Page 1

INSIDE: canadian rfa assesses year’s progress february 2011


Control Plus Blending Advances ND Creates Blender Pump Boom Page 44 Racing Circles Rev Up with E85 Page 52 A Unique Approach to Retail Islands Page 60 Winning $5 Million with E85 Page 66

The Ancient Art of Falconry Controls Pests Page 82



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Novozymes Full Page Pg3




Basically, an ethanol plant is very similar to any other manufacturer; our success is based on production, yields, and proper risk management – and that’s kind of where Novozymes comes in: helping us improve yields and conversions on our corn ethanol base. JEFF TUSSEY, 2010


Novozymes’ solutions help your plant run smoothly and your mind rest easy. Our enzymes give you higher ethanol yields, faster throughput, and lower overall processing costs. Add to that our unmatched technical expertise and our unique training programs, and you won’t find a better partner.

february 2011 | Ethanol Producer Magazine | 3 Novozymes is the world leader in bioinnovation. Together with customers across a broad array of industries we create tomorrow’s industrial biosolutions, improving our customers’ business and the use of our planet’s resources.


features 52


february issue 2011 VOL. 17 ISSUE 2



Editor’s Note

Positive Results for E85 By Susanne Retka Schill

10 The Way I See It

An Update from Down Under By Mike Bryan




A North Dakota program has created a boom in blender pump installation and kick-started biofuels sales. BY Kris Bevill

Ethanol has some big fans in the racing crowd who are working to rev up its use.

Propel Fuels is deploying a unique business model to partner with retailers and boost biofuel availability in California.

Blending to the Top

Green Flags for E85

BY holly jessen

Pumping up E85

Upcoming Conferences & Trade Shows

12 View From the Hill

30 Years of Unparalleled Progress By bob dinneen

BY Kris Bevill


11 Events Calendar


14 Drive

Market Access to Make a Permanent Difference By tom buis

16 Europe Calling

Spinning ILUC Policy the European Way By Rob Vierhout



Optimizing the engine for E85 in a super light car won the X Prize. BY holly jessen

Canadian Renewable Fuels Association assesses the year’s progress. BY Kris Bevill

Winning $5 Million with E85

18 Talking Stalk

Canadian Report Card: Passing & Growing

Contributions 78

Sorghum Plays Role in Ethanol’s Impact By bill kubecka

20 Business Matters



The Time to Plan for Ethanol’s Future is Now By porter j. martin & gregory j. lynch

24 Business Briefs 28 Commodities Report 32 Distilled management

How Should Ethanol Producers Respond to External Conditions?

Given market conditions and uncertain policy, producers must evaluate internal responses. BY peter dominici

pest control

Ancient Art of Falconry an Asset in Avian Pest Control

Though ethanol plants provide food and shelter for birds, control is possible. BY stephen bucciarelli &


Protect Employees, Contractors With Safe Work Permit System Avoiding accidents requires a methodical approach and improved communications. BY david ayers

melanie paterack Ethanol Producer Magazine: (USPS No. 023-974) February 2011, Vol. 17, Issue 2. 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.

4 | Ethanol Producer Magazine | february 2011

91 Marketplace 94 Ad Index On The Cover

Kristin Roks handles Isis, a Luggar falcon used to mitigate an avian infestation. PHOTO: Melanie Paterack

february 2011 | Ethanol Producer Magazine | 5

editor’s note

The ethanol industry will be kept on its toes this year, with an all-out battle to keep some version of industry subsidy—probably a reformed tax incentive—alive, not to mention keeping critics at bay who don’t like the bullish corn market. Our columnists in this issue address these concerns from several angles.

positive results for e85 Susanne Retka Schill, Editor

Our feature articles this month uncover the progress being made for the industry on several other fronts. Associate Editor Kris Bevill attended the Canadian Renewable Fuels Summit in early December, which was celebrating a strong year’s performance for the Canadian biofuels industry. She also writes about Propel’s interesting retail approach in California. Propel builds and operates biofuel fueling islands situated at filling stations with room to tuck in another island. They recently rolled out a special program that will tell customers just how much imported oil they’ve displaced with their biofuel purchase. Bevill also tells the story of how one state—our home state of North Dakota—implemented a program that has resulted in a huge increase of blender pumps in the state and made North Dakota No. 1 in the nation. Associate Editor Holly Jessen delves into the world of racing this month, reporting on efforts to optimize E85 engines. She also writes about the team that won the X Prize for getting the equivalent of 100 miles per gallon—using E85 in a specially tooled engine and ultra light car to beat out electric cars. Turns out, when you factor in the coal-fired electricity’s greenhouse gas (GHG) emissions in charging those electric batteries, the E85powered car also beats the electric cars in GHG reduction. Good news indeed, as the ethanol industry strives to tell its message about the positive benefits of ethanol. This issue is heading to Phoenix, Ariz., for the 16th annual National Ethanol Conference. It will be a nice break for those coming from the midst of winter, and a opportunity to network with others in the industry, which is often as important as listening to the great lineup of speakers. I’ll be going to Phoenix, as well, and look forward to visiting with you there.


contributors PETER DOMINICI is a managing director of Focus Management Group. With more than 25 years of experience in finance and accounting, he has helped improve the performance of ethanol plants, oil and gas distributors and diversified energy companies. 6 | Ethanol Producer Magazine | february 2011

DAVID AYERS is a principal consultant with Applied Safety Management. He specializes in solving difficult and demanding safety and environmental issues.

EDITORIAL EDITOR Susanne Retka Schill ASSOCIATE EDITORS Holly Jessen Kris Bevill COPY EDITOR Jan Tellmann




EDITORIAL BOARD Mike Jerke Cilion Inc. Jeremy Wilhelm Commonwealth Agri-Energy LLC Mick Henderson Corn Plus LLLP Keith Kor Golden Grain Energy LLC Walter Wendland Chippewa Valley Ethanol Co. LLLP

Neal Jakel Illinois River Energy LLC Bert Farrish Lifeline Foods LLC Eric Mosebey Lincolnland Agri-Energy LLC Steve Roe Little Sioux Corn Processors LP Bernie Punt Siouxland Energy & Livestock Co-op

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

Please recycle this magazine and remove inserts or samples before recycling COPYRIGHT Š 2011 by BBI International

february 2011 | Ethanol Producer Magazine | 7

Power your old ethanol plant with New Ethanol production.


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february 2011 | Ethanol Producer Magazine | 9


the way i see it

An Update from Down Under By Mike Bryan

I am living and working in Australia and thought perhaps it might be of interest to update Ethanol Producer readers on the Australian ethanol industry. Keep in mind that Australia is the size of the United States with a population of 21 million, so the market demands are much smaller. The bulk of fuel ethanol is produced on the east coast and sold in the states of New South Wales, Queensland and Victoria. The three main facilities are: • • •

Manildra in New South Wales using waste starch has a capacity of 300 MMly (80 MMgy). Sarina in North Queensland using molasses has a capacity of 60 MMly. Dalby Bio-Refinery in south west Queensland using red sorghum has a capacity of 80 MMly.

E10 is available at more than 600 service stations nationally. These figures are expected to rise as availability and demand for biofuel blends increase since consumer education is a large part of the progression and acceptance of E10. In recent years, the oil industry in Australia has also started supplying E10 through more and more of its outlets. Caltex Australia has started rolling out its Bio E-Flex-branded E85 ethanol-petrol fuel pumps across Australia to coincide with the national launch of Holden’s E85-capable VE Series II Commodore in 2010-’11. Australia’s reserves of crude oil are considered to be low with the reserves-toproduction ratio estimated to be below 10 years. Australia has a national trade deficit in crude oil and refined products of $16 billion a year, heading for $30 billion by 2015. 10 | Ethanol Producer Magazine | february 2011

The federal Ethanol Producers Grant provides for a 100 percent rebate of the excise duty to Australian producers (and is not available on imported product). A proposed change to the existing excise regime, a staged phasing out of the Ethanol Producers Grant through June 2020 to allow the domestic ethanol industry time to adjust, was announced in the 2010 Federal Budget papers. The New South Wales government has a legislated mandate for ethanol sales under the NSW Biofuels Act that began by requiring 6 percent of the volume of unleaded petrol sold in the state to be E10. This will be phased in until all regular unleaded petrol in New South Wales is E10 by July 2011. The Queensland government drafted legislation to introduce an ethanol mandate requiring a minimum ethanol blend of 5 percent to be sold throughout Queensland, however, it was recently announced that a final decision to bring in a mandate will be delayed for at least 12 months, because of concerns that the mandated demand would be filled by imports. No similar mandates have been adopted by other states, or the federal government as of this date. There are a number of projects that are currently under some stage of development; most, however, as in the U.S., are looking for financing. That’s the way I see it!

Author: Mike Bryan Chairman, BBI International

events calendar

National Ethanol Conference February 20-22, 2011

JW Marriott Desert Ridge Phoenix, Arizona Focused on vital marketing, legislative and regulatory, the theme of the 2011 NEC is “Building Bridges to a More Sustainable Future.” Join this premier ethanol networking event hosted by the Renewable Fuels Association. (800) 258-6094

International Biomass Conference & Expo May 2-5, 2011

27th Annual FEW Heads to Indy


Indianapolis may be home to the electrifying Indianapolis Motor Speedway and the Indy 500, but for four days in June, the buzz in the city will be coming from ethanol. As host to the 27th annual International Fuel Ethanol Workshop & Expo, from June 27 to 30 at the Indiana Convention Center, the city can expect more than 2,500 well-versed experts and attendees to arrive for the most recognized ethanol event in the world. Anticipation for the FEW has already begun, and the mayor of Indianapolis has responded with a personal greeting to those headed for the Hoosier State. “I admire your organization’s commitment to ethanol, a product that helps fuel our famous Indianapolis 500 cars,” Mayor Gregory A. Ballard wrote to International FEW organizers. And the city itself, according to Ballard, should provide an invigorating backdrop for the conference. “The 13th largest city in the U.S. is continuing to grow, with more than $3 billion in new tourism offerings coming on line by the time we host the Super Bowl in 2012,” Ballard says. “Consistently ranked as one of the Top 25 most visited cities in the U.S., I am confident our numerous cultural attractions, convenient downtown, and diverse culinary scene will create the perfect setting for your meeting.” The four-day event will feature keynote speeches, technical presentations and unmatched networking forums based on the current, and future, ethanol industry. The 27th installment of the FEW will include four main tracks highlighting the most up-todate innovations, strategies and operations in the realm of production, management, coproducts and cellulosic ethanol, all of which reach the presentation floor through an abstract rating process that utilizes nearly 40 industry experts to handpick the best of the best. With industry professionals attending from nearly all 50 states, and 25 countries, and plant personnel from almost every ethanol facility in the U.S. and Canada, this year’s FEW will remain a conference tailored to ethanol producers. For those interested in the current trends and challenges facing the blossoming cellulosic ethanol industry, expect the latest news and thoughts on where the industry is and where it is headed.

America’s Center St. Louis, Missouri The largest, fastest growing biomass event was attended in 2010 by 1,700 industry professionals from 49 states and 25 nations representing nearly every geographical region and sector of the world’s biomass utilization industries—power, thermal energy, fuels and chemicals. Plan to join more than 2,500 attendees, 120 speakers and 400-plus exhibitors for the premier international biomass event of the year. (701) 746-8385

International Fuel Ethanol Workshop & Expo June 27-30, 2011

Indiana Convention Center Indianapolis, Indiana The FEW is the largest, longest-running ethanol conference in the world. Focused on production of grain and cellulosic ethanol, operational efficiencies, plant management, energy use and nearterm research and development, the FEW will attract 2,500 attendees. Presentation abstracts are being accepted through Feb 25, 2011. (701) 746-8385

International Biorefining Conference & Trade Show September 14-16, 2011

Hilton Americas – Houston Houston, Texas The International Biorefining Conference & Trade Show brings together agricultural, forestry, waste, and petrochemical professionals to explore the value-added opportunities awaiting them and their organizations within the quickly maturing biorefining industry. Speaker abstracts are now being accepted online. (701)746-8385 february 2011 | Ethanol Producer Magazine | 11

view from the hill

30 Years of Unparalleled Progress By Bob Dinneen

Given the new entrants in the past few years, the memory of how the ethanol industry has evolved sometimes fades. As we prepare for what could be the seminal year in American ethanol, there is great value in recognizing how far we’ve come.

When the Renewable Fuels Association was formed in late 1980, America was producing just 175 million gallons of ethanol per year. Today, the industry produces more than 13 billion gallons annually, with some plants producing more ethanol than the entire industry in 1980. Once little more than a nuisance to big oil, ethanol now constitutes a significant percentage and is on the precipice of truly challenging big oil as a renewable alternative. This success was not achieved overnight. For the past three decades, American ethanol producers have worked tirelessly to gain market access and level the playing field in a fuel market monopolized by cheap oil. With the support of its members, the RFA has worked to extend the tax incentive on five occasions, including the final days of 2010. This tax incentive has been a driving force for ethanol use, encouraging critical investments. Any effort to reform the incentive cannot simply be a bumper stick slogan. It must be well-conceived and plausible to ensure the progress VEETC spurred is not lost.

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Early ethanol producers also successfully convinced Congress to amend the Clean Air Act to require fuels with ethanol’s characteristics to improve air quality in the nation’s largest metropolitan areas. This marked the first time ethanol’s value as a cleaner alternative to petroleum was recognized and was the first large scale expansion in the market for ethanol use. None of these efforts were easy. They were ultimately successful because the industry, and most of agriculture as well, stood together. We beat back many of the same ill-informed claims we hear today about food and fuel, ethanol’s energy balance, and the cost-effectiveness of renewable fuels. While those early efforts were significant, the most important advancements for American ethanol have occurred in the past decade. Unified behind one message, members of the RFA and our partners in agriculture helped secure the first renewable fuel standard (RFS) in 2005, requiring renewable fuels join petroleum in America’s fuel mix. More astonishingly, this same coalition successfully navigated growing headwinds in opposition to renewable fuels to expand the RFS by 500 percent in 2007. Now, the RFS is an ambitious and robust policy that recognizes the value of domestic ethanol production and the promise and necessity of emerging advanced and cellulosic ethanol technologies. As an employee of the RFA for more than 23 years, I am proud of everything the members of this association have been able to achieve. With your support, the RFA is not only the world’s largest ethanol trade association, but is recognized as the authoritative voice of the American ethanol industry in Washington and around the world. But our work is far from over. New challenges to ethanol policies will be mount-

ed from within the new 112th Congress and from lobbyists desperately seeking a return to the status quo before ethanol. New technologies that will expand the basket of feedstocks from which ethanol is produced require continued commitment to commercialize and achieve the goals of the RFA. And, new voices within the industry itself reflect the diversity and dramatic growth we have experienced and, with it, new internal industry dynamics. American ethanol production is not monolithic. The industry is comprised of small producers and large publicly traded firms. It is populated with innovative and ingenious leaders with no shortage of ideas for the future of the industry. Then again, the industry has always possessed and been proud of this pedigree. It is this diversity paired with a willingness to set aside differences for the good of the industry as a whole that has allowed for the unprecedented successes ethanol has achieved. These characteristics will be put to the test in the coming years. The RFA and its members remain steadfastly committed to policies that foster the development of the entire ethanol industry. On behalf of RFA employees past and present, I thank all of you who have supported this association for the past 30 years. The strength of this association and the industry as a whole are the people. It has been an honor to stand beside you and help facilitate the dramatic growth and innovation the industry has achieved. I look forward to tackling new challenges as we always have—together and with the facts. Author: Bob Dinneen President and CEO of the Renewable Fuels Association (202) 289-3835

Trantor Phe Full page Front Right

february 2011 | Ethanol Producer Magazine | 13


Market Access to Make a Permanent Difference By Tom Buis

Last summer, Growth Energy proposed an overhaul in federal energy policy that would dismantle the hurdles that prevent America’s ethanol producers from fair access to an open, competitive transportation fuels market.

than 170,000 fueling stations in the United

The Fueling Freedom Proposal is a market-based solution which would permanently eliminate the blend wall and give consumers genuine choice at the fuel pump. Our proposal would gradually redirect the Volumetric Ethanol Excise Tax Credit—a support that initially helped the ethanol industry grow—to help construct an alternative fuels infrastructure. We believe that if we can put 200,000 blender pumps in the ground and put 120 million flex-fuel vehicles (FFVs) on the road, we could finally see the kind of market access that would make a permanent difference to our industry and to the American motorist. But, we know this investment won’t happen overnight. In the near-term, the oneyear extension of the ethanol tax incentive that was adopted in the so-called lame duck Congress will give us the opportunity to work with lawmakers and the administration to carry out this proposal. There is broad and deep support for energy policy that creates jobs in American industries such as ethanol, and officials within the administration have signaled support for Growth Energy’s Fueling Freedom plan. Last October, Secretary of Agriculture Tom Vilsack announced an initiative to encourage installation of up to 10,000 blender pumps. This is a very positive step. There are more

pumps, then we as Americans would have a

14 | Ethanol Producer Magazine | february 2011

States and with Fueling Freedom we can put a blender pump in every one of those stations to give consumers real choice. The Fueling Freedom plan makes sense. If every car or pickup in the U.S. were flex fuel, and nearly every fueling station had blender genuine choice in the marketplace. We could choose gasoline if the price were right. Or we could choose ethanol, because we want cleaner air, or want to keep our money here in America, or bring our soldiers back from the Middle East. Each gallon of clean-burning domestic ethanol means less reliance on foreign oil— making our nation stronger, more economically secure and environmentally friendlier for our children and grandchildren. And, even more importantly, when we produce ethanol in the United States, we’re also producing jobs in this country that cannot be outsourced. Every administration over the past three decades has promised to make our country energy independent. We have energy policies in place that aim to reduce our dependence on foreign oil through alternative fuels—but we lack the infrastructure to deliver that fuel to the consumer. Through the Fueling Freedom program, we can build out that infrastructure to give Americans the cleaner, greener choice they deserve to help reduce our dependence on dirty, imported oil. Author: Tom Buis CEO, Growth Energy (202)545-4000


february 2011 | Ethanol Producer Magazine | 15


Europe Calling

Spinning ILUC Policy the European Way By Robert Vierhout

It took the European Commission several stakeholder meetings, two public consultations and many more economic modelling studies to conclude that the indirect land use change (ILUC) effects of biofuel demand are not that obvious. At least the opinions and results from over 100 documents on the topic are so diverse that a straightforward conclusion is impossible, except perhaps that there is no overall agreement on the effects. More study is needed was the recent conclusion. Obviously, those people who are convinced that ILUC exists do not need more proof. They believe the effect is self-evident. Their reasoning is that more demand for land use can only result in the use of land (in countries far, far away) that is not intended and should not be used for agricultural purposes. If (further) proof is required it is not difficult to find a study describing a model that will deliver the proof. After all, models are static and you can prove pretty much anything depending on what assumptions have been included in the model. The predictable consequence of this static analysis is that there will be long discussions on the output because of difference of view on the input. The researchers’ defense of their models

16 | Ethanol Producer Magazine | february 2011

reminds me of a statement ascribed to Winston Churchill who supposedly once said he trusted only those statistics that were made by himself. In the past 12 months, I thought of Churchill’s self-fulfilling prophecy often as I attended meetings on ILUC. The main flaw of the use of economic equilibrium models for trying to establish the land use effect of future biofuel demand is the inability to include in the equation the impact of politics and any given policy on supply and demand. In a market such as biofuels, that is so much determined and set by political decisions, the use of economic models precisely to determine the politics on ILUC is questionable and strange. So, we are trying to understand the effects of a highly politically defined market by analytical instruments that are unable to take account of changes in political realities. Most ILUC researchers will argue that this is irrelevant. The objective is to assess the effects of biofuel policy measures and to determine the extent to which the policy needs change. Relevant or irrelevant as it may be, what certainly is not irrelevant is to include in the models the effects of animal feed production, yield increase and the use of idle or abandoned agricultural land—to name just a few highly important variables. For example, in the EU year-on-year, we see a growing area of agricultural land being abandoned. All of the models that were presented to the European Commission ignored the combined effect of these realities, and none looked at historical data. To put it differently: we have had biofuels in the EU since 2003.

