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INSIDE: AUTOMATED TERMINAL SOLUTIONS IMPROVE YOUR BOTTOM LINE July/August 2012

Supply Chain Connections Collaboration Aligns Feedstock, Biodiesel Production and Distribution for Improved Economics Page 26

Plus

Florida Legislation Incentivizes Biodiesel Infrastructure Developments

Page 22

AND

RIN Market Developments

Page 15

Comparing Energy Consumption of Glycerolysis, Acid Esterification Page 32

WWW.BIODIESELMAGAZINE.COM


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CONTENTS

JULY/AUGUST 2012 VOLUME 9 ISSUE 4

26

22 INFRASTRUCTURE

DISTRIBUTION DISTRI

Building Opportunity

A Collaborative Approach

BY ERIN VOEGELE

BY ERIN VOEGELE

Florida tax incentives to spur biodiesel availability, promote economic growth

Advertiser Index 9 2012 Algae Biomass Summit 34 2012 National Advanced Biofuels Conference & Expo 38 2013 International Biomass Conference & Expo 11 BBI Consulting Services 15 California Biodiesel Alliance 30 Crown Iron Works Company 29 EcoEngineers 20 Frazier, Barnes & Associates, LLC 31 Gorman-Rupp Pumps 40 INTL FCStone Inc. 24 Iowa Central Fuel Testing Lab. 25 Jatrodiesel, Inc. 35 Liquid Controls 10 Louis Dreyfus 20 Methes Energies 39 Murex Na Ltd. 5 & 28 National Biodiesel Board 21 Oil-Dri Corporation of America 2 Schroeder Industries 7 Teikoku USA, Inc. 13 The Jacobsen Publishing Company

A trio of companies in the Pacific Northwest align, vertically integrate supply chain

CONTRIBUTION 32 PROCESS

Energy Consumption: Acid Esterification vs. Glycerolysis A comparative analysis

BY KIRK COBB

DEPARTMENTS 4 Editor’s Note Adaptability

BY RON KOTRBA 6 Legal Perspectives

Patentably Distinguishing Your End Products

BY BENJAMIN SPEHLMANN 8 Talking Point

Automated Terminal Solutions Turn Challenges into Opportunities

BY AL RIVERO 10 Biodiesel Events 12 FrontEnd

Biodiesel News & Trends

16 Inside NBB 20 Business Briefs Biodiesel Magazine: (USPS No. 023-975) July/August 2012, Vol. 9, Issue 4. Biodiesel Magazine is published bi-monthly by BBI International. Principal Office: 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. Periodicals Postage Paid at Grand Forks, North Dakota and additional mailing offices. POSTMASTER: Send address changes to Biodiesel Magazine/Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, North Dakota 58203.

Companies, Organizations & People in the News

36 Marketplace

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EDITOR'S NOTE

ADAPTABILITY www.BiodieselMagazine.com E D I T O R I A L

Editor Biodiesel Magazine rkotrba@bbiinternational.com

Tom Bryan President & Editor in Chief tbryan@bbiinternational.com Tim Portz Vice President of Content & Executive Editor tportz@bbiinternational.com Ron Kotrba Editor rkotrba@bbiinternational.com Erin Voegele Associate Editor evoegele@bbiinternational.com Jan Tellmann Copy Editor jtellmann@bbiinternational.com P U B L I S H I N G Mike Bryan Joe Bryan Matthew Spoor Howard Brockhouse

&

S A L E S

Chairman mbryan@bbiinternational.com CEO jbryan@bbiinternational.com Vice President, Sales & Marketing mspoor@bbiinternational.com Executive Account Manager hbrockhouse@bbiinternational.com

Jeremy Hanson

Senior Account Manager jhanson@bbiinternational.com

Marty Steen

Account Manager msteen@bbiinternational.com

Bob Brown

Account Manager bbrown@bbiinternational.com

Andrea Anderson Dave Austin Jessica Beaudry

Account Manager aanderson@bbiinternational.com Account Manager daustin@bbiinternational.com Circulation Manager jbeaudry@bbiinternational.com

Marla DeFoe

Advertising Coordinator mdefoe@bbiinternational.com

John Nelson

Senior Marketing Manager jnelson@bbiinternational.com

Jaci Satterlund Elizabeth Burslie

Ron Kotrba

A R T Art Director jsatterlund@bbiinternational.com Graphic Designer bburslie@bbiinternational.com

Subscriptions Subscriptions to Biodiesel Magazine are free of charge to everyone with the exception of a shipping and handling charge of $49.95 for any country outside the United States, Canada and Mexico. To subscribe, visit www.biodieselmagazine. com or you can send your mailing address and payment (checks made out to BBI International) to: Biodiesel Magazine Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You can also fax a subscription form to (701) 746-5367. Reprints and Back Issues Select back issues are available for $3.95 each, plus shipping. Article reprints are also available for a fee. For more information, contact us at (701) 746-8385 or service@bbiinternational.com. Advertising Biodiesel Magazine provides a specific topic delivered to a highly targeted audience. We are committed to editorial excellence and high-quality print production. To find out more about Biodiesel Magazine advertising opportunities, please contact us at 701-7468385 or service@bbiinternational.com. Letters to the Editor We welcome letters to the editor. If you write us, please include your name, address and phone number. Letters may be edited for clarity and/or space. Send to Biodiesel Magazine Letters, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203 or email to rkotrba@ bbiinternational.com.

The ongoing RIN scandal has dominated U.S. biodiesel news for the past several months. With such sensational developments and provocative stories involving investigations, deceit, lawsuits, raids, subpoenas, hardship and jury trials, it can be easy to overlook all of the positive news in the industry. One encouraging story has been in the making for six months, and it is a direct result of the abuse on the federal system established to track obligated parties’ compliance of the renewable fuel standard (RFS) by a few bad actors who most certainly do not represent the biodiesel industry, or its people. While it may be a reactionary tale, the National Biodiesel Board’s quick appointment of a RIN Integrity Task Force early this year has produced results that many in the industry believe will help prevent fraud and restore confidence in the RIN market and, most importantly, allow small and medium producers to move their RINs so they can do what they do best: produce quality biodiesel fuel for their local communities. A number of RIN programs exist. Murex N.A. Ltd., for example, boasts 100 percent validity in 7.6 billion RINs moved, but the NBB supported development of one in particular: Genscape’s trademarked RIN Integrity Network. Biodiesel producers have various, reasonably priced payment options to be a part of Genscape’s network, which involves monitoring a spectrum of activities at their production facilities so, through a dashboard, obligated parties can be assured credits generated by subscribed producers are valid. The program launched in late May, but negotiations between Genscape and Lee Enterprises Consulting led to the rollout of version 2.0 less than three weeks later. Lee Enterprises’ RIN 9000 program possessed aspects that Genscape found desirable, such as fuel quality sampling and RIN education, and a deal was struck to merge RIN 9000 into Genscape’s RIN Integrity Network. Genscape is confident the move will benefit all parties involved. Best of all, a solution is now available to help the small biodiesel producer get back on track. Adaptability is one of this industry’s biggest strengths. Other positive news in the past few months include mold-making strategies such as small feedstock, biodiesel production and distribution companies collaborating to reduce costs and increase biodiesel availability, such as the vertical model developing in the Pacific Northwest and profiled in our Distribution feature, “A Collaborative Approach,” on page 26. Also, new biodiesel infrastructure incentives in Florida aim to spark the economy while broadening biodiesel’s presence in the retail market. Read about them in “Building Opportunity” on page 22.

Please recycle this magazine and remove inserts or samples before recycling TM

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COPYRIGHT © 2012 by BBI International


Advanced Performance Is Here, Now. Who says that just because it’s green it has to be slow? Certainly not Brent Hajek. Recently this Oklahoma farmer sped to an amazing 182-mph speed record in a B20 biodiesel-powered Ford Super Duty® pick-up truck. Hajek has long been a proponent of the possibilities of biodiesel. It’s already fueling the equipment and conserving energy costs on his soybean farm. Biodiesel is performing on a national scale too. A recent economic study found that production of 1 billion gallons of biodiesel supports 39,027 U.S. jobs and more than $2.1 billion in household income. American biodiesel production is cutting diesel imports by 3 million gallons a day. It’s the fast track to more American jobs and energy independence.

