production. In addition to working to improve grain sorghum (also known as milo), researchers are developing sweet sorghum and high-biomass sorghum as feedstocks for advanced biofuels.

Biomass sorghum varieties based on forage sorghums grow up to 18 feet tall with yields up to 20 tons per acre. Sweet sorghum varieties have long been grown for the sugary syrup extracted from the stems.

Historically, sweet sorghum production has been limited by narrow markets for the syrup and the variety’s low seed production rates. Researchers are focusing on improving sweet sorghum’s seed production while enhancing sugar yields. Annual sweet sorghum crops could potentially extend the

processing season in areas where sugarcane is grown.

Scientists and industry officials said completion of the sorghum genome mapping will aid with the sequencing of numerous other potential bioenergy crops. Sorghum is only the second grass genome to be completely sequenced to date, following rice. The data being generated from plant genome sequencing helps crop breeders hone in on agronomic traits such as rapid growth, drought resistance and pest tolerance. Biofuels researchers are developing strategies to optimize the plants themselves as biofuels feedstocks, altering characteristics such as branching habit, stem thickness and cell wall chemistry. Genome sequencing has also aided work in microbial biomass breakdown, including the manipulation of fungi, bacteria and yeast organisms targeted for cellulosic ethanol and biobased chemical production.

—Susanne Retka Schill

Sorghum is the second grass to have its genome mapped, following rice.

PHOTO ABOVE: USDA NATURAL RESOURCES CONSERVATION SERVICE

26

ETHANOL PRODUCER MAGAZINE • April 2009

Verenium, Range Fuels progress with cellulosic plans Range Fuels Inc., which is building a commercial-scale cellulosic ethanol plant in Soperton, Ga., has new competition. Verenium Corp. has announced plans to build a commercial-scale cellulosic ethanol plant in Highlands County, Fla. The news came shortly after Verenium regained compliance with NASDAQ’s listing requirements. The exchange requires listed companies to maintain a minimum market capitalization of $50 million, or total assets and total revenues of $50 million each for the most recently completed fiscal year, or for two of the three most recent fiscal years.

With that challenge overcome, Verenium said it will build a 36 MMgy biorefinery that takes in agricultural residues provided by Lykes Brothers Inc., a Florida agri-business.

The company received a special use permit from Highlands County and is in the process of finalizing other necessary permit applications. Groundbreaking is slated for the second half of 2009. With an estimated construction period of 18 to 24 months, completion is

slated for 2011. Verenium expects the $250 million to $300 million facility to provide approximately 140 full-time jobs.

In mid-February, Verenium took another step forward with its project, announcing the formation of a 50:50 joint venture with BP Amoco PLC. The oil giant had previously invested in Verenium. In particular, the venture, for which each company committed $45 million, will focus on the commercial-scale facility in Highlands County.

The project was also awarded a $7 million grant as part of Florida’s Farm to Fuel initiative, a program designed to facilitate the development of Florida’s renewable energy industry.

As for Range Fuels, the Broomfield, Colo.-based company received notification of the approval of funds to assist with the construction of its commercial-scale facility. The USDA notified the company in mid-January of a conditional commitment for an $80 million loan guarantee made possible through collaboration between the USDA Office of

Rural Development, AgSouth Farm Credit and Range Fuels. The loan guarantee falls under the Section 9003 Biorefinery Assistance Program authorized by the 2008 farm bill, which allows for grants covering up to 30 percent of the cost of developing and building demonstration-scale biorefineries. It also allows for loan guarantees of up to $250 million for the construction of commercial-scale biorefineries that produce advanced biofuels, or any fuel that is non-corn based.

Range Fuels broke ground for its 120 MMgy facility in late 2007. The company said plans are on track to complete its first phase, which involves a production capacity of 20 MMgy, in 2010.

The company’s K2 system technology employs a two-step thermochemical process that converts biomass to synthesis gas and then ethanol. The plant will use feedstocks such as wood waste from the state’s forests and mills.

—Anna Austin

Range Fuels’ 120 MMgy cellulosic ethanol plant will sit on a 60-acre site.

PHOTO ABOVE: RANGE FUELS INC.

ETHANOL PRODUCER MAGAZINE • April 2009

27

Ethanol producers look to rebound from bankruptcy

Suncor Energy Inc. delayed plans for a proposed $101 million expansion project at its existing 200 MMly (52.8 MMgy) ethanol plant in Sarnia, Ontario, which would’ve doubled capacity.

PHOTO: SUNCOR ENERGY INC.

As ethanol producers battle compressed operating margins and volatile commodity markets, some have been forced to file for bankruptcy. According to data compiled by EPM, four ethanol plants representing approximately 443 MMgy filed for Chapter 11 bankruptcy protection in January.

According to a research bulletin written by David Peters, assistant professor of sociology for Iowa State University’s College of Agriculture and Life Sciences, a typical 100 MMgy corn-based ethanol plant built in 2005 with capital debt can expect to operate at a net loss when the spot price of ethanol is between $1.50 and $1.75 per gallon. For those same plants to break even, corn prices would need to drop to $2.25 or $3.30 per bushel, respectively.

Conversely, a typical 100 MMgy corn-based ethanol plant built in 2005 with no capital debt will continue to lose money when the spot price of ethanol is $1.50 to $1.75 per gallon, Peters found. For those plants to break even, corn would need to fall to $2.85 or $3.90 per bushel, respectively.

In February, South Dakota-based ethanol producer VeraSun Energy Corp. signed an agreement in bankruptcy court with Valero En-

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ETHANOL PRODUCER MAGAZINE • April 2009

ergy Corp. to sell five of its ethanol plants to the Texas-based oil refiner for $280 million. Those five facilities are located in Aurora, S.D.; Charles City, Fort Dodge and Hartley, Iowa; and Welcome, Minn. The deal also included a site under development in Reynolds, Ind. VeraSun said it would welcome proposals from other bidders

by March 13. An auction, if necessary, was to be held March 16.

VeraSun expected to complete the asset sales by March 31 or in the second quarter of 2009.

Cascade Grain Products LLC, Northeast Biofuels LLC, Panda Ethanol Hereford LP and Renew Energy LLC were the plants that filed Chapter 11 bankruptcy in January.

Some ethanol companies halted operations recently for reasons unrelated to bankruptcy. Husker Ag LLC temporarily shut down its 67 MMgy corn-based ethanol plant in Plainview, Neb., but later resumed operation in late January. Pacific Ethanol Inc. temporarily suspended operation of its 40 MMgy corn-based plant in Madera, Calif., and DENCO LLC temporarily shut down its 24 MMgy corn-based ethanol plant in Morris, Minn.

Suncor Energy Inc. scrapped plans for a proposed $101 million expansion project at its existing 200 MMly (52.8 MMgy) plant in Sarnia, Ontario. The expansion project would’ve doubled capacity to 400 MMly (106 MMgy). Suncor intends to revisit the project in early 2010.

Show Me Ethanol LLC requested permission from its shareholders to ask for $10 million in additional funding through a voluntary capital contribution and a capital call of approximately $4,800 per share. The funding would maintain operations at its 55 MMgy facility in Carrolton, Mo., according to a Dec. 29 filing with the U.S. Securities and Exchange Commission. The company said if the money wasn’t raised, it would have to file for Chapter 11 bankruptcy.

Atchison, Kan.-based MGP Ingredients Inc. confirmed in an 8-K filing with the SEC on Feb. 3 that it planned to exit the fuelgrade ethanol business and temporarily shut down its food-grade alcohol production at its 78 MMgy facility in Pekin, Ill. At the time of the filing, MGPI said the Pekin facility would be shut down for approximately 90 days.

As a result of the slowdown in the ethanol industry, Dallasbased railcar manufacturer Trinity Industries Inc. elected to indefinitely defer an $800 million investment in approximately 10,000 railcars for multiple ethanol producers. The railcars were scheduled for delivery to Trinity’s leasing company in 2010 and 2011.

—Bryan Sims

Iowa survey shows shift in corn sales, ethanol and DDGS movement The direct sale of Iowa corn from growers to processors, including ethanol plants, has been increasing steadily, while the sale of corn to grain elevators has been declining, according to a study conducted by researchers from Iowa State University and the University of Tennessee.

Meanwhile, grain elevators are shipping more corn to ethanol plants, and they are receiving and shipping more distillers dried grains (DDGs). The effects of the ethanol industry on the movements of Iowa corn were studied by Chad Hart, an agronomist at Iowa State University, and Tun-Hsiang Yu, an agronomist at the University of Tennessee. They reported their findings in a paper titled “Impact of Biofuel Industry Expansion on Grain Utilization and Distribution: Preliminary Results of Iowa Grain and Biofuel Survey.” The researchers surveyed nearly 5,000 farmers and grain handlers over several months during the 2006-’07 marketing year, and the data gathered was compared with surveys from previous years.

During 2006-’07 according to the survey, Iowa farmers produced 2.05 billion bushels of corn, 62 percent of which was sold

Markets for Iowa ethanol, DDG and WDG from corn processors

Only 7 percent of the ethanol produced in Iowa was used in Iowa. Nearly 30 percent of the resulting DDGs was sold in Iowa. Less than 2 percent of the ethanol was exported outside the U.S. More than 10 percent of the DDGs was exported outside the U.S. SOURCE: CHAD HART AND TUN-HSIANG YU

to private and cooperative grain elevators. Twenty-seven percent was sold to ethanol plants and other corn processors, which purchased 92 percent of their corn from Iowa sources, all of which

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Since 1958 West Des Moines, Iowa USA ETHANOL PRODUCER MAGAZINE • April 2009

Iowan Ethanol Destinations

Approximately 23 percent of Iowa ethanol was shipped to California, Arizona, Nevada and Utah, while 10 percent was shipped to states in the northeastern U.S. More than 7 percent was shipped to Texas, Oklahoma and New Mexico.

The largest share of ethanol was shipped to states not listed on the survey but was likely shipped to states surrounding Iowa, the researchers said.

SOURCE: CHAD HART AND TUN-HSIANG YU

was delivered to the processors by truck. In contrast, the 19992000 marketing year survey showed that 66 percent of Iowa corn went to elevators, while 13 percent was sold to corn processors,

including ethanol plants. The percentage of corn sold to river terminals and farm feeding operations declined.

Meanwhile, most of the ethanol and DDGs produced by ethanol plants were shipped to out-of-state destinations. Only 7 percent of the ethanol produced in Iowa was used in Iowa. Approximately 23 percent of Iowa ethanol was shipped to California, Arizona, Nevada and Utah, while nearly 10 percent was shipped to states in the northeastern U.S. More than 7 percent was shipped to Texas, Oklahoma and New Mexico. The largest share of ethanol was shipped to states not listed on the survey but was likely shipped to states surrounding Iowa, as well, the researchers said.

Less than 2 percent of Iowa’s ethanol was exported outside the U.S. The majority of Iowa corn processors (85 percent) use drygrind processes to produce ethanol, and 85 percent don’t use fractionation, the survey found. However, nearly 23 percent planned to add the process within five years. Only 8 percent extracted corn oil, but half said they expect to implement the practice by 2012.

Approximately 38 percent of processors were not considering adding cellulosic ethanol capabilities by 2012, while 62 percent were undecided. Approximately 38 percent indicated their facilities’ plans to expand their operations by 2012, 23 percent did not plan to expand, and 38 percent were undecided.

—Ryan C. Christiansen

31

Thar Process receives grant for distillation replacement technology The state of Pennsylvania is funding 49 biofuels and clean energy projects through two separate programs: the Energy Harvest Grant program and the Alternative Fuels Incentive Grant program, worth a total of $13.7 billion. One particular grant recipient plans on making improvements to the conventional ethanol production model currently in widespread use throughout the industry.

Thar Process Inc. received a grant award for $588,000 under the AFIG program to build a pilot-scale plant to demonstrate technology that uses pressurized propane to remove the high volumes of water from the beer coming out of the fermentation process without using conventional distillation or drying methods. “It’s a liquid-liquid extraction process that could be a drop-in replacement for an existing ethanol plant’s conventional distillation,” said John Davis, development manager for Thar Process. “I want to emphasize this: With what we’re working on, you can take an existA typical Thar Process plant for supercritical fluid extraction PHOTO: THAR PROCESS INC.

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ETHANOL PRODUCER MAGAZINE • April 2009

ing ethanol plant, rip out its existing distillation system and put this one in.”

How much water could the extraction system remove? “It depends on how you do it,” Davis said. “We don’t want to talk too much about that, but [the system] can take [the alcohol] to a full anhydrous state, so you’re not only eliminating the distillation step, but you can eliminate the molecular sieve drying phase, too.”

Davis said Thar Process has a lot of experience in highpressure extraction, primarily involving supercritical carbon dioxide, supercritical water and propane. “It’s our basic business,” he told EPM. “It’s been applied commercially, mainly to extractions from herbal sources—plants and spices, that sort of thing.”

He also said the pressurized propane extraction technique could be an alternative approach to hexane extraction for the chemical removal of vegetable oils from oilseeds. “In a separate project (sponsored by the National Institute of Technology), we’re pursuing an application of this for biodiesel processing,” he said. “It involves the supercritical carbon dioxide extraction of soybean oil from soybeans. That’s been going on for a year now, so we’re one year into that two-year project.”

ETHANOL PRODUCER MAGAZINE • April 2009

Davis said the equipment required to convert the waterladen beer into ethanol using high-pressure propane extraction would include a “couple of extractor columns and a depressor— that’s basically it.” The propane used in the extraction process is recycled, according to Davis, and the energy savings from bypassing the conventional distillation and molecular sieve drying steps is significant. “Our initial studies on this indicated to us that we would be cutting energy consumption by about onehalf,” he told EPM. The Pennsylvania grant will be used to build a pilot-scale demonstration facility in Pittsburgh, where Thar Process is headquartered. “It’s a two-year project, and we just got the OK for this, so we’ll be launching it [by the end of April],” Davis said.

Applying this technology to ethanol has been “discussed in laboratories for a few years,” he said, but has never been demonstrated. He wouldn’t reveal the production capacity of the pilot plant, but he said the company aims to scale up to a 25 MMgy facility in the future.

—Ron Kotrba

33

Availability of midlevel ethanol blends increases in Kansas The market for midlevel ethanol blends in Kansas is poised for rapid expansion. In January, Kansas Secretary of Agriculture Adrian Polansky announced that the state’s pilot program for ethanol blender pumps has been made permanent, effectively opening the opportunity for fuel suppliers around the state to offer midlevel ethanol blends to their flexible-fuel vehicle customers.

At the same time, NewGen Fuel, a joint venture established by ethanol design and engineering firm ICM Inc., ethanol producer Poet LLC and wholesales fuel distributor Crescent Oil Co., began installing ethanol blender pumps throughout the state.

The Kansas Department of Agriculture first implemented its ethanol blender pump pilot program in early 2008. The pilot program demonstrated that the blender pumps were highly accurate in dispensing both the correct quantity and percentage of midlevel ethanol blends. “We’ve had enough experience that we feel at this point we can move forward on a permanent basis,” Polansky said.

Those supplying fuel dispensers to new retail locations are encouraged to communicate with the state Department of Agricul-

34

‘We need to find a way to be certain that [the blend stock] is always coming to the blender station with a specific percentage blend.’

ture prior to dispensing midlevel ethanol blends, Polansky said. Although this notification is no longer a requirement of the program, the department intends to continue to work closely with those supplying the fuel dispensers to ensure that fuel is being accurately dispensed to customers.

The Department of Agriculture program requires ethanol blender pumps to meet certain guidelines for use within the state.

All retail dispensers and storage tanks must be properly labeled.

Midlevel blends aren’t allowed to be labeled with an octane rating but are required to display an orange warning label alerting customers that the fuel is for use in flex-fuel vehicles only. The department also requires the use of a two-hose configuration.

ETHANOL PRODUCER MAGAZINE • April 2009

While the department currently requires the use of E100 as a blend stock, Polansky said this could change in the future. “We’re reviewing the possibility of utilizing E85,” he said. E85 is currently not allowed to be used as a blend stock because its actual ethanol content can vary seasonally. The department’s concern is that a varying blend stock Goodnight would cause variations in the percentage of ethanol contained within the midlevel blends distributed to customers. “We need to find a way to be certain that [the blend stock] is always coming to the blender station with a specific percentage blend,” Polansky said.

NewGen Fuel’s business model involves working with independent operators of fuel retail stations. The company offers to install the blender pumps at the location, and helps the station owner understand all of the regulations and requirements involved with selling midlevel blends. In return, NewGen Fuel receives a portion of the fuel sales.

The actual percentage of installation costs covered by NewGen Fuel is determined on a station-by-station basis. “In some cases, it will make more sense for NewGen to cover the complete cost and

participate on a higher level from a revenue-sharing perspective,” said Alan Goodnight, president of NewGen Fuel. “In other cases, it will make more sense to share in the cost of the equipment, and then NewGen will participate in a smaller amount of the fuel sales revenue.”

NewGen Fuel’s goal is to adopt this unique fuel retail model at more than 1,000 locations nationwide. However, less than one month after Crescent Oil announced its participation in NewGen Fuel, the company filed for Chapter 11 bankruptcy. While the goals of NewGen Fuel haven’t changed, Goodnight said the scope and timing of some of the company’s projects may be affected.

“NewGen Fuel is its own business entity,” he confirmed. “The unfortunate news from Crescent in no way impacts the viability of NewGen Fuel.” However, the initial sites where NewGen Fuel intends to install the blender pumps are served exclusively by Crescent Oil. Goodnight said that NewGen Fuel has no plans to replace Crescent Oil. “However, if it became obvious that Crescent Oil could no longer supply the hydrocarbon fuel to NewGen, we would of course need to find another supplier,” he said.

—Erin Voegele

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ETHANOL PRODUCER MAGAZINE • March 2009

37

Representing 1.54 Billion Gallons Annually

Ethanol Plant Construction New Project

Project Complete

Project Expansion

Expansion Complete

Will plant construction pick up in 2009? his issue of EPM contains the sixth edition of the Proposed Ethanol Plant List, starting on page 64. It confirmed what many in the industry already believed: There are fewer proposed ethanol plants, just as there are fewer ethanol plants under construction. Of the 118 proposed projects listed in 2008, two are currently under construction: Highwater Ethanol LLC, a 55 MMgy plant in Lamberton, Minn., and Bionol Clearfield LLC, a 110 MMgy facility in Clearfield, Pa. According to Highwater Ethanol General Manager and Chief Executive Officer Brian Kletscher, construction is approximately 70 percent complete. Most of the buildings are erected, and construction of the distillers grains area is ongoing. He said he hopes to begin operation in May at full capacity, pending favorable economic factors. “We’re evaluating the economics now just like everybody else, but we anticipate we’ll be running at full production capacity right away after start-up,” he said.

Progress is being made at Bionol Clearfield, as well. Rail excavation for new siding and work on the hammer mills is underway, according to Tom Hoole, director of corporate projects for parent company BioEnergy International. Construction of the plant’s energy center, processing building and water treatment system will be the next priority, he said.

The facility will draw 14 megawatts of electricity daily to meet its production requirements, according to Hoole. It will also use 1.5 mil-

T

lion gallons of water per day through 40-foot wells and intakes. The plant is being built on the site of a former brick factory, which left the soil contaminated with arsenic. Construction work has helped clean the site, he said.

In other plant construction news, concrete was poured for distillery equipment at Louisiana Green Fuels LLC, a soon-to-be 25 MMgy plant in Lacassine, La., according to spokesman Randal Johnson.

The plant will utilize sugarcane, sugarcane bagasse and sweet sorghum as feedstocks. Once operational, the bagasse will be used to cogenerate 7.4 megawatts of electricity annually to power the facility.

