June 2013 Ethanol Producer Magazine

June 2013

Gen 1.5 to Gen 2 Cellulosic R&D at ICM Page 58

ALSO

Salary Survey Shows High Job Satisfaction Rates Page 36

Attracting and Retaining a Talented Team Page 48

www.ethanolproducer.com

contents

JUNE issue 2013 VOL. 19 ISSUE 6

features 36

34 Q & A

Practicing the Golden Rule

Big River Resources makes employee morale a priority

By Tim Portz

48 Human Resources More Than Just Staff

The right team can positively influence profitability

By Holly Jessen

58 PROFILE

Gen 1 + 1.5 + 2 Equals Process Progress

ICM Inc. steps up testing for cellulosic ethanol

By Susanne Retka Schill

36 Personnel

2013 US Ethanol Industry Salary Survey

From job satisfaction to payroll, ethanol plant employees share their views

By Holly Jessen

66 Efficiency

Ethanol Industry Snapshot

2008 ethanol plant survey updated with positive results By chris hanson

DEPARTMENTS 6

7

Editor’s Note

Take Care of Your People and Your People will Take Care of You

By TOM BRYAN

Ad Index

10 The Way I See It

CO2 Levels Rising ... Big Deal!

By MIKE BRYAN

11 Events Calendar

Upcoming Conferences & Trade Shows

12 View From the Hill Eat This!

By bob dinneen

14 Drive

Biofuels, Light Bulbs and Why Quitting is Not an Option

By retired Gen. Wesley Clark

16 Grassroots Voice

Required Reading (You’re

Already Taking the Test)

By Ron Lamberty

18 Europe Calling

Rocking the Biofuels Boat with

a Publicity Stunt

By Rob Vierhout

20 Business Matters

CONTRIBUTIONS 74

Finance

Lessons Learned From Past Downturns

Applying wisdom gained to maneuver through current tough markets

By Scott McDermott

80

sustainability

Instrumentation, Control Systems Contribute to Sustainability

Efficient water, energy use achieved with effective process control

By Leigh Parnell

84

OPTIMIZATION

Absolute Energy Tackles Evaporator Fouling Problematic mineral deposits successfully treated

Get on the Bus: Human

Resource Strategies Essential to Success

By Rob Southern

22 Business Briefs 24 Commodities Report 28 Distilled 86 Marketplace

By Jerry Tegels and Kevin Mundell

CORRECTION The “Corn Oil Makes the Grade” article in the May issue incorrectly identified corn oil as the No. 3 feedstock for biodiesel production. It was actually No. 4.

Ethanol Producer Magazine: (USPS No. 023-974) June 2013, Vol. 19, Issue 6. Ethanol Producer Magazine is published monthly by BBI International.

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ON THE COVER

ICM research team members in the pilot plant in St. Joseph, Mo. PHOTO: SAIT SERKAN GURBUZ

4 | Ethanol Producer Magazine | June 2013

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With good chemistry great things happen.™

editor’s note

Years ago I read a book called “12: The Elements of Great Managing.” I can’t say it transformed my professional life but its core takeaways stuck with me. The book’s premise is that, through extensive polling, it had been discovered that

Take Care of Your People and Your People will Take Care of You Tom Bryan, PRESIDENT & EDITOR IN CHIEF tbryan@bbiinternational.com

12 simple questions universally determine employee job satisfaction. Question No. 1 is elemental: “Do I know what is expected of me at work?” The other 11 questions address praise, clarity of mission, voice, sentiments about co-workers, workplace friendships and opportunities for professional development. The collective essence of the questions is reflected in the managerial insight offered in this issue of Ethanol Producer Magazine, both anecdotally and in the form of hard data about ethanol plant employee salaries and job satisfaction.

This month’s cover story profiles ICM’s disciplined, stepwise quest for cellulosic ethanol, but our theme is different topic altogether: personnel recruiting, training and compensation. It’s brought to life in an ambitious 20-page section anchored by Holly Jessen’s infographic-dense reveal of our 2013 U.S. Ethanol Plant Personnel Compensation & Job Satisfaction Survey. The detailed results of the survey, starting on page 36, provide a snapshot of an industry that employs a satisfied, well-compensated and increasingly experienced workforce. It also depicts a workforce that is loyal, well-trained, highly educated and hard-working.

Once again our survey reveals that money isn’t everything. America’s ethanol plant employees, while appreciative of their salaries, rate job security as the most important determinant of their professional happiness, followed by a positive workplace atmosphere, good benefits and, finally, competitive pay. Ethanol producers have known this for years, and as we discover in this month’s Q&A with Big River Resources’ Deb Green, maintaining a positive workplace environment starts with the Golden Rule: Do unto others as you would have them do unto you. Cultivating a thoughtful, supportive work environment, along with great training, competitive pay and good benefits, has enabled Big River to achieve an extremely low turnover rate, and because of it, industry-leading financial and operational performance.

Jessen’s other feature in this issue, “More than Just Staff,” on page 48, delivers additional insight about attracting and retaining employees. In it, Ascendant Partners’ Scott McDermott advises producers to offer competitive compensation programs even when margins are tight. Our salary survey indicates that most producers agree with him. Despite difficult times facing the ethanol industry, 68 percent of survey respondents said they received a raise in the past 12 months; 69 percent of respondents also received monetary bonuses in the same time period. The bottom line: The U.S. ethanol industry is providing high-paying, rewarding careers to thousands of men and women who, in return, make American ethanol plants run efficiently, safely and profitably.

For industry news: www.ethanolproducer.com or Follow Us: 6 | Ethanol Producer Magazine | June 2013

twitter.com/EthanolMagazine

AdIndex

EDITORIAL

56-57 2013 International Fuel Ethanol Workshop & Expo 94 2013 National Advanced Biofuels Conference & Expo 79 2014 International Biomass Conference & Expo 33 2014 International Fuel Ethanol Workshop & Expo 32 American Coalition For Ethanol

PRESIDENT & EDITOR IN CHIEF Tom Bryan tbryan@bbiinternational.com

Vice President of Content & EXECUTIVE EDITOR Tim Portz tportz@bbiinternational.com

MANAGING EDITOR Holly Jessen hjessen@bbiinternational.com

SENIOR EDITOR Susanne Retka Schill sretkaschill@bbiinternational.com

NEWS EDITOR Erin Voegele evoegele@bbiinternational.com

STAFF WRITER

50 Aggreko

Chris Hanson chanson@bbiinternational.com

COPY EDITOR

5 Ashland Hercules Water Technologies 78 BBI Consulting Services

Jan Tellmann jtellmann@bbiinternational.com

ART ART DIRECTOR GRAPHIC DESIGNER

PUBLISHING

88 CHS Renewable Fuels Marketing 86 Clariant Produckte (Deutchland) Gmbh 39 Cloud/Sellers Cleaning Systems

CHAIRMAN Mike Bryan mbryan@bbiinternational.com

CEO Joe Bryan jbryan@bbiinternational.com

SALES VICE PRESIDENT, SALES & MARKETING Matthew Spoor mspoor@bbiinternational.com

Business Development Director Howard Brockhouse hbrockhouse@bbiinternational.com

ACCOUNT MANAGERS Marty Steen msteen@bbiinternational.com Andrea Anderson aanderson@bbiinternational.com Kelsi Brorby kbrorby@bbiinternational.com Tami Pearson tpearson@bbiinternational.com

Senior Marketing Manager CIRCULATION MANAGER Jessica Beaudry jbeaudry@bbiinternational.com

ADVERTISING COORDINATOR Marla DeFoe mdefoe@bbiinternational.com

EDITORIAL BOARD

Customer Service Please call 1-866-746-8385 or email us at service@bbiinternational.com.

