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INSIDE: NEW PROCESS YIELDS MORE ETHANOL AND COPRODUCTS JANUARY 2008

Tapping into Quality Water Preliminary Testing Smoothes the Rough Edges When Siting an Ethanol Plant

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Introducing the Delta-T HED (High Efficiency Dryer™) system. An extraordinary new advance in dryer waste heat integration that reduces both thermal energy and water required to produce fuel ethanol. Developed by Delta-T, built around a super heated steam flash dryer by Barr-Rosin, and proven at its first commercial installation in Zhaodong, China. Best part: it’s yours exclusively with the newest Delta-T biorefinery design. The difference is dramatic. You’ll cut thermal energy use by about 25% and water by about 50%. What once required 34,000 btu’s per gallon of undenatured ethanol will take just 26,000; make-up water will drop to below 1.5 gallons. And you’ll shrink atmospheric emissions as well–90% of the dryer plume and 43% of VOC emissions. Order a new biorefinery with the HED system from us today, and the energy reduction will translate into huge savings on your operating costs. Compared to a conventional dryer in your 108 mmgpy plant, payback for HED takes about two years, with projected savings of $6 million every year. How does the HED system do it? By capturing waste heat from the dryer and integrating it back into the process. Noncondensables in the dryer exhaust plunge from 60% to just 5%. Heat recovery of the exhaust approaches 95% and energy efficiency soars. For technical details about the new HED system, give us a call. And get it all. A smaller environmental footprint. A greener path to renewable fuels. A greater payback from every dollar. In a flash.

Unconventional solutions, unrivaled results. © 2007 Delta-T Corporation, 133 Waller Mill Road, Williamsburg, Virginia, USA 23185 tel: 01-757-941-0188 www.deltatcorp.com Delta-T High Efficiency Dryer™ is a trademark of Delta-T Corporation


inside

JANUARY 2008 . VOLUME 14 . ISSUE 1

features 64 WATER QUALITY Putting Water to the Test

106 OUTLOOK Up Size, Downsize or Right Size?

Finding a site with an ample supply of water is only half the battle for

What is the most efficient plant size in light of tighter ethanol production

ethanol plant developers, especially if the water quality is lacking.

margins? Is it 100 MMgy or larger, 10 MMgy or smaller, or somewhere in

Preliminary water testing is crucial when considering the capital costs

between?

By Michael Shirek

associated with water pretreatment. By Bryan Sims

116 CONSTRUCTION Building the Biofuels Industry 72 ENVIRONMENT More Corn a Cause for Concern

Fargo, N.D.-based Wanzek Construction Inc. has built a solid reputation in

Maintaining water quality in some major U.S. watersheds may require

the biofuels industry. The company expects it will continue to serve the

farmers to implement tighter conservation practices as they plant more

industry as it grows. By Craig A. Johnson

corn to keep up with the growing demand. By Susanne Retka Schill

Page 64

Page 116

Page 124

80 WATER QUANTITY The Future of the Ogallala Aquifer

124 Q&A Connecting Capitol Hill to the Midwest

A study says that the amount of water needed to irrigate more corn acres

U.S. Sen. Byron Dorgan, D-N.D., conducted a Q&A with EPM, in which he

and fuel ethanol plants in the nation’s midsection could contribute to the

discusses his thoughts and plans regarding renewable fuels.

depletion of the Ogallala aquifer. Ethanol proponents, however, are quick

Questions By Jessica Sobolik

to point out that there are other crops and industries that use as much or more water than ethanol. By Anduin Kirkbride McElroy

134 EQUIPMENT Bringing in the Biomass Nebraska twins invented a harvester that collects corn and corncobs. Now,

88 TECHNOLOGY Squeezing More Out of Corn

Ty and Jay Stukenholtz are building a business around their invention by

Purdue University researchers have developed a new ethanol production

promoting the machinery and harvesting services, and marketing the

process that combines the best traits of dry- and wet-milling and

harvested biomass. By Ron Kotrba

yields more ethanol per bushel of corn. By Jerry W. Kram

98 INNOVATION European Technology Companies Unite U.S. ethanol producers caught a glimpse of the latest in European technology at a symposium in Chicago organized by Distil Alliance. The event showcased technologies that reduce production costs, improve efficiencies and increase coproduct revenue. By Jessica Ebert

ETHANOL PRODUCER MAGAZINE JANUARY 2008

7


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

considering how we can turn it into something useful. And you know what? Corn cobs and wheat straw are just the beginning. Who knows what other types of waste we can transform into fuel? Novozymes is the world leader in bioinnovation. Together with customers across a broad array of industries we create tomorrow’s industrial biosolutions, improving our customers’ business and the use of our planet’s resources. Read more at www.novozymes.com.

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


inside

JANUARY 2008 . VOLUME 14 . ISSUE 1

departments

contributors

11 Advertiser Index

142 MAINTENANCE The Fundamentals of Track Maintenance

14 The Way I See It

Railroad track is the primary means of transportation to get ethanol from the plant to market. Ethanol project owners can minimize costs and eliminate future problems by implementing a simple, proactive track maintenance plan. By Hal Harrison and Steve Kadrlik

By Mike Bryan Governments of All Sizes Should Address Climate Issues

18 Business & People 22 Commodities 24 A View From the Hill By Bob Dinneen Eyes on the Road Ahead

28 Industry News & BIObytes

148 RISK A New Era in Design/Build Contracts Contracts are the foundation to building a successful ethanol plant. Project owner/operators need a heightened sense of awareness in the changing world of design/build contracts. By Todd Taylor and Kermit Nash

152 RESEARCH Breaking Down Walls USDA Agricultural Research Service scientists are using the dairy cattle digestive system as an example of how to break down biomass materials. Their research could lead to a breakthrough in cellulosic ethanol production. By Erin K. Peabody

38 Plant Construction List 50 Our Plant By Jerry W. Kram Hear That Train a Comin’

52 In the Field By Susanne Retka Schill New Uses for Tropical Maize

54 Up Front By Anduin Kirkbride McElroy Project Development

56 Flex Factor By Ron Kotrba EPA Grants E85 Aftermarket Certification

58 Business By Bryan Sims Third-Quarter Financial Results Show Promise

60 Drive By Robert White Fighting the Absurd Accusations

62 Legal Perspectives By Krista McIntyre Environmental Law: Air Quality Compliance

158 Events Calendar 160 EPM Marketplace 166 E-Town By Jessica Ebert Water Way

on the web EthanolProducer.com reader’s poll results ÍFor the week of Nov. 12 Will ethanol prices rebound in 2008? Yes, high gasoline prices should help ethanol prices climb out of the cellar—42.9 percent No, the price of ethanol is no longer tied to the price of gasoline like it has been historically—17.8 percent No, there's simply too much supply for the current demand—28.6 percent Not sure—10.7 percent

ÍFor the week of Nov. 5 Will Congress pass the extended renewable fuels standard by the end of 2007?

Ethanol Producer Magazine: (USPS No. 023-974) January 2008, Vol. 14, Issue 1. 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.

Yes—41.5 percent No—49.2 percent Not sure—9.3 percent

ÍCanadian Renewable Fuels Summit 2007 Ethanol industry representatives met in Quebec City, Quebec, in early December for the fourth annual Canadian Renewable Fuels Summit. What’s the state of the ethanol industry in Canada?

BPA Worldwide Membership Applied for October 2006

ETHANOL PRODUCER MAGAZINE JANUARY 2008

9


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Ad Index 71 2008 International Fuel Ethanol Workshop & Expo 44 Adams Building Contractors

2 ICM Inc. 4 Indeck Power Equipment Co. 114 International Biomass '08

32 Agra Industries Corp.

Conference & Trade Show

48 Agri-Energy Funding Solutions

40 Interstates Companies

37 Alfa Laval Inc.

94 Intersystems

36 American Railcar Industries Inc.

59 ITT Industries Goulds Pumps

6 Anhydro Inc. 130 Aqua Power Inc. 78 Aquatech International Corp. 69 Barr-Rosin Inc. 97 & 141 BBI Project Development 33 BetaTec Hop Products Inc. 55 Biodiesel & Ethanol 101 DVDs 87 & 147 Biofuels Canada 146 Biomass Magazine 67 Biothane Corp. 74 Brown, Winick, Graves, Gross, Baskerville & Schoenebaum PLC 27 Buckman Laboratories Inc. 12 Burns & McDonnell 126 Calbrandt 145 Cashco Inc. 34 CEM Corp.

45 Kaltron Absorbents 30 Kennedy & Coe LLC 165 Layne Christensen Co. 57 Liberty International Underwriters 109 Ludeca Inc. 15 Lurgi Inc. 46 Management Recruiters of Atlanta 150 Mapcon Technologies Inc. 111 McC Inc. 122 Midwest Ethanol Transport LLC 29 Nalco Co. 100 Nexen Marketing USA Inc. 77 & 137 Noble Americas Corp. 90 North American Bioproducts Corp. 8 Novozymes

66 Ortman Ethanol Water Resources 31 Paragon Trailer Sales

153 Christianson & Associates PLLP

26 PhibroChem

84 Clifton Gunderson LLP 123 CompuWeigh Corp. 35 Davenport Dryer LLC 21 dbc SMARTsoftware Inc.

79 Emerson Power Transmission 70 Encore Business Solutions 95 Ethanol 2008 101, 108 & 156 ethanol-jobs.com

131 Praj Industries Ltd. 41 RailWorks Track Systems Inc. 112 Regional Economic & Cooperative Development 96, 154 & 157 Renewable Fuels Association 167 Robert-James Sales Inc. 47 Ronning Engineering 115 RSM McGladrey Inc. 82 SafeRack 127 Salco Products Inc.

68 Ethanol Promotion &

120 Seneca Waste Solutions

53 Ethanex Energy 49 Ethanol Technology 3 Fagen Inc. 76 FBA Consulting 92 FCStone LLC 105 Fermentis

121 Siemens Water Technologies Corp. 140 SimplexGrinnell 83 Smar International Co. 138 SPX Cooling Technologies Inc. 144 Strongform Nationwide Industrial Builders 118 & 119 Sulzer Chemtech USA Inc. 102 & 103 Swanson Flo-Systems

75 Flowserve Corp.

110 TDC Dryers

86 Fremont Industries Inc.

133 Trinity Rail

93 Gamajet Cleaning Systems Inc. 151 GATX Corp. 85 GE Fanuc 132 & 136 Genencor International Inc. 16 & 17 GS CleanTech Corp.

On page 18 of the Business & People section, U.S. Energy Services’ new office address was incorrect. The new address is 605 North Highway 169, Plymouth, Minn.

61 Pioneer Hi-Bred International Inc.

20 EthanolProducer.com

Information Council (EPIC)

Correction from our December 2007 issue:

168 Poet LLC

5 Delta-T Corp. 149 Distillers Grains Quarterly

On page 73 of the Corn feature, it was incorrectly stated that Foss North America had signed an agreement with Monsanto to use the company’s calibrations in the Foss Infratec whole grain analyzers. Monsanto has its own proprietary program, but its calibration can be used in the analyzers.

155 OPW Fluid Transfer

104 Cereal Process Technologies

63 C.J. Schneider Engineering

Correction from our October 2007 issue:

10 U.S. Water Services 129 Vaperma Inc. 139 Victory Energy 42 Vogelbusch USA Inc. 143 Volkmann Railroad Builders Inc.

43 H-O-H Chemicals Inc.

128 Walling Water Management

91 Hydro-Klean Inc.

113 Westfalia Separator

ETHANOL PRODUCER MAGAZINE JANUARY 2008

11


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E D I TO R I A L

PUBLISHING & SALES

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

Mike Bryan Publisher & CEO mbryan@bbibiofuels.com

Tom Bryan Editorial Director tbryan@bbibiofuels.com

Joe Bryan Vice President of Media jbryan@bbibiofuels.com

Jessica Sobolik Managing Editor jsobolik@bbibiofuels.com

Matthew Spoor Sales Director mspoor@bbibiofuels.com

Dave Nilles Contributions Editor dnilles@bbibiofuels.com

Howard Brockhouse Senior Account Manager hbrockhouse@bbibiofuels.com

Rona Johnson Features Editor rjohnson@bbibiofuels.com

Clay Moore Account Manager cmoore@bbibiofuels.com

Ron Kotrba Senior Staff Writer rkotrba@bbibiofuels.com

Jeremy Hanson Account Manager jhanson@bbibiofuels.com

Anduin Kirkbride McElroy Staff Writer amcelroy@bbibiofuels.com

Chip Shereck Account Manager cshereck@bbibiofuels.com

Jerry W. Kram Staff Writer jkram@bbibiofuels.com

Tim Charles Account Manager tcharles@bbibiofuels.com

Susanne Retka Schill Staff Writer sretkaschill@bbibiofuels.com

Chad Ekanger Account Manager cekanger@bbibiofuels.com

Bryan Sims Staff Writer bsims@bbibiofuels.com

Marty Steen Account Manager msteen@bbibiofuels.com

Jessica Ebert Staff Writer jebert@bbibiofuels.com

Trista Lund Advertising Coordinator tlund@bbibiofuels.com

Michael Shirek Online Editor mshirek@bbibiofuels.com

Jessica Beaudry Subscriptions Manager jbeaudry@bbibiofuels.com

Jan Tellmann Copy Editor jtellmann@bbibiofuels.com

Tim Greer Circulation Coordinator tgreer@bbibiofuels.com

Craig A. Johnson Plant List & Construction Editor cjohnson@bbibiofuels.com

Erika Wishart Administrative Assistant ewishart@bbibiofuels.com

A RT

Christie Anderson Administrative Assistant canderson@bbibiofuels.com

Jaci Satterlund Art Director jsatterlund@bbibiofuels.com Sam Melquist Graphic Artist smelquist@bbibiofuels.com

HOW TO REACH US

LETTERS TO THE EDITOR We welcome letters to the editor. Send your letter to: Ethanol Producer Magazine Letters, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203 or e-mail to jsobolik@bbibiofuels.com. Letters should include the writer’s full name, address and telephone number, and may be edited for purposes of clarity and space.

SUBSCRIPTIONS To subscribe, visit www.EthanolProducer.com or you can send your mailing address and payment (checks made out to BBI International) to: Ethanol Producer Magazine Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You can also fax a subscription form to (701) 746-5367. Subscriptions to Ethanol Producer Magazine are available to all ethanol producers and future ethanol producers worldwide, free of charge. Regular subscriptions are available for just $24.95 per year within the United States, $59.95 for Canada and Mexico, and $110 for any country outside North America.

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

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

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

COPYRIGHT © 2007 by BBI International

ETHANOL PRODUCER MAGAZINE JANUARY 2008

13


The Way I See It

Governments of All Sizes Should Address Climate Issues

T

he recent report by the Intergovernmental Panel on Climate Change has solidified what many already knew: Climate change is real, we are a large part of the problem, and time for change is of the essence. It seems as though this report, if nothing else, has refocused the world’s attention on the importance of reducing greenhouse gas emissions. Now the question is not so much why this is necessary, but by whom, when and how will it get done? If history is any indicator, governments around the world will step in and begin developing plans of action that may be nonachievable, onerous or terribly inefficient. They will throw huge amounts of money at the problem, make a few corporations fabulously wealthy and then claim success. That’s what governments seem to do best. Sorry if I sound a bit cynical, but we have all seen this happen time and time again. In my opinion, this is a problem that can’t be solved by government alone. The old axiom, “Think globally and act locally,” has never been more relevant. The reduction of GHG emissions must be done on a local level. The federal government needs to work with state and local governments to establish the goals and objectives, and then provide the funding to help them get the job done. Communities around the world need to step up and address these issues on a local level. It isn’t just a good thing to do; it is their responsibility. They must not wait for the federal government to intercede and make this happen from the top down. This initiative has to begin at the local level by identifying polluters, identifying ways to mitigate pollution and becoming more energy self-sufficient in the process. There is hardly a community or city anywhere in the world that doesn’t have the option to develop greater energy sustainability through indigenous renewable resources and, in the process, help reduce GHG emissions. The variety of opportunities is impressive: solar, wind, geothermal, municipal solid waste, biogas, ethanol, biodiesel and home heating oil are only a few examples. Then, as cities begin the process of drilling even further, the opportunity for home energy savings, and reductions in industrial energy use and pollution can greatly reduce GHG levels, while creating impressive economic benefits. Multiply this effect from cities around the globe, and the cumulative environmental and economic impact will be staggering. Global warming is a problem created by wealth, and wealth needs to be instrumental in helping to solve the problem. Environmentalists and capitalists can no longer afford to be at odds. Rather, they need to join hands to utilize the vision of the environmental community and the wealth of capitalism to create a safer, cleaner world. That’s the way I see it!

Mike Bryan Publisher & CEO mbryan@bbibiofuels.com

14

ETHANOL PRODUCER MAGAZINE JANUARY 2008


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GS CleanTechâ&#x20AC;&#x2122;s patent pending Corn Oil Extraction Technology safely recovers up to 75% of the corn oil trapped within the DDG. In addition, removing oil from the DDG can also be expected to reduce drying costs, reduce emissions of greenhouse gases and volatile organic compounds and to enhance the marketability of your remaining DDG.


Contact GS CleanTech for more information about the future of Renewable Fuel production. GS CleanTech Corporation 12600 Deerfield Parkway, Suite 100 • Alpharetta, Georgia 30004 phone: 678.566.3588 • email: info@gs-cleantech.com

www.gs-cleantech.com


BUSINESS&PEOPLE

Business& People Ethanol Industry Briefs Business

Syntec acquires ethanol catalyst technology Vancouver, British Columbia-based Syntec Biofuel Inc. has finalized a $3 million private placement offering with Wood Energy Resources LLC, in which Syntec acquired the intellectual property and ethanol catalyst technology assets to convert biogas and syngas into ethanol, biobutanol, methanol and propanol. Syntec, a leader in ethanol catalyst conversion technologies, intends to commercialize its processes in November, according to Syntec President Michael Jackson. The company has devoted its research and development efforts to catalysts since 2001, and has further refined efficiencies in-house. Syntec’s research efforts have been funded through private equity, as well as Canadian government agencies, the National Research Council of Canada and Natural Resources Canada. EP

Delta-T joins ethanol project Delta-T Corp. was recently awarded a $37 million engineering, procurement and technology contract by Agra Industries Inc., general contractor for Western Illinois Ethanol Plant LLC’s 55 MMgy project near Griggsville, Ill. Delta-T will provide process engineering, equipment design and procurement, construction supervision, commissioning, and start-up services. Construction is expected to take 18 months. According to WIEP, site preparation and dirt work are underway. EP 18

The International Fuel Ethanol Workshop & Expo has been named among Tradeshow Week magazine’s “Fastest 50 Trade Shows.” The publication evaluated winners based on the percentage of growth in attendance from 2004 to 2006 and the total net square footage of growth during the same years. The FEW grew 72 percent in attendance and added 16,300 net square feet to the trade show floor during this time. “We owe some credit to the explosive growth of the fuel ethanol industry,” said Steve Stucko, group director of BBI International’s Conferences & Events division. “However, this has also created an increase in the number of competing events. Our team has responded by adding more innovative features to the FEW, while closely examining and responding to the needs of the exhibitors and attendees.” More than 5,300 people attended the 2007 FEW, which included 716 exhibit spaces. The 2008 event has room for 803 booths, more than 550 of which have already been reserved. To purchase booth space for the event, visit www .fuelethanolworkshop.com or contact Connie Provick at (719) 207-7048 or cprovick@ bbibiofuels.com. EP

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

PHOTO: GS CLEANTECH CORP.

BBI conference receives accolades

GS CleanTech’s corn oil extraction system

GS CleanTech finds corn oil provider Ethanol production technology innovator GS CleanTech Corp. recently announced that it would extract about 10 MMgy of corn oil from the distillers grains produced at Northeast Biofuels, a 114 MMgy ethanol plant in Volney, N.Y., which is slated to start up before the new year. “This is a very strategic project for us, and we are thrilled to bring our technology to what is on target to be the first major biorefinery in the northeastern U.S.,” said David Winsness, GS CleanTech president and CEO. EP

Rockwell Automation to acquire Pavilion Milwaukee, Wis.-based Rockwell Automation Inc., a global provider of automation, control and information systems for manufacturing, announced it will acquire Austin, Texasbased Pavilion Technologies Inc., a process control technology provider. Pavilion’s software products will be integrated into Rockwell’s FactoryTalk Services Platform, an integrated production and performance suite, and its Logix Control Platform. “This acquisition continues our investment in the process automation business and expands our capabilities to serve this major global market more completely,” said Steven Eisenbrown, Rockwell senior vice president. EP

ETHANOL PRODUCER MAGAZINE JANUARY 2008


BUSINESS&PEOPLE

Sponsored by

Business U.S. Water tackles Galva water treatment

Chemineer launches line of agitators

Cambridge, Minn.-based U.S. Water Services signed an agreement in October to provide water treatment for Big River Resources Galva LLC, a 100 MMgy ethanol plant that started construction in midNovember in Galva, Ill. According to U.S. Water, the Galva facility will be the first to incorporate U.S. Water’s patented high-efficiency reverse osmosis process with its evaporation and crystallization process. Big River Resources selected the zero-liquid-discharge system because of the high mineral content in the local well water and the long distance to a river for discharge. The four-stage water treatment process includes softening; carbon dioxide reduction; the HERO process, which will recover 95 percent to 97 percent of the water; and the final evaporation and distillation process to reduce final waste streams to a landfill solid. EP

Chemineer Inc., a developer and manufacturer of mixing technology and equipment for fluid agitation applications, recently launched a new line of agitators designed to service a wide range of industries, including ethanol and biodiesel. The new agitators, models 20 HT and GT, are available in right-angle and parallelshaft configurations. The equipment features a high-efficiency gearbox, a variety of seal options and reversible rotation. The agitators are designed to meet many standards and requirements, such as those set by the Occupational Safety and Health Administration. EP

People Slunecka leaves EPIC Tom Slunecka has joined Rapid City, S.D.based KL Process Design Group as vice president of business Slunecka development to help develop the company’s cellulosic ethanol business. KL Process is developing a 1.5 MMgy wood-waste-to-ethanol plant in Upton, Wyo. Slunecka moved to KL Process after three years as executive director for the Ethanol Promotion and Information Council, which he helped found. At EPIC, Director of Operations Robert White has been named interim director, while the search for Slunecka’s replacement is underway. EPIC recently added James Jirak as director of industry relations, as well. EP

Mascoma acquires cellulosic ethanol technology

Neogen launches aflatoxin test for corn Neogen Corp. recently developed a test method to determine the general level of possible aflatoxin contamination in corn. The trademarked Reveal for Aflatoxin SQ is formatted similar to a home pregnancy test. A test strip is immersed in a sample that has been extracted from the process. After five minutes, the test, which uses the company’s trademarked Reveal AccuScan III System, can return results in the ranges of less than 10 parts per billion, 10 to 20 ppb, or greater than 20 ppb. Neogen develops, manufactures and markets products dedicated to food and animal safety. The food safety division is based in Lansing, Mich. EP

Mascoma Corp. announced in November the acquisition of Celsys BioFuels Inc., an Indianapolis-based company formed in 2006 to commercialize cellulosic ethanol production technology. Terms of the transaction weren’t disclosed at press time. The technology, developed in the Laboratory of Renewable Resources Engineering at Purdue University, is based on proprietary pretreatment processes for multiple biomass feedstocks, including corn fiber and distillers grains. Michael Ladisch, an internationally known leader in renewable fuels and cellulosic biofuels, developed the technology. He will take a twoyear leave of absence from Purdue to join Mascoma as the company’s chief technology officer. EP

ETHANOL PRODUCER MAGAZINE JANUARY 2008

MGPI CEO to retire Ladd Seaberg announced he will step down as chief executive officer of MGP Ingredients Inc. Seaberg on June 30. He will remain chairman of the board of directors after that date. He will be succeeded by Tim Newkirk, the company’s current president and chief operating officer. Seaberg became chairman of MGPI’s board in October. He has served as CEO since 1988. EP

19


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COMMODITIES REPORT Natural Gas Report

Are natural gas prices too high or too low? Nov. 19—Natural gas storage inventories are at historic highs (9 percent higher than average and 3 percent higher than 2006) and the winter weather forecast calls for warmer-than-normal temperatures across the United States. Given these two factors, one would expect natural gas prices to be relatively low. That is not the case. At press time, natural gas prices were 4 percent higher than 2006. In addition, natural gas prices have increased 50 percent over the past two months from less than $5.50/MMBtu to more than $8/MMBtu. This doesn’t make sense when the natural gas prices are viewed in isolation from the larger carbon complex (oil). However, when natural gas prices are viewed relative to oil prices a different picture emerges. Natural gas supply and markets are generally separate and distinct from oil supply and markets. However, there is a tendency for

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

natural gas prices to be influenced by oil price changes. For example, when oil prices are high, natural gas prices tend to be relatively high. When oil prices are low, natural gas prices tend to be low. Over the last four years, per barrel oil prices have been on average a multiple of eight times the per MMBtu natural gas price. If current natural gas prices reflected that historic price relationship, prices would be close to $12/MMBtu instead of slightly more than $8/MMBtu. The chart shows the ratio of oil prices to natural gas prices over the last four years. As mentioned above, the average ratio is eight over that time period, with a tremendous amount of variability around the average. The chart’s trendline shows that the ratio between oil and natural gas prices appears to be increasing over time. Adjusting for the upward trendline and given the current oil price, natural gas prices “should” be $9/MMBtu, or 12 percent higher than current prices. Whether viewed based on a historic average price relationship or an adjusted price relationship, natural gas prices are relatively low compared to oil prices. The conclusion: natural gas prices appear to be too high given current natural gas fundamentals. However, when compared to oil prices, natural gas prices appear to be a bargain. EP Casey Whelan, vice president of strategic initiatives, can be contacted at cwhelan@usenergyservices.com.

Corn Report

Acreage battle looms in ‘08 Nov. 16—The corn market continues to be supported and pressured by outside markets such as energies, the dollar and metals. In November the USDA reduced the national yield figure from 154.7 to 153 bushels per acre. This decreased corn production from the previous estimate of 13.318 billion to 13.168 billion bushels, compared to 10.535 billion bushels one year ago. The demand side of the equation was reduced by only 50 million bushels, stimulated by a reduction in feed and residual. The combination of the supply and demand picture equated to a carry-out of 1.897 billion bushels, down 100 million bushels from the previous estimate. Looking at the macro world supply and demand, corn ending stocks still rest at 110.39 million metric tons versus 104.98 million metric tons one year ago. The question remains as to what the speculator will do with the long corn position. At press time, the answer will most likely have a much better direction. However, what bears upon the marketplace during the New Year is the battle of acres between corn and soybeans. Remember the price hikes came in late February one year ago when March corn futures were trading in the upper $4.30s. These price levels may leave themselves vulnerable to be tested again, arising from any concern of more-than22

By Jason Sagebiel, FCStone

expected corn acreage loss. Overall, the market seems content in a trading range but long liquidation could very well come at the end of the year. Keep a watchful eye on the outside markets as well to offer any non-fundamental direction. EP

ETHANOL PRODUCER MAGAZINE JANUARY 2008


COMMODITIES REPORT DDGS Report By Sean Broderick, CHS Inc.

Export market demand continues to rise Nov. 21—As December began, it appeared as though the name of the game was exports. With the weakness in the U.S. dollar, DDGS business to the export market, particularly Canada, is better than ever. The Gulf market and Mexico have also been consuming in ever-increasing amounts as demand for proteins increases. With no impending break evident in Chicago Board of Trade and world prices, this trend looks to continue at least for the winter months. Domestically, buyers have so far been in denial, buying month to month and paying higher prices in every transaction. This type of activity tends to “self fulfill” itself, as buyers have a lead time of up to 10 days due to logistics. Whatever cars at the plant that do end up “on track” are generally spo-

ken for before they have any chance to depress prices. With soy, canola and cottonseed meal prices rallying, DDGS is a good protein buy in the ration. Going forward, the impending demand is not yet keeping up with projected supplies. Although there is a lot more tonnage coming on the market in the first and second quarters and deferred quotes are reflecting this, buyers still have a large portion of their ration to purchase. Whether the timing of the supply and demand meet each other is going to determine prices for the spring and the summer. However, with nearly every project in the last six to eight months getting delayed, it looks as though the buyers that are waiting for “all this DDGS” to come onto the market are going to have to blink first. EP

Regional Ethanol Prices (Monthly averages in cents per gallon)

SPOT

West Coast

191.036

185.75

195.838

Midwest

186.089

178.5

192.079

East Coast

191.964

----

193.04 Source: OPIS

Regional Gasoline Prices (Monthly averages in cents per gallon)

REGION

SPOT

RACK

RETAIL

West Coast

260.241

255.829

319.21

Midwest

246.893

251.352

302.392

East Coast

241.929

244.166

298.772 Source: OPIS

DDGS Prices ($/ton)

By Spencer Kelly, OPIS

Tight prompt market emerges Nov. 17—Ethanol markets firmed through most of November. However, prices appeared to stall heading into the Thanksgiving holiday amid forward price indications that lagged and returned some backwardation to physical markets. Stronger near-term markets and renewed backwardation turned up in the Midwest, where Chicago spot ethanol for next-day delivery topped $1.96 per gallon and week-out deals reached $1.92 per gallon. Ethanol spot prices gained some 12 cents since the start of November and some 37 cents or more since September. Similar gains were also repeated in other markets, where spot deals topped $2 per gallon for New York Harbor and Houston ethanol barges. Sources reported prompt and nearprompt tightness, or at least an unwillingness from suppliers to part with preThanksgiving volume. However, in the latter half of November, any-month material began to trade at a larger discount to the

prompts with December discussions starting to trade off. Chicago any-December ethanol traded at $1.85 per gallon and ran at an 11-cent discount against prompt trading. Rack ethanol Midwest top-off volume also gained substantially for the month, but postings showed signs of cooling in late November. On average, Iowa racks at $1.915 per gallon were up more than 10.5 cents since October, but down about onehalf a cent from its mid-month peak. The key for ethanol demand remained high-flying gasoline outrunning ethanol. Chicago spot unleaded ran about 52 cents more than prompt ethanol by late November. With the federal blending credit, that made ethanol about $1.03 per gallon cheaper than unleaded gasoline. Weekly U.S. DOE data continued to show record levels of discretionary blending, running almost 60 percent over the same time last year. EP For more information, contact OPIS Fuel Ethanol Report at (888) 301-2645, ext. 2478.