The plant is expected to come on line later this year. “We anticipate that operation of the ethanol plant will commence with the harvest of the sugarcane in October,” Johnson said. “This will allow the sugar syrup diffuser plant to supply the syrup directly to the ethanol plant colocated at the Lacassine Industrial Park.”

Meanwhile, Plymouth Energy LLC completed construction of its 50 MMgy corn-based plant in Merrill, Iowa, in early February. The plant began production in preparation for performance testing later that month, according to spokeswoman Lisa Eisma. This is the 172nd U.S. ethanol plant currently on line, bringing combined production capacity to 10.49 billion gallons per year.

—Bryan Sims

Abengoa Bioenergy of Indiana Posey County, Ind. Abener Energía SA Vogelbusch USA Inc. 88 MMgy corn Abengoa Bioenergy Trading Abengoa Bioenergy Trading undeclared March 2008 fourth quarter 2009

PHOTO: ABENGOA BIOENERGY OF INDIANA

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

Abengoa Bioenergy of Indiana To provide updates to this list, contact Bryan Sims at (701) 738-4950 or bsims@bbiinternational.com.

38

ETHANOL PRODUCER MAGAZINE • April 2009

Abengoa Bioenergy of Illinois Madison, Ill. Abener EnergĂ­a SA Vogelbusch USA Inc. 88 MMgy corn Abengoa Bioenergy Trading Abengoa Bioenergy Trading undeclared March 2008 fourth quarter 2009

PHOTO: ABENGOA BIOENERGY OF ILLINOIS

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

Abengoa Bioenergy of Illinois

Archer Daniels Midland Co.

Appomattox Bio Energy Location General contractor Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Hopewell, Va. Agra Industries Inc. Katzen International Inc. 65 MMgy barley Osage Bio Energy LLC N/A N/A October 2008 second quarter 2010

Columbus, Neb. undeclared undeclared 275 MMgy corn Archer Daniels Midland Co. undeclared undeclared July 2007 third quarter 2009

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

Synopsis of progress N/A

Big River Resources-Galva LLC

Archer Daniels Midland Co. Location General contractor Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Location General contractor Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Cedar Rapids, Iowa undeclared undeclared 275 MMgy corn Archer Daniels Midland Co. undeclared undeclared June 2007 first quarter 2010

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

ETHANOL PRODUCER MAGAZINE â&#x20AC;˘ April 2009

Location Design/builder Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Galva, Ill. Fagen Inc. ICM Inc. 100 MMgy corn CHS Renewable Fuels Marketing Hawkeye Gold LLC N/A September 2007 May 2009

Synopsis of progress Employee hiring is underway. Most tanks and structures are erected.

The energy center and process building are enclosed. Grain is being conveyed from the elevator to the silos. Piping and electrical work continues.

39

Highwater Ethanol LLC

Bionol Clearfield LLC Location Design/builder Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Clearfield, Pa. Fagen Inc. ICM Inc. 110 MMgy corn Bionol Clearfield LLC Land Oâ&#x20AC;&#x2122;Lakes N/A February 2008 January 2010

Synopsis of progress Ethanol storage tanks and the beer column are erected. Rail excavation for new siding and work on hammer mills are underway. Work on distillers grains silos continues.

Location Design/builder Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Lamberton, Minn.

Fagen Inc. ICM Inc. 55 MMgy corn Renewable Products Marketing Group

CHS Inc. N/A November 2007 May 2009

Synopsis of progress Construction is approximately 70 percent complete. Work on the distillers grains area is ongoing, and the administration building is nearly complete. Construction of the water treatment facility, and interior piping and electrical work, continues.

Clean Burn Fuels LLC Raeford, N.C. Biofuels Design/Clean Burn Fuels LLC

Katzen International Inc. 60 MMgy corn undeclared Harris Crane Inc. Airgas Inc. May 2008 September 2009

Synopsis of progress The grain receiving building and distillation tower are complete. One of two silos is erected. Four of six fermentors are installed. The chiller and cooling tower are complete. Concrete work for the boiler building is ongoing. Installation of the regenerative thermal oxidizer and concrete pouring for dryer foundations continue.

40

PHOTO: HIGHWATER ETHANOL LLC

Location General contractor Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Highwater Ethanol LLC

ETHANOL PRODUCER MAGAZINE â&#x20AC;˘ April 2009

Homeland Energy Solutions LLC

Louisiana Green Fuels LLC

Location Design/builder Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Location General contractor Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Lawler, Iowa Fagen Inc. ICM Inc. 100 MMgy corn Green Plains Renewable Energy Inc.

CHS Inc. N/A May 2007 April 2009

Synopsis of progress Construction is approximately 95 percent complete. Thirty-six employees have been hired. Corn grinding is expected to begin April 2.

Lacassine, La. Casey Industrial Inc Louisiana Green Fuels LLC/Praj Industries Ltd.

25 MMgy sugarcane/sweet sorghum undeclared N/A undeclared April 2008 fourth quarter 2009

Synopsis of progress Dirt work and prep work for concrete pouring are complete. Concrete has been poured for the distillery equipment.

Kawartha Ethanol Inc. Havelock, Ontario Profab International Ltd. Delta-T Corp.

80 MMly (21 MMgy) corn undeclared Thompson’s Ltd. undeclared October 2007 May 2009

PHOTO: LOUISIANA GREEN FUELS LLC

Location General contractor Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

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

Louisiana Green Fuels LLC

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ETHANOL PRODUCER MAGAZINE • April 2009 KAC.10442_EPM_Dir_7.5x3.375_4C 1

41 7/24/08 11:08:47 AM

Nexsun Ethanol LLC Location Design/builder Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Northwest Renewable LLC Ulysses, Kan. ICM Inc. ICM Inc. 48 MMgy corn undeclared undeclared undeclared September 2007 first quarter 2009

Location General contractor Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Longview, Wash.

Makad Construction Corp.

Lurgi Inc. 55 MMgy corn U.S. Ethanol LLC Lansing Trade Group undeclared November 2006 second quarter 2009

Synopsis of progress Financial arrangements are being finalized before construction continues.

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

Northwest Bio-Energy Ltd.

One Earth Energy LLC

Location General contractor Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Unity, Saskatchewan Northwest Terminal Ltd. Katzen International Inc. 25 MMly (6.6 MMgy) wheat undeclared undeclared undeclared September 2007 April 2009

Synopsis of progress The energy center and processing building are complete. All other ancillary buildings are erected. Preliminary piping tests, the calibration of mechanical equipment and electrical work are ongoing.

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Location Design/builder Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Gibson City, Ill. Fagen Inc. ICM Inc. 100 MMgy corn Eco-Energy Inc. Ag Motion Inc. N/A October 2007 April 2009

Synopsis of progress Construction continues. Employees are being trained by ICM.

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Location General contractor Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Start-up date

Project Complete Merill, Iowa Delta-T Corp.

Delta-T Corp.

50 MMgy corn C&N Cos. Plymouth Energy LLC undeclared May 2007 February 2009

Synopsis of progress Production has begun, followed by performance testing. Congratulations Plymouth Energy LLC!

Poet Biorefining-Laddonia Location Design/builder Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Start date Target completion date

Range Fuels Inc. Location General contractor Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Soperton, Ga. undeclared undeclared 10 MMgy woody biomass undeclared N/A N/A November 2007 second quarter 2010

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

Project Expansion Laddonia, Mo. Poet Design & Construction Poet Design & Construction from 52 MMgy to 57 MMgy corn Poet Ethanol Products Poet Nutrition undeclared December 2008 April 2009

PHOTO: POET BIOREFINING-LADDONIA

Plymouth Energy LLC

Synopsis of progress Construction continues. No further information was available at press time Poet Biorefining-Laddonia

ETHANOL PRODUCER MAGAZINE â&#x20AC;˘ April 2009

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45

FINANCE Managing Ethanol Risk

By Jerry Gulke he rise and subsequent demise of some in the ethanol business created an interesting ride. Bankruptcies were blamed on price volatility of corn and the demise of the energy markets. However, the apparent lack of price risk management and the adherence to sound management practices are likely the real culprits.

Had it not been for the price volatility of crude oil and its byproducts there would not have been the profitable opportunities witnessed in the ethanol industry. For many years, market analysts thought a 2 billion-bushel carryover of corn was a huge supply. However, as many sadly found out, we live and trade in the future. No longer can we assume that what worked in the past (seasonal tendencies, carryover stocks) are precursors of things to come. The market was looking ahead two years ago to what might happen if demand continued to outstrip supply of energy, foodstuffs and the resources used to produce them. Higher prices were a given, however the ethanol industry failed to consider that the world changed.

Economics 101 dictated that the rapid rate of corn use, Asian countries’ appetite for calories and limited resources to respond quickly meant prices had to eventually reach a level to discourage demand.

There was ample time for limited risk coverages of the price of corn for use in ethanol production as recently as late 2007 at the early fall harvest lows of $3.20 per bushel and the breakaway price gap at $4.20. Corn prices rallied with crude as market participants realized the obvious. Price rationing was a given at some point. Farmers responded with more acres of corn, and fewer of soybeans.

Buyers were like deer in the headlights refusing to believe. Media soon suggested that corn could go to $10 per bushel if crude went to $150 per barrel. The $200 price forced

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buyers of corn to finally capitulate and cover costs at what turned out to be levels that the economy could not support.

What Could Have Been Done Education in the process of a well-capitalized risk management program is a must whether it be in a corn producer’s ability to hedge off risk by selling futures or buying put options, or the end user buying futures and/or call options while keeping in mind that they are in the business of making money for themselves and stockholders. Throughout the two-year bull/ bust cycle there were opportunities for the end user to lock in inputs and hedge off production risk for multiple years, ensuring the viability of their business. Strangely, with the cooperation of the speculator, there was sufficient liquidity for both to have locked-in long enough to realize profits that could have been used to retire borrowed capital, rather than expand it into no-man’s land. However, lack of adequate capital and the understanding of simple math, supply and demand, and our free-market global environment helped create the demise of what promised to be one of the best of times for agriculture.

As a student of risk management, it appears to me that energy is cheap again. However, producers may not get the chance to have missed selling $6 or $7 corn, nor may the producer of crude or ethanol be given the chance to hedge $120 crude, $2.50 ethanol, or $4 wholesale gasoline anytime soon.

We saw in a mere six months what happens to a globally dependent economy with $6 corn or $4.50 gasoline. Risk management and return to investment have become a necessity.

Jerry Gulke is president of Strategic Marketing Services Inc. Kennedy and Coe LLC and SMS partner to deliver value to agricultural-based clients and ethanol plants. Reach Gulke at jerrygulke@gmail.com or (312) 896-2080.

ETHANOL PRODUCER MAGAZINE • April 2009

LEGAL PERSPECTIVES Schnathorst

New Form I-9 Rules to Be Implemented ecent immigration raids and steep penalties imposed on employers are frequent reminders of why immigration law compliance is important. Most employers know that they may not knowingly employ people who are not authorized to work in the United States. However, employers should also be aware that a good-faith defense is available if they correctly follow Form I-9 procedures and are otherwise unaware of an employee’s illegal status. This article discusses recent rules issued by U.S. Citizenship and Immigration Services that change some of the requirements for Form I-9.

The basic Form I-9 procedures remain unchanged: 1) the form must be completed on the first day of the employee’s paid work, 2) within three business days of the date of hire employers must physically review documents to verify the employee’s identity and authorization to work in the U.S., and 3) the employer must retain forms for all employees for three years after the date of hire or one year after the date of termination, whichever is later.

The new final interim rule, which is expected to be implemented April 3, 2009, changes the requirements for acceptable documents to use for the Form I-9 verification process. Employers will discontinue using the current edition of Form I-9 dated June 5, 2007, and will instead use the new Form I-9 for all new hires and required reverifications. (Unless reverification is otherwise required,

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employers should retain the old Forms I-9 for their existing employees and do not need to fill out a new form for such employees.)

The most significant change is that employers will not be able to accept expired documents to verify employment authorization. For example, employees could previously submit an expired U.S. passport as a form of identity. Under the new rule, an expired passport would not be acceptable.

A document that does not have an expiration date (such as a social security card) is deemed to be unexpired. The new form also removes some outdated employment authorization documents that are no longer issued: the Form I-668, Temporary Resident Card; and the Form I-688-A and I-688-B, Employment Authorization Cards. Several new documents are added to the list, including foreign passports that have temporary I-551 notations on machine-readable immigrant visas.

Because USCIS has extended the public comment period and delayed implementation of the interim rule, the final iteration of the rule may differ from the provisions described in this article.

Updates will likely be available on the USCIS Web site, and we urge you to contact us with any questions or concerns you may have about the requirements and procedures involved with the new rule.

Britney L. Schnathorst is an associate with BrownWinick, a Des Moines, Iowa-based law firm serving the renewable fuels industry. Reach her at bls@ brownwinick.com or (515) 242-2487.

ETHANOL PRODUCER MAGAZINE • April 2009

Tomorrow today will be yesterday. In order to be successful tomorrow, ethanol producers must maximize value creation from corn today. Buhler has the equipment and process know-how to produce food, feed and fuel from the same bushel of corn. This makes you more proďŹ table today and more environmentally friendly tomorrow. A full line of equipment, combined with in-house process engineering and unrivaled after sale support, equals customized solutions without limits.

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The solution behind the solution.

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ETHANOL PRODUCER MAGAZINE

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POLITICS

Obama and His Green

Dream Team The new administration faces the historic challenge of guiding the nation through one of the most severe economic downturns in its history. During the campaign, hope and change were the pillars of President Barack Obamaâ&#x20AC;&#x2122;s message. Industry leaders share their expectations of the new administration with EPM.

By Erin Voegele

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he Bush administration marked a number of milestones for the ethanol industry. During his eight years in office, President George W. Bush was a strong supporter of ethanol. “The Bush administration was far and away the most pro-ethanol administration that we had ever seen,” says Bob Dinneen, president and chief executive officer of the Renewable Fuels Association. “He understood that the U.S. mobile transportation fuel market could absolutely utilize greater volumes of renewables. Were it not for the leadership of President Bush, we would not have had a renewable fuels standard.”

to change. The Obama administration is expected to place less emphasis on the goal of energy security, and will concentrate on the issue of climate change. In addition, industry insiders anticipate the new administration will place a renewed focus on science and the development of secondgeneration technologyw.

The need for energy security has been the message that has driven political support for biofuels and has resonated with policymakers for the past decade, says Graham Noyes, an attorney with Stoel Rives LLP who focuses his practice on bio-

‘I think the Obama administration is going to place a lot of emphasis on climate change and low-carbon policies—more so than any president in the history of the United States. I think there will be a concerted effort to reduce greenhouse gas emissions like never before. That could be very good for biofuel.’

While those in the ethanol industry say that support seems unlikely to diminish under the Obama administration, they agree that the underlying reason for that support is likely

fuels issues. “I think that with this new administration—while energy security will still be a factor—global warming has probably surpassed it in terms of importance,” he says.

Dinneen says he believes the Obama administration is committed to building on the success of the ethanol industry, accelerating the development of cellulosic fuels and building Dinneen market opportunities.

“This administration— more than any other in histor y—understands the threat to our planet’s health of uncontrolled petroleum use and will do everything that it can to reduce carbon, and to Jennings stimulate more sustainable technologies,” he says. “I am very confident that the administration recognizes that biofuels have got to play an important role in our nation’s energy infrastructure.”

The American Coalition for Ethanol is also confident in the Obama administration’s commitment to a clean energy economy, says Brian Jennings, executive vice president of ACE. “I think the Obama administration is going to place a lot of emphasis on climate change and low-carbon policies—more so than any president in the history of the United States,” he Continued on page 52

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POLITICS

Obama Administration Key Members Energy Coordinator Carol Browner:

Protection, during which time she was

State Department Special Envoy for

Browner served as EPA administrator

known for her advocacy for reducing

Climate Change Todd Stern: Stern

under former President Bill Clinton, and

greenhouse gas emissions.

worked as a senior advisor in former President Bill Clinton’s administration,

has extensive experience in environmental policymaking. In her new role,

Secretary of Transportation Ray La-

where he coordinated the administra-

she is expected to oversee and pro-

Hood: LaHood served for 14 years as

tion’s overall efforts on climate change.

mote cooperation between government

an Illinois senator. During that time he

In his new position, Stern will serve as

entities involved in energy and climate.

was on the House Transportation and

principal advisor on international cli-

Infrastructure Committee. He is expect-

mate policy and strategy for the State

Secretary of Energy Steven Chu: Chu

ed to be an integral part of President

Department.

is the former direc-

Obama’s plan to accelerate the avail-

tor of the Lawrence

ability of flexible-fuel vehicles.

Berkeley

Secretary of Agriculture Tom Vilsack:

National

Laboratory. In 1997,

Secretary of the Interior Ken Salazar:

Vilsack served two

he won a Nobel

Salazar previously

terms as Iowa’s gov-

Prize for his work

served as a Colo-

ernor and is known

rado senator, dur-

for focusing on cre-

an outspoken ad-

ing which time he

ating economic op-

vocate for the need to develop carbon-

was on the senate

portunities in rural

neutral sources of renewable energy as

Agriculture and En-

communities. While

a way to combat global warming.

ergy and Natural

in physics. Chu is

Chu

Resources

Salazar

Com-

he was governor, he

Vilsack

chaired the Governors Ethanol Coali-

EPA Administrator Lisa Jackson:

mittees. He is considered a leader in

tion, and was instrumental in transform-

Jackson previously served as chief of

creating and implementing a vision for

ing Iowa into a leader in the production

staff to New Jersey Gov. Jon Corzine.

a renewable energy economy, and led

of ethanol and biodiesel.

She was also the commissioner of New

efforts to pass the 2007 Farm Bill.

Jersey’s Department of Environmental

POLITICS Continued from page 50

says. “I think there will be a concerted effort to reduce greenhouse gas emissions like never before. That could be very good for biofuel.”

Overall, Noyes says his impression is that the administration really wants to challenge the scientific, education and business communities to come up with solutions for our nation’s energy problems, and come up with them quickly. “I think this administration wants to really push the envelope and really push the industry,” he says.

Carbon Considerations and Indirect Land Use Noyes believes that carbon will be a critical issue for the ethanol industry in the coming years. “I think there has really been a sea change in administration here,” he says. “I think the lowcarbon fuel standard, greenhouse gas emissions and global warming issues are going to be keys to the industry.”

During his first week in office,

Obama issued a memorandum to the U.S. EPA, requesting that the agency revisit a March 2008 decision to deny California’s application for a waiver that would permit the state to adopt stricter limitations on greenhouse gas emissions. This request clearly demonstrates the president’s commitment to low-carbon fuel standards. “[This also] looks like an early indicator that the Obama administration wants to see innovation from the states,” Noyes says.

As part of California’s low-carbon plan and the EPA’s implementation of the renewable fuels standard, indirect land use is expected to have a significant impact on the ethanol industry.

As part of the implementation of the RFS, EPA must devise a tool to measure indirect land-use considerations.

“It’s the first time the government is being asked to establish a metric determining the carbon footprint of an industry,” Dinneen says. “They need to get it right or the opportunity for continued growth and evolution in

our industry will be unnecessarily and carelessly curtailed.”

“When a fuel is assigned a particular value in those systems, that becomes the truth for that policy or regulation, and there is oftentimes no changing it,” Noyes says. “If corn ethanol is not graded well, and there are a lot of policy issues that impact the science on how that grading is done, then [the industry] is going to suffer from it and be in a much less favorable position than if it gets a more favorable assessment in those findings.”