Biodiesel is Here, Now.

www.AmericasAdvancedBiofuel.org Sponsored by the United Soybean Board, the National Biodiesel Board, State Soybean Checkoff Boards, the U.S. Canola Association, and the Northern Canola Growers Association


LEGAL PERSPECTIVE

Patentably Distinguishing Your End Products BY BENJAMIN SPEHLMANN

An overriding objective of many advanced biofuels is being compositionally similar to petroleum counterparts. Innovation is often marked by advancements in how closely a producer can imitate conventional products, for example in composition and performance characteristics, rather than distinguish over them. Many R&D activities focus on process parameters that allow production of petroleum-mimicking products from the widest possible range of renewable carbon sources. This might lead to a perception that patent protection for advanced biofuel innovators is limited essentially to their improvements in production methods rather than end products. Ultimately, for a biofuel composition to be patentable, it must meet legal standards for novelty and nonobviousness over conventional, known products. Yet companies are also aware of the significant intellectual property (IP) value associated with protecting products, in addition to processes. Infringement of a process claim requires a competitor to practice some defined set of operating conditions, such as pressure, temperature, reactor residence time. A product claim, however, offers a different, potentially more meaningful scope of protection, namely the ability to exclude production, use or sale of a composition having a defined set of properties (e.g., cetane number, boiling point range, cloud point). The problem of patentably distinguishing a biofuel composition is not overcome merely by specifying that the composition is made according to a particular process. Infringement of a “product-byprocess� claim requires a competitor to actually practice the specified process. Such a claim therefore normally provides little value beyond a claim to the underlying process itself. Potential strategies for claiming biofuel end products, which can provide a process innovator with a desirable scope of patent protection, are discussed below. These involve claiming such products according to their (a) processspecific properties, (b) greenhouse gas (GHG) emission values or renewable carbon content, and/or (c) blend components. Process-Specific Composition Features: Any property of a biofuel composition that results from its specific production process, whether significant to its end use, can potentially serve as a patentable basis for distinction. For example, lignocellulosic biomass pyrolysis, combined with hydroprocessing, is known to provide an aromatic-rich product that can substitute for conventional petroleum naphtha reforming. Yet, due to the nature of the cyclic compounds derived from lignin, the pyrolysis product contains

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only minor amounts of benzene and toluene relative to the petroleum reformate. Specifying a low quantity of benzene, toluene or combination of both could therefore potentially distinguish a bioderived composition or component from its petroleum counterpart. GHG Emission Value, Renewable Carbon Content: The GHG emission value of a biofuel composition, expressed as CO2-equivalents per unit of energy according to U.S. government accounting practices, can serve as a defining property of a composition. This is a recognized biofuel property, based on a life-cycle assessment from the time of cultivation in the case of plant sources required for the compositions, up to and including the ultimate fuel combustion. For waste vegetable oils and animal fats, the GHG emissions for obtaining these feedstocks are usually negligible. Specifying a GHG emission value as a basis for patentability may be especially significant if refining process improvements can further reduce this quantity, beyond merely the benefit obtained from renewable carbon-based starting materials. For example, the on-site generation of green hydrogen feedstock for hydoprocessing, by reforming light, renewable carbon-derived byproducts, can reduce added GHG emission values associated with the production process. A similar approach resides in specifying a renewable carbon content of a composition or component, or even the specific source(s) of the renewable carbon. Blend Components: Many biofuel-based compositions of commercial value are actually blends of components derived from fossil and renewable carbon sources. The desirability for blended compositions stems from (i) the current, limited capacity of biofuel production methods compared to refining processes and (ii) the need to achieve conventional fuel specifications, such as maximum organic oxygen content. Specifying amounts of renewable and nonrenewable components, with each being defined according to its individual composition, can often provide grounds for asserting patentability of a blend. This may be true even if, based on composition alone, the biofuel blend is not easily differentiated from a conventional fuel. Using these strategies for claiming biofuel compositions can lead to success in obtaining valuable patent protection for your end products, rather than just the associated biorefining process innovations. Author: Benjamin Spehlmann Shareholder, Banner & Witcoff bspehlmann@bannerwitcoff.com


TALKING POINT

Automated Terminal Solutions Turn Challenges into Opportunities BY AL RIVERO

Today’s biodiesel market is full of unprecedented challenges, ranging from price sensitivity and fluctuations to regulatory uncertainty. Governments are moving subsidies to food markets, but with crude prices rising, the market is more competitive. The industry faces tight margins, margin erosion and a complex manual billing process, with heavy reliance on paper workflow and long day sales outstanding (DSO) followed by long day payable outstanding (DPO), resulting in a long conversion cycle. The need has never been greater to turn these challenges into opportunities. Improving DSO and DPO by one to three days helps create a stronger cash position within the organization. Companies need a system dedicated to providing the solid foundation and technological advancements that equip buyers and sellers to communicate effectively, manage inventory, credit and lifting, while also automating the buying and selling process. Automated lifting and credit controls, fully integrated with the terminal automation system to enable an efficient, out-of-the-box solution, generates significant time and cost savings for terminal operators and distributors. Automated lifting and credit controls also have the flexibility to customize a solution that specifically meets unique operational requirements. Improving the ability to manage bill of lading (BOL) transactions, credit limits and product allocations with the efficiency, cost-effectiveness and the real-time intelligence required by today’s market is crucial to turning challenges into opportunities. The industry is responsible for the efficient downstream distribution of fuels and other refined products through a network of equity- and third-partyowned terminals throughout North America. The biodiesel industry needs real-time data of when and where product is available throughout the entire developing network to manage position and exposure, while also controlling opportunistic buying and arbitration of product. While terminal automation and supply management solutions have been in production for more than 20 years, the above characteristics establish the standard for management and communication of terminal credit and product allocations. Top solutions interface with all major terminal automation systems and many proprietary systems, and integrate with your ERP applications, including JDE, SAP and others, to automate processes and provide real-time intelligence. This functionality also helps the supplier improve its cash position through real-time invoicing. 8

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Integration provides an end-to-end solution for the management of carriers, drivers and the ever-changing recipes to meet seasonal and legislative pressures on today’s operations. Top automation solutions provide security in the entry process: validating the facility access to a vetted list, and once inside, the driver just needs to enter his order number to ensure the correct load and blend is delivered to the compartment being loaded. This gives the operator the ability to manage and view the amounts of blends, components, neats and additives that were loaded, along with the products’ temperature and gravity. The solution must be capable of providing a costeffective, standardized credit limit control and allocations management system; centralized, global control across proprietary and nonproprietary terminals with integration to back-office applications to increase efficiencies and streamline and improve reporting accuracy; real-time intelligence on transactions with the data visibility and accuracy needed for making smart, timely business decisions; enable highly flexible allocation controls that can be scheduled in advance and implemented on the fly to manage position and exposure, while controlling opportunistic buying and arbitration of product (the result is maximized, ratable, wet-barrel availability to preferred customers); consistent, reliable, responsive and professional customer support with a cost-effective model throughout the downstream delivery chain; partner with a service provider who has the sustainability, global capabilities and projected longevity to achieve a cost-advantaged, well-managed and successful implementation; track all customer, shipper, carrier, driver, station and load dates and times; view the amounts of blends, components, neats and additives that were loaded, along with product temperature and gravity, and view the total amount of product loaded on the BOL. Partnering with a solution provider capable of developing a comprehensive, flexible, scalable credit limit and allocation management system is important for any automation implementation. These systems provide centralized, consistent control across proprietary and nonproprietary terminals that will facilitate the reduction in DPO by eliminating the paper-to-paper process with an automated electronic transaction-based solution. Providing an integrated, end-to-end solution simplifies operation, reduces risk and improves competitive advantage. Author: Al Rivero Vice President of Sales and Supplier Solutions, Telvent DTN (281) 755-6185


EVENTS CALENDAR LDCommodities.com

Algae Biomass Summit SEPTEMBER 24-27, 2012

Sheraton Denver Downtown Hotel Denver, Colorado Advancing Technologies and Markets Derived from Algae Organized by the Algal Biomass Organization and coproduced by BBI International, this event brings current and future producers of biobased products and energy together with algae crop growers, municipal leaders, technology providers, equipment manufacturers, project developers, investors and policy makers. Early bird registration rates expire Aug. 13. (866)746-8385 www.algaebiomasssummit.org

National Advanced Biofuels Conference & Expo

Creating Opportunity Since 1851.

NOVEMBER 27-29, 2012

Hilton Americas - Houston Houston, Texas Next Generation Fuels and Chemicals Produced by BBI International, the National Advanced Biofuels Conference & Expo is tailored for industry professionals engaged in producing, developing and deploying advanced biofuels, biobased platform chemicals, polymers and other renewable molecules that have the potential to meet or exceed the performance of petroleum-derived products. (866)746-8385 www.advancedbiofuelsconference.com

International Biomass Conference & Expo APRIL 8-10, 2013

Partnership Connecting Your Supply to the Domestic and Global Marketplace.

Community Active Participation in the Communities Where We Live and Work.

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Minneapolis Convention Center Minneapolis, Minnesota Building on Innovation Organized by BBI International and produced by Biomass Magazine, the International Biomass Conference & Expo program will include 30-plus panels and more than 100 speakers, including 90 technical presentations on topics ranging from anaerobic digestion and gasification to pyrolysis and combined heat and power. This dynamic event unites industry professionals from all sectors of the world’s interconnected biomass utilization industries―biobased power, thermal energy, fuels and chemicals. (866)746-8385 www.biomassconference.com

Commitment

International Fuel Ethanol Workshop & Expo

Supported by the Reliability and Financial Security of Louis Dreyfus Commodities.