ETHANOL PRODUCER MAGAZINE JANUARY 2008

NOV. 2006

NOV. 2007

OCT. 2007

Minnesota

130

120

95

California*

185

170

140

Chicago, Ill.

137

132

100

Buffalo, N.Y.

150

144

114

Central Florida

170

155

126

LOCATION

*Central Valley

Source: CHS Inc.

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

LOW

CLOSE

Nov. 16, 2007

3.81 1/2

3.77 1/2

3.79 1/2

Oct. 16, 2007

3.61 3/4

3.54 3/4

3.60 1/2

Nov. 16, 2006

3.65

3.50

3.51 1/2

DATE

Ethanol Report

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

REGION

Source: FCStone

Cash Sorghum Prices ($/bushel) NOV. 16, 2007 OCT. 25, 2007 Superior, Neb. Beatrice, Neb. Sublette, Kan. Salina, Kan. Triangle, Texas Gulf, Texas

NOV. 30, 2006 3.73 3.72 3.60 3.88 3.82 4.45

3.66 3.54 3.32 3.71 3.33 4.21

3.69 3.71 3.47 3.80 3.45 4.30

Source: Sorghum Synergies

Natural Gas Prices ($/MMBtu) NOV. 16, 2007

OCT. 26, 2007

NOV. 16, 2006

NYMEX

8.05

7.22

7.75

N. Ventura

6.57

6.57

7.45

Calif. Border

6.58

6.58

6.75 Source: U.S. Energy Services Inc.

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

434,000*

July 2007

421,000

August 2006

329,000

*all-time monthly high

Source: U.S. Energy Information Administration

23


VIEW FROM

THE HILL

Eyes on the Road Ahead January columns frequently take stock of the year that was, focusing on the events and achievements that defined that previous 12 months. The U.S. ethanol industry can certainly be proud of everything it accomplished in 2007. For instance, the renewable fuels standard was fully implemented without incident and our industry surpassed the 7 billion-gallon capacity threshold, expanded the use and production of ethanol to states not familiar with our fuel, and saw ground broken on the first of many cellulosic ethanol plants. (I hope we are also celebrating an expanded RFS, but negotiations are still ongoing as of this writing.) While 2007 proved to be a fruitful year, we also experienced firsthand what happens to industries that succeed faster and more robustly than its competitors would like. Chock full of misinformation, media report after media report blasted our industry for perceived shortcomings. Indeed, it felt like our industry was playing much more defense than offense. To continue to achieve the kind of success our industry desires, we must keep our eyes focused on the road ahead and cannot concern ourselves too much with what happened in our rearview mirror. After all, 2008 will require our complete attention. The continued development of new markets for ethanol blending will be a top concern for the Renewable Fuels Association and the industry. Great progress has been made in states like Tennessee, Georgia and Florida. Together with the expected expansion of ethanol blending in California, the demand for our product will no doubt continue to grow. Rapid advancements in technology will unlock never-before dreamt horizons for the U.S. ethanol industry. Improved efficiencies at existing grain-based ethanol plants will further reduce water use, create new sources of fuel for the biorefineries themselves and increase ethanol yields from every bushel of grain. Moreover, the investment by our industry, together with the federal government, will tremendous progress in the commercialization of cellulosic ethanol technology. 2008 will build upon the groundbreaking achievements we witnessed in 2007 by companies like Range Fuels, Abengoa Bioenergy and Poet. Indeed, there is tremendous opportunity for innovation in both traditional and next-generation ethanol production. As domestic opportunities abound, a growing world ethanol industry will require increased attention. As more countries around the world seek to develop domestic ethanol, our industry and those of Canada, Brazil and Europe are in a leading position to foster growth and ensure a robust global ethanol industry. Likewise, we will also have to be mindful to ensure that efforts to develop a global trade in ethanol do not infringe or restrain the continued development of existing ethanol industries. Last, but certainly not least, our industry has an opportunity to start telling its story. We have been under attack by those threatened by ethanolâ&#x20AC;&#x2122;s growing role in energy and agriculture. This was to be expected. As we have grown, we have attracted a list of antagonists that represent some of the nationâ&#x20AC;&#x2122;s least-liked industries. This attention should not be viewed through the lens of a victim, but rather as an opportunity for the U.S. ethanol industry to finally come together and speak with one voice about the economic, environmental and energy security necessity of a robust, domestic renewable fuels industry. Without question, that will be a focus in 2008. I eagerly look forward to the opportunities that lie ahead and hope to see you on the road with us.

Bob Dinneen President and CEO Renewable Fuels Association 24

ETHANOL PRODUCER MAGAZINE JANUARY 2008


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BIObytes

INDUSTRYNEWS

Ethanol News Briefs Ethanol leaders request Farm Credit expansion Iowa’s renewable fuels industry leaders recently wrote letters to several U.S. senators, calling for them to support an amendment added to the Farm Bill by Sen. Saxby Chambliss, R-Ga., that would expand Farm Credit Services' lending authority to renewable fuels facilities. Currently, Farm Credit can only lend to a start-up ethanol or biodiesel plant if the facility is 50 percent farmer-owned. The letter pointed out that this may have been reasonable in the early days of the renewable fuels industry, but now bigger, more expensive plants are being built, “making it impossible to achieve 50 percent farmer ownership.”

Rex Stores takes stake in ethanol Appliances and electronics retailer Rex Stores recently invested $50.8 million in One Earth Energy’s 100 MMgy ethanol plant being developed in Gibson City, Ill. The investment gives Rex 74 percent equity in the project. First National Bank of Omaha’s Renewable Fuels Group closed $110 million of senior secured debt for the project in October. Fagen Inc. is providing complete design, engineering and construction services, using ICM Inc. process technology. Construction is expected to be complete by the spring of 2009. In July, Rex added $10 million to its existing investment in Big River Resources LLC, which recently finished a 40 MMgy expansion in West Burlington, Iowa.

Countryside drops ethanol plans Countryside Renewable Energy Inc. abandoned its plan to consolidate up to 10 farmer-owned ethanol plants and has ceased operations. Countryside had signed nonbinding letters of intent to acquire an interest in several ethanol plants, including Dakota Ethanol LLC in Wentworth, S.D. It planned to operate the plants through the same management and continued on page 30

28

Southeast tweaks specs to boost E10 use While the southeastern United States has seen limited E10 and E85 blending, widespread adoption of the ethanol blends is being considered in several states through rule changes that would loosen the standards slightly. Florida: The state Department of Agriculture held a public workshop in late October to gather suggestions from the industry on rule adjustments. The department proposed to adopt a one-pound-per-square-inch increase to the vapor pressure standard year-round, according to Matt Curran, chief of petroleum inspections for the consumer services division. The department is currently reviewing other suggestions made by industry representatives at the meetings to loosen the midpoint distillation (T50) requirement and vapor-to-liquid ratio standard. With the public comment period closed, the new rules were in the review stage before submittal to the Florida Secretary of State for an additional 21-day public comment period. South Carolina: Proposed changes following National Institute of Standards and Technology Handbook 130 recommendations have been filed, according to Carol Fulmer, director of the state’s consumer services division within the state Department of Agriculture. Once the legislative session begins in January, the legislature has 120 days to consider the proposal. If no action is taken, it becomes effective. “The current regulations do not really address the [ethanol] issue,” Fulmer said. “All they say is that the fuel has to meet current ASTM standards.” Fulmer said while the state currently has E10 and E85 blends available, the changes should encourage more blending. “There is some concern about distillation and vapor pressure, and if you blend with any gasoline, it might fail those specs. The major oil companies have some concern unless there is some allowance for that.” North Carolina: “There’s a misconception that we haven’t allowed ethanol blending in this state,” said Steve Benjamin, standards division director at the state Department of Agriculture. “It’s been legal for over 15 years.” He said BP, Marathon and other local distributors have been contacting officials in several southeastern states about adding E10 blends. “They see [ethanol

blends] coming and want to be prepared,” he said. He said he’s somewhat puzzled by the questions being posed about specifications or the requests for ethanol blending approval since a set of specifications has been in place since he started at the department 15 years ago. North Carolina has its own specifications and doesn’t follow the NIST 130 handbook, Benjamin explained. The division has a draft proposal being reviewed now that would loosen the current regulations. He explained the current T50 distillation specs are set at 158 degrees Fahrenheit, and the proposal seeks to drop that to 148 degrees and possibly waive the vapor lock requirement. He said he expects to present the draft proposal to the state gas and oil board meeting in February or March, after which it goes to the state assembly for final approval. Georgia: The state Department of Agriculture held two town hall meetings in late November to gauge public and petroleum industry support for changes to the state’s ethanol blending requirements. The department’s fuel and measures division recommended the T50 be dropped to 150 degrees Fahrenheit, the V/L be dropped 10 to 12 degrees, and a waiver of the onepound psi pressure requirement. After the town meetings, the commissioner of agriculture will decide whether to implement the proposed emergency regulations, possibly in the first quarter of 2008, according to David Au, state oil chemist. —Susanne Retka Schill

ETHANOL PRODUCER MAGAZINE JANUARY 2008


INDUSTRYNEWS

Company considers regional ethanol pipeline Tulsa, Okla.-based Seminole Energy Services is gauging the interest of Nebraska ethanol producers in a $150 million pipeline covering 175 miles in central Nebraska with a new terminal pegged somewhere within a 25-mile stretch between Hastings and Grand Island. The facility would have the capacity to store 27 million gallons (nearly 650,000 barrels) of ethanol at one time, and if enough ethanol producers sign on, the terminal could aggregate nearly 2 billion gallons per year near the intersection of two major rail lines. The proposed facility will also contain a unit-train loading facility. Seminole Energy’s business development representative Kirk McClymont told EPM his company is already building a natural gas pipeline through central Nebraska, predominantly to serve ethanol producers that consider local natural gas supplies to be limited and therefore more costly. The company hopes to increase natural gas supplies to those producers and help to lower energy costs. Now, Seminole Energy is gauging interest in an ethanol pipeline to increase product output while lowering transportation costs. “We’re already securing right of ways and environmental easements,” McClymont said. “It’s been my contention that we need a pipeline to move ethanol around the state. We’re trying to see if it will be economically feasible to bring the product to a central area that will have access to Union Pacific and Burlington Northern Santa Fe [railroads].” McClymont said it's ideal to build a natural gas pipeline while planning an ethanol pipeline. “It’s an opportune time to explore,” McClymont said. “It will take seven to 10 months to build the natural

gas pipeline, which would be ample time to gauge interest in the project.” From mid-November to mid-December, Seminole Energy will be talking with plants “in the fairway,” or close to the natural gas line under construction, having them sign confidentiality agreements and filling out questionnaires about their current rail situation. “If producers choose to fill out the questionnaire, we’ll assess the interest,” McClymont said. “If there are only two or three, then it probably won’t work.” If closer to eight or 10 plants show interest, then the company's engineering staff would assess the feasibility of the project, which would take an additional 30 days. It would take another 60 days to complete a precedent agreement and a detailed plan to get the pipeline and terminal built. “We need a commitment from the plants,” McClymont stressed. He couldn’t say how much producers would have to pay per gallon for access to the pipeline at press time, but he said he would be able to estimate costs in midJanuary. He added there are still unanswered technical questions to be addressed, such as corrosiveness. Ethanol plants choosing to invest in the pipeline/terminal project would have the option to sell their products to the end-user directly from the plant or from the terminal. McClymont said the big pipeline runners—the Kinder Morgans and Magellans of the world—aren’t interested in pipelining ethanol, in part because of the lack of large volumes at a common point. If the proposed terminal has 650,000 barrels of on-site storage and nearly 2 billion gallons of ethanol coming through it every year, the major oil pipeline operators may think differently about ethanol. —Ron Kotrba

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ETHANOL PRODUCER MAGAZINE JANUARY 2008

29


Ethanol News Briefs continued from page 28

marketers, allowing those plants to better compete with larger players in the ethanol industry. However, declining margins in the ethanol industry made the venture less attractive to investors. The last of the letters of intent expired Oct. 1, and Countryside ceased operations at the end of that month.

North Dakota college to add biofuels program Representatives from the North Dakota State College of Science in Wahpeton, N.D., met with ethanol producers to gather input on its new biofuels technology program, which will enroll its first class in the fall of 2008. The two-year associate degree will include a core curriculum in basic sciences, plus specialized courses on instrumentation, process control, quality control and microbiology, according to Harvey Link, NDSCS vice president for institutional advancement. The course also includes an internship. The biofuels training program is one of several new courses that involve emerging technologies such as nanoscience, micro science and biotechnology.

continued on page 32

INDUSTRYNEWS

Commercial-scale cellulosic ethanol plant breaks ground Broomfield, Colo.-based Range Fuels established itself as a pioneer in cellulosic ethanol production when the company broke ground on the nation’s first commercial-scale cellulosic ethanol facility in Treutlen County near Soperton, Ga., in early November. Approximately 700 people attended the groundbreaking at the site of the future cellulosic facility. The event featured federal, state, city and county dignitaries, including U.S. Secretary of Energy Samuel Bodman, Georgia Gov. Sonny Perdue, state Sen. Jack Hill, former state Sen. Hugh Gillis and Range Fuels CEO Mitch Mandich. “There was just a tremendous spirit there,” Mandich said. “When you get state and federal support at those levels, in addition to local representation, it was a very meaningful event.” The new plant will use wood and wood residue from Georgia’s pine forests and mills as its feedstock. Once fully operational, the facility will have a maximum capacity of 100 MMgy. As part of its $76 million Technology Investment Agreement with the U.S. DOE, Range Fuels will receive $50 million for the construction of the first 20 MMgy. The remainder of the grant will go toward construction of the next phase of the project. Construction of the first phase is expected to be complete by late 2008, according to Mandich. The Soperton facility has been permitted as

PHOTO: RANGE FUELS

BIObytes

Left to right: U.S. Energy Secretary Bodman, Vinod Khosla of Khosla Ventures, Mandich and Gov. Perdue.

a minor source of emissions. Its proximity to both wood supplies and ethanol markets will minimize energy expended in supplying the facility with feedstock and providing ethanol to consumer markets, further demonstrating the lowimpact, environmentally friendly nature of Range Fuels’ technology. “The state of Georgia has provided us with an excellent opportunity to locate our first plant using its abundant, renewable forest resources as feedstock,” Mandich said. “Our technology transforms the wood and wood waste from Georgia’s millions of acres of woodlands into ethanol, a key source of transportation fuel.” —Bryan Sims

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www.kcoe.com 30

ETHANOL PRODUCER MAGAZINE JANUARY 2008


INDUSTRYNEWS

FCStone launches carbon entity In addition to helping its customers and client base mitigate environmental risk, FCStone Carbon LLC, a wholly owned subsidiary of the risk management company FCStone Group Inc., aims to create, represent and market technologies that improve efficiencies in the renewable energy sector. “Ethanol and biodiesel producers are showing a tremendous amount of interest in making sure they get ahead of the curve and manage their total environmental risk,” explained Mike Knobbe, president of FCStone Carbon. “They’re showing a lot of interest as margins compress in that industry. They want to become the most efficient player on the block and be lowcost.” To that end, the company has been working to develop a portfolio of services and technologies that can help ethanol producers better understand their energy footprint, carbon emissions profile, and the tools available to mitigate costs and environmental risks, according to Mike Kinley, vice president of technology for FCStone Carbon. “We’re going to them not with just a carbon marketing platform,

but with a suite of technologies and services that will help them find a pathway to being a low-cost producer and a low emitter,” he said. “We’re the only company that we’re aware of that’s linking both technologies to reduce costs and risk to the creation of greenhouse gas emission credits or environmental emissions credits.” On the technology side, the company recently announced a partnership with engineering company Harris Mechanical; AE&E Von Roll, an equipment provider; and Alliant Energy, a Midwest power provider, to develop, scale up and market a fluidized bed reactor technology for the renewable fuels industry. “They have without a doubt the best design, and we’ve partnered with them to market that technology,” Kinley explained. The reactor can be used by an ethanol plant to incinerate

its low-cost, low-value coproducts like the syrup left over from the thin stillage stream. The process steam that is created can be used to replace natural gas. “The technology has been used in other industries and has been extremely beneficial,” Kinley said. In addition, the reactor that FCStone Carbon will market has been scaled up and run pretty much nonstop at Corn Plus LLLP in Winnebago, Minn., he said. Cost-reducing and energy-saving technology isn’t the sole focus of the company. As ethanol producers and others in the renewable fuels industry work to reduce their carbon footprints, FCStone Carbon will usher those companies into the carbon market and help them to trade their emissions. “I think that in the current environment and as we go forward, ethanol plants have to identify ways to become more competitive,” Kinley said. “We see this technology and greenhouse gas platform as another area of opportunity to reduce risk and reduce cost, and it’s definitely the right time to bring this to the table.” —Jessica Ebert


BIObytes Ethanol News Briefs continued from page 30

Gate Biofuels plans biofuels terminal in Florida Gate Biofuels LLC, a subsidiary of Gate Petroleum Co., is in the early stages of developing a 55 million-gallon biofuels terminal in Jacksonville, Fla. The $90 million facility will be capable of receiving, blending and shipping ethanol and biodiesel via truck, barge or rail. It will also provide fuel storage for Gate Biofuels and third parties. Once the terminal is operational, Gate Petroleum will offer E10 at all of its retail gasoline locations in Jacksonville and the surrounding areas.

UN head calls for balanced approach to biofuels Conflicting reports and statements by various United Nations officials regarding biofuels and their impact on food and world hunger led Secretary-General Ban Ki-Moon to issue a statement about the matter in November. Ki-Moon was in Brazil on an official trip focused on climate change. “Clearly, biofuels have great potential for good and perhaps also for continued on page 34

32

INDUSTRYNEWS

Novozymes eyes Midwest expansion Novozymes is screening sites in the Midwestern United States for a potential new enzyme production plant. However, the company has no active plans to build a plant, said Thomas Nagy, Novozymes executive vice president for stakeholder relations. “We have not made a decision to expand,” he said. “We are trying to get ahead of the curve, so when we see it is needed, then we will be through some of the initial steps.” With the rapidly expanding ethanol market and the impending growth in production of cellulosic ethanol, the company wants to be prepared for the future. “We expect our growth to be in the area of 20 [percent] to 25 percent for the next couple of years and then probably slowing down a little bit,” Nagy said. “Then we expect the enzymes for the biomass to be ready to be utilized by that time.” One reason the company is taking these steps is to prepare for the uncertain pace at which cellulosic ethanol technology will develop. “We still believe that we and our partners in the industry have some research to do,” Nagy said. “We also know that, all of a sudden, things may go faster than anticipated, so that is why we are preparing this initial phase.”

Nagy said the company is looking at sites in the Midwest because it believes that area will continue to be the heart of the ethanol industry. “Looking at the U.S., biofuels businesses are almost exclusively based on corn,” he said. “We also believe that in the U.S., corn stover will be the cellulosic material that will be commercialized first. That means it will be in the Corn Belt, where most of our customers will most likely be located. We want to be close to our customers to make the most efficient supply chain with them.” The company is currently in talks with state and local officials in Iowa, Nebraska, South Dakota, Minnesota and Illinois to discuss suitable sites. “We have a team surveying these different states right now,” Nagy said. “We are zooming in on various sites to get an idea for what would be a good location in case we need one." —Jerry W. Kram

ETHANOL PRODUCER MAGAZINE JANUARY 2008


INDUSTRYNEWS

NCERC hosts Operators’ School Ethanol Technology held The Operators’ School on Nov. 13-15 at the National Corn-to-Ethanol Research Center in Edwardsville, Ill. Aimed at operators working in ethanol production facilities, the course featured lectures and demonstrations of production and management techniques designed to yield the most efficient process possible. According to Ethanol Technology Global Sales Manager Chris Richards, approximately 50 people attended, and all but four were from operating or soon-to-beoperating fuel ethanol plants. Richards said the turnout was strong, and the program was effective. “We put together two-and-a-half days of training, where the first two days were based on the process itself, right from grain intake and milling all the way through the dryhouse and dehydration,” he said. “In each of the talks there, we attempted to take it down to an operator’s level, where we could look at how operating teams affect profitability in each area and how they could improve efficiencies.” Presenters at The Operators’ School included 2007 International Fuel Ethanol Workshop High Octane Award winner Dave

Kelsall, Mike Ingledew of the Ethanol Technology Institute, members of the Ethanol Technology team, members of the NCERC team and McCord Pankonen of Documentation Specialists International Inc., a training product and consulting service provider. “Overall it went extremely well,” Richards said. “We had a fairly detailed review sheet … ranging from individual presenters to the plant visits that we had. On each day, we actually had either an hour or an hour-and-a-half visit to the plant, where we could actually see [it] running and working, and review the areas we just discussed.” Ethanol Technology designed the program for instruction at the operator’s level, and the knowledge acquired at The Operators’ School can be used to increase plant efficiency and hold up sagging margins caused by low ethanol prices and high corn prices. “The theme that went all the way

through the course was ways that plants can make their operational side more profitable and more effective,” Richards said. “When it comes down to it, an operating team can’t really affect the incoming or outgoing prices of products, but they can affect how [the plant uses] them.” Richards called The Operators’ School a big success and said Ethanol Technology is already preparing for the event in 2008. “We’re very close,” he said, when asked if any decisions had been made. Though nothing has been confirmed, Richards said the NCERC is again being considered. When the date is announced, registration information will be available at Ethanol Technology’s Web site at www .ethanoltech.com. —Michael Shirek

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Ethanol News Briefs continued from page 32

harm,” he said. “It is up to national governments to responsibly balance the social costs and benefits.” He said research into renewable technologies should continue. At the same time, issues of food security through pricing and other sustainability matters should be looked at.

Alltech moves forward with ethanol plant project Alltech received approval from the Kentucky Economic Development Finance Authority for financial incentives that will go toward building a $40 million ethanol plant in Springfield, Ky. The $8 million incentive is based on a sales tax refund for building and equipment costs, a state income tax wage reduction for new employees and a credit against state income taxes. The company has also applied to the U.S. DOE for grant assistance and expects to get approval in February. The biorefinery will use up to 30 percent cellulosic feedstocks such as switchgrass, corn cobs and corn stover. It will also use the fiber left over from the corn-to-ethanol process to make additional products. EP

INDUSTRYNEWS

CMEC, SunOpta to build cellulosic ethanol plant In November, SunOpta BioProcess Inc., a subsidiary of SunOpta Inc., signed a letter of intent with Central Minnesota Ethanol Co-op in Little Falls, Minn., to complete feasibility and engineering studies that may lead to the two companies jointly building, owning and operating a 10 MMgy cellulosic ethanol plant. The facility would be adjacent to CMEC’s existing corn-to-ethanol plant and would use local wood chips as a feedstock, provided final engineering and definitive agreements are completed. The critical pretreatment process step will utilize SunOpta BioProcess’ patented auto hydrolysis process, which uses steam explosion technology to pretreat and partially hydrolyze lignocellulosic materials. In this process, no external chemical catalyst is required, and the water contained in the feedstock is efficiently used, eliminating the need for large external water sources. This technology is currently being used in a number of demonstration-scale cellulosic ethanol plants around the world, according to SunOpta. The proposed facility would initially produce 10 MMgy of cellulosic ethanol with modular scaleup plans to expand to more than 50 MMgy. The wood waste feedstock supply would also be used in CMEC’s biomass gasifier, which started operating in the fall of 2006, to provide power to both plants. “We anticipate powerful synergies with

PHOTO: CMEC

BIObytes

CMEC's current corn-based ethanol plant with biomass boiler may have a cellulosic ethanol neighbor.

CMEC’s management and operations expertise, excellent existing infrastructure and strong community relationships,” said Murray Burke, president of SunOpta BioProcess. “We expect the planned cellulosic ethanol facility to be one of the first of its kind in the world, bringing the commercial production of cellulosic ethanol to reality. This venture is consistent with [SunOpta’s] long-term strategy of leveraging our proprietary technology in the ownership and operation of leading-edge cellulosic ethanol operations.” On Oct. 28, a minor fire and explosion occurred in a wood chip storage silo for the biomass boiler at CMEC’s corn-based plant. There were no injuries, and no damage was sustained in the rest of the facility. The cause wasn’t immediately determined. After a brief shutdown, it was on line one day later. —Jessica Sobolik


INDUSTRYNEWS

RIN webinar reveals need for compliance The beginning of 2008 marks four months into the implementation of renewable identification numbers. During this time, ethanol producers and other effected parties continued to adjust to the new system and comply with reporting requirements. Quarterly reports are due two months following the end of the quarter. The first reporting requirement was the third-quarter 2007 report, which was due Nov. 30. The year-end compliance report is due Feb. 28. To help obligated parties prepare for the looming deadlines, the RINSTAR Renewable Fuel Registry held a RIN Boot Camp on Oct. 30. According to Clean Fuels Clearinghouse President Clayton McMartin, 234 people representing more than 100 companies attended the webinar. About one-third of the attendees were producers or importers. The webinar, an Internet-based conference, consisted of an hour of prepared material, and an hour of questions and answers from U.S. EPA representatives. The online tool was designed to help attendees understand the basics of compliance and report preparation. McMartin said it was apparent from attendee questions that compliance with the renewable fuels standard, from which the RINs

were implemented, isn’t up to par. “The industry is in denial,” he said. “I think people are just now realizing this is for real.” Poll data taken during the event indicated that 59 percent of the respondents hadn’t started on the third-quarter report, while just 5 percent had completed and submitted the report to the EPA. Another poll showed that 61 percent of respondents received RINs at least one day after the product transfer document. “One of the most revealing things from the webinar is that RINs are not accompanying renewable fuel as required by the regulations,” McMartin said. “The fuel shows up, and the RINs show up later. RINs are to be transferred the same day the product is transferred. I see companies that are two months behind on their transfers.” Another webinar will likely take place in January and cover year-end reporting, McMartin said. With the right system, he said reporting can be simple. “We built our system on a solid foundation of a database,” he said. “We account for every transaction, which allows us to put every-

ETHANOL PRODUCER MAGAZINE JANUARY 2008

thing back together. We keep the data organized so that reports can be generated the day after the quarter ends.” Customers of the RINSTAR registry have found this to be true. “For less than $200 and just a few minutes of my time, we had our thirdquarter reports into the EPA,” said Mike Swan, operations manager at Holland Terminal Inc. “I sent these reports through [EPA’s Central Data Exchange] system, which is a minor accomplishment on its own.” McMartin said the registry continues to grow each week. “We are handling as many as 800 transactions a day now—up from around 250 in September,” he said. “Our transaction rate is on a pace of 10,000 transactions per month.” The transactions are among more than 30 member companies, which McMartin said accounts for more than 1 billion gallons of renewable fuel transfers annually. “That shows you how much [fuel] trading happens before it gets to the end-user,” he said. RINSTAR was developed by Clean Fuels Clearinghouse. It is a Web-based renewable fuels validation and credit management system, open to all stakeholders in the renewable fuels arena. —Anduin Kirkbride McElroy

35


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NEW PROJECT

PROJECT COMPLETE

PLANT EXPANSION

EXPANSION COMPLETE

INDUSTRY

Ethanol Plant Construction Slow but Steady n the December issue of EPM, we noted that several plants were finishing construction and starting production, but fewer plants were starting construction. For example, from September to press time in November, 10 plants had completed construction. During this same time, only two plants began construction. This time frame is a microcosm of the ethanol industry’s construction slowdown. 2008 is likely to begin with the continuing decline in construction capacity until something changes. A project can take several years to get from concept to production. Sometimes the equity drive ends up taking the longest. Unfortunately, when equity drives slow significantly, so does everything else. “Once ethanol’s price went down [during the summer of 2007], it became much harder to close equity drives,” said Art Wiselogel, a manager in BBI International’s Project Development division. Wall Street investors lowered the amount of money they were willing to loan to projects, decreasing the bank’s risk and, in turn, making it harder for a project to raise more money in an unfavorable season. “The only plants you’re going to see get started [at the beginning of] the fourth quarter are those that are self-financed,” Wiselogel said. This may explain the lack of plants that began construction between September and November, but it doesn’t discourage all project developers. In Casselton, N.D., Tharaldson Ethanol LLC is building a 100 MMgy facility. The project began construction in May, and despite the severe weather that threatens the region every winter, crews will be on the ground until the job is complete. “Everyone’s got their eyes on us,” said one engineer at the site. This isn’t a self-promoting statement. Rather, with so much at stake, getting the job done at close to 100 percent efficiency has become a necessity. Competition is increasing with each passing month. Wiselogel said he expects ethanol capacity coming on line in the third and fourth quarters of 2007, and possibly into the first quarter of 2008, to exceed 1 billion gallons before there is a slowdown in completed projects. According to Wiselogel, 14 billion gallons of corn-based ethanol capacity may be all the U.S. market can bear. “This will probably continue until the financial environment dictates otherwise,” he said. In keeping with this trend, no new plants were added to the list this month. However, three plants completed construction. Advanced BioEnergy LLC in Fairmont, Neb., began production Oct. 25 and is currently running at full capacity. Renew Energy LLC in Jefferson, Wis., started production in November. Likewise, Western New York Energy LLC in Shelby, N.Y., began production just before Thanksgiving. In addition, two facilities

38

PHOTO: CRAIG A. JOHNSON, BBI INTERNATIONAL

I

Tharaldson Ethanol LLC

completed expansion projects. Big River Resources LLC in West Burlington, Iowa, and Husker Ag LLC in Plainview, Neb., completed 40 MMgy expansion projects in November. —Craig A. Johnson

EPM will remove seemingly inactive projects from this list if: 1. Our good faith attempts to contact project representatives go unanswered for three straight months. 2. Through exhaustive means, we are unable to verify the continued advancement of a project. 3. The Renewable Fuels Association, as well as project representatives, are notified and given a reasonable amount of time to verify the project’s current status. To provide updates to this list, contact Craig A. Johnson at (701) 7468385 or cjohnson@bbibiofuels.com.