Subscriptions to Ethanol Producer Magazine are free of charge to everyone with the exception of a shipping and handling charge of $49.95 for any country outside the United States, Canada and Mexico. To subscribe, visit 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. Back Issues, Reprints and Permissions Select back issues are available for $3.95 each, plus shipping. Article reprints are also available for a fee. For more information, contact us at 866-746-8385 or service@bbiinternational.com. Advertising Ethanol Producer Magazine provides a specific topic delivered to a highly targeted audience. We are committed to editorial excellence and high-quality print production. To find out more about Ethanol Producer Magazine advertising opportunities, please contact us at 866-746-8385 or service@bbiinternational.com. Letters to the Editor We welcome letters to the editor. Send to Ethanol Producer Magazine Letters to the Editor, 308 2nd Ave. N., Suite 304, Grand Forks, ND 58203 or email to hjessen@bbiinternational. com. Please include your name, address and phone number. Letters may be edited for clarity and/ or space.

Please recycle this magazine and remove inserts or samples before recycling

13 Lallemand Biofuels & Distilled Spirits 61 Louis Dreyfus

46 Natwick Associates Appraisal Services 17 Novozymes 15 Phibro Ethanol Performance Group 47 POET-DSM Advanced Biofuels 43 Premium Plant Services, Inc.

52 Crown Iron Works Company

29 ProQuip, Inc.

87 DuPont Fermasure

68 Protectoseal Company, The 41 QUALSPEC

21 DuPont Pioneer

89 Renewable Fuels Association

95 Eco-Energy

69 RPMG, Inc.

51 ETS Laboratories

28 Salco Products, Inc.

19 Fagen Inc.

82 Sulzer Process Pumps (US) Inc.

63 Ferm Solutions

Mike Jerke, Chippewa Valley Ethanol Co. LLLP Jeremy Wilhelm, Cilion Inc. Mick Henderson, Commonwealth Agri-Energy LLC Keith Kor, Pinal Energy LLC Walter Wendland, Golden Grain Energy LLC Neal Jakel Illinois River Energy LLC Eric Mosebey Lincolnland Agri-Energy LLC Steve Roe Little Sioux Corn Processors LP

53 INTL FCStone Inc.

81 CPM Roskamp Champion

3, 96 DuPont Industrial Biosciences

John Nelson jnelson@bbiinternational.com

44 Interra Global Corporation

62 Mist Chemical & Supply Company 38 Nalco, an Ecolab Company

30 Buckman

Lindsey Noble lnoble@bbiinternational.com

54 Indeck Power Equipment Co.

70 Methes Energies

26-27 BetaTec Hop Products

Jaci Satterlund jsatterlund@bbiinternational.com

8-9 Inbicon

72-73 Syngenta: Enogen

55 Fermentis - Division of S.I. Lesaffre 40 Freez-it-Cleen

22 Tower Performance Inc.

83 Fuel Ethanol Industry Directory

77 U.S. Water Services

45 Gamajet Cleaning Systems, Inc.

71 United Sorghum Checkoff Program 65 Verenium

2 Growth Energy

64 Tranter Phe

42 Hengye USA

76 Vogelbusch USA Inc.

75 Himark bioGas

23 Wabash Power Equipment Co.

60 Hydro-Klean LLC

31 WINBCO

11 ICM Inc.

85 Zeochem

COPYRIGHT Š 2013 by BBI International TM

june 2013 | Ethanol Producer Magazine | 7

6 high-alpha producers wanted for 6 New Ethanol projects.

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the way i see it

CO2 Levels Rising …

Big Deal!

By Mike Bryan

Last week, the parts per million level of CO2 in the world's atmosphere reached nearly 400 parts per million for the first time in 15 million years. What’s the big deal?

Come on, that’s only .0004 of one percent.

I mean, how bad can that be?

Unfortunately, that’s the way many people think about CO2. Look, there are clearly multiple positions on the impact CO2 levels have on our global climate change.

But there is one inescapable fact. Despite all the background noise, 97 precent of scientists agree the increase in the levels of CO2 is primarily manmade.

One could argue, so what? Besides, CO2 is a global issue and anything we do to combat global warming is nullified

by China, India and others. We see the smog-ridden cities in other countries where people are literally choking on pollution and often think: what’s the use? It’s like trying to counter a hurricane with fans.

Interestingly only about 50 percent of Americans believe global warming is manmade and will have much of an impact on our world. In the U.K., only 1 in 20 believe global warming is something that they should be overly concerned about. While Australians might have a bit more concern about global warming, they continue to ship millions of tons of coal to China and other parts of the world, while boasting about their tax on carbon.

In truth, global warming is probably not

10 | Ethanol Producer Magazine | June 2013

going to be an issue that drives renewable energy. At least not until we are staring an environmental Armageddon in the face, by which time it may be too late. What will drive renewable energy will still be price, rural economic development and energy independence. Not that those are bad things, they are clearly important drivers, but the clock is ticking on our environment.

We have the capability to make great strides with renewable energy. Make no mistake, China, India and others are working hard to build renewable energy projects. Coal is just a tool to get them from point A to point B. I am convinced that in the years ahead, China and India will become world leaders in renewable energy.

We don’t have to worry about saving the planet as some suggest, it will go back to default very quickly when we are no longer here. So you can be the judge of whether reaching 400 parts per million of CO2 in the atmosphere is a big deal, but for me, I’m going with the science and the majority of science says: Take action and take it now!

That’s the way I see it.

Author: Mike Bryan Chairman, BBI International mbryan@bbiinternational.com

EVENTS CALENDAR National Advanced Biofuels Conference & Expo September 10 -12, 2013 CenturyLink Center Omaha Omaha, Nebraska

Proving Pathways. Building Capacity.

Produced by BBI International, this national event will feature the world of advanced biofuels and biobased chemicals—technology scale-up, project finance, policy, national markets and more—with a core focus on the industrial, petroleum and agribusiness alliances defining the national advanced biofuels industry.

866-746-8385 | www.advancedbiofuelsconference.com

Algae Biomass Summit September 30 - October 3, 2013 Hilton Orlando Orlando, Florida

This dynamic event unites industry professionals from all sectors of the world’s algae utilization industries including, but not limited to, financing, algal ecology, genetic systems, carbon partitioning, engineering and analysis, biofuels, animal feeds, fertilizers, bioplastics, supplements and foods.