JUNE 10-13, 2013

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America’s Center St. Louis, Missouri Where Producers Meet Now in its 29th year, the FEW provides the global ethanol industry with cutting-edge content and unparalleled networking opportunities in a dynamic business-to-business environment. The FEW is the largest, longest running ethanol conference in the world―and the only event powered by Ethanol Producer Magazine. (866)746-8385 www.fuelethanolworkshop.com


BOTTOM LINE RESULTS

Saving me and money is key. Because we’ve completed more than 335 bioenergy projects around the world, the team here at BBI Consul ng Services is able to streamline any bioenergy and engineering project. In return, you’ll save me and money, elimina ng underfunded and undermanned projects. We’ll help you keep your project on the best track for success.

Consulting Services

www.bbiinterna onal.com 866-746-8385 | service@bbiinterna onal.com

Consul ng Services offered: • Feasibility studies • Development of business & financial strategies • Evalua on and selec on of renewable energy technologies • Business plans • Market analysis

• Resource assessments • Due diligence • Review of government grant proposals (RFPs) • Grant proposal review and submission • Conceptual design for bioenergy projects


Biodiesel News & Trends

PHOTO: INDIAN INSTITUTE OF SCIENCE EDUCATION AND RESEARCH

FrontEnd

COLORFUL RESEARCH: IISER researchers Santanu Pal, left, and Samrat Ghosh happened upon a quick field test applicable to the biodiesel industry.

New Color Test for Presence of Cosolvent Indian researchers develop fast-acting, multifunction field test Scientific discoveries are made accidentally sometimes. Scientists at the Indian Institute of Science Education and Research developed a color test to detect acetone—a potential cosolvent for biodiesel production to reduce heating requirements, agitation/ ultrasonication, centrifugation, excess chemicals and washing— and tertiary butyl hydroquinone (vegetable oil antioxidant) levels in biodiesel and vegetable oil, respectively. In a paper on their discovery, IISER researchers discussed how a Japanese group reported (Green Chem., 2011, 13, 1124) on its technique using catfish and jatropha oil feedstock in alkali catalyzed transesterification with methanol in the presence of acetone cosolvent, at 25 degrees Celsius with yields around 95 percent. The researchers— Samrat Ghosh, Shilpa Setia, Sumyra Sidiq and Santanu Kumar Pal—note that for conventional processing to obtain similar yields would require excess methanol (alcohol to oil molar ratio of 6:1) and reaction temperatures of 55 to 60 C, along with vigorous mechanical agitation for at least 30 minutes. One company using such a cosolvent, tetrahydrofuran (THF) according to the IISER researchers, is Canadian biodiesel producer Biox Corp. While the boiling point of acetone is relatively low—56 C (nearly 133 degrees Fahrenheit)—heating to this degree consumes energy, reducing the net-energy balance of the fuel and increasing production costs. “Instead of heating the biodiesel for an arbitrary period,” write the researchers, “if regular monitoring of the presence of acetone left in the fuel during the heating process is carried out, it will definitely help in optimization of the heating process.” Typically, FTIR or NIR infrared spectroscopy can work on regular intervals, but the researchers contend visual tests would be more convenient, faster and cost-effective for frequent screenings. If a biodiesel sample with trace amounts of acetone is spiked with a strong base (methoxide/NaOH or KOH) followed by a 12

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negligible quantity of p-quinone, it results in an intense green-blue color effect. If a sample has too much catalyst present, addition of p-quinone alone will give the same green-blue effect and therefore can test for presence of both cosolvent and catalyst left in the fuel. “We observed the p-quinone reaction quite by chance while synthesizing biodiesel at room temperature according to the green technique reported by Maeda et al. in our laboratory from commercially available soybean oil (Fortune brand, India), acetone as cosolvent and sodium methoxide catalyst,” they state, noting the catalyst was prepared by adding sodium metal to anhydrous methanol rather than mixing methanol and NaOH. “The logic behind using Na metal instead of NaOH…was to avoid the byproduct H2O,” and water is obviously undesirable in conventional transesterification. They observed the sample turn blue, then brown-red. To understand this, they performed similar reactions on coconut and mustard oils—but the blue color phenomenon wasn’t observed. “These results made us ponder the connection between the blue color effect and additives in these vegetable oils,” the researchers explain. After investigating, they concluded that the blue color effect was due to the preservative E-319 in the soybean oil. “The preservative is known [as] tertiary butyl hydroquinone (TBHQ) and is a well-known antioxidant in the oil industry,” they state. The green-blue test can be used to detect the presence of TBHQ-type preservatives in vegetable oils, as well as acetone cosolvent presence in biodiesel. They also note the possibility of TBHQ use as a biodiesel corrosion inhibitor. “Presence of such additives in B100 or blends can be qualitatively detected by our green-blue color test on addition of acetone and a strong base.” —Ron Kotrba


FRONTEND

Pacific Biodiesel, Piedmont Biofuels Hold Plant Openings Advanced technologies featured in both new facilities Pacific Biodiesel was scheduled to hold a grand opening ceremony July 2 for its newest, most technologically advanced biodiesel facility, Big Island Biodiesel. The plant, Pacific Biodiesel’s thirteenth, is scaled at 5.5 MMgy and is designed for expansion. The new production facility is designed to process multiple feedstocks, including locally collected used cooking oil, trap grease, animal fats and virgin vegetable oils. First Hawaiian Bank helped finance the project with a USDA Rural Development loan guarantee. The Pacific Biodiesel Technologies’ engineering team, run by Engineering Manager Will Smith, designed Big Island Biodiesel with the most superefficient, state-of-the-art, zerowaste technology it has developed to date. Pacific Biodiesel said the construc-

tion and installation of all buildings, tanks and nonproprietary technical equipment brought 85 jobs to the local community. A job fair for staffing the plant was held onsite in March and brought 150 applicants. Hiring for permanent plant jobs began in May. Pacific Biodiesel Logistics, the trucking division of the company, collects local feedstock in the form of used cooking oil and grease-trap waste from restaurants, hotels and other food service facilities throughout the Hawaiian Islands. Pittsboro, N.C.-based Piedmont Biofuels was scheduled to hold a ribboncutting ceremony June 22 for its new FaESTER enzymatic biodiesel refinery. The plant is adjacent to Piedmont’s existing production facility. Speakers were scheduled to include Joe Jobe, CEO of the

National Biodiesel Board; Sen. Kay Hagan, D-N.C.; Larry Shirley with the North Carolina Department of Commerce; Steven Burke, CEO of the Biofuels Center of North Carolina; and a Novozymes representative. Novozymes is a global enzyme provider with a production plant in North Carolina. The company has been a partner in this biodiesel project since its inception. Construction of Piedmont’s new biodiesel plant was made possible with a three-year, $1.2 million U.S. DOE Small Business Innovation and Research grant. Most biodiesel is produced through transesterification using sodium methoxide. Piedmont’s new plant uses enzymes, not chemicals, for catalysis. —Ron Kotrba


FRONTEND

Renewable in Rhode Island

Bob Morton, managing partner of Newport Biodiesel, says his company is experiencing strong demand for biodiesel, so much so that the decision was made to triple the size of the plant. The expansion, which was completed this spring, increased capacity from 500,000 gallons to 1.5 MMgy. Morton notes that the upgrade was supported by the Rhode Island Economic Development Corp., which provided some funding to complete the project. Newport Biodiesel also invested in the expansion. A large part of the build-out included upgrading tankage, both within the production facility and adding capacity for waste vegetable oil storage. The plant features batch processing and is currently running two 2,500-gallon batches daily. Morton said there is potential to run additional batches in the future. TRIPLED CAPACITY: Newport Biodiesel recently expanded from 500,000 gallons a year to 1.5 Newport Biodiesel primarily supplies fuel MMgy due to strong local demand for biodiesel. within Rhode Island, but some is also sold into the Massachusetts market, he says. The region features a strong Bioheat July would require at least 2 percent biodiesel. On July 1, 2013, the manmarket, Morton adds. The plant generally sells into the Bioheat market date would increase to require a B3 product. In July 2014, B4 would be from October through April, and sells into the transportation fuel required, with B5 in 2015. market the remainder of the year. Morton says he supports the measure, noting that it would help Pending legislation within the state of Rhode Island could help stabilize the Rhode Island marketplace. He also stresses that the manmake the local Bioheat market even stronger. The bill, known as the date would not only benefit biodiesel producers, it would also benefit Ultra-Low Sulfur and Biodiesel Heating Oil Act of 2012, aims to oilheat dealers. While many home heating oil suppliers have experiencourage biofuel production within the state, while also helping to enced trouble competing with cheaper, cleaner natural gas, blending create jobs, improve air quality and encourage the installation of more oilheat with biodiesel creates a greener product that can better compete efficient heating equipment. with the emissions profile of natural gas, making it more attractive to Under the legislation, all heating oil sold within the state as of this consumers.—Erin Voegele

Frazier, Barnes & Associates, LLC Technical & Marketing Services

For more than a decade, FBA has provided value-added services to the biodiesel industry. When issues such as RIN Validity, Margin Management and Process Safety Management arise, trust the team that knows. Trust the team with experience. Phone: 901-725-7258 www.FrazierBarnes.com 14

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Feasibility Studies / Business Plans RFS2 Registration and Pathways *RIN Verification* Feedstock Procurement Margin Management Business Valuations/Appraisals Product Marketing Plant Sales