ETHANOL PRODUCER MAGAZINE JANUARY 2008


Construction Represents 4.79 Billion Gallons Annually

Aberdeen Energy LLC Mina, South Dakota Fagen Inc. ICM Inc. 100 MMgy corn

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

undeclared undeclared N/A November 2006 early 2008

PHOTO: ABSOLUTE ENERGY LLC

Location Design/builder Process technology Capacity Feedstock Synopsis of progress N/A

Absolute Energy LLC Location St. Ansgar, Iowa Ethanol marketer RPMG Design/builder Fagen Inc. Distillers grains marketer CHS Inc. Process technology ICM Inc. Carbon dioxide marketer N/A Capacity 100 MMgy Broke ground July 2006 Feedstock corn Target start-up date February 2008 Synopsis of progress One-third of all roadwork is complete, and most construction is focused on the energy center and processing building. The facility is receiving corn.

Project Complete

Absolute Energy LLC

Advanced BioEnergy LLC

Arkalon Energy LLC

Location Fairmont, Nebraska Ethanol marketer RPMG Design/builder Fagen Inc. Distillers grains marketer CHS Inc. Process technology ICM Inc. Carbon dioxide marketer N/A Capacity 100 MMgy Broke ground December 2005 Feedstock corn Start-up date October 2007 Synopsis of progress The plant began production Oct. 25 and is running at full capacity. Congratulations Advanced BioEnergy LLC!

Cloverdale, Indiana F.A. Wilhelm Construction Vogelbusch 88 MMgy corn

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

undeclared undeclared undeclared October 2006 April 2008

Location Design/builder Process technology Capacity Feedstock

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

Murex Conestoga Energy Partners

undeclared August 2006 December 2007

Big River Resources LLC West Burlington, Iowa Fagen Inc. ICM Inc. from 52 MMgy to 92 MMgy

corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Start date Completion date

Provista UBE Ingredients N/A December 2006 November 2007

Synopsis of progress The plant completed construction and aimed to ramp up to 100 percent capacity by mid-December. Congratulations Big River Resources LLC!

Biofuel Energy Corp.

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

Liberal, Kansas ICM Inc. ICM Inc. 110 MMgy corn/milo

Synopsis of progress Roadwork and construction of the rail spur continue at the site.

Expansion Complete

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

Location Design/builder Process technology Capacity Feedstock

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

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

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

ETHANOL PRODUCER MAGAZINE JANUARY 2008

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

Location General contractor Process technology Capacity Feedstock

Fairmont, Minnesota The Industrial Co.

Delta-T Corp. 110 MMgy corn

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

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

Synopsis of progress Finishing touches remain, including piping and electrical work, and work on the materials handling area.

39


Biofuel Energy Corp. Location General contractor Process technology Capacity Feedstock

Wood River, Nebraska The Industrial Co. Delta-T Corp. 110 MMgy corn

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

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

PHOTO: CASCADE GRAIN PRODUCTS LLC

Synopsis of progress Construction continues on the materials handling area. Piping and electrical work is underway.

Bridgeport Ethanol LLC Location Design/builder Process technology Capacity Feedstock

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

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

undeclared undeclared undeclared September 2007 October 2008

Synopsis of progress N/A

Cascade Grain Products

Calgren Renewable Fuels LLC Location General contractor Process technology Capacity Feedstock

Pixley, California Lurgi Lurgi 52 MMgy corn

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

Calgren Renewable Fuels

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

PHOTO: HEATHER CRAIG, CARDINAL ETHANOL LLC

Synopsis of progress Work continues on the cooling tower. The pipe rack between the distillation, dehydration and evaporation area and process area is erected, and pipe is being installed. Forms are stripped from the foundations for the two liquefaction tanks.

Cardinal Ethanol LLC Location Design/builder Process technology Capacity Feedstock

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

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

Murex CHS Inc. N/A February 2007 summer 2008

Synopsis of progress Rail spur construction continues. Water pipes are being set for the fire system. Construction of the county road and nearby highway continues. Work on the energy center has also begun.

Cardinal Ethanol LLC

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Cascade Grain Products LLC Location General contractor Process technology Capacity Feedstock

Clatskanie, Oregon JH Kelly Ethanol Delta-T Corp. 108 MMgy corn

Center Ethanol Co. LLC Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Eco-Energy Land Oâ&#x20AC;&#x2122;Lakes undeclared June 2006 March 2008

Location General contractor Process technology Capacity Feedstock

Synopsis of progress Work on the fermentors is complete, and construction of steel tanks continues. Steel is also going up for the process center. The distillation, dehydration and evaporation area is being enclosed.

Sauget, Illinois Delta-T Corp. 50 MMgy corn

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

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

Carbon dioxide marketer Broke ground Target start-up date

Center Oil Co. undeclared undeclared October 2006 January 2008

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

Cargill Inc. Cargill Inc. N/A May 2006 December 2007

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

undeclared undeclared N/A July 2006 second quarter 2008

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

undeclared undeclared undeclared July 2006 December 2007

Synopsis of progress N/A

Central Illinois Energy Co-op

Castle Rock Renewable Fuels LLC Location Design/builder Process technology Capacity Feedstock

Ethanol marketer

T.E. Ibberson/McCarthy Industrial Distillers grains marketer

Location General contractor Process technology Capacity Feedstock

Murex CHS Inc. undeclared September 2006 December 2007

Canton, Illinois Lurgi Lurgi 37 MMgy corn

Synopsis of progress N/A

Synopsis of progress Overall construction is more than 95 percent complete. Some work in the tank farm remains.

Cilion Ethanol LLC Location General contractor Process technology Capacity Feedstock

Keyes, California Harris Construction Praj Industries 55 MMgy corn

PHOTO: CASTLE ROCK RENEWABLE FUELS LLC

Synopsis of progress Overall construction is more than 50 percent complete.

Castle Rock Renewable Fuels LLC

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

Coshocton, Ohio The Industrial Co. Delta-T Corp. 60 MMgy corn


Courtland, Wisconsin Agra Industries Delta-T Corp. 50 MMgy corn

Glacial Lakes Energy LLC

Plant Expansion

Didion Ethanol LLC Location General contractor Process technology Capacity Feedstock

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

Location Design/builder Process technology Capacity Feedstock

undeclared undeclared N/A October 2006 December 2007

Aventine Renewable Energy

ICM Inc. ICM Inc.

Glacial Lakes Energy N/A December 2006 late 2007

Distillers grains marketer Carbon dioxide marketer from 50 MMgy to 100 MMgy Start date corn Target completion date

Synopsis of progress N/A

Synopsis of progress N/A

Greater Ohio Ethanol LLC

First United Ethanol LLC Location Design/builder Process technology Capacity Feedstock

Watertown, South Dakota Ethanol marketer

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

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

Location General contractor Process technology Capacity Feedstock

Eco-Energy First United Ethanol undeclared January 2007 summer 2008

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

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

undeclared undeclared N/A September 2005 December 2007

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

Commercial Alcohols

Synopsis of progress N/A

Synopsis of progress Fermentation tanks and evaporators are being erected. Concrete work is complete in the process area and continues in the energy center. Construction in the grain receiving area is progressing, and site preparation is beginning for the grain elevators. Most major equipment is on-site. The distillers grains building and bridge over the railroad loop are complete. The tank farm is about 80 percent complete.

GreenField Ethanol Location General contractor Process technology Capacity Feedstock

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

Commercial Alcohols

undeclared October 2006 fourth quarter 2008

PHOTO: FIRST UNITED ETHANOL LLC

Synopsis of progress Hydro-testing of beer well is complete. Field-erected potable water tanks are complete, and mechanical installation in the process area and energy center is ongoing.

Plant Expansion

Location Design/builder Process technology Capacity Feedstock

Heartland Grain Fuels LP Aberdeen, South Dakota ICM Inc. ICM Inc. from 8 MMgy to 48 MMgy corn

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

Aventine Renewable Energy

Dakotaland Feeds N/A September 2006 first quarter 2008

Synopsis of progress All concrete work is complete. The energy center and electrical work are 75 percent complete. Construction of all mechanical components is 80 percent complete. Hydro-testing of storage tanks has begun.

First United Ethanol LLC

42

ETHANOL PRODUCER MAGAZINE JANUARY 2008


Holt County Ethanol LLC Location General contractor Process technology Capacity Feedstock

O'Neill, Nebraska Adams Construction Vogelbusch 100 MMgy corn

Indiana Bio-Energy LLC Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target completion date

undeclared undeclared N/A July 2007 late 2008

Location Design/builder Process technology Capacity Feedstock

Location Design/builder Process technology Capacity Feedstock

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

Aventine Renewable Energy

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

Poet Ethanol Products

CHS Inc. N/A November 2006 June 2008

Synopsis of progress N/A

Synopsis of progress N/A

Expansion Complete

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

Kansas Ethanol LLC

Husker Ag LLC Plainview, Nebraska ICM Inc. ICM Inc. from 27 MMgy to 67 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Start date Completion date

Location Design/builder Process technology Capacity Feedstock

Eco-Energy Husker Ag LLC N/A September 2006 November 2007

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

undeclared N/A January 2007 March 2008

Synopsis of progress N/A

Synopsis of progress Construction is complete, and the plant started its boiler Nov. 15. Congratulations Husker Ag LLC!

Levelland/Hockley County Ethanol LLC Location Design/builder Process technology Capacity Feedstock

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

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

Lansing Trade Group Lansing Trade Group Chaparral Energy Inc.

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

undeclared undeclared N/A September 2006 March 2008

January 2007 February 2008

Synopsis of progress N/A

PHOTO: HUSKER AG LLC

Marquis Energy LLC

Husker Ag LLC

Location Design/builder Process technology Capacity Feedstock

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

Synopsis of progress Electrical and piping work is ongoing. The rail spur is approximately 50 percent complete.


Marysville Ethanol LLC Location Design/builder Process technology Capacity Feedstock

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

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

undeclared undeclared N/A August 2006 early 2008

Synopsis of progress N/A

Location General contractor Process technology Capacity Feedstock

Volney, New York Lurgi Lurgi 100 MMgy corn

Northwest Renewable LLC

Atkinson, Nebraska Delta-T Corp. Delta-T Corp. 44 MMgy corn

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

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

Location General contractor Process technology Capacity Feedstock

Scandia, Kansas

Ethanol marketer Free Country Design & Construction Distillers grains marketer ICM Inc. Carbon dioxide marketer 10 MMgy Broke ground corn Target start-up date

Poet Ethanol Products Nesika Energy LLC N/A December 2006 November 2007

Synopsis of progress Overall construction is more than 95 percent complete. The wet feed system that will deliver hot, wet feed to cows at a nearby farm is operational.

Location General contractor Process technology Capacity Feedstock

Fergus Falls, Minnesota Harris Mechanical Delta-T Corp. 57.5 MMgy corn

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

RPMG CHS Inc. N/A October 2006 March 2008

Pacific Ethanol Magic Valley LLC Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Synopsis of progress Dirt work continues, despite unfavorable weather conditions.

44

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

Synopsis of progress High winds in mid-November damaged a 1 million-gallon on-site storage tank. No injuries were reported, and the damage wonâ&#x20AC;&#x2122;t alter the plantâ&#x20AC;&#x2122;s target start-up date.

Nexsun Ethanol LLC Ulysses, Kansas ICM Inc. ICM Inc. 40 MMgy corn/milo

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

Otter Tail Ag Enterprises LLC

Nesika Energy LLC

Location Design/builder Process technology Capacity Feedstock

Longview, Washington Makad Construction Corp. Lurgi 55 MMgy corn

Synopsis of progress N/A

Synopsis of progress The fire tank foundation is poured, and electrical and piping work continues.

Location General contractor Process technology Capacity Feedstock

Noble Americas Corp. Perdue Farms BOC Gases July 2006 fourth quarter 2007

Synopsis of progress N/A

NEDAK Ethanol LLC Location General contractor Process technology Capacity Feedstock

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

undeclared undeclared undeclared August 2007 2008

Location General contractor Process technology Capacity Feedstock

Burley, Idaho Parsons RCI Inc. Delta-T Corp. 50 MMgy corn

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

Kinergy Marketing Pacific Ag Products LLC

undeclared February 2007 second quarter 2008

Synopsis of progress The process building is being enclosed. Construction continues in various areas of the site.

ETHANOL PRODUCER MAGAZINE JANUARY 2008


Pacific Ethanol Stockton LLC Location General contractor Process technology Capacity Feedstock

Stockton, California Parsons RCI Inc. Delta-T Corp. 50 MMgy corn

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

Kinergy Marketing Pacific Ag Products LLC

undeclared April 2007 third quarter 2008

Synopsis of progress At least seven storage bins have lids. Steel erection continues on additional bins.

Location Design/builder Process technology Capacity Feedstock

Hereford, Texas Lurgi Lurgi 115 MMgy corn

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

Murex undeclared undeclared February 2007 spring 2008

Synopsis of progress Construction of the fermentation tanks and the eight-mile rail loop is nearly complete.

Platinum Ethanol LLC

Panda Hereford Ethanol LP Location General contractor Process technology Capacity Feedstock

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

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

Aventine Renewable Energy

Panda Ethanol undeclared August 2006 first quarter 2008

Location Design/builder Process technology Capacity Feedstock

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

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

Provista UBE Ingredients N/A November 2006 August 2008

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

Poet Ethanol Products

Synopsis of progress N/A

Synopsis of progress N/A

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

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

Poet Nutrition N/A February 2007 second quarter 2008

PHOTO: OTTER TAIL AG ENTERPRISES LLC

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

Plant Expansion

Location Design/builder Process technology Capacity Feedstock

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

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

Poet Ethanol Products

Poet Nutrition N/A October 2006 second quarter 2008

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

Otter Tail Ag Enterprises LLC

ETHANOL PRODUCER MAGAZINE JANUARY 2008

45


Project Complete

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

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

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

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

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

Renew Energy LLC

Location General contractor Process technology Capacity Feedstock

Jefferson, Wisconsin CR Meyer Delta-T Corp. 130 MMgy corn

Leipsic, Ohio Poet Design & Construction Poet Design & Construction 60 MMgy corn

Renova Energy of Idaho LLC Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Poet Ethanol Products Poet Nutrition N/A December 2006 first quarter 2008

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

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

Location General contractor Process technology Capacity Feedstock

Plant Expansion

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

Poet Ethanol Products Poet Nutrition N/A May 2007 December 2008

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

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

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

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

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

Renova Energy Renova Energy Renova Energy February 2007 first quarter 2008

Siouxland Energy & Livestock Co-op

Location Design/builder Process technology Capacity Feedstock

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

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

C&N Ethanol Marketing Farmers Co-op Society

N/A October 2006 December 2007

Synopsis of progress N/A

Southwest Iowa Renewable Energy LLC

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

Heyburn, Idaho Dilling Corp. Katzen International 20 MMgy corn

Synopsis of progress Overall construction is more than 50 percent complete.

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

Renew Energy Renew Energy undeclared September 2006 November 2007

Synopsis of progress Construction is complete. Congratulations Renew Energy LLC!

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

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

Poet Ethanol Products Poet Nutrition N/A third quarter 2007 first quarter 2009

Location Design/builder Process technology Capacity Feedstock

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

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

Lansing Ethanol Group Bunge undeclared November 2006 August 2008

Synopsis of progress Installation of the loading system and cooling tower depot is underway. Additional structural steel work was set to begin around Thanksgiving.

ETHANOL PRODUCER MAGAZINE JANUARY 2008


Standard Ethanol Cambridge LLC Location General contractor Process technology Capacity Feedstock

Cambridge, Nebraska The Industrial Co. Delta-T Corp. 44 MMgy corn

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

U.S. Bio Dyersville Noble Americas Corp.

The Scoular Co. N/A April 2006 December 2007

Synopsis of progress N/A

Location Design/builder Process technology Capacity Feedstock

Superior, Iowa Agra Industries Delta-T Corp. 50 MMgy corn

RPMG undeclared N/A July 2006 January 2008

Location Design/builder Process technology Capacity Feedstock

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

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

Provista UBE Ingredients N/A August 2006 second quarter 2008

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

U.S. Bio Janesville

Terra Grain Fuels Inc. Belle Plaine, Saskatchewan Ethanol marketer EllisDon/VCM Contractors & Engineers Distillers grains marketer

Delta-T Corp. 150 MMly (40 MMgy) wheat

Carbon dioxide marketer Broke ground Target start-up date

undeclared undeclared undeclared September 2006 December 2007

Location Design/builder Process technology Capacity Feedstock

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

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

Provista UBE Ingredients N/A January 2007 third quarter 2008

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

Synopsis of progress N/A

Tharaldson Ethanol LLC Location General contractor Process technology Capacity Feedstock

Provista UBE Ingredients N/A November 2006 second quarter 2008

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

Synopsis of progress N/A

Location General contractor Process technology Capacity Feedstock

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

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

Superior Ethanol LLC Location General contractor Process technology Capacity Feedstock

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

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

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

undeclared undeclared N/A June 2007 December 2008

Synopsis of progress With more than 140 workers on-site, construction is underway on the tanks, distillers grains area and the process center. Crews are on pace to meet the target start-up date as they take advantage of an unusually warm autumn in North Dakota.

Location Design/builder Process technology Capacity Feedstock

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

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

Archer Daniels Midland Archer Daniels Midland

N/A October 2006 January 2008

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

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913-239-8118 To l l f r e e : 8 6 6 . R O N N I N G ETHANOL PRODUCER MAGAZINE JANUARY 2008

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Project Complete

VeraSun Bloomingburg LLC Location Design/builder Process technology Capacity Feedstock

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

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

Cargill Inc. Cargill Inc. N/A November 2006 first quarter 2008

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

Western New York Energy LLC

Location Design/builder Process technology Capacity Feedstock

Shelby, New York Fagen Inc. ICM Inc. 50 MMgy corn

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

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

Location Design/builder Process technology Capacity Feedstock

June 2006 November 2007

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

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

Murex Quality Distillers Grain N/A July 2006 fourth quarter 2007

Synopsis of progress N/A

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

EPCO Carbon Dioxide Products

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

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

Location Design/builder Process technology Capacity Feedstock

Eco-Energy CHS Inc.

Synopsis of progress Construction at the site is complete. Hydro-testing is underway, and the boiler was fired just before Thanksgiving. Congratulations Western New York Energy LLC!

VeraSun Hartley LLC Location Design/builder Process technology Capacity Feedstock

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

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

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

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

Location Design/builder Process technology Capacity Feedstock

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

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

Murex The Scoular Co. undeclared October 2006 first quarter 2008

Synopsis of progress N/A

Verenium Biofuels Louisiana Location General contractor Process technology Capacity Feedstock

Jennings, Louisiana Cajun Constructors Inc. Verenium Biofuels 1.4 MMgy

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

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

Synopsis of progress Overall construction remained at 50 percent complete in mid-November.

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ETHANOL PRODUCER MAGAZINE JANUARY 2008


:OU R P L A N T 50

Hear That Train a Comin’

T

he plant is still under construction, but the train whistle and bell are sounding at Patriot Renewable Fuels LLC in Annawan, Ill. The company purchased a 1966 Electro Motive Division General Electric switch engine from the Iowa Interstate Railroad. The old engine will receive a new paint job in the company’s colors of red, white and blue on a silver background. Gene Griffith, CEO and chairman of Patriot Renewable Fuels, said the design was inspired by the safety vehicles of the ethanol-powered IndyCar Series. “We thought that was a very attractive paint scheme, so we thought we would try to do something similar,” the chief executive officer says. The company is building a 45,000foot rail yard, which will be the largest private rail yard on the Iowa Interstate Railroad, a short line that runs from Omaha, Neb., to Chicago. The yard will

PATRIOT RENEWABLE FUELS LLC LOCATION DESIGN/BUILDER PROCESS TECHNOLOGY CAPACITY FEEDSTOCK ETHANOL MARKETER DISTILLERS GRAINS MARKETER CARBON DIOXIDE MARKETER BROKE GROUND START-UP DATE

have the capacity to hold 500 cars of ethanol, distillers grains and corn at one time. “We will be able to assemble unit trains and store all the cars that will be required to service the plant,” Griffith says. “We will have the ability to receive corn by rail, as well.” The recently overhauled switch engine is being used to help build the rail yard. Its 645-cubic-inch cylinders deliver 1,400 horsepower, which allow it to move 25 cars of ballast rock at a time. More than 200 railcars of ballast rock will be

Annawan, Illinois Fagen Inc. ICM Inc. 110 MMgy corn Murex CHS Inc. N/A February 2007 summer 2008

needed from a quarry in Milan, Ill., to complete the rail yard. Colo Railroad Builders is building the rail yard, laying an average of more than 800 feet of rail per day. Griffith says the track’s innovative design makes the installation clean and efficient. “Colo is an experienced railroad contractor, and it is doing a good job for us,” he says. “Our siding will be 9,500 feet, and it is constructed of ribbon rail on steel ties. Ribbon rail was brought in 1,400-foot lengths on 25 or 30 special cars designed to haul that kind of rail. The steel ties have some advantages in that the durability, we think, will be almost

ETHANOL PRODUCER MAGAZINE JANUARY 2008


The company’s name was derived in part from Henry County, which was named for Patrick Henry, who said, “Give me liberty or give me death.” Griffith reasons, “The name was suggested and sounded good. It coincides with the idea that we are trying to reduce our dependence on foreign oil. It’s a national priority to develop renewable fuels, and the name just seemed appropriate.” The plant will be one of the largest dry-grind ethanol plants in Illinois. “This will be a major employer in Henry County,” Griffith adds. “We won’t be the largest employer in the area, but we will have a major impact by bringing in 50 new jobs. It is the largest single project that has been started in Henry County.” The plant will also be distinctive for its access to transportation. Besides its rail links through the Iowa Interstate Railroad, which connects to most major rail lines in the United States and Canada, the plant is adjacent to Interstate 80, a major eastwest artery across the country. The plant is also close to two major highways going north and south. It is only 30 miles from terminals on the Mississippi and Illinois rivers, allowing the plant to utilize barges for transportation. —Jerry W. Kram PHOTOS: PATRIOT RENEWABLE FUELS LLC

ETHANOL PRODUCER MAGAZINE JANUARY 2008

:OU R P L A N T

indefinite. Instead of spikes, the rails are attached with clips that inserted and fastened permanently. We should have a rail yard here that will need very little maintenance for a very long time.” After the engine finishes its work on the rail yard, it will be off to Kansas City, Mo., for more upgrades and its new paint job. One of the upgrades will be a remote control system that will allow an operator on the ground to control all functions of the engine from a belt pack, including the throttle, brakes, whistle and bell. Patriot Renewable Fuels was formed after a Henry County economic development committee explored the possibility of locating an ethanol plant in the rural county about 30 miles from the Quad Cities (Davenport and Bettendorf in Iowa, and Moline/East Moline and Rock Island in Illinois). “The village of Annawan has been very proactive in developing jobs and industry in this area,” Griffith says. “There were two of us that took that on and decided to make it a reality in January 2005. We started our fundraising in January 2006 and broke ground in late 2007.” Most of the money was raised within 100 miles of Annawan.

51


:INTHEFIELD 52

New Uses for Tropical Maize

R

emember seeing the silhouette of two faces looking at each other and trying to refocus your eyes to see the lamp in the middle? That’s what happened to Fred Below when he started working with tropical maize. As a crop physiologist, he has known for years that corn stores sugar in its stalks. “First it’s in the leaves, then it’s in the stalks, then it’s in the grain where the sugar is converted to starch,” he says. The University of Illinois at UrbanaChampaign researcher was looking at tropical maize plants one day with his graduate students when the obfuscated became obvious. “It’s a new use for a phenomenon that has been known for a long time,” he explains. Corn, or maize, that has adapted to the photosynthesis periods of tropical regions grows normally there, but when it’s transplanted and growing during longer summer days in Illinois, it behaves differently. In the longer photosynthesis period, the tropical maize delays its flowering cycle and grows

taller. Instead of sending its energy into tasseling and cob formation, it stores sugar in the stalk. In other words, it behaves exactly like its sister grassy crops—sugarcane and sweet sorghum. “We’ve grown some of the material, measured some of its biological potential and squeezed some juice for fermentation studies,” Below says. The stalks yielded about 25 percent simple sugars—mostly sucrose, fructose and glucose. The initial data from fermentation studies indicates that yeast makes good quantities of butanol and ethanol, and there doesn’t appear to be any natural inhibitors, he says. Midwestern-grown tropical maize easily grows 14 to 15 feet tall, he says, compared with the 7.5-foot typical hybrid corn varieties. Below’s preliminary data indicates that biomass yields will total approximately eight tons per acre. Good biomass yields should be achievable with one-fourth the fertilizer required in conventional corn crops, he says. The heavy nitrogen applications used in corn production are primarily utilized by the corn plants to maximize the yield of grain. “The nice thing is that it can be

planted and managed the exact same way as corn,” he says. “The farmer can use existing equipment, and we think he’ll be able to use silage cutters for harvest.” More work needs to be done, Below says. As a plant scientist, he will continue to learn how to maximize the plant’s potential. Others working in process engineering will need to examine how it will fit into the ethanol industry. He expects that the simple sugars will be extracted first for fermentation into ethanol in one process, with the remaining pulp, or bagasse, burned for energy or run through a cellulosic ethanol process. At this point, Below has just enough seed to use for his research in Illinois. However, he is trying to make arrangements to increase seed quantities so that others can plant test plots for research and demonstration. Plus, the original research project using tropical maize will continue. Very little nitrogen is used in the production of corn in the tropics, Below explains, which should result in varieties that are quite efficient in using available nitrogen. Midwestern corn varieties, on the other hand, have been developed in recent years for high responses to added nitrogen. His work with tropical maize began in the search for genes to improve the efficiency of nitrogen utilization in Midwestern corn. It appears that effort will be successful, as well. —Susanne Retka Schill

University of Illinois doctoral student Mike Vincent, left, holds a stalk of regular hybrid corn and compares it to a stalk of tropical maize held by Below. PHOTO: CENTER FOR ADVANCED BIOENERGY RESEARCH, UIUC

ETHANOL PRODUCER MAGAZINE JANUARY 2008


:UP FRONT

Project Development

R

ick Serie has spent his career in management and project development, first in the amusement industry and later in the ethanol industry. In 1988, Serie saved an amusement park from demolition by successfully renovating the park. In 1995, he was project coordinator for Agri-Energy LLC in Luverne, Minn. Today, he draws on these experiences while managing Poet Biorefining-Chancellor. The 50 MMgy plant is in the middle of an expansion to 100 MMgy. A solid waste fuel boiler is also being installed to generate enough steam from the burning of wood biomass to produce more than half of the expanded plant’s power needs. Q: How was Chancellor chosen to have a solid waste fuel boiler? A: We’re in close proximity to a wood supplier, which was one of the key elements in deciding to go forward. It takes a tremendous amount of wood—150 to 350 tons of wood per day. This is a testing ground for Poet. If it works well and the logistics work out, I’m sure Poet will consider putting them in other plants.