This means it will be necessary for the ethanol industry to focus a great deal of energy on how those metrics are developed, and be as involved as possible in the process.

The Dream Team Those in the ethanol industry agree that sound science needs to be the foundation of the indirect landuse metrics. This emphasis on science seems to be reflected in Obama’s cabi-

POLITICS

net member and administration selections. The most notable example was the appointment of Energy Secretary Steven Chu. “There usually aren’t Nobel Prize winners in the cabinet,” Noyes says. “But, it’s a great thing to have one.”

“I think [Secretary Chu] was a great choice,” says Bruce Jamerson, Mascoma Corp.’s chief executive officer. “He is clearly focused on climate change and the role of transportation fuels in that.” In addition, he brings a strong scientific background into the discussion of indirect land-use issues and carbon policies. “I think Steven Chu has clearly distinguished himself as a scientist and I think he has many talents he brings to the job,” Jennings says. “Secretary Chu has been an outspoken advocate for moving to cellulosic feedstocks to make biofuels, and that’s something we all embrace.” Growth Energy agrees. “We are confident that under [Secretary Chu’s] leadership, the department will

make great progress in harnessing the full potential of renewable energy sources such as renewable, reliable ethanol today, and advanced biofuels such as cellulosic ethanol tomorrow,” says Growth Energy Spokesman Jin Chon.

The appointment of Agriculture Secretary Tom Vilsack, the former governor of Iowa, has also been strongly supported by the ethanol industry. “[Secretary Vilsack] brings a lot of experience and understanding from the farm states, the biofuels industries and agribusiness,” Noyes says. As an Iowan, Vilsack clearly has an appreciation for what the ethanol industry can do, Dinneen says. “[He] also has a real appreciation for the impacts of agriculture and the progress that farmers have made in reducing their energy inputs and their carbon footprint,” he says. Chon adds that Vilsack’s leadership will help ensure that American agriculture will continue to be the most innovative and

Obama Administration Energy Agenda Highlights Help create 5 million new jobs by investing $150 billion over the next 10 years to catalyze private efforts to build a clean energy future Ensure 10 percent of our electricity comes from renewable sources by 2012, and 25 percent by 2025 Implement an economy-wide cap-and-trade program to reduce greenhouse gas emissions 80 percent by 2050 Establish a low-carbon fuel standard Double the production of alternative energy in the next three years Ensure that rural areas continue their leadership in the renewable fuels movement Create a Green Jobs Corps to directly engage disadvantaged youth in energy efficiency opportunities while providing them with practice skills Information sourced from www.whitehouse.gov.

Visit the White House Web site for additional information on President Obama’s agendas and policies.

POLITICS

advanced in the world. “He also understands the importance of creating green-collar jobs, the critical role our rural communities play in achieving energy security, and the power of clean, green, homegrown energy to power our nation today,” he says.

Other administrative appointments further demonstrate the president’s commitment to his energy policies. Noyes says the selection of Carol Browner as the White House Energy Coordinator, or energy czar, and the appointment of Lisa Jackson as EPA administrator will bring a lot of regulatory experience to the administration. The administration’s commitment to clean energy and climate change is also apparent through Secretary of State Hillary Clinton’s appointment of Special Envoy for Climate Change Todd Stern. Dinneen says he thinks this move reflects the deep commitment of the Obama administra-

tion to take serious, meaningful action in regard to climate change around the world. “It won’t do much good for the U.S. to unilaterally disarm in terms of our greenhouse gas emissions if the rest of the world doesn’t,” Dinneen says.

“Assuring that the developing world is thinking about these issues and enacting policies that will really heal the planet is an important component.”

The Wish List Although members of the industry are confident that the Obama administration will prove positive to the ethanol industry, they have also identified a number of issues that must be addressed to help the industry move forward. Most importantly, Dinneen says the administration must work to stimulate the economy. “The ethanol industry is the original green job,” he says. “We think we can play a role in the revitalization of

the entire economy, but only if access to capital issues are resolved and the market is allowed to continue to grow.”

This potential for growth in the industry is largely tied to the ability to increase demand by approving the use of midlevel blends in legacy vehicles, Jennings says. “The most important thing is moving past the blend wall to midlevel blends,” he says. Overcoming the blend wall is also a necessary component in the commercialization of cellulosic biofuels.

“We will be unable to commercialize cellulosic ethanol unless the E10 blend wall is dealt with,” Jennings adds. “It’s widely recognized that corn ethanol will handle the E10 blend market. If we don’t move beyond E10 and there is no market for cellulosic biofuel, the lenders won’t step up to the plate and help commercialize these plants.”

Jamerson cites the refining, expansion and streamlining of the U.S. DOE loan guarantee program as an issue that is important to the industry. Dinneen says implementation of the RFS will continue to be vital to the industry as well. “We’ll be looking to make sure the existing federal program for renewable fuels, the tax incentive, the secondary tariff and the RFS remain in place,” he says. “We believe that the federal program has been extraordinarily successful in creating an industry that is providing significant and critical benefits to the United States in terms of world economic development, energy security and environmental progress; and we want to make sure that program is not undermined and that our industry is allowed to continue to grow.” EP Erin Voegele is an Ethanol Producer Magazine staff writer. Reach her at evoegele@bbiinternational.com or (701) 373-8040.

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ETHANOL PRODUCER MAGAZINE

April 2009

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TECHNOLOGY

PHOTO: MOR TECHNOLOGY

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April 2009

TECHNOLOGY

Concentrating on

Coproducts A diverse group of people pooled their expertise to design an advanced fractionation system specifically for the ethanol industry that maximizes food-grade production and product yields.

By Anna Austin

U

nique is an appropriate word to describe MOR Technology LLC’s fractionation system, and the group of people who banded together in 2006 to form the company, including “Dippin’ Dots” Inc. ice cream inventor Curt Jones; SEMO Milling LLC Chief Executive Officer Ken DeLine; corn-milling veteran Dan Claycamp; and family farm owner Kurt Ulrich.

Ulrich’s son, Brad, who is the director of technology at MOR Technology, says that even though MOR team members have diverse backgrounds, one thing each share in common is that they’ve all been successful in their particular ventures. This combination of varying expertise has resulted in the development of a fractionation system that produces coproducts that are considerably more valuable than those of traditional fractionation systems, the company says.

Pieces of the Puzzle Jones, whose background is in microbiology, participated in a host of early, cutting-edge research in the ethanol industry, Brad Ulrich says. He was a lead researcher for Southeastern Illinois College’s Ethanol Production Program, where he led plant operations and training and performed research on carbon dioxide utilization, feed byproduct improvements and algae growth research.

Years after founding Dippin’ Dots, a $50 million company, Jones had become less involved in the daily operation of the ice cream business and desired to once again work in the ethanol industry, which had gained a lot of momentum since his departure. “He had done early work in cellulosic ethanol and algae research, so he understood the broad possibilities for renewable fuels,” Ulrich says. “One of the things he was frustrated

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TECHNOLOGY

with is that, after working on a number of research projects in the 1980s, he hadn’t observed much change in process technology in the 20 years since he left the industry.”

The initial observation Jones made was that ethanol plants can be more efficient than they are right now, Ulrich says.

“At the time, we had been working on developing a project in southern Illinois,” he says. “One of my main jobs was to develop and select second-generation technologies for that plant, and it was during that project that we became familiar with SEMO Milling and Dan Claycamp, one of the leading corn milling engineers and scientists in the country.”

Claycamp has designed and operated a wide range of milling systems and equipment with a focus on corn milling.

He is the designer and contractor for the newest food-grade corn mill in the country, SEMO Milling in southeast Missouri, with which he developed the concept for a unique fractionation technology.

“As we got to know them, we became very impressed with what they were doing and became familiar with the relationship they had with Rodger Marentis, a Pennsylvanian who developed a supercritical oil extraction technology,” Ulrich says.

“All of that, over the course of the next couple of years, led to the formation of MOR Technology and MOR Supercriti-

58

cial, to take both the fractionation technology and the oil extraction technology to not just the corn-based ethanol industry, but broader—the oilseeds and renewable fuels industries as well.”

Distinctly Different MOR Technology sees itself as significantly different from any other fractionation offering out there, Ulrich says.

“The biggest differentiating factor is a germ wet-mlling technology, where we take the germ produced from the dry fractionation process and perform an additional wet milling step on it,” he says. “At the end of the day, it gives you product quality and yield that you would typically see with a wet mill, but with the capital and operating costs of a dry mill.” That’s because the wet milling step is performed on a smaller scale for only a short period of a time, making it cheaper to operate and build, Ulrich says. “I think other people who have approached fractionation— not particularly designed for the ethanol industry—have approached it based too much on traditional food-grade corn milling applications,” he says. “That’s why you see systems with so much starch loss.”

Compared with other types of fractionation systems, most of MOR Technology’s equipment is the same but the process and the way the equipment is arranged is set up differently, Ulrich points

out. “That is the most important factor in an ethanol-specific fractionation system,” he says.

MOR Technology doesn’t source all of its system components from the same provider, which is also a common practice. “From his experience in the corn milling industry, Dan has operated just about every type of equipment out there, and he understands that one company may make the best roller mill, while the other makes the best sifter, while another makes the best degerminator and the best bran finisher,” Ulrich says. The process, which is suited for ethanol production, was formulated by finding the best pieces of equipment to perform each specific task, he says. MOR Technology went a step further by designing proprietary modifications to pieces of the milling equipment, and filed for patents on the modifications. “We are operating the equipment significantly differently than it was intended to be used.” Ulrich says. “So that’s a novel aspect, which no one else that we’re familiar with has done.”

Food-Grade Focus MOR Technology’s efforts are concentrated on producing coproducts that meet stringent food-grade requirements.

“We believe that there’s no sense in doing fractionation if you’re not focusing on food-grade products,” Ulrich says. “One

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TECHNOLOGY

MOR Technology says it’s fractionation system provides a quality product and yields that would typically be produced at a wet mill, with the capital and operating costs of a dry mill.

SOURCE: MOR TECHNOLOGY

of our competitors promotes low energy use and a short flow, and there are advantages to that, but they’re going to have a 7 percent to 8 percent starch loss, while we will have only 2 percent.”

Ulrich says that an average competitor’s distillers dried grains protein content would be about 40 percent, while

the MOR Technology system produces distillers grains with about 60 percent protein content. “This is a major difference,” he says. “It all goes back to the numbers—fractionation is a difficult thing to wrap your head around from a numbers standpoint because there are so many variables. Out of all these different

products and compositions, the most important is starch loss and protein content in distillers grains.

Targeting food-grade markets can be an extraordinary benefit if a fractionation process can produce clean, pure products with good separation. MOR Technology sees the future of fractionation going in

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that direction, Ulrich says. â&#x20AC;&#x153;It gives ethanol plants immediate opportunities, but it also sets them up for additional downstream options that are underdeveloped today,â&#x20AC;? he says. â&#x20AC;&#x153;A perfect example is protein isolates from corn, a lot of foodgrade companies are working on that.â&#x20AC;?

If a facility isnâ&#x20AC;&#x2122;t set up to be food grade, it may be losing opportunities, Ulrich says. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s a trade-off between product purity and product yield,â&#x20AC;? he says. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s possible to capture all the starch, but the product will not be pure. The goal is to get pure starch without losing any, and thatâ&#x20AC;&#x2122;s what we mean by good separation; the starch in one pile, the germ in one pile, all of the fiber in another pile.â&#x20AC;?

Another factor differentiating MOR Technologyâ&#x20AC;&#x2122;s system from others goes back to the germ wet-milling processâ&#x20AC;&#x201D;the ability to produce a germ product with 40 percent to 45 percent oil, as opposed to 18 percent to 20 percent oil, which is typical for a dry fractionation system, according to Ulrich. â&#x20AC;&#x153;The reason that it is important is two-fold,â&#x20AC;? he says. â&#x20AC;&#x153;Any time you are producing a higher purity product, it makes any downstream processing that much more efficient. Just as important, it creates a product that has an immediate market.â&#x20AC;?

One of the challenges associated with dry fractionation has been a lack of options to utilize the germ product, Ulrich says. â&#x20AC;&#x153;That is the question that we have always arrived at in looking at dry fractionation,â&#x20AC;? he says. â&#x20AC;&#x153;Thatâ&#x20AC;&#x2122;s one of the big ETHANOL PRODUCER MAGAZINE

April 2009

PHOTO: MOR TECHNOLOGY

TECHNOLOGY

MOR Technology has a pilot fractionation plant in the SEMO Mill in Scott City, Mo.

goals of fractionation, and there is a lot of demand right now for corn oil. The supply is fixed from wet mills, but there is a huge demand for corn oil perceived as premium oil.

It has the ability to replace vegetable oil if the supply is there.

By producing a germ, product with 40 percent to 45 percent oil, you can sell it as a commodity because it is a product that we call “wet-mill germ,” which is sold in large volumes today by the wet millers, whereas the dry fractionated germ at 18 percent to 20 percent oil is a brand new product with no market and nobody set up to process it.”

The icing on the cake is that MOR Technology’s partner Quality Technology International Inc. can provide off-take marketing agreements with MOR Technology’s customers for the germ product. “This is a big advantage,” Ulrich says.

“They’ve got the ability to immediately get it into the human food-grade market.”

Cost, Payback and More MOR Technology doesn’t have its patent-pending system installed in any ethanol plants yet, but the company has a pilot fractionation plant in the SEMO Mill in Scott City, Mo. By utilizing this system, the company estimates that an ethanol plant could generate an additional 28 cents per gallon in profits, giving fairly conservative values to coproducts and recognizing that some are newer and it may take time to establish values, and by making conservative assumptions about the process. “The 28 cents is after servicing debt, assuming a 50/50 debt-to-equity-ratio and by making reasonable assumptions as to how the project would be financed,” Ulrich says. He says that the number could change daily based on many variables, but one of the things the comETHANOL PRODUCER MAGAZINE

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TECHNOLOGY pany has noticed is that fractionation is a hedge for high corn prices because it ties more of the revenues of the plant to the coproducts, which trade closer to the value of the corn. “You don’t have the big commodity risk that you had before,” he says. “When corn was $7 a bushel, the return on investment on our system was about a two-year payback. It’s not the same now, as we’re looking at a three- to four-year period, but generally that is financeable.”

The MOR Technology system is 20 percent to 40 percent more expensive than average fractionation systems— at a cost of about $35 million for all associated expenses—but the payback period will be significantly shorter, Ulrich says. “When we look at a fractionation plant that isn’t food-grade, and doesn’t achieve low-starch loss and good performance characteristics, [the payback period] might be six to seven years,” he says. “In addition, operating with our system would allow a plant to withstand well over a $1 increase in the price of corn.”

The price and payback estimates are based on assumptions drawn from a system designed for a 50 MMgy year ethanol plant, which could process about 3,200 bushels of corn per hour, Ulrich says. “We have some flexibility with the size we can provide,” he says. “We’ve modeled according to a nameplate of 50 million gallons, but that could operate as a 70 MMgy plant, as we expect to see an increase in the throughput of the plant when using fractionation.”

In reflecting on the development of the MOR Technology fractionation system as a whole, the company has tried to work with as many leaders in the industry as possible, such as ethanol plant designer and builder Fagen Inc., the National Corn-to-Ethanol Research Center, ethanol technology developers and several universities for feeding trials, Ulrich says. “By being open with what we do, we think we’ve gained a lot of credibility in the industry.” EP Anna Austin is an Ethanol Producer Magazine staff writer. Reach her at aaustin@ bbiinternational.com or (701) 738-4968.

PROJECT DEVELOPMENT

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PROJECT DEVELOPMENT

By Megan Skauge, Ryan C. Christianson, Anna Austin, Erin Voegle, Hope Deutscher, Susanne Retka Schill, Ron Kotrba, Rona Johnson, Dave Nilles, Jessica Sobolik and Bryan Sims ETHANOL PRODUCER MAGAZINE

April 2009

65

PROJECT DEVELOPMENT

L

ast year, EPM’s annual Proposed Ethanol Plant List

A majority of proposed projects continue to come out of

consisted of 118 projects, two of which have since

the Midwest, specifically the North Central-West region—North

begun construction. Economics were tough then

Dakota, South Dakota, Nebraska, Kansas, Minnesota, Iowa and

and will likely continue to be in 2009. Therefore, this

Missouri. There, 17 projects account for approximately 1.23 bil-

sixth annual list reflects what many in the industry have already

lion gallons of annual production capacity.

known: The number of proposed plants in North America has

While there were fewer proposed projects in every other

decreased by 40 percent to 70, representing approximately 3.9

region this year, the South Atlantic—Maryland, West Virginia,

billion gallons of annual capacity.

Virginia, North Carolina, South Carolina, Georgia and Florida—

Many project developers on this list are keeping a close

reported an increase with 11 projects representing 616 MMgy,

eye on these economic conditions, not just as they pertain to the

compared with nine a year ago. Although there is only one etha-

ethanol industry, but to the world. The downturn has ultimately

nol plant currently producing in the South Atlantic—Southwest

hindered the ability for many ethanol companies to obtain fund-

Georgia Ethanol LLC, a 100 MMgy plant in Camilla, Ga.—there

ing, building materials and other necessities required for plant

are three more under construction with a projected capacity of

construction. Readers will notice that several projects on this list

135 MMgy.

are on hold until market conditions improve.

Despite the challenging economics, it’s probably no surprise

EPM couldn’t find any proposed projects in the New England region this year.

that a number of projects are turning toward cellulosic feedstocks

As always, EPM reminds readers that the Proposed Ethanol

in an effort to meet the 2010 cellulosic biofuel requirement estab-

Plant List is not intended to be an all-encompassing list but rather

lished in the new renewable fuels standard. The 2010 require-

a broad depiction of trends in ethanol project development. This

ment is set at 1 million gallons and will increase incrementally to

year, the EPM editorial staff attempted to contact more than 420

16 billion gallons by 2022.

proposed projects in its database, and only those it heard back

Of the 70 total plants listed, 25 intend to start construction

from, or obtained official public documentation for, are listed here.

in 2009. Thirty aim to use cellulosic feedstocks, some in com-

Several were labeled “defunct,” in no way moving ahead ever,

bination with corn. Of those 30, eight plants representing ap-

and are not listed here. Some projects chose not be included,

proximately 170 MMgy plan to exclusively use municipal solid

and some didn’t respond at all. In any case, EPM believes this

waste (MSW) as a feedstock. Another five plants representing 63

list is a valuable resource that may ultimately indicate where the

MMgy will exclusively use wood-based feedstocks. Conventional

industry is headed.

ethanol production is still in the majority: Twenty-four plants representing 2.4 billion gallons of annual production capacity plan to use only corn as a feedstock.

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ETHANOL PRODUCER MAGAZINE

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PROJECT DEVELOPMENT

American Ethanol Inc. Location: Santa Maria, Calif.

Target groundbreaking: late 2009 Feedstock: molasses/waste biomass Capacity: 100 MMgy Design/build team: undeclared Synopsis: According to company President David Baskette, the permitting process is nearly complete and groundbreaking should occur later this year.

In order to acquire financing during current economic conditions, the facility will use molasses and other biomass feedstocks instead of corn. Baskette hoped to close financing in mid-February 2009.

BlueFire Mecca LLC Location: Mecca, Calif.

Target groundbreaking: undeclared Feedstock: MSW Capacity: 18 MMgy Design/build team: undeclared Synopsis: BlueFire Ethanol Inc. is progressing with the permitting and design of this cellulosic ethanol facility, according to Chief Technology Officer John Cuzens. In particular, the company is acquiring the necessary site control permits for the plant. It received a $40 million U.S. DOE grant to help pay for this facility.