...Trust ...Results ...Experience

Process Safety Management Pre-Treatment Solutions Product Quality Optimization Plant Expansion Justification Commissioning Services Operator Training Process Troubleshooting Independent Engineering

Frazier, Barnes & Associates, LLC

PHOTO: NEWPORT BIODIESEL

Newport Biodiesel expands capacity, state considers Bioheat mandate


FRONTEND

The Always Interesting, Cutthroat World of Biodiesel

Fraud, raids, subpoenas, trials, declining values and hope for stability Significant developments in the biodiesel renewable identification number (RIN) credit market have unfolded in the past two months. In April, Houston-based Green Diesel LLC was issued a notice of violation (NOV) from the U.S. EPA for generating more than 60 million bad RINs, the third known case of its kind following last year’s bust of Clean Green Fuel LLC and Absolute Fuels LLC. Just before the agency issued the NOV, it announced administrative settlements levied against 30 obligated parties and renewable fuel exporters for purchasing invalid biodiesel RINs. The agency has come under fire not only from oil lobbyists seeking repeal at minimum of the cellulosic mandates in the renewable fuel standard (RFS), but from RIN broker OceanConnect and the U.S. House. OceanConnect filed a lawsuit against EPA alleging negligence in registering biodiesel producers (RIN generators) without verifying if they even have a plant (Rodney Hailey, Clean Green Fuel owner). After the Green Diesel NOV, a House committee sent EPA a letter stating it opened an investigation on the agency’s handling of the RIN fraud cases, which has wrought havoc on small biodiesel producers, brokers and oil companies. The committee gave EPA a tight deadline to produce testimony and documents on virtually every detail in the fraud cases, particularly what EPA knew about Green Diesel prior to its NOV issuance while it was settling with obligated parties. Just before Memorial Day weekend, federal agents raided Cima Green Energy Services’ New Jersey office in search of documents, emails and anything to do with Indiana producer eBiofuels LLC and parent company, publicly traded Imperial Petroleum.

Biodiesel Magazine learned handfuls of companies were subpoenaed to turn over all correspondence pertaining to eBiofuels to federal agents, including the FBI, U.S. Securities and Exchange Commission and EPA. As these developments unfolded, Genscape’s RIN Integrity Network, developed with the National Biodiesel Board’s RIN Integrity Task Force, launched. Producers pay to allow their facilities to be monitored in various ways so subscribed obligated parties can verify through a dashboard that credits purchased are valid. Several companies have their own integrity programs, such as Murex, which lays claim to 100 percent validity in 7.6 billion RINs moved since RFS launched. Murex became one of the first RIN marketers to require initial and ongoing site audits for all its suppliers. Weeks after Genscape’s program launch, Lee Enterprises’ RIN 9000 program, featuring RIN education and fuel sampling, merged into Genscape’s RIN Integrity Network. In June, the jury trial of the first accused biodiesel RIN scammer, Hailey, began. Reports of the trial indicate Hailey’s defense is everybody knew the credits were fake but they bought them anyway, so there was no fraud. Hailey was convicted of wire fraud, money laundering and violating the Clean Air Act. Finally, since May 1, about the time the Green Diesel NOV was issued, until mid June, RIN values declined by 17 percent from around $1.45 to $1.20. RIN expert Jess Hewitt with Gulf Hydrocarbon says this has more to do with the price spread between diesel and biodiesel than fraud. —Ron Kotrba

Representing biodiesel producers, marketers, retailers, feedstock suppliers and stakeholders in California Biodico Sustainable Biorefiner ies

Membership Info: call (916) 583-8015 | www.CaliforniaBiodieselAlliance.org JULY | AUGUST 2012

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Industry in High Gear to Secure Critical Federal Policy Decision Those who attended the National Biodiesel Board’s June membership meeting in Washington, D.C., know that our team has been working overtime to win a volume increase for biodiesel under the renewable fuel standard (RFS) next year. Based on our members’ input, we know that there is no issue more important to the industry than winning this fight, and we wanted to give you an overview of the efforts we have taken and strongly encourage you to stay engaged in this issue. Regardless of the final outcome this year, this is a battle our industry could be waging for years to come as the U.S. EPA establishes annual RFS volumes for biodiesel. Starting this year, the RFS calls for a minimum of 1 billion gallons of biomass-based diesel (mostly biodiesel) to be used each year in the U.S. fuel supply until 2022. The law gives the EPA the discretion to raise that minimum requirement each year based on industry capacity, feedstock availability and other factors. For 2013, the EPA proposed increasing the volume requirement to 1.28 billion gallons. This proposal is consistent with our internal research on sustainable growth and we strongly support it. A final decision, however, has been stalled as the Office of Management and Budget—an arm of the White House charged with scrutinizing regulation—has raised questions. NBB’s Washington office has been working closely for months with the EPA, OMB, USDA, Congress and other White House officials to explain the economic, environmental and energy security benefits of increasing biodiesel production and use. We have held a series of meetings with OMB in which we particularly focused on the economic benefits of biodiesel, including potential savings to consumers. In addition, we have been communicating regularly with the EPA, White House officials and others to ensure that the right people understand the significance of this rule to our industry and the broader economy, and we have boosted our presence on Capitol Hill to bolster our support there. Simultaneously, the biodiesel community has weighed in strongly with grassroots advocacy. In our initial grassroots campaign that started in January, we estimate that nearly 2,000 letters were sent to the administration on this issue. Along with strong participation from you, NBB dedicated additional resources to

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identifying supporters across the country and organizing letter-writing campaigns in a handful of key states. More recently, as the administration moves closer to a decision, we have launched another outreach campaign that includes paid advertising in key states and another letter-writing campaign, and we need your participation. If Anne Steckel, Vice you haven’t already, please visit the Fueling President of FedAction link at www.biodiesel.org website and eral Affairs, National Biodiesel Board send one of our advocacy letters. While we don’t have a final ruling as of this writing, we know that even in a busy election season, your message is getting through and building awareness at the White House that this is a decision that affects thousands of people’s livelihoods. In February, 60 members of Congress signed letters to the White House urging the administration to finalize the EPA’s proposal, and we are working with lawmakers on additional letters of support. At our June membership meeting, a handful of biodiesel producers participated in a meeting with key administration energy officials where we had the opportunity to state our case. The following day, White House energy adviser Dan Utech addressed our meeting and said the administration understands the rule’s importance and was reviewing it carefully. In addition, President Obama specifically mentioned the importance of biodiesel at a campaign event in California a few days later. After months of delays, we believe we are nearing the finish line and that the administration is moving closer to a decision. If you haven’t already, we urge you to make your voice heard on this critical decision. Write the administration. Call your members of Congress. Ask your friends and family to do the same. With strong grassroots advocacy, we can continue to strengthen the RFS and grow the U.S. biodiesel industry into America’s leading advanced biofuel. Anne Steckel, Vice President of Federal Affairs, National Biodiesel Board


inside

NBB National ad campaign takes off showcasing America’s advanced biofuel

It's loud, fast and thrilling, and it's more than a concept. Biodiesel is America's only advanced biofuel available nationwide. It's the fast track to American jobs—the road to energy independence. As the U.S. biodiesel industry shows in its just-launched ad campaign, biodiesel is here, now. This ad campaign is the second time the industry has taken to the airwaves, television screens, Web and print outlets to tell its story. And what a story it is. The campaign centers around Brent Hajek's 182 mile-per-hour land speed record, set with B20 in a Ford SuperDuty. The multimillion dollar project includes national television and Web advertising, and regional print and radio advertising. Two 30-second spots began airing across the nation on Sunday morning network talk shows on June 17. The National Biodiesel Board worked with PCI Communications, a leading provider of creative communications services for Fortune 500 corporations, national associations and federal agencies, to create the campaign. Take a look at the campaign at www.AmericasAdvancedBiofuel.com. The effort is supported by the United Soybean Board, the NBB, State Soybean Checkoff Boards, the U.S. Canola Association and the Northern Canola Growers Association. JULY | AUGUST 2012

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insideNBB

Biodiesel industry continues progress to stabilize RIN market As the RFS continues to come under fire, the biodiesel industry is actively striving to improve the program. One of the criticisms that opponents use to attack the RFS and characterize it as an ineffective policy is the handful of isolated fraud cases that have impacted the RIN markets. That is why the National Biodiesel Board’s RIN Integrity Task Force has worked diligently to provide a solution to the uncertainties in the RIN market. The U.S. biodiesel industry took a large step towards stabilizing the RIN market with the launch of the Genscape’s trademarked RIN Integrity Network dashboard in late May. NBB’s RIN Integrity Task Force, made up of obligated parties, blenders, retailers, and small and large biodiesel producers, helped guide the development of the voluntary, private-sector program that would provide transparency and integrity to the marketplace. The RIN Integrity Network dashboard allows obligated parties who subscribe to the Genscape service to do their due diligence with real-time information on participating biodiesel producers through a user-friendly, online information service. This dashboard allows subscribing parties to cheaply and easily tell whether an individual

biodiesel producer's RINs have been verified through the Genscape system, which includes ongoing monitoring through physical equipment, data from producers and feedstock providers, and EMTS monitoring. Currently there have been more than 70 full registrations, and 15 obligated parties have signed up to trial the service. Hearing concerns from the industry on cost, NBB has worked hard to encourage Genscape to develop a pricing structure that is both effective and affordable and shares the cost among stakeholders throughout the entire RIN system. The structure is flexible to fit individual producer needs with the lowest risk option being a $1,000 annual fee plus a penny per RIN sold, capped at $40,000. Other options include a higher annual fee with reduced variable pricing based on RINs sold. All pricing structures reflect a 20 percent discount to NBB members. Recently, Genscape announced a partnership with Lee Enterprises Consulting that would add valuable RIN education, fuel quality, and additional consulting services to the program. Additional information can be found at info.genscape.com/RIN.