Q: How did your experience in the amusement industry prepare you for what you’re doing now? A: Organizing a project and actually running the park itself can be good insight into running a business, operating profitably and working with a board of directors. It’s also good for establishing budgets, financing and everything that a general manager does. Q: How does the job of general manager differ between the industries? A: We had a couple hundred seasonal employees at the park. Because of the limited full-time staff, I also did the marketing and sales. Q: Describe the management philosophy at Poet. A: Poet grew because we know the business well. We do a great job for all of our shareholders and employees. Everyone is equal. The work culture is teamwork, communications and a positive attitude, which relates to leaving your ego at the door. In our system, it doesn’t matter where the

good idea comes from. You don’t have to be the general manager to have a good idea implemented. The best idea wins out. It’s a much easier way to manage because you have everyone involved and you’re getting everyone’s feedback on the decision process. You’re doing what’s best for all—shareholders, management, employees. It’s a proven fact that those closest to the problem know the solution, but they have to have trust to bring those solutions forward. Q: Did you have a mentor in the industry? A: Jeff Broin. We worked very closely putting the original plant together in Luverne and became business associates. He had this vision, and a lot of times he talked about his vision, and how good ethanol was for America and for farmers. Q: What’s the greatest lesson you’ve learned in your career? A: Nothing is given. You have to work hard. The harder you work, the luckier you get. I’ve always lived by that. —Anduin Kirkbride McElroy PHOTO: POET LLC

Name Rick Serie Title General Manager Plant Poet Biorefining-Chancellor Hometown Luverne, Minn. Career Chronology Poet Biorefinery-Chancellor, General Manager 2000 – Present Boyle Development, Vice President of Operations 1995 – 2000 Arnolds Park Amusement Park, General Manager 1988 – 1995 Serie Fun Shows, Owner 1970 – 1988

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ETHANOL PRODUCER MAGAZINE JANUARY 2008 55


:FLEXFACTOR 56

EPA Grants E85 Aftermarket Certification

T

he U.S. EPA recently granted a specified certificate of conformity for an aftermarket E85 kit installed in certain 4.6-liter Ford Motor Co. fleet vehicles. Flex Fuel U.S., developer of the Flex-Box Smart Kit, gained its first of what CEO Mitch Sremac says will be 12 certificates of conformity for 12 engine series in the next six months. “Our first was the 2006 Lincoln Town Car Livery, Mercury Grand Marquis and Ford Crown Victoria series,” the chief executive officer says. “Our second will be for the 5.7-liter Dodge Chargers and Dodge 300, and then Ford Mustang.” The certification is good for up to 225 vehicles. “We didn’t want to buy certification of 5,000 if we only sold a few hundred,” Sremac tells EPM. Additional fees are due to the EPA if more than 225 total vehicles get the E85 retrofit. “This is an expensive endeavor,” he says. Each model costs $30,000 to certify, including fees paid to the EPA and engine tests done at an agency-approved test lab. Flex Fuel U.S. says it has one of the premier labs in the country—Roush Industries—collecting emissions,

performance and fuel economy data on its kits, which are then presented to the EPA. Sremac says his competitors have found it difficult to gain a certificate of conformity because of the breadth of vehicle variety that their systems cover, as well as the upper hand he says his Flex-Box Smart Kit has over the competition in terms of design. The Flex-Box Smart Kit doesn’t mess with original engine manufacturer fuel trim language inside the engine control module. Instead, an extra injector is installed just behind the throttle plate on the manifold. Rather than a sensor relaying to the ECM which air-to-fuel ratio to deliver, the factory system performs undisturbed while the supplemental ECM gains its queues for extra fuel volume from sensors detecting emissions or alcohol concentration, engine speed and load. “It gives just enough extra fuel so the factory ECM does not go out of calibration and read [a malfunction indicator light],” he says. “Everyone else just uses the factory ECM and adjusts timing by 30 percent.” There is a provisional patent on the kit, he adds. Sremac says the marketing of

his kits was geared toward fleets because that’s where they would be most readily accepted. “They are the ones who can reap the benefits of the certification through alternative vehicle tax credits and other incentives,” he says. So far, the response from fleet managers has been very good, and Flex Fuel U.S. has a pilot program underway in a major Midwestern city. “If it goes well, they’ve agreed to convert all 2,500 of its police vehicles,” he says. Fuel economy loss averages between 2 percent and 5 percent, Sremac says. “With the Crown Vics, it’s 4 percent,” he says. “Is there a reduction? Absolutely, but we’re not seeing the 20 percent to 25 percent reductions people talk about.” Installation can be done at any of the 1,100 AAMCO Transmissions centers nationwide, or by fleet mechanics who have taken a one-day installation training seminar at Flex Fuel U.S.’s training facility. “The reason we chose AAMCO is it is ubiquitous, and it has high-caliber technicians,” Sremac says. —Ron Kotrba

Flex-Box Smart Kit for 2006 Lincoln Town Cars PHOTO: FLEX FUEL U.S.

ETHANOL PRODUCER MAGAZINE JANUARY 2008


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:BUSINESS 58

Third-Quarter Financial Results Show Promise

S

everal ethanol producers saw positive gains during their fiscal year third quarter, despite compressed operational profits that are expected to linger into 2008. Producers that experienced financial success credited improved diversification of upward sales revenue streams, and increased merger and acquisition activity. Those that reported declines were impacted by difficult market conditions such as lower-than-average ethanol prices, a lack of discretionary blending by refiners and independent distributors (which is now on the rise), and the absence of an expanded nationwide renewable fuels standard (RFS) to offset the supply imbalance.

End-to-end energy provider, marketer and producer Aventine Renewable Energy Holdings Inc. reported a net income of $3 million, down more than 43 percent from the same period last year. Total cash flow from its operations for the quarter totaled $8.8 million. Revenue decreased 8.7 percent, compared with 2007 second-quarter results. The Andersons Inc. established new earnings records, as the Maumee, Ohio-based producer reported a net income of $10.6 million with revenues totaling $554 million. During the first nine months of 2007, the company earned a net income of $45.3 million on revenues of $1.6 billion. Net earnings for ag giant Archer Daniels Midland Co. increased to $441 million, a $38 million gain from the $403 million it posted over the same period in 2006. ADM’s corn processing division, which houses ethanol sales, decreased $36 million to $253 million, due to lower ethanol sales

prices, volumes and higher net corn costs. Pacific Ethanol Inc. swung into a third-quarter loss as the California-based producer posted a $4.8 million net loss versus a profit of $3.8 million during the same period last year, despite a record level of sales and ethanol volumes. The company sold more product (50 million gallons, compared with 22.7 million gallons one year ago) but made less profit due to low ethanol prices, as revenue nearly doubled to $118.1 million (a 93 percent increase) from $61.1 million during the same time last year. U.S. BioEnergy Corp. saw its net income rise 34 percent to $11.1 million compared with $8.3 million during the previous quarter. The Minnesota-based ethanol producer posted its revenue at $150 million, slightly lower than the $154 million it reported in its previous quarter. VeraSun Energy Corp., one of the nation’s largest ethanol producers, reported strong earnings primarily due to an increased revenue stream. The Brookings, S.D.based company reported revenues of $221.9 million, a 49 percent increase compared with the same quarter last year. Although it posted a net income of $7.8 million, compared with $32 million the same time a year ago, VeraSun’s net ethanol sales increased $58 million to $188.5 million as a result of a 72 percent increase in ethanol volume sold (95.1 million gallons). —By Bryan Sims

ETHANOL PRODUCER MAGAZINE JANUARY 2008


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:DRIVE 60

Fighting the Absurd Accusations By Robert White

“F

ood Riots in Mexico, “Crimes Against Humanity,” “Biofuel Bust,” “Dead Zone in the Gulf of Mexico.” The ethanol industry has heard it all over the last six months. It appears some in the media have treated us like a piñata, swinging wildly while blindfolded. It has bordered on the absurd. In some corporate circles ethanol has become as convenient an excuse as “the dog ate my homework” is in grade school. Please, enough is enough. As many of you are well aware, the industry has formed a coalition to fight back against these accusations, which stem from what we believe is a wellWhite orchestrated, wellfunded campaign by ethanol’s detractors. While our critics may have deep pockets, our industry is united and the facts are on our side. The headlines may cause many of us angst, but there is positive news: consumers appear to be tuning out the antiethanol drumbeat. The latest Ethanol Promotion and Information Council consumer research found that nearly

one-third of respondents indicated that their attitude toward ethanol has become more favorable over the last six months. Sixty-two percent reported their opinions stayed the same. In baseball vernacular, our opponents have swung for the fences and grounded out to shortstop. Let’s take a look at the facts. Our research found that an overwhelming majority of consumers still believe the United States is too dependent on foreign sources of oil. When the price of oil reaches record levels, how can any critic argue against alternative energy? The International Energy Agency reports that as the world seeks to boost energy supplies over the next two decades, an increasing percentage of its supplies of oil and gas will come from a dwindling number of countries, largely centered around the Persian Gulf. This will leave industrialized countries even more dependent on this volatile region. So-called experts have pointed the finger at the ethanol industry for rising food prices. However, with rising heating oil prices, these detractors appear to have gone underground. Where is the outrage when residents on fixed incomes in the Northeast face tough “food-versus-fuel” choices this winter? The economic impact is across the board. According to the Air Transport Association, every $1 increase in the per-barrel price of oil adds $470 million per year in jet fuel costs to the U.S. airline industry. It's ludicrous that some will print

accusations that the price of gummy bears in Germany will rise due to ethanol production, while consumers realign their family budgets to deal with rising energy costs. A Consumer Federation of America report found that over the last five years household energy expenditures have nearly doubled and are now more than 23 percent more than spending on food. Our survey found that 79 percent of respondents agreed that the government should require cleaner and more efficient sources of energy. That’s positive news for E85 and bad news for our detractors. "America's Flex-Fuel" is on the move. In November the first E85 pump in metro Atlanta began operating at the Texaco Food Mart in Smyrna, Ga. This is a significant step in EPIC’s effort to increase the availability of ethanol blends throughout the United States. This is not to say we can rest easy. We will continue to set the record straight. As comedian George Carlin once said, “Just cause you got the monkey off your back doesn't mean the circus has left town.” EPIC takes great pride in our industry, and we will continue to press forward with spreading the news about the positive benefits of ethanol. Robert White is the director of operations of the Ethanol Promotion and Information Council. Reach him at rwhite@EPICinfo.org or (402) 9320567.

ETHANOL PRODUCER MAGAZINE JANUARY 2008


High performance starts in the field

Pioneer is a vital link between growers and the ethanol industry. Planted on more acres than any other brand, Pioneer® brand corn hybrids help ensure ethanol plants a more consistent supply of high quality grain. Pioneer brand High Total Fermentable (HTF) ethanol hybrids are attracting more growers, which will put more corn with higher levels of ethanol yield in fields near ethanol plants. And with up to a 7 percent variation in ethanol yield among different hybrids, HTF hybrids can produce higher returns for ethanol plants. Many ethanol hybrids contain the Herculex® insect protection trait, reducing insect damage to grain and the presence of molds and mycotoxins. This helps ensure a stronger market for distillers grain.

TECHNOLOGY THAT FUELS.

Pioneer is dedicated to leading the industry with products, agronomic support and … ^

Herculex® insect protection technology by Dow AgroSciences and Pioneer Hi-Bred. ®Herculex and the HX logo are registered trademarks of Dow AgroSciences LLC. ^

®

See product label for provisions of this mark. MARKET CHOICES is a certification mark used under license from ASTA.

YieldGard is a registered trademark under license from Monsanto Company.

To protect the usefulness and availability of these technologies for the future, growers must implement an Insect Resistance Management (IRM) program as specified in product use guides for the following traits available in Pioneer corn hybrids: Herculex® I, Herculex RW, Herculex XTRA and YieldGard® Corn Borer. For detailed IRM requirements for hybrids with in-plant insect resistance, refer to the appropriate product use guide, available from your Pioneer sales professional or on the web at: www.pioneer.com/IRM.

www.pioneer.com/ethanol ® SM TM , , Trademarks and service marks of Pioneer Hi-Bred. All purchases are subject to the terms of labeling and purchase documents. © 2007 PHII INDSL007082P238AVAR1

The DuPont Oval Logo and The miracles of science™ are trademarks of E.I. du Pont de Nemours and Company.


:LEGALPERSPECTIVES 62

Environmental Law: Air Quality Compliance By Krista McIntyre thanol plant owners and mental protection with operating flexoperators are subject to ibility, permits require monitoring, environmental laws, record-keeping and reporting that including complex air can overburden plant staff. The priquality regulations that mary objective for the owner or opergovern the quantity and quality of air ator in this process is to obtain a valid emissions generated at the plant. Air permit reflecting the proposed operaquality regulations are adopted by tion of the plant and allowing suffistate and federal environmental pro- cient operational flexibility. tection agencies. Failure to comply The owner or operator will be can result in significant monetary subject to air emissions requirements penalties. In 2002 the U.S. EPA based on the proposed operating implemented an enforcement initia- specifications. Any material changes tive against ethanol producers in from the design presented in the Minnesota. Settlements with produc- application could trigger additional ers got the attention of the industry review. The owner or operator will and state agencies. Since then, per- also be required to obtain an operatmit agencies have ing permit. In some imposed tighter limitainstances the pretions and sought more construction permit robust compliance transforms into the demonstrations in peroperating authorizamits. This article sumtion after certification marizes the air quality of compliance. In regulations that apply other instances, a to ethanol plants. second permit appliIn the midst of cation and review is project development required. In both activities for a new cases, the operating McIntyre plant, owners and permit will reflect the operators must initiate terms and conditions the regulatory process to obtain a of the original pre-construction perpre-construction air quality permit. An mit. In both cases, the terms and conowner or operator is required to ditions are enforceable. Operating obtain the permit prior to commence- permits typically have a finite term ment of construction or initiation of and the owner or operator will be on-site activities of a permanent required to apply for renewal in a nature. Depending on the level of timely manner. Additional permit proposed air emissions from the review may be triggered by subseplant, the permitting process can take quent physical or method of operafour to 18 months. Although many permit agencies have experience with ethanol plants, every permit is different and negotiable. While permit agencies strive to balance environ-

E

tion changes. The terms and conditions included in permits derive from air quality rules that 1) protect public health by ensuring that the amount of pollution allowed from any single source does not adversely impact ambient air quality to which the general public is exposed, or 2) reflect technology standards adopted for categories of operating equipment, or 3) regulate the emissions of hazardous air pollutants determined by EPA to present significant risk to the environment and public health. Other rules control esthetic impacts, such as dust or odor generation. To demonstrate compliance, owners and operators are typically required to conduct emissions testing, monitor production or emissions rates, maintain records and submit reports to the permitting agency. Owners and operators are required to certify compliance and disclose noncompliance. State and federal agencies have authority to inspect the plant and require the permit holder to comply, install additional pollution controls and assess penalties for noncompliance. Repeat violations increase the severity of the regulatory response. The obligation to obtain an air quality permit is only the first of many responsibilities for environment compliance at ethanol plants. Early investments made by owners and operators in negotiating the permit, understanding its contents and implementing systems to ensure compliance will pay off. Owners and operators that develop a clear understanding of the regulations, establish a constructive relationship with regulators and train employees on environmental compliance will be the wiser for the effort. Krista McIntyre is a principal at Stoel Rives LLP. Reach her at kkmcintyre @stoel.com or (208) 387-4239.

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

ETHANOL PRODUCER MAGAZINE JANUARY 2008


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WATER QUALITY

PUTTING WATER TO THE

TEST

Water quality is equally as important as water quantity in choosing a site for an ethanol plant. EPM talks to water management and project development consultants about the importance of water testing. By Bryan Sims

PHOTO: U.S. WATER SERVICES

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ETHANOL PRODUCER MAGAZINE JANUARY 2008


WATER QUALITY

ETHANOL PRODUCER MAGAZINE JANUARY 2008

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WATER QUALITY

ater quality plays a vital role during the operation of ethanol plants and should be a consideration during the feasibility and development phases of an ethanol project. â&#x20AC;&#x153;When you look at water quality, it influences how much capital equipment is required up front to pretreat that water,â&#x20AC;? says U.S. Water Services Marketing Manager Mike Mowbray. â&#x20AC;&#x153;Capital costs ultimately determine the quality and quantity of water for an ethanol plant.â&#x20AC;? Plymouth, Minn.-based U.S. Water Services has been involved in more than 40 ethanol plant designs, start-ups and consulting services. Once a producer decides how much he can spend on water equipment, industry experts recommend identifying eight key areas to consider before choosing a plant site: a viable water source; design requirements; environmental impacts; options for equipment and treatment in the form of required capital and expense outlays; proper control mechanisms to maintain water quality and water system designs; resources to monitor treatment equipment in real time to minimize asset degradation; effluent discharge regulations imposed by a particular state; and preliminary water quality samples taken at anticipated operational levels. To avoid any potential pitfalls during the project development process, consulting firms such as the Natural Resources Group offer preliminary analysis services such as its â&#x20AC;&#x153;Fatal Flaw

PHOTO: U.S. WATER SERVICES

W

Mowbray adds coagulants in a gang stir to precipitate unwanted river water solids.

Analysis.â&#x20AC;? The purpose of an FFA is to provide ethanol plant developers with an outline of possible site issues that could limit construction on a particular property or cause significant time delays, says Angela Ronayne, project manager of Minneapolisbased NRGâ&#x20AC;&#x2122;s renewable fuels group. Employing a project development advisor such as NRG can prove beneficial in the long run for both the developer and the contractors to avoid any legal consequences that may have been overlooked. â&#x20AC;&#x153;[An FFA] is not

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WATER QUALITY

a substitute for the permitting stage,” Ronayne emphasizes. “It’s simply a consulting parameter to follow during the feasibility stage of an ethanol project.” To understand how important water quality management issues are for any ethanol plant in today’s expanding industry, project developers must be engaged with the micro-intricacies of water activity inside and outside of a given a facility.

Water Sourcing For a typical corn-based ethanol plant, the selection of an appropriate water source and the conducting of preliminary water quality tests is a critical portion of the project development process. Groundwater or well water is a popular choice because it’s more readily available and generally higher in quality than surface water from a river or a local municipality. Depending on the scope of the project and how much a producer wants to spend, each water source has its advantages, according to Kent Herbst, a certified water technologist and ethanol team leader for U.S. Water Services. Another option to consider is the use of “grey water” from a wastewater treatment plant. Water companies say that grey water has been used as a supplement to a main water source, but they caution that it’s expensive to pretreat. “Well water is probably easier to treat just

ETHANOL PRODUCER MAGAZINE JANUARY 2008

because it’s typically more consistent than surface water,” Herbst says. “It’s easier to design an ethanol plant based on well water for that sake. Although, there is some pretty bad well water out there that we encourage people to shy away from.” Although groundwater is more consistent than surface water, it can vary drastically among different aquifers within the same geographic location. Additionally, the composition of groundwater can change over time as aquifers become stressed because of continuous use such as in the case of the Ogallala Aquifer—the nation’s most abundant groundwater source that stretches from South Dakota to Texas. The pumping rate can also affect water quality. “If you pull out 100 gallons per minute versus 1,000 gpm, you can Herbst have different water quality,” Herbst says. As more projects come on line in the Midwest, quality water may become scarce prompting project developers to look elsewhere for plant sites. Locations such as southwest Minnesota, southeast South Dakota, eastern Iowa and Colorado tend to “have some bad, deep aquifers,” Herbst says. The East and West Coast areas have better groundwater quality, he adds.

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WATER QUALITY

Testing

WE’RE HELPING EVERYONE BREATHE EASIER. The word is out; cleaner, renewable ethanol fuel is an important way to reduce the effects of greenhouse gases and pollution. That’s good news for anyone who’s concerned about the environment and America’s energy independence. The Ethanol Promotion and Information Council (EPIC) is a nonprofit alliance of ethanol producers and industry leaders showing the world how cleaner, greener ethanol-enriched fuels can help our cars and our planet. We’re asking consumers to look for ethanol at the fuel pump and be part of the solution for a better environment, too. We’re growing the market and the demand. But there’s more work to be done, and your support is essential. Discover what EPIC is doing to help everyone – producers and consumers alike – breathe a little easier. Then, encourage your company to join us. Be a part of EPIC, and help drive the future of ethanol. For a membership prospectus, call 402-932-0567, or email: info@EPICinfo.org. WE’RE CLEARING THE AIR ABOUT ETHANOL ©2007 Ethanol Promotion and Information Council, Inc. All Rights Reserved. The “e” mark and “stylized e” are registered service marks of the Ethanol Promotion and Information Council.

Once a water source is identified, water management companies strongly recommend collecting water samples at anticipated operational levels. This is imperative when gauging how the water quality could impact utility systems and processes. “We always try to encourage people to do well testing early in the process and sample a couple of different wells because different areas on the aquifer, and different aquifers within the same region may have vastly different water,” Mowbray says. “As a result you may save yourself money and headaches by relocating your plant.” Water sampling conducted during the feasibility stage of an ethanol project determine what type of front-end water pretreatment methods should be utilized. Ultimately, it’s up to the ethanol company and the engineer, procurement and construction contractor and the technology firm to come up with solutions to water quality challenges. Carefully testing and monitoring constituent or mineral levels (hardness) relative to the incoming water rate can prevent asset degradation. “What’s equally important is making sure that the technology providers in conjunction with the EPC firm don’t experience slow downs due to unforeseen water problems,” says Tony Stanich, industry development manager for Nalco Co.’s grain/ethanol industry sector. The Illinois-based company provides integrated water treatment and process improvement services and has more than $40 million in global sales in the grain and biofuels processing industries. Nalco, and its joint venture partner Siemens Water Technologies, manage more than $200 million in assets as part of its Treated Water Outsourcing business. “We try to work closely with the


WATER QUALITY

DDGS Drying

PHOTO: U.S. WATER SERVICES

means more to us

Tera Ziesmer of U.S. Water Services tests for water quality by gauging its clarity in the light at the company’s analytical lab.

EPC, technology provider, and owner in the selection of water treatment equipment, chemical, and control technology to minimize related operational and capital costs specific to the plant site,” Stanich says.

Pretreatment Methods Looking through a typical “cookiecutter” lens, pretreatment models employed by corn-based ethanol plants include reverse osmosis and some type of polishing softeners for the steam boilers to decrease sulfate and mineral levels that contribute to unwanted hardness levels. “Over the past 12 months, we’ve seen the need for more complex water treatment systems,” Stanich says. “In the past most sites only required a simple reverse osmosis system followed by water softener systems.” Iron, manganese and silica are a few of the key elements in water that would limit water treatment measures. “You can handle high hardness relatively easily with lime softening for its precipitation process,” Herbst adds. “Once you start getting into sodium, chloride and sulfate, those three are some bad actors that are extremely tough to precipitate out of the water, so you end up just moving it around and you concentrate it and there’s no way to physically remove it from the water before it gets discharged.”

Conducting appropriate water pretreatment methods tailored to the specific needs of a particular plant’s utility and process demands should be of paramount interest as well. Requirements for the two can vary between technology providers. For example, some ethanol facilities need varying amounts of water for utility systems, such as for heat exchangers or heat recovery stream generators as both require high-quality water and high maintenance to mitigate mineral scales or deposits. Incoming water quality also impacts cooling tower operations, which requires the largest amount of water. Correct observation of the “cycles of concentration” is important when monitoring water activity in this process. “The higher the cycles you run the less water and chemicals you use so it’s a balance of maximizing the cycles relative to what capital costs you have to do for pretreatment,” Herbst says.

Water Output Balancing environmental sustainability while maximizing production and minimizing investment can be a difficult feat for any ethanol producer. Water quality effluent is probably one of the most variable process constraints associated with water management in an ethanol operation because each site is different. Understanding the discharge parameters imposed by each particular

ETHANOL PRODUCER MAGAZINE JANUARY 2008

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PHOTO: NALCO CO.

WATER QUALITY

Nalco’s customer analytical examines ethanol makeup for water quality.

state dictates front-end pretreatment and/or process technology designs. “If we have a state that chooses to be restrictive then we have limits that are set in terms of how efficiently we can operate,” says Chris Sleigher a water specialist with ICM Inc., which is involved with nearly 100 ethanol projects around the country. “Water quality is definitely becoming a much more stringent issue today,” Ronayne says. “Of course, certain areas [of the country] are more stringent than others. It really

depends on what location and state you’re in. I would expect that water quality is going to be more heavily scrutinized as projects move forward in the coming years.” Most process technology firms such as ICM provide zero liquid discharge equipment, which doesn’t impact effluent water discharge. However, much of the concern lies in the effluent that comes from the cooling towers. Because it’s the central piece of equipment that requires the most and highest quality water, it remains the exclusive contributor to discharge issues. The cooling tower is usually the point where water is reused or recycled, depending on the flexibility of the discharge permit. “States have become more protective of their water quality in recent years so they’re not going to let you dump your effluent into a receiving stream without permission,” Ronayne says. “If the facility chooses to discharge to a receiving stream the water balance is typically designed around the source water and the discharge limit.” Whether an ethanol plant sources its water from a well, river or local municipality, ethanol developers must be mindful of the increasingly stringent discharge regulations and limitations set forth. “Producers don’t want to spend any more money than they have to,” Stanich says. “But, they still want to follow environmentally sustainable practices. Balancing the two is where we can help.” EP Bryan Sims is an Ethanol Producer Magazine staff writer. Reach him at bsims@bbibiofuels.com or (701) 7468385.

Fueling your Environment Reap the Rewards of Integrated Innovation REAP™ is a comprehensive commodity procurement and business management software solution for biofuel plants. Our integrated solution helps you manage: • Commodity Procurement • Investors’ Relations • Construction and Expansion Projects • Lab Analysis • Inventory • Accounting and Finance 70

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ETHANOL PRODUCER MAGAZINE JANUARY 2008


BBI Internationalâ&#x20AC;&#x2122;s

June 16 -19, 2008 Gaylord Opryland Resort & Convention Center Nashville, Tennessee, USA

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ENVIRONMENT

Montana

North Dakota Minnesota

Wisc South Dakota Wyoming Nebraska

Iowa

Colorado Kansas Missouri

Oklahoma

Arkansas

New Mexico

M Texas

Louisia

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ETHANOL PRODUCER MAGAZINE JANUARY 2008


ENVIRONMENT

consin New York Pennsylvania New Jersey Delaware Maryland

Ohio Illinois

s

Indiana Kentucky Tennessee

West Virginia

More Corn

Virginia

North Carolina

Alabama

Mississippi

ana

a cause for

Concern The increase in U. S. corn acres planted in response to growing demand from the fuel, feed, food and export markets has raised concerns about water quality in watersheds and could lead to more stringent conservation practices. By Susanne Retka Schill

ETHANOL PRODUCER MAGAZINE JANUARY 2008

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ENVIRONMENT

T

he prospect of vastly expanded corn acres has set off alarms in two of the nation’s watersheds where water quality is heavily impacted by agriculture: Mississippi River and Chesapeake Bay. Simply put, more corn means more fertilizer, and in many places tillage practices that could cause soil erosion. Three reports issued in 2007 expressly examined the effects on water resources and reviewed the best management practices and policy choices needed to deal with increased corn acres. One was prepared by the Environmental Working Group, who raised concerns about the prospect of more corn acres and the need to tighten conservation compliance. Water quality issues that stem from agricultural practices focus on three areas: nitrogen, sediment and phosphorus. Phosphorus is a nutrient that attaches to soil, says Gyles Randall, a soil scientist at the University of Minnesota’s Southern Research and Outreach Center in Waseca, Minn. “If you can keep water on the land and the soil on the land, you can keep phosphorus on the land.” On hilly land and in fields near streams, tillage practices can make a big difference in preventing soil and nutrient losses, he says. When hay land and meadows, where there is no runoff or sediment loss, are converted into cropland, it’s likely that more phosphorus will enter the nation’s waterways.

Nitrogen behaves differently in that it leaches into the soil rather than being carried into streams by runoff and erosion, Randall says. “The more corn we grow, the more nitrogen in the system,” he says. “Corn and soybean [fields] are both fairly leaky.” By leaky, Randall means that excess nitrogen is able to leach into the ground through drainage tiles in farm fields and flow into streams. According to a report by the Chesapeake Bay Commission, “Biofuels and the Bay—Getting it Right to Benefit Farms, Forests and the Bay,” 150 pounds of nitrogen per acre is typically applied to corn in the region. “In addition, corn is a relatively inefficient user of these nutrients, consuming only 50 [percent] to 60 percent of the fertilizer applied,” the report says. “Barring conservation management practices, an estimated 20 to 40 pounds of nitrogen per corn acre is released into the groundwater and streams leading to the bay.” The report calls for a full suite of conservation practices to reduce that nitrogen loss. It also says, however, that the potential threat could produce a positive outcome. “The influx of corn, and the threat it brings for significant increases in nutrient loadings to the bay, may improve technical assistance and ramp up implementation of best management practices on farms that, until now, had little financial incentive or ability to do so.” Chesapeake Bay was the nation’s first watershed to tackle


PHOTO: MARY HOLLINGER, NOAA

ENVIRONMENT

High nutrient runoff creates algae blooms like this one in a pond in Calvert County, Md. The photo was taken in the fall of 1993.

pollution problems starting with the creation of a tri-state governmental commission in 1983. The mid-1980s marked the beginning of conservation compliance measures and incentives to reduce erosion on highly erodible soils. A report by the National Research Council titled “Water Implications of Biofuels Production in the United States,” covers a range of issues surrounding water quantity, biorefinery water use and water quality. The report credits the conservation compliance

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measures of the 1980s for reducing soil erosion levels and decreasing nutrient losses. The report raises the concern that more corn for biofuels will reverse that trend. With nutrients from the entire U.S. Corn Belt running into the Mississippi River watershed, more corn acres means more nitrogen draining into the Gulf of Mexico, the report states. Researchers have concluded that excess nitrogen in the river system is the major cause of the oxygen starved “dead zone” in the gulf, where many forms of marine life cannot survive. “This year (2007), we have near-record gulf hypoxia at 20,000 square kilometers (7,700 square miles),” says Jerald Schnoor, professor of environmental engineering at the University of Iowa. “We have a national goal to reduce this hypoxia to 5,000 square kilometers (1,900 square miles). We’re going in the wrong direction.” Schnoor chaired the committee of scientists who wrote the National Research Council’s report. Aside from describing water quality issues surrounding biofuels, the report reviews practices and technologies that can significantly reduce the impact of increased corn acres. Conservation tillage practices have had a positive effect on erosion. The USDA’s National Resources Inventory shows a 40 percent reduction in annual cropland erosion from 1982 to 2003. However, the shift to conservation tillage may have reached a plateau, Schnoor says.