BlueFire Ethanol Lancaster LLC Location: Lancaster, Calif.

Target groundbreaking: mid-2010 Feedstock: MSW Capacity: 3.7 MMgy Design/build team: undeclared Synopsis: According to BlueFire Ethanol Inc. Chief Technology Officer John Cuzens, the company received the necessary conditional use and air permits, and is trying to arrange financing for this cellulosic ethanol facility.

To ensure the continuous construction of the plant, its board of directors determined that groundbreaking would not occur until all the necessary funds are in place. BlueFire officials remained optimistic that the necessary capital can be raised with President Barack Obama in office and when the capital markets normalize.

The Green Fuel Association Pilot Plant Location: Corning, Calif.

Target groundbreaking: second quarter 2009 Feedstock: molasses Capacity: 1.5 MMgy Design/build team: undeclared Synopsis: The Green Fuel Association, formed in late 2008, hopes to complete construction of this pilot-scale cellulosic ethanol plant by the end of 2009, according to Public Relations Manager Lou Hecker. Itâ&#x20AC;&#x2122;s currently in the permitting process. Once built, the facility will be used to train personnel while the association builds an adjacent 40 MMgy commercial-scale cellulosic ethanol facility.

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ETHANOL PRODUCER MAGAZINE

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PROJECT DEVELOPMENT

The Green Fuel Association Commercial Plant Location: Corning, Calif.

Target groundbreaking: 2012 Feedstock: switchgrass Capacity: 40 MMgy Design/build team: undeclared Synopsis: During the construction of its pilot-scale cellulosic ethanol plant, The Green Fuel Association will begin designing this adjacent commercial-scale cellulosic ethanol facility, according to Public Relations Manager Lou Hecker. The association plans to grow its own switchgrass feedstock on a 1,500-acre site near Corning, as well as contract with local farmers and ranchers who will also grow switchgrass for the facility.

Kauai Ethanol LLC Location: Kaumakani, Hawaii Target groundbreaking: October 2009 Feedstock: molasses/sugarcane bagasse Capacity: 15 MMgy Design/build team: Praj Industries Ltd. Synopsis: This project will produce sugar and ethanol, and provide 20 megawatts of cogenerated electricity to the Kauai Island Utility Co-op, according to William Maloney, president of project developer Pacific West Energy LLC. Additional sugarcane bagasse and supplemental biomass will be processed into steam and electricity. Locally cultivated tropical sugar beets and sweet sorghum are also being considered as feedstocks, he says.

Pacific Biofuels & Energy Corp.

Location: Oahu, Hawaii Target groundbreaking: undeclared Feedstock: switchgrass Capacity: 15 MMgy Design/build team: undeclared Synopsis: According to project spokesman Sam Monet, this project is in the planning stage. No further information is available.

Inland Pacific Energy Center LLC Location: Stanfield, Ore. Target groundbreaking: July or August 2009 Feedstock: corn Capacity: 120 MMgy Design/build team: Delta-T Corp.

Synopsis: This company plans to build three adjacent 40 MMgy plants that utilize an advanced dry-grind fractionation process. “We are doing that to spread out the time frame of the building process, which will allow us to make some feedstock switches if we need to,” says Project Manager Bob Doughty. It will also allow the company to take advantage of any new technologies that may develop as the plants are being built. The project includes three adjacent canola-based biodiesel plants with a combined total operating capacity of 96 MMgy. “We’ll also have a large feed mill between the ethanol and biodiesel plants to use the distillers grains and the canola meal,” he adds. Doughty says he’s been working on securing project financing for five years and is close to reaching his goal.

Moses Lake Ethanol LLC Location: Moses Lake, Wash.

Target groundbreaking: spring 2009 Feedstock: straw/ paper waste /wheat Capacity: 60 MMgy Design/build team: Liquafaction Corp.

Synopsis: According to company President Mark Mollo, plans for this facility include retrofitting a former ethanol plant built in 1990. Once the final $4 million of financing is in place, Mollo says he expects the retrofit will happen quickly, with possible start-up this summer. The necessary permits were obtained a year ago when Moses Lake Ethanol changed its feedstock from corn to cellulose after the corn market started fluctuating.

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April 2009

69

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PROJECT DEVELOPMENT

Unnamed Location: Arizona Target groundbreaking: spring 2010 Feedstock: MSW Capacity: 26 MMgy Design/build team: Genahol LLC Synopsis: According to Genahol President Don Bogner, his company is a partner in this first of three identical facilities under development in Arizona.

The first plant will be located in Chandler, Ariz., but sites haven’t been selected for the other two projects. Each plant would be capable of processing 2,000 tons of MSW per day.

Great Western Ethanol LLC Location: Evans, Colo.

Target groundbreaking: June 2009 Feedstock: corn Capacity: 115 MMgy Design/build team: ICM Inc. Synopsis: “Financing seems to be moving forward quickly,” says Chief Executive Officer Jim Geist. He says he believes the current economic status of the ethanol industry “will turn around” and the company needs “to move quickly so we don’t lose our slot.” It hopes to take advantage of current market conditions, including lower raw material prices.

Confluence Energy LLC Location: Kremmling, Colo.

Target groundbreaking: undeclared Feedstock: wood chips Capacity: 5 MMgy to 10 MMgy Design/build team: undeclared Synopsis: “The world has changed dramatically in the past six months,” Chief Executive Officer Mark Mathis admits to EPM. “Still, we’re moving forward.” The company has signed letters of intent with unnamed technical partners and met with federal government representatives in mid-January to discuss loan guarantee options. Mathis also expects a “large petroleum company” to partner with the project. “We’re just deciding how big to build it and who the players are,” he says.

Montana Microbial Products LLC Location: Montana, Idaho or eastern Oregon Target groundbreaking: fall 2009 Feedstock: barley Capacity: 2 MMgy Design/build team: undeclared Synopsis: “We’re thinking about byproducts and coproducts in different ways,” co-owner Cliff Bradley tells EPM. Although this facility would produce ethanol, it would focus more on the production of a high-value barley protein concentrate to be used as aquaculture feed (8,800 tons per year).

“Initially, we would supply trout farm markets in Idaho,” he says. Sites are being evaluated in Montana, Idaho and eastern Oregon, areas where feed barley—not malting barley—is abundant. Engineering is underway.

72

ETHANOL PRODUCER MAGAZINE

April 2009

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PROJECT DEVELOPMENT

Dexter Ethanol LLC Location: Dexter, Iowa Target groundbreaking: mid-2009 Feedstock: corn Capacity: 58 MMgy Design/build team: Agra Industries Inc./Delta-T Corp.

Synopsis: According to Agra Industries spokesman Bob Diedrick, a site has been identified and air permits have been secured, but additional funding is needed before groundbreaking will occur. After initial start-up, the plant will be expanded to 108 MMgy. Fractionation technology would then be installed, and fractionated residue would be used to heat and power the facility. This project is a subsidiary of Alpha Holdings LLC. Harvest BioFuels LLC Location: Galbraith, Iowa Target groundbreaking: 2009 Feedstock: corn Capacity: 110 MMgy Design/build team: Fagen Inc./ICM Inc. Synopsis: According to Harvest BioFuels Director of Contracting Mona De La Torre, a site has been identified, zoned and permitted for construction.

Additional funding has yet to be finalized. Once funds have been raised, De La Torre says the company intends to break ground “once market conditions become favorable again.”

74

Harvest BioFuels LLC Location: Garner, Iowa Target groundbreaking: 2009 Feedstock: corn Capacity: 110 MMgy Design/build team: Fagen Inc./ICM Inc. Synopsis: According to Harvest BioFuels Director of Contracting Mona De La Torre, a site has been identified, zoned and permitted for construction.

However, funding has yet to be finalized. Once funds have been raised, the company will break ground “once market conditions become favorable again,” De La Torre says.

Harvest BioFuels LLC Location: Gilmore City, Iowa Target groundbreaking: 2009 Feedstock: 110 MMgy Capacity: corn Design/build team: Fagen Inc./ICM Inc. Synopsis: According to Harvest BioFuels Director of Contracting Mona De La Torre, a site has been identified, zoned and permitted for construction.

However, funding has yet to be finalized. Once funds have been raised, the company will break ground “once market conditions become favorable again,” De La Torre says.

ETHANOL PRODUCER MAGAZINE

April 2009

PROJECT DEVELOPMENT

Tama Ethanol LLC Location: Tama, Iowa Target groundbreaking: spring 2009 Feedstock: cellulose/corn Capacity: 58 MMgy Design/build team: Agra Industries Inc./Delta-T Corp.

Synopsis: Air permits have been secured, and the company is in the process of obtaining financing, according to Chris Miller, owner and chief executive officer of parent company Alpha Holdings LLC. Once operational, this facility will be expanded to 108 MMgy and include a front-end fractionation process. Fractionated residue would be used to heat and power the plant. In addition, the company intends to capture carbon dioxide for on-site algae production.

Dial Ford County Bio-Renewable Fuels LLC Location: Dodge City, Kan. Target groundbreaking: undeclared Feedstock: corn Capacity: 130 MMgy Design/build team: ICM Inc. Synopsis: The company is securing funding for this proposed $432 million facility, according to Project Development Director Ted Osuniga. Once constructed, the plant would feature ICMâ&#x20AC;&#x2122;s food-and-fuel design.

Central Minnesota Cellulosic Ethanol Partners Location: Little Falls, Minn.

Target groundbreaking: undeclared Feedstock: woody biomass Capacity: 10 MMgy Design/build team: undeclared Synopsis: According to General Manager Kerry Nixon, also general manager of Central Minnesota Ethanol Co-op, the first phase of a feasibility study has been completed. The second phase of the study should be complete in June. The facility would be adjacent to CMECâ&#x20AC;&#x2122;s existing corn-based ethanol plant.

American Ethanol Inc. Location: Sutton, Neb. Target groundbreaking: undeclared Feedstock: corn Capacity: 100 MMgy Design/build team: undeclared Synopsis: According to President and Chief Operating Officer Andy Foster, this project is on hold until market conditions improve.

E Energy Auburn Location: Auburn, Neb. Target groundbreaking: undeclared Feedstock: corn Capacity: 100 MMgy Design/build team: undeclared Synopsis: A representative of project partner Rawhide Management LLC said this project will move forward when market conditions improve.

DeWeese Biofuels LLC Location: Fairfield, Neb. Target groundbreaking: undeclared Feedstock: corn Capacity: 50 MMgy Design/build team: Fagen Inc./ICM Inc. Synopsis: According to member manager Clay Rawhouser, this project is on hold until industry conditions improve.

E Energy Broken Bow Location: Broken Bow, Neb. Target groundbreaking: undeclared Feedstock: corn Capacity: 100 MMgy Design/build team: undeclared Synopsis: A representative of project partner Rawhide Management LLC says this project will move forward when market conditions improve.

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PROJECT DEVELOPMENT

Midwest Energy Producers LLC Location: Oâ&#x20AC;&#x2122;Neill, Neb. Target groundbreaking: undeclared Feedstock: corn Capacity: 110 MMgy Design/build team: undeclared Synopsis: According to Vice President of Project Development Kurt Bravo, the company is working with lenders to secure equity, and debt financing has been secured.

Panhandle Ethanol LLC Location: Lancaster County, Neb. Target groundbreaking: undeclared Feedstock: hemicellulose Capacity: 8 MMgy to 10 MMgy Design/build team: Fagen Inc./ICM Inc. Synopsis: According to member manager Clay Rawhouser, this project is on hold until industry conditions improve.

Plymouth Ethanol LLC Location: Jefferson County, Neb. Target groundbreaking: undeclared Feedstock: cellulose Capacity: 5 MMgy to 20 MMgy Design/build team: Fagen Inc./ICM Inc. Synopsis: According to member manager Clay Rawhouser, this project is on hold until industry conditions improve.

Republican Valley Ethanol LLC Location: Superior, Neb. Target groundbreaking: undeclared Feedstock: milo Capacity: 20 MMgy to 50 MMgy Design/build team: Fagen Inc./ICM Inc. Synopsis: According to member manager Clay Rawhouser, this project is on hold until industry conditions improve.

Spiritwood Ethanol Location: Jamestown, N.D. Target groundbreaking: undeclared Feedstock: corn Capacity: 100 MMgy Design/build team: undeclared Synopsis: According to Duaine Espegard, director of lead project developer Newman Group, plans will move forward when market conditions improve.

Wagner Native Ethanol LLC Location: Wagner, S.D. Target groundbreaking: spring 2009 Feedstock: corn/milo Capacity: 50 MMgy Design/build team: Fagen Inc./ICM Inc. Synopsis: According to Project Coordinator Bill Riechers, this plant will be powered by biomass, taking in approximately 760 square bales of corn stover per day and producing 30 tons of pot ash fertilizer per day. A fractionation system will also be installed, so the facility could burn bran as an additional energy source.

Number of Proposed Ethanol Plants By Region

76

Pacific

9

Mountain

4

North Central-West

17

South Central-West

6

North Central-East

12

South Central-East

4

New England

0

Mid-Atlantic

1

South Atlantic

11

Canada

6

ETHANOL PRODUCER MAGAZINE

April 2009

www.biofuelsrecruiting.com

PROJECT DEVELOPMENT

Colusa Biomass Inc. Location: Stuttgart, Ark. Target groundbreaking: late March 2009 Feedstock: rice hulls/rice straw Capacity: 12.5 MMgy Design/build team: undeclared Synopsis: According to Chief Financial Officer Tom Bowers, the plant will be located on a 40-acre parcel in the Stuttgart Industrial Park.

Pine Bluff Ethanol Location: Pine Bluff, Ark. Target groundbreaking: late 2009 Feedstock: corn/woody biomass Capacity: 100 MMgy Design/build team: undeclared Synopsis: According to Bill Eason, president of Arkansas Farmers Biofuels LLC, project coordinators are still hoping to break ground on this project, but current market conditions are making it tough.

Oklahoma Ethanol LLC Location: northern Oklahoma Target groundbreaking: undeclared Feedstock: corn/milo Capacity: undeclared Design/build team: undeclared Synopsis: Despite partner Oklahoma Sustainable Energy LLC dropping out of this project, Chaparral Energy, an Oklahoma City-based oil company, says it intends to move forward. “However, our project is essentially on hold until the financial markets improve,” Chaparral Energy’s Mike Maly says.

78

LoneStar Ethanol Location: Port of Victoria, Texas Target groundbreaking: undeclared Feedstock: corn/milo Capacity: 100 MMgy Design/build team: Vogelbusch USA Inc. Synopsis: This project is on hold, pending an improvement in the economy, but LoneStar Ethanol Executive Director Ron White says he is optimistic that the project will advance in the future.

Novahol Brazos River LLC Location: Stephenville, Texas Target groundbreaking: undeclared Feedstock: undeclared Capacity: undeclared Design/build team: undeclared Synopsis: This project is on hold due to touch economic conditions, according to Norcon International Inc. President Jerry Norman. He says by June, he hopes the project will advance.

Sunray Ethanol LLC Location: Sunray, Texas Target groundbreaking: undeclared Feedstock: corn/milo Capacity: 59 MMgy Design/build team: ICM Inc. Synopsis: This plant is being developed by Pivot Energy Inc. According to Wade Walker, the company’s vice president, the project is currently in the financing stage. It will utilize ICM’s corn-oil separation technology and is in close proximity to cattle feedlots. Permitting is being finalized.

ETHANOL PRODUCER MAGAZINE

April 2009

PROJECT DEVELOPMENT

Algonquian Ethanol Plant LLC Location: Princeton, Ill. Target groundbreaking: fourth quarter 2009 Feedstock: corn Capacity: 108 MMgy Design/build team: Delta-T Corp.

Synopsis: Chet Perry, president and chief executive officer of corporate manager and project developer ITEC Refining and Marketing Co. Ltd., says a majority of capital had been raised prior to the recession, but the project is now on hold. He says he is hopeful the ethanol industry and the nationâ&#x20AC;&#x2122;s economy in general will improve by late 2009. ITEC is working with an unnamed company in Europe to modify the design of the plant to include a combined-heat-and-power unit that will reduce water consumption by 80 percent to 90 percent.

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American Ethanol Inc. Location: Danville, Ill. Target groundbreaking: undeclared Feedstock: corn/cellulose Capacity: 100 MMgy Design/build team: undeclared Synopsis: President and Chief Operating Officer Andy Foster says the company owns a 175-acre plant site, but the project is on hold due to market uncertainty and a lack of financing.

American Ethanol Inc. Location: San Jose, Ill. Target groundbreaking: undeclared Feedstock: corn/cellulose Capacity: 100 MMgy Design/build team: undeclared Synopsis: President and Chief Operating Officer Andy Foster said the company had acquired an option to purchase 107 acres for this plant, but the project is on hold due to market uncertainty and a lack of financing.

ETHANOL PRODUCER MAGAZINE

April 2009

PROJECT DEVELOPMENT

Fulton Ethanol LLC Location: Fulton, Ill. Target groundbreaking: undeclared Feedstock: corn Capacity: 54 MMgy Design/build team: Benchmark Design USA Synopsis: Company spokesman Keith Holesinger says this project is ready for groundbreaking but on hold due to a lack of financing. The project design includes a biomass-fed combined-heat-and-power unit.

Illini Bio-Energy LLC Location: Hartsburg, Ill. Target groundbreaking: undeclared Feedstock: corn Capacity: 100 MMgy or 130 MMgy Design/build team: undeclared Synopsis: Spokeswoman Sara Wilcox says this project is on hold due to a lack of financing. The letter of intent signed by the design and construction firm has expired, and Illini Bio-Energy is considering building a smaller plant due to equity constraints. Wilcox says an updated design might include fractionation technology.

Powers Energy One of Indiana LLC Location: Lake County, Ind. Target groundbreaking: May 2009 Feedstock: MSW Capacity: 30 MMgy Design/build team: KBR Inc. Synopsis: In late November, Lake County, Ind., officials approved a 15year contract with Indiana-based Powers Energy One for the construction and operation of this facility. An engineering team was in the process of selecting a site from two options within Lake County in mid-January, according to Powers Energy of America President Earl Powers. The necessary permits are also being obtained. This plant has committed to processing 2,000 tons of MSW per day, but if neighboring counties become involved, this total could increase to up to 10,000 tons per day and 150 MMgy of ethanol production. Ineos Bio, which has operated a pilot plant in Fayetteville, Ark., for five years, will act as a technical partner on the project. “There’s nobody else out there that has the technology we have,” Powers says. Powers Energy of America owns Powers Energy One of Indiana and Powers Energy Two of Kentucky LLC.

ETHANOL PRODUCER MAGAZINE

April 2009

Putnam Ethanol LLC Location: west central Indiana Target groundbreaking: undeclared Feedstock: corn Capacity: 100 MMgy Design/build team: undeclared Synopsis: This project is still in the feasibility study stage, and a location hasn’t been finalized yet. The feedstock may change as the technology/ market changes, according to Bill Dory of the Putnam County Economic Development Office.

Frontier Renewable Resources LLC Location: Kinross Charter Township, Mich.

Target groundbreaking: undeclared Feedstock: woody biomass Capacity: 40 MMgy Design/build team: Mascoma Corp.

Synopsis: Frontier Renewable Resources is the entity formed by Mascoma and its Michigan partner JM Longyear LLC to commercialize the cellulosic ethanol technology developed by Mascoma. The consolidated bioprocessing is described as a single-step, cellulose-to-ethanol process designed to lower costs by limiting additives and enzymes, according to Mascoma spokeswoman Kate Casolaro. The estimated $300 million project held prescoping meetings in February prior to beginning the permitting process. The project received a $26 million DOE grant and $23.5 million from the state of Michigan.