Did anyone study the ILUC effect that has occurred because of seven years biofuel policy? The ILUC debate has been politicized from its inception. It doesn’t matter how many scientists will get involved in this discussion. In the end every scientific “truth” will be used to prove one or the other. Therefore, the debate on biofuels and ILUC needs to be resolved by politics and this is how it will happen in the EU as it has happened in the U.S.A., though not in precisely the same way. In the EU by mid 2011, we will eventually conclude that the ILUC effects differ by feedstock to such an extent that certain biofuels cannot penetrate the EU market any longer after a certain date. However, to apply an ILUC factor or raise the greenhouse gas emission threshold to such a level that most of the biofuels would be out of the game is politically not possible. All EU governments know, and have indicated, that they need biofuels to achieve the 2020 emission reduction targets. Taking biofuels out of the equation is simply not an option. By mid-2011, the European Commission will spin the ILUC policy in a way that there will be clear winners and clear losers. Most likely it will make both those fighting and favoring an ILUC factor unhappy, but this is probably the best way to spin a controversial policy. Author: Robert Vierhout Secretary-general, ePURE

For more information, visit or email february 2011 | Ethanol Producer Magazine | 17

Graphic design s Marie RIO

Our fermentation experts offer custom made recommendations to adapt to your process, your needs & your economics. From the selection of the yeast strain to the definition of its format up to onsite training of your staff, Fermentis offers your ethanol plant a global fermentation approach to maximize your efficiency & profitability.

taking stalk

Sorghum Plays Role in Ethanol’s Impact By Bill Kubecka

As the many visionaries of the renewable fuels movement gather in Phoenix, Ariz., this month for the annual National Ethanol Conference, I’ve been reflecting on this country’s march to a more secure energy future. While much discussion and attention are focused on future developments in biofuels technology, it is ethanol that is making an immediate impact each time a motorist fills up the car. Despite the naysayers, the future of this movement looks promising. I’m reminded of the quote, “The road before us is shorter than the road behind.” Sorghum growers are proud to play a critical role in this journey toward a future less dependent on fossil fuels. The facts: Sorghum is now the No. 2 crop used for grain-based ethanol production. Thirty to 35 percent of domestic sorghum production is utilized in the grain-to-ethanol market. The benefits: Sorghum and corn are interchangeable in the grain-based ethanol market. A bushel of grain sorghum produces as much ethanol as a bushel of

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corn. Sorghum dried distillers grains with solubles (DDGS) tends to be lower in fat and higher in protein than corn DDGS. Grain sorghum is an excellent crop for sustainable ethanol production because it produces the same amount of ethanol per bushel as comparable feed grains while using up to one-third less water in the plant growth process. The process: Most major ethanol construction companies design their plants to either use grain sorghum or corn. There are a number of newer ethanol plants that are set up to receive both sorghum and corn at the same time. For older plants, minor modifications may be necessary, including smaller filtering screens because the sorghum kernel is smaller than a corn

sorghum distillers grains in these most critical markets. Our ethanol conversion kits are being distributed to plants across the United States. This industry-first “calculator” was created to provide bottom line numbers for sorghum and ethanol. The kits provide a detailed look at the costs and technical aspects of using grain sorghum in the ethanol production process. On the research front, Conestoga Energy and the USCP are conducting a feeding trial on the performance of beef cattle fed wet distillers grains with solubles (WDGS). The different rations will contain blends with corn WDGS or sorghum WDGS and used together. The trial began in September and has a target completion

kernel. A year ago, those of us at the United Sorghum Checkoff Program (USCP) were poring over the results of an extensive survey we had commissioned on the use of sorghum in the ethanol industry. The results were not only a wake-up call, but a call to action. Out of this survey, the Sorghum to Ethanol Plan was born. STEP provides information to all parties on sorghum to ethanol, distillers grains, transportation logistics and more. The pace has been frenetic over the past 12 months. We fanned out across the sorghum belt, holding meetings every 35 days with sorghum producers and ethanol plant managers. We also spoke with feedlot managers, dairy managers and nutritionists to assist in advancing

in the next month. The goal of this test is to establish sorghum nutrition for beef cattle. This theory, if proved, should increase the value of sorghum WDGS being sold directly from the ethanol plants and, in turn, allow them to purchase more sorghum at a higher value. The future is bright. For those of us at USCP, the breakneck pace will continue in 2011. But we’re comforted by the words of Henry David Thoreau: “Success usually comes to those who are too busy to be looking for it.” Author: Bill Kubecka Board Chair United Sorghum Checkoff Program (806) 687-8727


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business matters

The Time to Plan for Ethanol’s Future is Now By Porter J. Martin and Gregory J. Lynch

Ethanol supporters had been trying for months and months to pass extensions of key supports in federal legislation and time and time again they were rebuffed. It looked like it wasn’t going to happen. In the final days of December, the House and the Senate finally passed a one-year extension of the 45-cent-per-gallon blenders credit, the 54-cent tariff on imported ethanol and the 10-cent-per-gallon small producer tax credit. But, can we do it again? And if we can, then can we get these supports extended again when they expire after that? How many times can ethanol supporters count on these supports being extended? How many times can supporters win this political fight, and can we expect victory in the future in light of the enormous budget deficit our nation is struggling with? Ethanol’s critics on the right and the left are undaunted and are vowing to fight on. Supporters should consider themselves lucky if the next political fight over extending these supports is no harder than it was this year. Critics’ accusations haven’t changed—that ethanol drives up the price of food to consumers, that ethanol costs too much in federal subsidies, that ethanol has a negative energy balance. Supporters have successfully disproved each of these points time and again but that doesn’t stop

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critics from repeating these tired claims and muddying the public’s understanding about the value of ethanol. So what is the solution? Can ethanol survive without these supports? I believe the answer is yes, if we take steps to plan now. Why? Because we have seen ethanol producers start to develop solutions already. In Wisconsin, Nebraska and other states across the Midwest, ethanol producers have installed their own fueling stations where they sell gasoline blended with their ethanol. Blends include 10, 25 and 85 percent ethanol and this fuel is sold directly to the public. People

paid to oil companies so they will blend ethanol into gasoline, and redirect it (1) to gas stations for the installation of the infrastructure necessary to deliver ethanol blends directly to the consumer, and (2) to vehicle manufacturers and consumers to install flex-fuel technology in every vehicle being driven in the United States so that consumers would have the ability to use higher blends of ethanol if they so choose. This change in policy would both give consumers a choice of fuel and move ethanol away from government support. If this sounds radical, it isn’t. As mentioned above, entrepreneurial ethanol producers

are buying it because they understand that by purchasing this fuel they are helping to grow jobs in the Midwest and they are reducing the amount of foreign oil we are buying from overseas. We should take this opportunity to redirect federal ethanol policy away from the current support system, which is politically damaging and based on government payments year after year, to a system that jumpstarts the necessary ethanol infrastructure to help ethanol stand on its own without government support. The key is a two-tier approach to make ethanol available directly to the public and bypass the oil companies. In other words, instead of paying oil companies a blenders credit to use ethanol, that money could be directed to help pay for the installation of technology on vehicles and at fueling stations across the United States. Specifically, we could take the federal money, which is currently being

in the Midwest have already proved that consumers will buy ethanol straight from the pump and Brazil’s vehicle owners overwhelmingly drive flex-fuel cars. The battle over federal ethanol supports at the end of 2010 has made it clear that the political world is changing. Whether it is the political power of ethanol’s critics or the reality of America’s huge budget deficits, the fact is that ethanol needs to be thinking ahead and planning for a day when there are no federal supports. What will be our solution for that day? Can ethanol survive when that day comes? Yes it can, but we need to start planning for it now. Authors: Porter Martin, Greg Lynch Michael Best & Friedrich LLP, (608) 283-0116, (608) 283-2240

february 2011 | Ethanol Producer Magazine | 21

22 | Ethanol Producer Magazine | february 2011

HPD’s High Efficiency Stillage Concentration System (HESC™) reduces energy consumption in the DDG drying process. This proven, unique design concentrates highly viscous stillage with minimal fouling while decreasing the evaporation load to the dryer. The benefits of the concentrator system include: > More efficient method of removing water from stillage compared to standard drying processes > Concentrates syrup greater than 50% TS with minimal fouling > Reduced natural gas usage decreases emissions to allow more ethanol produced for given air permit > Modular system for simplified integration into existing plants, expansions or new facilities

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february 2011 | Ethanol Producer Magazine | 23

business briefs People, Partnerships & Deals

RangeFuels Soperton Plant has garnered an award for Merrick & Company, which assisted in the engineering of the 11 MMgy cellulosic biofuel plant completed this past year in Soperton, Ga. Merrick received the Grand Conceptor Award for excellence in engineering, the highest level award offered by the American Consulting Engineers Council (ACEC) Colorado Chapter, the state where RangeFuels and Merrick are based. Merrick assisted Range Fuels in obtaining a $76 million U.S. Department of Energy grant to help fund the project. The firm supported early pilot plant testing, assisted with the operations of the second generation pilot plant, and designed and engineered all process systems for the plant in collaboration with Range Fuels. When industry suppliers could not provide the necessary equipment within schedule and budget constraints, Merrick provided custom built-to-print designs for the indirect gasification devolitization and reformer units, which together, make up the heart of the two-step thermo-chemical conversion process.

UK-based Pursuit Dynamics PLC has contracted with four U.S. ethanol producers to install its ethanol reactor system, the company announced in its year-end report. Tests at an installation at a Pacific Ethanol Inc. plant were favourable, resulting in the ethanol producer’s agreement to install the system in its three other plants. “Initial early performance measures, including ethanol concentration, residual sugars, glycerol, and lactic acid, from the first Pacific Ethanol plants are consistent with ICM uplift results

and have demonstrated a considerable reduction in cycle times,” the company said. Contracts were also signed with Mid America Bio Energy and Commodities LLC at Madrid, Neb., and Marquis Energy LLC at Hennepin, Ill.

PhyMetrix Inc. has found a new application for its two-year-old handheld PPMa moisture analyzer. “An end-user tried the PPMa in ethanol, and had excellent results,” said spokesman Ani Omer. “He called us back excited that this will be a great solution for the ethanol manufacturing industry.” That company uses a Karl Fischer titrator to measure the moisture in the ethanol coming out of the drier, Omer said, adding the Karl Fischer method requires working with chemicals, and is slow and not really portable. “Our PPMa is a compact, handheld device weighing less than two pounds, that responds quickly, measures accurately and reproducibly and is priced less than some Karl Fischer titrators.” University of Minnesota researcher Pavel Krasutsky will be working with partners Crown Iron Works and GlycosBio over the next three years to design a pilotscale plant to convert distillers grains into biodiesel, additional ethanol and a highprotein feed suitable for animals from pigs to poultry to fish. “We are jumping from lab to pilot scale,” Krasutsky said. Supported by the university’s Initiative for Renewable Energy

24 | Ethanol Producer Magazine | february 2011

& the Environment, the project has already produced a patent for biodiesel production. The pilot project should lead directly to construction of a commercial plant, Krasutsky says. Industrial-scale production will mean not only greater profits, but also high biofuel production. Extech Instruments Corp. has introduced two new electrical dataloggers, the DL150 single-channel and DL160 dualchannel true RMS AC voltage and current dataloggers. The new handheld tools are designed for professionals who need extended recording of in-depth readings for electrical motors, components or circuits. They can log up to over a quarter million readings with adjustable sampling rates. Readings can be downloaded via USB to a computer for analysis or exported to an Excel format using the dataloggers’ software application. Mike Bishop is the new general manager at Poet Biorefining-Fostoria, Poet LLC’s 69 MMgy ethanol plant at Fostoria, Ohio. A native of Van Buren, Ohio, Bishop Poet’s Newest is completing a doc- Mike Bishop will be staff to torate in business ad- supervising ensure rules and ministration at North- regulations are met central University. He and efficient production achieved. served as a director of operations and plant manager during a 22year career in the automotive industry. Walter Howard is the new CEO of Zegen Inc, replacing Bill Davis who founded Ze-gen in 2004. Howard has held executive positions with utility leaders including General Electric, American Water, US Generating, Noble Power and others. Davis will remain on Ze-gen’s board of directors and stay actively involved with the company.

Sponsored by

Howard will be leading Ze-gen’s efforts to reach commercialization of its gasification and syngas technologies. Carlos Fadigas will become the new CEO of Brazil-based Braskem S.A. In 2010, Fadigas headed operations of Braskem America, the polypropylene business acquired from Sunoco Chemicals. In 2010, Braskem began producing polyethylene from sugarcane ethanol at its facility in Brazil, becoming the largest biopolymer producer in the world, according to the company.

Randy Ives has joined Gavilon Group LLC as director of ethanol services. He will be responsible for promoting Gavilon’s physical margin management services, including corn procurement, ethanol and distillers grains marketing. Ives brings to Gavilon more than 25 years of renewable fuels industry experience, most recently as senior vice president of distillers grains at Hawkeye Gold LLC. He has also served as president of ICM Marketing Inc., and as senior vice president of United BioEnergy LLC. Headquarter in Omaha, the privatelyheld Gavilon was formed by investors in 2008 after acquiring ConAgra Trade Group, which earlier had acquired Peavey Co. Agrivida Inc. will be collaborating with Syngenta Ventures to develop advanced crop technology to provide low-cost sugars for a variety of industrial applications. Under the terms of the agreement, Syngenta licenses access to crop technology and intellectual property to Agrivida in return for Agrivida equity. Agrivida will bolster its existing technology portfolio, including its proprietary intein trait platform, with technology licensed

from Syngenta. The company is developing new traits for multiple crops, including corn, sorghum, switchgrass and miscanthus with the goal of significantly decreasing biomass processing costs. This summer, Medford, Mass.-based Agrivida announced breakthroughs in its development of sugar production from enzyme expressing crops. Castle Rock Renewable Fuels officially became Marquis Energy-Wisconsin LLC, on Jan. 1. Mark Marquis, president of Marquis Holdings and Marquis Energy LLC announced that the family business, which founded and developed the Marquis Energy ethanol plant at Hennepin, Ill., has acquired a second ethanol plant. Marquis took over operation of the 50 MMgy plant in July, pending closing of the equity, management and marketing deal. Marquis Management Services President Jason Marquis said several operational changes at the Necedah, Wis., plant resulted in a 12 percent increase in ethanol output and significant profit gains. Marquis management will also provide ethanol marketing services for both facilities. The Iowa Power Fund and Iowa Office of Energy Independence have awarded $2.5 million to SynGest Inc. for the design and engineering of a biomass-based ammonia facility to be built and operated in Iowa. Replacing imported, natural gasbased ammonia fertilizer with domestically produced, biomass-based ammonia will not only reduce energy imports, but reduce greenhouse gas emissions 150 percent compared to conventional ammonia production methods, according to Syngest CEO Jack Oswald. LPP Combustion LLC has successfully demonstrated the clean generation of electrical power using 14 different liquid fuels in a commercial gas turbine, all processed through the same LPP fuel skid prior to injection into

the gas turbine. The tests included anhydrous ethanol, aqueous ethanol up to 25 percent water, on- and off-spec biodiesel, waste product solvents and petroleum-based liquids. The skid-based technology vaporizes liquid fuels to form LPP Gas, a substitute natural gas, which can be used without alterations in a gas turbine. Emissions from the Capstone C30 gas turbine operating at full load on LPP Gas are lower in nitrogen oxides than with natural gas operation, regardless of the liquid fuel used, according to the company.

Butamax Advanced Biofuels LLC has been granted patent number 7851188, “Fermentive Production of Four Carbon Alchohols,” encompassing its isobutanol producing biocatalyst. “This biocatalyst patent is a reflection of our first-mover position in isobutanol. As more of our patent portfolio matures, our patents will play an important role in our efforts to develop and commercialize biobutanol for the global transport fuel market," said Tim Potter, CEO. Butamax’s technology laboratory in Paulinia, Brazil, opened in November and its demonstration facility in Hull, England, is in the start-up phase. The company is combining DuPont’s industrial biotechnology experience with BP’s global fuels market knowledge to commercialize biobutanol.

Share your industry briefs To be included in Business Briefs, send information (including photos and logos if available) to: Business Briefs, Ethanol Producer Magazine, 308 Second Ave. N., Suite 304, Grand Forks ND 58203. You may also fax information to (701) 7468385, or e-mail it to Please include your name and telephone number in all correspondence.

february 2011 | Ethanol Producer Magazine | 25

The Power of Grace

Produce ultra-dry ethanol with EnSieve® molecular sieve. Because traditional distillation techniques fall short of drying ethanol to an acceptable level, water removal with molecular sieve adsorbents (zeolites) is the method of choice. In our pursuit of helping customers obtain high ethanol contents we have developed EnSieve® molecular sieve. Designed for ethanol dehydration, EnSieve® molecular sieve offers outstanding benefits. Its unique structure provides a superior rate of adsorption and higher ethanol recovery due to the low coadsorption of ethanol. Its minimal attrition means longer service life. Product composition minimizes side reactions such as the formation of aldehydes and ketones. The Renewable Technologies product line draws on Grace Davison’s expertise in catalysis and separations to develop and provide technologies for purification, drying and biomass conversion. The Renewable Technologies product portfolio includes: • EnSieve® molecular sieve for ethanol dehydration • TriSyl® silica and EnPure® adsorbents for feedstock and biodiesel purification • EnRich™ catalysts for renewable fuels and chemicals

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26 | Ethanol Producer Magazine | february 2011

Sukup Manuf. Full Page

february 2011 | Ethanol Producer Magazine | 27

commodities Natural Gas Report

Natural gas prices low vs. corn and oil Jan. 3—Natural gas prices are relatively low. The 2011 average futures price is $4.35 per MMBtu, 25 percent lower than from 2008 to 2010. Over the same period, corn prices are up 27 percent, from $4.70 to $6 per bushel and oil prices are up 15 percent, from roughly $80 per barrel to $92. Why haven’t natural gas prices followed oil and corn? After all, natural gas is part of the energy complex as is oil, and natural gas is a liquid, multi-use commodity similar to corn. As the chart shows, natural gas prices have remained essentially flat while the other two rallied. There are two primary reasons. Over the past few years, tremendous additional natural gas supply has become economically and technically viable due to amazing advances that boost shale drilling and recovery. Shale production is forecast to go from less

By Casey Whelan

than 5 percent of our production base five years ago to 30 percent by 2020. These same advances also helped oil supply, but with roughly 60 percent of U.S. demand met with imports, the impact is severely mitigated. The second reason is that we have a contained North American market, met with Canadian or U.S. supply. Conversely, oil and corn are traded freely worldwide and relative currency values and international trade patterns have dramatic impacts. The weak U.S. dollar tends to push up corn and crude oil prices, but has a negligible impact on natural gas prices. Also, strong demand

fundamentals in China and India clearly impact demand for agricultural commodities and crude oil, but again have a minimal impact on natural gas demand and prices.