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ETHANOL PRODUCER MAGAZINE JANUARY 2008

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PHOTO: U.S. GEOLOGICAL SURVEY

ENVIRONMENT

This series of satellite photos, taken in 1973, 1989 and 2003, show three decades of change in the birdsfoot delta of the Mississippi River. The river collects soil eroded from the central half of the United States. Upon reaching the Gulf of Mexico in Louisiana, the river’s velocity abruptly slows and mud and sand are deposited in an alluvial fan pattern.

“We need new incentives, new encouragement to take us further,” he adds. One suggestion offered in the National Research Council report is to make ethanol subsidies variable, and in times of high profitability to divert the funds to cellulosic ethanol research and farmers who improve their practices. The EWG goes a step further in its recommendations. EWG spokesperson Michelle Perez was the lead author of the report “Trouble Downstream: Upgrading Conservation Compliance.” She says while her group works to improve funding for the USDA’s voluntary conservation programs, the report recommends expanding conservation requirements. “In exchange for taxpayer support, we make the case that farmers should provide a minimum level of environmental performance,” she says. Current laws require those farming highly erodible land to implement conservation measures to qualify for several farm programs. EWG is proposing that the eligibility requirements include qualifying for crop insurance. They also recommend that the minimum standards be expanded from soil conservation measures to include requirements for nutrient management plans and the planting of grassy buffer zones along surface waters that trap sediments and nutrient runoff. In its fact sheet, “The Unintended Environmental Impacts of the Current Renewable Fuel Standard,” the EWG summarizes the concerns environmen-

talists have with increased corn production for biofuels. The group lists five major unintended environmental impacts: loss and degradation for wildlife habitat, an increase in aquifer depletion, herbicide and insecticide pollution, nutrient pollution and soil erosion. “The majority of corn is not grown under conservation practices,” Perez says. “Many farmers still conventionally plow every year. The estimate of how much soil erosion occurs with each gallon of ethanol produced is a major number.” EWG calculates that 24 pounds of soil is lost per gallon of ethanol produced. (In its calculations, EWG uses the latest USDA National Resources Inventory figure for average cropland erosion of 4.9 tons per acre for 2003, plus the 2006 national average corn yield of 149 bushels per acre and ethanol production of 2.7 gallons per bushel of corn.) Coupled with nutrient losses amounting to an average of 25 pounds of nitrogen per acre of corn, she says farmers are not optimizing nutrient management practices. “Our national policy is not sending the right signals to farmers. There is no regulatory policy, and the voluntary cost incentives we have are under funded and don’t send as strong a signal as they could.” EWG reports that 75 percent of farmer requests to participate in voluntary programs go unfunded. “I don’t think anyone’s against corn farmers or ethanol producers in general,” Perez says. “Because of these environmental  Continued on page 78

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ENVIRONMENT

Potential Ecological Impact In 1999, a study indicated that the pollen from Bt corn was a threat to monarch butterflies that fed on milkweeds near cornfields. The experiment couldn’t be duplicated outside of the laboratory and subsequent studies proved that genetically modified corn posed no risk to the butterflies. The jury is still out, however, on whether genetically modified corn impacts aquatic ecosystems. Scientists have genetically engineered corn varieties to express the Bt toxin found in the naturally occurring microorganism Bacillus thuringiensis. These varieties are widely used by farmers to control crop losses caused by rootworm and corn borer. Before licensing Bt corn, the U.S. EPA conducted trials to test its impact on water biota, but it used a crustacean commonly used in toxicity texts and didn’t consider insects more closely related to the pests targeted by Bt corn. Royer A study by Todd Royer, an environmental science professor at Indiana University in Bloomington, and several colleagues, postulated that Bt corn may affect the aquatic food chain in corn country waterways. The species of interest is the caddisfly, an aquatic insect that’s related to the pests targeted by the toxin in Bt corn. Caddisflies are a food source for higher organisms, like fish and amphibians. The study, “Toxins in Transgenetic Crop Byproducts May Affect Headwater Stream Ecosystems,” was funded by the National Science Foundation and involved Royer, Emma RosiMarshall of Loyola University Chicago, Jennifer Tank of Indiana’s University of Notre Dame near South Bend and Matt Whiles of Southern Illinois University in Carbondale. The researchers have verified parts of their theory, Royer says. They found the Bt toxin in the decaying corn detritus in streams. They also found corn pollen in the guts of caddisflies, which establishes that they feed on corn detritus. In the laboratory, researchers found consumption of Bt corn increased mortality and reduced growth in the soft-sided caddisfly larvae. “We’ve documented the affect of Bt in the laboratory, but to this point we’ve not seen an effect in the stream,” Royer says. The next step is to design a project that answers the question: Does it matter out in the real stream? “My impression is that the environmental impact at this point is pretty small,” Royer says. “The kinds of streams we’re examining are in watersheds with very intensive agriculture.” He says it will be difficult to design a study in streams that have other problems including water quality issues, habitat degradation and sedimentation, all of which impact the health of the stream’s biological community. Royer suggests there could be greater problems if corn acres move into new areas where streams aren’t already impacted by farming. “Every new technology comes with some benefits and some risks,” he says. “I think probably the risks associated with widespread planting of Bt corn were not fully assessed.”

WHEN IT COMES TO ETHANOL YOU’RE IN GOOD HANDS

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ENVIRONMENT  Continued from page 76

concerns, we want ethanol done right. We don’t want to trade our energy policy and global warming potential gains for local and regional losses in water quality, air quality and wildlife.” Soil scientists are sympathetic to the farmers’ position as well. “Sometimes farmers are stuck in the middle,” says Andrew Sharpley, a soil scientist who worked in the Chesapeake Bay watershed until moving to the University of

Arkansas in Fayetteville. “As we’ve seen in the past, forces outside the farm drive what farmers do on the farm. The water quality impacts tend to be indirect and after the fact.” Sharpley compares agriculture’s attempts to improve its environmental impact on water to the experience of municipal water treatment facilities. “Cleaning up the first 30 [percent] or 40 percent is relatively easy,” he says. “To clean up the water further gets increas-

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ingly more expensive.” There are some positive environmental outcomes on the horizon. High energy costs could prompt farmers to till less and manage fertilizer applications to optimal levels. Precision farming is considered to be a promising technology to help optimize fertilizer use. New foliar nitrogen applicators are equipped with sensors to identify nitrogen-deficient plants and can apply variable rates of nitrogen where needed. While the use of yield monitors in combines has caught on, Randall says the move toward farmers using the equipment to manage variable fertilizer rates on the land is slow to catch on. “Quite often the payback isn’t there,” he says. “The environment isn’t included in that equation for success, if it doesn’t pay out in higher yields.” Sharpley, who is an expert on phosphorus issues, agrees, “If your livelihood depended upon it, you’d want to be sure to apply enough fertilizer to get good yields.” Times change, however, and farmers may need to heighten their environmental awareness. “Farmers are doing a pretty good job given the information and programs that are available to them,” Sharpley says. “When things change, like we’ve been seeing with oil prices and the drive for biofuels, we see changes.” That may mean reacting to the potential for increased amounts of nutrients leaching and flowing into the nation’s waterways as grain production becomes more concentrated. “We need to be aware of the consequences and not go headlong into this and afterwards say we have got a problem,” he says. EP Susanne Retka Schill is an Ethanol Producer Magazine staff writer. Reach her at sretkaschill@bbibiofuels.com or (701) 746-8385.

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ETHANOL PRODUCER MAGAZINE JANUARY 2008


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The Future of the

Ogallala Aquifer The Ogallala aquifer irrigates some of the most important cropland for food and fuel. For years, itâ&#x20AC;&#x2122;s been steadily depleting leaving some to wonder about the sustainability of tapping into it for increased corn irrigation and ethanol production. By Anduin Kirkbride McElroy

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summer’s flight from Chicago to Denver can give one a new perspective on water use. Before the plane climbs above the clouds, one can see vast stretches of prairie land, cut into rectangles of dark green crops. From the sky, the crops seem to go on and on, delineated only by roads, trees and winding rivers. According to the National Corn Growers Association, more than 85 percent of all corn produced in the United States is nonirrigated, and much of it is raised on this fertile land that’s been under agricultural production since white men settled the region in the 1800s. As the flight continues over Illinois, Iowa, Nebraska and eastern Colorado, one might notice that the farmscape begins to change. Circles, one-half mile in diameter, start to be dispersed amongst the rectangles. Further on, the land looks like a pale green and yellow checkerboard with dark green checkers placed atop of the squares. As the plane descends over eastern Colorado, the prevailing color of the land is brownish yellow, a striking contrast to the circles full of dark green crops. The land west of the Missouri River is fertile, but crops must be coaxed out of the ground with irrigation. The dark green circles are a result of center-pivot irrigation, which enables the arid prairie states to be as fruitful as the Midwestern states. Colorado, for example, with its mountains and high prairies, is the 13th largest corn-producing state in the United States, according to Dave Kramer, general manager of Sterling Ethanol LLC and Yuma Ethanol LLC in northeastern Colorado. What’s more, Yuma County is one of the top three largest cornproducing counties in the country, producing 42 million bushels per year. Irrigation has also enabled Nebraska to be an integral part of the Corn Belt. About 60 percent of corn acres in the state are irrigated, according to the Nebraska Corn Board. The state’s corn supply and ambitious development recently bumped its ranking to the second largest ethanol-producing state, after Iowa. Nebraska has more

than 1,565,000 gallons of annual capacity built or under construction.

Water Source Yes, the land is fertile, thanks to a generous supply of groundwater. The High Plains aquifer, also known as the Ogallala aquifer, lies under portions of eight states: South Dakota, Nebraska, Wyoming, Colorado, Kansas, Oklahoma, New Mexico and Texas. It is one of the largest aquifers in the world, spanning about 175,000 square miles. According to the U.S. Geological Survey, approximately 27 percent of the irrigated land in the United States is in this region, and about 30 percent of the groundwater used for irrigation in the United States is pumped from the Ogallala aquifer. In 2000, irrigation withdrawals were 17 billion gallons per day and 1.9 million people were supplied by groundwater from the Ogallala aquifer with total public supply withdrawals of 315 million gallons per day, according to the USGS. The aquifer is not only large, but it’s also accessible. “It’s relatively shallow, the quality is relatively good, so it’s very user friendly,” says David Hume, a hydrogeologist and senior associate at Leggette, Brashears & Graham Inc. The aquifer was formed over millions of years, but has since been cut off from its original natural sources and is being depleted faster than it can be recharged. The water table in the Ogallala Formation is separated from overlying land-use practices by as much as 400 feet of unsaturated sediments, and recharge has been estimated to take at least 50 years. Over extraction has led to substantial declines in the water table in many places, complete exhaustion of extractable groundwater in others, and debate and legislation about the aquifer’s future, according to a report by Environmental Defense, a nonprofit environmental advocacy group formerly known as the Environmental Defense Fund. The report, “Potential Impact of Biofuels Expansion on Natural Resources; a case study of the Ogallala aquifer region,” was released in September. Large portions of the aquifer show declines in the water

ETHANOL PRODUCER MAGAZINE JANUARY 2008


ETHANOL PRODUCER MAGAZINE JANUARY 2008

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lons of water for every gallon of ethanol produced. In the past few years, the lack of water has stopped the development of some plants. Proposed plants from Florida to northern Minnesota to California have faced opposition from those concerned about the facilities’ water use. “Regulatory agencies and the public are more aware of the volume of water required,” Hume says. “Opposition at public meetings has certainly increased in the past few years compared with when the industry first took off—you might have a few residents who would be concerned about the impact a plant could have on their water supply. In general, the industry has become more aware of possible oppostion and the importance of water for plant operations.” Some of the awareness likely comes from media coverage of recent reports about ethanol’s water requirements. A report issued in October by the National Research Council titled “Water implications of biofuels production in the United States” analyzed the potential impacts on water quality and supply from increased use of corn for ethanol production. The NRC formed a committee to look at how shifts in the nation’s agriculture to include more energy crops, and potentially more crops overall, could affect water management and long-term sustainability of biofuels production. It found that an increase in ethanol production from corn could significantly impact water quality and availability unless new practices are employed. The report acknowledged that the water consumed in the ethanol production process is similar to most other industries, but could still substantially affect local water supplies. It estimated that a 100 MMgy plant would consume as much water as a town of 5,000 people, using the national average water use per person per day of 180 gallons. “Biorefineries themselves generate local, but often intense, water supply challenges, while irrigated agriculture can generate regional-scale problems,” the report says. “If, however,

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table of more than 100 feet. Some reports have found that the water level is dropping by 3 to 5 feet a year in some areas. Estimates for its lifespan range from 60 to 250 years, depending on the area. In the arid Plains, states have developed complicated legal arrangements for issuing water rights and developing water diversions. Water is appropriated by the government and the rights to it are traded and sold to the highest bidder. Lately, expanding cities have bought water rights from irrigation districts—essentially putting irrigated agriculture out of business. “Some areas in the Ogallala aquifer region, particularly in parts of Colorado and Nebraska, have existing groundwater protections that will reduce opportunities to convert new land to irrigated production,” the Environmental Defense report states. “Strengthening and expanding any existing local and regional groundwater conservation efforts may be one of the most effective ways to minimize groundwater depletion and the destruction of significant remaining blocks of wildlife habitat.” Indeed, water rights are a significant issue in Colorado, as current producer Front Range Energy LLC found out when developing its plant in Windsor. According to BBI International Project Development Vice President Mark Yancey, who did project development for the plant, the company spent about $1 million just for the right to use the water; sourcing the water was a separate endeavor. Years of drought have made aquifer resources even more important in the Plains states. Now that ethanol has moved into all corners of the aquifer people are starting to express concern over the industry’s impact. Ethanol brings an increased demand for corn, which must be irrigated, and production of the fuel also requires significant amounts of water. Like many industrial processes, water is vital to ethanol production. The majority is used in the cooling process; the amount used can be influenced by the quality of the water, Yancey says. The production process uses between 3 to 5 gal-

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WATER QUANTITY

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WATER QUANTITY

the agriculture is rain-fed, water for the biorefinery may be the primary source of groundwater or surface water extraction in the area. Compared to the water incorporated in the feedstock, water use for the biorefineries is quite small.” The report concluded that producing 1 gallon of ethanol from irrigated corn requires 780 gallons of water, using statistics from 2003 when 2,100 gallons of irrigation water was used to produce a bushel of corn, which yielded 2.7 gallons of ethanol. This number doesn’t include the water required to make the ethanol, and is actually about 200 times greater than the 4:1 water to ethanol ratio. Yancey confirms these findings. “The water used to produce ethanol at a 100 MMgy plant is equal to one center pivot—1,000 gallons per minute,” he says. Growing biofuels crops in areas with limited water supplies is a major concern, the report says. According to the NRC, “the committee found that agricultural shifts to growing corn and expanding biofuels crops into regions with little agriculture, especially dry areas, could change current irrigation practices and greatly increase pressure on water resources in many parts of the United States.” Biofuels crop irrigation could compete with, or even be constrained by, regional water demands for drinking, industry and other uses. “In the next five to 10 years, increased agricultural production for biofuels will probably not alter the national-aggregate view of water use,” the report reads. “However, there are likely to be significant regional and local impacts where water resources are already stressed.” The Ogallala aquifer is certainly stressed. “This aquifer is currently being pumped at a rate of more than 1.5 billion gallons per day for agriculture, municipalities, industry and private citizens,” the report reads. “Thus, 15 million gallons per day for bioethanol would represent only 1 percent of total withdrawls. But it is an incremental withdrawal from an already unsustainable resource. Current water withdrawals are much greater than the aquifer’s recharge rate (about 0.02 to 0.05 foot per year in south-central Nebraska …), resulting in up to a 190-foot decline in the water table over the past 50 years. It is equivalent to ‘mining’ the water resource, and the loss of the resource is essentially irreversible.” The Environmental Defense study looked at the Ogallala aquifer as a “microcosm of the environmental concerns that may accompany rapid and unplanned expansion of biofuels production.” According to the report, the aquifer supports the majority of irrigated agriculture in the southern Great Plains. “However, in recent decades it has experienced substantial water table declines in areas where rates of groundwater pumping have far exceeded rates of replacement,” the report says. The report found that the water demands for individual plants from ethanol processing and feedstock production aren’t exceptionally higher than other industrial or agricultural users. However, the construction of new plants in areas where water is already scarce can impact the level of the aquifer. “Water demands from new ethanol plants in areas of Ogallala aquifer ETHANOL PRODUCER MAGAZINE JANUARY 2008


WATER QUANTITY

depletion may reach 2.6 billion gallons per year for corn-to-fuel processing alone, and between 59 [billion] and 120 billion gallons per year for increased water demand if there are local increases in irrigated corn production,” according to the study. Interestingly, the region is experiencing ethanol production growth in areas where water resources are most stressed. The report points to southwest Kansas and the Texas panhandle, where several plants are proposed or under construction, as areas with the highest depletion, defined as within 50 miles of aquifer zones where water tables have dropped by more than 10 feet between 1980 and 1996.

Other Water Users The Environmental Defense report didn’t go over very well with the Nebraska Corn Board. “It made for sensational headlines and is just the latest in a series of attacks on corn and ethanol producers in regard to water,” said Jon Holzfaster, a farmer and chairman of the board. “Those who want to blame the expansion of ethanol for increased water usage are ignoring the fact that corn is going to be produced in Nebraska, whether or not there is an ethanol industry. And that those same acres will likely be irrigated whether they are growing corn, soybeans or any other crop.” Holzfaster compared the water used to raise corn to that used to water homeowner’s lawns and golf courses. “It is estimated that it may take around 1,750 gallons of water to produce a bushel of corn,” he said. “That sounds like a lot, but did you know it takes 684,000 gallons of water per acre per year to irrigate a golf course? And that, on average, a homeowner uses 21,600 gallons to water his or her lawn each year?” The NCGA has also found it useful to put the numbers in perspective. Based on USGS statistics, NCGA Chief Executive Officer Rick Tolman points out that it takes 1,851 gallons of water to refine a barrel of crude oil and 1,500 gallons to produce a barrel (42 gallons) of beer. Regardless of these justifications, Environmental Defense advocates for 85

policy changes that would encourage sustainable ethanol development. “Current biofuels policy makes few distinctions between different biofuels production pathways,” the group says. “But plant location, production techniques and choice of feedstocks strongly influence the environmental footprint of ethanol production.” Ideal policy changes, which would by nature need to be local and regional, would guide ethanol production toward more sustainable locations by making local approval of ethanol plant siting contin-

gent on analyzing the impacts on water resources in areas of existing water scarcity. “Local agencies should be careful to consider indirect effects of ethanol in driving new irrigated cropland acres as well as calculations of water use directly for ethanol plant operation,” Environmental Defense says. EP Anduin Kirkbride McElroy is an Ethanol Producer Magazine staff writer. Reach her at amcelroy@bbibiofuels.com or (701) 7468385.

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TECHNOLOGY

PHOTO: PURDUE NEWS SERVICE PHOTO/DAVE UMBERGER

Li Fu Chen, a professor in food sciences, demonstrates the machine he helped invent that is used to produce ethanol as well as many edible products. 88

ETHANOL PRODUCER MAGAZINE JANUARY 2008


TECHNOLOGY

SQUEEZING MORE OUT OF CORN Millers have been converting corn into valuable products for centuries, so when a new process comes around claiming to do it faster, cheaper and cleaner while yielding more ethanol and creating more valuable coproducts, it demands attention. Reed-Three Rivers Bio-Grain Inc. is implementing a process they say will do all that. By Jerry W. Kram

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TECHNOLOGY

thanol isn’t made from corn. It’s made from starch. While a good-sized chunk of a corn kernel is made up of starch, there’s a lot of other stuff in there as well. Stuff that can be even more valuable than the ethanol made from the starch. In a conventional dry-mill ethanol plant all of the potentially valuable fiber, oil and proteins in corn get tossed into the fermentation tank with the starch. It comes out of the process as distillers grains. Fiber and oil can be extracted from the distillers grains, but almost all of it is used for animal feed. Wet mills separate the fractions of the kernel so a pure starch stream can be used for food or as a feedstock for ethanol production. The coproducts are separated in the process and can be marketed as well. But wet mills are expensive to build and operate and require chemicals such as sulfur dioxide which are regulated as pollutants. Purdue University researcher Li Fu Chen and his graduate student Qin Xu have developed a process which, if successfully implemented on a commercial scale, would combine the advantages of both milling systems. It has the potential to lower the cost of fractionation without the use of harsh chemicals and produce slightly more ethanol per bushel of corn. The Purdue Research Foundation licensed the patent for what has become the Chen-Xu process to Bio Processing Technology Inc., which has in turn reached an agreement with Reed-Three Rivers Bio-Grain Inc. of San Jose, Ill., to implement the system in the latter’s proposed ethanol plants. Reed-Three Rivers

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Bio-Grain is proposing to build nine 240 MMgy ethanol plants in Illinois, Indiana, Kentucky and Arizona. Construction on the plants will begin in early 2008, says Dale Elder, vice president and chief financial officer of Reed-Three Rivers Bio-Grain.

The Big Squeeze The Chen-Xu process differs from wet milling in the number of steps it requires to fractionate the corn kernel. According to Chen, wet milling can take up to 13 steps to remove valuable products from the corn, starting with a two-day soak in a dilute sulfur dioxide solution to soften the kernels and release nutrients. The Chen-Xu process, on the other hand, takes just two to five steps, depending on which components of the grain are extracted, and requires no preprocessing. “The process I developed doesn’t require soaking,” Chen says. “In wet milling, to remove the oil they separate the germ first. What I did was remove the oil, [the protein] zein, gluten and fiber to obtain some syrup. Then this syrup can go to fermentation. Compared with wet milling we get the same kinds of products and byproducts. Because we don’t go through the soaking, these products can be food or pharmaceutical grade.” According to the patent for the process, corn is fed into a highshear processor with water or steam. If the starch is to be used for ethanol production or corn syrup, thermostable amylase enzymes can be added during this step to start breaking down the starch into sim-

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TECHNOLOGY

Chen-Xu Process High Shear Processor

Extractor

Evaporator

Corn Oil Zein

Extracted Residue

Filtration Separator

Fiber Gluten Meal

Sugar Syrup

Fermentation

Distillation

CO2

Fuel Ethanol

A simplified flow chart of the Chen-Xu process shows the high-value products that can be extracted from corn while isolating starch for ethanol production.

ple sugar. The heat and pressure inside the high-shear processor partially gelatinizes the starch, making it more soluble in water and promoting liquefaction. The oil and protein in the corn combine in the processing, which also improves the action of enzymes on the starch. The result is extruded as a paste, which is combined with an

alcohol to extract corn oil and zein. After extraction, water is added to the remainder to dissolve the starch and sugars. Insoluble bran fiber and protein (gluten) are filtered out of the solution. The purified starch stream can then be used for ethanol production or other products. Chen has been working on the system for decades, having been granted the first patent related to the system in 1989. While the ChenXu process differs from existing milling methods, it’s just a new way to use existing technology, he says. “If you look at the procedure, it is different,” he adds. “But technology wise there is nothing new in the world. You just put different technology together, that’s it.”

Implementing Chen-Xu Inventions and processes developed at Purdue University are commercialized through the Purdue Research Foundation. The foundation licensed the Chen-Xu process to Bio Processing Technology, which is headed by Purdue emeritus professor John Tse. “This company was formed to bring the Chen-Xu process to commercial production,” he says. “It takes a lot of effort and we have now gotten to that point.” Tse is excited by the potential for the new process to increase ethanol production while reducing pollution. “This is a new process that has no problems in the manufacturing process like the traditional dry-grind and wet-milling methods,” he says. “With this method,

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we don’t produce distillers grains. The problem with manufacturing distillers grains is that it comes after the fermentation process and distillation and is not environmentally friendly. A Minnesota plant was fined in 2002 for violations of the Clean Air Act. They were forced to install control devices. We don’t have this problem because we don’t manufacture distillers grains.” The emissions from the plant will be much lower than traditional plants, Elder says. “We don’t have lower pollution problems, we essentially have no pollution problems,” he says. “We don’t even need thermal oxidizers.” Water consumption will also be lower than traditional plants because the corn doesn’t need to be soaked in water to dissolve the starch. “We will probably use a third less water than a traditional ethanol plant,” Elder says. “For one thing, we will recycle everything. We don’t have any wastewater that will run outside of the plant.” The coproducts of the Chen-Xu process are corn oil, gluten, fiber and zein. “Our coproducts are extracted before fermentation,” Tse says. “All these are food- and pharmaceutical-grade. They are not like distillers grains, which is just animal feed for cows. Therefore our coproducts will bring in much more in sales than distillers grains. It will make the sales of our coproducts that much higher than a dry-grind ethanol plant can get from distillers grain.” The process extracts starch completely from the corn kernel which means more ethanol can be made from a bushel of corn. In dry-grind plants, a small amount of starch remains unconverted in the distillers grains. According to Chen, plants should be able to make 2.85 gallons of ethanol from a bushel of corn, which is slightly higher than the current industry average. Elder thinks production could even exceed 3 gallons per bushel. Another advantage of the process is the projected lower cost of the system, which Tse estimates is 40 percent

ETHANOL PRODUCER MAGAZINE JANUARY 2008


TECHNOLOGY

‘It is a much more elegant method and is certainly the cleanest process I’ve ever seen. I think a lot of people are going to look at it and be amazed at how well it works, how efficient it works and how profitable it is.’ less than a dry-grind ethanol plant. Operating costs should be lower as well, Tse says, because of the inherent efficiency of the process. Because the starch is already partially hydrolyzed before it enters the fermentation tank, the throughput time of the process is much quicker. “From the time we feed the corn in, to the time the ethanol comes out, the total is less than 24 hours,” he says. “It’s a more efficient way of manufacturing ethanol so the processing cost is cheaper than the traditional dry-grind method.”

Building Big Bio Processing Technology signed a sublicense agreement with Reed-Three Rivers Bio-Grain in September 2007 to use the Chen-Xu technology in its ethanol plants. The agreement is unusual in that Reed-Three Rivers Bio-Grain is taking the process from the bench scale to full production without testing it first in a pilot or engineering-scale demonstration plant. “We are skipping the pilot plant that many people think we would need,” Tse says. “We have experts working on this. We will be able to get a turnkey construction contract from one of the largest chemical and pharmaceutical contractors in the world. So there’s a guarantee for the output.” Elder says they don’t need to build a pilot plant because they know what they’re doing and they have confidence in the technology. “We wouldn’t be messing with this if we weren’t absolutely certain of the technology,” he adds. The company turned to builders from the pharmaceutical industry because Elder thought they were more suited to design these plants than the major design/build companies in the ethanol business. “We’ve got to be very careful with the people we bring in to do the building on this,” says Elder, who declined to name the company. “They understand what has to go in to maintain the quality in these things.” Most of the information about how the company plans to implement the process is proprietary, Elder says. “This is a brand new technology,” he says. “We’re taking it from test tubes and beakers through to commercialization.” Reed-Three Rivers Bio-Grain plans to break ground on the new plant shortly after New Years in Danville, Havana or Greenville, Ill. The company is also looking at sites in Henry, Ill., Paducah, Ky., Gila Bend, Ariz., and three sites in Indiana for future plant development.