Genahol LLC Location: Canton, Ohio Target groundbreaking: 2010 Feedstock: MSW Capacity: 16 MMgy to 32 MMgy Design/build team: undeclared Synopsis: According to company President Don Bogner, this facility will process 500 tons of MSW per day, possibly increasing to 1,500 tons per day. Site development is underway, and Bogner says the company is looking into state and federal funding for the project.

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Agribusiness Services Clifton Gunderson was founded in the heart of the Midwest and many of our partners and professional staff were raised in rural communities. Even though we have grown to become one of the largest CPA firms in the country, we continue to have a natural interest in and understanding of agribusiness.

In fact, many of our specialized tax consulting services benefit the ethanol industry by providing immediate cash flow benefits. Our fixed asset and cost segregation studies alone have uncovered additional current year tax deductions for numerous ethanol facilities of over $100 million.

SuGanit Systems Inc. Location: Toledo, Ohio Target groundbreaking: early 2010 Feedstock: compost/yard waste Capacity: undeclared Design/build team: SuGanit Systems Inc. Synopsis: The city of Toledo, The University of Toledo and the ToledoLucas Port Authority are working in conjunction with SuGanit Systems to build this commercial-scale cellulosic ethanol facility. Meanwhile, the company hoped to open a pilot plant in March. It would produce 80 to 100 gallons of ethanol per day. Funding is being provided by the city of Toledo in hopes the commercial-scale facility will save taxpayer dollars.

Belmont Bio-Ag LLC Location: Belmont, Wis. Target groundbreaking: undeclared Feedstock: corn Capacity: 50 MMgy Design/build team: undeclared Synopsis: Late last fall, all permits were in place, but when the financial and commodity markets went sour, this project was put on hold, according to board Chairman Bob Brodbeck. This project was taking an integrated approach by using all waste streams for energy or valueadded products. A proposed feedlot was removed from the project in order to get the final permit, but the possibility remains of revisiting that component once the plant is in operation for four years. “It’s on ice until we see a turn in the markets,” Brodbeck says.

Sharon Ethanol LLC Location: Sharon, Wis. Target groundbreaking: fall 2009 Feedstock: corn Capacity: 120 MMgy Design/build team: Delta-T Corp.

Synopsis: Air permits are in hand for this proposed plant that would utilize dry fractionation at the front end of the ethanol process, according to Jeff Knight, managing director of project developer Global Renewable LLC. He says financing arrangements are being finalized in parallel with a 10-year offtake agreement that is under negotiation.

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Proposed Ethanol Plant Design/Build Teams Undeclared

46%

When you count on Clifton Gunderson to help yield the best results from your agribusiness, you can count on insight.

Contact Mark Colvin at 309-495-8754 for a no-charge assessment of your ethanol or biodiesel plants tax savings potential.

Katzen International 2%

ICM Inc. 4% Other 21%

Fagen Inc./ICM Inc. 17% Delta-T Corp. 6%

Vogelbusch USA Inc. 2%

Praj Industries Ltd. 2%

301 SW Adams, Suite 900 • Peoria, Illinois 61602 www.cliftoncpa.com 82

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April 2009

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PROJECT DEVELOPMENT

Tennessee Valley Agri-Energy LLC Location: Colbert County, Ala. Target groundbreaking: undeclared Feedstock: corn Capacity: 110 MMgy Design/build team: Fagen Inc./ICM Inc. Synopsis: Initially hoping to become a publicly traded company in order to wrangle up enough capital for construction, Tennessee Valley Agri-Energy took a different path once its members realized how poor the public equity markets had become. While the company is struggling like any other today, business manager Phil Foster says this project is far from dead.

Central Appalachian Ethanol Plant Location: Pike County, Ky. Target groundbreaking: undeclared Feedstock: MSW/wood waste/yard waste Capacity: 20 MMgy Design/build team: RW Armstrong/GeneSyst International Inc. Synopsis: Zig Resiak, program director of project owner Agresti Biofuels LLC, tells EPM this facility’s continuous flow process design would utilize weak acid hydrolysis and gravity pressure vessels to break down biomass into fermentable sugars. Agresti Biofuels and Pike County were on the verge of signing a terms and conditions sheet, which Resiak says would be followed by equity and debt financing. “Getting equity lined up in this economic environment is touchy,” he adds.

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Powers Energy Two of Kentucky LLC Location: Henderson or Webster County, Ky. Target groundbreaking: May 2009 Feedstock: MSW Capacity: 47 MMgy Design/build team: undeclared Synopsis: The air permit for this project has been received, along with a $335,000 planning grant and $15 million energy grant. The MSW feedstock includes “auto fluff”—the interior materials of abandoned automobiles—and a small amount of tars. This project will take in 2,000 tons of MSW per day, but the auto fluff and tars will produce more ethanol than the company’s similar project in Lake County, Ind., according to Powers Energy of America President Earl Powers. The waste stream contracts from three counties and the city of Henderson, Ky., were being finalized at press time. Financing will begin after that. Ineos Bio, which has operated a pilot plant in Fayetteville, Ark., for five years, will act as a technical partner in the project. “There’s nobody else out there that has the technology we have,” Powers says. Powers Energy of America owns Powers Energy One of Indiana and Powers Energy Two of Kentucky.

Agro*Gas Industries LLC Target groundbreaking: late summer 2009 Location: McMinn County, Tenn.

Feedstock: ag waste/industrial waste/kudzu Capacity: 12 MMgy Design/build team: undeclared Synopsis: According to cofounder Doug Mizell, a site has been identified, lawyers have been hired and environmental studies are being conducted to determine the feasibility of this project. He said this state-of-the-art cellulosic ethanol plant is expected use multiple feedstocks, including kudzu, a vine commonly used for forage and erosion control, but also a serious weed in the Southeast.

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April 2009

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PROJECT DEVELOPMENT

GREEN Holding LLC Location: Tremont, Pa. Target groundbreaking: undeclared Feedstock: corn Capacity: 120 MMgy Design/build team: Katzen International Inc. Synopsis: GREEN Holding—an acronym for Green Renewable Energy, Ethanol & Nutrition—intends to build a conventional ethanol plant with back-end oil extraction, from which corn oil will be converted to biodiesel on-site. Once that’s complete and operational, according to GREEN Holding’s Jeffrey Dershem, the plan is to integrate synthesis gas fermentation technology into the ethanol plant in 2011 or 2012.

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PROJECT DEVELOPMENT

Coskata Inc. Location: Clewiston, Fla. Target groundbreaking: undeclared Feedstock: sugarcane/sugarcane bagasse Capacity: 100 MMgy Design/build team: Coskata Inc. Synopsis: Warrenville, Ill.-based cellulosic ethanol developer Coskata announced in November that it had reached an agreement with Clewiston, Fla.-based United States Sugar Corp. for the construction of this project.

Under the agreement, the partners were expected to seek loan guarantees from the USDA and a financial match from the Florida Energy Office.

Ethanol Technology Services Inc. Location: Osceola County, Fla. Target groundbreaking: undeclared Feedstock: sweet sorghum Capacity: 30 MMgy Design/build team: undeclared Synopsis: According to Chief Executive Officer Bruce Nason, this project was ready to go when the global economic crisis hit, which halted financing.

At press time, Ethanol Technology Services was in discussions with another large investor. Land and air permits have been received, and the project is approved by the Florida Public Service Commission. Nasonâ&#x20AC;&#x2122;s sweet sorghum fieldwork has resulted in 60- to 70-ton-per-acre yields for a potential ethanol yield of 600 gallons per acre per harvest, with two harvests per year possible. Future plans include building two more adjacent ethanol plants and producing renewable energy in an integrated project.

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Highlands Ethanol Project Location: Brighton, Fla. Target groundbreaking: mid-2009 Feedstock: energy cane/sorghum Capacity: 36 MMgy Design/build team: Verenium Corp.

Synopsis: In January, Cambridge, Mass.-based Verenium received a $7 million grant through the Florida Farm to Fuel Initiative and signed a longterm feedstock supply agreement with Lykes Brothers Inc., from which it has leased land to build this cellulosic ethanol facility. Permitting is underway, with the special use permit from Highlands County in hand in January.

Negotiations were underway with an engineering, procurement and construction contractor. The estimated cost of the biochemical facility is $250 million to $300 million based on technology first developed by a University of Florida team led by Lonnie Ingram. Pretreatment involves mild acid hydrolysis and steam explosion, followed by a solids separation step. Liquid sugars are sent to C5 fermentation, while the cellulose and lignin go to simultaneous enzymatic hydrolysis and fermentation. Recovered lignin is used for process heat.

Highlands Envirofuels LLC Location: Lake Placid, Fla. Target groundbreaking: first quarter 2010 Feedstock: sugarcane/sweet sorghum Capacity: 20 MMgy Design/build team: undeclared Synopsis: A grower database has been developed over the past year with some of those growers investing in the project, according to Bradley Krohn, manager of Highlands Envirofuels and president of project developer U.S. EnviroFuels LLC. At press time, this project was close to announcing the technology providers for the sugar mill and ethanol process, after which the process design and permitting will get underway. The project received a $7 million grant from the Florida Farm to Fuel Initiative.

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PROJECT DEVELOPMENT

Ineos New Planet BioEnergy LLC Location: Florida Target groundbreaking: late 2009 Feedstock: construction and demolition debris/MSW/woody biomass Capacity: 8 MMgy Design/build team: Ineos Bio Synopsis: New Planet Energy LLC has entered into a joint venture with Ineos Bio to build a cellulosic ethanol plant at an undisclosed location in Florida using a combined thermal chemical and fermentation process developed

by Ineos Bio. The joint venture is picking up the project initially led by Alico Inc. that received one of the first rounds of DOE funding for cellulosic ethanol in 2007. Ineos New Planet BioEnergy was strongly encouraged to reapply for the DOE funding, says Craig Evans, a consultant working with New Planet Energy, and the project is waiting to hear from the DOE before moving forward. The commercial demonstration plant would have the capability of expanding to 72 MMgy. While starting with wood waste as a feedstock, the goal is to use MSW, tires, plastic and other waste streams, as well.

Southeast Renewable Fuels LLC Location: Hendry County, Fla. Target groundbreaking: fourth quarter 2009 Feedstock: sweet sorghum Capacity: 20 MMgy Design/build team: undeclared Synopsis: Financing for the first of three proposed plants was close to being finalized in February, according to Chief Operating Officer Don Markely. A site had been identified, and permit applications had been submitted.

Southeast Renewable Fuels intends to build three plants in the Lake Okeechobee area with a combined capacity of 100 MMgy.

East Coast Ethanol LLC Location: Seabord, N.C. Target groundbreaking: undeclared Feedstock: corn Capacity: 110 MMgy Design/build team: Fagen Inc./ICM Inc. Synopsis: As the fourth of four plants proposed

by East Coast Ethanol in the Southeast, this North Carolina project is in the pre-construction phase.

Zoning has been approved, options on land are in place, and permitting is underway, according to Chief Financial Officer John Long. While the equity drive is still active and individuals have invested, the fundraising focus has shifted to potential large investors and companies.

East Coast Ethanol LLC Location: Chester, S.C. Target groundbreaking: undeclared Feedstock: corn Capacity: 110 MMgy Design/build team: Fagen Inc./ICM Inc. Synopsis: As the third of four plants proposed by East Coast Ethanol in the Southeast, the South Carolina project is in the midst of permitting and pre-construction preparation, according to Chief Financial Officer John Long. Zoning has been approved, and options on land are in place. While the equity drive is still active and individuals have bought in, the fundraising focus has shifted to potential large investors and companies.

TPG LLC Location: Clewiston, Fla. Target groundbreaking: undeclared Feedstock: citrus waste Capacity: 4 MMgy Design/build team: undeclared Synopsis: Initial permitting is complete, but this project is on hold due to a lack of funding, according to Manager Dave Stewart. The plant would be adjacent to a citrus processing facility.

East Coast Ethanol LLC Location: Jessup, Ga. Target groundbreaking: undeclared Feedstock: corn Capacity: 110 MMgy Design/build team: Fagen Inc./ICM Inc. Synopsis: As the first of four plants proposed

by East Coast Ethanol in the Southeast, this Georgia project has completed the zoning and permitting processes, according to Chief Financial Officer John Long. The project is ready for dirt work to begin once finances are in place. While the equity drive is still active and individuals have bought in, the focus has shifted to potential large investors and companies.

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April 2009

Osage BioEnergy LLC Location: Carlisle, S.C. Target groundbreaking: undeclared Feedstock: barley Capacity: 68 MMgy Design/build team: undeclared Synopsis: Osage BioEnergy has purchased land and acquired permits for this project, and is awaiting an improvement in economic conditions before moving forward, according to John Warren, director of government relations. This would be Osage BioEnergy’s second project; its Appomattox BioEnergy facility is under construction in Hopewell, Va. Others are under consideration.

Number of EPM Proposed Ethanol Plants By Year

2005

80

2006

110

2007

141

2008

118

2009

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PROJECT DEVELOPMENT

Enerkem Greenfield Alberta Biofuels LP Location: Edmonton, Alberta Target groundbreaking: mid-2009 Feedstock: MSW Capacity: 37.8 MMly (10 MMgy) Design/build team: Enerkem Inc./GreenField Ethanol Synopsis: Enerkem Inc. and GreenField Ethanol are collaborating on this project. The two companies will jointly own, build and operate this cellulosic ethanol facility, according to Marie Helene Labrie, Enerkem’s vice president of government affairs and communications. They signed a 25-year agreement with the city of Edmonton to supply 100,000 tons of sorted MSW per year. The environmental permit has been submitted, and applications for more permits are underway in order to proceed with construction, which was expected to be complete by early 2011.

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Strathmore Bio-Village Inc. Location: Strathmore, Alberta Target groundbreaking: August 2009 Feedstock: wheat Capacity: 100 MMly (30 MMgy) Design/build team: Delta-T Corp.

Synopsis: The groundbreaking date for this plant was pushed back approximately six months because of the economic recession, according to Gordon Hart, chief executive officer and chairman of CR Fuels Inc. “We are building a power plant on-site and will be taking the wastewater from the local community to use as process water,” he says. The company plans to employ anaerobic digestion technology and possibly build a 40 MMgy biodiesel plant that will use canola as a feedstock.

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April 2009

PROJECT DEVELOPMENT

EToH Energy LLC Location: Russell, Manitoba Target groundbreaking: April 2009 Feedstock: wheat Capacity: 150 MMly (40 MMgy) Design/build team: North America Construction Ltd. Synopsis: Initial groundbreaking for this project was expected in late 2008, but the frozen ground pushed groundbreaking to March or April, according to Ernest Sittenfeld, executive vice president of Naples, Fla.-based EToH Energy Marketing Corp. He says the company was waiting to obtain permits for the plant, which is expected to create approximately 50 local jobs once operational.

Cypress Agri Energy Inc. Location: Shaunavon, Saskatchewan Target groundbreaking: fall 2009 Feedstock: wheat Capacity: 150 MMly (40 MMgy) Design/build team: ICM Inc./North America Construction Ltd. Synopsis: According to Karri Sachkowski, corporate secretary for Cypress Agri Energy, the company has been working on this project for seven years and is looking to secure more funding.

Iogen Corp.

Location: north central Saskatchewan Target groundbreaking: undeclared Feedstock: wheat straw Capacity: 90 MMly (24 MMgy) Design/build team: undeclared Synopsis: This commercial-scale cellulosic ethanol plant is expected to use the same technology employed at Iogen’s 2 MMgy demonstration plant in Ottawa, according to Communications Director Mandy Chepeka.

CSEA Co-op Inc. Location: Tillsonburg, Ontario Target groundbreaking: undeclared Feedstock: corn/sweet potatoes Capacity: 150 MMly (40 MMgy) Design/build team: undeclared Synopsis: This ethanol plant is part of a larger project that involves green energy, according to Berry Murray, president of Sand Plains Energy Corp. and a founder of CSEA Co-op Inc. The project was planned for one of the Ontario Power Authority’s green zones, which would have made it eligible for a 20-year fixed contract to provide electricity to a utility. However, the green zone designation was pulled, which made obtaining funding difficult.

Murray says CSEA Co-op is pursuing an explanation for why the green designation was dropped and whether the decision can be overturned. “We’ve been trying to bounce back,” he says. “We’re not giving up.” Once the cooperative establishes its energy center, it will use the waste energy to run the ethanol plant. Murray says the town of Tillsonburg is excited about the project that would lead to the planting of 40,000 acres of energy crops in an area where tobacco is no longer grown.

Proposed North American Feedstocks Corn 35%

MSW 11%

Other (includes feedstocks in combination with corn) 34% Wheat 4% Sweet sorghum 3%

Wood 7% Barley 3% Switchgrass 3%

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TRANSPORTATION

Cedar Rapids & Iowa City Railway Co. locomotives prepare to haul tank cars from the 420 MMgy Archer Daniels Midland Co. ethanol plant in Cedar Rapids, Iowa.

PHOTO: CEDAR RAPIDS & IOWA CITY RAILWAY CO.

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TRANSPORTATION

The Ethanol Line Regional and short line railroads continue to upgrade their operations to move ethanol.

By Ryan C. Christiansen

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TRANSPORTATION

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ail access is an essential requirement for large-scale ethanol plants. According to the Renewable Fuels Association, a 100 MMgy ethanol plant can expect to receive 60 percent of its corn by rail, or 17 railcars per day. The plant will ship 10 tank cars of ethanol per day and nine hopper cars per day of distillers dried grains with solubles (DDGS).

In the Corn Belt, ethanol plants are served by both Class I main line railroads and smaller Class II and Class III railroads. According to the Midwest Regional University Transportation Center, federal guidelines define Class II regional railroads as those that operate at least 350 miles of track and generate at least $40 million in gross revenue. A Class III short line railroad might be a local carrier that operates on less than 350 miles of track or might be a switching or terminal railroad that transfers cars between Class I connections and local shippers.

The existence of viable short line and regional railroads is due in large part to the Staggers Rail Act of 1980, which helped to rescue a nearly bankrupt railroad industry. According to the Federal Railroad Administration, the Staggers Act de-regulated the industry, allowing railroads to sell unprofitable lines to smaller railroads. The result is many more short line and regional railroads offering services, but also a set of Class I carriers that focus on optimizing their businesses to handle growing global trade volumes. For Class I carriers, optimization means shipping ethanol in 80- to 110-car unit trains instead of smaller train lengths.

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The demand for unit trains has led one Iowa-based railroad to upgrade its infrastructure and equipment. Iowa Interstate Railroad Ltd. (IAIS), based in Cedar Rapids, a subsidiary of Railroad Development Corp. of Pittsburgh, Pa., recently received a $31 million loan from the FRAâ&#x20AC;&#x2122;s Railroad Rehabilitation

and Improvement Financing program to help with the purchase of 12 new 4,400-horsepower General Electric ES44AC Evolution Series locomotives, which have allowed the railroad to increase train lengths, tonnage and operating speeds in its service to ethanol plants along its line. The new locomotives are 18 percent more fuel efficient than alternatives and comply with all of the latest U.S. EPA requirements. The railroad received the new locomotives in the fourth quarter of 2008.