Corn Report

Global corn supplies tighten Jan. 3—A growing world economy holds all raw commodities on the upswing. The corn market breeched the $6 mark fairly easily. New crop corn lags, however, in anticipation of more corn acres to be planted, although many things can happen before then. U.S. corn demand is outpacing production, resulting in dwindling stocks. This year corn production was 12.54 billion bushels and demand was 13.43 billion. Ethanol demand alone could consume an additional 200 million bushels of corn this marketing year with the USDA currently projecting 4.80 billion bushels. Ahead-of-pace production could see the industry consume nearly 5 billion bushels as margins remain profitable. Offsetting more demand for ethanol would be more DDGS for feed, helping meet livestock demand


which is higher now than the past two years. While many feeds have rallied in this market, they are still cheaper than corn and soymeal in a feed ration. The corn market will remain volatile (seems to be mentioned frequently) but with world demand and domestic demand continuing to grow, this market will remained poised for “excitement.” Globally, corn carry-out is placed at 130 mmt, down from 147.19 mmt a year ago. Weather markets are likely, with eyes on Argentina and the U.S. spring season. The market will keep a watchful eye on demand rationing as prices surge, but any issues could test 2008 highs.

28 | Ethanol Producer Magazine | february 2011

The accompanying chart illustrates market anxiety about current world corn carryout-to-use ratios. This year sees the lowest value since the 2006 marketing year due to the decline in U.S. production.


Regional Ethanol Prices

($/gallon on Jan. 3) Front Month Futures (AC) $2.360 REGION



West Coast






East Coast


$2.6600 SOURCE: DTN

Regional Gasoline Prices

DDGS Report

Snowstorms, Chinese markets impact U.S. DDGS BY SEAN BRODERICK Jan. 3—With the start of the new year, we see DDGS taking the lead from CBOT corn. There was about a $20 per ton run-up in most of the regions that started right after Thanksgiving, and only fell back after Christmas. Buying in the container market—mostly in Chicago—led prices up, and in hindsight looks to have been pre-Chinese New Year buying. As product flowed to Chicago, feeders in California and the Southwest started to worry about having product in the pipeline, and jumped on the buying bandwagon. The barge market followed suit. Eastern U.S. plants are shipping DDGS to the Southeast, where cash corn is tight, and prices are being supported by higher DDGS inclusion rates in hog rations. With the eastern plants that are close to Chicago diverting product to the

Southeast, we are seeing more product from west of the Mississippi supplying that container market. Gulf bulk business is quiet, so the container demand is welcome for those who would typically look to the river. Looking ahead, there should be some decent cold weather demand. Some plants slowed down due to tank cars returning from the East Coast being backed up by snowstorms. In response, both hopper cars and tankers may be kept on shorter runs to minimize weather issues. The approaching Chinese New Year should keep nearby export demand quiet. China did initiate a dumping accusation against DDGS importers— but with a decision likely a year away, business may not be affected until the end of 2011.

REGION West Coast

Corn rally shoots ethanol futures higher BY RICK KMENT tight along both coasts, and backlogged product through much of the country while the holiday season drove an increase in demand. RBOB gasoline prices have bounced higher with moderate to strong commercial and noncommercial buying support over December. The energy complex continues to be challenged to break out of the recent trading range. This could keep gasoline price levels moderately stable over the first several weeks of the year, and will create additional support for ethanol prices, which are currently following the corn market very closely.








East Coast


$2.5182 SOURCE: DTN

DDGS Prices ($/ton) location

Feb. 2011

Jan. 2011









Feb. 2010

Buffalo, N.Y.




Central Calif.




Central Fla.



152 SOURCE: CHS Inc.

Corn Futures Prices Date

(March corn, $/bushel)




January 3, 2011



6.20 1/2

December 3, 2010


5.55 1/2

5.73 1/2

4.26 1/4

4.13 1/4

January 4, 2010

4.18 1/2 SOURCE: FCStone

Cash Sorghum Prices ($/bushel) LOCATION

Ethanol Report

Jan. 3—The ethanol market has seen additional support coming from many areas through the end of the year. Ethanol plant margins have been significantly reduced with the corn futures prices rallying at the end of 2010 to levels not seen since the summer of 2008. This has created additional buying support in the ethanol market, with traders trying to keep pace with the higher cost of production to try to protect the infrastructure that has stabilized over the past year. The late year winter storms that hit many areas limited ethanol movement, as many of the rail systems were hindered by snow, ice or floods. This kept supplies

($/gallon on Jan. 3) Front Month Futures (RBOB) $2.3904

Dec. 29, 2010

Nov. 24, 2010

Dec. 18, 2009

Superior, Neb.




Beatrice, Neb.




Sublette, Kan.




Salina, Kan.




Triangle, Texas




Gulf, Texas




SOURCE: Sorghum Synergies

Natural Gas Prices


Jan. 1, 2011

Dec. 1, 2010

Jan. 1, 2010





N. Ventura




Calif. Border




SOURCE: U.S. Energy Services Inc.

U.S. Ethanol Production Output Per day


(1,000 barrels)

End stocks

Oct. 2010




Sept. 2010




Oct. 2009




SOURCE: U.S. Energy Information Administration

february 2011 | Ethanol Producer Magazine | 29

e n e rg y grains fo o d s

Resources for enriching lives.

CHS Renewable Fuels Mktg Full page Front

W i t h t h e r i g h t p a r t n e r, a n y t h i n g i s p o s s i b le . As an ethanol producer, you need a marketing partner who knows where you’re coming from and offers a collaborative approach to get you where you want to go. Through CHS Renewable Fuels Marketing, you’re gaining a financially stable and transparent partner with extensive experience marketing ethanol and distillers grains. Our size and scope create the broadest range of options to maximize your plant’s netbacks. To move your business in the right direction, call 800-851-7949 or email © 2009 CHS Inc. CHS is listed on NASDAQ at CHSCP.

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february 2011 | Ethanol Producer Magazine | 31


Ethanol News & Trends

ILUC Uncertainty

Report examines the uncertainty surrounding land use change analyses and available marginal lands.


A report issued by the nonbe available to satisfy biofuels exprofit international scientific orpansion. “There are major doubts ganization CABI and Hart Enabout official estimates of availergy Consulting, titled “Biofuels able land, including those classed and Land Use Change: A Science as unused, abandoned, degraded and Policy Review,” explores the and marginal,” the authors stated. various research methods used to “Current estimates of the land calculate land use change (LUC) that might be pressed into service and offers recommendations for in the next 40 years vary widely, by the further assessment of both half an order of magnitude and direct and indirect LUC. While more. Until these discrepancies are the long-term effects of land use resolved, the various attempts to for biofuels production is uncercalculate and model what will haptain, the report highlights major pen as biofuel production expands discrepencies among the various should be regarded as extremely Making Use A Ceres sorghum researcher evaluates the performance of models used to attempt to calcutentative, otherwise such estimates experimental hybrids. A survey recently conducted by Ceres shows that many farmers believe they have under-utilized land which could be used to grow late LUC and said the methodrun the risk of becoming accepted energy grasses such as sorghum. ological problems with lifecycle as the truth by policymakers.” analysis only compound that unIn the U.S., energy grass procertainty. ponents have poured much effort the analysis were to be listed and emphasis “There is a need to establish standard were given to remaining uncertainties. into the exploitation of marginal lands for methodologies to evaluate the wide range Putting aside the questionable LCA biofuel crop production. Ceres Inc., a Caliof effects, direct and indirect, that ensue methodologies, the report attempted to ex- fornia-based energy crop developer, recently from the growing global biofuels market,” amine possible LUC as a result of greater conducted a survey of farmers in the Southsays Tammy Klein, assistant vice president biofuels demand. The authors identified sev- east to gauge their interest in growing energy of Hart Energy. “This would enable much eral scenarios in which LUC could occur as a crops and examine whether there might be greater confidence when comparing future result of biofuels, including: enough marginal land to grow the crops. studies and enable decision-makers to make • Bringing land into production that has Three-quarters of the survey’s respondents more informed judgments.” not previously been used for agricultural said they do in fact have under-utilized land Authors of the report reviewed 67 bio- purposes. that would be suitable for grasses such as fuel life-cycle analyses (LCAs) and found • Replacing existing food crops with miscanthus, sorghum and switchgrass. Althat the studies used different methods of biofuels crops. most as many growers showed interest in allocating energy used and produced and • Utilizing marginal lands to produce growing those crops as a way to diversify also used various start and end points. Some biofuels crops. their growing operations. Additionally, more measure well-to-wheel, some measure well- • Intensifying land use without reducing than 70 percent of growers surveyed said to-tank and others calculate cradle-to-grave crop production, including improved they support long-term contracts and would impacts. “The latter is the most complete and yields, technologies and integrating crop consider putting at least half of their acreindeed is surely needed if society is to evalu- and/or livestock activities. age in long-term energy crop contracts. Gary ate the full costs of our current freewheeling Koppenjan, communications and product lifestyles,” the authors wrote. “But by so doWith respect to marginal land use, the marketing director for Ceres, says this is ing, these most comprehensive studies tend report’s authors found several crops with po- good news for end users since long-term to reduce the overall differences between tential to thrive, including jatropha, sweet cas- feedstock contracts are critical for new facilifuel stocks, which are often the center of sava, sweet potato and energy grasses. How- ties to obtain financing. “What constitutes a interest.” Considering the wide discrepancies ever, the authors cited a 2005 assessment that long-term contract will likely be an area for among analysis methods, the report’s authors claimed nearly all of the world’s suitable land discussion, but it appears the suppliers and found that no one LCA could be confidently is already in use and expressed uncertainty users are on the same page,” he says. credited, unless every assumption used for as to how much marginal land might actually —Kris Bevill 32 | Ethanol Producer Magazine | february 2011


‘Ethanol Kicks Gas’

Poe takes Fagen plane to new heights As Greg Poe flies above, aggressively flipping and stalling his MX2 two-seater airplane, air show attendees get a strong message about the power of renewable fuels. “It becomes apparent that I have a lot of confidence in the airplane,” he tells EPM. Poe has spent 18 years on the national air show circuit, the past five with sponsorship by Fagen Inc., promoting ethanol. He considers it an honor, helping people understand


that there’s an alternative fuel they should take a look at using themselves, he says. That message reaches a lot of people. In 2010, more than 3.6 million people attended 22 domestic air shows in 18 states and one show in Roatan, Honduras. But the exposure doesn’t end there. Everywhere he goes, Poe’s plane is featured in major newspaper and magazine articles and on national television. In all, Poe’s team estimates that more than 30 million people were exposed to the ethanol-positive message in the past year—and that’s a conservative estimate. For example, his ability to withstand high amounts of gforce was featured on national television in a 15-minute program called “Stan Lee’s Superhumans.” The show had about 1.2 million viewers when it aired originally and reruns about once a month. Poe wasn’t always as High Flying Fuel Greg Poe waves to fans from his Fagen Inc.-sponsored confident in ethanol as he is airplane. The MX2 runs on a mix of aviation fuel and about 90 to 95 today. When he first started percent ethanol.

testing the fuel, he was very cautious, flying with two fuel tanks and switching to ethanol once airborne. He then watched the gauges very carefully to make sure there were no problems. He was surprised to find that the plane actually runs better on ethanol, running cooler with more horsepower and without fouling the spark plugs as aviation fuel does. Besides that, Poe can feel the difference in a smoother ride with ethanol. This year, Poe plans to get an MXS, a single seater plane, which he will use for air shows. He’ll use the MX2 for promotional rides, he says. In addition to performing in air shows, Poe has spoken to more than 10,000 children through the Elevate Your Life program. He comes into the community early and gives a presentation at schools, youth groups or other venues. Motivated by the fact that he lost his son to drug abuse, Poe wants to reach children with a message of setting goals, following dreams and taking a positive path in life. —Holly Jessen

What’s next?

Reform on the table after 1-year extension of VEETC At the 11th hour, U.S. Congress approved a 45-cent-per-gallon, one-year extension of the Volumetric Ethanol Excise Tax Credit, commonly known as the blenders’ credit. That’s great news for the ethanol industry in the short term, but what’s going to happen at the end of the year, when it expires again? Groups such as the Renewable Fuels Association and Growth Energy started gearing up for that fight even as the 2010 extension was signed into law by President Obama. The next step for 2011 and beyond, both groups say, is reform. RFA has long maintained that extending VEETC for a year provides the industry the time it needs to start the discussion on

reforming ethanol tax policy. That discussion must include reform to the tax credits and subsidies provided to the oil industry, however, stresses Bob Dinneen, president and CEO of RFA. “American ethanol producers are committed to responsible reform of ethanol tax policy, but urge Congress to take this opportunity to reform all energy tax policy,” he says. “Oil producers and other fossil fuel industries still receive hundreds of billions of dollars in taxpayer support despite decades of subsidies and high profits.” Growth Energy has emphasized reform in terms of its Fueling Freedom plan, which it first unveiled this summer. Ethanol needs an open market to complete, the group

says. “Our plan to reform the market would encourage the installation of blender pumps and make every auto sold in the U.S. a flexfuel vehicle, ultimately giving American consumers the power to choose their fuel at the pump, instead of having that choice made for them,” says Tom Buis, CEO of Growth Energy. During meetings this fall, RFA, Growth Energy, the National Corn Growers Association and the American Coalition for Ethanol reportedly agreed on a draft longterm policy road map, which closely mirrors the Fueling Freedom plan. The next question is whether those ideas can transform from words on paper into reality. —Holly Jessen

february 2011 | Ethanol Producer Magazine | 33


Educating the Clueless The goal is simple. Sell more gallons of ethanol. One way to get there is by educating drivers who aren’t even aware they have a flex-fuel vehicle (FFV), says Doug Durante, executive director of the Clean Fuels Foundation. If even two out of every 10 people who don’t know about FFVs start using E85 or a higher blend in their vehicles, it has a big impact. “There are 9 million [FFV] cars on the road, if we got 1 million of those people to start using ethanol regularly, that would be huge,” he says. “But if we got 1 million, why not 4 million—why not half of them? Why not a goal of half?” The National FFV Awareness Campaign, announced by the Clean Fuels Foundation late last year, was created for just that purpose. Clean Fuels is working with the USDA and the U.S. EPA, among other supporting organizations, to expand public awareness of fueling options for FFVs. According to private and government surveys, as many as 75 percent of FFV owners don’t know they can fuel with E85 or other blends. There’s so much need for education that Durante calls it a nearly “blank canvas.” While some might see reaching all those drivers as a challenge, Durante sees it differently. Even if only a few FFV drivers are educated and start using ethanol, that is, in his eyes, a success. “It would be hard to not succeed on this, it really would,” he says. This isn’t the first example of government support of an awareness program, says Burl Haigwood, the program manager for FFV awareness campaign. The government has also helped spread the word about the importance of wearing seat belts, driving the speed limit and the dangers of drunk driving or smoking. In the 1980s, people weren’t fully aware of the dangers of smoking. Today, 90 percent of consumers don’t know the impact that imported oil has on their lives, he says. The national campaign will kick off in Ohio. That state was selected because it already has significant number of E85 or


National campaign targets FFV drivers

Prompting Curiosity Signs at a retail gas station aim to prompt drivers to discover if they own a flex-fuel vehicle. A pilot program was conducted in Texas prior to the National FFV Awareness Campaign that was announced late last year.

blender pumps, Durante says. It wouldn’t be as helpful to do FFV education in an area where few people drive FFVs or the E85 or higher ethanol blends simply aren’t available. “You want to pick a place where you can make a difference,” he says, adding that four of Ohio’s biggest cities have at least 20 E85 or blender pumps. There’s additional interest in Texas and Florida, where pilot programs were conducted, and Georgia, Kansas, Nebraska, and Washington, D.C., will be among the first areas for the FFV awareness program to concentrate on. “Wherever there is interest we’re looking at it,” he says. Ultimately, Durante wants to reach large numbers of people through already established channels. For example, Clean Fuels is working to gain the cooperation of state transportation departments, so drivers can be educated about FFVs and E85 when they receive notification that it’s time to renew drivers license, registration or complete an emissions check. That would take advantage of a virtually free communications network to reach large numbers of FFV drivers. “It’s difficult to do by onesies and twosies,” he explains.

34 | Ethanol Producer Magazine | february 2011

Other opportunities include putting up signs at retail stations, emissions testing stations or state department of motor vehicle

Resources Available These signs, pamphlets and other resources are examples of materials that can be tailored for campaigns in specific areas. The materials are available from the Clean Fuels Foundation through the National FFV Awareness Campaign. PHOTO: CLEAN FUELS FOUNDATION


locations. The idea is to get drivers to start thinking about FFVs and tell them how to find out whether they own one. Clean Fuels will provide resources, such as signs, banners, pamphlets and more to help spread the message. “There’s very efficient ways we can reach these people when you do a statewide approach,” he says. The organization will also work to get the auto industry further involved in FFV education efforts. Clean Fuels already has a good relationship with car makers such as Chrysler, General Motors Corp. and Ford Motor Co., which have committed to producing a minimum of 50 percent of its new vehicles as FFV, Durante says. Through the national FFV awareness campaign, Durante would like to see auto dealership training programs to help them educate customers about FFVs. For example, some older FFVs don’t have the FFV badge that newer FFVs do. Perhaps dealership mechanics could provide those drivers with pamphlets about FFVs before the car goes back out on the street. “That would be a huge thing if we got the auto industry doing that,” he tells EPM. Another part of the awareness campaign is working to get more E85 and blender pumps installed. In the fall, the U.S. DOE clarified that American Recovery and Reinvestment Act funds could be used for refueling infrastructure, including blender pumps. There had been some confusion on that in the past Durante says, adding that DOE funding for Clean Cities grants had only been for E85 infrastructure and not blender pumps. It was good news to find that the recovery act money wasn’t under the same rules, he says. Ohio has some recovery act funding that has yet to be committed to a specific project, he adds. The Clean Fuels Foundation has been meeting with the Ohio Department of Energy to see if those funds can be put into fueling infrastructure. Another one of Durante’s goals is to get more engaged with the U.S. DOE. That organization has been fixated on E85 because that’s the only blend that is officially defined as a renewable fuel. However, using other blends, from E15 on up is an avenue for meeting the goals in the renewable fuel standard. “Our fixation with E85 probably needs to be modernized,” he says. “There are a lot of other blends that might be used for a lot of other reasons.” To get started, the program received an unspecified amount of seed money from the USDA and EPA. On a list of more than 20 supporting organizations is the American Coalition for Ethanol, Growth Energy, Chrysler and even individual ethanol producers. More supporters are needed, either through financial contributions, by endorsing the  on the web program or other ways. “There’s For more information on the Naa lot of ways people can help,” tional FFV Awareness Campaign visit: Durante says. —Holly Jessen february 2011 | Ethanol Producer Magazine | 35


Yes I can!