866-746-8385 | www.algaebiomasssummit.org

International Biomass Conference & Expo March 24-26, 2014 Orlando Convention Center Orlando, Florida

Organized by BBI International and coproduced

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

International Fuel Ethanol Workshop & Expo June 9-12, 2014 Indiana Convention Center Indianapolis, Indiana

Celebrating its 30th 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

view from the hill

Eat This!

By Bob Dinneen

Through more than a quarter century proudly advocating for U.S. ethanol producers, the one issue that seems impervious to logic and just will not go away is the pernicious food vs. fuel canard. It

simmers like a hot ember awaiting Big Oil’s windbags to blow it into a raging fire as their political agenda demands. It resonates among Washington’s elite, who think their food comes from the Safeway and don’t know the difference between sweet corn and No. 2 feed corn. The facts are too difficult to grasp.

Make no mistake, despite decades of educating urban policy makers that ethanol simply uses the starch component of corn, and that a very high-value, high-protein feed remains to be consumed by poultry and livestock, the food vs. fuel debate continues to be the single biggest obstacle to the continued growth of the industry. We have to do an even better job of conveying our message.

The first accompanying chart emphatically demonstrates what should be the most important message, i.e., oil drives food prices, not corn and not ethanol! Every step of the food supply chain is reliant on petroleum products—from diesel fuel used in farm machinery, natural gas used in food processing plants, plastics used in food packaging, to gasoline or diesel used to transport the food to the restaurant or grocery store. In fact, the correlation coefficient between global food prices and global oil prices since 2000 is 0.92, a near-perfect relationship.

The second chart underscores that, contrary to what our opponents say, food price inflation has been falling while ethanol

12 | Ethanol Producer Magazine | June 2013

production has been increasing over the past decade. Food price inflation has been lower (2.9 percent) since the renewable fuel standard (RFS) passed than in the 20 years prior (3.02 percent). And two of the lowest food-inflation rates in the past 50 years have occurred since the passage of RFS2 in 2007.

Facts can be nettlesome to our opponents. But facts are the only thing I know

to keep the cynics at bay. Use them. Respond to the media and public officials who willingly or unwittingly ignore reality. Do it and we will prevail. And the RFS will be preserved.

Author: Bob Dinneen President and CEO, Renewable Fuels Association 202-289-3835

IT’S A DONE DEAL. IF THERE’S ONE BUSINESS CARD YOU PICK UP AT THIS YEAR’S FEW, IT’S THIS ONE.

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DRIVE

Biofuels, Light Bulbs and Why Quitting is Not an Option By retired Gen. Wesley Clark

News reports have shown that in recent years major oil companies like Chevron and Exxon have “given up” on biofuels. The consensus

is that the work to develop biofuels is too difficult for them to figure out and that it would be too costly and not profitable enough.

Really, are they serious? Moreover, do they expect Americans to believe quitting is the best option for our future?

After just a few years of effort and little commitment to research and development, they just decide that, well, it’s not easy, so let’s just give up. What if Thomas Edison had given up on the light bulb? Where would we be now? Sitting in the dark.

Persistence and the understanding that there was a better way to provide light drove Edison to make an inspired thought a reality.

It may have taken years and many others to perfect the light bulb, but persistence led the way to progress. Neither Edison, nor those who followed his footsteps, decided to give up.

It took years and countless trials to develop the bulb and filament technology.

There were certainly critics and I am sure that the whale oil industry, who then supplied the fuel to oil lamps, was adamantly opposed to the idea. They didn’t want to become irrelevant, so they opposed it. But they could not stop it—today there is electric light everywhere.

Americans pride themselves on hard work and ingenuity. There is little doubt that

14 | Ethanol Producer Magazine | June 2013

we believe that the collective strength of our great nation is derived from the amazing people it is comprised of, like Edison and other great visionaries and inventors. We have always been a forward-thinking country that plays the long game, looking for solutions to the problems we currently face and also ones we anticipate will arise in the future.

Enter 21st century energy. While we are dangerously dependent on fossil fuels, many pioneers have recognized there are many viable components to a more diverse energy portfolio, and one answer that can play a significant role is renewable fuels. They are sustainable, unlike the current carbon-based fossil fuels we rely on today.

This industry started small, with a few pioneers and has grown tremendously over the past few decades. It has grown to become self-sufficient from government subsidies and more efficient in terms of water usage and power output. And it is infinitely renewable—just some sun and rain to perpetually grow the feedstock.

However, the success of renewable fuels threatens the bottom line and market share of oil companies, such as Exxon and Chevron. While these companies initially promoted these fuels, they could not make the same profits and also found that drilling for oil was easier than advancing technology of biofuels and new infrastructure for them to secure our energy future.

So, not only have these companies given up on their research into renewable biofuels, but they have actively engaged in public affairs campaigns and legal and regulatory hurdles to block any future progress. According to one new report, a return of 5 percent wasn't enough for companies used to margins triple that. They

are putting corporate profits ahead of energy security and they simply do not care.

Just imagine where we would be if a 19th century inventor were as timid as a 21st century corporation. Biofuels are sustainable and are cleaner and better for our environment. As we continue to learn of the harmful emissions that traditional fossil fuels generate while being burned to fuel our vehicles, we must reaffirm our dedication to producing cleaner fuels that are better for the air we breathe and also protect the environment for both current and future generations.

If great inventors, such as Edison, could see the progress we have made, they would be amazed. Furthermore, they would be inspired by the current pioneers—those perfecting first-generation biofuels and developing next-generation fuels from diverse feedstocks to secure our energy needs for the future while serving a critical role in preserving our environment.

On the other hand, companies like Exxon and Chevron—those who not only gave up on biofuels production and research but fought against progress—would certainly disappoint the great inventors. Their stubborn actions to accept a failed status quo goes against the very spirit of American ingenuity and progress.

It truly is a shame that 21st century corporations give up on meaningful advancements and fight against progress just to keep those deep pockets full of excessive profits at the expense of progress and our nation.

Author: retired Gen. Wesley Clark Co-chair of the Growth Energy Board of Directors 202-545-4000 info@growthenergy.org

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GRASSROOTS vOICE

Required Reading (You’re Already Taking the Test)

By Ron Lamberty

Much of the discussion about fuels that will be used by the automobiles of the future to reach the federal targets for higher mileage and lower greenhouse gas emissions has centered on higher octane fuel and higher compression engines. That’s great news for ethanol, since those happen to both be areas where ethanol holds a distinct advantage over gasoline. Ironically, it’s also an area where automakers and the oil industry have a great deal of information and history, apparently.

An article by Jamie Lincoln Kitman in The Nation magazine tells about General Motors’ experience with higher blends of ethanol, and mentions the work of a GM engineer named Thomas Midgley, who applied for a patent on an alcohol-gasoline blend as an anti-knock fuel. According to article, Midgley drove a car with a high compression engine to a Society of Automotive Engineers meeting in Indianapolis, using a gasoline-ethanol blended fuel containing 30 percent alcohol.

Midgeley told the group that “Because of the possible high compression, the available horsepower is much greater with alcohol than with gasoline."