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TECHNOLOGY

The nine proposed plants will each have a capacity of 240 MMgy, more than double the capacity of a typical large-scale ethanol plant. “It’s an economy of scale matter,” Elder says. “With the Chen-Xu method and the byproducts that are put out besides ethanol, it became obvious that the economy of scale worked better at the 240-million-gallon range than any other. In fact, some of these plants may expand beyond that.” The plants will also use drier technology

owned by the Reed Klondike Group so they can take in corn harvested at 38 percent moisture. Elder says corn harvested at that moisture level contains more starch. “Therefore we will be able to get more ethanol production out of a bushel of corn than other plants simply because we get more starch up front,” he says. “It’s going to be nice for farmers. We’re going take the corn after about 90 days, and I think south of the St. Louis area there are going to be many farmers who will be able to

double crop their land in a year.” Because these facilities will be working with high-quality products they will need to employ about 205 people, which is more than a typical ethanol plant. “These products are all food- or pharmaceutical-grade materials,” Elder says. “There are no automatic functions here. In most dry-mill plants, the only byproduct is [distillers grains] and you can handle that about any way you want. But with pharmaceutical-grade materials, it has to be handled carefully and monitored all the time.” Building a new technology from scratch has its challenges. “Finding and redesigning equipment to meet our needs has been a challenge,” Elder says. “But fortunately we have run into many manufacturers who are willing to work with us on this and do what’s necessary to get their equipment to do what we need it to do. Another challenge is to get anyone to take you seriously with the number of plants that get announced and don’t get built. But we are up to the challenge and our plants are going to get built. Our funding is all in place.” Elder says his group was planning to build a traditional dry-grind ethanol plant about 18 months ago before learning about the Chen-Xu process. He believes the process will permanently change the ethanol industry. “This is a paradigm shift in the way ethanol is produced,” he says. “It’s a far better process than anyone has seen before. I think it will make ethanol a far more viable product in the U.S. and the world market. It is a much more elegant method and is certainly the cleanest process I’ve ever seen. I think a lot of people are going to look at it and be amazed at how well it works, how efficient it works and how profitable it is.” EP Jerry W. Kram is an Ethanol Producer Magazine staff writer. Reach him at jkram@bbiobiofuels.com or (701) 7468385.

ETHANOL PRODUCER MAGAZINE JANUARY 2008

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BioGasol’s pilot plant PHOTO: BIOGASOL

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European

Technology Companies

Unite

Eight European firms have joined forces to market their technological wares to ethanol producers worldwide. Representatives of four Denmark-based companies held a symposium in Chicago to explain how their cutting-edge technologies reduce ethanol production costs, improve efficiencies and increase coproduct revenue.

By Jessica Ebert

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riginally established to serve the brewery industry, Distil Alliance, a coalition of equipment suppliers and technology innovators, is making itself known to the ethanol industry. “The Distil Alliance is a mix of various companies that offer groundbreaking core processes and well-proven, reliable technologies,” explains Niels Ammundsen, chairman of DA and a mechanical engineer for Union Engineering, a Danish carbon dioxide technology developer. On a recent trip to the United States, DA met individually with leading companies in the ethanol industry including Poet LLC and Fagen Inc., and sponsored a oneday symposium in Chicago. The latter brought these leading European equipment suppliers together with other ethanol producers in an intimate networking setting. The seminar consisted of introductory presentations about DA and its members followed by workshop discussions where the attendees could meet one-on-one with company representatives. EPM was able to participate in these discussions and reports on the innovative technologies offered by DA.

Intriguing Innovation BioGasol, an engineering and technology company, has developed cellulose-to-ethanol technology that overcomes

PHOTO: BIOGASOL

O

BioGasol’s pilot plant

the major barriers of this process and has many ethanol producers talking. The company was established in January 2006 as a spin-off of a research and development effort at the Technical University of Denmark. Since 1994, this work, led by Birgitte Ahring now chief executive officer of

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BioGasol, was aimed at devel‘Coproducts improve margins and can become a large part of oping a process for the coproprofits. We’ve discovered that biofuel waste streams may contain duction of ethanol biogas (i.e. more value on the protein side than the main manufactured methane), hydrogen and lignin as a solid fuel. The product. Our technology adds value to new coproducts.’ process utilizes proprietary equipment and patented processes and a unique, heatloving or thermophilic bacterium isolated 15 years ago from a thermal spring in Iceland. In 2005, a grant from the Danish Energy Department made it possible to create a sure released at high temperatures breaks apart the lignin pilot-scale facility for testing the new technology, which the cage that locks away the sugars needed for fermentation. company has done since 2006. Now, BioGasol has plans to “It’s a brute-force method for destroying the biomass strucbuild a demonstration plant on an island called Bornholm ture and separating the cellulose and hemicellulose from the lignin,” Skovgaard-Petersen explains. This process differs near the Swedish coastline. BioGasol’s cellulosic ethanol technology stands out from the acid-wash that is typically used for pretreatment. The pretreated biomass is pumped into a reactor for from other processes in three major ways. First, pretreatment of the biomass, which can range from wheat straw to the combined hydrolysis and fermentation of the material. corn stover to bagasse and woody materials, involves a BioGasol uses enzymes from Novozymes for the hydrolysis method called wet explosion. “We essentially pressure boil of the cellulose and hemicellulose into glucose (C6 sugar) the biomass,” explains Rune Skovgaard-Petersen, engineer- and xylose (C5 sugar). The former is simultaneously fering manager for BioGasol. A little bit of oxygen and pres- mented to ethanol by an industrial yeast, while the latter is

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funneled to a second reactor. The lignin that remains is separated and sold as a solid fuel pellet. A second reactor is raising the eyebrows of those ethanol producers looking to the future and to the reality of second-generation plants. In this fluid bed reactor, oxygen is eliminated, the temperature is cranked up to 70 degrees Celsius (158 Fahrenheit) and a novel bacterium converts the xylose to ethanol and hydrogen. “The C5 fermentation unit is getting a lot of attention,” Skovgaard-Petersen says. “This is the step that positions BioGasol in the race.” Finally, any remaining organic material is shuttled to a second anaerobic digester and converted into methane. “We call the whole process the carbon slaughterhouse,” Skovgaard-Petersen says. “It’s become part of our philosophy; get as much energy out of the biomass as possible.” In addition, the process water is treated with the company’s patented desalination technology and reused. According to SkovgaardPetersen, only 0.3 gallons of new water is added to produce one gallon of ethanol. In March 2007, BioGasol was named one of the top-most innovative private companies in Europe, the Middle East, and Africa by Red Herring, a European media company. This past fall, the company signed a joint-development agreement with the food manufacturer Tate & Lyle PLC. The two companies will integrate BioGasol’s technology into Tate & Lyle’s corn processing facilities for the conversion of corn fiberto-ethanol. In the meantime, the company is moving forward with its plans for a demonstration plant on the island of

Bornholm. Construction of the 2.6 MMgy facility is expected to begin soon with startup planned for 2009.

Cunning Columns In a similar attempt to squeeze as much value from coproducts as possible, the technology company Upfront Chromatography has designed a process for extracting high-value protein from raw materials for the production of food additives and ingredients for human consumption and healthcare. “Coproducts improve margins and can become a large part of profits,” says Morten Olander, a biotechnology engineer with Upfront. “We’ve discovered that biofuel waste streams may contain more value on the protein side than the main manufactured product. Our technology adds value to new coproducts.”

PHOTO: UPFRONT CHROMATOGRAPHY

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ETHANOL PRODUCER MAGAZINE JANUARY 2008


INNOVATION

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The process is a separation trademarked solution called Rhobust. It takes place in stainless steel cylinders called columns that are filled with tiny beads that look like grains of sand. Raw material is pumped through the column and proteins bind to the beads, which are then separated and washed. The proteins are finally eluted or removed from the beads and used in downstream processes that result in ingredients for the production of salad dressings, ice cream, powdered soup and skin care products. The chemistry of the beads

can be customized to bind particular proteins, specifically high-value proteins suitable for food ingredient markets. For instance, the column technology has been demonstrated at industrial scale for the separation of potato protein from the fruit juice used by AVEBE, the world’s leading potato starch producer. The project is the world’s largest industrial protein chromatography installation. It can process more than 26,000 gallons of raw material per day and trap more than 100,000 tons of protein per year. The technology has also been used successfully at a large

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INNOVATION

dairy cooperative in Australia for the processing of cheese whey and the separation of proteins for food and healthcare. Now the company is in talks with corn processors and ethanol producers to explore the possibility of breaking into these industries. One person who attended the symposium, a science and technical manager for a West Coast ethanol producer said her company was

keen to explore this chromatography solution. “Margins are very tight at the moment so we’re looking for something that will get straight to the bottom line,” she said.

Old Favorites The two remaining members of DA who made the trip across the pond are veterans of the ethanol industry. Grundfos, a leading pump manufactur-

er and developer, is already a familiar name in many ethanol plants. The name is synonymous with high-efficiency pumps and according to Henrik Skov Laursen, a regional segment manager for the company, “the more efficient the pumps are the more efficient the overall process is.” Although Grundfos pumps are typically used to move water and ethanol around a plant, in 2008, the company will be bringing a solids-handling pump to the U.S. market. “We’ve always been on the water side but now we’re growing the business and [research and development] on the process side,” Laursen says. In fact, all the pumps at BioGasol’s demonstration plant will be of the Grundfos variety. In addition, the company has introduced a new metering pump, which they showcased at last year’s International Fuel Ethanol Workshop and Trade Show. This pump can be used for enzyme dosing and is an area that Grundfos is focusing on. Finally, Union Engineering, a company with more than 70 years experience in the design and construction of carbon dioxide recovery plants, is gearing up to service new ethanol plants, especially those being built on the coasts. For instance, the company built the carbon dioxide recovery facility at the Northeast Biofuels plant in New York. Coastal plants like this one are relatively close to the major consumers of carbon dioxide, including the food and beverage industries and companies that produce dry ice, therefore transportation costs are lower. EP Jessica Ebert is an Ethanol Producer Magazine staff writer. Reach her at jebert@bbibiofuels.com or (701) 7468385.

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PHOTO: NESIKA ENERGY LLC

Nesika Energy LLC in Scandia, Kan., is the first 10 MMgy ethanol plant designed by ICM Inc. The plant is set to come on line in January 2008. 106

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The fuel ethanol industryâ&#x20AC;&#x2122;s building frenzy has settled and the slowing pace of growth should give industry leaders a chance to decide where to go in 2008. Will companies continue to construct 100 MMgy plants in the heart of the Corn Belt or will smaller facilities make a comeback? By Michael Shirek

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n April 2003, EPM published a feature article titled “Advent of the Giant Dry Mills” and posed the question: Are 100 MMgy ethanol plants becoming the industry’s new standard? Fifty-six months later, the answer isn’t a resounding yes, but rather a brisk nod. While the giant dry mill isn’t the only game in town, it’s the biggest game in town. As the ethanol boom of 2006 expended its energy in 2007, the question is no longer whether the high-capacity plant is the industry standard, but rather what will replace the behemoth as the plant du jour? Since the ink dried on “Advent of the Giant Dry Mills,” the number of dry-mill ethanol plants with 100 MMgy or more of capacity has risen from three to 12 with two more plants sporting capacities of more than 90 MMgy and 27 more 100 MMgy-plus plants in various stages of construction. But with low ethanol prices and high corn prices squeezing the bottom line and taking away investor interest in the industry, the giant ethanol biorefinery may be on its way out, for now. In October, VeraSun Energy Corp. suspended construction of its 110 MMgy plant at Reynolds, Ind., citing market conditions. Although VeraSun says it will pick up where construction left off when market conditions improve, the suspension proved that one of the top three ethanol producers in the United States wasn’t willing to defy

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PHOTO: VERASUN ENERGY CORP.

I

VeraSun Charles City in Charles City, Iowa, is one of the dozen 100 MMgy-plus dry mill ethanol plants in the United States. Although more than 20 100 MMgy plants are now under construction, the window for these large plants may be closing.

market conditions when it had the option to hold back. If market conditions have stalled the advent of the giant

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OUTLOOK

dry mills, what’s in store for the industry as it builds out to its full capacity?

Finding the Next Big Thing

The move away from relying on fuel ethanol as the primary source of revenue could become a bigger factor in the industry if smaller plants can find innovative ways to prop up their bottom lines with diversified product lines tailored to their particular geographic region.

“With logistics and the competitive nature of these ethanol plants, corn-based plants will probably stay in the 40 [million] to 50 millon gallon range,” says Jeff Kistner, BBI International vice president of project finance. “The [100 MMgy] plants are there, but I don’t see the economic benefits in them right now. We might in the future, but probably not too many more will be built that way, I don’t think. Right now in a lot of geographic locations, these 40 million and 50 million gallon plants are the best returning per gallon.” The 40 MMgy to 50 MMgy plant does have inherent advantages over those twice its size in certain market conditions, Kistner says. Right now, the midsize plants are doing better on the margin because they’re not exhausting their local corn supplies and having to bring the expensive commodity to the plant site from a distance.

And the mid-size plants could also be the next industry standard because they have a built-in flexibility that the 100 MMgy plants don’t: they can be expanded if conditions warrant. “You can double, you can expand and you can improve by doing minor things for just a few million dollars compared with building a 100 million gallon plant and trying to raise $120 million in equity. You only have to raise $40 million to $50 million on the smaller plants.” Once a plant is built up in capacity, the only way to reduce it is to run below nameplate and produce fuel ethanol at less than peak efficiency.

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OUTLOOK

feed, being in the proximity of a feed yard,” Hill says. The plants relatively diminutive size isn’t a concern for the company’s profit margin because the operation is designed to capitalize on its particular situation. “You can always expand,” Hill says, “but as far as being the right fit for the feed yard, this came out to be a very good player in the game.” Nesika Energy gains its market advantage by processing corn that would be used as feed and selling off two valueadded products. Selling the wet distillers grains to the adjacent feedlot also saves the company the energy costs associated with drying the distillers grains. The move away from relying on fuel ethanol as the primary source of revenue could become a bigger factor in the industry if smaller plants can find innovative ways to prop up their bottom lines with diversified product lines tailored to their particular geographic region.

‘We have to be able to differentiate ourselves going forward. Just building an ethanol plant in South Dakota, Minnesota, Iowa, Nebraska, just won’t cut it anymore. You have to be different to attract some attention if you’re going into an overbuilt area.’

Though the mid-size plant could experience a revival, there is another denizen within the U.S. fuel ethanol industry that seems to have all but vanished. The small ethanol plant—those with nameplate capacities between 5 MMgy and 25 MMgy—could have new life when the industry’s growth returns from the stratospheric heights of 2006 and 2007. According to EPM’s ethanol plant construction list, there are only two such plants under construction in the United States: Renova Energy of Idaho LLC (20 MMgy) in Heyburn, Idaho, and Nesika Energy (10 MMgy) in Scandia, Kan. Andy Hill is plant manager at Nesika Energy, which is set to begin production in January 2008. He says his plant can compete with the industry titans because the modest price of ethanol doesn’t affect the revenue produced by the entirety of its final product. Nesika Energy was built next to a feedlot specifically to take advantage of two markets: ethanol and distillers grains. “[Nesika Energy’s] main goal was the wet

Thinking Outside the Rails Another feature unique to Nesika Energy when grouped with its larger contemporaries is the absence of unit trains for ethanol transportation. With a nameplate capacity of just 10 MMgy, Nesika Energy can effectively get its prod-

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uct to market using trucks. The mode of transporting the fuel ethanol isn’t exactly innovative, but the logic behind it is. Nesika Energy is the first 10 MMgy plant designed by ICM Inc., a process technology giant. “I think you’re going to see that in strategic locations, where [the plant is] tied to a feedlot,” Kistner says. “ICM is working on a smaller plant to roll out on the international level, and it works perfectly for what [Nesika Energy] is looking for.” “It’s more of a design for the export markets because of the footprint that it leaves,” Hill says. “It can be serviced by trucks [instead of] trains. If you get into Africa or Europe, they don’t have the infrastructure there for unit trains but they do have the capacity for trucking.” It isn’t clear yet whether ICM’s smaller process design will find a home in the U.S. market, but Hill says it’s a way for groups without cavernous pockets to get into the industry. “I think the smaller ones might be the way to go due to their small footprint and the [lack of] unit trains,” he says. “You don’t have to have that many people to operate it [and] everything is very scaled down.” Kistner says that smaller plants could find their place in communities Kistner looking to promote sustainability by keeping energy resources and dollars within their borders, but in the commercial game they might not fare as well. The smaller plants will earn their place at the table when cellulosic ethanol finds its legs commercially, he says. When it comes to corn ethanol, the ideal plant size will

ETHANOL PRODUCER MAGAZINE JANUARY 2008

PHOTO: LIFELINE FOODS LLC

OUTLOOK

Lifeline Foods LLC, a 40 MMgy plant in St. Joseph, Mo.

be determined solely by the market unless the government steps in to steer the industry. “We have to be able to differentiate ourselves going forward,” Kistner says. “Just building an ethanol plant in South Dakota, Minnesota, Iowa, Nebraska, won’t cut it anymore. You have to be different to attract some attention if you’re going into an overbuilt area.” What could happen, Kistner says, is that small- to mid-sized ethanol plants could be collocated with other ventures such as feedlots with anaerobic digestion in a closed system or

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‘I think [the industry] is going to be back to normal growth. What I mean by normal [is that] we’re going to consistently have our 13 to 15 plants under construction. It’s not going to be 50 or 60 plants under construction like we’ve seen in the past 18 months.’

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through other innovative projects. Whichever direction the industry takes in 2008 and beyond, it’s clear that the 100 MMgy plant probably won’t be the unanimous choice for the industry standard. And the heart of the Corn Belt will likely see its growth begin to wane if the corn market gets even tighter. Kistner says an industry slowdown, however, won’t be fatal because the recent growth was quite steep. “I think [the industry] is going to be back to normal growth,” he says. “What I mean by normal [is that] we’re going to consistently have our 13 to 15 plants under construction. It’s not going to be 50 or 60 plants under construction like we’ve seen in the past 18 months. The capital’s not there and a lot of the good locations are already built out. Now we’re forcing projects in less ideal locations where you’re going to have to build infrastructure for rail, natural gas and water, and that’s just adding costs to these projects.” As Nesika Energy comes on line in January, the smallest corn ethanol plant under construction joins its bigger brothers in the competitive market. Whether the small plant can gain a solid foothold in the U.S. market remains to be seen, but if the era of the giant dry mill is a possibility, a scaled-down version of the dry mill could take its place as the next big thing. EP Michael Shirek is the Ethanol Producer Magazine online editor. Reach him at mshirek@bbibiofuels. com or (701) 746-8385.

To learn more about biofuels investment opportunities in Saskatchewan, visit www.saskatchewan.ca

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CONSTRUCTION

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BUILDING THE

BIOFUELS INDUSTRY

Wanzek Construction Inc. started in 1971 as a small firm headquartered in Leo and Janet Wanzekâ&#x20AC;&#x2122;s home in Fargo, N.D. Today, the company has more than a thousand projects under its belt, employs 800 people and owns a fleet of 30 cranes. Article and Photographs By Craig A. Johnson

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n a brisk North Dakota morning in early November, the crew at the Tharaldson Ethanol LLC construction site started the day planning for one of the more risky operations: lifting and setting two 14,000-pound hammermills. Planning for the move took more than an hour as each team learned its part in the process. The 70,000-pound crane gently lifted the first hammermill and placed it on the slab without incident, exactly what every contractor wants. In this case, the general contractor is Fargo-based Wanzek Construction Inc. Jim Heyer, vice president of engineering and construction for Tharaldson Ethanol, says Wanzek Construction was the first contractor the company considered when they began to seek a general contractor to build a 110 MMgy plant near Casselton, N.D. “Wanzek is a professional company dedicated to safety. That’s what we wanted,” Heyer says referring to Wanzek’s decision to keep a team member onsite at all times, which shows the company’s desire to create a safe and dynamic environment. Among general contractors, Wanzek has a sterling reputation not only because it employs a professional staff, but also because of its commitment to safety and precision on the job site. Getting the job done doesn’t mean getting the job done fast if someone might be injured. This is part of what Jason Kaufman, direc-

O

A Wanzek Construction crane prepares to lift one of two 14,000-pound hammermills.

tor of project development for Wanzek Construction, refers to as Wanzek’s “safety culture.” There is value in having an experienced staff, Kaufman says. “We put the time into people,” he says. “We’ve put a lot of effort into creating a cor-


CONSTRUCTION

To move the hammermill, an hour of preparation is necessary before a single line is set.

Crews work with precision to ensure a smooth transition of the hammermill from truck to pad.

porate culture that takes care of those people.” Wanzek was also careful to create a service that other construction companies could utilize. “They’ve always been forward thinking,” says Kevin Bucholz vice president of

Moore Engineering Inc. in West Fargo, N.D., which has partnered with Wanzek to build dams, sewer and water, and heavy earthwork projects. “In this region you have a lot of smaller general contractors … [Wanzek’s crane service] is a


CONSTRUCTION

specialized service, but it was their vision to find markets where they could utilize their capabilities,” Bucholz says. In 1971, Leo Wanzek and his wife, Janet, founded Wanzek Construction and based the company out of their Fargo home. Their first contract came from the U.S. Army Corps of Engineers, who hired them to complete a visitor’s center on Lake Ashtabula, near Valley City, N.D. Since then, Wanzek has established a reputation as a family-owned company that provides world-class services to the biofuels and wind energy industries, and the heavy/civil construction sector. Early projects the company undertook were civil engineering jobs involving mainly road work, excavations and bridges. Thirty years later, with more than a thousand projects behind them, Wanzek has developed into one of the leading providers of construction support in the industry with more than 800 employees and a fleet of 30 cranes. The company has been involved with 15 biofuels projects, including nine Poet LLC plants, three VeraSun Energy Corp. plants and Archer Daniels Midland Co.’s Marshall, Minn., facility. Wanzek’s diversity in the heavy-industrial markets allows it to meet a client’s expectations and field a team to get the job done. One of the company’s strengths is its large crane capacity. Even if Wanzek doesn’t win a contract, oftentimes

Wanzek Construction’s fleet of cranes is among the most versatile for heavy civil projects and ethanol plant construction.

the company is called in as a subcontractor because of its crane fleet. Wanzek’s involvement with the ethanol industry dates back to some early projects and its business relationships

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continue to the present. Ethanol and biodiesel have been an important aspect of those business relationships, as well as Wanzek’s ability to meet the needs of its clients. “As our company has grown over the years, our core competencies in heavy industrial work have expanded,” says Jon Wanzek, Leo Wanzek’s son and president of Wanzek Construction.

The Ethanol Industry In the past year, the ethanol industry has experienced a slowdown in construction, brought on by the high cost of feedstocks and building materials, according to Kaufman. Despite the slower pace, he’s confident about the company’s future in the biofuels industry. “There’s no question there’s been a slowdown, but we’re optimistic that in six to 12 months, you’ll see a turnaround,” he says. According to Art Wiselogel, a project development manager for BBI International, ethanol plant construction starts coming out of 2006 were benefited by low-cost corn and good returns for ethanol. In 2007, the landscape changed. Following demand, the price of corn went up. Construction materials, which were already high, went higher. Then the price of ethanol dropped, leaving construction starts in a precarious position. “Last spring (2007) is when we started seeing the closing of equity drives,” Wiselogel says.

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dearth of handling facilities. As production increased, the infrastructure necessary to assist the ethanol industry didnâ&#x20AC;&#x2122;t keep up. â&#x20AC;&#x153;A lot of folks could see this coming; the market was obviously overheated,â&#x20AC;? he says. Wiselogel echoes his sentiment, pointing to the current infrastructure. â&#x20AC;&#x153;The infrastructure for getting ethanol into the gasoline market needs to be upgraded and improved â&#x20AC;Ś specifically, refineries and ethanol storage in these refineries needs to be increased. Those are the primary limiting factors.â&#x20AC;? Wiselogel predicts there to be a twoKaufman year lag for the entire storage and infrastructure complex to come on line. Thinning margins and more competition for fewer contracts in the ethanol industry may signal belt-tightening for some contractors, who are also dealing with high fuel, equipment and labor costs. Addressing the rise in the cost of labor, Kaufman points to the role of experience as a determiner of future success. â&#x20AC;&#x153;Finding qualified personnel is the most important step. [Wanzek] has to get the right equipment into

the right hands at the right time.â&#x20AC;? Despite the increased competition for construction projects, Jon Wanzek sees a future in the ethanol industry and a place for Wanzek Construction in it. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;re optimistic that there will opportunities for smart, strategic growth,â&#x20AC;? he says. â&#x20AC;&#x153;Thereâ&#x20AC;&#x2122;s going to be a continued demand for ethanol and biodiesel.â&#x20AC;? Weâ&#x20AC;&#x2122;ll continue to manage our growth in a changing industry.â&#x20AC;? EP Craig A Johnson is the Ethanol Producer Magazine plant list & construction editor. Reach him at cjohnson@bbibiofuels.com or (701) 746-8385.

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Q&A

U.S. Sen. Byron Dorgan, D-N.D. visits Red Trail Energy LLC in Richardton, N.D. PHOTOS: OFFICE OF SEN. BYRON DORGAN

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Connecting Capitol Hill to the Midwest U.S. Sen. Byron Dorgan, D-N.D., is part of a growing group in Congress that is interested in and excited about the potential benefits of renewable fuels in the United States. Here, he shares some of his ideas and plans with EPM. By Jessica Sobolik

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Q&A

Q

:Renewable fuels, including ethanol and biodiesel, have become popular in Congress in the past couple years. Can you explain why support for the industry is building steam on the Hill? A: Renewable fuels hold tremendous potential to reduce America’s dangerous dependence on imported oil, grow local economies, reduce harmful greenhouse gas emissions and provide new markets for farmers. These are win-winwin solutions. I coauthored the original renewable fuels standard that was included in the Energy Policy Act of 2005. It called for the production of 7.5 billion gallons of renewable fuel annually by 2012. We are now on pace to exceed that goal as soon as next year. I have also introduced legislation to expand the renewable fuels standard to 36 billlion gallons by 2022. It is important to continue to find ways to reduce the imported oil we use in our daily lives. In America, we use 25 percent of the world’s oil. We import more than 60 percent of that oil—much of it from hostile parts of the world. Many in Congress feel that America will remain vulnerable if we continue to depend on Saudi Arabia, Nigeria, Iran, Venezuela and others to feed our energy appetite. Renewable fuels are an important way to help satisfy our energy demand. Q: What challenges do you think the industry will face in the future? A: The largest challenge facing renewable fuels in the imme-

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diate future is ensuring that we have the proper infrastructure. For example, we have more than 16,000 flexible-fuel vehicles on the road in North Dakota but only 23 E85 pumps. We have been successful in our efforts to boost production of renewable fuels, but at the same time, we need to make sure drivers have access to Dorgan vehicles that can burn greater blends of ethanol and have access to E85 and blender pumps. We are producing more renewable fuels, but we need to find ways to market and deliver renewable fuels to the consumer. I introduced bipartisan legislation earlier this year wtih Sen. Richard Lugar, R-Ind., called the Renewable Fuels Strategy Act. It requires automakers to manufacture more flexible-fuel vehicles and creates greater incentives and requirements for service stations to install renewable fuels pumps. Q: Earlier this year, you introduced the Security and Fuel Efficiency (SAFE) Energy Act of 2007 (S.875). What is the purpose of this bill? A: The SAFE Energy Act is a comprehensive approach to reducing America’s dependence on foreign oil. I recognize there is no “silver bullet” to solving our energy crisis. We can’t dig and drill our way out of our current energy crisis— that’s a strategy I call “yesterday forever.” Conservation alone is not the only answer, either. The SAFE Act is a bal-

ETHANOL PRODUCER MAGAZINE JANUARY 2008


Q&A

Q: The Senate recently passed the Clean Energy Act. How did that come about? Any debates or concerns? A: The Senate passed the Clean Energy Act in June to address rising energy prices and our growing addiction to imported oil. This bill represents the work of four Senate committees. Each passed strong bipartisan bills that were packaged into the Clean Energy Act. The Clean Energy Act includes many provisions that were controversial but long overdue, including increases in vehicle efficiency standards that havenâ&#x20AC;&#x2122;t changed in more than 20 years. I was pleased that three of the four key pieces of my SAFE Energy Act were included in the bill that passed the Senate, including increases in vehicle efficiency standards, expanded production of renewable fuels and enhanced energy diplomacy. The House passed its own Energy Bill in August. Now the Senate and House are working to reconcile the two bills in order to send one final bill to the president for his signature.

PHOTO: OFFICE OF SEN. BYRON DORGAN

anced energy policy that reduces the amount of oil we use in our economy. The SAFE Act includes four parts: 1) gradual increases in vehicle efficiency standards, 2) expansion of the production and use of renewable fuels, 3) access to oil and gas reserves in the eastern Gulf of Mexico, and 4) enhancement of international diplomatic alliances for energy security. I worked with the Energy Security Leadership Council, a group of senior business executives and retired military commanders, to develop this balanced energy strategy. It will help to ensure that the generations that follow arenâ&#x20AC;&#x2122;t left vulnerable by a reliance on foreign oil.

Dorgan speaks to reporters before a summit he organized in Fargo, N.D., to discuss what must be done to fix renewable fuel distribution bottlenecks and other hurdles that limit the use of renewables.