Scott Dillman doesn’t work in the ethanol industry. He doesn’t even own a flex-fuel vehicle. That didn’t stop the Fond du Lac, Wis., resident from riding 475 miles on an E85 powered minibike to show people that the fuel is safe for use in two-cycle engines. “I know I changed some people’s minds,” he tells EPM. “I know I did.” It all started with demolition derby cars sponsored by a local business. When the business owner asked them to run on E85, he was told that wasn’t possible. Dillman’s interest was piqued by the story because he doesn’t like the phrase “you can’t do that.” He was convinced that, with a little tinkering, any engine can run on E85. So he started researching it. “It was fascinating how much bad information there was and the little amount of good information,” he says. Eventually, he hit upon the idea of educating the public by converting his latemodel Chevy S-10 to burn E85 and then setting a world record with the vehicle. He scrapped the plan because he would have had to drive 400,000 miles. Dillman then turned to Guinness World Records, the authority on record-breaking achievements such as the most concrete blocks broken whilst holding a raw egg (24), the most nationalities in a sauna (91) and the tallest living married couple (a combined 13 ft 4.4 inches). The people at Guinness suggested a record breaking attempt on a pocket or mini bike. He located a 1989 Yamaha YSR50 minibike that qualified under the strict parameters set by Guinness. Then he set out to find a mechanic to increase the size of the carburetor jets in order to burn E85 in the bike. He called mechanics all over the state and they all said it couldn’t be done. Finally a mechanic at Mid-Cities Motorsports in West Bend, Wis., said yes and $200 later Dillman had an E85 minibike.


Wisconsin man attempts world record on E85-optimized minibike

Scootering On Wisconsin resident Scott Dillman rode this minibike 475 miles to beat the previous record.

The bike is about three feet high and goes a maximum of about 45 miles an hour. It has a 48.5 cc engine, or about the size of a chainsaw engine. Dillman is over 6 feet and weighs 240 pounds. “I felt bad for the bike actually,” he says. “I think a lot of people did.” The record attempt itself should have only taken a day, Dillman says, but in the end it was a three-day adventure. The bike repeatedly had mechanical problems and twice Dillman had to haul it back home, repair it, and then haul it back to where he’d stopped to resume the trip. “You had to restart exactly where you stopped, no matter what occurred,” he says. Not one of those mechanical problems, however, had anything to do with E85. In fact, the majority of his issues had to do with the exhaust pipe, which is located only 3 inches off the ground and was knocked off the bike several times. His first attempt was derailed when the bike’s engine overheated and had to be rebuilt because it was accidentally filled up with E10 at a full service station. Dillman

36 | Ethanol Producer Magazine | february 2011

was also chased by a dog and nearly run over twice, once by two deer and the other time by an Amish buggy. Still, Dillman enjoyed driving the E85 minibike. “You could hear how nice the engine was running,” he says, “and I knew E85 was a good idea.” Dillman could have driven the minibike as is, without converting it to E85, and still have broken the record. Using E85 was about educating the public, he says. Along the way he talked to many people who were under the impression that E85 would damage a two-stroke or two-cycle engine, like that in Dillman’s minibike, lawnmowers, weed eaters, boats and chainsaws. That’s not true, he told them. A two-cycle engine can be optimized to run on E85. Dillman has submitted the required information to Guinness and was hoping his world record trip of 475 miles would be verified by the end of January, beating the previous record by 25 miles. —Holly Jessen



Unfair Grade Members of the U.S. House of Representatives say the proposed letter-grade fuel efficiency label provides electric cars an unfair advantage over all other vehicles.

Picking Winners?

Proposed labels may favor electric cars Last August, the U.S. EPA and the U.S. Department of Transportation proposed the first revisions to vehicle fuel economy labels in more than 30 years. At the time of the proposal, the EPA said the current labels were “petroleum-centric” and new labels are necessary to reflect recent advancements made in fuel efficiency and emissions technology. Two label design options were presented by the agencies. One is similar in style to the current label, but includes fuel consumption and emissions information as well as a slider bar to illustrate the vehicle’s performance compared to all other vehicles. The second option is an entirely new design and incorporates a letter grade to symbolize the vehicle’s overall fuel economy and emissions performance. In December, a group of 53 members of the U.S. House of Representatives issued a letter to EPA Administrator Lisa Jackson and DOT Secretary Ray LaHood, stating their belief that the letter-grade label option unfairly favors electric vehicles over all other types of vehicles. “The ‘A’ and ‘A+’ categories are reserved for a very narrow range of vehicles, i.e., battery electric vehicles and plug-in hybrids,” the representatives stated. “However, a fuel efficient diesel vehicle would be penalized with a low or mediocre grade. Similarly, most fuel efficient SUVs and pickup trucks would rate no higher than a “C+.” The representatives further stated that the letter grade marginalizes the most important piece of information provided on the label—the fuel economy of the vehicle. Combining the fuel economy and emissions performance of a vehicle into one rating, as would be done with the letter grade option, presents even greater problems for labeling flex-fuel vehicles (FFVs) because they can be operated on more than one type of fuel. In the EPA’s label proposal, it suggested using gasoline metrics for FFV labels because evidence suggests that 99 percent of FFV drivers use gasoline rather than E85. The EPA says it is reviewing the representatives’ letter as well as all other comments received. The agency is tentatively scheduled to decide on a new label by June. —Kris Bevill february 2011 | Ethanol Producer Magazine | 37


Getting from Here to There EIA predicts ethanol pricing base to shift As gasoline prices continue to increase, the U.S. DOE’s Energy Information Administration predicts that consumers’ evaluation of E85 prices will shift from a volumetric basis to an energy-equivalent basis when comparing ethanol to gas. The EIA released its Annual Energy Outlook 2011 on Dec. 16, which contains its base energy forecasts for the next year. The full report, which will contain multiple scenarios based on differing assumptions such as high or low prices for oil, will be released in the spring, says Peter Gross, EIA analyst. The shift in thinking will happen as E85 becomes more prevalent in the marketplace and consumers gain awareness about the fuel, Gross tells EPM. He envisions a day when consumers don’t pay as much attention to price per gallon of fuel, rather judging E85 by how many miles traveled for the price. Gasoline prices are forecast to increase from $2.35 per gallon in 2009 to $3.69 by 2035. The number is lower than what was forecast by the EIA last year. By 2022, the retail price of gas is predicted to be $3.43 per gallon, compared to $2.68 for E85. Because gas has a higher energy content, the prices are actually comparable per mile traveled, the report said. The EIA’s projections for cellulosic biofuel are different than what was projected

last year, with forecasts for some biofuels up, such as cellulosic ethanol, and others down, Gross says. Although it’s difficult to know for certain, the EIA projects that there won’t be enough cellulosic biofuels to meet the renewable fuel standard targets by 2022. The report forecasts the 2022 target of 36 billion gallons will be modified to 25.7 billion gallons. U.S. consumption of liquid fuels, both fossil and biofuels, is projected to increase from 18.8 million barrels per day in 2009 to 22 million barrels per day in 2035. As always, the transportation sector sucks up the lion’s share of liquid fuels, at 72 percent of total consumption in 2009 with a slight increase to 74 percent in 2035. The forecast also calls for imports to meet a major but declining share of total U.S. energy demand. In 2005, U.S. dependence on imported liquid fuels reached 60 percent and by 2009 it had decreased to 52 percent. That percentage, which is measured as a share of total liquid fuel use, is expected to continue declining to 42 percent in 2035, the report says. This decrease is due to increased use of renewable fuels produced domestically, the adoption of efficiency standards, which reduces demand, and rising energy prices. “Rising fuel

Growing Share Biofuels represents a small but growing segment of U.S. energy consumption. The EIA predicts it will grow from 1 percent in 2009 to 3 percent in 2035. SOURCE: EIA

prices also spur domestic energy production across all fuels, which moderates growth in energy imports,” the report says. Production of U.S. crude oil was at 5.4 million barrels per day in 2009 and is projected to increase to 6.1 million barrels per day by 2019. It will decline slightly, however, from that level to 5.7 million barrels per day in 2035. “Production increases come from onshore enhanced oil recovery projects and shale oil plays,” the report says. —Holly Jessen

Storing E15

The U.S. EPA proposes compliance guidance As mid-level ethanol blends become more available, compatibility between those higher blends and underground storage tanks (UST) becomes a concern. In November, the U.S. EPA issued proposed guidance for owners and operators of retail fuel stations in an attempt to offer compliance measures to those who wish to add levels of ethanol greater than E10 to their list of available fuels. According to the EPA, there are at least 607,000 regulated USTs in the U.S. Owners have typically been able to prove compliance by using Underwriters Laboratories Inc.approved equipment, but the EPA says many

systems currently in use have not been tested for compatibility with ethanol blends greater than E10. The agency has proposed three compliance methods: certification or listing by an independent test laboratory, equipment manufacturer approval, or another state agencyapproved method. The Renewable Fuels Association says it agrees with the EPA’s proposals, but offers improvements to the required documentation. “There is a general lack of information as a result of ownership changes and the long-expected useful life of equipment,” RFA President and CEO Bob Dinneen said. “Improved requisite

38 | Ethanol Producer Magazine | february 2011

information for UST and fuel handling equipment is necessary for the introduction of other new fuels and fuel blends.” The American Petroleum Institute offered several suggestions regarding the EPA’s guidance, most of which addressed its concerns with E15 compatibility in legacy equipment. The group says it is conducting its own tests on UST system components with E15 and expects results in June. The EPA expects to issue its final guidance early this year, but API has requested the agency delay its final decision until its private E15 compatibility testing is complete. —Kris Bevill


Source: U.S. EPA

The Numbers for 2011 Cellulosic lowered as expected, corn ethanol unchanged

With little fanfare, the U.S. EPA finalized its 2011 renewable fuel standard (RFS) volumes on schedule at the end of November and, as expected, drastically reduced the mandate for cellulosic biofuels. Originally set to be 250 million gallons, the 2011 cellulosic biofuels volume is now only 6 million gallons. This amount is still considered to be ambitious, as it is unlikely that the five producers named in the EPA’s projection will all actually produce at the levels assigned to them. The EPA noted this in its ruling but stated it purposely finalized what it believes are “attainable volumes” in order to prevent an undesirable circumstance where cellulosic biofuel is produced at levels over and above the mandated amounts, thus weakening demand for the fuel and renewable identification numbers (RINs). Corn ethanol’s portion of the RFS remains virtually unchanged this year when compared to the initial 2007 volume target. While the EPA did not accept the ethanol industry’s proposal to allow corn ethanol to be used in place of any unproduced advanced biofuels, it also did not agree with the petroleum industry’s suggestion to lower the overall RFS to account for a lessened cellulosic biofuels volume. —Kris Bevill

february 2011 | Ethanol Producer Magazine | 39


‘Biofuels are the New Oil’ BP doesn’t invent things. It just takes previously developed pieces of technology and makes them better. BP Biofuels North America President Sue Ellerbusch says this strategy holds true for the company’s biofuels sector as it positions itself to be a leader in the cellulosic biofuels industry. “BP didn’t invent cellulosic biofuels,” she says. “And BP didn’t build the first pilot plant or demonstration unit. BP will, however, construct the nation’s first commercial-scale cellulosic biofuels facility and begin to commercialize this industry at scale.” Ellerbusch spoke at a recent ethanol industry conference and provided attendees with an update on BP Biofuels’ U.S. projects as well as some insight into the oil major’s motivation to become a biofuels producer. “We believe that what we are seeing today is the coming of age of a new energy sector that over the next 100 years will supplement traditional fossil fuels First at BP Sue Ellerbusch, to create a more diverpresident of BP Biofuels sified energy mix,” she U.S., says BP will be the first to commercialize said. “In the U.S., one cellulosic ethanol. of the critical new energy technologies is biofuels. … We project that biofuels could account for up to 20 percent of the global road transport fuels market by 2030—and that’s at the conservative end. For some oil companies, biofuels remain a limited strategic option where investments are sometimes viewed as more of a technology hedge than as a business imperative or, more practically, to ensure a company can comply with blending mandates. That is not BP’s position.” According to Ellerbusch, BP has identified biofuels as the most likely alternative fuel for internal combustion engines and found that producing those fuels is not dissimilar to its traditional business—producing petroleum. “Biofuels are in many ways the

new oil,” she says. “The difference is that they are created from unlimited supplies of fresh biomass rather than finite supplies of fossilized biomass. They are not simply a complement to gasoline but a complement to our traditional core producer of crude oil. Today, when I look at a typical ethanol plant, I see a 4,000 to 6,000 barrel-a-day well.” Sweet Future Tropical BioEnergia, BP’s joint venture with Brazil’s secondBP made its initial largest sugarcane crusher, Santelisa Vale, is focused on producing sugarcane ethanol. venture into biofuels in 2006 and has since committed more than $1.5 billion, more than Additionally, BP formed the Energy any other oil company, to its biofuels opera- Biosciences Institute in San Francisco and tions, according to Ellerbusch. Its most well- provided a 10-year, $500 million grant for reknown project in the U.S. to date has been a searchers there to study the various scientific partnership with Verenium Corp. to produce aspects associated with producing advanced cellulosic ethanol from sugarcane and energy biofuels. The institute’s collaborators include cane bagasse. The duo opened a 1.4 MMgy the University of California-Berkeley, Lawdemonstration-scale facility in Jennings, La., rence Berkeley National Laboratory and the in 2008 to commercialize Verenium’s pro- University of Illinois at Urbana-Champaign. cess technology. Last year, BP paid Verenium Ellerbusch stressed that while research $98.3 million for all of its cellulosic interests, and development of conversion technology including the Jennings plant, its cellulosic eth- is a crucial element of the production proanol technology and the joint venture’s Glob- cess, BP’s goal is not to create new methods, al Biofuels Technology Center in San Diego, but to perfect what has already been develwhere research and development is con- oped. “The issue is not about invention of ducted for technologies to convert perennial these new technologies,” she says. “The issue grasses to biofuels. BP is currently operating is about who can scale these technologies at the Jennings facility, where it is streamlining the lowest cost.” its production process before constructing a BP’s benchmark for cellulosic biofuels commercial-scale plant in Highlands County, is $1 per gallon. It is at that price that they Fla. Ellerbush says she believes the $400 will be able to compete with $40-50 per barmillion project, operated under the name rel oil without subsidies, Ellerbusch says. To Vercipia Biofuels, will be the first operating achieve this goal, BP has identified energy commercial-scale cellulosic ethanol plant in grasses as its ideal U.S. feedstock and believes the U.S. when it comes online in 2013. The sugar-based fuels will become the world’s 36 MMgy Florida plant will convert perennial third largest source of liquid hydrocarbons grasses, including energy cane, napier grass by 2030. —Kris Bevill and high-biomass sorghum to ethanol, using biological fermentation technology.

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BP focuses its cellulosic activities on energy grass feedstocks


Making the Grade Isobutanol cleared by EPA

Gevo Inc. announced its isobutanol has successfully been registered with the U.S. EPA as a fuel additive. Under the renewable fuel standard, isobutanol now qualifies for 30 percent more renewable fuel value, or renewable identification numbers (RINs) than ethanol for obligated parties. Gevo will soon begin the retrofit of the 22 MMgy corn ethanol plant in Luverne, Minn., to produce 18 MMgy of isobutanol, expected to be online in 2012. It entered a quiet period in midAugust after filing a registration with U.S. Securities and Exchange commission related to its initial public offering. The company will integrate a proprietary fermentation process that's designed to fit into existing ethanol production plants. Coined GIFT (Gevo Integration Fermentation Technology), the technology platform consists of two components: a yeast biocatalyst and a separations technology unit that bolts onto existing ethanol plants to produce isobutanol from grain crops such as corn, wheat, sorghum, barley and sugarcane, as well as nonfood-based cellulosic inputs. With a higher energy density than ethanol and lower Reid Vapor Pressure, Gevo believes isobutanol will be an attractive blendstock. "We’ve taken another important step in commercializing our product in the near term, said Gevo CEO Patrick Gruber. "Along with the chemicals market, selling isobutanol as a low Reid Vapor Pressure biofuel blendstock is one of our most important opportunities." Gevo’s isobutanol can be used directly as a specialty chemical, as a gasoline and jet fuel blendstock, and through conversion into plastics, fibers, rubber and other polymers. —Susanne Retka Schill

Negative ILUC

UK report examines wheat ethanol A report for the UK Department for Transport singled out wheat ethanol as having a negative indirect land use change (ILUC) impact. The study, which was conducted by E4tech, a UK and Switzerland energy technology consulting and software company, estimates the ILUC impact of five biofuel feedstocks, including palm oil, rapeseed oil, soybean oil, wheat and sugarcane. Wheat was the only feedstock resulting in a decrease in greenhouse gas emissions, at a range of -53 grams CO2 equivalent per megajoule to -5.1 grams CO2e, depending on the scenario. “The main reason why the ILUC factor is negative for wheat is due to the credit that comes from wheat bioethanol coproducts displacing land-grown animal feeds such as soybean meal and feed wheat,” Claire Chudziak, one of the study’s four authors, tells EPM. —Holly Jessen

february 2011 | Ethanol Producer Magazine | 41

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Renewable Fuels Assoc. Proud toPage be Full the voice of the ethanol industry for 30 years. Since 1981, the Renewable Fuels Association has proudly served our members as the voice of the ethanol industry, delivering the landmark legislative, regulatory, and tax policy victories that helped create the industry we enjoy today. And our work continues. From our industry-leading technical and research expertise to our market development activities that continue to expand opportunities, we owe our success to all of our ethanol producer members. Thank you for 30 years of commitment.

Join our membership ranks and together we will expand markets and our industry. To learn more, visit february 2011 | Ethanol Producer Magazine | 43 Š2011 Renewable Fuels Association. All Rights Reserved.


Consumer Choice A PetroServe USA customer fills his flexfuel vehicle with E30 from one of the station’s blender pumps. Statistics show that consumption of ethanol in North Dakota has skyrocketed since the state implemented its blender pump program, demonstrating consumers’ willingness to use alternative fuels. PHOTO: KRIS BEVILL, BBI INTERNATIONAL

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Blending to the

Top Sparsely populated North Dakota leads the U.S. in blender pumps BY Kris Bevill

The USDA’s recent directive to assist retailers with the financial burden of installing 10,000 blender pumps over five years stands to usher in a new push for blender pumps throughout the U.S.