Number of BQ-9000 labs doubles as fuel quality program grows The backbone of the BQ-9000 program is the unique combination of the ASTM standard for biodiesel, ASTM D6751, and a quality management system that includes storage, sampling, testing, blending, shipping, distribution, and fuel management practices to ensure quality for consumers. As more producers and marketers become BQ-9000-certified, it has become increasingly important for there to be more certified laboratories to provide testing. Just halfway through the year, the BQ-9000 laboratory program has more than doubled with the addition of four newly accredited laboratories, bringing the total to seven. The four new labs include: • AmSpec Services LLC laboratory, Linden, N.J. • Inspectorate America Corp, Linden, N.J. • AmSpec Services LLC laboratories, St. Rose, La. • AmSpec Services LLC laboratories, Galena Park, Texas The BQ-9000 laboratory program continues to grow as more applicants are currently in the certification process now. According to BQ-9000 Program Manager Kyle Anderson, more than 80 percent of U.S. biodiesel production is from BQ-9000accredited producers. This number continues to increase as more biodiesel producers are accredited into the program, and it shows the industry’s continued commitment to fuel quality. Also this year, the program has accredited five additional producers and one marketer,

NBB welcomes new member Green Fuel Technologies Cashton LLC—Cashton, Wis. 18

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bringing year-to-date totals in the program to 40 certified producers, 23 marketers and seven laboratories. The BQ-9000 program is open to any biodiesel producer, fuel marketer or testing laboratory. For more information, or to inquire about becoming a BQ-9000 Accredited Organization, contact Kyle Anderson at the National Biodiesel Board office.


insideNBB

On the grow: pennycress harvest demonstrates feedstock diversity Pennycress has been on the fast track to becoming a sustainable biodiesel feedstock since 2008, and this year, an Illinois team of researchers and entrepreneurs believes it has found the best way for farmers to grow the crop. It could mean another viable, sustainable source of oil for our nation’s biodiesel supply while adding income to farm operations. Alan Weber, NBB feedstock program “I saw an opportunity to produce an enmanager, has been ergy crop here-and-now on underutilized asappointed to the sets with no negative impact to the environfederal Biomass Research and ment or the farm,” said Peter Johnsen, who Development has been instrumental in commercialization Technical Advisory of the crop. Johnsen is a retired director of Committee. the USDA’s National Center for Agricultural Utilization Research in Peoria, Ill. A member of the mustard family, pennycress grows wild in the Midwest, and its seed packets contain oilseeds that yield 36 percent oil when crushed. Johnsen and his partners are contracting with other farmers to grow and harvest the plants as a winter crop. They plan on crushing the seeds and selling the oil to biodiesel producers. “A great benefit is that we can grow pennycress during the winter on existing farms that would otherwise just sit dormant,” he said. “It has no impact on existing crops, conservation grounds or critical wildlife habitat.” Alan Weber, who runs the National Biodiesel Board’s feedstock development program, said, “The diversity of fats and oils

Peter Johnsen harvests pennycress outside Peoria, Ill.

from which biodiesel can be made has always been one of its greatest strengths, and pennycress is a perfect example of how our industry is innovative and sustainable.” NBB’s feedstock program supports industry programs for expanding the supply of oils and fats for biodiesel production. This includes serving as an advocate at industry meetings and providing strategic vision for future research investments in Washington, D.C. To that end, Weber has been appointed by the USDA and U.S. DOE to serve as a member of the Biomass Research and Development Technical Advisory Committee. The prestigious committee helps USDA and DOE in meeting important goals of a healthier rural economy and improved national energy security.

California LCFS could open new 700 million gallon market This spring, the Ninth Circuit Court of Appeals lifted an injunction on the low carbon fuel standard (LCFS), a promising step that could open a 700 million gallon market for biodiesel. The LCFS is a California Air Resources Board regulation designed to reduce the carbon intensity of fuels sold in California 10 percent by 2020. This could mean more biodiesel sales in California than ever before. The National Biodiesel Board’s state governmental affairs team, led by Shelby Neal, has spent time and resources to stay engaged in this important effort during the past several years. In CARB’s 2011 Program Review Report, the agency identified a number of compliance scenarios in which the LCFS target reductions could be met. By 2017, each of these scenarios relied upon B20 in every gallon of California diesel, or about 700 million gallons per year in total. Some think even more biodiesel will be needed to meet the targets in the later years of the policy.

“Either way, California has the potential to be a tremendous market for biodiesel,” Neal said. “Biodiesel is one of only a very few low carbon fuels produced at commercial scale.” Neal added that the CARB staff understands that biodiesel is an important and necessary tool for the state to meet its low carbon goals. “While regulatory challenges continue to exist, CARB has taken a solutions-oriented approach toward biodiesel and I think these issues will ultimately be resolved,” Neal said. Nothing, however, is a done deal yet. And the final outcome of the lawsuit against the LCFS is even less clear. “Nevertheless, should the LCFS move forward on a permanent basis, NBB members should know that we have done everything we can to position biodiesel for success within that policy framework,” Neal said.

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BusinessBriefs Biox Corp. announced it signed definitive agreements with International-Matex Tank Terminals to secure the site and related infrastructure for the construction of its second biodiesel production facility. Biox’s second facility will have a 100 MMly capacity (26.4 MMgy), 50 percent larger than its existing facility in Hamilton, Ontario. The new facility will be located within the IMTT terminal in Bayonne, N.J., at New York Harbor. The agreements include a long-term land lease agreement for the plant as well as long-term leases on existing storage tanks at IMTT. The IMTT terminal at New York Harbor is a 600acre facility within which Biox has secured 3.5 acres for its second plant. New York Harbor is a major petroleum distribution hub. The selection of this site is consistent with Biox’s strategy to locate facilities adjacent to largescale petroleum storage and diesel distribution infrastructure as well as users of petroleum diesel and blenders of biodiesel to minimize transportation costs.

Companies, Organizations & People in the News

The Shell Co. of Australia Ltd. officially opened a new biodiesel facility at its Newport Terminal in Victoria. The new state-of-the-art facility has enabled Shell to launch BioDiesel 20 (B20) into the Australian market, a world first for the company. Shell’s new B20 diesel fuel will be offered to Shell’s commercial customers, initially from its Newport terminal in Melbourne. The biofuel component of Shell BioDiesel 20 is being sourced from Australian biocomponent producer Australian Renewable Fuels based in Barnawartha in regional Victoria. Shell BioDiesel 20, which is blended at Newport, is made of Shell diesel with a bio component produced from vegetable oils or animal fats that meet Shell’s global sustainability standards. Shell plans to expand its B20 availability nationally as it continues to work

with its customers to offer fuels and lubricants solutions that help reduce their CO2 footprint while being produced in environmentally and socially responsible ways. Shell believes biofuels are a practical commercial solution to assist in reducing carbon emissions from the road transport sector over the next 20 years. Shell is one of the world’s largest distributors of biofuels.

Propel Fuels celebrated the grand opening of its first Clean Mobility Center in Fullerton, Calif. The station offers biodiesel blends and E85 along with conventional petroleum fuels, and allows drivers to offset carbon emission from their fuel purchases at the pump by helping fund clean-air projects through Propel’s partnership with Carbonfund.org Foundation. Starting in Fullerton, each station will have free air stations for tires to increase vehicle miles per gallon, education centers offering information on local public transit and rideshare options, bicycle tuning


BUSINESSBRIEFS Sponsored by centers, recycling stations at the pump and, soon, emerging fueling types such as natural gas and electric vehicle charging. Propel’s Fullerton station is one of a growing network of locations built in coordination with the California Energy Commission’s Alternative and Renewable Fuel and Vehicle Technology program. The company operates stations throughout California and Washington State with more than 200 stations planned for the next two years.

Biodiesel producer and marketer Renewable Energy Group Inc. announced it will establish a B100 wholesale terminal at its yet-to-be-completed biodiesel plant near Clovis, N.M., with product available begin-

ning in July. The 15 MMgy biodiesel facility, known as REG Clovis, is approximately 40 percent complete. The company is converting the site’s liquid storage and truck loadout into a wholesale terminal for REG-9000branded biodiesel sales via truck and rail.