Q: As one of the original authors of the Energy Policy Act of 2005, would you say it has worked as intended thus far? Do you feel there is room to expand that legislation? A: The Energy Policy Act of 2005 was a boost to the renewable fuels industry, and the Clean Energy Act expands on that. The renewable fuels standard I mentioned earlier


PHOTO: OFFICE OF SEN. BYRON DORGAN

Q&A

Dorgan fills his van with E85 at a Cenex station’s newly opened E85 gas pump in Bismarck, N.D.

will be expanded nearly sevenfold to 36 billion gallons by 2022 and calls for greater production of advanced biofuels from biomass and other feedstocks. Where we have room to grow is in providing more robust, long-term incentives for renewables. The Senate Finance Committee developed a package of tax incentives that extends for two years (through Dec. 31, 2012) an important tax credit that encourages production of renewable fuels. It also creates a new production tax credit that will hlep encourage investment in cellulosic ethanol. Unfortunately, even these short-term extensions didn’t receive enough votes to pass as a part of the Clean Energy Act. However, the Energy Bill passed by the House of Representatives includes tax incentives and we hope to include renewable fuels incentives in the final bill that’s sent to the president. Q: You have an energy plan for North Dakota. Do you think this is something that other states could

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implement as well, tailored to their own resources? A: I believe a coherent energy plan is important for any state to have, and that’s why my goal has been to create an Energy Corridor in North Dakota. The state has a vast and diverse portfolio of energy resources, and the development of those resources will help our state’s economy and our nation by leading us toward energy independence. North Dakota is the Saudi Arabia of wind. We have tremendous coal and oil reserves. We produce corn, sugar beets, biomass and other feedstocks that can be converted into ethanol. No state has greater potential than North Dakota to provide significant amounts of energy to meet our country’s growing demand. Q: Often the oil and renewable fuels industries are pitted against each other. Do you feel the two could work together to benefit everyone? A: We will always use our fossil fuels.

ETHANOL PRODUCER MAGAZINE JANUARY 2008


Q&A

This country has rich biomass resources like wood chips, crop residues and waste, switchgrass, and many others that can be utilized without significantly impacting traditional farmland. renewable fuels feedstocks such as algae could create even greater collaboration between fossil and renewables. As more energy companies look for ways to capture carbon dioxide for beneficial use, they could theoretically inject that carbon dioxide in algae pond farms that could be harvested as a feedstock for renewable fuel. Finding new and innovative ways to meet energy demand was one of the themes of the Great Plains Energy Expo that I co-hosted in late October in Bismarck, N.D. I organized this event with Bismarck State College and Kadrmas, Lee & Jackson to bring all the major players together—both from the fossil fuels and renewable industries—to discuss our

PHOTO: OFFICE OF SEN. BYRON DORGAN

That is a fact. The question is how we use them. We also need to work together to develop our renewable fuels industry. Yes, we need to dig some. Yes, we need to drill. Fossil fuels will always be a part of our energy portfolio. We also need to understand that renewable energy is no longer some sort of sideshow. Renewable energy is a significant part of our energy portfolio, and must work in concert with fossil fuels in a way that benefits our energy supply, helps reduce our dependence on foreign oil and addresses climate change. More oil companies are blending renewable fuels like ethanol or biodiesel into their fuel mix. New research is showing that alternative

Dorgan speaks at Archer Daniels Midland Co.’s ribbon-cutting ceremony held for the company’s biodiesel plant in Velva, N.D.

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Q&A

energy future and how to harness it to benefit our state and our nation. Our country’s demand for energy is growing very rapidly, and I believe there is enough room for both industries to succeed.

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Jessica Sobolik is the Ethanol Producer Magazine managing editor. Reach her at jsobolik@bbibiofuels.com or (701) 373-0636.

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Q: What other renewable fuels do you see becoming major energy players in the future? A: Fuel that comes from biomass or cellulose holds tremendous potential for this country. The renewable fuels standard included in the Senate version of the Clean Energy Act contained a provision that mandates the production and use of 21 billion gallons of nonstarch, or biomass-derived fuel, between 2015 and 2022. This country has rich biomass resources like wood chips, crop residues and waste, switchgrass, and many others that can be utilized without significantly impacting traditional farmland. Ultimately, we must continue to develop all forms of renewable energy. I have funded a project in North Dakota that uses wind power to separate hydrogen from water through electrolysis. Vehicles that run on hydrogen, for example, get twice the power and efficiency to the wheel, and emit water vapor out the tailpipe. These renewable fuels provide income for our farmers. They help protect the environment and reduce the need to import oil from nations that want to harm us. It is critical that we develop our renewable fuels, and I’m going to keep working to make sure we do so. EP

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ETHANOL PRODUCER MAGAZINE JANUARY 2008


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EQUIPMENT

PHOTO: CERES AGRICULTURE CONSULTANTS

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EQUIPMENT

BRINGING IN THE BIOMASS

Nebraska twins invent the Residue Recovery System, a custommade biomass collection system for combines that harvests and stores whole corncobs separately from the grain in a single pass through the field. By Ron Kotrba

ETHANOL PRODUCER MAGAZINE JANUARY 2008

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EQUIPMENT

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T

y and Jay Stukenholtz are inventors. They’re also identical-twin brothers. The differences in appearance between the two may be hard to see, but once they speak it’s easier to distinguish one from the other. Ty is soft-spoken and responds quickly while Jay speaks in a deeper tone, his responses taking a little longer as if he’s battling the profundity of his own thoughts. Raised on their family’s 350-acre farm outside of Nebraska City, Neb.—land they still work today—the 34-year-olds each earned an agricultural engineering degree from the University of Nebraska. Ty and Jay graduated in 1997. With their educational training and farming experience, the Stukenholtz brothers know all about harvesting corn. Now they know even more about corncob harvesting. Soon after graduating from the university, the twins’ inventiveness materialized. Their ingenuity eventually turned into a rather lucrative custom-harvest business, raking in corn and whole corncobs in the same time it would take others to harvest just the grain. Their invention is a custombuilt add-on that can be used with virtually any combine on the market. Its purpose is to effectively separate the corncobs from the stalks and leaves during the harvest, keeping the cobs separate in the combine’s onboard storage. It’s called the Residue Recovery System, a patented and trademarked ensemble of equipment they originally built to collect and sell corncobs to a furfural plant outside of Omaha, Neb. Furfural is a liquid aldehyde made from corncobs and similar agriculture residues, and is used as an industrial solvent. Ty relates the progression of events that took place after he and his brother graduated from college. “The first two years we were back from college our dad harvested on the family farm,” he says. “Then it got rented out, so we didn’t have anyplace to harvest.” It wasn’t going to be easy for them to refine their

© 2006 Genencor International, Inc. Genencor®, Genencor International®, FERMGEN™, and STARGEN™ are trademarks or registered trademarks of Genencor International, Inc. or its affiliates in the United States and/or other countries.

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EQUIPMENT

design with no land to work. That prompted the two to search for custom-harvest acres so they could keep their project going. Finding that special farmer willing to allow experimental equipment runs on their land was challenging. “We were fortunate enough to find one with a couple thousand acres of corn that we could run over,” Ty says. “It helped get the bugs out of our design.” The Stukenholtz brothers harvested corn within two miles of the cob processing plant in Omaha using their cob collection system. “We ended up getting between $40 and $50 an acre just for the cobs, so compare that to a $20 or $25an-acre custom rate and it’s pretty lucrative,” he says. With the family farmland rented to another farmer, the brothers custom harvested from 1999 to 2004. Using their single-pass harvesting invention, the Stukenholtz brothers were able to undercut other custom harvest bids by amassing the dense cobs and selling them to buyers such as the furfural plant or ruminant feed markets. The farmers weren’t going to miss the cobs; they just wanted the grain. According to the Stukenholtz brothers, cobs are the least valuable component in the corn-crop residue. The farmers that they are working with plant corn-on-corn, meaning crops are not rotated seasonally. Cob piles at the edge of the fields aren’t always completely cleaned up by harvest’s end, and when the next year’s corn crop starts coming in, farmers have difficulties in areas where cobs were left over winter. “It ties up the nitrogen,” Jay says. “As much as the cost of the fertilizer is, especially if it keeps going up, and if it takes extra fertilizer to break down the lignin in the corncob to make it into a usable nutrient, that offsets the value in a corn-oncorn rotation,” he says. “The cobs are out there every year—it might be beneficial to remove them.”

The Invention Another farmer, who was working with the Omaha furfural plant, designed a

wagon to be pulled behind a combine that cleaned the corncobs out of the stover. “They had a hard time making it work,” Ty says. “Eventually they got some of the bugs out, but from our experience, pulling a wagon in our part of the country—anywhere really—there just had to be a better way.” There was one year when all the brothers did was separate cobs via pullbehind wagons, but that didn’t match the efficiency of typical corn-harvesting combines. “That’s when we undertook our project,” Ty says. “The intent was to build a machine that could run in the hills of southeast Nebraska.” Because rotary combines make up a vast majority of combines marketed in the United States today, most of the Stukenholtz’s biomass collection systems have been tailored for rotary combines. The Residue Recovery System consists of what’s trademarked the CleanBoot and the TopTank. “The CleanBoot typically contains a sieve and two blowers,” Ty says. One fan is used for cleaning the lighter, fluffier leaves and stalks from the denser cobs; the other blower is used to transport material to the TopTank. “The blower fan is downstream from a Venturi,” he says. A Venturi effect, named for Italian physicist Giovanni Battista Venturi, is created when airflow passes through a constricted area and pressure on the inlet side is increased while pressure on the downwind side of the Venturi decreases, creating a vacuumlike environment. “It’s unlike anything else I’ve ever seen,” Ty continues. “It can take a tremendous amount of material and blow it into the tank, and it doesn’t take a lot of power. It’s taken quite a few years to get it ironed out to where we are now.” Just as their voices are unique, so are the roles each twin plays in the ongoing development of the Residue Recovery System. For example, Jay handles the blowers and CleanBoot on the back-end of the combine, while Ty focuses on the TopTank and grain extension on top of the harvester. The TopTank holds 3,000 pounds of cobs, so it’s sized at about 80

ETHANOL PRODUCER MAGAZINE JANUARY 2008

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PHOTO: CERES AGRICULTURE CONSULTANTS

EQUIPMENT

Jay, left, and Ty Stukenholtz invented the Residue Recovery system to harvest corn and corncobs.

percent of a combine’s onboard grain storage tank. Thus, harvesters with a 300-bushel grain tank would be outfitted with a 300-cubic-feet cob tank, which only takes about half-a-minute to unload once it’s full. Patent-pending Autofold technology also allows the operator to collapse the storage bin from inside the cab. With all of the work the Stukenholtz brothers have done with corncob harvesting, Ty still admits, “Cobs are not an exact science.” After 10 years of refining and tweaking their invention and supplying a dozen or more custom-engineered collection systems to a

smattering of farmers and agribusinesses in the Midwest, the Stukenholtz brothers and their new business partner Beth Pihlblad prepare to take this implement to the next level. Pihlblad was introduced to the Stukenholtz’s through a cousin who had been working with them early in the development of their invention. Pihlblad herself was immersed in renewables, working with a recycling company that was using woody biomass to cofire with coal. “I became more curious about their invention, so I contacted them last fall and that’s when they told me their story,” she says. “I was introducing them to the larger potential of what they created.” Pihlblad says the Stukenholtzes knew of the emerging biomass utilization industries such as biomass-to-power, cellulosic ethanol and the “green” chemistry movement, but didn’t realize how big an effort was being amassed in that direction. Shortly after Jan. 1, Ty, Jay and Pihlblad formed a company, Ceres Agriculture Consultants, to promote their machinery and harvesting services, and to build relationships in the industry. The brothers started another company in 2001, Cobco Manufacturing Inc., which they formed to help market prototypes of their equipment, harvested cobs and other forms of biomass to end users. “We’ve supplied two coal plants with cobs—one was at the University of Missouri in Columbia—and we’ve worked with a public utility company supplying them with cobs,” Ty says. Now, Ceres Agriculture Consultants will take a lead role in promoting renewable energy proj-


EQUIPMENT

ects development for its business partners. Cobco will likely be transformed into what Pihlblad calls a “fuel processing and trucking/distribution company.” Ty explains the rationale behind this move. “A lot of the markets we have for cobs, which have sustained our project, are 250 miles away,” he says. “We already have the trucks we need to get started … We would have to expand a lot, but we have a start anyway.” Amidst all of these activities—developing renewable energy projects, agricultural consulting, custom-harvesting, and fuel processing and distribution—one wonders what will become of the Stukenholtz’s cob collection system? “We still need to refine the engineering and partner with a manufacturer,” Pihlblad says. An aftermarket equipment maker will likely be the first partner in the manufacturing of this machinery, Jay says. “Once it appears the market is big enough, the [original equipment manufacturers] will be more likely to pick it up.” Deciding exactly how large the market is for their invention remains a challenge. “We’re having a hard time trying to figure it out,” Ty says. “We are going to need somewhere between a couple of these and 500. That’s the biggest challenge here—moving from the prototype stage with custom-built machines for specific applications to a product that has manufacturability.” Until a manufacturing agreement is set, the brothers will continue to test and refine their creation for different applications. This fall they will harvest 60 acres

ETHANOL PRODUCER MAGAZINE JANUARY 2008

of soybeans and test their invention collecting the soybean pods. The residue sizes make the biggest difference when configuring each custom-built apparatus. “Change the air, change the sieve size, and if you have to, change the whole sieve,” Jay says. “That’s what we have to do for different residues.” The twins are especially interested in trying their device on wheat straw, Ty says. “There’s a large push— especially in the cellulosic ethanol industry—to use wheat straw, largely because wheat is grown in drier climates,” he says. “But with wheat straw there are density issues that will require a larger TopTank on the combine.” Pihlblad says she will concentrate on building momentum in the emerging biomass industries for the cob collection system they’ve developed. “We’ll be focusing on education within the industry,” she says. “Farmers are going to have to see the value—the intrinsic value imbedded, and how much money they can make on this. Our focus until next spring will be education and awareness, and generating momentum—we need momentum. We need farmers to be asking, ‘Where can I use this? Where can I buy it? What are its applications?’” Moreover, Pihlblad says what’s really needed are outlets for all of the available biomass materials. EP Ron Kotrba is an Ethanol Producer Magazine senior staff writer. Reach him at rkotrba@bbibiofuels.com or (701) 746-8385.

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MAINTENANCE

The Fundamentals of Track Maintenance By Hal Harrison and Steve Kadrlik

M

ore than 100 new ethanol and biodiesel facilities are expected to start production in the United States this decade. As the competitiveness within each industry grows, project owners spend considerable time and expense selecting the right property, preparing the site and constructing the facility. Yet, once the facility is in production, many owners will overlook protecting their multi-million dollar investment in railroad track infrastructure. If properly maintained, railroad track will endure into the next century and generate a handsome return on investment. If neglected, the track will deteriorate, exposing owners to thousands of dollars in lost productivity and revenues, safety incidents and excessive track rehabilitation costs. Even for facilities less than two years old, it’s not too early to initiate a track maintenance program to safeguard the investment and ensure plant operations are not interrupted due to track failure. Harrison, left, and Kadrlik Track maintenance doesn’t require a significant time or financial investment. Much like there’s no need to call in a professional to fuel and wash your car, or put air in the tires, the same applies for an ethanol facility’s railroad track. Basic track housekeeping can be performed by a facility management team as part of a routine maintenance regimen. Initial track maintenance is simple, but occasionally overlooked. The main objective is to keep the track free from any type of obstruction. Clean up corn, distillers grains and other

Average recommended track maintenance program* Track age Up to five years

• • •

Six to 10 years

• •

11 to 15 years

• • • • •

15 years or more • • •

• •

Program Semi-annual inspections and minor maintenance Adjust switches and tighten bolts Resurface approaches if necessary Semi-annual inspections and maintenance Adjust switches and tighten bolts Resurface track Semi-annual inspections and maintenance Adjust switches and tighten bolts Resurface track Repair/replace track components (switches, frogs, turnouts, etc.) Semi-annual inspections and maintenance Adjust switches and tighten bolts Repair/replace track components (switches, frogs, turnouts, etc.). Bi-annual inspections and maintenance Replace ties Replace rail/resurface track (varies based on track design, and train tonnage and volume)

*Programs vary based on the track design, train tonnage and train volume. Consult a qualified track contractor for a recommended program for your track. SOURCE: RAILWORKS TRACK SYSTEMS

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

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MAINTENANCE

Routine track housekeeping Clean up any rail car spillage (corn, distillers grains or other materials) that falls into the track Control vegetation on and around the track Remove snow and ice from the track and switch points

PHOTO: RAILWORKS TRACK SYSTEMS

Start a semi-annual track maintenance program with a qualified track contractor

SOURCE: RAILWORKS TRACK SYSTEMS

materials that may have spilled from a railcar. Apply a herbicide or cut down vegetation that may have begun growing within and around the track. During the winter months, remove snow and ice from the track and switch points. A proactive and ongoing housekeeping program that pays attention to these areas will extend rail life and help make train movement more fluid throughout the facility. Plant managers who wait to take action until others report track problems are taking a costly risk. Plant personnel can’t count on railroads to alert them to track defects. The practice of railroads conducting routine industrial track inspections is a thing of the past. Railroad inspectors generally examine track only when they suspect a defect or safety

ETHANOL PRODUCER MAGAZINE JANUARY 2008

RailWorks Area Manager Randy Ruppert inspects track at a Nebraska ethanol facility.

concern. If inspectors find a serious defect, the railroad will not hesitate to “red flag” or discontinue service until repairs are completed. Industry train crews are credited with reporting many track failures. However, a plant manager is already behind when a train crew member reports a “dip or kink, or the

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PHOTO: RAILWORKS TRACK SYSTEMS

MAINTENANCE

A common problem area occurs where the ballasted track adjoins direct fixation track in structures such as weigh scales.

track is way out of cross level.” Taking a preventive approach will be less costly in the long run, eliminate safety risks and avoid a track outage. That begins by relying on a qualified track contractor to conduct semi-annual inspections, generally in the fall and spring, or before and after winter takes its toll on the track. A thorough inspection involves walking the entire track, evaluating the subgrade, rail, ties, ballast, switches and turnouts. The inspection team will also often perform routine maintenance, such as adjusting switches and tightening bolts. If a pressing deficiency is identified, the contractor will notify the facility manager so immediate action can be taken. A few days after the inspection, the contractor will present a detailed report featuring an overall track evaluation and an assessment

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of each turnout in the facility. Even though the track design and scope vary from facility to facility, new ethanol startups will be confronted with similar track infrastructure concerns a few years into production. One of the most common problem areas is ballasted “approach track” set on the subgrade. This track adjoins direct fixation track in structures, which is set on concrete and generally located near the track scale. Track is only as good as the surface it is built upon. If the subgrade is inadequate, the approach track may show signs of settling as early as one year into use. A qualified track contractor can repair this problem by using a tamper to raise the elevation of the track, and tamping and re-ballasting the subgrade. Another common problem area is water drainage, particularly at facilities that have expanded produc-

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tion capacity since opening. The addition of a new road or structure on the property can impact how water collects and drains. When water doesnâ&#x20AC;&#x2122;t drain properly, it can erode the track subgrade, creating dips or uneven elevation. Again, the remedy calls for correcting the drainage problem and resurfacingâ&#x20AC;&#x201D;or tampingâ&#x20AC;&#x201D;the track to achieve the proper elevation. Resurfacing costs vary based on the track profile, length and if any additional ballast is needed. Spot surfacing to correct low spots in approach tracks, isolated dips on the track and minor cross-level corrections may cost as much as $4,000 to $5,000. Resurfacing the entire track structure is more costly, with an average cost of $2 per foot and $1,200 per turnout. The popular expression â&#x20AC;&#x153;Pay me now or pay me laterâ&#x20AC;? rings true when it comes to longer-term track maintenance. Spreading out a track maintenance investment over 15 years will put one ahead compared to putting off the expense until a severe problem arises. Well-maintained track will extend the life of the track and track components and save maintenance dollars in the long run. Neglected track requires emergency repairs and more extensive rehabilitation. Without maintenance, track components such as ties, rail, ballast and switches will fail prematurely and require replacement years sooner than necessary. Wood ties with a life of 25 to 30 years will deteriorate years earlier. The same goes for rail, which if neglected will break down rather than last indefinitely.

Private industry can take a lesson from well-traveled railroads. Invest in properly maintaining a track network and it will keep a business free from safety incidents and profitable for generations to come. EP

contractor. Reach Harrison at hharrison @railworks.com. Reach Kadrlik at skadrlik @railworks.com. Both can be reached at (952) 469-4907.

Project Manager/Estimator Hal Harrison and Area Manager Steve Kadrlik work in the Lakeville, Minn., office of RailWorks Track Systems, a leading North American track

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RISK

A New Era in Design/Build Contracts by Todd Taylor and Kermit Nash

A

s the ethanol industry adjusts to increased competition, a tighter credit market and escalating input costs, the fine details of the design/build contract are becoming more important than ever. Arguably, the most critical part of an ethanol construction project is the design/build contract. Owners must be aware that even the seemingly insignificant terms of the contract can have significant practical, financial and legal consequences. As the Greek philosopher Plato once said, “The beginning is the most important part of the work.” Carefully negotiating the terms, including what may be considered purely business or technical terms (the “boilerplate”), is an investment that may save an owner significant time and resources during and after construction. The ethanol industry has transitioned from a once cautious use of design/build contracts to a saturation of contract forms from the American Institute of Architects, the Design/Build Institute of America, Associated General Contractors of America and other reputable sources. Each organization has forms that are excellent starting points, but according to their own sources, they should be used as guides and not blindly accepted. Also, the increasing number of developers in the biofuels construcNash tion industry has produced a new generation of “hybrid” construction documents which take elements from different design/build contracts. The forms are essentially a “cafeteria-style” approach to contract formation as they deviate, sometimes substantially, from standard industry documents. While this deviation is not an unpardonable

sin, making certain that all the parties are in agreement with all of the terms of the design/build contract can be like learning to ride a bike—without the training wheels—for the first time. Each ethanol project has unique requirements which must be considered at the design/build contract negotiation stage in order to address the owner’s goals. The industry is accustomed to a “design/build bid contract” or “design/build lump sum contract” with fairly standard terms. Yet, one can skim no further than the definitions section of hybrid contracts and discover awkward shifts of duties and responsibilities from the contractor Taylor to the owner. While this departs from most independent owner’s expectations, many owners are shocked to discover that their executed design/build contract reflects this “agreement.” The most common, yet avoidable, areas of dispute involve poorly defined, inconsistent or insufficiently defined terms in the contract. If the parties aren’t careful, terms of a design/build contract can be ambiguous, used incorrectly or assume that each party understands a definition. For example, if you ask 10 people to define “best efforts,” which is a common contract term, you will likely get 10 different answers— even from lawyers. Take into consideration instances when the terms are as technical as a performance guarantee where opinions vary between experts. In addition to a reputable legal counsel negotiating these points, an experienced owner’s representative can also spot issues for the owner. The owner’s representative can also provide accountability to ensure that the negotiated criteria and

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

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other technical aspects are drafted and Court decisions throughout the United executed properly. States demonstrate that changes not Other factors of consideration are a matter of common sense. contemplated at the time of contract, Contracts should avoid dense industry even if not documented properly, can be jargon. Implement the “bus stop” approach to contract drafting. If the properly awarded against an owner. average person at the bus stop can’t make sense of your agreement, then they won’t be able to understand it when they’re sitting in the jury box and in charge of resolv- Handling Disputes ing your contract dispute. Even with the most careful planning and drafting, probFor specific industry terms relating to design criteria, lems will occur once construction has commenced. An change orders, payments, timing, “substantial completion,” owner representing shareholders, investors and lenders, has retainage, warranties and dispute avoidance, solid advice a tendency to react quickly to keep a project on task. from a party who understands how these matters will be However, reacting too quickly can create ancillary problems resolved if there is a dispute will help build a better contract. that hinder resolving a business issue. The following offers a For example, change orders often cause difficulties if they couple of practical considerations in light of a design/build aren’t detailed and don’t discuss timing, cost increases and contract. responsibilities. Since change orders are often an exception First, carefully review the facts with the relevant conto the lump-sum requirement of a design/build contract, tract provisions and construction binder to confirm the facts owners must overlook the potential for additional costs, time and factors of the situation. Second, confirm who bears and completion obligations in the balance of the contract. responsibility for the problem pursuant to the contract. Court decisions throughout the United States demonstrate Third, convene with the owner’s representative and an attorthat changes not contemplated at the time of contract, even ney to review the situation in detail, identifying all of the if not properly documented, can be properly awarded issues and potential outcomes in order to prepare a against an owner. Just think what would happen when “sub- response. Be careful to consider all facts and possibilities, stantial completion” is not understood among parties, since including potentially harmful information, since it is easier it does not always mean the ability to produce fuel. to deal with negative facts early in the process. Fourth, consider the costs of the alternatives, including the time and

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RISK

and less formal than either arbitration or litigation. A well-drafted design/build contract will state that the goal of mediation is to get the parties to reach a mutually acceptable agreement to resolve a dispute. The mediator is usually an impartial industry expert, attorney or retired judge who has no formal power to force a settlement, but instead may help each party identify strengths and weaknesses with their case and offer creative methods to reach an agreement. Arbitration is typically binding and the award canâ&#x20AC;&#x2122;t be appealed in the courts. The arbitration process is less formal than litigation, but implements the use of many of the same evidentiary concepts and procedures. An advantage is that there is no jury and formal procedural calendar, which expedites the resolution process. In the event the design/build contract does not contain an arbitration clause, or the parties cannot resolve their issues amicably, litigation is a likely next step. The scope of this article neither allows the space or the need to articulate the costs of litigation nor the impact on a construction project. However, a well-negotiated contract, good legal counsel and proper documentation will be key factors in litigation preparation. When problems and disputes arise during the construction process, the parties may carve out issues that are not material to the completion of the project, allowing the construction process to continue. It is possible for parties to resolve matters pertaining to costs and expenses relative to

The arbitration process is less formal than litigation, but implements the use of many of the same evidentiary concepts and procedures.

frustration that are a part of disputes and, for larger issues, litigation. If a problem or dispute arises during the construction process, most modern design/build contracts follow a defined process that may include alternative dispute resolution, mediation and arbitration. Careful consideration of the contract requirements may prevent a problem from growing to an act of default that gives further remedy to either party. By following the proper notice provisions, including the timing requirements, you are adhering to the requirements of the design/build contract and creating a paper record of events required by insurance or used if litigation occurs. A problem doesnâ&#x20AC;&#x2122;t have to stop the construction process. However, any indication that the problem is not going to be resolved in a reasonable manner may have broader implications for the project. Failed negotiations usually lead to a form of alternative dispute resolution. Most modern design/build contracts contemplate non-binding mediation, followed by either binding arbitration or litigation. Mediation is non-binding

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the design/build contract without impacting other aspects of the project. However, if the issue is material to the design, construction, operation or safety of a project, there will likely be no carve-out available. Since problems always arise, the contractor should have contemplated some degree of potential problems into their estimate of construction completion and cost. For post-completion project issues, the design/build contract is still the source for resolving any issue. Once final completion is reached pursuant to the contract, post-completion issues shift from construction performance to warranties. The warranty provision is critical to resolving problems as the final payment subject to final completion has been met, bills have been paid and the contractor and subcontractors are working on their next project. Moreover, if the issue arises after the release of any retainage on the project, any commitment to address an issue will likely be an out-of-pocket cost for the party who has to make a correction. Warranty issues may be subject to alternative dispute resolution. Also, the critical element will be giving proper notice to the contractor upon discovery of the issue. Do not rule out the importance of the bond and insurance policy for the project. Each policy contains language, often unread, that requires notice to be delivered to the carrier of any claim, defect, damage or otherwise. Failure to tender a claim in a timely manner may violate the terms of the policy or negate any proper claim made by the contractor or the owner.

Words fail to describe a project that has crumbled due to poor contract negotiation. The old adage that an ounce of prevention is worth a pound of cure is never more real than when considering how critical the design/build contract negotiation process can be. Since the goal of every project is to pump fuel, do not overlook the essential steps of properly preparing

the contract, or if its already in place, getting the counsel you need in the event a problem arises. EP Todd Taylor and Kermit Nash are officers with Fredrikson & Byron P.A. Reach Taylor at ttaylor@fredlaw.com or (612) 492-7355. Reach Nash at knash@fredlaw.com or (612) 492-7356.

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For more information, visit www.gatxrail.com ETHANOL PRODUCER MAGAZINE JANUARY 2008

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RESEARCH

Breaking Down Walls By Erin K. Peabody

T

here may soon be another reason to support the local dairy farmer. In Wisconsin, where a similar message is proudly plastered on everything from bumper stickers to T-shirts to coffeeshop windows, researchers at the USDA Agricultural Research Service’s U.S. Dairy Forage Research Center are proving that the nation has an unlikely ally in its quest for energy independence: dairy cows. Featuring one of the most sophisticated digestive systems in nature, cows and other ruminants can convert rough, fibrous plant material into critical, life-sustaining energy and milk. Yet, while herds of these natural plant processors are scattered across the country’s vast bucolic landscape, there’s not a single commercial facility in the United States capable of a similar feat: converting the Earth’s most abundant renewable resource—plant cellulose—into fuel.