While the USDA’s support is a welcome signal of federal support for ethanol infrastructure, other efforts are already being carried out at various levels throughout the country with the same overall goal of increasing the amount of ethanol available to consumers. Several states offer retail station owners incentives to install blender pump or E85 dispensers. Various corn grower groups also offer financial reimbursement for the installation of E85 or blender pumps. Growth Energy offers a direct grant of $2,500 to any retailer who installs an E85 pump and $5,000 for a blender  on the web pump. All of these programs are interactive map offering statean encouraging sign of the ethanol An by-state summaries of incentive market’s potential to expand, but programs, loan programs, and and regulations related to one state’s strategy in particular laws biofuels is maintained by the stands out for its impressive level U.S. DOE Alternative Fuels & AdVehicles Data Center at: of success in building out blender vanced ethanol/incentives_laws.html pump infrastructure.

february 2011 | Ethanol Producer Magazine | 45


Empowering Ethanol

North Dakota, (total population about 650,000) has an economy that historically has been driven largely by agriculture. In recent years, corn production has increased and, with it, ethanol production. Booming oil production in the western half of the state helped build a budget surplus and has added an interesting dynamic to this traditionally farm-based state. But even before the oil boom began, forwardthinking legislators and hands-on industry members decided that North Dakota needed to accelerate the development of various energy sources produced in the state and to actively promote those resources. In 2000, under the leadership of Gov. John Hoeven, a committee was formed to evaluate the state’s energy resources. The resulting policy, called EmpowerND, included comprehensive measures to support the economic development of all aspects of North Dakota’s energy sources, including coal and petroleum, wind power, ethanol and biodiesel. One of the initial goals of EmpowerND was to increase the state’s ethanol production by tenfold, says Tom Lilja, executive director of the North Dakota Corn Council. In 2001, the state had just 20 million gallons of ethanol production capacity. A statewide ethanol production incentive program was put in place in 2002 and by 2008, due in part to the incentives made available through EmpowerND, more than 300 million gallons of additional ethanol capacity had come online. The state’s current production capacity is about 330 MMgy. Once ethanol production capacity had been expanded, work began on increasing in-state usage of the fuel. Members of the state corn growers association contacted the governor’s office to discuss incentivizing E85 as well as ethanol blender pumps. “We approached the governor and he really liked the idea,” Lilja says. “He wanted to do it as a cooperative effort, so the corn growers offered to put up a half-million dollars toward this program to get a lot of pumps across the state.”

46 | Ethanol Producer Magazine | february 2011

The governor requested $2 million from legislators for a statewide Biofuels Blender Pump Program to incentivize the installation of pumps at retail stations. Under the program’s guidelines, any North Dakota retailer who installed an approved blender pump and agreed to sell biofuel blends for two years would be eligible to receive $5,000 for each installed blender pump, capping at $40,000 per retail site. In 2009, the state legislative assembly approved the program and agreed to allocate $1 million from the state’s general fund to finance it. Matching federal funds were obtained to equal the governor’s initial request of $2 million. In addition to the state program, the North Dakota Corn Council agreed to provide $2,500 for each installed pump. After factoring in federal tax incentives and Growth Energy’s available grant money, the approximate $25,000 price tag for a new blender pump would now actually cost North Dakota retailers about half that amount. “Moving ethanol and increasing ethanol production has been a big part of the governor’s agenda,” says Shane Goettle, commissioner of North Dakota’s commerce department. “The governor sought early on to increase ethanol production. This [blender pump program] was an effort to support that production. Having Money Man the infrastructure in Shane Goettle, place to consume commissioner of North Dakota’s ethanol was a key commerce department, part of the strategy. is responsible for off on grants It was the next step signing for blender pump in this evolution installations. after we had the plants in place to make it available to our consumers.”

Consumer Choice

Retailer and consumer response to North Dakota’s blender pump program


was almost immediate. Prior to the program’s unveiling in October 2009, the state had no blender pumps. By November 2010 at least 76 ethanol blender pumps had been installed throughout North Dakota and another 172 reimbursement applications had been received by the commerce department.

North Dakota now has more blender pumps than any other state in the country, including neighboring Minnesota, which has more than triple the ethanol production capacity and consumes about three times as much fuel as North Dakota on an annual basis.

4C3: B63 4CBC@3

Of course, installing the pumps is only the first step toward increased consumer usage. Once the choice is available, will customers buy more ethanol? In North Dakota, the short answer is “yes.” Retailers who installed blender pumps in the first year of the program reported increased sales for all types of fuel offered at their stations. Most notable though has been the growth in sales of E85. Between January and August of 2009, 167,025 gallons of E85 were consumed in North Dakota. During the same time period last year, 351,161 gallons of E85 were consumed. “What’s really crazy about those numbers is that 50 percent of that increase was only five blender pump locations,” Lilja says. “So we think E85 sales will be exploding once we have a lot of these pumps in place. We think we could go through 1 million gallons of E85 by 2011.”

Biofuels Operations

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Driving Demand Sales for E85 from Blue Flint Ethanol LLC’s inline blending site have increased significantly as a direct result of added blender pumps in the plant’s market area.

february 2011 | Ethanol Producer Magazine | 47


Sales of mid-level blends were not included in the 2009-â&#x20AC;&#x2122;10 comparison, so the actual amount of ethanol consumption within the state is even higher than reported. Goettle says the number of reimbursements issued by his department is a good indication of the demand for blender pumps from retailers and consumers. â&#x20AC;&#x153;Ethanol consumption has doubled and we expect that to continue to move forward

as consumers learn about this choice at the pump and begin using it in their vehicles,â&#x20AC;? he says. â&#x20AC;&#x153;The choice here lies with the consumer. Thatâ&#x20AC;&#x2122;s the advantage of the program. The increase in sales is because consumers are responding to the availability.â&#x20AC;?

Ethanol Input

Part of what made North Dakotaâ&#x20AC;&#x2122;s incentive program so successful is the






48 | Ethanol Producer Magazine | february 2011

"Blender pumps empower people ... they should be part of the nation's larger energy strategy." N.D. Sen. John Hoeven


Essential Expertise for Water, Energy and Air

high level of collaboration that occurred between all parties with vested interests in the pumps, including ethanol producers, corn growers, petroleum marketers and state officials. Jeff Zueger, chairman of the North Dakota Ethanol Council and general manager of the 50 MMgy Blue Flint Ethanol LLC plant, located in the central part of the state, says the stateâ&#x20AC;&#x2122;s ethanol plants provided background information and market data to support the call for blender pumps and also lobbied local and state officials to pass the legislation. The work was worth their effort. Zueger says demand for ethanol from state producers increased almost immediately as a result of the program. At Blue Flint, E85 sales from its onsite inline-blending system increased by four times the amount sold prior to the blender pump incentive. And that was within just two months of the program. He expects demand to continue to grow as more pumps are installed in the plantâ&#x20AC;&#x2122;s area.


â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s been very positive for our facility,â&#x20AC;? he says. â&#x20AC;&#x153;It provides a great opportunity for our industry to work more closely with retailers on providing product that they can directly market. Weâ&#x20AC;&#x2122;ve found specifically at Blue Flint that if we work directly with retailers, we can offer pricing options that meet their business objective. We offer spot and forward pricing. If they like to have their forward-priced product indexed off of petroleum-based products we can offer that to them as opposed to indexing it off of the ethanol market. It allows for hedging opportunities for the retailer to lock in prices when the spread


between gasoline and ethanol are optimal for them.” The 120 MMgy Tharaldson Ethanol LLC plant in Casselton, located about 20 miles west of Fargo, doesn’t offer inline blending so it has experienced a more gradual climb in local demand, according to general manager Russ Newman. The plant currently sends between 93 and 97 percent of its product to other states in unit train shipments, but he’d like to eventually keep up to 20 million gallons per month in the state. “We realize we’re going to be exporters, but as much as we can get in the area the better,” he says.

direct result of the blender pump incentive program.

Contributions and Considerations

Ethanol became the industry it is today due largely to grassroots political efforts of early producers. North Dakota’s incentive program brings to light an emerging trend which resembles those early production

efforts, only now the goal is greater consumer availability for the product. This includes passing legislation and forming relationships with petroleum representatives and transportation fuel marketers. When North Dakota’s blender pump program was in the formative stage, the state’s ethanol producers took an active role in lobbying legislators at the state capital. They also formed relationships with their local representatives and made

Petroleum Partner

While collaboration was vital in forming and implementing North Dakota’s blender pump program, most parties involved credit one man for its ultimate success. Kent Satrang, CEO of Petro Serve USA, manages 20 retail fueling stations throughout the state, several of which are located in Fargo, North Dakota’s largest city. He’s a longtime supporter of ethanol because, he says, it’s “the right thing to do.” His company’s stations were some of the first to install blender pumps following the program’s launch and Satrang says he is very proud of helping North Dakota become the No. 1 blender pump state in the country. “What was done with blender pumps through the North Dakota program is going to be a model for the future for other states and will be huge for North Dakota’s industry,” he says. “To go from zero blender pumps to 250 by the end of 2011 … we have changed the infrastructure of pumps in North Dakota.” In Grand Forks, for example, which is located about an hour north of Fargo and is the state’s third largest city, there were no blender pumps six months ago. In fact, “you couldn’t buy E85 within a 50-mile radius of the town,” Satrang says. “Yet there were 4,000 FFVs. The option was just not there.” Grand Forks consumers now have four blender pumps to choose from, all of which were installed as a february 2011 | Ethanol Producer Magazine | 49


their case for increased ethanol availability. “We’re fortunate to have a supportive legislature and governor’s office and others within the state lawmaking divisions,” Zueger says. “Policymakers viewed it as an investment in growing ethanol use throughout the state, which would positively affect the economics of the state, rather than viewing it as an expenditure.” Alliances were also formed with the state petroleum marketers association. “Those people can be your best partners,” Newman says. “Kent Satrang went to [the capital] with

the ethanol producers and that was a benefit because the retailers were asking for it, not just ethanol producers.” Also key to North Dakota’s success was an informational program organized by the state designed to introduce retailers to blender pumps. Ethanol plant managers, retailers, blender pump manufacturers, the petroleum marketers association, the corn growers association and the state commerce department all participated in the meetings. Zueger says those meetings were critical in getting the word out regarding the incentive

Blender Pump Manufacturers North Dakota ethanol producers formed strategic relationships with blender pump manufacturers while lobbying for the state’s incentive program. The top two blender pump manufacturers in the U.S. are Gilbarco Veeder-Root Inc. and Dresser Wayne Inc. The two companies provide approximately 90 percent of the blender pumps sold to retailers across the U.S., according to Ron Lamberty, vice president of market development for the American Coalition for Ethanol. Bennett Pump Co. is the only other major pump manufacturer in the nation.

50 | Ethanol Producer Magazine | february 2011

program to retailers. “We’d set up these meetings and present the different aspects of the blender pump program and the pumps themselves,” Zueger says. “We had retailers who had installed the pumps come to some of the meetings and talk about the experience they had. In our area, we also talked about pricing mechanisms, supply mechanisms and quality control measures that we use in producing the product and moving it to the market.” Lilja says North Dakota’s program was launched at exactly the right time because it kicked in just as many retailers needed to upgrade their pumps for other reasons. So instead of replacing pumps with new traditional pumps, many were convinced to install blender pumps in order to take advantage of the incentives. Additionally, Lilja believes the location of the first few blender pumps was crucial to the program’s overall success. “It really was because we got some pumps in a larger metropolitan area near the beginning of the program that



Federal Fuel John Hoeven is a staunch supporter of the ethanol industry and has passed supporting policies throughout his career as governor of North Dakota. He is now representing North Dakota in the U.S. Senate and holds a seat on the Senate energy committee.

really helped it,” he says. “I know other states have done blender pumps, but they’ve done them in the small towns and they’ve had a hard time getting into the larger metropolitan areas. Rolling this out of Fargo under the leadership of Satrang and Petro Serve USA was huge.” Goettle says North Dakota’s overall collaborative attitude toward energy policy deserves evaluation from other states seeking to form their own policies. “We’re one of the few states that has crafted a comprehensive energy policy,” he says. “The manner in which we seek industry input and direct communication with industry on what we need to move forward in all of these sectors is, I think, unique and a model for the country.” From a financial perspective, there are few states with as healthy a budget surplus as North Dakota has, so groups such as state corn growers associations might have to take on larger roles in offering incentives elsewhere. “Based on the budget situations in other states, I think the corn growers are

going to have to offer most of the money per pump,” Lilja says. “We were fortunate to have a $1 billion surplus in North Dakota and that’s one of the reasons the governor was in favor of this.” Reimbursement applications for blender pumps installed in North Dakota are being accepted through May 1 and it’s possible the state legislators will vote to extend the program. In November, Hoeven was elected to the U.S. Senate and will take a seat on the Senate energy committee. North Dakotans believe Hoeven will use his experience in the state to benefit the nation’s ethanol industry, and early indications from Hoeven suggest he has a similar agenda. “Blender pumps not only support biofuels production, but empower people to make their own choices at the pump,” Hoeven says. “They should be a part of the nation’s larger energy strategy.” Author: Kris Bevill Associate Editor, Ethanol Producer Magazine (701) 540-6846

february 2011 | Ethanol Producer Magazine | 51


E85 Rallies The proprietary ethanol blend, Ignite fuel, was used by race car driver Stephan Verdier during the summer X Games. Verdier races in RallyCross and Formula D. PHOTO: lary chen

52 | Ethanol Producer Magazine | february 2011



Flags for E85

Ethanol has big fans in the racing crowd and they are revving up its use. By Holly Jessen

With the jury still out on whether the U.S. EPA will approve the use of E15 for all cars, regardless of age, it’s going to take some creativity to clamor over the blend wall. Here’s where racing enters the picture.

Arguably one of the biggest announcements of 2010 came when the National Association of Stock Car Auto Racing agreed to use E15 in its races. Beyond that, the American Ethanol brand will be prominently displayed at all races, promoting the fuel to millions of fans. “NASCAR fans are the most loyal of any sport in the country,” says Stephanie Dryer, public affairs associate for Growth Energy. “We expect that NASCAR’s use of E15 will encourage all American motorists to embrace mid- and high-level ethanol blends like E15 for its high-octane fuel properties. Using more ethanol in our automobiles–either racing vehicles or street cars–will create new jobs in the U.S., clean our skies and strengthen our national security by reducing our dependence on foreign oil.”

february 2011 | Ethanol Producer Magazine | 53


Forrest Jehlik, a research engineer with the Argonne National Laboratory, applauds the groundbreaking six-year deal. Getting E15 into the gasguzzling fuel tanks E85 Booster of NASCAR stock Forrest Jehlik says cars is a step in the racing can lead the way to decreasing right direction, he tells petroleum use. EPM. NASCAR is only one of many racing venues, however. Jehlik and Jay Berry, founder of Central Indiana Ethanol LLC, at Marion, Ind., are two examples of people working to break into circle track and other types of racing with ethanol blends of E85 and higher. Although working separately, the two have a goal in common: reaching

race drivers and fans on a grassroots level to demonstrate the benefits of ethanol on and off the racetrack.

In the Groove with E85

Jehlik wants to start a revolution. There are great examples from history of average people changing the world for the better, he tells EPM. In a time when the U.S. spends $1 billion a day to import petroleum and imports 65 percent of its petroleum needs, why can’t race car drivers be the vehicle to change by using E85 to decrease petroleum use? “It’s time for America to take America back, and we think this is a good start,” he says. While it doesn’t have the star power that NASCAR does, circle track racing is a popular sport in the U.S. More than 1,100 tracks are found in all states and 440,000

54 | Ethanol Producer Magazine | february 2011

teams participate in races. More than 20 million spectators attend the events annually. Jehlik would like to see circle track racing transition to E85. Not only would that decrease petroleum use in racing, but once race car drivers and spectators get used to using the fuel on the track, it wouldn’t be that far of a leap to use the fuel in their personal vehicles. Take, for example, a town like Lisbon, N.D., population under 2,000. Someday, Jehlik would like to see all the race cars at Lisbon’s dirt circle track use E85. Beyond that, he envisions a day when that fuel for that track comes from a nearby cellulosic ethanol plant. “That’s money that people are paying for the fuel that is going back into the community,” he says. Two years ago, Circle Track magazine started taking a look at the decline of circle track racing, wondering why that was and what could be done to change it. That led to discussion with Argonne researchers on the subject of petroleum use and what other types of technologies and fuels racing could use. That’s how Circle Track Project GREEN (green racing experimental engine narratives), a U.S. DOE funded research project, was born. “[It will] hopefully bring in a whole new fold of racing fans that would realize racing wasn’t just about racing anymore, but it was also about a sustainable movement,” Jehlik says. The whole idea is to test E85 against 100 octane race fuel and then openly share the results. In addition to fuels, Project GREEN is examining modern engine technologies, the use of catalytic converters versus no catalytic converter, and carburetors versus a modern fuel injection engine. “Race engines today still use carburetors, which is really basically Stone Age technology for engines,” Jehlik explains. A new 6.2 liter CT-525 engine from GM Performance Parts was put into a Chevrolet Camaro race car operated by driver Dalton Zehr of Zehr Racing. The team added an intake manifold and carburetor but made no changes to the internal engine. Other partners included



Racing Team Forrest Jehlik, at right, leaning on the car, is leading Argonne National Laboratory forward in its green racing research program. Also shown, left to right, are Mark Jones, chief crew mechanic of Zehr Racing; Marty Zehr, team owner of Dalton Zehr Racing; Dalton Zehr, driver; Robert Fisher, editor of Circle Track magazine; Jehlik, and Danny Bocci, electrical engineer.

fuel tanks, one for racing fuel and the other for E85, allowing them to quickly swap fuels without purging and cleaning the fueling system, Jehlik says. Testing showed that when running on E85 with electronic fuel injection and catalysts, the race car generated more power and torque 87 percent of the time. There was also a decrease in emissions when a catalytic convertor was used in a fuel injection engine, particularly with E85, while still showing increased performance.