The Railway Association of Canada announced this month that Central Manitoba Railway (CEMR) has been selected as the winner of its 2012 Marketing Award. The railway is being recognized for the innovative biodiesel fuel blending solution it has pioneered. The blending technology includes a mobile liquid blending and distribution unit that is capable of blending fuels at a rate of 1,200 liters (317 gallons) per minute. The system can be attached to up to four fuel sources and blend those sources into a finished product. CEMR was approached by diesel supplier Astra and petroleum company Imperial Oil to design the solution to serve the market demand created by Manitoba’s

biodiesel mandate. CEMR used its transportation center located six miles from Imperial Oil’s facility as the blending location. The railway transported diesel fuel from Imperial Oil and shipped in biodiesel from the U.S. on the Canadian Pacific Rail. Using the liquid blending and distribution unit, tank cars and transloading track infrastructure, CEMR was able to blend the two fuel sources on site without the use of expensive tanks, loading racks or piping system. The highly successful system has been used to blend all of Imperial Oil’s summer diesel the past two years.

SHARE YOUR BUSINESS BRIEFS To be included in Business Briefs, send information (including photos, illustrations or logos, if available) to: Business Briefs, Biodiesel Magazine, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You may also fax information to (701) 746-5367, or email it to rkotrba@ bbiinternational.com. Please include your name and telephone number in each correspondence.


INFRASTRUCTURE

BIODIESEL UPGRADE: In Florida, costs to retrofit existing fueling infrastructure to distribute blends of biodiesel higher than 10 percent to neat B100 are covered up to $1 million per taxpayer.

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INFRASTRUCTURE

Building Opportunity New tax credits in Florida aim to incent economic development and job creation through biofuel infrastructure investments BY ERIN VOEGELE

Tax credits can be a powerful mechanism to help spur investment in biodiesel infrastructure while simultaneously creating much-needed opportunities for economic development and job creation. Energy legislation that aims to achieve those objectives became law in Florida in April. The biofuel tax credits contained in the law are modeled after those that were in effect within the state from 2006 through 2010. The legislation, HB 7117, was sponsored by state Rep. Scott Plakon, who represents District 37 in Florida. According to Plakon, one reason he sponsored the bill is that he believes it will help improve Florida’s economic situation. “We are looking for various ways to encourage development by stimulating private investment and hiring,” he says, noting the bill will also help Florida diversify its fuel supplies. Specifically, the bill provides a sales tax refund for materials used in the distribution of blends of B10 through neat B100, ethanol blends of E10-E100, and other renewable fuels produced with biomass feedstock and used to reduce consumption of fossil-based transportation fuels. A statewide cap of $1 million per year is placed on the incentive, which is scheduled to sunset on July 1, 2016. The law also includes a renewable energy technologies investment tax credit. Under the initiative, 75 percent of all capital,

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INFRASTRUCTURE “In deference to the support for those tax credits by Florida Commissioner of Agriculture Adam Putnam and the legislators who have worked on this legislation, [it] will become law without my signaREPRESENTING POLICY EXPERT: ALGAE ADVOCATE: PROGRESS: State NBB Director of ABO Executive ture.” Scott also noted that State Governmental Director Mary Rep. Scott Plakon without clear documentasponsored energy Affairs Shelby Rosenthal tion that the proposed tax legislation now Neal says state notes that no credits have produced sufin effect with incentives known adverse tax incentives are powerful environmental ficient return or provided mechanisms in impacts have for biodiesel significant cost savings for infrastructure driving biodiesel been identified the state’s taxpayers, he development. development. regarding research with genetically will request their repeal. modified algae. Plakon notes that the trend with the first incepoperation, maintenance and research and tion of biofuel-related tax credits seemed development costs incurred between July to indicate growing interest in adding bio1, 2012, and June 30, 2016, in connection fuel infrastructure within the state. “They with an investment in production, storage weren’t used in the first few years, and in and distribution of B10-B100, E10-E100 the last year they were fully subscribed,” and other renewable fuels qualify for the he says. “It appears demand grew as time tax credit. The law specifies eligible costs went on.” include those associated with constructing, Ned Bowman, executive director of installing and equipping these technologies the Florida Petroleum Marketers & Convewithin the state. The retrofit of fueling sta- nience Store Association, says the potention pumps for B10-B100, E10-E100 and tial of the incentives could be tempered by other renewable fuels qualify as an eligible low demand for biodiesel and other biofucost. A cap of $1 million per year per tax- els. “I think the credits may help some of payer is set, with a $10 million per year cap our members, but for many it won’t make for all taxpayers. a difference,” he says. “They want to see According to Plakon, the incentives demand for [biodiesel] before they make an represent a starting point and a baby step investment. There has got to be demand towards job creation and expanded use in order for the market to pick it up and of renewable fuels. The hope is that they capture it.” will give the market a nudge. Plakon notes Current demand for biodiesel in that Florida Gov. Rick Scott is very perfor- Florida is pretty low, Bowman adds, notmance-based. “We’ve instituted these poli- ing there might be a couple of pockets of cies and they are going to be monitored as higher demand within the state. Orlando is we go to make sure things happen as in- one example. Retailers within the state are tended,” Plakon says. “As time goes on, if aware of the fuels and incentives, he says, the intended result is not accomplished, we but many are likely to be unwilling to make can modify them as we go. This is just a new infrastructure investments due to the baby step, and we hope we can build upon state of the economy. “Our members are this in future years.” in business to make a profit,” Bowman Scott actually let the measure become says, “and if it’s not profitable, they’re not law without signing the bill. “While I sup- going to do it.” port many provisions of [the bill], I am Assuming demand for biodiesel inconcerned whether the taxpayers of Flori- creases and there is more interest from da will receive a return on the targeted tax retailers in installing biofuel infrastructure, credits in the bill,” Scott said in a statement. Bowman says he’d probably like to see a 24

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INFRASTRUCTURE larger incentive in place, as upgrading piping, tanks and other equipment is an expensive endeavor. “Our members are individuals and they are entrepreneurs,” he says. “When they see an opportunity, they’ll take it, but it has to be market-driven.” Shelby Neal, director of state governmental affairs at the National Biodiesel Board, offers a more positive take on the incentives. “Regardless of the type of economic development being discussed, financial incentives work in that they tend to bring about more of the desired activity and strengthen the businesses involved in the activity,” he says. “In the case of biodiesel, I think the results speak for themselves. Where meaningful production incentives exist, biodiesel production exists. Where meaningful consumption incentives exist, biodiesel consumption exists. It’s pretty simple, really.”

Addressing Algae HB 7117 could also impact algae development and infrastructure projects, thereby affecting growth of algae biofuels within Florida. The law establishes new regulations regarding algae and cyanobacteria cultivation. Under the law, nonnative algae and cyanobacteria—including those that are genetically engineered—cannot be cultivated at a scale of more than two contiguous acres without a special permit. A permit is not required, however, to cultivate plants or groups of plants that, based on experiences or research data, do not pose a threat of being an invasive species. The plants grown without permit are specified to be those commonly grown in the state for human food consumption, commercial feed, feedstuffs, livestock forage, nursery stock, or silviculture. As part of the law, each permit holder is to maintain a bond or certificate of deposit in the amount determined by the department for each growing location. The amount cannot be more than 150 percent of the estimated cost of removing and destroying the cultivated plants. It is also capped at $5,000 per acre, unless a higher amount is determined to be necessary to protect the public health, safety and welfare.

While Plakon notes he is generally philosophically inclined to deregulate rather than regulate, he says the permitting requirement was included in the legislation because the Florida Department of Agriculture had identified the release of nonnative or genetically altered algae and cyanobacteria as a potential problem. “We have to be prepared to deal with a potential release of these organisms into the environment,” he says. Algal Biomass Organization Executive Director Mary Rosenthal says the regulations should relieve concerns of those who want to see the algae industry develop in a safe, responsible way. “It’s too soon to determine what effect Florida’s new requirements will have on algae investments in the state,” she says. “We hope it doesn’t place an unnecessary burden on the development of any current or future technologies for sustainable and renewable products from algae. ABO believes that existing regulations from

the U.S. Federal Coordinated Framework for the Regulation of Biotechnology, combined with responsible local and state requirements, can provide the necessary comprehensive environmental protection.” Rosenthal further notes that academic and private laboratories have been working with modified algae for more than 30 years. “As far as we know, no adverse environmental impacts have been tied to algae-based research and development,” she says. “As such, we applaud Florida’s efforts to work with the algae industry in finding ways to minimize potential regulatory burdens of this new law, including exploring appropriate exemptions where the environmental impact does not warrant increased scrutiny.” Author: Erin Voegele Associate Editor, Biodiesel Magazine (701) 540-6986 evoegele@bbiinternational.com

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DISTRIBUTION

LOADING RACK: Whole Energy President Atul Deshmane estimates that 90 percent of the biodiesel his company brings to market fills discretionary demand. PHOTO: WHOLE ENERGY FUELS CORP.