Why haven’t we heard this before?

The Nation article also talks about two brands of gas sold in England, Cleveland

16 | Ethanol Producer Magazine | June 2013

Discoll and Kool Motor—(which contained) 30 percent and 16 percent alcohol, respectively.” Those fuels were the products of two U.S. oil companies, and the article points out that the companies advertised the E30 and E16 as “the most perfect motor fuel the world has ever known, providing extra power, extra economy, and extra efficiency.”

Meanwhile, back in the United States, the same big oil companies were savaging alcohol fuels in the halls of Congress, saying it would destroy engines.

Now that sounds more familiar.

Here’s the really interesting part— the article I’m referencing actually ran 13 years ago in the March 20, 2000, issue of The Nation, and was entitled “The Secret History of Lead.” The incidents above all took place in the 1920s. And while it is fascinating to learn that the world’s largest automaker determined E30 was a fantastic fuel in the 1920s, and that the forerunners to ExxonMobil and Citgo sold E30 and E15 in England almost a hundred years ago, what may be more instructive and relevant to our current situation is the rest of the article, which documents the dishonesty and callousness that GM, Standard Oil of New Jersey (now ExxonMobil) and DuPont displayed as they fought to keep alcohol out of the U.S. fuel supply.

They fought to keep it out, to keep tetraethyl lead in. Lead isn’t something that exists in oil before they take it out to make unleaded gas. It was added to reduce knock. And these three companies owned “ethyl” and stood to make a fortune by adding it to gasoline.

The refiners knew about the health hazards of leaded gasoline and so did the U.S. public health officials—but oil companies just said the claims weren’t true, and bought-and-paid-for regulators and elected officials believed those claims.

Ethanol was safer and more effective than lead, but oil companies fought court battles, encouraged laws to keep any other additives out of the market, and when all of that failed, they simply mounted a smear campaign against other fuel alternatives and additives, complete with phony studies paid for and controlled by the original lead partners.

It took more than 60 years to get lead out of the fuel supply, even as thousands of people literally died every year as a result of contact with lead. Maybe we should be more encouraged by ethanol’s progress? “The Secret History of Lead” should be required reading for all ethanol supporters. It is a sobering view of the lengths some industries have gone to, to protect enormous profits in the past. And those who forget the past (or don’t even know about it) are condemned to repeat it.

Author: Ron Lamberty Senior Vice President, American Coalition for Ethanol 605-334-3381 rlamberty@ethanol.org

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.

Rethink Tomorrow

Europe Calling

Rocking the Biofuels Boat with a Publicity Stunt

By Robert Vierhout

After being accused of driving up food prices, grabbing land in Africa, nongovernmental organizations (NGOs) are now claiming that biofuels are costing society too much money.

A group of green NGOs recently hired the services of the International Institute for Sustainable Development to trigger a debate on the economics of EU biofuels.

It is not the first time that IISD published such a report. IISD has been hitting at biofuels for several years. The process is strongly influenced by people close to the Organization for Economic Cooperation and Development and funded by those who don't like us. Last year a similar report was issued then financed by food company Nestle. Now it is the NGOs. Is this coincidence? Is there some sort of unholy alliance here?

The latest report, “Biofuels―At What Cost?,” claims that in 2011 EU governments provided around 10 billion euros ($13 billion) to the biofuels industry. A relatively high number compared to the 2012 IEA World Energy Outlook, which said that in 2011 total global biofuels subsidies were $24 billion, or less than 10 percent of global oil subsidies. Whether the 10 billion euro figure is correct is neither here nor there as long as there is a high figure, easy to remember. It is all about easy publicity.

18 | Ethanol Producer Magazine | June 2013

Those taking the trouble to study the report can only conclude that the number is the creation of researchers and reviewers with an imaginative mindset but no practical knowledge of the subject matter. The report has severe methodological errors, often contradicting IISD's own methodology and/ or previous research, next to the array of material factual errors.

Maybe it's a predictable result knowing that the report was peer reviewed by those with the same ideological biases and no academic qualifications in industrial and agricultural sciences. The authors expressly prevented review by industry experts with appropriate academic credentials, on the pretext that industry reviewers would have leaked the report to the press. So much for an honest peer-review process.

The major flaw with the IISD report is that it is almost entirely about excise tax exemptions, a subsidy paid to fuel suppliers.

With the introduction of the renewable energy directive, known as RED, member states now overwhelmingly use mandates to achieve their binding renewable transport energy obligations. Interestingly enough, those mandates did not result in higher fuel prices at filling stations.

So, if EU member states decide to pay fuel suppliers to buy biofuels through excise tax exemptions (such exemptions being a policy tool appropriate for the voluntary biofuels blending policies of the past and simply redundant in the face of a binding mandate) then it's fuel suppliers who are skinning governments and consumers.

That’s why only a minority of member states have such excise tax exemptions today and why those exemptions are quickly

disappearing, facts conveniently omitted from IISD’s report. Indeed, if all excise tax exemptions disappeared tomorrow, the EU biofuels industry would see its market stay the same as it is today.

But do tax exemptions result in the high costs as pictured by this report? It doesn't seem to be in line with a very recent study carried out by Price Waterhouse Coopers (PwC) that looked into the socioeconomic impact of the fuel ethanol sector in France. The study found that jobs were created directly and indirectly and that in 2010 the value added to the French economy was 815 million euros. In addition, the French government made a net profit of 305 million euros thanks to additional tax income as a direct and indirect result of 158 million euros of tax exemption to the oil industry for using biofuels.

The PwC study is in sharp contrast to the IISD study. Even though the PwC study is limited to ethanol and France, the numbers are so distinct from what IISD is claiming that I consider the latter a cheap publicity stunt, carefully planned and timed to rock the biofuel boat once more.

Author: Robert Vierhout Secretary-general, ePURE Vierhout@epure.org

business matters

Get on the Bus: Human Resource Strategies Essential to Success

By Rob Southern An ethanol plant manager is typically focused on running the daily operations and producing a quality end product. In addition to ensuring the equipment and people inside the plant are running correctly, human resource needs must also be met.

When it comes to finding and hiring the right employees, a little community involvement goes a long way. Be active in local and school job fairs and career days.

This provides personal interaction with people who are eager to work. When your plant has an open position, a person who has already heard about the plant or met a plant recruitment manager will be more likely to apply. It also pays to sponsor community events. This ensures local visibility and name recognition, which is a key recruitment tool.

Be sure to recruit for open positions using the latest technology. Placing an ad in the newspaper used to be enough but today’s employees are scanning job boards, social media and LinkedIn to find work. The local Chamber of Commerce may also have a job board that can help reach candidates with specific skills and put together a pool of qualified candidates.

Interviewing potential employees also takes preparation. Ask candidates the right questions, check their references and conduct appropriate background checks and drug screenings. The extra effort ensures you utilized all resources available to get the best people on board.

20 | Ethanol Producer Magazine | June 2013

If you question your ability—and time—to post an effective job description or whether you are asking the right interview questions, call on a human resources consultant for the best approach. Think about what you need to do to get the best candidates in the door. Experience counts and that’s why companies utilize consultants who work in human resources on a regular basis.