The IAIS main line runs 552 miles from Council Bluffs, Iowa, to Blue Island, Ill., a suburb of Chicago. IAIS branch lines include 43 miles from Bureau Junction, Ill., to Peoria, Ill.; 14 miles from Altoona, Iowa, to Prairie City, Iowa; 11 miles from Rock Island, Ill., to Milan, Ill.; and six miles from Oakland, Iowa, to Hancock, Iowa. The railroad has connections with the entire Class I railroad system, giving ethanol producers the ability to ship and receive goods to or from anywhere in North America. The railroad provides intermodal facilities at Blue Island and Council Bluffs and also at West Liberty and Newton, Iowa. The IAIS offers access to the Mississippi River and Illinois River terminals for rail-to-barge or barge-to-rail service.

IAIS expects to move approximately 1 billion gallons of ethanol per year from ethanol plants along its line by the end of 2010. The ethanol plants that are currently producing along the IAIS line include the 37 MMgy Penford Products Corp. ethanol plant and the 420 MMgy Archer Daniels Midland Co. ethanol plant in Cedar Rapids; the 110 MMgy Hawkeye Renewables ethanol plant in Menlo, Iowa; the 100 MMgy ADM plant in Peoria; the 160 MMgy Aventine Renewable Energy Inc. plant in Pekin, Ill.; and the 100 MMgy Patriot Renewable Fuels LLC plant in Annawan, Ill. The ethanol plants under construction along the line include a 275 MMgy ADM expansion in Cedar Rapids and a new 110 MMgy Southwest Iowa Renewable Energy LLC Continued on page 98

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TRANSPORTATION

Short Line Challenges and Opportunities Approximately one-third of the nation’s rail freight network, or 50,000 miles of track in 49 states, is operated by the industry’s 550 short line and regional railroads. According to Richard Timmons, president and treasurer for the American Short Line & Regional Railroad Association, those railroads serve about 14,000 customers on a weekly or monthly basis, providing a sizeable portion of first-mile and last-mile freight movement. For the ethanol industry, small railroads connect to the main Class I railroad system to deliver grain to and to ship ethanol and distillers dried grains with solubles from ethanol plants.

During the past four years, the expansion of the ethanol industry has led to business opportunities for short line railroads, resulting in an expansion of the rail network, Timmons says. “These guys are putting in connecting track, they are building holding facilities, they are building blending facilities, and they are running out sections of track to connect to Class I railroads,” he says. “And so you’ve got this whole business of connecting to the plants and the ancillary facilities that go along with ethanol.” He says as short line railroads have increased car volumes, they have been able to use equipment more efficiently and have realized fuel savings. The railroads have also increased their payroll and interface more often with Class I carriers.

Along with network expansion comes new customers, “some of which may or may not be directly related to the ethanol business,” Timmons says. “Just the fact that these guys are expanding and have gotten increased visibility, they’ve got additional customers.”

Short line railroads and the ethanol industry were able to invest in infrastructure in large part, Timmons says, because of legislation passed in 2004, 2005, 2006 and 2008, which enacted and then extended a railroad track maintenance credit, covering 50 percent of qualified railroad track maintenance expenditures for Class II or Class III railroads or companies that furnish railroadrelated property to those railroads. “A lot of

ETHANOL PRODUCER MAGAZINE

the upgrades for the small railroad industry, and in particular for these ethanol guys, comes out of this federal tax credit,” he says.

“And it has hit at just the right time. The tax credit went into effect on Jan. 1, 2005, and that’s about the time that this groundswell of ethanol stuff was really bursting through the surface. These guys were able to tap into that for the past four years and we’ve got another year to go on it. We’re engaged here in Washington in trying to get that into [some legislation] so we can extend it for a couple more years, because when you talk about upgrading these tracks and these facilities, it’s a very, very important thing to do.”

“This has got nothing to do with payroll,” he continues, “this is for equipment. This is for railroad infrastructure. This is for getting the railroad up to 286,000-pound axle weight cars.” As of press time, the tax credit was set to expire at the end of this year.

Even with the tax credit in place, however, Timmons says railroads have invested with caution. “From a funding standpoint, short line railroads have been very particular in what they have jumped into the middle of,” he says. “Two or three years ago, there was this mad rush to get money to build ethanol facilities [and] one of the best ways to tap in to this thing was to get short line railroads on your property, especially short line railroads that had a couple of different connections.

There were a number of forecasted facilities that were either partially built, or never got off the ground, and that was sort of an issue for the small railroads.”

Timmons says some ethanol plants were completed with inadequate rail infrastructure. “You had a number of track configurations around ethanol plants, maybe done by legitimate railroad contractors, but they really didn’t understand the ethanol operation or the railroad’s requirements, and so you had some inefficient track layouts that either later had to be modified or curtailed the productivity of the plants. [But] other than some design headaches related to the plants, upgrading the infrastructure and getting that to mesh with the Class I railroads has not been a real obstacle.”

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TRANSPORTATION

PHOTO: IAIS

Continued from page 96

A new IAIS locomotive pulls a unit train of ethanol along its line.

98

ethanol plant in Council Bluffs. IAIS also serves Renewable Energy Group Inc.’s 30 MMgy Central Iowa Energy LLC biodiesel plant in Newton.

There are 3,969 miles of track in Iowa. According to the Iowa Department of Transportation Office of Systems Planning, Class I railroad service in Iowa has declined from nine carriers in 1985 to four. The number of Class III railroads has remained steady at 12 and the number of Class II railroads has increased from one to three. The Class II and III railroads account for 35 percent of track mileage in Iowa, but only 9 percent of ton-miles and 13 percent of freight revenues. The number of cars pulled per locomotive in Iowa increased from an average of 23 cars in 1985 to 32 cars today.

With 20 percent of its traffic hauling ethanol and DDGS from plants along its line, the IAIS is significantly invested in ethanol, according to Dennis Miller, president and chief executive officer for IAIS. “Iowa Interstate has seen a lot of growth in that area over the past three or four years,” Miller says. “We have hauled ethanol here out of Cedar Rapids for over 20 years, but the past three or four saw some new plants being constructed on our line. What we have seen is, rather than these things moving in carload lots, we’re moving more unit trains of ethanol to destination. Those are 80-car, 110-car units going to California, New York and New Jersey. It has been a pretty good traffic boost for us. And you’ve got the DDGS on top of that.”

Miller says IAIS hauls most of its unit trains to Chicago but occasionally, the railroad gives up its tank cars at Rock Island, Ill., to travel via the Burlington Northern Santa Fe Railway Co. to California. He says the increase in ethanol unit trains necessitated the purchase of new locomotives. “We had about 40 older

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April 2009

locomotives in pretty good shape,” he says, “but we had to put four or five of those locomotives on a train to haul it. We did an analysis about two years ago to try to figure out what we were going to need once all of the [new] ethanol business comes on line.

“If we wanted to continue [using older equipment], then we would probably end up with about 70 locomotives. That’s a lot of fuel consumption, oils, lubricants and maintenance people and so we weighed that against purchasing brand new, fuelefficient, EPA-compliant locomotives with higher horsepower and the latest and greatest technology. It benefits us to go with the newer locomotives, because we have fewer of them and pull more tonnage using less fuel. It was kind of a no-brainer at that point. It’s kind of unusual for a railroad our size to do that, but it’s paying off so far.”

Before the ethanol boom, whatever corn wasn’t used locally by food processors or feeding operations was trucked to the local grain elevator to be shipped by rail to distant national and international markets. But nowadays, more farmers are bypassing the elevators. While IAIS has experienced an increase in ethanol and DDGS traffic with the expansion of the ethanol industry, the railroad has experienced a decline in grain shipments. “A lot of farmers are trucking their grain directly to the ethanol plant,” Miller says, “but the one has kind of offset the other.”

The IAIS has daily service to Cedar Rapids over the Cedar Rapids & Iowa City Railway Co. (CIC), which operates 25 miles of track between Cedar Rapids and Iowa City, Iowa.

The CIC has direct connections with IAIS and also the Iowa Northern Railway Co. which operates 163 miles of track from Cedar Rapids to the Manly Terminal ethanol terminal near Manly, Iowa. As the source carrier for the 420 MMgy ADM ethanol

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PHOTO: IAIS

TRANSPORTATION

IAIS based in Cedar Rapids, recently purchased 12 new 4,400-horsepower General Electric ES44AC Evolution Series locomotives, which have allowed the railroad to increase train lengths, tonnage and operating speeds in its service to ethanol plants along its line.

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TRANSPORTATION

plant in Cedar Rapids, the CIC, too, has had to upgrade its infrastructure and equipment in anticipation of ADM’s 275 MMgy expansion there. The expansion is expected to come on line in 2010.

“We’ve kind of revamped our locomotive fleet in the anticipation of pulling longer unit trains,” says Jeff Woods, marketing manager for Alliant Energy Corp., the parent company for the CIC. “We’re investing a lot of capital to facilitate the connection with Iowa Interstate. We’re spending a lot of money on our main line, installing over

the past two years a lot of continuous welded rail, which is a first for us. We’re spending a few million dollars in our yards, extending leads and whatnot, and hope to increase our interchange track.”

On the Receiving End Short line and regional railroads that serve ethanol plants aren’t the only ones upgrading their operations to accommodate ethanol. At the other end of the line, the Knoxville & Holston River Railroad (KXHR), which operates 20 miles of track

in the Knoxville, Tenn., area, has set up a rail-to-truck transloading facility in Knoxville to accommodate the delivery of ethanol. The railroad has built a new siding on the line, which included installing 500 feet of track pans to catch possible spills, purchasing firefighting equipment and alcohol-resistant foam, and grounding the track to prevent fires in the event of static discharge or lightning strikes. “We’ve had to become much more cognizant of handling hazardous materials,” says Peter Claussen, vice president of asset management for Gulf & Ohio Railways Inc., the parent company for KXHR. Claussen said KXHR transloaded its first tank car of ethanol in November 2007. “We have done probably close to 500 since then,” he says. “It has been a significant improvement in our business at a time when a lot of the other stuff is sort of tapering off.”

Invested in Ethanol The ethanol industry has affected the fortunes and expenditures of short line and regional railroads at both ends of the line.

“We’ve been rebuilding our railroad very heavily the past five years,” Miller says of IAIS. “We’ve hired quite a few people in the past year or two, as well, trying to get them geared up and trained so that we’re prepared to handle the volume. We’ve laid down a lot of new welded rail, a lot of new ties and ballast, and we’ve added probably four miles of new railroad, track sidings and places to store this stuff. We’re basically adding capacity and getting prepared for 2010 when we expect another big influx of traffic.

I guess the way we look at it is: there is a mandate out there for ethanol and the plants on our line are pretty solid. Hopefully, we can bank on that.” EP Ryan C. Christiansen is an Ethanol Producer Magazine staff writer. Reach him at rchristiansen@bbiinternational.com or (701) 373-8042.

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ENVIRONMENT

Coming Clean Whether, and to what extent, businesses should disclose climate change risks in their U.S. Securities and Exchange Commission filings is gaining the attention of a number of stakeholders, including those in the ethanol industry.

By Bryan Sims

Pictured is the U.S. Securities & Exchange Commission headquarters in Washington, D.C. PHOTO: KEVIN ROCHE JOHN DINKELOO AND ASSOCIATES LLC

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ENVIRONMENT

P

ublicly held ethaThis backdrop Despite the uncertainnol companies of regulatory uncerty regarding regulation, the must not allow tainty has delayed inmajority of global compapreoccupation vestment decisions nies are acting to reduce with the economic crisis to and prompted senior GHG emissions, according distract them from the immanagement to call to a report released in Sepportance of focusing on clifor greater visibility on tember by the Carbon Dismate change risk disclosure climate change related closure Project. The CDP Lynch Brown through the U.S. Securities policy to better anticiincludes exclusive data and Exchange Commission, according pate the impact of regulation-driven from 1,550 of the world’s major comto securities lawyers. carbon markets. panies on GHG emissions and climate Attorneys who specialize in cli“It’s one of those great un- change related strategies. According to mate change litigation say pressure knowns,” says Greg Lynch, managing the CDP report, 74 percent of public is mounting for public companies to partner for Michael Best & Friedrich companies are now reporting emisreport climate change risk and how LLP’s Madison, Wis., office. “I think sions reduction targets, an indication it might affect their businesses in the potentially, ethanol companies could that climate change mitigation meaSEC Regulation S-K. With green- benefit because if they do a whole life- sures are being taken seriously. house gas emissions (GHG) reduction cycle analysis, given that they’re using “It’s not that you talk about climate change exclusively,” says C. Baird Brown, a partner in the business and finance department and a member Seventy-four percent of public companies are now reporting of the energy and project finance emissions reduction targets, an indication that climate change group for the law firm Ballard, Spahr mitigation measures are being taken seriously.

Andrews & Ingersoll LLP. “The real question is, is this one of the risks to my business model that I should be disclosing and could it affect my firequirements already under a micro- renewable bioproducts, they certainly nancial standing with the company? scope in industries outside the ethanol have a much better carbon profile than Clearly, anything that has a significant sector, how might this directly affect gasoline so there could be a benefit, impact on your business model needs publicly held ethanol producers and especially for those companies that to be reported to the SEC if you’re a their current reporting procedures and capture and sell their carbon dioxide public reporting company.” requirements to the SEC? emissions for credits voluntarily.”

To navigate through potential le-

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gal issues, it’s important that public ethanol companies understand what and how to report to the SEC, and understand the reporting items, whether voluntary or involuntary.

Reporting Requirements Although the SEC doesn’t explicitly address climate change related disclosure, items 101 (Description of Business), 103 (Legal Proceedings) and 303 (Management Discussion and Analysis of Financial Condition and Results of Operations) of Regulation S-K may trigger reporting requirements.

As currently written, item 101 requires the disclosure of the “material effects that government regulations or probable regulations would have on the company’s business, including material costs of complying with environmental laws and, in the case of companies in the renewable energy or energy efficiency sectors, increased demand for products and services …,” according to the SEC. Item 103 requires disclosures regarding any material pending legal proceedings out of the ordinary course of business and proceedings known to be contemplated by governmental officials relating to environmental compliance.

Item 303 requires a company to

disclose “information necessary to an Outside Influences understanding of its financial condiIn September 2007, a coalition of tion, changes in financial condition environmentalists, institutional invesand results of operations,” including tors and state investment officers led any known trends, demands, commit- by CERES (an alliance of environmenments, events or uncertainties tal groups, investors and affecting liquidity, capital reother public interest groups sources or results of operaand the Environmental Detions in a material fashion refense Fund), state officials, lating to climate change. investment advisers and inAccording to Brown, the stitutional investors, who focus of these requirements collectively managed more is the materiality threshold, than $1.5 trillion in assets, which the Supreme Court depetitioned the SEC for “an Eustermann fined broadly as the importance interpretive release clarifyof the information to the “reasonable ing that material climate-related inforinvestor” in light of the total informa- mation must be included in corporate tion available. disclosures under existing law.”

Public companies are in a bind The coalition also urged the SEC because the SEC doesn’t explicitly ad- to begin examining the adequacy of dress climate change related disclosure registrants’ financial disclosures rerequirements for reporting procedures. garding climate change. In June 2008, This lack of clarity has sparked trends the same coalition filed a supplemenin itemized reporting to the SEC. As tal petition with the SEC, discussing a result, a spate of activity aimed at developments since its initial petition increasing disclosure of GHG emis- and reiterating its request that the SEC sions information and risks may mo- develop interpretive guidance. tivate public companies to analyze Major institutional investors and more closely the risks associated with state enforcement officials have also climate change. pressured the SEC. The question now is whether the SEC will respond to these petitions. According to John Eustermann, an attorney with Stoel Rives

ENVIRONMENT

LLP, disclosure guidance on specific environmental issues has not been the SEC’s practice in the past. “The SEC has basically taken the position saying that there are trends,” he says.

“They’re legitimate trends, but they’re not specific. I think what the SEC is going to say is that it probably bodes well for companies to include, to the extent that they can, some form of disclosure in the risks, in other words, the risks to the investment.”

Preparing for a Carbon Market As ethanol producers understand the need for a carbon market to firmly take shape—and soon, they are constantly on the lookout for effective and relatively inexpensive ways to reduce their carbon footprint should the federal government enact a cap-andtrade system. This may prompt the industry, where it could compete with other industrial sectors, to earn carbon credits instead of buying them.

Regardless of whether the SEC responds to the petitions it has received, the question remains: How can ethanol producers be better prepared for a mandatory cap-and-trade system? The consensual advice by climate change lawyers is to begin preliminary audits on the ethanol plant. This will save time, money and resources in the long run, if and when the new presidential administration adopts GHG reduction laws at the federal level. This tactic is prudent because it will protect investors who have a significant stake in the plant, according to Brown.

“In terms of reporting, I would say that you want to report what your carbon footprint is and what you think the impact of having that footprint under a coming regulatory scheme will be on your business model,” Brown says. “Second, I would address—if there is anything to address—what actions could be taken to change that footprint.”

Drafting disclosures regarding climate change risk can be challenging for any ethanol company, public or private, given all of the uncertainties surrounding climate change and the scope of financial risk to a particular company as a result of climate change.

According to Eustermann, much of the ambiguities on what to report stem from the subjective definition of climate change. Either way, producers must consider becoming more proactive and aware of climate change risk in their disclosure filing to the SEC. “To not acknowledge [climate change risk] at all would probably not be the recommended action to take,” he says. EP Bryan Sims is the Ethanol Producer Magazine staff writer and plant list manager. Reach him at bsims@ bbiinternational.com or (701) 738-4950.

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INDUSTRY

RIN Credits, Ethanol Blending and the

800-Pound Gorilla Renewable energy credit prices are on the rise as ethanol blend economics remain poor and the year-end reporting date looms. EPM talks with Clayton McMartin, president of Clean Fuels Clearinghouse, about renewable identification number credits, industry consolidation, and the oil industryâ&#x20AC;&#x2122;s 800-pound gorilla, Valero Energy Corp., which can no longer be ignored.

By Ron Kotrba

ILLUSTRATION: SAM MELQUIST, BBI INTERNATIONAL

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ETHANOL PRODUCER MAGAZINE

April 2009

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T

he 800-pound gorilla in the room finally announced itself in early February. For months, speculators have been trying to figure out which ethanol companies will buy out which ethanol plants during this period of crushing economic recession and potential ethanol industry consolidation. Aside from food companies, what other industry made record profits in 2008 and could logically purchase distressed ethanol production facilities? The oil refiners— they who are obligated to blend ethanol into their supplies as mandated under the federal renewable fuels standard (RFS). On Friday, Feb. 6, VeraSun Energy Corp. “took out the trash”—that’s public relations lingo for releasing bad news on a Friday, with the understanding that there will be little coverage of it until at least Monday. The same day, VeraSun issued a press release titled, “VeraSun Energy Obtains ‘Stalking Horse’ Bid From Valero for Five Facilities; Files Motion Seeking Authority to Sell Substantially All Assets by March.”

According to Bill Day, corporate spokesman for Valero Energy Corp., the oil refiner’s 2008 overall production averaged 1.19 million barrels per day of “gasoline and related blend stocks” equaling roughly 18.2 billion gallons a year. The U.S. EPA has declared that this year’s RFS is 11.1 billion gallons, which equals 10.21 percent volume ethanol blend requirement for each of the obligated parties. Assuming Valero’s 2009 gasoline production projections are similar to its 2008 production its share of the 10.21 percent would come to about 1.9 billion gallons of ethanol blending in 2009.

Valero could purchase renewable identification number (RIN) credits to satisfy its obligation. If the oil refiner were to only purchase RINs to satisfy its RFS obligation and blended zero ethanol into its supplies—an unrealistic scenario but interesting to entertain, nevertheless—figuring a historically high RIN credit price of 15 cents per

credit, the oil refiner could pay $285 million in RIN credit accumulations to satisfy its obligation for 2009. Instead, Valero proposes to pay $280 million for capital assets that, year after year, will continue to help it internally meet obligations under the RFS. It is also interesting to note that the five VeraSun plants in question have a cumulative nameplate capacity of 560 MMgy, which could satisfy between a quarter and a third of Valero’s ethanol blending obligations for 2009. The five ethanol plants at $280 million with a 560 MMgy cumulative production capacity could amount to the oil company paying only 50 cents per installed gallon of production capacity.