Random Technology, which donated catalytic converters; Mast Motorsports, which did engine work, including calibrations and testing; and Sensors Inc., which donated time, expertise and equipment for on-road emissions testing. The engine was tested on a track as well as on a dynamometer, or dyno, which measures power and simulates the loads and environment of a racing engine. Besides installing onboard emissions equipment, the vehicle had two separate

Performance Engine A 6.2 liter CT-525 engine from GM Performance Parts was used for the project. february 2011 | Ethanol Producer Magazine | 55

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Using the Argonne model for greenhouse gasses, regulated emissions and energy use in transportation (GREET), researchers determined that that race car reduced the CO2 impact relative to using race fuel by about 20 percent. With cellulosic ethanol the race car’s greenhouse gas (GHG) impact could be reduced to about the same as a 2010 Toyota Camry, using unleaded fuel for mixed city and highway driving. If the vehicle used 97 percent denatured ethanol the GHG impact would be far lower than a Toyota Prius, burning unleaded gas for mixed city and highway driving. The results suggested that when using near neat ethanol, the race car would have a well-to-wheel GHG impact of a car that achieved nearly 110 mpg. “It was really an impressive result,” Jehlik says. In October, the team showcased the E85 race car at the La Crosse, Wis., Oktoberfest circle track race. Not only did the event demonstrate that a race car can burn E85 but that it can do so with a production engine and at a significant cost savings for the racer. On the E85 side, fuel from a pump would have cost the team about $2.35 per gallon while race fuel at the track was $10.75. The car used just over 16 gallons of E85, which cost $38. The race fuel would have cost the team $131, which includes compensating for the difference in energy content between the racing fuel and

E85, he says. The team also saved money by using a production-based engine. The GREEN racing team’s engine cost about $8,500, compared to upwards of $40,000 for a race engine. In all, using E85 and the production engine saved the team $31,593. Jehlik is passionate about Project GREEN. The results show a definite benefit for the use of renewable fuels in racing. E85 is produced domestically, produces more power, reduces GHG emissions, reduces the amount of petroleum used and is cheaper. “We believe that there are so many positives to this fuel that it’s hard to ignore it relative to the racer,” he says. “There’s no downside to it at all.” There’s still more work to do, however. While the demonstration race this fall was successful in terms of showing racing fans a race car with a production engine burning E85, at the end of the race, the car came in 14th out of 65. The goal of this project wasn’t to produce a winning race car, but to determine if E85 is a viable racing fuel, he says. With that proved, others can take on the task of optimizing the engine for E85 and making it even more powerful. That’s where Michigan Technological University comes in. Argonne researchers will collaborate with the school in looking at some of the finer details of the differences between race fuel and E85, Jehlik says. Work will also begin on engine optimization. He

PHOTO: lary chen


Dirt Flies Stephan Verdier kicks up dirt during a summer X Games RallyCross event.

isn’t ready to reveal what comes next, except that the project will continue through the next year and beyond. “We have an amazing list of things we are going to start tackling,” he says.

Ignite a Winner

In Marion, Ind., Central Indiana Ethanol produces a product specifically blended for race cars. The trademarked Ignite fuel is a

proprietary blend of ethanol with octane ratings of 108, 111 or 114, Berry tells EPM. The fuel is a higher blend than E85 and lower than E100. He’s also tight lipped about what denaturants and lubricants are used. Ignite is marketed and distributed by National Biofuels Distribution. The company, of which Berry is a founder and vice president, supplies municipalities, state and federal vehicles and corporations, with

E85 and biodiesel, he says. The creation of Ignite fuel came after customers in Indiana started asking questions about the difference in E85 fuel in different areas. They’d fill up with E85 locally and their car would run great. Then they’d go out of state and fill up with E85 and have problems. “They couldn’t figure out why the engine was having issues, why it wasn’t running correctly,” he says. The root of the problem is inconsistency

february 2011 | Ethanol Producer Magazine | 57

in the blends, he says. A fuel marketed as E85 isn’t exactly 85 percent ethanol. The other question is, what makes up the other 20 to 30 percent of the fuel, Jay asks. Is it below-grade 87 octane gasoline? “That’s why we created Ignite,” he says. “It is the exact same blend of ethanol every time.” Two years ago, Central Indiana Ethanol was blending a small amount of Ignite for just a few people. Today the fuel is used by race tracks or individual racers in a variety of motorsports, from dirt track races and National Hot Rod Association events to motorcycle racing or even boat racing. “It pretty much started with a few customers and word of mouth and now we have distribution in 42 states,” he says. Ignite helps the 50 MMgy ethanol plant diversify its markets and bring in additional revenue. That’s a positive thing in this economic climate and as the ethanol industry faces the blend wall. “Our goal is to grow it out within the next couple years

to 4 to 5 million gallons of Ignite a year,” West Coasts will eventually be required to meet the same emissions standards as street he says. Berry would like to see people transition vehicles. The high-octane racing fuel used from viewing ethanol as simply an additive. by most race car drivers today wouldn’t It can be marketed to the racing industry meet those more stringent emissions stanas a high performance fuel, reaching racers dards. Alan Tehan, owner of Technical Seras well as spectators. Races are great places to do sponsorship or promotional events to educate people about the benefits of ethanol. “If a guy is running his race car on ethanol and he has a $30,000 to $60,000 engine, why can’t you run it in your car?” he asks. As racing becomes more and more green, ethanol will continue to attract attention. For example, Berry expects Driving Ethanol Stephan Verdier used Ignite fuel in RallyCross and Formula D races on the East or racing events last year.

58 | Ethanol Producer Magazine | february 2011

PHOTO: lary chen



vices Inc. in Syracuse, Ind., conducted third-party testing on Ignite. The goal was to determine if the fuel could serve as a direct replacement for racing fuel without engine problems. Ignite passed with flying colors, causing no knock problems, additional heat or loss in power. “You can buy Ignite ethanol racing fuel, put it in your engine, properly jet the carburetor and get the same results or better than what you were getting before,” he says. Naturally skeptical of everything he tests, Tehan was surprised to find the fuel actually performs better than racing fuel. Torque and horsepower increase 2 to 3 percent. Heat output is lower. In addition, ethanol doesn’t have the same issues with shelf life as race fuel that will degrade if it sits around for six months or a year. “I think there are some rather significant benefits to using [Ignite fuel],” he says. The only drawback Tehan can think of is the possibility of rust with older vehicles. Ethanol tends to draw moisture, and older fuel system components are made of steel. Newer components are either stainless steel or polymer, however, and don’t have this problem. “Overall, I think if you prepare properly to use [Ignite], it will give you good service,” he says. What Tehan discovered in a lab, Stephan Verdier has seen first hand on the race track. This past year, Verdier used Ignite fuel in drifting and RallyCross during this summer’s X Games. The two biggest advantages are the lower price and the fact that engines runs cooler with ethanol. “The cooler the engine is, the more reliable the engine is,” Verdier says. To prepare Verdier’s race car for the switch to Ignite, the injectors were changed, to allow more fuel to be pumped into the engine. The vehicle’s computer was retuned specifically for ethanol. The team also swapped out the fuel pump, although that’s not always necessary. “It’s a pretty simple and economical way to change over,” he says.

Verdier has experience with ethanol and knew it was a good product. However, others around him had concerns about safety and reliability. In fact, some were watching him carefully, waiting for his engine to blow up, he says. That never happened and by midway into the drifting season, the top five teams followed Verdier in making the switch to Ignite fuel. “I think in the future, you’ll see in the next five years,

pretty much all the series switch to ethanol,” he says. “It’s such a green thing to do and it doesn’t affect the performance, so it would be kind of stupid not to do it.” Author: Holly Jessen Associate Editor, Ethanol Producer Magazine (701) 738-4946


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Pairing Up Propel Fuels Inc. negotiates lease-type agreements with retail gas station owners in order to place its Clean Fuel Point dispensers at their stations. PHOTO: PROPEL FUELS INC.

60 | Ethanol Producer Magazine | february 2011



upE85 Propel Fuels aggressively addresses Californiaâ&#x20AC;&#x2122;s dire need for infrastructure By Kris Bevill

In most U.S. states, the number of flex-fuel vehicles (FFVs) owned and operated within the state is disproportionately greater than the number of retail E85 pumps. This

unfortunate distribution imbalance is starkly apparent in California, where there are currently more than half a million FFVs on the road and only about 53 E85 pumps, according to the most recently available U.S. DOE statistics. What makes the need for E85 pumps even more desperate in California is the fact that it is the nationâ&#x20AC;&#x2122;s largest fuel market and is home to more FFVs than any other state. The potential to increase ethanol market share through greater use of E85 is significant and so is the potential to profit from the installation of E85 pumps. Propel Fuels Inc. has seized this opportunity and

february 2011 | Ethanol Producer Magazine | 61



recently launched business model, an aggressive staHorton says, betion expansion cause it has the plan that could most vehicles, the quadruple the largest fuel market current number and employs proof E85 stations gressive environin California over mental policies. the next two years Alternative fuels and may impact infrastructure other states as is supported by well. the government, Founded in policy-wise and fiWashington state, nancially, and ProPropel Fuels was pel has benefitted created specififrom both aspects. cally to address California also has the lack of retail the most difficult infrastructure for regulatory enviPump Proprietor Matt Horton, CEO of Propel Fuels Inc., plans to expand his company this year renewable fuels, ronment of any and install its Clean Fuel Point alternative fuel dispensers in states outside of the West Coast. says CEO Matt state, however, and Horton. In 2007, is one of the most the company installed its first Clean Fuel expensive markets to do business in. The Point dispenser, offering biodiesel blends benefits outweigh the challenges though, to consumers in Seattle. Since then, Pro- and Propel believes that success in Calipel has installed five additional renewable fornia will prove the company’s strength fuel dispensers in Washington. In 2010, and enable it to easily penetrate other arthe company moved its headquarters to eas of the country. “We wanted to prove northern California and proceeded to this business model in California because open 21 of its Clean Fuel Point dispens- we believe if we can do it in California, we ers in the state, selling E85 and biodie- can do it anywhere,” Horton says. sel, mostly in the San Francisco Bay and Propel’s business strategy is unique Sacramento areas. Propel’s experience in that the company doesn’t produce fuel over the past few years has demonstrated nor does it deploy typical retail stations. that when consumers have the choice Instead, the company markets fuel on a available to them, they willingly fill their case-by-case basis, leasing space at existvehicles with alternative fuels, company ing retail stations where Clean Fuel Point leaders say. Therefore, greater availability dispensers can be installed. This arrangeof E85 in California will unquestionably ment works well for retail station owners, lead to greater consumer usage and, as Horton says, because many of them lack a result, increased demand for ethanol the capital and appetite for risk that can from producers. The company recently be necessary for installing alternative fuunveiled plans to roll out 200 more E85/ els dispensers. By partnering with Propel biodiesel stations in California within the Fuels, station owners receive the benefits next two years and plans to expand its from selling fuels that their competitors business model to include other states as may not offer without having to foot the well. bill associated with installing the pumps. “We designed our business model to be You Play, We Pay a partner for these stations where we can California has been good for Propel’s provide them with all of the benefits of 62 | Ethanol Producer Magazine | february 2011


having renewable fuels on their site without all the headache and hassle that usually goes with it,” he says. Propel provides capital for infrastructure costs, installs storage tanks and files all grant and permit applications. The partnership requires no financial investment from the station owner. “It’s like found money for them because we’re helping them monetize a part of their site that wasn’t being used before,” Horton adds. “Many of them are most interested in the number of new customers that we bring to their sites every month. Those are customers that will use their convenience store, their car wash or other services on site.” “One of the barriers for many station owners is just a lack of understanding of the market,” Horton continues. Propel tries to alleviate those concerns by conducting educational campaigns to introduce consumers to their new fueling option. “Just putting an ethanol pump out there … if you haven’t reached the relevant flex-fuel drivers you’re not going to move

much ethanol. That’s a huge concern for individual station owners who just don’t have the resources to aggressively market the fuel. We do all of the customer service, marketing and outreach to the public.”

Federal Support

In August, Propel was awarded a $10.9 million grant from the U.S. DOE and the California Energy Commission to build and operate 75 Clean Fuel Point stations by the end of 2011. The DOE invested $6.9 million in the project through its Clean Cities’ Petroleum Reduction program. The CEC provided the remaining amount through its Alternative and Renewable Fuel Vehicle Technology program. The project, known as the Low Carbon Fuel Infrastructure Investment Initiative, will create 450 jobs and is expected to displace 39 million gallons of petroleum and 187,500 tons of CO2 emissions annually once all 75 stations become operational. Propel has agreed to match the grant with $16 million of its own funds.

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a 12-minute drive from a Propel alternative fuel station, Horton says. â&#x20AC;&#x153;Thatâ&#x20AC;&#x2122;s the point of our business modelâ&#x20AC;&#x201D;to place stations in areas where itâ&#x20AC;&#x2122;s convenient for FFV drivers to fill with E85,â&#x20AC;? he says.


Room to Grow

Funding Fuel A crowd gathers to learn details of the $10.9 million grant awarded to Propel Fuels Inc. by California and the U.S. DOE in August. The funding will be used to partially finance the expansion of Propelâ&#x20AC;&#x2122;s retail alternative fuels dispensers.

The build-out is already under way. By the end of 2010, Propel had nearly doubled the number of E85 stations previously located within the state. By fall 2011, Horton expects to have a total of 80 stations in

place. By the end of 2012, the companyâ&#x20AC;&#x2122;s business model calls for 200 Clean Fuel Point stations throughout California. If that plan is achieved, approximately 80 percent of Californiaâ&#x20AC;&#x2122;s FFV drivers will be within

Propelâ&#x20AC;&#x2122;s model includes room for further expansion and the company is aggressively seeking new markets outside of the West Coast. Blender pumps are not currently part of Propelâ&#x20AC;&#x2122;s repertoire, but the company is exploring adding them in certain markets. Itâ&#x20AC;&#x2122;s also eyeing a possible partnership with the USDA to assist with its target of installing 10,000 blender pumps across the U.S. by 2015. To prepare for these potential expansions, Horton says Propel has brought in a number of new executives who have experience in managing large construction projects and retail fuel companies. Significant investments are also being made to make Propelâ&#x20AC;&#x2122;s pumps unique. One such improvement is the addition of a data program, called CleanDrive, which calculates the consumerâ&#x20AC;&#x2122;s emissions reductions and the amount of petroleum they have displaced by fueling with either E85 or biodiesel. The data is reported to

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the customer via a personalized online account and they can immediately see the effect their alternative fuel purchases have made on the environment. Propel also compiles the data and reports it to participating fleet managers. “For some of our large customers like the U.S. Postal Service, it’s a really helpful way for them to show that they are in compliance with their own objectives in terms of renewable fuels usage,” Horton says. “For us, it’s a great way to build customer loyalty.”

CleanDrive calculates the consumer’s emissions reductions and the amount of petroleum displaced by fueling with either E85 or biodiesel. While mid-level blends have taken the spotlight in recent months, Horton says Propel’s top priority continues to be E85. “We recognize that we’re not going to get where we need to go with limitations of

low-blend gasoline, so a big part of our business is focused on expanding access beyond the blend wall, and that means high-blend ethanol infrastructure,” he says. The company “definitely” plans to expand outside of California in 2011, according to Horton but the specific location has yet to be announced. Propel’s business model works best in areas where there is a high concentration of FFVs and few E85 fueling stations, so expansions are likely to occur elsewhere on the West Coast and in areas of the East Coast.


Propel tries to purchase as much locally produced ethanol as possible to supply its fueling points, according to Horton, although that is not always an option, depending on the location of its dispensers. The company declined to release information detailing specific amounts of ethanol purchased and sold by Propel in recent years. But Horton says the company has established good working relationships with producers in California and he expects that would also be the case in other areas of the country as the company expands its operations. “We think there is a great opportunity in

this country to localize fuel production and consumption,” he says. “We think we can be a very important part of that.” Horton also believes the government needs to play a greater role in building out alternative fuel infrastructure and he encourages ethanol producers to bring the need for retail infrastructure to their legislators’ attention. “We need to let our elected officials know that expanding market access by building more infrastructure is the most important thing we can do to help the ethanol industry long-term,” he says. He cautions against overlooking the importance of E85 as a piece of ethanol market share and says pricing will be key in gaining consumers’ acceptance of the fuel. “Rebuilding the nation’s fueling infrastructure takes time,” he admits. “But we need to understand as an industry that it’s more than just making a pump available. There are lots of places we can put stations where they just will not perform very well, so we need to treat this issue holistically and make sure we’re addressing all the key drivers for success.” Author: Kris Bevill Associate Editor, Ethanol Producer Magazine (701) 540-6846

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Winning Designers Ron Mathis, left, chief of design, and Oliver Kuttner, founder and CEO, helped create the vehicle that won $5 million in the X Prize automotive competition. PHOTO: EDISON2

66 | Ethanol Producer Magazine | february 2011



$5Million with E85

The Edison2 team abandoned electric car technology to meet the requirements of the X Prize with a super light, super efficient E85-optimized carâ&#x20AC;&#x201D;and won. By Holly Jessen

It all started when Oliver Kuttner heard about the X Prize competition to create a car with a fuel economy of at least 100 miles per gallon equivalent (mpge). Following U.S. government standards, mpge measures the distance traveled per unit of energy consumption, comparing a gallon of gas to the energy content in E85, diesel or electric power. Kuttner, a real estate redeveloper in Virginia involved in sports car racing his whole life, thought â&#x20AC;&#x153;I could win that.â&#x20AC;? The first X Prize competition to target automotive innovation began in 2008, according to the X Prize Foundation, an educational nonprofit prize organization. Over the next 30 months, 111 competing teams with 136 vehicle entries worked to develop safe and super fuel-efficient vehicles, angling for a piece of the $10 million prize money in the Progressive Insurance Automotive X Prize competition.

february 2011 | Ethanol Producer Magazine | 67


Kuttnerâ&#x20AC;&#x2122;s team assumed at first that success would come with an electric car or a hybrid. When they started preparing for the competition, they named the team the Edison2, in honor of Thomas Alva Edison, the inventor of the electric light. In the end, the team got top honors, winning the mainstream classâ&#x20AC;&#x201D;but not with the help of electricity. The winning vehicle was an E85-powered car with a 250 cc onecylinder internal combustion engine. The two other alternative class winners, which won $2.5 million each, were both batteryoperated electric vehicles. There were many requirements to win the X Prize mainstream class, spokesman David Brown says. The vehicle had to have a fuel economy of at least 100 mpge and a 200-mile range. It also had to hold four people, pass various safety tests and

emissions requirements and go from zero to 60 mph in under 15 seconds, among other things. The Edison2 team entered four cars into the three classes of the X Prize competitionâ&#x20AC;&#x201D;one car each into the two alternative classes and two cars into the mainstream class. â&#x20AC;&#x153;This is a racing-based team,â&#x20AC;? Brown says. â&#x20AC;&#x153;Racing teams never go in a race with only one car.â&#x20AC;? By the finals round, only two cars had qualified to go on in the mainstream class. Both came from the Edison2 team. â&#x20AC;&#x153;In terms of the main prize we were the only ones that actually made it to the final round,â&#x20AC;? he says, â&#x20AC;&#x153;which pointed out significantly the limits of electric cars.â&#x20AC;? By the end of the competition in September, the Edison2 Very Light Car # 98 took top honorsâ&#x20AC;&#x201D;and $5 million in

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prize money. The car had a fuel economy of 102.5 miles mpge, for combined city and highway driving, and weighed only 830 pounds.