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DISTRIBUTION

A Collaborative Approach Companies in Portland, Ore., cooperate to vertically integrate feedstock, production and distribution infrastructure BY ERIN VOEGELE

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DISTRIBUTION The word “infrastructure” often brings to mind huge industrialscale endeavors. Strong infrastructure development is also important, however, for smaller-scale biodiesel operations that aim to serve their local and regional communities. A new project underway by three companies in Portland focuses on the co-location of grease recycling, biodiesel production and distribution operations. Once complete, the collaborative initiative will allow all three entities to better and more efficiently serve their communities. While many in the biodiesel industry

aim to supply fuel into the compliance marketplace, oil recycler Oregon Oils Inc., fuel producer Beaver Biodiesel LLC and distribution company Whole Energy Fuels Corp. are primarily working to efficiently supply fuel to meet the discretionary blending market in the Portland metro area. Whole Energy President Atul Deshmane says the Portland marketplace offers a strong demand for discretionary biodiesel blending. “Whole Energy has always been about a discretionary market,” Deshmane says, noting that his company has developed distribution

in several locations along the West Coast. “Almost all of our customers buy biodiesel because they really want to buy it—they really like the product.” In fact, Deshmane estimates that 90 percent of the biodiesel his company delivers to market fills discretionary blending demand. The new location in Portland will also offer powerful cost savings, largely through reduced transportation costs. Daniel Shafer, principal manager of Beaver Biodiesel, estimates that moving his company’s biodiesel plant to the new location could reduce transportation costs associated with feedstock and fuel delivery and that co-locating with Oregon Oils will help manage risks associated with feedstock supply disruption. Oregon Oils is also relocating its operations as part of the project. Company President David Burns says the move will also help his company better meet the needs of its clients, as oil collection operations can be completed more quickly and efficiently.

Project Development

The Road To American Energy Independence Is Faster Than You Might Think. 182 mph, to be exact. That’s the speed record recently set by Oklahoma soybean farmer Brent Hajek in a B20 biodiesel-powered pickup truck. But there’s a more important race at stake. Biodiesel production is already cutting diesel imports by 3 million gallons a day and putting America on the fast track to energy independence.

Biodiesel is Here, Now.

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Oregon Oils and Beaver Biodiesel have long histories of working in the Portland metro area. Oregon Oils has been in business 20 years and is the largest waste cooking oil and trap grease recycler in the metro area, according to Burns. The company initiated the move to its new location in December. “We are in the middle stages of getting set up,” he says. Beaver Biodiesel is also in the process of relocating its plant. The company is moving its production capacity approximately 80 miles north, from Albany, Ore., to an industrial district near downtown Portland. The 1.2 MMgy plant has been in operation for several years, and has historically produced fuel using mostly recycled cooking oil. Shafer notes, however, that his company is a sponsor of a Biomass Crop Assistance Program camelina project area, and expects to produce a portion of its biodiesel using camelina oil in the future. Shafer says that he anticipates the move will allow his company to reduce its transportation costs by up to 20 cents per gallon. That savings takes into account transportation costs for both feedstock delivery and fuel shipment. “We expect to be [more] price competitive,” he says.


PHOTO: WHOLE ENERGY FUELS CORP.

DISTRIBUTION

EXPANDED REACH: In addition to its Portland, Ore., headquarters, above, Whole Energy Fuels owns and operates biodiesel distribution points in Washington and California.

Work to move the facility is already underway. “We intend to move all of our production to Portland, and then expand operations over time,” Shafer says. “We expect to have our [original 1.2 MMgy] capacity reinstalled and operational this fall.” The plant will also register with the U.S. EPA under RFS2. That process takes approximately six months. While Shafer stresses that his company’s intent is to have the plant reassembled and operational this fall, biodiesel production will not necessarily begin immediately. “We need to do some careful planning in order to decide when biodiesel production should resume here,” he says. The wholesale price of diesel recently dropped, weakening the local market demand for biodiesel. In addition, unsettlement in the renewable identification number (RIN) market with regard to a lack of demand for RINs from small producers due to isolated incidents of fraud is also making it more difficult for small producers to compete economically. The market is going to have to strengthen and RINs are going to have to become a firmer proposition to the small producer for it to make economic sense to restart our production, Shafer says. The potential delay in restarting the Beaver Biodiesel plant will not, however, impact the biofuel hub’s grease recycling and biodiesel distribution operations. Whole Energy, alternatively, is not relocating to the new location near downtown.

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JULY | AUGUST 2012

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DISTRIBUTION would want a distilled product,” he says, addDeshmane says he’s been interested in ing that if this decision is made, Whole Energy establishing this type of cooperative project would co-invest. Shafer notes Beaver Biodiesel because he believes in the concept that small would also be involved. businesses can achieve significant benefits through cooperation. “I think the main benefit is that businesses working together toEffective Cooperation “The importance of this project is that we wards a common cause can grow the market genuinely reduce the cost of production and and provide highly efficient service,” he says. distribution of biodiesel,” Shafer says. “We “I think businessmen, by nature, are fiercely will be able to bring a cost-effective, premium independent, but the world of energy is so quality product to market and be competitive. big and [big agriculture and energy compaWe are vertically integrated in a way that allows nies] are too easily able to dominate. Small us to bring a product to market that customers businesses have to band together if we expect to survive in energy.” want at a price that works.” While it’s possible many companies would prefer to have ownership in all three vertically integrated operations, Deshmane points out that there are advantages to simply forming cooperative working arrangements with other companies absent ownership. He stresses that capital investments are far less. “It’s easier for a small company to play a role and grow into being part of a bigger overall enterprise,” he says. There are also benefits to collaborating with companies that have longterm experience and in-depth knowledge of their industry and market. The location of the initiative is one of several factors that Deshmane, Shafer and Burns name as important to this project’s success. Portland is a good home for this type of co-located project due to its strong discretionary blending market, Deshmane says. Portland also offers strong potential for colocated operations due to sufficient feedstock supplies and a lack of competition from other community-scale producers. The specific location within Portland is Stay ahead of tighter also important. Oregon consumes about 40 biodiesel specifications million gallons of B100 per year, Shafer says. Much of that fuel is used to meet the state’s B5 mandate. According to Shafer, approxiImprove cold mately 60 percent the petroleum fuel that weather performance enters the state flows directly into major fuel terminals in Portland. “This facility is about three blocks away from the highway where 60 percent of the fuel is distributed throughout the state via truck,” he says. “Whole Energy is wise to develop this project into a major FATTY ACID STRIPPING | EXTRACTION | OIL PROCESSING | BIODIESEL | GLYCERIN REFINING | ESTERIFICATION distribution terminal, and this location for CROWN IRON WORKS COMPANY distribution is the real powerhouse aspect of Call us today 1-651-639-8900 or Visit us at www.crowniron.com this facility. We have rail on-site, so there is Additional offices in Argentina, Brazil, China, England, Honduras, India, Mexico, Russia and Ukraine the opportunity to expand operations into a

Rather, it is establishing new operations within the market. “We are just getting the Portland location set up,” Deshmane says. “We are going to pursue proportional blending there.” The location will also feature 20,000 gallons of indoor, heated storage capacity. According to Deshmane, the 20,000-gallon tank is just a first step, and it is likely storage capacity will increase. He says storage and distribution aspects of the project were to be operational this summer. It is also possible that distillation equipment may be added to the new Portland site eventually. “We think that the Portland market

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DISTRIBUTION major biodiesel manufacturing and distribution hub.” Deshmane adds that it is imperative to find partners who really want to collaborate for a project like this to be successful. “If there is not that initial desire to work together, then you can’t go anywhere,” he says. “We have a really good collaborative effort. We are all in this together. It’s hard to do that—to find people who have the right mentality.” Beyond the desire to collaborate, he also notes it’s crucial that each entity fully trusts the others. According to Deshmane, Whole Energy will consider replicating this type of vertically integrated project in other metropolitan areas, as long as it’s a good fit with the local market.

out competing with its biodiesel suppliers. By starting a glycerin refining operation, he says Whole Energy is actually able to help its biodiesel suppliers increase the value of their glycerin coproduct. “I want to expand what we are doing with glycerin into California.”

customer base in the Richmond area. “Business in Richmond is going really well,” he says. “I can barely keep up.” The company is also eying the possibility of upgrading its other existing facilities. “We would like to have the proportional blending and microfiltration at each of our locations,” Deshmane says. The company is also expanding its operations to include glycerin refining, and is putting together a glycerin refining plant at the Mount Vernon Terminal Railway in Washington. According to Deshmane, his company wanted to find a way to be involved in production with-

Author: Erin Voegele Associate Editor, Biodiesel Magazine (701) 540-6986 evoegele@bbiinternational.com

Additional Infrastructure The Portland project is far from the only biodiesel infrastructure development initiative that Whole Energy is spearheading. The company also owns and operates biodiesel distribution in several other locations spanning from California to Washington. Whole Energy’s location in Anacortes, Wash., has 120,000 gallons of heated storage capacity. The site also features proportional blending equipment and an on-site lab. While rail access is not available there, Deshmane says rail transloading is nearby. The company’s site in Tacoma, Wash., includes both rail and truck access and up to 120,000 gallons of storage. A location in Richmond, Calif., also has rail and truck access and the opportunity for Whole Energy to lease up to 250,000 gallons of storage. Whole Energy has also established distribution infrastructure in the Los Angeles area that includes rail and truck access and 30,000 gallons of storage. Deshmane says the California Energy Commission recently selected Whole Energy to receive $125,274 in grant funding to install proportional blending equipment at the Richmond facility. The company has already secured permits for the project and expects the upgrade to be complete by end of year. We would have completed the upgrade eventually, Deshmane says, noting that the grant award is enabling Whole Energy to upgrade its capabilities sooner than would otherwise be possible. The new blending equipment will help Whole Energy better serve its strong

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PROCESS

PHOTO: KIRK COBB, SUPERIOR PROCESS TECHNOLOGIES

CONTRIBUTION

CLEAR AS DAY: Done under the right technique, oil produced via glycerolysis, right, results in a color nearly identical to feed oil, left.