The RFS, RINs and Ethanol Industry Consolidation There are some important things to remember about the RFS before getting into RINs, or the government’s mechanism to keep track of how much renewable fuel is being blended into U.S. fuel supplies for domestic consumption to meet the RFS, and the state of U.S. ethanol production. First, the RFS is a floor, not a ceiling—it’s the minimum volume obligated parties must blend into U.S. gasoline supplies. During spells of weak economics, however, that floor may act as a ceiling. Second, there is a distinction between U.S. installed capacity, actual U.S. production and consumption by obligated parties to satisfy the federal mandate.

Installed capacity will always be greater than or, at best, equal to actual production. As far as the RFS is concerned, consumption by obligated parties to satisfy the mandate includes consumption of domestic product produced, plus net imports of ethanol, or the delta between exports and imports, plus the change in ethanol stocks at the end of a given period. According to data gathered by BBI International’s Staff Writer and Plant List Manager Bryan Sims, 32 U.S. ethanol plants rep-

wabash

ETHANOL PRODUCER MAGAZINE

April 2009

INDUSTRY Ethanol Production Production 7,540

Net Imports 487.5

Stocks 638.1

Stock Change 196.7

Consumption 7,837

Totals from January 2008 to October 2008 Figures in millions of gallons SOURCE: ENERGY INFORMATION ADMINISTRATION

resenting 2.02 billion gallons of annual production capacity are currently idled.

This phenomenon, coupled with poor ethanol blend margins—meaning the price of ethanol and the price of gasoline are so close that any economical benefit blenders would see by blending the cheaper ethanol have been minimized—along with the 2008 year-end reporting deadline approaching quickly on Feb. 28, 2009, have together caused RIN prices to skyrocket.

“The price of RINs is going up because it’s more favorable to the obligated parties to place RINs in order to satisfy their obligations directly as opposed to the RINs they would get through blending,” says Clayton McMartin, president of Clean Fuels Clearinghouse and the renewable fuels registry, RINSTAR. In late January, RIN prices hit 16 cents per credit, up from just a couple of cents at the beginning of the year. “There are some people who are coming to the game late, and are just now starting to understand what their obligations are under the regulations,” McMartin continues. “Consequently, they’re out there scrambling trying to find RINs, but there is less ethanol being put into the marketplace right now so, as a result, the RINs that are out there are fetching a higher price.” Some of the latecomers buying up RINs in January and February 2009 are doing so to apply them to their 2008 obligations. But obligated parties can also carry a deficit forward for one year without penalty. With 32 ethanol plants idled, and some that are producing under capacity, stocks or inventories are lower. Until inventories are back up, McMartin doesn’t see RIN prices dropping.

ETHANOL PRODUCER MAGAZINE

But with 10.5 billion gallons of installed production capacity still in operation (likely producing well under nameplate capacity), and with 2.02 billion gallons of installed production capacity idled, without even considering capacity under construction there is fear that the industry is overbuilt versus the mandate. McMartin, with years of experience in the oil business, says consolidation is coming to the ethanol industry. “The first 14 years of my career—and I’ve been at this for 20 some years—was spent in the refining industry, and when I started, the oil refining industry had twice as many refineries as it has today,” he says. “And today those refineries produce more product than what was produced by twice as many refineries years ago. The ethanol industry has now entered into a period when consolidation is coming—it’s overbuilt.” From the perspective of the obligated parties that must blend ethanol or buy RINs, an overbuilt ethanol industry is desirable because ethanol and RIN prices would remain low. For ethanol producers, however, consolidation would mean stronger ethanol prices and a healthier industry long term.

“When you’re in a consolidation period, which is what the ethanol industry is now in, you’ve got hardware on the ground and ultimately it will be utilized, but it won’t be used by the same people who are on the title today,” McMartin says. “They’re going to recapitalize and we’re already seeing some of that.” He says the phenomenon of major oil companies purchasing distressed renewable fuel assets is inevitable. “This is classic consolidation and it will change the complexion of

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the renewable fuel industry forever,” he tells EPM. “Refiners—and especially Valero—have been in this mode for the past 25 years. Check out the history of Valero—they are the poster child of mergers, acquisitions and consolidation. They are in the energy business. And when you can buy assets for 10 cents on the dollar, it just makes sense.”

Finagling RINs: Not Just an Accounting Function The quickest way to improve blend economics would be to raise the cost of crude oil, but hoping for higher crude oil prices seems counterintuitive. “Isn’t the objective of the RFS for us to replace crude oil in the United States with renewable fuels?”

McMartin poses. “That’s happening today but it’s not being reported.”

He says two major factors are driving down the cost of crude oil. “One is we’re approaching having renewables constitute 10 percent of our motor fuels use,” he says. “And the other, of course, is the downturn in the economy; but the downturn in the economy just accelerated what was intended to happen from the RFS.” Displacing petroleum means less of a demand for crude oil, so how is more crude oil

112

put it in for consumption, put into the marketplace? By the RIN becomes a tradable lowering the price. “So oil is credit known as a separated going to go down, and it will RIN,” he says. Assigned continue to go down so long RINs are different in that as renewable fuels use goes up,” he says. “If you’re a rethey follow the fuel all the way from the point of pronewable fuel producer you duction through the supply do one of two things. You McMartin chain to consumption; for learn to compete at a lower margin—and like I said, the ethanol assigned RINs, the credit is not moved industry is going through a consoli- independently from the fuel.

“What’s not very well understood dation period now—or you somehow figure out how to monetize the asset is that fuel can move without RINs, that you’re generating. And that asset so a gallon of ethanol can move with that you as an ethanol producer are zero RINs and up to 2.5 RINs,” he generating is the renewable fuel credit says. “So if I have a customer who known as a RIN. Most producers just wants to take two RINs and is willing to pay me more for them than the cushaven’t recognized that.”

The RIN-Master as McMartin is tomer who I end up selling zero RINs sometimes referred to, says he is see- to, I keep my RINs moving to the ining an active market for RINs form- dividual in the marketplace who’s willing right now. “I’m talking about RINs ing to pay me more for them. That’s with fuel and RINs without fuel,” he what producers should give real serisays. “We’re starting to see premiums ous consideration to doing—but they placed in the marketplace on fuel with don’t. Because they move them one for one, they produce them and they RINs versus fuel without RINs.” For each gallon of ethanol pro- move them.”

The general manager for Comduced domestically or imported into the United States, a RIN is generat- monwealth Agri-Energy in Hopkinsed. “EPA wanted to ensure the RIN ville, Ky., Mick Henderson, tells EPM, moved through the supply chain and “We feel that RINs are always bought then, when it got to the end just at the with the ethanol,” he says. “Even the point before the consumer took it and smallest jobbers have figured out the

ETHANOL PRODUCER MAGAZINE

April 2009

INDUSTRY

value of RINs. If they did consider the idea [of moving ethanol with or without RINs], they would undoubtedly bid the ethanol down to a price that would negate the sales value separate anyway. Therefore we don’t see any positive impact for our business, RINs or without.” McMartin says a lot of ethanol plants look at RINs this way, a point of view he says is shortsighted. “You can lead a horse to water but you can’t make it drink,” he says. “If an ethanol producer is going to take control of their product in the marketplace, then this is where they would do it.”

The ability to move from zero to 2.5 RINs per gallon of ethanol gives producers latitude in commercial consideration, which EPA intended all along. “As long as the RIN moves through the system, EPA doesn’t care how it goes,” McMartin says. “They want it to go where economics drive it.”

Valero’s director of regulatory compliance, John Braeutigam, tells EPM that, while he can’t talk about the VeraSun deal or Valero’s business strategy, he says that he doesn’t view the RFS or RINs as necessary evils. “We’re just following requirements set out in regulations,” Braeutigam says. EPM asked him how a refinery would maximize its ownership of ethanol production facilities. “If a company is just an ethanol producer, then there are limited circumstances where they can sell ethanol without RINs,” he says. “Refiners or importers can separate RINs from fuel, and rack blenders can also separate. If an oil refiner had more ethanol plants than they needed and generated more RINs than they needed as an obligated refiner, they would have to sell the rest.”

McMartin speculates as to how Valero might best utilize in-house

ETHANOL PRODUCER MAGAZINE

ethanol production. “It depends on a lot of things, such as how it handles the entity—will it be part of Valero or a separate wholly owned company,” he says. “Also it depends on other ethanol supplied to Valero, since there are limitations under the regulations as to what an obligated party can do with its own production. In the end though, Valero will maximize the assets within the confines of the regulations. You can bet your last dollar that Valero will have ethanol for sale both with and without RINs.”

April 2009

With 32 ethanol plants idled and some producing under capacity, McMartin says ethanol stocks are being reduced and, until inventories are replenished, he doesn’t expect RIN prices to let up. EP Ron Kotrba is an Ethanol Producer Magazine senior writer. Reach him at rkotrba@ bbiinternational.com or (701) 738-4942.

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FERMENTATION. BY PATRICK HEIST Contribution

Identifying, Controlling the Most Common Microbial Contaminants Microbial contamination is a significant concern for fuel ethanol producers.

Proper cleaning guidelines and control strategies will help avoid potential yield losses and the production of unwanted organic acids.

B

acteria that contaminate fuel ethanol plants are referred to as lactic acid bacteria as they produce various organic acids including lactic and acetic acidsâ&#x20AC;&#x201D; the primary indicators of bacterial contamination. Lactic acid bacteria are further subdivided based on their ability to produce one or more organic acids (homo- versus heterofermentative).

Bacterial contamination often occurs due to inadequate cleaning or impediments to process flow (heat exchanger blockages, tools and other items in the piping, and biofilms, among others). Because fermentation is an anaerobic process, these bacteria are most often either anaerobic or facultative anaerobes, although there are some

aerobic bacteria that can cause problems in other areas such as the propagation tank or the beer well. These bacteria enjoy lower pH levels (less than 5) than most other bacteria, grow well under fermentation conditions and compete with yeast for nutrients conditions and fermentable sugars resulting in reductions in ethanol yield, among other things.

These bacteria are typically gram positive rods. However, gram positive cocci as well as various gram negative bacteria also have the potential to cause contamination of grain-based fermentations. Proper sanitation and implementation of a rotational antibacterial control strategy are important for preventing bacterial contamination and emergence of resistant bac-

terial strains. It is also important to remember that certain species of yeast can also lead to contamination problems and yield losses. Here we discuss some of the most common microbial contaminants of the fuel ethanol production process as well as any unique features and methods for control and prevention.

Lactobacillus Species Lactobacillus species are gram positive, rod-shaped bacteria and are among the most prevalent bacteria known to contaminate fuel ethanol plants.

They are found throughout the environment and are present on various grains including corn.

Several species of Lactobacillus have been isolated from contaminated fermentors. Some of the most common Lactobacillus

species include L. fermentum, L. brevis and L. plantarum. These bacteria generally respond well to each of the different antibacterial products on the market, but can lose their sensitivity if cleaning and other facets of sanitation are not strictly followed.

Weissella species, formerly classified in the genus Lactobacillus, are also commonly isolated from grain-based fermentations and include Weissella confusa among others.

Pediococcus Species Pediococcus species are gram positive cocci (spherical) and often arranged in pairs or tetrads (packets of four). These bacteria are significant contaminants of grain-based fermentations and have the potential to cause major yield losses. Due to their unique

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

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cell morphology compared to more prevalent gram positive rods such as Lactobacillus species, Pediococcus can be easily differentiated and identified using simple microscopy. Pediococcus species are resistant to most commonly used antibacterial products such as virginiamycin and penicillin, but are controlled at low concentrations using other products developed specifically for their control.Pediococcusacidilacticiand P. pentosaceus are the most commonlyisolatedPediococcusspecies from fuel ethanol plants.

Other Gram Positive Bacteria Various other gram positive bacteria have been isolated from grain-based fermentations and include Enterococcus species such as E. faecium, E. faecalis and E. durans. These bacteria are found normally in the intestinal tracts of humans and other mammals and likely get into the fuel ethanol production process through sump water. Keeping the floors clean and the plant free of rodents helps prevent introduction of these bacteria.

Enterococcus species are notoriously resistant to antibacterial products, but there are options for their control available to fuel ethanol plants.

Acetobacter Species Acetobacter and related bacteria such as Gluconobacter species are gram negative rods and are commonly found in grainbased fermentations. Because these bacteria are strictly aerobic they are often limited in ethanol plants to areas like the propagation tank and beer well (although the beer well is often anaerobic due to high levels of carbon dioxide, it is a common place for isolating these bacteria).

Acetobacter and related species usually have a mucoid appearance when growing on agar and characteristic tan- to browncolored translucent colonies. A common misconception is that elevated acetic acid levels are an indicator of Acetobacter contamination.AlthoughAcetobacter species are known producers of acetic acid, elevated acetic acid levels without corresponding lactic acid is more likely to be an indication of yeast stress (Saccharomycescerevisiae,theyeast used for fuel ethanol production also produces acetic acid). These bacteria are resistant to several commonly used antibacterials, but there are options available to ethanol plants for controlling these microbes. Another interesting fact about Acetobacter species is that they can use ethanol as a carbon source, resulting in acetic acid production.

Other Gram Negative Bacteria Other gram negative bacteria commonly isolated from grain-based fermentations include members of the family Enterobacteriaceae. These bacteria are rod shaped and are typically longer than Acetobacter and related species. These bacteria are facultative anaerobes meaning they can grow either aerobically or anaerobically (with or without oxygen). These bacteria are known to ferment glucose and are negative for the enzyme cytochrome oxidase, a test used to differentiate them from other morphologically similar bacteria. Examples of bacteria in the family Enterobacteriaceae isolated from contamination events at fuel ethanol plants include Klebsiella, Escherichiacoli and Shigella species. As normal inhabitants of the intestinal tracts of hu-

ETHANOL PRODUCER MAGAZINE

April 2009

mans, other mammals and birds, these bacteria gain access to the system through sump water.

For this reason it is important to keep the floors clean and the grounds free of small rodents and birds to prevent introduction of these bacteria.

Wild Yeast Wild yeast refers to any yeast species including S. cerevisiae that was not intentionally put into the fermentation process. These organisms cause problems primarily in ethanol plants utilizing the continuous process, but are also found in batch plants. Wild yeasts such as Dekkera species can produce organic acid byproducts including acetic acid and have the potential to cause significant yield losses. Because wild yeasts are eukaryotic organisms and different from bacteria, they are not affected by antibacterial products available for bacterial control. Thorough cleaning is the best way to prevent introduction and proliferation of wild yeast.

Detection, Prevention and Control High performance liquid chromatography is one of the best ways to detect bacterial contamination. Elevated lactic and/ or acetic acid (0.3 percent and 0.05 percent, respectively) is the most obvious sign of a bacterial contamination event. Increased residual glucose and decreased ethanol yields may also occur.

The first line of defense for preventing bacterial contamination is through intensive cleaning. Making sure your caustic solution is at the proper concentration, temperature, and flowing through the system at the appropriate pressure is imperative for adequate cleaning. Another

requirement for proper cleaning is to make sure the caustic flows through the system for the proper amount of time. Together these different components are referred to as the four Ts of cleaning: time, temperature, turbulence and titration.

Sulfamic acid is commonly used as a solvent to clean heat exchangers and for removal of biofilms. Routine review of all cleaning practices and associated equipment (e.g., pumps and sprayballs) is recommended for maximum effectiveness. Secondary to cleaning is the use of antibacterial products, developed specifically to control bacteria in fuel ethanol plants.

These products, each with a different site of action and spectrum of activity, are very selective for bacterial toxicity at very low concentrations and do not affect the yeast at recommended doses. Modes of action for antibacterial products used in fuel ethanol production include inhibition of cell wall (peptidoglycan) synthesis and inhibition of protein synthesis at the level of the bacterial ribosome.

Conclusion In summary, microbial contamination is a significant concern for fuel ethanol producers due to potential yield losses and production of unwanted organic acids. By following proper guidelines for cleaning and sanitation as well as using a rotational antibacterial control strategy, contamination can be kept to a minimum while maximizing ethanol yields and return on investment. EP Patrick Heist, Ph.D., is chief scientific officer for Ferm Solutions Inc. Reach him at eheist@ ferm-solutions.com or (859) 4028707 93

EQUIPMENT. BY JOSH BAKER Contribution

Design Guide: Safe, Efficient Loading Racks

D

esigning and constructing a loading facility can be a daunting task for a project manager without the added pressures of designing the rack to meet safety requirements and improve efficiency to increase the bottom line.

Many find themselves deep in this dilemma Baker and look for a place to turn for guidance. The following article is intended to help prevent the mistakes others have

made. The ability to save time and money on a project is becoming increasignly important in today’s rocky economy.

Designing a cargo-handling structure is often considered a minor part of the total handling system. However, the result of a poorly designed structure can be costly in terms of initial capital costs, long-term operating costs, and costs for future modifications. The initial phase of design is to identify the needs from an operational view. This would take into consideration the vehicles to be accessed, the workers needing access, and the tasks to be performed once access is gained.

SOURCE: CARBIS INC.

Don’t follow the one-size-fits-all approach to ethanol loading racks or corn delivery systems.

Increase profits while providing workers safe access.

The wide variety of vehicle shapes and sizes determines access equipment.

Vehicles Type, Use Determining the vehicle or vehicles which may be loading out ethanol or unloading feedstocks in will help identify the proper solution to fit the need. A

main misconception in safety access equipment is the “standard application thinking.” There is no one-size-fits-all, standard solution to meet all needs. Every project has its own unique situa-

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).

94

ETHANOL PRODUCER MAGAZINE

April 2009

SOURCE: CARBIS INC.

Solutions for tight spaces within a facility may include drive-under platforms that make better use of allotted space.

tions and problems that must be carefully considered before proposing a solution to solve them.

Differences in the height, width, length and maneuverability of the vehicle can pose potentially deadly results if not fully considered.

Safety and loading equipment will only function properly in given parameters. Outside of the design parameters, this equipment becomes ineffective and potentially dangerous, depending on the situation.

Identifying the type of vehicle used in the current operation is important, but what about the potential for change? Involving plant management, operations management and the transportation company could prove useful in developing a risk factor for the potential of change.

While planning for change may add some additional costs, what is the cost of a failed project if

the vehicle dimensions change?

The next step is to understand how the vehicle will access the loading facility. Will it be a tank truck pulling alongside, a barge positioned at a dock, a railcar being positioned by the rail company, or will the loading facility leave little room for maneuvers and errors? The ability to move into position and exit the area quickly improves the efficiency and throughput of the operation.

Workers, Operations Once the vehicle is in position, consideration for the number of workers needing access and the location of the required access is the next hurdle. A solution for a single worker to access a single hatch may prove ineffective or inefficient when the need to access multiple points arises.

Planning for the length of access needed and the number of

ETHANOL PRODUCER MAGAZINE

April 2009

workers on top at any given time will provide a solution that is cost effective and, most importantly, safe and efficient.

Workersâ&#x20AC;&#x2122; age and physical ability is yet another factor to consider in the design phase of your project. With the American workforce aging according to the Bureau of Labor Statistics, ergonomic issues also rise in importance with safety and efficiency. For example, a solution designed to be lifted with 40 pounds of force may be fast and easy for a 22-year-old male, but what about the same solution for a 50-year-old man or woman? Access systems powered by hydraulics, electricity and pneumatics provide speed and ease no matter which operator is on duty. While the ability to quickly put the system in place may seem minor, what would the increase in profits be if one to three more loads were able to leave or be dropped at your facility in the same amount of time?