Training new and current employees is a vital step in maintaining an efficient and happy workplace. When a new person starts work, don’t assume they know what they’re doing based on previous experience. Offer a thorough orientation of the plant and provide knowledge they can use now and in the future. Giving them the time up front pays dividends later.

The first 90 days on the job are vital and the initial training can make a new employee feel they are valued by the company, which contributes to positive morale. Excellent new hire training also gives them the confidence to hit the ground running.

For current employees, training has to be relevant and apply to what they’re doing today and in the future. Make it engaging by avoiding a lecture-style classroom and get participants involved. Training is costly if employees do not grasp or remember the concepts because they were bored or uninterested. Make it worth the time by showing them the connection of how their daily work impacts the future of the company.

Dealing with employee compensation issues can be a sensitive subject but

an employer who is prepared can avoid having an awkward conversation. Do your homework to be sure pay is competitive in the marketplace, which can be accomplished using salary survey data.

Also, remind employees about the value of their benefits, not just the salary numbers.

Pay your folks based on performance and provide incentives for quality work. Having a systematic plan, including pay ranges for compensating staff is much better than winging it.

Salaries are one of the largest expenditures for a company and an HR consultant can help companies review what each employee is compensated to ensure the company is effectively managing this cost. In this economy a 3 to 4 percent raise should not be expected every year but it’s also important to reward people who continue to do great work. Other options are to give a lump sum payment, or bonus, instead of a raise.

Getting the right employees on the bus is essential and keeping them is critical.

Thus, providing positive and strong human resource strategies is key to driving that bus, or company, down the road.

Author: Rob Southern Kennedy and Coe LLC consultant specializing in human resources rsouther@kcoe.com or 316-691-3736

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business briefs

People, Partnerships & Deals

The Renewable Fuels Association has added three new members: Monroe, Wis.-based Badger State Ethanol, Plainview, Neb.-based Husker Ag, and Redfield, S.D.-based Redfield Energy LLC. Redfield Energy is a 55 MMgy facility with 43 fulltime employees. The dry mill plant became operational in April 2007 and produced its 300 millionth gallon of ethanol in February.

In addition to ethanol, the plant also produces approximately 162,000 tons of modified wet and dried distillers grains each year. The 70 MMgy Husker Ag plant is a farmer-owned cooperative with more than 600 members.

The facility employs 50 full-time employees and produces 450,000 tons of modified wet distillers grains each year. The 57 MMgy Badger State Ethanol plant employs 47 people.

In addition to ethanol, the facility produces 128,000 tons of dried distillers grains annually, along with 50 percent corn protein and corn oil. Carbon dioxide captured at the plant is used in the food industry.

CSX Corp. has announced winners of its 19th annual Chemical Safety Excellence Awards, which recognize customers for their commitment to the safe transportation of hazardous materials by rail. The awards are presented to customers that ship more than 600 car loads of hazardous materials during the year without a release due to factors such as not securing valves or closures properly.

Several companies active in the ethanol industry were recognized with the award this year, including Buffalo Lake Energy Corp., Cardinal Ethanol LLC, Cargill, Eco-Energy Inc., Flint Hill Resources LLC, Granite Falls Energy LLC, Patriot Renewable Fuels LLC, Pioneer Trail Energy Corp., and Southwest Iowa Renewable Energy.

The Biotechnology Industry Organization has named Jay Keasling as the recipient of its 2013 George Washington Carver Award for innovation in industrial biotechnology. Keasling is a professor of biochemical engineering at the University of California, 22 | Ethanol Producer Magazine | June 2013

Berkeley, an associate laboratory director at Lawrence Berkeley National Laboratory, CEO of the Joint BioEnergy Institute, and director of the Synthetic Biology Engineering Research Center. He was Jay Keasling was recognized for his selected for the award contributions to due to its contributions synthetic biology. to the field of synthetic biology promoting the use of engineering microbes to produce biofuels, medicines and cosmetic compounds from biomass, such as sugarcane and grasses. Past recipients of the award include Gevo Inc. CEO Patrick Gruber; Charles O. Holliday, Jr., chairman of DuPont’s board in 2009; Gregory Stephanopoulos, the Willard Henry Dow professor of chemical Engineering at the Massachusetts Institute of Technology in 2010; Feike Sijbesma, CEO of Royal DSM in 2011 and Steen Riisgaard, president and CEO of Novozymes in 2012.

LanzaTech has appointed Ken C. Lai as vice president of its Asia Pacific operations.

Based in Shanghai, he will oversee the development and commercialization of the company’s gas-to-advanced biofuel facilities and continued development of LanzaTech’s value chain partners Ken C. Lai will in the region. Prior to help LanzaTech joining LanzaTech, Lai accelerate growth in China. served as general manager of licensing and sales for the Asia Pacific region at Shell Global Solutions International B.V. He has more than 30 years of experience in technology licensing, sales, account management and business development in the petroleum refining and petrochemcials industry.

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Royal DSM, the global Life Sciences and Materials Sciences company, has appointed Christian Koolloos as business manager of bioethanol with DSM’s biobased products Christian Koolloos and services business has experience with unit. In his new posinew technology rollout activities. tion, Koolloos will be responsible for DSM’s involvement in cellulosic ethanol production outside of the Poet-DSM Advanced Biofuels joint venture. His responsibilities include developing and managing DSM’s enzymes and yeast business in the field of cellulosic biomass-to-ethanol and other renewables. Koolloos joined DSM as the commercial manager of yeast in 2011 through the acquisition of C5 Yeast Co., which was created as a spin-off of Royal Nedalco.

RINAlliance, a cloud-based software utilized by renewable fuel blenders across the U.S., has won the 2013 Prometheus Clean Energy Innovation award. The award is sponsored by the Technology Association of Iowa and recognizes the state’s top technology innovators and entrepreneurs. Criteria for the award include market position, business impact, growth and positive impact on the environment. The RIN Alliance had a record year in 2012, experiencing a 104 percent increase in revenue, a 63 percent increase in the number of subscribers, and, in response to a satisfaction survey, 83 percent of respondents saying the organization exceeded expectations and 17 percent saying it met expectations. To date, RINAlliance subscribers have blended more than 1.5 billion gallons of renewable fuel.

Abengoa Bioenergy S.A. has joined the Fuels America coalition, a broad group of stakeholders representing the biofuels industry, national security interests, agriculture and

Briefs, send information (including photos and logos if available) to: Business Briefs, Ethanol Producer Magazine, 308 Second Ave. N., Suite 304, Grand Forks ND 58203. You may also fax information to 701-7468385, or email it to evoegele@bbiinternational.com. Please include your name and telephone number in all correspondence.

other sectors. The group is focused on educating the both the public and policy makers on the benefits of renewable fuel. The group supports the continued implementation of the renewable fuel standard and the economic development and savings to consumers that result from its implementation.