A Winning Strategy

E85 was a smart choice for the team for a variety of reasons, Brown says. The fuel helped the team meet and exceed the 200-mile range requirement, something an electric vehicle would have difficulty with. â&#x20AC;&#x153;The two key virtues of auto efficiency are low-weight and low-aerodynamic drag, and it just doesnâ&#x20AC;&#x2122;t make sense to put hundreds of pounds of batteries into a car striving for peak efficiency,â&#x20AC;? he says. The team decided to focus on making the car as light as possible, and that meant using a conventional internal combustion engine. â&#x20AC;&#x153;Ethanol was a key ingredient to optimizing that,â&#x20AC;? he said. E85, a very high-octane fuel, is very tolerant of recirculation, explains Ron Mathis, chief of design for the team. Recirculation isnâ&#x20AC;&#x2122;t a new techniqueâ&#x20AC;&#x201D;itâ&#x20AC;&#x2122;s used routinely on modern cars. â&#x20AC;&#x153;We took exhaust gas recirculation to a new extreme and thatâ&#x20AC;&#x2122;s something thatâ&#x20AC;&#x2122;s only realistically possible with ethanol fuel,â&#x20AC;? he says. As a conventional engine reaches cruising speeds, it throttles back because it doesnâ&#x20AC;&#x2122;t need as much energy as when it was accelerating, Brown says. Throttling prevents air from getting into the cylinder while the cylinder is still trying to pull air in. This causes an inefficiency called pumping loss. The fix was extensive exhaust gas recirculation to decrease power by reducing the charge in the cylinder. This is a solution that works with E85 because ethanol doesnâ&#x20AC;&#x2122;t misfire with a charge dilution, he says. In the end, the winning X Prize vehicle had a very high performing engine with a 15-1 compression ratio, again, something that was possible due to ethanol. In addition, E85 gave the Edison2 team an edge in the arena of mpge. The competition used the same metric used



Team Work Members of the Edison2 team work on the X Prize winning vehicle.

by the U.S. DOE to compare the energy content of electric power, E85 and diesel to the energy in a gallon of gasoline. Brown says. For electric power, 33 kilowatt hours of electricity equals one gallon of gas. Diesel fuel, however, has greater energy content than gas, so a competitor using diesel would be allowed less than a gallon of fuel. E85 has slightly less energy content than gas

so the Edison2 team was allowed to use roughly 1.4 gallons of E85 to equal the same amount of energy as one gallon of gas, says Brad Jaeger, an Edison2 engineer and one of the drivers in the X Prize competition. The standard energy content of gas was set at 115,400 Btu for the X Prize but, because gas from the pump varies, the fuel used for the competition was tested by a lab to

determine the exact energy content. “Due to this variance, the exact amount of E85 to equal one gallon of gas changed slightly, but was always around 1.4 gallons,” Jaeger says. Testing for mpge on the track simulated city, urban and highway driving cycles, adding starts, stops and different speeds on the track, as specified by EPA standards, Jaeger says. The Edison2 car achieved 129 mpge in the highway cycle. Overall, it had 102.5 mpge when the combined cycle on-track testing was averaged with the combined cycle validation testing performed in a lab with a dynamometer. Burning E85 also helped the team meet emissions ratings. Most people would consider an all-electric vehicle an extremely clean car—it doesn’t even have a tailpipe. However, electric vehicles do have upstream emissions, depending on the source of the electricity, which in the U.S. is usually coal. This was calculated using Argonne National Laboratory’s Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation (GREET) Model. “Using that comparison we had the lowest greenhouse gas (GHG) emissions and the lowest carbon emissions in the X Prize competition,” Brown says. Although the Edison2 team was pleased

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with what it achieved with E85, that’s not what won the competition. In fact, with what they learned about creating a super efficient engine, they believe they could succeed with another drive, even an electric vehicle. “The secret of our success was not the engine,” Brown says. “The secret of our success was the platform, creating a car of unprecedented efficiency. It just takes very little energy to push this car.” Related to that is the fact that the winning vehicle had the lowest drag coefficient of any four-wheeled car tested in the GM wind tunnel and at the Chrysler Proving Grounds. It has half the drag of Prius, a full-hybrid, electric mid-sized car, commonly thought of as a very efficient car, Mathis says. It has one quarter of the drag of an Escalade, a fullsize luxury sport utility vehicle. “We flit through the wind,” he explains, “These cars are just breathtakingly efficient.” The Nissan Leaf, an all-electric car that went on sale in December, could not win the X Prize, he points out. For comparison, it has a range of only 73 miles per charge (based on the U.S. EPA city cycle), weighs 3,500 pounds and has

a 99 mpge for combined city/highway driving. “At the end of the day, no matter what else you do, you still have to push 3,500 pounds,” Brown says, “and it takes a certain amount of energy to push a car that weighs that much and on top of that, has mediocre aerodynamics.” The way Mathis looks at it, an extremely efficient car answers critics who use the food versus fuel argument against ethanol. By creating a car that is so efficient and so light, that it only burns a small amount of energy to make it move, that argument falls flat. “What we are doing here tends to remove an objection to biofuels,” he says, “How valid you think that objection is depends on your political colors and we don’t want to get into that. But it does tend to remove that objection.”

What’s Next?

The team is now working to transform the competition prototype into something that is more user-friendly for consumers. “[We are working to make] it something that people can look at and imagine taking their kids to soccer practice in,” he says.

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1-800-279-4757 Four Entries The Edison2 team entered a total of four cars in the X Prize competition, two in the mainstream class, and one in each alternative class.

The decision on whether the next car will run on E85 has not been made yet. It could be E85, diesel, gas or electric. “At this point we’re focusing on the car’s design and not the powertrain,” he says. The idea is to come up with concepts that car manufacturers can incorporate into the design of cars the average person would buy, Mathis says. The project the team is working on today could mean big changes to how cars are built and profoundly affect the ordinary car buyer in the near future. “We are trying really hard to open up a whole new market in cars,” he says. The team will work for the next few years to prove that a very light car can be safe, Brown says. Designed with the same principles that allow a race car driver to walk away from a crash, the cars designed by the Edison2 team have an internal cage structure to protect the occupants. In addition, the vehicle is shaped like a diamond, meaning very few impacts will be direct, as is the case with a traditional rectangle-shaped car. Finally, the wheels are set outside the body of the car, allowing for collapsible space in the event of a crash. While the $5 million prize was a triumph for the team, it’s far from enough to accomplish its goals, he says. The team worked for two years to prepare four vehicles for the competition and will work for several more to come up with designs to bring to car manufacturers. Edison2 will work together with a combination of private investment, corporate partnerships and government grants to achieve its goals. “We actually think the car we designed, even though it won us $5 million dollars, is obsolete already,” he says. “We’re beyond it. We’re working on the next designs.”



Speeding Laps The winning vehicle moves around the track.

Author: Holly Jessen Associate Editor, Ethanol Producer Magazine (701) 738-4946

february 2011 | Ethanol Producer Magazine | 71


Forward Thinking Canadian Renewable Fuels Association welcomes attendees to the groups seventh annual renewable fuels summit and encourages them to continue to work toward advancing the nationâ&#x20AC;&#x2122;s renewable future. PHOTO: BRIGITTE BOUVIER

72 | Ethanol Producer Magazine | february 2011


Canadian Report Card:

Passing &

Diversification and unification were underlying themes at the annual Canadian Renewable Fuels Summit. By Kris Bevill


The Canadian renewable fuels industry is growing up and out, as evidenced by the industry’s report card released by the Canadian Renewable Fuels Association during its annual summit, held Nov. 29Dec. 1 in Gatineau, Quebec. The

summit’s theme, “Growing Beyond Oil,” emphasized the industry’s desire to become its own force in a country that is a net exporter of oil. The industry report card proved it deserves to be taken seriously. Canada’s biofuels industry has experienced steady growth over the past five years to a current annual capacity of almost 2 billion liters (528 MMgy). The CRFA says $2.3 billion has been spent on the construction of new production facilities during that time span, resulting in $3 billion of economic activity throughout the nation. Thousands of new jobs have been created through the expansion of the industry, many of them in the rural areas of Canada where jobs can otherwise be hard to come by. This was a talking point for many of the approximate 300 conference attendees, many of whom had experienced firsthand the benefit biofuels can bring to rural communities.

Gordon Quaiattini, CRFA president, highlighted these accomplishments during his keynote speech to conference attendees, but the majority of his speech focused on the industry’s 2010 highlight—the passage of Canada’s first federal renewable fuels standard (RFS). The standard became effective Dec. 15 and requires all fuel blended in Canada to contain 5 percent renewable fuels. Ethanol, biodiesel and petroleum-based biofuels qualify as renewable fuels for this portion of the RFS. Quaiattini told conference attendees the mandate makes Canada the fifth largest market for ethanol in the world and that the nation will now consume 2 billion liters of renewable fuels annually. “This is truly a milestone accomplishment in the history of Canada’s renewable fuels industry and I am sincerely grateful to be on this podium at this time looking out at all of you and saying ‘thank you’ for your excellence and achievement,” he said. It didn’t take long for the mood of the conference to shift from what has been accomplished to what remains to be achieved, however. Quaiattini pointed out that the nation’s House of Parliament was located just a few miles from the conference site and said that hosting a national biofuels conference

so near to the government’s center was meant to send a loud signal to policymakers. “We remind policymakers—elected and otherwise—that our industry is here and we are delivering,” he said. “Our presence here is a clear reminder to the federal government that the partnership pursued over the past 15 years has worked—and worked well. Now is the time to turn to the important and exciting work ahead.”

Canola Belt Concerns

At the time the conference was held, Canada’s government had yet to finalize a start date for the national B2 mandate. Many conference attendees were biodiesel producers and equipment providers and all seemed intent on securing a firm start date for the mandate. The CRFA also said finalizing that mandate’s start would be its No. 1 priority for the short term. Canada’s biodiesel industry, not unlike its counterpart in the U.S., has been paralyzed by a lack of demand for its product. While the U.S. has its Corn Belt, however, Canada has vast canola fields, a seemingly ample supply of feedstock for a domestic biodiesel industry that hasn’t yet had the chance to put this wealth of feedstock to use domestically. Robert Hunter,

february 2011 | Ethanol Producer Magazine | 73


Canadian Awards

The Canadian Renewable Fuels Association honored recipients of the 2010 Green Fuels Awards during a luncheon held Dec. 1, at the close of the group’s seventh annual Canadian Renewable Fuels Summit. Husky Energy Inc. received the 2010 Fuel Change Award for its new promotional initiative, titled “Mother Nature’s Fuel.” Husky Energy has been producing ethanol since 1981 and operates facilities in Saskatchewan and Manitoba. Ken Field, chairman of GreenField Ethanol Inc. was the recipient of the Green Fuels Industry Award in recognition for his “outstanding dedication to the advancement of renewable fuels in Canada.” Field, who was later referred to as one of the most energetic and passionate people in the entire ethanol industry, founded GreenField Ethanol in 1989. The company is currently the largest producer of ethanol in Canada. The CRFA identified Field as one of the country’s pioneers of renewable fuels.

vice president of communications for the Canola Council of Canada, pointed out in his presentation that Canada’s 45,000 canola farmers export 1.6 million metric tons of canola seed and oil annually. Quaiattini said that there is yet to be a large commercialscale biodiesel plant built in Canada and emphasized the group’s efforts to focus on expanding the biodiesel industry in the coming year.

Advancing Beyond First-Gen

Throughout the three-day event, it was clear that all attendees agreed there must be continued support for first-generation biofuels, both through increased federal RFS mandates as well as continued financial incentives. But it was also acknowledged by most speakers and attendees that the

74 | Ethanol Producer Magazine | february 2011

ultimate goal is to pursue advanced biofuels development. First-generation support is necessary to spur that development, but if Canada is to ever truly grow beyond oil its best course is through a robust advanced biofuels and bioproducts industry. Canada’s immense forestry sector presents multiple opportunities for cellulosic ethanol and advanced biofuel/ bioproducts companies. This was the focus of a lengthy afternoon session that included panel members from the pulp and paper industry, the Forest Products Association of Canada and UOP, a Honeywell Co. Paul Lansbergen, director of energy, economics and climate change for the Forest Products Association, presented findings from the Bio-Pathways Project, which was conducted in order to assist in determining its best options for transformation. Phase 1 of the project, which was completed in 2009, identified biorefineries as an ideal reformation for pulp and paper mills because the production processes can be easily combined. “Instead of just making pulp and paper, it could serve its own energy needs through biomass cogeneration and it could also make other energy products as well as chemicals,” he said. “You can make ethanol, you can make pulp, you can have a paper machine on site, you can make some chemicals such as furfural and lignin, which you can further refine into other niche chemicals.” While there are several cellulosic ethanol companies that plan to use wood and wood wastes as feedstocks, Canada’s forestry sector could find more potential partners by focusing on bioproducts and other fuels, according to Omar Irani, senior business manager for Honeywell/ UOP. His presentation focused on relaying information UOP has received from its customers, mainly members of the petrochemical industry. Not surprisingly, that industry’s wish list includes dropin replacement fuels that can be used in the existing infrastructure. “They want a fuel replacement,” he said. “A lot of our customers view ethanol as an additive— that’s just the way they see it.” UOP acted on its customers’ feedback and has formed


a partnership with Ensyn Technologies Inc. to produce pyrolysis heating oil, and potentially drop-in ready transport fuels, from woody biomass. Alain Bourdages, director of energy development and strategy for pulp and paper company AbitibiBowater Inc., painted a broader picture of what the pulp and paper industry is looking for in a partner. He was frank about the shrinking demand for his industry’s traditional products and about AbitibiBowater’s recent financial difficulties. According to him, biofuels and bioproducts offer an ideal opportunity for pulp and paper companies to diversify away from their traditional products and AbitibiBowater is willing to entertain any product partnership, as long as the potential partner can provide the specific technical expertise. “We’re a forest products company,” he said. “We’re not an IP [intellectual property] developer. We don’t do a whole lot of research and development. Our approach is basically to bring what we have to processes that are close to maturity and bring in that extra push of having the feedstock, the security, the infrastructure and other elements. Our interest is bringing as much value out of the forest as we can. So if it’s ethanol, it’s ethanol. If it’s biodiesel, it’s biodiesel. If it’s chemicals only, it’s chemicals only. We’re really not that attached to any given product.” Quaiattini also paid specific attention to advanced biofuels development in his remarks, saying that one of the CRFA’s longterm goals is to work with the government to add advanced biofuels categories to future RFS mandates. Politicians who participated in a panel during the final day of the conference appeared to be very interested in next-generation biofuels, but largely unaware of the hurdles facing the emerging industry. This was especially apparent when an audience member questioned the panel as to why there continues to be a lack of policy support for bioproducts that can be produced at biofuels facilities. One panel member suggested the first step in forming policy support for these industries is to inform politicians that they exist.

Working Together

Canada’s biofuels industry remains a drop in the bucket when compared to the United States’ industry and many panel presentations looked to the U.S. for policy and demand predictions. Canada’s biofuels industry has made significant headway in the past 12 months, but its current capacity is only about 4 percent of the United States’ production capacity, which means that U.S. producers still largely influence the action of their northern neighbors. The status of the Volumetric Ethanol Excise Tax Credit extension was still unknown at the time of the CRFA summit and conversation between sessions often focused on what might happen to Canada’s industry if the U.S. were to let its credit lapse. Many attendees and speakers also said monetizing carbon is a long-term goal that would benefit Canada’s biofuels industry, but it’s unlikely a carbon policy will be put in place unless the U.S. does it first. There is no question that Canada’s biofuels industry, no matter the size, continues to be a collaborative effort among ethanol, biodiesel, advanced biofuels and policymakers. Industry representatives almost seemed to relish their status as the underdogs of sort and appeared ready to seize the task at hand, which is to continue to advance the industry. “We have tasks yet to complete,” Quaiattini admitted. “But there can be no serious doubt that we have met and exceeded every test asked of us by government. Growing beyond oil isn’t a promise. It is not an aspiration. It is a statement of fact and a description of what we’ve done to date. When we look to the future and the incredible promise of advanced biofuels, we know that our best days are those yet to come.” Author: Kris Bevill Associate Editor, Ethanol Producer Magazine (701) 540-6846

february 2011 | Ethanol Producer Magazine | 75

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How Should Ethanol Producers Respond to External Conditions? With external factors looking unfavorable, producers should look to internal variables. BY peter dominici

Ethanol producers in the U.S. are currently feeling the strain of low margins and uncertain tax incentives. The futures pricing for corn, natural gas and ethanol does not provide an outlook for any immediate relief of this strain.

In fact, current forecasts of input costs and ethanol sales prices continue to show costs of corn and natural gas exceeding 90 percent of the projected sale price of ethanol. Given such market conditions, to continue to operate and generate profits, ethanol producers must look internally—to

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). 78 | Ethanol Producer Magazine | february 2011

their controllable production costs and to their capital structure. The demand for ethanol in the marketplace is currently subsidized by the U.S. government through the federal tax credit made available to the ethanol producers’ primary customers—the blenders. The blender’s objective is to earn a profit by mixing or blending lower net-price per gallon ethanol with higher net-price per gallon unleaded gasoline, and then selling the


blended fuel to customers at the higher-per gallon unleaded gasoline price. The federal tax credit, which declined from 51 cents per gallon of ethanol purchased by the blender in January 2005 to 45 cents in January 2009, has historically increased a blender’s profit when the blender’s net blended cost of a gallon of E10 gasoline is below the blender’s net purchase price for a gallon of unleaded gasoline. Further adding to the complexity of the ethanol producer’s business model is an artificial demand side of the market. The U.S. EPA had imposed a ceiling that only allowed ethanol to be blended at a rate of 10 percent ethanol to 90 percent unleaded gasoline in every E10 gallon sold (known as the blend limit), with an annual aggregate ethanol usage ceiling imposed at 10 percent of total U.S. annual unleaded gasoline consumption each year (known as the blending ceiling). This artificially imposed demand ceiling had remained constant at 10 percent, both on the E10 blend limit and on the annual aggregate blending ceiling, since 1978. The combination of the blend limit and the blend ceiling is known in the ethanol industry as the blending wall. The proposals discussed on includTight Margins Peter Dominici, ing ethanol tax credits managing director of in the bill extending Focus Management Group, suggests the Bush-era tax inproducers scrutinize centives, which was internal factors. passed and signed just before Christmas, ranged from eliminating tax incentives for ethanol, to extending them at current levels for one year, to extending them for multiple years at a reduced rate of 36 cents per gallon of ethanol blended. Over the years, ethanol producers have lobbied to have the mandated 10 percent blending limit raised to 15 percent, and recently the blending limit was raised to 15 percent in some cases. It was not mandated,

Figure 1 The relationship between major costs and ethanol sales is shown for 2010 and forecast through June. Source: Focus Management

however. Currently, the decision to blend beyond the current mandate of 10 percent rests with the blenders. Blenders will only blend at the higher level if an appropriate blending profit is available to them. The recent increase to E15 is also impacted by market conditions. Gasoline that contains 15 percent ethanol can only be used in cars and light trucks sold since 2007. Therefore, even if the blending profit motive exists for blenders to blend, demand will be limited to the percentage of gasoline that is utilized by post-2006 light cars and trucks. The additional complexity in the delivery system for fuel products will also be a limiting factor. As a result, increased demand at the ethanol producer level is uncertain. Assuming the tax credit remains at 45 cents per gallon of ethanol, raising the blending limit to 15 percent would result in an additional tax credit of 2.3 cents per gallon (45 cents per gallon of ethanol multiplied by the additional 5 percent), assuming the 15 percent blending ratio is used. In contrast, reducing the tax credit to 36 cents per gallon of ethanol reduces the blenders profit by 0.9 cents per gallon (9 cents per gallon of ethanol multiplied by the 10 percent ratio).