Energy Consumption: Acid Esterification vs. Glycerolysis Which really consumes more energy? BY KIRK COBB

I read with interest “A Critical Component” by Erin Voegele in the January/February 2012 issue of Biodiesel Magazine. It compares biodiesel pretreatment options to remove impurities from lower quality feedstocks, most notably free fatty acids (FFA) in used cooking oils. The article identifies three common process options to remove or assimilate FFAs prior to downstream processing: acid esterification, glycerolysis and steam stripping. The first two options convert FFA to methyl esters; the third removes FFAs, sacrificing yield to avoid soap formation. The table on page 24 of the original article specifically notes energy usage for glycerolysis is “very high” compared to acid esterification, listed as requiring “minimal” energy usage. I respectfully disagree.

When acid esterification is used to reduce FFAs in feedstock, the immediate energy use is low, however, it produces water, creating wet, acidic methanol, which must be neutralized, dried and recovered. Furthermore, if the starting feedstock has 20 to 40-plus percent FFAs, multiple steps may be needed to reduce them to acceptable levels, generating even more acidic, wet methanol. After neutralizing the acidic methanol, drying requires multistage distillation with significant reflux rates, resulting in very high energy use. Therefore, all things considered, the use of acid esterification and necessity of wet methanol recovery results in “very high” energy use.

In comparison, glycerolysis can convert any FFA levels to glycerides without methanol, and water formed in reaction evaporates away, and doesn’t generate wet methanol. As the glycerized feedstock enters transesterification, the system can be kept essentially moisturefree; excess methanol from transesterification can be stripped out and recovered dry. When comparing mass and energy balances, acid esterification (with methanol drying) uses six times the thermal energy as glycerolysis. Glycerolysis does require high-temperature operating conditions, typically 460 degrees Fahrenheit; 500 to 550 F thermal oil is the recommended utility; typical steam boilers (150 psig steam at 360 F) simply cannot do the job. But in the oleochemicals industry, including biodiesel manufacturing, high-temperature thermal oil systems (500 to 650 F) are the

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

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PROCESS

norm, not the exception. Fatty acid vacuum distillations, fatty acid ester production (methyl, isopropyl, butyl, glycol, glycerol esters, etc.), polyesters, dimerized fatty acids, and other oleochemical processes, all routinely use thermal oil utility systems. But contrary to popular (mis)conception, high-temperature processing does not imply high-energy use, especially in continuous flow as opposed to batch. Furthermore, high-temperature heating systems are not necessarily more expensive than steam boilers—but for existing plants with only steam heating, a thermal oil system represents added capital investment. The glycerolysis option results in the lowest process energy use, not the highest, and for grass-roots multifeedstock plants, glycerolysis is a much-preferred option with lower capital and operating costs compared to acid esterification for the same biodiesel plant capacity, particularly for high-FFA feedstocks. For discussion, consider a 10 MMgy biodiesel plant design running continuously for 350 days yearly (8,400 hours/year). The feedstock contains 15 to 20 percent FFA, and is fed to the process at 9,900 pounds per hour (pph) (22 gallons per minute (gpm)). The required glycerin feed rate is 1,600 pph, or 160 gallons per hour. Glycerolysis typically operates at 460 F. Feedstock comes from storage at 120 F, so it must be heated up 340 F, requiring a total heat load of about 2.2 MMBtu per hour (9,900 x .65 x 340). The glycerin stored at 160 degrees must be heated to 460 F, requiring 360,000 Btu per hour. So, total heat load is approximately 2.56 MMBtu per hour. In a continuous process, however, the hot glycerized oil can be used to preheat the incoming feed. The 460-degree glycerized oil can be cooled to 160 degrees, thus preheating the incoming feed from 120 to 420 F. Thermal energy savings are therefore about 1.93 MMBtu/hour. The glycerolysis pretreatment also dries the feedstock. Assume typical feedstock contains 1 percent moisture, or 100 pph water. Also, about 100 pph of water is generated from the glycerolysis reaction. Thus a total moisture load of around 200 pph, when

evaporated out of the hot oil, will contribute approximately 200,000 Btu/hour (200 x 1,000 Btu/pound). Combining all these figures, the net heat load of the glycerolysis system is about 830,000 Btu/hour. The glycerized oil then moves into transesterification. Two continuous reactors may be run in series. The first reaction is fed at around 2,200 pph of methanol (two times stoichiometric); after decanting glycerin, the second reaction is fed an additional 550 pph methanol (0.5 times stoichiometric). Methoxide catalyst may be fed at 0.5 percent in reaction one and 0.125 percent in reaction two, with small amounts of methanol in the catalyst solution of course, which collectively add another 200 pph of methanol. Total methanol actually charged is 2,950 pph. Of this, about 1,900 pph is excess and can be recovered dry when stripped from the crude biodiesel and glycerin streams. About 400 pph of reflux may be used when stripping methanol, so a total evaporative heat load might be 1.1 MMBtu/hour (2,300 x 475). There are some sensible heat loads as well during methanol stripping, so the total methanol stripping heat load is estimated to be about 1.5 MMBtu/hour. Following glycerolysis and transesterification, the methanol can be recovered dry and is ready for reuse. If acid esterification was first used instead of glycerolysis, however, the excess methanol would be wet and contain free sulfuric acid, requiring neutralization, and couldn’t be reused unless dried. Typically, acid esterification uses as much methanol as transesterification—often more—especially if more than one esterification cycle is required. Assume total wet methanol recovered from both acid esterification and transesterification is 3,800 pph (1,900 pph x 2). A typical reflux rate to dry methanol is 1.75 times the distillate, so reflux equals 6,650 pph. The total methanol drying column vapor load is 10,450 pph of dry vapor at top of column, with latent heat of vaporization of 4.96 MMBtu/hour (10,450 x 475, excluding sensible heat loads). This methanol drying heat load is six times the heat duty

for continuous glycerolysis of 830,000 Btu/ hour. Thus, drying methanol at temperatures between 147 and 220 F uses six times the energy than glycerolysis at 460 F. Assume the feedstock was dark-colored, rendered oil. The resulting biodiesel is dark like coffee, risking marketability. Vacuum distillation may be the next step. The same high-temperature thermal oil utility system used for glycerolysis will supply the distillation process heat. At this point, the crude biodiesel is about 9,900 pph, roughly equal to feedstock plus methanol minus glycerin and a few minor items such as neutralized salts, minor oil losses on the salts, etc. Assume all 9,900 pph of dark methyl esters must be distilled. The net heat of vaporization of finished product is 1.24 MMBtu/hour (9,900 pph x 125 Btu/pound). There are some sensible loads, and a bit of reflux, bumping this distillation heat load up to about 1.5 MMBtu/ hour. The original article in the January/February 2012 issue of Biodiesel Magazine also mentioned that glycerolysis will darken the final product. We tested food-grade cooking oil mixed with 100 percent FFA made from the same oil to create a high-FFA, very lightcolored oil. This high FFA oil was then glycerized at 460 F using USP-grade glycerin. The resulting low-FFA glycerized oil was tested for color. The test confirmed that if glycerolysis is done with proper process technique, this hightemperature process does not result in discoloration. Both samples, before and after glycerolysis, are lighter than a Lovibond 1 color. Finally, thanks to Jed Seybold of Paratherm Corp. for promoting thermal oil systems in biodiesel plant utility systems, and Jon Van Gerpen, department head of Biological and Agricultural Engineering at University of Idaho, for his review and critique of this data.

JULY | AUGUST 2012

Author: Kirk Cobb Senior Process Design Engineer Superior Process Technologies Inc. (612) 378-0800 x1 kcobb@superiorpt.com

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Equipment & Services AXI Fuel Conditioning 239-690-9589 www.axifuelconditioning.com

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PFT-Alexander, Inc. 1-800-696-1331

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Met-Chem ¿lter presses are ideal stock pre-¿lters. They have been sucessfully used in process ¿ltration of Magnesol™ and in various other applications for processing biodiesel.

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Feasibility Studies NEAtech, LLC 303-906-6234

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French Oil Mill Machinery Company 937-773-3420 www.frenchoil.com/biodieselmag.shtml

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Savage Associates 908-822-8735 www.savageassociatesinc.com

Maintenance Services PFT-Alexander, Inc. 1-800-696-1331

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Savage Associates 908-822-8735 www.savageassociatesinc.com

Quality Assurance Test Products Bullard Consulting 501-833-8511

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Gulf Hydrocarbon 800-834-0202

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Separation Equipment GEA Westfalia Separator 201-767-3900

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www.maascompanies.com JULY | AUGUST 2012

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July/August Biodiesel Magazine