John Hofmeister, former president of Shell Oil Co. and CEO of Citizens for Affordable Energy, has joined the Fuel Freedom Foundation’s board of advisors. Fuel Freebrings a dom is a nonpartisan, Hofmeister unique perspective nonprofit organization on the oil industry to dedicated to breaking the board.

America’s oil addiction by opening the fuel market to allow replacement fuels, such as ethanol, methanol, and others to fairly complete with gasoline.

Propel Fuels has been named the 2013 Green Innovator of the Year by the San Mateo County Economic Development Association in California. Propel was recognized for its pioneering approach to providing consumers with better access to renewable fuels and clean mobility options.

The U.S. DOE has announced the selection of BioProcess Algae LLC to receive a grant of up to $6.4 million as part of a project related to the production of biobased hydrocarbon fuels that meet military specifications. The project will use renewable carbon dioxide, lignocellulosic sugars and waste heat through BioProcess Algae’s Grower Harvester technology platform, which is collocated with the Green Plains Renewable Energy Inc. ethanol plant in Shenandoah, Iowa.

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commodities Natural Gas Report

Has the supply boom come to an end?

April 29—Natural gas prices have dropped over the past several years as the market increasingly recognized that natural gas supply was growing at a much more rapid pace than demand. In 2008, prices were above $8 per MMBtu and the “experts” thought prices would continue to go up, but shale drilling dramatically changed market expectations. Not surprisingly, as prices dropped, drilling activity directed at natural gas dropped as well. However, production continued to grow in spite of diminished drilling for natural gas. That may be changing.

As the chart shows, monthly production numbers are certainly flattening and may be starting to drop. This may be the beginning of a sustained drop in natural gas production or perhaps just a lull in production increases. At this time, the answer isn’t known for certain.

After all, production dropped in the first quarter of 2012 but then rebounded to hit historic high levels. Certainly the answer matters to natural gas consumers since natural gas prices are highly responsive to natural gas supply. If natural gas production is dropping, prices are likely to be well above $5 per MMBtu as the market recognizes movement into a supply short position. If, on the other hand, production

By Casey Whelan

remains steady or increases, prices likely will remain at $4 per MMBtu or lower. For consumers who believe the downtrend will continue, it may be a good time to “get long”. For those who believe the downtrend is transitory, maintaining a short position is the best strategy.

Corn Report

Corn demand picture a moving target

BY JASON SAGEBIEL

2012 Mar 13 Change April 29—The corn market has been under pressure for most U.S. acres 97,155 97,282 +127 of the year as money exits agriculture type commodities. In addition, follow-through selling came as the USDA placed a bearish undertone in the March stocks report. However, the market will shift to the fundmental perspective. First, old crop supplies are tight or in tight hands reflected by the very firm basis levels exhibited throughout the U.S. Secondly, new crop prices will be under pressure with even below trend line yields but planting delays could cause some immediate concern.

Corn movement from the producer has been vitually nonexistent since the March stocks report. With lower prices, producers have been less excited about moving corn as their attention focuses on the next crop, therefore, cash markets have been historically tight. This should keep old crop supported at values observed in April.

With recent moisture, the new crop outlook is more optimistic The March corn planting intentions compared to the 2012 acreage numbers, showing change up or down in each state in thousands of acres. but one would not assume trend line yields are achievable. With more acreage slated in areas that are historically less productive the national SOURCE: USDA yield curve will see a drag. However, without a drought at the magni- termined by price throughout the 2013-’14 marketing campaign. New tude of last year, new crop production is much more promising this crop corn will hold $5.20 support levels until better yield prospects year. The demand picture will be a moving target and that will be de- are more defined.

24 | Ethanol Producer Magazine | June 2013

report

Regional Ethanol Prices Front Month Futures (AC) $2.440

($/gallon)

REGION

SPOT

RACK

West Coast

2.695

2.750

Midwest

2.480

2.650

East Coast

2.650

2.841 SOURCE: DTN

Regional Gasoline Prices

DDGS Report

DDGS price drops as percentage of corn BY SEAN BRODERICK April 29—As May begins, the DDGS market is paying close attention to planting delays and the impact on corn availability for the rest of the summer, until harvest. The rapid futures price drops, as seen after last month’s report, enabled ethanol plants to lock in margins through May, and ensured sufficient DDGS supplies through the month. Since then, announcements of restarting idled ethanol plants pushed the DDGS-as-a-percentage of corn number from 99 percent down into the low 90s, as buyers assumed more production coming.

Demand, which traditionally starts to drop off with the warmer spring weather, has been steady, but prices have dropped since the end of March. Wet/modified distillers grains demand has started to drop off and plants that shipped their

product locally for the winter are now loading cars and pressuring the destination markets. Export container demand from the Chicago area, which is usually the premium market, has seen product being shipped into it from as far away as western Iowa. Barge shipments, which were dicey because of low water in March, were being shelved because of high water. That tonnage is needed in other destinations, namely trucks into Chicago.

Looking ahead, plant margins are going to be affected by the availability of old crop corn, which will influence their production, and the DDGS supply. As of late April, it was still profitable to make ethanol and the resulting DDGS supply is expected to depress the percentage of corn calculation. A spike in corn prices will reverse that process.

($/gallon) Front Month Futures Price (RBOB) $2.8349

REGION

SPOT

RACK

West Coast

2.911

3.068

Midwest

3.325

3.083

East Coast

2.692

3.216 SOURCE: DTN

DDGS Prices ($/ton) location

MAY 2013

JUN 2013

Minnesota

235

220

JUN 2012 210

Chicago

270

238

226

Buffalo, N.Y.

258

230

229

Central Calif.

305

280

258

Central Fla.

296

258

236 SOURCE: CHS Inc.

Corn Futures Prices Date

(May Futures, $/bushel)

High

Low

Close

APR 30, 2013

6.69

6.47 3/4

6.50

MAR 28, 2013

7.16 1/4

6.76

6.76

APR 30, 2012

6.34 3/4

6.20 1/2

6.34 1/4 SOURCE: FCStone

Cash Sorghum Prices ($/bushel) LOCATION

APR 20, 2013

MAR 28, 2013

APR 25, 2012

Superior, Neb.

5.48

6.71

6.21

Beatrice, Neb.

5.69

6.65

6.17

Gasoline demand: Better late than never

Sublette, Kan.

5.88

6.76

6.22

Salina, Kan.

5.48

6.75

6.22

BY RICK KMENT

Triangle, Texas

6.01

6.77

6.27

April 29—Despite the pressure in the corn market seen over the past couple of weeks, there is a light at the end of the tunnel, so to speak. Both gasoline and ethanol prices are starting to rebound as demand for fuel starts to pick up speed in front of the summer driving season. Despite a 35 cent per gallon price erosion over the past months, in late April in just one week implied demand for gasoline rebounded and inventory levels started to fall. The outlook for ethanol demand has also improved over the past couple of weeks with inventory levels falling below year-ago levels.

Gulf, Texas

6.96

7.30

6.80

Ethanol Report

For ethanol to maintain demand growth, gasoline demand needs to improve significantly. Ethanol usage throughout the country is directly correlated with overall demand for gasoline. There are still a lot of questions concerning economic strength that need to be answered over the coming weeks. But smaller inventory levels and increased implied demand in the latest U.S. Energy Information Administration report is creating hope that overall gasoline and ethanol demand may not be as sluggish as previously thought.