External Factor Outlook

Moving forward, ethanol producers will need to analyze the impact of the four variables affecting their business, in conjunction with tax credit changes, blending limit changes, and the price of corn and natural gas. Of the four variables impacting a producer’s profit, three are external—the primary direct costs of corn and natural gas, ethanol prices, and coproduct sales. One is internal—production efficiencies, including conversion rates, natural gas usage, and enzyme and chemical consumption. The outlook through June does not look good for ethanol producers. The primary external costs to produce a gallon of ethanol (cost of corn per gallon and cost of natural gas per gallon) are projected to be greater than 100 percent of the projected ethanol sales price per gallon over the same time period. Figure 1 displays the relationship between these factors for 2010 and the forecast through June. Historically, ethanol producers do not fare well financially when their primary cost components (corn and natural gas) are greater than 90 percent of ethanol’s sale price. Figure 2 extends the forecast period from December 2010 to December 2013.

february 2011 | Ethanol Producer Magazine | 79


viable forecast. Producers cannot look to the external market to correct their financial performance issues. Internal factors related to production efficiencies, overhead costs, and capital structure will need to be the primary focus.

Internal Factors

Figure 2 The relationship between major costs and product price is forecast through December 2013. Source: Focus Management

The long-term outlook is also weak as the cost of corn and natural gas per gallon of ethanol produced is greater than 90 percent of the projected sales price over that same period. External factors do not support strong projections for earnings before interest, taxes, depreciation and amortization for

ethanol producers. While commodity markets do change, the corn, natural gas and ethanol prices have not resulted in combinations that facilitate strong cash flow performance for ethanol producers since the first quarter of 2008. As a result, assuming external market conditions will improve for ethanol producers is not a

80 | Ethanol Producer Magazine | february 2011

An analysis of performance data for seven Midwestern ethanol plants shows production and overhead costs can range by as much as 16 cents per gallon, depending on labor and other production costs. With the ethanol producerâ&#x20AC;&#x2122;s margins so tight because of market conditions, the management of these internal costs is critical. Labor costs for these plants range between 3.3 cents and 6.6 cents per gallon. Other operating costs range between 1.4 cents and 8.1 cents per gallon. In addition to these productionrelated costs, interest expense and debt amortization requirements are key to the ability to survive this period. Producers will also need to be focusing on reducing capital structure-related cash outlays. Looking near-term, ethanol producers will have limited ability to reduce input costs



or increase ethanol prices. In addition, tax credit changes may erode profitability and, from a long-term perspective, relying on the tax code to provide profitable operations is an added risk.

An analysis of performance data for seven Midwestern ethanol plants show production and overhead costs can range by as much as 16 cents per gallon. Dependable Service 24/7 Ethanol producers must engage in strict review of expenses and tough negotiations with equity partners and lenders. In many cases, the ethanol producer would benefit from a thirdparty review of operations and capital costs. This review would provide an independent analysis of staffing and production costs, and an independent assessment of the capital structure and costs. At this juncture, the dollars spent in this type of assessment may be the most valuable monies an ethanol producer can spend, if the probability of long-term survival is to be increased. This is not the time to blame outside conditions for performance problems. Everyone knows those issues exist. This is the time for ethanol producers to differentiate themselves as industry leaders by thoroughly assessing their production costs and capital structure. Author: Peter Dominici Managing Director, Focus Management Group (813) 281-0062

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Ancient Art of Falconry an Asset in Avian Pest Control Avian infestations can create safety and health hazards, affecting ethanol plant revenue. BY stephen bucciarelli & MELANIE PATERACK

An ethanol plant is a bird havenâ&#x20AC;&#x201D;a warm steel forest with an all day buffet. Such a readily available, continuous supply of food with numerous places for refuge and shelter, areas that generate warmth and various levels of peaks and towers create perfect wild bird habitat. The structures and environment of ethanol production provide ideal circumstances to sustain bird populations,

especially over the winter months. Plant sites in the midst of corn communities not only aid in corn accessibility, but also tend to be places where birds naturally thrive. Typical species observed frequenting ethanol plants in large numbers are European starlings, house sparrows and pigeons. When large numbers of these birds accumulate, they potentially pose health and safety issues, impact productivity, create fire hazards and cause product losses. While

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). 82 | Ethanol Producer Magazine | february 2011

total prevention of birds on site is difficult, managing their numbers is a very realistic prospect. Typical areas that attract nearby birds include towers, peaks and prominent, high points of the facility. Birds perched on these high spots serve as confidence birds. If a pigeon is perched on a tower, for example, it is serving as a sentry for any approaching dangers such as birds of prey. As long as these confidence birds remain in place, it signals to all surrounding birds that the area is safe and they can forage for food on the ground without consequence, where traditionally they would be vulnerable and

pest control

eliminate waste in the highest concentration. Avian feces are extremely corrosive, having ammonia as its highest occurring inorganic nitrogen compound, which eats away at the protective sheath around wires, exacerbating the potential risk for fire and contamination. Ethanol plants provide numerous other sites for flocks to colonize, as they will be attracted to any area that provides a food source, warmth or shelter. It is imperative to note that every plant is different and therefore will present unique challenges in bird control. Distinctive layouts, age and type of machinery at each facility create different levels of heat and noise. One facility may be overrun with wild quarry while another nearby location may not have as much as a feather on site.

Management Techniques

exposed to predation. By managing the confidence birds, populations at lower levels are also controlled. Birds feeding without a lookout system in place will very quickly feel vulnerable, thus altering their psychology and instilling a level of fear. This can be achieved in an optimally timed effort with the use of falconry—the art of using trained birds of prey. The corn-receiving area is usually the largest food source for resident birds, and unfortunately the easiest place for disease pathogens to enter a production system. The ceiling in these buildings usually gets torn to shreds by house sparrows which are gathering materials and building nests. Often these birds will pull out insulation, and then proceed to build nests in warm areas such as above lights and electrical wires. Apart from this obvious fire hazard from dry, flammable material being packed around ignition sources, wherever birds roost is where they

Evaluating the level of needed concern can be done inexpensively through pathogen testing, available from many universities, colleges and pest control companies. Areas where pathogens are occurring in the highest concentrations indicate problematic sites to be targeted. Swabs from such areas can be submitted to see if threats to human health exist. Recovered pathogens, which in some instances could warrant eradication, may include West Nile virus, avian influenza, histoplasmosis, Salmonella and E.coli. Once problem locales have been determined, the next step is to consider bird psyche. Flight paths and movement need to be closely monitored. Once established, it may be possible to physically control access to the most appealing and frequented regions.

fective at pushing birds around a facility for ease of trapping, or scaring them away entirely; it makes birds uncomfortable and susceptible to predation. Falconry is an ideal control method prior to audits, for short-term image, or when wild birds could delay construction or work crews. Having raptors on site will clear birds from the available food source, eliminate confidence birds, and make roosting pest birds too uncomfortable to stay. Trapping can be used to relocate avian residents. For this technique to be effective, however, extraneous food sources must be controlled, such as spilled corn, in order to lure birds into baited traps. Of vital importance is that traps are equipped with adequate food and water, protection from the elements (insulation in winter, shade in summer), are free from predation, and are maintained and emptied routinely and frequently— ensuring the health and well-being of caught birds. If trapped birds are perishing in on-site traps, the company can be held criminally accountable for animal cruelty.

Methods include: • Mist netting—the use of fine mesh nets as catch-barriers that can catch thousands of pest birds and keep them out of specific areas, serving as an economic, effective means of management. • Falconry—the use of trained raptors (hawks, falcons, eagles) is extremely effebruary 2011 | Ethanol Producer Magazine | 83

pest control

It is highly unadvised to utilize poisons to rid a facility of nuisance birds. Use of poisons is banned in Canada and many parts of the United States. Not only is it damaging to the environment and a companyâ&#x20AC;&#x2122;s public image, it also counteracts any natural bird control. If there is a raptor naturally occurring in the vicinity, it is an active part of bird maintenance. Once a pest bird is poisoned, it appears drunk and is immediately picked out for predation if exposed. The toxin works its way up the food chain upon consumption and concentrates at the highest levels, as we saw in the DDT scare 40 years ago that almost annihilated bald eagle populations in North America. Wild raptors are assets, and a proper program capitalizes on them. Successful avian deterrent and management can be achieved by combining some or all of these methods into a maintenance program that fluctuates LWC627-RJS-0445 Ethanol Ad #1 1/1/11 7:43 AM Page 1

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seasonally. In addition, flexibility and openness to new ideas and approaches are important. The most unorthodox methodology may prove to be the most effective on an individual site. One solution may not fix all problems, however. Through careful delineation and some trial and error, a program can be tailored to meet the needs of each facility encompassing the most effective techniques. Each approach should be given a sufficient trial period, making adjustments as needed. As a wildlife management company, we at Predator Bird Services Inc. employ numerous maintenance techniques with an emphasis on natural, eco-friendly approaches, continually seeking innovative ideas. Currently, we have installed a peregrine falcon nesting box, under the guidance and approval of a local natural resources management agency, to encourage a local breeding pair of falcons

to take up residence at an industrial site. If successful, the peregrine falcons would become an integral component to the facilityâ&#x20AC;&#x2122;s bird maintenance program, utilizing nature to its fullest. This would not only aid in sustaining this protected species, it would be an extremely cost-effective, atypical management tool.

Contracting Services

Successful management of avian infestations at an ethanol plant can become quite complicated due to the sheer number and variety of species, each with its own attraction to the site. While exact guarantees are impossible to make, changes to programs can be quickly made to increase efficacy. When contracting services, look for a management company that will provide a comprehensive and thorough plan that includes multiple control strategies such as

netting, falconry, trapping and pyrotechnics. Avoid companies that claim one method is the end-all, be-all to bird control. Be sure to contract someone with the integrity to duly conduct animal work. Keep in mind that compliance to a continued maintenance program may prove beneficial, as the availability of food and shelter for wild birds are inherent with ethanol production. That said, through systematic elimination of pest bird hotspots, plants could drastically reduce, if not eliminate, the concerns to health and safety and revenue losses posed by avian infestations. Authors: Stephen Bucciarelli, president Melanie Paterack, R&D, health and safety Predator Bird Services Inc. (519) 858-2555

february 2011 | Ethanol Producer Magazine | 85



Protect Employees, Contractors With Safe Work Permit System A methodical approach ensures safety issues are considered and multiple hazards are accounted for. BY david ayers

The manufacturing of ethanol Permit Areas Ethanol plants are covered under several is a pretty straightforward process sections of the Occupational Safety and Health that is inherently dangerous if Administration’s Process Safety Management safety procedures are not followed. Compliance with safety procedures is complicated whenever contractors and subcontractors work at the facility. Some of the potentially hazardous situations where contractors are often brought in to augment plant personnel include line breaking, entering confined spaces and working on systems where lockout/tagout procedures need to be followed. Many accidents are attributed to a lack of communication between the contractor and the plant personnel. Plant managers should always have a safety orientation meeting with contractors prior to beginning work.

Standard found at 29CFR 1910.119. Ethanol plants will meet the OSHA threshold if they exceed 10,000 pounds of anhydrous ammonia used, or 15,000 pounds of aqueous ammonia (greater than or equal to 44 percent). There is an exemption for “hydrocarbon fuels used solely for workplace consumption as a fuel (e.g., propane used for comfort heating, gasoline for vehicle refueling), if such fuels are not part of a process containing another highly hazardous chemical by this standard.” OSHA’s Process Safety Standard specifically calls for establishing a “hot work” permit system.

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). 86 | Ethanol Producer Magazine | february 2011

OSHA’s confined space entry standard, found at 29CFR 1910.146, will also apply to ethanol plants. All confined spaces should be labeled as “Danger—Permit Required Confined Space—Do Not Enter.” Even nonpermitted confined spaces will need to be labeled as “Non-permit Required.” Permitrequired confined space operations include the cleaning of process vessels, railcar tankers, truck tankers and grain bins, to name a few. A nonpermit required confined space is large enough and configured so that an employee can bodily enter to perform assigned work. It also has limited entry and exit (other examples include silos and feed hoppers) and is not designed for continuous human occupancy. Most, if not all, confined spaces at an ethanol plant will be permit-required confined spaces that may contain a hazardous atmosphere, contains a material that has the potential for engulfing an entrant such as grain or contains any other recognized serious safety


Potential Safety Issues Hazard

Injury Potential

Liquid Chemical—sulfuric acid, sodium hydroxide, aqueous ammonia

Chemical burn to personnel

Fire (solid & liquid)—ethanol, feedstock, etc.

Explosion, death, major or minor injury to personnel

Fire (gas)—natural gas, propane, etc.

Explosion, death, major or minor injury to personnel

Machine Guarding—pumps, grinders, tail pulley motor, etc.

Finger, hand, arm amputation; scalping if hair is entangled

Gas Chemical—anhydrous ammonia

Asphyxiation, major or minor injury to personnel

Stored Pressure—line break, various liquids and gases

Major or minor injury to personnel


Death, major or minor injury to personnel

Combustible Dust

Explosion, death, major or minor injury to personnel

Working from Heights—falls from ladders, scaffolds, off rail cars, tankers

Death, major or minor injury to personnel

Thermal Burns—heat-producing equipment, steam, boilers, etc.

Major or minor injury to personnel

Vehicle Accidents—tankers, feed stock delivery, forklift, employee vehicles

Death, major or minor injury to personnel

Confined Space Entry—atmospheric hazards, moving parts, chemicals, gases, engulfment in feed stock, etc.

Explosion, death, major or minor injury to personnel

Hoisting and Rigging—crane lifting, hoisting of equipment

Death, major or minor injury to personnel

or health hazard. The internal configuration could potentially trap or asphyxiate an entrant with inwardly converging walls or a floor that slopes downward and tapers to a Safety Planner smaller cross-section. Consultant David Ayers Establishing a says a permit system comprehensive safe helps ensure all steps have been taken to work permit system make work in hazardous starts with deciding conditions as safe as possible. what operations will need a permit to be completed. Some examples of common operations needing safe work permits include: • Hot work—welding, cutting, grinding and spark producing work, • Line break—liquid and gaseous chemi cals, water, sewer and process water, • Confined space entry, • Hoist and rigging, also called heavy lift, • Working at elevated heights, • Fire detection and suppression system impairment during maintenance, testing, or construction, • Air and water pollution abatement system maintenance on areas such as the CO2 scrubber or bag house maintenance.

Operations Covered

A safe work permit does not mean that the job is safe and easy to complete. It simply authorizes employees or contractors to work in the hazardous conditions. The main purpose of the permit system is to ensure that all the steps have been taken to make the job as safe as possible, while coordinating the work with the plant’s operations and maintenance staffs. Multiple permits will most likely be needed, covering multiple categories of potential hazards. A safe work permit system can aid overall plant hazard abatement with the added attention to detail. Plus, personnel will no longer struggle through an undocumented and ever-changing process to get a job done. One example of a situation needing multiple permits is during construction and retrofitting when process piping is welded to a process vessel. The welding will take place on both sides of piping entering the process vessel, so the hot work section of a safe work permit document is completed, along with the confined space section. Another example is when the ethanol plant’s footprint is being reconfigured. Process vessels are lifted by a crane and repositioned. In this case, complete the permit section for hoist and rigging (also known as heavy lift in some companies) along with the hot work section to weld the new or reconfigured piping.

If the operation involves the use of a scissor lift or cherry picker to reach the area, then also complete the section for working at elevated heights. Another example is the addition of an ethanol storage tank and the installation of a new line to the ethanol tanker loading area. The ethanol tank will need to be checked for proper cleaning and any hazardous gases present if the tank being added to the plant is a used one. The confined space section along with the hot work section will need to be completed in the safe work permit. In the final example, some states’ operating permits have provisions for operational fire detection and suppression systems along with air and water pollution abatement. Bag house maintenance is covered in the air and water pollution abatement section. While not required by OSHA, adding this to the “safe work permit” can help you with documentation requirements for regularly scheduled and emergency work on these systems.


Once a safe work permit system is created, employees will be trained in its purpose and use, and progress in its implementation monitored. It also helps for the employees to be involved as much as possible in writing the program so they feel as though they own the process,

february 2011 | Ethanol Producer Magazine | 87


instead of it being a corporate mandate via e-mail from a person no one has met. The employees are also experts in detecting unsafe working conditions. Their help will make the ethanol plant as safe as possible. For some companies, this type of procedure will be a culture change. Ethanol is a young industry and cultures take time to

grow. Employees should be continually trained and checked to make sure the safe work permit system is followed and updated as needed. Finally, each safe work permit needs to be authorized by the appropriate plant supervisor before work is started. This usually involves the signature of the shift supervisor at a minimum, if not the plant manager. Before authorizing,

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the permit should be reviewed to ensure that all steps have been taken to reduce the risk of accident. The employee performing the work should also sign the permit. To ensure proper coordination between plant personnel and outside contractors, the contractorâ&#x20AC;&#x2122;s project manager should also sign the permit stating that they know and understand the permit provisions. Working with contractors and subcontractors can add a level of complexity to the system. The contractor and subcontractor must know exactly when a permit will be required every time. Getting it correct most the time is a recipe for disaster. Contractors and subcontractors should be chosen carefullyâ&#x20AC;&#x201D;taking the lowest bid doesnâ&#x20AC;&#x2122;t always mean hiring the safest and most quality-conscious company. One of the best ways to ensure coordination and compliance with the safe work permit system is to cover the procedure at a pre-construction conference. Sit down and explain the expectations of the contractors and subcontractors to complete the work safely and incident- and injury-free. Even if the contractor or subcontractor tries to persuade the ethanol plant to use an alternate permit system, resist. Itâ&#x20AC;&#x2122;s your plant and your responsibility that it operates safely. Use the safe work permit system that you have customized to your needs. While ethanol plants are straightforward processes, the use of contractors and subcontractors to perform specialty work or to augment plant personnel will continue. Retrofits, upgrades and maintenance are ongoing. Creating a safe work permit system is one way to make sure that all employees and contractors identify safety hazards, implement proper safety procedures and coordinate their work with others. Ethanol plants are not only costly investments, but they employ our families and friends who deserve to go home to their families every night. Author: David Ayers, Principal Consultant, Applied Safety Management 443-896-7540

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Ethanol Producer Magazine - February 2011  

Ethanol Producer Magazine February 2011

Ethanol Producer Magazine - February 2011  

Ethanol Producer Magazine February 2011