Once the final decision is made on the vehicle application, the length of access, and the number and makeup of workers needing the access, the operations performed while on the vehicle must be considered. Will workers be loading, sampling, venting or unloading? Will there need to be multiple access points for different tasks, and is there potential for other workers to be present on the ground below the platform? Workers loaded with tools, hoses, breathing apparatus, and other job specific tools add weight and stress to access equipment.

The bulky materials being carried or used to perform their

tasks can become awkward and dangerous when the improper safety equipment is put in place.

Explaining the operations at the site to the designer and fabricator of the potential solution will help them design and propose a solution that will work in the operational setting in which it is to be applied.

Summary While this article is not a complete guide to designing the next loading facility, by considering the questions listed you will be able to develop a better idea of a solution for which you would be looking. On more than one occasion, it has been reported that a project has been installed, and months or even days later, a variable in the equation changes and the solution becomes almost completely useless. Solutions have been installed and operating without flaw, and the slightest change in height or width of a vehicle can cost a company thousands in repairs. Without addressing the problem, it could potentially cost a worker his/her life.

Taking time through the design phase and working with a company that will ask many questions that may at first seem inexperienced or even non applicable can prove to be the difference between a successful project and one that spells disaster either financially or physically.

With the bumpy economic times we all face, the ability to stay on budget and provide a successful solution is important. EP Josh Baker is with Carbis Inc. Reach him at josh.barker @carbis.net or (800) 845-2387.

95

EVENTS CALENDAR Energy Fuel Policy & Supply Summit April 5-7, 2009 Renaissance Washington, D.C., Hotel Washington, D.C. Attendees of this event will learn how energy policy is shifting under the Obama administration, what changes will occur once the latest renewable fuels standard is enforced, new concerns regarding the food-versus-fuel debate, and how to participate in carbon credit exchanges. Sessions will also cover the impact of cellulose and biomass on greenhouse gases, a refiner’s view of ethanol’s changing market role, and Brazil’s role in advanced biofuel markets.

(866) 620-5940 www.opisnet.com/altfuels

The Alcohol School March 30-April 3, 2009 Mercure Toulouse Atria Toulouse, France This week-long course will educate fuel-ethanol and distilled beverage producers in the science of alcohol production. The program will cover the ethanol production process from milling and mash preparation through fermentation and distillation. Enzyme usage, yeast biology, and 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.

(800) 583-6484 www.ethanoltech.com

Carbon TradeEx America April 7-8, 2009 Walter E. Washington Convention Center Washington, D.C. This event aims to bring together industry leaders, and technology and service providers in the carbon business. Agenda items will focus on the U.S. carbon market, energy and climate policies, carbon finance and trading, and capture and storage technology. In particular, one Emerging Opportunities session will address the switch to a low-carbon economy through biofuels, forestry and agricultural carbon offsetting strategies.

Advanced Biofuels Development Summit April 20-21, 2009 Marriott at Metro Center Washington, D.C. This event will bring together leaders of scientific innovations in advanced biofuels, including cellulosic ethanol. Preconference workshops will address the commercialization of advanced biofuels and the Obama administration; U.S. DOE renewable energy programs; USDA directions, policies and programs; biofuel development and coproducts; industrial biotechnology research and development; carbon cap and trade policies; and sustainability standards. Additional topics will include business models and strategies, financing, emerging feedstocks and process technologies, and international biofuels development.

(781) 972-1346 www.biofuels-summit.com

+44 (0) 207 220 5601 www.carbontradeexamerica.com

Apr

Mar

The Future of Biofuels April 4-8, 2009 Snowbird Resort Snowbird, Utah The goal of this meeting will be to share a broad perspective defining the critical needs for biofuels, and to highlight cutting-edge research and development efforts that are defining the next generation of biofuel product and process advances. This event will bring together a broad spectrum of core experts to help better enable and advance biofuel research efforts globally.

(800) 253-0685 www.keystonesymposia.org

Alternative Fuels & Vehicles National Conference + Expo April 19-22, 2009 Walt Disney World Swan and Dolphin Resort Orlando, Fla. This 14th annual event will represent all fuels, vehicles and technologies that provide an alternative to petroleum, including ethanol. Preconference sessions will address biofuels blends, government funding and incentives, and how to convert vehicles to run on alternative fuels. Breakout sessions will focus on local and state policies, and U.S. EPA regulations. There will also be a ride-and-drive event, industry tours, and niche market workshops focusing on government fleets, school buses, airports, transit and goods movement.

(702) 254-4180 www.afv2009.com

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Ethanol & Biodiesel Risk Management University April 27-29, 2009 Millennium Knickerbocker Hotel Chicago This three-day course will give attendees the tools to properly manage biofuels. Sessions will give insight into how gasoline and diesel markets operate, how and where to get top value for ethanolblended gasoline, and how the Obama administration will likely impact renewable fuels. A portion of the event will focus on how to quantify and control the differing risks for corn, natural gas, gasoline, and more.

(866) 620-5940 www.opisnet.com/ethbiomgmt

ETHANOL PRODUCER MAGAZINE

April 2009

International Fuel Ethanol Workshop & Expo June 15-18, 2009 International Biomass Conference & Expo April 28-30, 2009 Oregon Convention Center Portland, Ore. This event, sponsored by BBI International Inc., will focus on six major biomass sectors: crop residues; food processing residues; municipal solid waste, urban wastes and landfill gas; forest and wood processing residues; livestock and poultry wastes; and dedicated energy crops. In particular, cellulosic ethanol will be discussed in some of the crop residue and dedicated energy crop sessions. Attendees will also be able to tour the Summit Natural Energy Corp. ethanol plant in Cornelius, Ore.

Denver Convention Center Denver This will mark the 25th anniversary of the worldâ&#x20AC;&#x2122;s largest ethanol conference, which was recently recognized by Trade Show Week magazine as one of the fastest-growing events in the United States for the second consecutive year. The workshop will address conventional ethanol, next-generation ethanol and biomass. More details will be available as the event approaches.

(701) 746-8385 www.2009few.com

(701) 746-8385 www.biomassconference.com

May

Jun

Waste-to-Fuels Conference & Trade Show May 17-19, 2009 Hyatt Regency Mission Bay San Diego This second event will inform the public and private sectors of the economic and environmental benefits of converting waste materials to alternative fuels such as ethanol. Agenda topics will address the conversion of biomass, municipal solid waste and agricultural waste to fuel. Attendees will also have a chance to preview the newest advances in alternative fuel production products and services.

More information will be available as the event approaches.

Aug

Sept

Ethanol Conference & Trade Show Aug. 11-13, 2009

The Alcohol School Sept. 13-18, 2009

Milwaukee The American Coalition for Ethanolâ&#x20AC;&#x2122;s 22nd annual conference will highlight public policy, technology and education in regard to the ethanol industry, among many other topics. A more detailed agenda will be available this spring.

Montreal, Quebec This week-long course will educate fuel-ethanol and distilled beverage producers in the science of alcohol production. The program will cover the ethanol production process from milling and mash preparation through fermentation and distillation. Enzyme usage, yeast biology, and 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.

(605) 334-3381 www.ethanol.org

(800) 583-6484 www.ethanoltech.com

(800) 441-7949 www.waste-to-fuels.org

ETHANOL PRODUCER MAGAZINE

April 2009

97

EPM MARKETPLACE Ag Products & Services

Cleaning

Grain Origination Services

Dryer Systems

Agnetic, LLC 317-696-2824

Hydro-Klean, Inc. 515-283-0500

blog.agnetic.com

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Seneca Companies 800-369-5500

Hybrid Corn Pioneer Hi-Bred International, Inc. 800-247-6803 www.pioneer.com

Ductwork

Associations/Organizations

Hydro-Klean, Inc. 515-283-0500

Trade

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Emergency Spill Response

API Credit Exchange 202-682-8192

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Chemicals PhibroChem 800-223-0434

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Filter Media Hydro-Klean, Inc. 515-283-0500

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120

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Tank Cleaning Equipment Spraying Systems Co. 630-665-5000

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April 2009

EPM MARKETPLACE Professional Environmental Cleaning Services 402-212-0949 www.professionalECS.com Seneca Companies 800-369-5500

CYC Construction 402-333-1652

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Miller Insulation Co, Inc. 701-258-4323 www.millerinsulation.com Petrochem Insulation 707-644-7455

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Management Marcus Construction Company 800-367-3424 www.marcusconstruction.com

Mechanical

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/)( K_`i[ 8m\el\# Cfe^m`\n# N8 0/-*) *-'%+)*%,,(' nnn%a_b\ccp%Zfd Reimer Welding Inc. 218-773-0886

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Railroad Tracks R & R Contracting, Inc. 800-872-5975

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Railworks 913-888-4091

Fabrication Agra Industries, Inc. 715-536-9584

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W. Soule & Company 1-877-976-8531

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Tanks Mid-States Mechanical Services, Inc. 800-950-0279www.mid-statesmechanical.com

Agra Industries, Inc. 715-536-9584

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ATEC Steel 620-856-3488

Agra Industries, Inc. 715-536-9584

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Caldwell Tanks 502-964-3361

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WINBCO Tank Company 641-683-1855

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www.railworks.com

April 2009

121

EPM MARKETPLACE Natural Resource Group, LLC. 612-347-6789 www.nrg-llc.com

Iowa Biofuels Training International 641-969-4167 www.biofuelstraining.org

Pinnacle Engineering Inc. 507-280-5966

Iowa Lakes Community College 800-242-5108 www.iowalakes.edu

www.pineng.com

Seneca Companies 800-369-5500

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Feasibility Studies Harris Group Inc. 206-494-9422

www.harrisgroup.com

Management Services

Combustion Equipment Eclipse.Inc. 815-637-7213

www.eclipsenet.com

Computer Software

Employment Recruiting

dbc SMARTsoftware, Inc. 770-427-7633 www.dbcsmartsoftware.com

SearchPath of Chicago 815-261-4403 www.searchpath.com/chicago

Encore Business Solutions 204-989-4330 www.encorebusiness.com

The Richmond Group USA - BioEnergy Search Division

John Deere Agri Services 800-518-0472 www.johndeereagriservices.com

804-285-2071

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Engineering

Control Systems

Design/Build

FeedForward, Inc. 770-426-4422

Agra Industries, Inc. 715-536-9584

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Process Design Vogelbusch USA, Inc. 713-461-7374

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SoftPLC Corporation 512-264-8390

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Control Systems-Distributed www.vogelbusch.com

Equipment & Services Agitation Equipment ProQuip, Inc. 330-468-1850

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Air Pollution/Odor Control

Greenway Consulting,LLC 320-589-3085 www.greenwayconsulting.net

Plant Optimization Granatus Consulting, Inc. 218-773-0005 www.granatusinc.com Harris Group Inc. 206-494-9422

www.harrisgroup.com

Analytical Instruments

Delta Cooling Towers, Inc. 800-BUY-DELTA www.deltacooling.com

Gusmer Enterprises, Inc. 847-277-9785 www.gusmerbiorefining.com

Distillation Equipment

Perten Instruments, Inc. 801-936-8165

SRS Engineering Corporation 800-497-5841 www.srsbiodiesel.com

www.perten.com

Dryers-Fluid Bed

Blowers & Fans FlaktWoods 716-845-0900

www.flaktwoods.com

Robinson Industries, Inc. 724-452-6121 www.robinsonfans.com

Hurst Boiler & Welding Co., Inc. 800-666-6414 www.hurstboiler.com Rentech Boiler Systems, Inc. 325-794-5701 www.rentechboilers.com

www.harrisgroup.com

Education Iowa BioDevelopment 641-969-4167 www.iabiodevelopment.com 122

Cooling Towers

Boiler Systems

Project Development Harris Group Inc. 206-494-9422

Ceco Abatement Systems, Inc. 630-493-0624 www.cecoenviro.com/Abatement

Boilers-Reboilers Wabash Power Equipment CO. 847-541-5600 www.wabashpower.com

Littleford Day, Inc. 859-525-7600

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Dryers-Ring Barr-Rosin,Inc 630-659-3980

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Dryers-Rotary Drum Barr-Rosin,Inc. 630-659-3980

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Ronning Engineering Company, Inc. 913-239-8118 www.ronningengineering.com

Emission Monitoring Systems MonitorTech Corp.

866-682-6771

www.monitortechgrp.com

ETHANOL PRODUCER MAGAZINE

April 2009

EPM MARKETPLACE WIKA Instrument Corporation 888-945-2872, x5127 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

Moisture Analyzers www.wika.com

Insulator

Perten Instruments, Inc. 801-936-8165

Industrial Construction & Engineering 636-970-1650 www.ic-e.cc

Sartorius Mechatronies-Omnimark 800-835-3211 www.sartorius-omnimark.com

Laboratory-Equipment

Molecular Sieves Vaperma, Inc. 418-839-6989

www.vaperma.com

Laboratory-Outsourcing

Zeochem, LLC 502-634-7600

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SGS North America Inc. 281-479-7170 www.sgs.com/alternativefuels

Motors

Laboratory-Supplies

Trico TCWind, Incorporated 320-693-6200 www.tricotcwind.com

Perten Instruments, Inc. 801-936-8165

www.perten.com

Fermentation Monitoring ETS Laboratories 707-963-4806

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Fermentors ATEC Steel 620-856-3488

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CHATA Biosystems 877-246-2428

WINBCO Tank Company 641-683-1855

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customerservice@chatasolutions.com

Phenomenex 310-212-0555

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Filtration Equipment Fluid Engineering 814-453-5014

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Fractionation-Corn Buhler Inc. 763-847-9900

www.buhlergroup.com/us

Cereal Process Technologies 217-779-2595 www.cerealprocess.com Crown Iron Works 651-639-8900 FWS Technologies 204-487-2500

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MOR Technology, LLC 618-522-8324 www.mortechnology.com

Midwest Laboratories, Inc. 402-829-9877 www.midwestlabs.com

ISCO Industries 800-345-4726

Romer Labs, Inc. 636-583-8600

Robert-James Sales, Inc. 800-666-0088

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Trilogy Analytical Laboratory 636-239-1521 www.trilogylab.com

Carbis, Inc. 800-845-2387

Munters - Des Champs Products 540-291-1111 www.deschamps.com

Instrumentation Endress+Hauser, 317-535-2174 Perten Instruments, Inc. 801-936-8165

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Pressure & Temperature

SafeRack 866-761-7225

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Mapcon Technologies, Inc. 800-922-4336

WIKA Instrument Corporation 888-945-2872, x5127

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Pressure Vessels www.mapcon.com

Mills-Hammer CPM/Roskamp Champion 800-366-2563 www.cpmroskamp.com

Millwright

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Process Control Harris Group Inc. 206-494-9422

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Pumps www.agraind.com

Mixers KINEMATICA, INC. 631-750-6653

Pipe-Fittings

Pipe-Flanges

Hemco Industries, Inc. 877-347-7106

Agra Industries, Inc. 715-536-9584

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Heat Exchangers Custom Metalcraft Inc. 417-862-0707 www.custom-metalcraft.com

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Robert-James Sales, Inc. 800-666-0088

Maintenance Software www.agraind.com

Mongan / Bockman 260-748-7655 www.monganbockman.com

Pipe

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Paint & Protective Coatings

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Loading Equipment www.crowniron.com

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ITT Industries Goulds Pumps 315-568-2811 www.gouldspumps.com Watson-Marlow Bredel Pumps 800-282-8823 www.watson-marlow.com

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Process Sensors Corp.

508-473-9901 www.processsensors.com ETHANOL PRODUCER MAGAZINE

April 2009

123

EPM MARKETPLACE QA Test Products

Used Equipment

Perten Instruments, Inc. 801-936-8165

Finance Accounting

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Christianson & Associates PLLP 320-235-5937 www.christiansoncpa.com

Resource Recovery Eco-Tec, Inc. 905-427-0077

Eide Bailly LLC 605-977-2703

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Kennedy and Coe, LLC 800-303-3241

Seals

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Aesseal Inc. 865-531-0192

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Appraisals

Utex Industries, Inc. 432-333-4151/800-873-0946

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Natwick Associates Appraisal Services 800-279-4757 www.natwick.com

Due Diligence

Separation Equipment Fluid Engineering 814-453-5014

Harris Group Inc. 206-494-9422

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Mergers & Acquisitions

Storage-DDGS Laidig Systems, Inc. 574-256-0204

Kent Group, Inc. 715-358-7528

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Agra Industries, Inc. 715-536-9584

First Capitol Risk Management 800-884-8290 www.firstcapitolrm.com

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R.J. Oâ&#x20AC;&#x2122;Brien 800-621-0757

Cherokee Steel Fabricators, Inc. 903-759-3844 www.cherokeesteelfabricators.com

Tanks www.agraind.com

ATEC Steel 620-856-3488

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Check-All Valve Mfg. Co. 515-224-2301

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Federal Equipment Company 800-652-2466 www.fedequip.com www.paragontrailer.com

WINBCO Tank Company 641-683-1855

North American Safety Valve 800-800-8882

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Encore Business Solutions 204-989-4330 www.encorebusiness.com

Legal Services

Wastewater Treatment Services BrownWinick Law Firm 515-242-2400 www.biofuellawyers.com

Biothane Corporation 856-541-3500x501 Hydro-Klean, Inc. 515-283-0500

www.biothane.com Faegre & Benson, LLP 612-766-6930

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American Waste Removal 505-417-9933 www.americanwasteremoval.com

Stoel Rives LLP 612-373-8800

Aquatech International Corporation 724-746-5300 www.aquatech.com

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Marketing Fuel Ethanol

Fluid Engineering 814-453-5014

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Ethanol Production

Thermal Oxidizers

www.faegre.com

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Water Treatment

Thermal Energy

Atlas Renewable Energy, LLC 800-884-8290 www.atlasenergyllc.com

Miscellaneous

Existing Producers www.pro-env.com

Louis Dreyfus Commodities 402-844-2680 LDCommodities.com POET LLC 605-965-2200

124

www.checkall.com

Attorneys

CMC Letco Industries 417-831-1528

Pro-Environmental, Inc. 909-989-3010

www.rjobrien.com

Software-Accounting

Valves

Agra Industries, Inc. 715-536-9584

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Structural Fabrication

Paragon Trailer Sales 800-471-8769

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April 2009

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Rail Ties Thompson Industries, Inc. 317-859-8725 www.thompsonindustries.net

Railcar Moving Shuttlewagon, Inc. 816-767-0300

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Utilities Utility Integrys Energy Services 608-235-2547 www.integrysenergy.com

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EPM MARKETPLACE

EPM MARKETPLACE With all contact information placed in one convenient location, Ethanol 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 the perfect solution.

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Evolution Markets, Inc. 914-323-0259

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ETHANOL PRODUCER MAGAZINE

April 2009

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Marine

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Transportation

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Robert-James Sales is your #1 source

for stainless PIPE, FITTINGS and FLANGES up to 36" in Sch 5, 10 and 40. We also carry 2205 duplex through 24".

www.rjsales.com Buffalo, NY Cleveland, OH Cincinnati, OH Chicago, IL Cranbury, NJ

800-666-0088 800-777-0820 800-777-2260 800-777-2008 800-777-1858

Indianapolis, IN Minneapolis, MN Raleigh, NC Tavernier, FL

800-777-0510 800-777-1355 866-493-8834 305-852-1694

Free Product CD 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.