SOURCE: Sorghum Synergies

Natural Gas Prices

($/MMBtu)

LOCATION

APR 26, 2013

APR 1, 2013

MAY 1, 2012

NYMEX

4.25

3.98

2.04

NNG Ventura

4.12

4.26

2.07

CA Citygate

4.25

4.34

2.13

SOURCE: U.S. Energy Services Inc.

U.S. Ethanol Production

(1,000 barrels)

Per day

Month

End stocks

FEB 2013

809

22,645

19,580

JAN 2013

804

24,935

20,558

FEB 2012

919

26,653

22,572

SOURCE: U.S. Energy Information Administration

june 2013 | Ethanol Producer Magazine | 25

distilled

Ethanol News & Trends

IEA calls for accelerated biofuel development

Billion liters

The International 3.20 Global biofuels production Energy Agency recently Projections 2DS target Advanced 250 made its annual report to Other Biodiesel the Clean Energy Minis200 Ethanol terial, which is comprised 150 of representatives of 100 countries responsible for Conventional 50 approximately 80 percent Biodiesel Ethanol 0 of the world’s greenhouse 2000 2005 2010 2015 2020 gas (GHG) emissions.

The IEA reported that renewable technologies are one of the few bright fuels and government funding for research and spots in an otherwise bleak assessment of global production is needed.

Under the scenario, 6 percent of global progress towards clean energy. transportation fuel demand would be met by Regarding biofuels, the IEA said that calow-carbon fuels by 2020. Nearly 80 percent of pacity must more than double by 2020 to meet that demand would be met by 240 billion liters of the 2 degree Celsius scenario (2DS) targets. The biofuel.

Currently, biofuels meet only 2.3 percent 2DS describes an energy system that is projected of global liquid fuel demand. to give an 80 percent chance of limiting average global temperature increases to 2 degrees Celsius.

To reach the prescribed biofuel target, the IEA said more dedicated support for advanced bio-

Calif. plant to produce advanced biofuel The Aemetis Advancced Fuels Keyes Inc. facility in Keyes, Calif., is preparing to produce advanced biofuel. The plant was idled in January for planned maintenance and to prepare to produce grain sorghum ethanol. Startup commenced in April with corn feedstock, with the plan to move towards grain sorghum or a blend of the two inputs to maximize operating income.

“About $5 million of capital investment and new working capital has been invested since mid-January for maintenance and to enable the plant to produce advanced biofuel in a flexible configuration that enables the use of multiple feedstocks and energy sources,” said Eric McAfee, chairman and CEO of Aemetis.

Additional plant improvements are expected to be made soon. Late last year, the company announced it would install Edeniq’s Cellunator technology. According to Aemetis, a schedule for that installation should be in place soon.

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ICE and CME launch futures contracts for RINs

EIA reveals final 2012 ethanol data

IntercontinentalExchange (ICE) has announced the introduction of new North American environmental futures contracts for three categories of renewable identification numbers (RINs): D4 biomass-based diesel RINs, D5 advanced biofuel RINs and D6 renewable fuel RINs. The decision to introduce the RIN contracts was based on discussions with ICE customers and in response to the risk management needs they face, according to Brookly McLaughlin, ICE communications director. “The ability to hedge positions in a transparent and regulated futures market will enable market participants, such as those with exposure to renewable fuel compliance obligation, to better manage price moves in the market,” she said. ICE is currently focused on D4, D5 and D6 RINs, but would consider adding contracts for D3 cellulosic biofuel and D7 cellulosic diesel RINs in the future, based on market demand and consumer feedback.

CME Group has also announced the launch of future contracts for D4, D5 and D6 RINs. "With the recent increase in volatility in RINs prices, we've seen strong interest from our customers and other market participants for cost-effective ways to manage their risk in this market," said Gary Morsches, managing director of global energy at CME.

Ethanol consumption, use and imports Production (in million gallons)

Net imports (in thousand barrels)

Consumption (in million gallons)

2008

9,309

12,610

9,683

2009

10,938

4,720

11,037

2010

13,298

-9,115

12,858

2011

13,929

-24,365

12,893

2012

13,300

-6,002

12,946

SOURCE: U.S. Energy Information Administration

The U.S. Energy Information Administration published ethanol production, use and export data for the entire 12 months of last year in a recent issue of its Monthly Energy Review. While production was down slightly from 2011, the data revealed a slight increase in consumption from 2011 to 2012.

The U.S. ethanol industry produced approximately 13.3 billion gallons of ethanol in 2012, a slight reduction compared to the 13.93 billion gallons produced in the prior year.

Consumption, however, increased from 12.89 billion gallons in 2011 to 12.95 billion gallons in 2012. According to EIA data, the net import level for 2012 was -6 million barrels. In comparison, the net import level for 2011 reached -24.93 million barrels.

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june 2013 | Ethanol Producer Magazine | 29

distilled

EIA reports increase in E85 consumption Estimated quantity of alternatively fueled vehicles made avaible in 2012 Compressed natural gas

11,664

Electricity

79,082

E85

2,466,743

Hydrogen

100

Liquified natural gas

284

Liquified petroleum gas

1,812

Diesel-electric hybrid

1,264

Gasoline-electric hybrid

416,542

SOURCE: U.S. Energy Information Administration

The U.S. Energy Information Administration released updated data on alternative fuels and vehicles in April, noting that E85 consumption increased 52 percent from 2010 through 2011. Overall consumption of all alternative fuels, including E85, hydrogen,

electricity, natural gas and propane, increased only 13 percent over the same time frame.

In 2011, approximately 515.62 million gasoline-equivalent gallons of alternative transportation fuels were consumed in the U.S. E85 accounted for nearly 137.17 gasoline-equivalent gallons of that amount, trailing only natural gas in volume.

The EIA reported that the consumption of E10 remained flat between 2010 and 2011 due to the blend wall. This limitation shifted more ethanol into the E85 market in 2011.

More E85-capable vehicles were available in the U.S. during 2011 than any other alternatively fueled vehicle. For 2012, the EIA projected there would be nearly 2.47 million E85-capable vehicles on the road, including 623,191 automobiles, 363,115 vans and minivans, and 717,795 light duty trucks and SUVs.

Sweet sorghum plant project advances Preparation activities for the first sweet sorghum ethanol plant in the U.S. are well-underway. The 20 MMgy plant is under development by Southeast Renewable Fuels LLC in Hendry County, Fla. According to Aaron Pepper, CEO of Southeast Renewable Fuels, the process technology for the plant is being supplied by Uni-Systems do Brasil Ltda, which is also building the plant. Financing for the project was arranged through the Bank of Brazil.

The plant has been under development for several years. The project was awarded a $2.5 million Florida Department of Energy grant in March 2009.

Financing and permitting activities were underway when a third-party issue halted process on the project.