Lignin Locks up Energy Even though dairy cows are impressive plant-to-energy converters, they can’t digest especially fibrous feed portions toughened up by lignin, the cementing agent that holds plant cell walls together. For bioenergy researchers, lignin and other cell wall components are significant stumbling blocks to unlocking the enormous energy that’s tied up in plants. “It’s all about the sugars,” says Michael Casler, a geneticist based at DFRC. “To draw energy from a crop, you’ve got to get to the sugars so that they can be fermented into fuel.” However, in cows and biofuels research, lignin almost always gets in the way. Plants use three main materials to build their cell walls: the polysaccharides cellulose, hemicellulose and the phenolic polymer lignin. Cellulose is a chain of glucose (sugar) molecules strung together. As these molecules multiply, they organize themselves in linear bundles that crisscross through the cell wall, giving the plant strength and structure. The cellulose bundles are weakly bound to an encircling matrix of

hemicellulose, which is strongly linked to lignin. The gluey lignin polymer further strengthens plants and gives them flexibility. Lignin is the reason plants can pop back up after heavy rains and winds, and it’s how they made the leap from a life in the ocean to one on land eons ago. Plants have invested great energy in crafting exquisite cell wall structures that resist degradation and loss of their precious sugars. Over the course of millions of years, they’ve had to fend off an insatiable crowd of energy-hungry fungi, bacteria, herbivores—and now, people.

A Sticky Plasticity John Ralph, a DFRC chemist, is one of a handful of scientists in the world who is probing lignin’s structural details. With the help of nuclear magnetic resonance, a technology that takes advantage of the magnetic fields surrounding atoms, Ralph and colleagues have been able to chip away at lignin’s mysteries, including how plants make it through a process known as “lignification.” Many of Ralph’s insights have come from years of scrutinizing the lignin structures in transgenic plants. He says there’s much to be learned about a gene by watching what happens when it’s altered. For example, almost 10 years ago, Ralph and colleagues published a paper describing what happens to loblolly pine trees when they’re deprived of the gene that codes for cinnamyl alcohol dehydrogenase— an enzyme that helps make vital lignin building blocks. Ralph says that even with extremely low levels of the important lignin-building enzyme, the trees compensated by incorporating novel monomers— small molecules that can bind with others to form polymers—to ensure that they had the necessary lignin-like glue to perform basic functions. After using nuclear magnetic resonance and other methods to analyze many other genetically transformed plants—including tobacco, aspen, alfalfa, corn and the model plant Arabidopsis—Ralph and his colleagues and collaborators have laid a foundation of basic knowledge

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

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Plant molecular geneticists Jane Marita, left, and Mike Sullivan study genetically modified alfalfa to see what factors influence the plants' architecture.

Weimer, center, discusses tests of a new biobased glue with chemist Chuck Frihart, left, and technician Brice Dally of the USDA Forest Service's Forest Products Laboratory.

about how lignin production is orchestrated in plants. Ralph belongs to a major camp of scientists who maintain that the formation of the lignin polymer is pretty much a random affair and isnâ&#x20AC;&#x2122;t strictly controlled by proteins and enzymes like many other plant polymers. Another group argues that lignification is just like pro-

tein building, a process thatâ&#x20AC;&#x2122;s predictable and leaves few surprises. Ralph contends that the plant has a wider number of building blocks for assembling lignified cell walls at its disposal. He says the plant can put these components together in a virtually infinite number of ways, as did the pine trees and many other transgenic plants.

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Ralph calls it “metabolic plasticity.” Lignification is “a remarkably evolved solution that allows plants considerable flexibility in dealing with various environmental stresses,” he says. Even if some don’t appreciate lignin’s evolutionary role in helping plants adapt, that’s OK, Ralph says. “A greater awareness of these plant processes will increase our opportunities to modify lignin composition and content,” he says.

structures of the entire cell wall. The amount of detail is striking.” Researchers interested in running cell wall samples from either conventionally bred or genetically modified energy crops can use the tool to get a zoomed-in view of what their plants’ modified cell walls look like. With such powerful capabilities, the method can serve as an important gauge of progress.

Low-Input Plants for Energy Zooming in on Lignin Another of DFRC’s many lignin-related discoveries has been especially well received in scientific circles. Fachuang Lu, a research associate in Ralph’s group, was the first to find a way to study the highly detailed chemical structure of the entire plant cell wall. In the past, the job of extracting the various polymers from cell walls for detailed analysis required the deftness of a brain surgeon. There was always a tradeoff between the integrity of the material extracted and the speed with which it could be done. Now, entire cell walls can be dissolved in a special solution in which all their contents—cellulose, hemicellulose and lignin—are dissolved in a matter of hours instead of weeks, as with traditional methods. Once all the polymers are in the solution, nuclear magnetic resonance can provide a structural picture of them. “Traditionally, we could only get a portion of the cell wall into solution,” Ralph says. “By using this new solution and nuclear magnetic resonance method, we can get a chemical fingerprint of the major and minor

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In addition to probing minute cell-wall structures, DFRC scientists are also breeding plants that possess energy-friendly qualities. Casler is hanging his hopes on grasses—the perennials that cover an estimated one-third of the nation’s acreage. Aside from switchgrass, on which he’s built an entire breeding program, Casler is also eyeing the promise of other low-input grasses, such as smooth bromegrass, orchardgrass and reed canarygrass. He thinks they have the potential to feed both cows and the country’s enormous energy appetite. Casler and colleague Hans Jung, a DFRC dairy scientist based in St. Paul, Minn., have been selecting grasses that possess either less lignin or fewer ferulates, which are chemicals that help bind lignin to hemicellulose in the cell wall, impeding access to the sugars. “When we started these studies, we wondered ‘Is it lignin that’s most responsible for binding up the carbohydrates, or is it the way ferulates link the lignin to hemicellulose?’” Casler says. After running studies in several grass species, Casler, Jung and

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collaborators have proved that either approach works when it comes to breaking down tough cell walls. Hoping to breed plants whose cell walls are more easily degraded, Casler and Jung will soon begin crossing promising grass lines.

Focusing on Alfalfa Other DFRC researchers are focused on alfalfa—a crop that, unlike corn and other grasses, fixes its own nitrogen and therefore requires less fertilizer. Plant physiologist Ronald Hatfield and molecular geneticist Michael Sullivan are working to boost alfalfa’s biomass by altering genes that affect its development. “We’re looking at alfalfa’s developmental structure, how it branches,” Hatfield says. “We’re also trying to reduce leaf abscission, or leaf drop.” Because alfalfa plants are grown close together, many of their understory leaves fall off from lack of sunlight. Hatfield and Sullivan would like to minimize loss of this valuable plant material. Hatfield, Sullivan and Ralph are collaborating with the Noble Foundation in Ardmore, Okla., to build the ideal alfalfa plant. “The Noble Foundation usually engineers the plants with reduced lignin,” Hatfield says. “Then we use nuclear magnetic resonance and other analytical techniques to see what the modified cell walls look like and how easily they can be processed either by the cow or for biomass conversion to energy.” The alfalfa research team has already discovered that when they transform plants by down-regulating enzymes called “methyl trans-

ferases,” they can reduce lignin content, boost cellulose content and enhance cell wall digestibility.

Part of the Big Picture In the end, DFRC researchers believe that agriculture’s role in supplying renewable energy to the country is crucial. However, Hatfield cautions that the bioenergy movement mustn’t miss the forest for the trees. “We need to consider the whole agricultural picture,” he says. “You can’t convert everything into bioenergy.” There are other biobased products and niche industries to consider. Take alfalfa, for instance. DFRC researchers have found that, in addition to providing great grist for the ethanol mill, alfalfa is a source of quality protein and health-promoting nutraceuticals. Plus, its fiber fractions have value as a water-filtering agent, and it’s an ideal substrate for making an all-natural glue. “We also have to think in terms of sustainability for the sake of local agricultural economies and our natural resources,” Hatfield says. EP Erin K. Peabody is a member of the USDA-ARS’ information staff. Reach her at erin.peabody@ars.usda.gov or (301) 5041624. This article was published in the April 2007 issue of Agricultural Research.

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Changing the Climate February 25â&#x20AC;&#x201C;27, 2008 JW Marriott Orlando Grande Lakes Orlando, Florida

For program updates and conďŹ rmed speakers, visit www.nationalethanolconference.com Register today!


6th European Motor Biofuels Forum January 9-10, 2008 De Doelen Rotterdam, Netherlands This forum will attract a wide range of participants to discuss the challenges in strengthening a growing European biofuels industry. The agenda consists of six categories: policy/strategy (e.g., foodversus-fuel discussion and the European Commission biofuels quality directive); sustainability; product/process technology, including first- and second-generation biofuels; vehicle technology; international trade and financing/commercialization.

Ethanol Short Course F e b r u a r y 11 - 1 5 , 2 0 0 8 Reneaissance Hotel and Convention Center Schaumburg, Illinois North American Bioproducts Corp. is organizing this biannual course, which educates participants on the basics of fuel ethanol production and offers an in-depth study of similar principles. Agenda items will cover each part of the ethanol production process. There will also be hands-on workshops. Plant operators and managers, lab technicians and managers, and maintenance staff should attend. (866) 342-7026 www.ethanolshortcourse.com

Rio Casino and Resort Las Vegas, Nevada This fifth-annual event aims to address the most important trends and issues impacting the renewable energy and fuels industry. Session topics include financing and market trends (cleantech infrastructure investments, renewable energy credits and carbon), bioenergy policy and local opportunities, waste-to-energy facilities, feedstocks, technologies, and biopower, among many others.

CALENDAR

World Biofuels Markets Congress

Canadian Renewable Energy Workshop

Ethanol 2008 Australia

March 12-14, 2008

March 16-18, 2008

Brussels Expo Brussels, Belgium

IPSCO Place Regina, Saskatchewan

Sydney Convention & Exhibition Center Sydney, Australia

This event will address several aspects of biofuels, including investment and finance, certification and sustainability, policy and regulation, shipping and logistics, feedstocks, and trading. More information will be available as the event approaches. +44 20 7801 6333 www.worldbiofuelsmarkets.com

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February 19-21, 2008

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Power-Gen Renewable Energy & Fuels

A p r i l 8 - 11 , 2 0 0 8

This inaugural event will facilitate the continued development of Canadaâ&#x20AC;&#x2122;s ethanol and biodiesel industry. Decision-makers and key stakeholders will network and discuss emerging technologies and operating practices. More information will be available as the event approaches.

This third annual event will continue to build Australiaâ&#x20AC;&#x2122;s ethanol industry by bringing together industry leaders, ag business firms, investors, technology providers, vendors, governments, trade associations and other stakeholders to discuss development opportunities. More information will be available as the event approaches.

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Australia: +61 7 3360 7000 U.S.: (719) 539-0300

ETHANOL PRODUCER MAGAZINE JANUARY 2008


Agricultural Outlook Forum February 21-22, 2008 Crystal Gateway Marriott Hotel Arlington, Virginia This 84th annual event, themed “Energizing Rural America in the Global Marketplace,” will address several issues facing today’s agriculture sector. Besides general ag and foreign trade outlooks, the agenda is broken down into five concurrent session tracks: Rural America, Energy & Technology, Policy & Trade, Food Risk & Security, and Conservation. The Energy & Technology track will discuss biofuels (specifically ethanol) and biomass for energy. (202) 720-5447 www.usda.gov/oce/forum

13th Annual National Ethanol Conference

Washington International Renewable Energy Conference

February 25-27, 2008

March 4-6, 2008

JW Marriott Orlando, Grande Lakes Orlando, Florida

Washington Convention Center Washington, D.C.

This Renewable Fuels Association (RFA) event, themed “Changing the Climate,” will include RFA President Bob Dinneen’s annual State of the Industry Address, along with various panel discussions and concurrent breakout sessions. Breakout sessions topics include technology, E85, future feedstocks, distillers grains, financing, cellulose and safety. Panel discussions will include economic impacts, international markets, infrastructure demands, cellulosic ethanol technology and the annual Washington Insiders’ Roundtable.

This event will present the latest developments in renewable energy. Speakers will discuss the status of key renewable energy technologies, plus systems costs, economics, markets, manufacturing and financing. Biofuels and biomass technologies will also be discussed. A trade show will be collocated with the conference. (202) 393-0001 www.wirec2008.org

(719) 539-0300 www.nationalethanolconference.com

International Biomass Conference & Trade Show

Alternative Fuels & Vehicles National Conference + Expo

April 15-17, 2008

M a y 11 - 1 4 , 2 0 0 8

June 16-19, 2008

Las Vegas Rio All-Suite Hotel Las Vegas, Nevada

Opryland Hotel & Convention Center Nashville, Tennessee

This 14th annual event focuses on alternative fuels, alternative fuel vehicles, advanced transportation technologies, vehicle emissions and policy. The preliminary agenda includes discussions that will educate vehicle fleet operators and endusers on the options available in alternative fuels. The expo features auto manufacturers, technology developers, fuel suppliers and many others. There will also be a ride-and-drive event.

This conference will follow the record-breaking 2007 event, in which more than 500 exhibitors participated and more than 5,300 people attended. More information will be available as this event approaches.

Minneapolis, Minnesota This event, which stemmed from the Energy and Environmental Research Center’s biomass conference last year in Grand Forks, N.D., aims to facilitate the advancement of near-term and commercial-scale manufacturing of biomass-based power, fuels and chemicals. Topics include biorefining technologies for the production and advancement of biopower, bioproducts, biochemicals, biofuels, intermediate products and coproducts, which will be presented through general sessions, technical workshops and an industry trade show. (719) 539-0300 www.biomassconference.com

24th Annual International Fuel Ethanol Workshop & Expo

(719) 539-0300 www.fuelethanolworkshop.com

(702) 254-4180 www.afvi.org/NationalConference2008

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Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

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VAL-FAB Inc. 877-482-5322

Insulation Mavo Systems 763-788-7713

www.mavo.com

www.fremontind.com

Management Cain and Associates Engineers & Constructors, Inc.

Dryer Systems

251-661-2605

www.hkcain.net

Plant Construction

www.hydro-klean.com

Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

Agra Industries, Inc. 715-536-9584

Ductwork

Agri-Systems 406-245-6231

Hydro-Klean, Inc. 515-283-0500

www.valfab.com

www.univarusa.com

Cleaning Hydro-Klean, Inc. 515-283-0500

Construction Mid-South Maintenance, Inc. 901-527-1570 www.mid-southmaintenance.com

Water Treatment Fremont Industries Inc. 952-445-4121

www.hydro-klean.com

Fabrication

CIP Univar USA Inc. 402-733-3266

Tank Cleaning Services

Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

www.lactrol.com

Anti-Microbial PhibroChem Ltd. 800-223-0434

Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

Reimer Welding Inc. 218-773-0886

www.hydro-klean.com

www.agraind.com

www.agrisystems.net

www.reimerwelding.com

Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

Railroad Tracks

Emergency Spill Response

Volkmann Railroad Builders, Inc. 262-252-3377 www.volkmannrr.com

Hydro-Klean, Inc. 515-283-0500

Plate-Frame www.hydro-klean.com

Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

Fans Hydro-Klean, Inc. 515-283-0500

Tanks www.hydro-klean.com

Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

Railcars www.hydro-klean.com

Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

Filter Media Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

160

Hydro-Klean, Inc. 515-283-0500

Drumm Inc. 513-641-4141

www.caldwelltanks.com

Eagle Tanks, Inc. 888-678-0698 WINBCO Tank Company 641-683-1855

www.tankcarcleaning.com

Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

www.eagletanks.com

www.winbco.com

Consulting Advertising Holly AR Jaffe 203-221-4994

Smoke Stack Hydro-Klean, Inc. 515-283-0500

Caldwell Tanks 502-964-3361

hajaffe@yahoo.com

www.hydro-klean.com

ETHANOL PRODUCER MAGAZINE JANUARY 2008


EPM MARKETPLACE Delta-T Corporation 757-220-2955

Business Plans Equity Financial Resources 877-455-1945 www.equityfinancialres.com ICM, Inc. 716-796-0900

www.icminc.com

Environmental

Ethanol Productions 813-968-6867

jim.plautz@verizon.net

GS CleanTech Corp. 678-566-3588

www.gs-cleantech.com

ICM, Inc. 716-796-0900

ICM, Inc. 716-796-0900

www.icminc.com

www.icminc.com

General Seneca Companies 800-369-5500 www.senecacompanies.com

, Inc.

MTA

Mechanical www.harrisgroup.com

Plant Equipment Failure Analysis

Groundwater Services Leggette, Brashears & Graham, Inc. 651-490-1405 www.lbgweb.com

Management Services www.feedconcepts.com

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

Carolina Management System Services 704-502-3838 cdgarth@carolina.rr.com

Process Design

Risk Management

Agri-Systems 406-245-6231

Harris Group Inc. 206-494-9422

www.harrisgroup.com

Project Development

www.agrisystems.net

www.vogelbusch.com

Equipment & Services Air Pollution/Odor Control Anguil Environmental Systems, Inc. 414-365-6400 www.anguil.com

Recruiting Hobbs & Towne 610-783-4600x108

916-705-5510

Process Engineering Associates, LLC 865-220-8722 www.processengr.com Vogelbusch USA, Inc. 713-461-7374

Education

www.harrisgroup.com

Terratec Biofuels of Solutia 800-742-1476 www.TerratecBiofuels.com

Harris Group Inc. 206-494-9422

mikeblum@mtalabs.com

Employment

Harris Group Inc. 206-494-9422

Ethanol Productions 813-968-6867

Corrosion

Quality Assurance

Minnesota West Community & Tech College 320-564-4511 www.mnwest.edu

Plant Optimization

Welding

Harris Group Inc. 206-494-9422

Wear

Feasibility Studies

FeedConcepts 360-813-4212

www.deltatcorp.com

www.hobbstowne.com

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

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

ICM, Inc. 716-796-0900

Engineering

Blowers & Fans

Civil

New York Blower Company 800-208-7918

www.icminc.com

jim.plautz@verizon.net

www.harrisgroup.com

Public Relations Lanser Public Affairs, LLC 262-797-7876 www.lanserpublicaffairs.com

Reach your customers

Antioch International, Inc. 402-289-2217 www.antioch-intl.com

www.nyb.com

Robinson Industries, Inc. 724-452-7017 www.robinsonfans.com

Control Systems Bachelor Controls 785-284-3482

Centrifuge Repair www.bachelorcontrols.com

Nosnhoj Services Inc. 317-887-6436

www.nosnhojinc.com

Design/Build Your Solution. Advertise Today.

EPM MARKETPLACE

Agra Industries, Inc. 715-536-9584 Agri-Systems 406-245-6231

ETHANOL PRODUCER MAGAZINE JANUARY 2008

Centrifuges www.agraind.com

Westfalia Separator, Inc. 201-784-4322

www.wsus.com

www.agrisystems.net 161


EPM MARKETPLACE Gusmer Enterprises, Inc. 847-277-9785 www.gusmerenterprises.com

Compressed Air Systems Sullair Corporation 800-785-5247, x3036

www.sullair.com

Fluid Engineering 814-453-5014

Dryers-Fluid Bed Aeroglide Corporation 919-851-2000

Computer Software Integrated Business Solutions 888-697-3060 www.ibsolutions-llc.com

Filtration Equipment www.fluideng.com

Grain Handling & Storage www.aeroglide.com McC, Inc. 763-477-4774 www.mccormickconstruction.com

Dryers-Other

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

Davenport Dryer, LLC 309-786-1500 www.davenportdryer.com

Sukup Manufacturing Co. 641-892-4222

Control Systems

Dryers-Rotary Drum

Heat Exchangers

Aeroglide Corporation 919-851-2000

Des Champs Technologies 540-291-1111 www.deschamps.com

FeedForward, Inc. 770-426-4422

www.feedforward.com

www.aeroglide.com

Dracool-USA 937-743-5899

www.sukup.com

www.dracooloflykens.com

Instrumentation Instrument Associates 708-597-9880 www.instrumentassociates.com Shimadzu Scientific Instruments 800-477-1227 www.ssi.shimadzu.com

Laboratory-Testing Services Eurofins GeneScan, Inc. 504-297-4330 www.gmotesting.com Midwest Laboratories 402-334-7770

www.midwestlabs.com

Trilogy Analytical Laboratory 636-239-1521 www.trilogylab.com Revere Control Systems 800-536-2525 www.reverecontrol.com

Control Systems-Distributed

ICM, Inc. 716-796-0900

Loading Equipment www.icminc.com

Phillips Kiln Services Ltd. 800-831-0876

www.saferack.com

SafeRack 866-761-7225

www.saferack.com

www.kiln.com

Emission Monitoring Systems MonitorTech Corp. 866-682-6771

SafeRack 866-761-7225

Maintenance Services www.monitortechgrp.com Mid-South Maintenance, Inc. 901-527-1570 www.mid-southmaintenance.com

Conveyors–Enclosed Hudco Industrial Products, Inc. 800-247-9908 www.hudcoinc.com

Continuous Emissions Monitoring Systems Easiest installation, operation and maintenance Meet or exceeds EPA requirements NOx, O2, CO, SO2 and others Turnkey systems for under $100,000.00 P.O. Box 9271, Columbus, Oh 43209 866-682-6771 sales@monitortechcorp.us

Conveyors–Pneumatic

Fermentors

Blower Engineering 800-388-1339 www.blowerengineering.com

WINBCO Tank Company 641-683-1855

162

Maintenance Software Mapcon Technologies, Inc. 800-922-4336 www.mapcon.com

Mills-Hammer CBT Wear Parts, Inc. 888-228-3625

www.cbtwearparts.com

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

ETHANOL PRODUCER MAGAZINE JANUARY 2008


EPM MARKETPLACE Millwright

Pumps

Agri-Systems 406-245-6231

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

www.agrisystems.net

Molecular Sieves Vaperma, Inc. 418-839-6989

www.laidig.com

Tanks Agra Industries, Inc. 715-536-9584

www.vaperma.com

www.agraind.com

Paragon Trailer Sales 800-471-8769 www.paragontrailer.com

Pipe Robert-James Sales, Inc. 800-666-0088 www.rjsales.com

Ultraflote Corporation 713-461-2100

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

WINBCO Tank Company 641-683-1855 www.rjsales.com

www.ultraflote.com

www.winbco.com

Thermal Oxidizers

St. Louis Pipe & Supply 800-737-7473 www.stlpipesupply.com

ICM, Inc. 716-796-0900 Pro-Environmental, Inc. 909-989-3010

www.icminc.com

www.pro-env.com

Used Equipment

Valley Equipment Co. Inc. 423-753-3541 www.valleyequipment.com Yamada America, Inc. 800-990-7867 www.yamadapump.com

Security Services Illinois Security Services Inc. 773-881-0044 www.Illinoissecurity.com

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

Sensors www.rjsales.com

Electro Sensors 800-328-6170

www.electro-sensors.com

Pressure Vessels WINBCO Tank Company 641-683-1855

Separation Equipment www.winbco.com

Fluid Engineering 814-453-5014

www.fluideng.com

Puritan Magnetics, Inc. 248-628-3808 www.puritanmagnetics.com

Your Ad HERE Your Solution. Advertise Today.

EPM MARKETPLACE

Steel Suppliers Chapel Steel 800-320-6042

davidj@chapelsteel.com

Valves Central States Group 800-318-2747 www.centralstatesgroup.com

ETHANOL PRODUCER MAGAZINE JANUARY 2008

163


EPM MARKETPLACE Check-All Valve Mfg. Co. 515-224-2301 Metso Automation 508-852-0215

www.checkall.com

www.metsoethanol.com

R.J. O’Brien 800-621-0757

www.rjobrien.com

RAILCAR MOVING

Marketing Fuel Ethanol

Wastewater Treatment Services Biothane Corporation 856-541-3500x501

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

www.biothane.com

The CUB™ is an electromechanical machine designed to move single railcars or groups of cars. Some advantages of the CUB™ are:

Noble Americas Corporation 626-585-1705 www.thisisnoble.com

Water Treatment Fluid Engineering 814-453-5014

www.fluideng.com

Layne Christensen Company 262-246-4646 www.laynechristensen.com Siemens Water Technologies 800-525-0658 www.siemens.com/water

Finance

Provista Renewable Fuels Marketing 651-355-8519 www.provistafuels.com

Ask about our complete line of Railcar Moving Devices

Transportation Air Charter Service Crossroads Aviation 800-720-1866 www.crossroadsaviation.com

Heavy Highway Transport

Accounting

Landstar Carrier Group 920-487-3877

Kennedy and Coe, LLC 800-303-3241

www.landstar.com

Rail Federal Appraisal & Consulting, LLC. 908-823-0607 www.federalappraisal.com

www.heylpatterson.com P

412-788-9810

F

412-788-9822

E

info@heylpatterson.com

MH Equipment Company 317-240-6300 www.mhequipment.com

www.kcoe.com

Appraisals

•Safety of Personnel •One Person Operation •Little Maintenance Requirements •Low Investment/Operating Costs

Blacklands Railroad 903-439-0738 www.blacklandsrailroad.com

Railcar Parts Salco Products, Inc. 630-783-2570

www.salcoproducts.com

Utilities Natural Gas

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

Due Diligence Harris Group Inc. 206-494-9422

www.harrisgroup.com

Equity Procurement Greenman Funding 888-802-7678 greenman.funding@verizon.net

Rail Consulting

Insurance

Antioch International, Inc. 402-289-2217 www.antioch-intl.com

Chubb Insurance 312-454-4250

chubb.com

Railcar Leasing

Lender Representatives

GATX Rail 312-621-8008

Agri-Energy Funding Solutions 402-895-5067 www.agri-energyfs.com

Railcar Moving

Greenman Funding 888-802-7678 greenman.funding@verizon.net

Heyl & Patterson Inc. 412-788-9810

Risk Management

R.J. O’Brien 800-621-0757 164

124 W. Broadway, Suite 300 Madison, Wisconsin 53716 www.integrysenergy.com

www.heylpatterson.com

Utility

Reach your customers

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

www.rjobrien.com

Contact Mark Rundle at marundle@integrysenergy.com or (608) 222-5170.

Your Solution. Advertise Today.

EPM MARKETPLACE

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

Water Layne Christensen Company 262-246-4646 www.laynechristensen.com

ETHANOL PRODUCER MAGAZINE JANUARY 2008


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Water Way Boardman, Oregon — Population: 3,400

N

estled along a bend in the Columbia River and flanked by U.S. Interstate 84, the riparian community of Boardman, Ore., made news recently when the first ethanol plant in the Northwest came on line. Owned and operated by West Coast ethanol producer Pacific Ethanol Inc., the 40 MMgy plant in Boardman officially opened in early October. “We’ve had a very successful start-up, and now are running at levels above design capacity,” says Neil Koehler, chief executive officer and president of Pacific Ethanol. The Boardman plant lies within the East Beach Industrial Park, one of three such parks established by the Port of Morrow, a government agency with a mission to improve livability in Morrow County through the creation of new and higher-paying jobs. The area has become a hub for food, fiber and seed, and lumber processing industries. The riverside is marked by such

names as Lamb Weston, the French fry maker; Oregon Potato; and Boardman Foods Inc., the fresh onion packer and processor. “We’re at a great transportation corridor,” explains Lisa Mittelsdorf, director of economic development for the port. “Easy access to transportation [whether truck, barge or rail] is the key reason why they locate here.” In addition, the county lies in agriculture country, and the port is adorned with manufacturing facilities that mainly produce valueadded agricultural products. “We deal with potatoes and onions, so having a plant that did a process with corn wasn’t a stretch for us,” she says. The new plant will supply fuel to meet Portland’s E10 mandate that took effect in July, as well as the entire state’s E10 mandate, which will take effect Jan. 1. For the town of Boardman, the new facility means more high-paying jobs, a source of feed for the area’s cattle and dairy

farmers, and a buyer for locally grown corn, although most of the plant’s feedstock will be railed in from the Midwest. “Being right on the river, having rail access and also having the ability to distribute the coproducts locally … all the pieces came together perfectly for this project,” Mittelsdorf says. For this rural agricultural community, the real benefit lies in the jobs that the new plant provides. “Right now there are 35 to 40 new jobs,” Mittelsdorf says. “Since the plant is located in an enterprise zone, which means it gets some property tax relief, it has to commit to paying 150 percent of the county wage. Adding another 35 to 40 jobs that are paying better than the ones you have is always a good thing.” —Jessica Ebert PHOTO: LISA MITTELSDORF, PORT OF MORROW

ETHANOL PRODUCER MAGAZINE JANUARY 2008


g " kin e of o 24 c Sto rang 1 /2" t in ull a f plex Du 05

22

EXPANDING? UPGRADING? Keep Your Plant Running with our In-Stock Stainless PVF Robert-James Sales—the leading distributor of in-stock stainless pipe, fittings, valves and flanges—got your new plant up and running when it was built. Now look to us to service all your continuing MRO requirements. Over 80% of all orders are shipped the same day from our nine regional warehouses. We also ship the larger size products up to 54” in diameter demanded by the biofuel processing industry today.

Free Product CD

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Buffalo, NY Cleveland, OH Cincinnati, OH Chicago, IL Indianapolis, IN Minneapolis, MN South Plainfield, NJ Raleigh, NC Tavernier, FL

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Contact the Robert-James Sales location nearest you and ask for a free copy of our comprehensive, up-to-date CD. It outlines our stainless product line including reference charts, graphs and tables to help you calculate what your processing plant needs.


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January 2008 Ethanol Producer Magazine  

January 2008 Ethanol Producer Magazine

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