The project is once again active, with groundwork having begun in April. The first equipment is expected to arrive in October, with expected startup in January 2015.

The complete facility will include a 25 MW combined-heat-and-power plant that takes in bagasse as feedstock. The project also includes carbon dioxide capture.

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UK consumed record amounts of ethanol in 2012

Fertilizer plant to co-locate with ND ethanol producer

UK ethanol consumption Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Volume (in million liters) Percent of gasoline

167

149

161

153

148

154

162

188

178

197

169

203

3.40%

2.80%

3.10%

3.00%

3.10%

3.10%

3.30%

3.80%

3.90%

4.10%

4.20%

4.30%

SOURCE: U.K. Department of Energy & Climate Change

The United Kingdom experienced a record year for ethanol consumption in 2012.

The U.K. Department of Energy & Climate Change recently released updated energy statistics, noting that ethanol accounted for 55 percent of the biofuels consumed in the U.K. last year. Following six years of trailing biodiesel consumption, 2012 marked the first time the U.K. consumed more ethanol than biodiesel.

According to the DECC, ethanol consumption increased by approximately 19

percent in 2012, from 652 million liters (172.24 million gallons) in 2011 to an alltime high of 774 million liters last year.

The share of ethanol was even higher during the fourth quarter of 2012 than it averaged the rest of the year. Ethanol consumption increased 8.2 percent during the quarter, from 188 million liters to a record 203 million liters. During the quarter, ethanol accounted for 64 percent of the U.K.’s biofuel consumption.

Colorado-based Agrebon Inc. is preparing to co-locate a nitrogen fertilizer production facility at the 153 MMgy Tharaldson Ethanol Inc. plant in Casselton, N.D. The project is currently in the financing stage.

Once complete, the new facility would produce urea, anhydrous ammonia and urea ammonium nitrate from biogas produced from ethanol stillage.

According to Scott Dyer, chief science officer and co-owner of Agrebon, an agreement with business development partner Progressive Nutrient Systems is already in place. The agreement with Tharaldson Ethanol is also near completion.

North Dakota-based Leading Edge Angel Fund LLC is raising equity funds for the project to supplement local investment. The fertilizer plant could break ground midsummer and be operational within six months.

june 2013 | Ethanol Producer Magazine | 31

SARY R E V A N NI y

Q&A

Practicing the Golden Rule Employees are the No.1 asset of Big River Resources LLC and Deb Green is tasked with seeing to it they are well-trained, safe and happy.

Interview by Tim Portz Maintaining the roster of full-time employees at Big River Resources falls to Deb Green, human resources manager.

Staffing four ethanol production facilities and two grain handling terminals, Green relies heavily upon her existing team to welcome new employees into the company, pass along vital skills and assure employee safety. Recognizing that these critical initiatives are widely varied, the company keeps things simple by distilling all of them down to a companywide focus on the Golden Rule to help boost company morale.

How many people are employed across the organization and what percentage of those folks have to be replaced each year because of retirement or attrition?

Big River Resources employs and is a management company for 237 full-time employees. The company also employs some part-time and seasonal help with the grain elevator facilities. The turnover rate per year is about 11 percent.

Most of the jobs at an operating ethanol plant are relatively technical in nature. Is it difficult to find candidates with the right technical background?

Big River Resources performs on-thejob training, which provides process-related employees the skill sets needed to operate efficiently. The position that we have recently had a difficult time filling was qualified instrumentation/electrician. This varies per site or territory.

34 | Ethanol Producer Magazine | June 2013

What have you found works best from a recruiting standpoint? Are you always in an active state of recruiting, or do you only begin looking when there is a specific job opening or need?

When there is a job opening, Big River Resources posts the position internally first.

Several of our managers have been promoted from entry level positions. Many excellent employees have been found from employee referrals. Big River Resources also has an online application website. Newspaper helpwanted ads are also used to find applicants.

Big River Resources is able to keep an applicant listing for some positions. This accelerates the hiring process. There are other positions that recruiting begins upon a job opening.

Can you talk a little bit about the training program you’ve developed for new employees?

Training is ongoing at Big River Resources. For most positions, employees are trained through on-the-job training by the site employees. Once an employee is hired, the second item—after new hire paperwork—is harassment and violence training. After this training, the new hire has an extensive safety training program to complete. This program is coordinated through the safety manager and the site safety/environmental coordinator.

Once safety training is completed, the employee begins on-the-job training.

Throughout the year for all employees, additional formal safety and vendor training is performed. Key personnel also use their skills for operational training. Supervisor training, team building, and other performance enhancement training are available throughout the year.

New employees receive an introductory period review evaluation at 45 and 90 days.

This allows the manager to concentrate specifically on the new hire. If the review shows the new hire is having an issue in a specific performance area, a different training strategy may be implemented to assist the employee. In the past, we have found significant improvement in the next evaluation. This is thanks to recognizing there was an issue early and addressing it by another method that worked better for the employee.

The state of Iowa has an excellent training grant program that is available for new, existing, and expanding facilities. This grant was used at our two Iowa facilities and was instrumental in helping with the initial bulk cost of getting new staff trained.

How has it evolved as the organization has grown?

The training process has become more streamlined. As everyone gets familiar with their jobs, they can focus and adjust to what works well and what does not work well.

For example, the introductory period review evaluation form was implemented after a few new hires were not performing at 90 days. We wanted to make certain the new hires were given the chance to be successful at Big River Resources. This chance begins with a successful training time frame.

Are you finding more and more applicants with industry-specific experience now that the industry is mature?

Yes, for the exempt (salaried) positions, as these employees are more likely to relocate.

However, the turnover rate for exempt positions is very low at Big River Resources.

Occasionally applicants with previous ethanol experience apply for nonexempt (hourly) positions.

Q&A

How important is employee morale for the organization?

Enormous, ginormous, astronomic, gigantic. A negative attitude is not tolerated at Big River Resources. If an employee possesses a toxic attitude, the attitude can quickly infect other employees, and be detrimental to morale. Regardless of the skill sets the employee may possess, the employee has a choice to correct their attitude or be relieved [to pursue] other opportunities.

How does Big River positively affect employee morale?

Do you think it is an advantage from a staffing perspective to have multiple production facilities?

After all, ethanol producers with only one facility can’t reach out to another lab manager or general manager if they get stuck, have turnover or other issues.

PHOTO: PHIL POOL, OMNI PHOTOGRAPHY

Big River Resources believes employees are its most important asset. Therefore, we take every opportunity to shine, polish, and protect our most important asset.

The company is diligent to train, careful to coach and counsel, and thoughtful through difficult personal life events. Managers have been given the leeway to care for employees and be considerate during unexpected life events. Do unto others as you would have them do unto you is the company culture. It starts with the board of directors and senior managers and gets absorbed into the entire staff. Positive morale can be difficult to keep at times, but the company culture definitely helps with morale and, ultimately, retention.

The advantage of multiple production facilities is administrative staff. For example, one senior manager (general manager, financial director, etc.) for four facilities is more cost effective than one for each.

In regard to one facility not being able to be reach out to another, quite the contrary.

One facility can and does reach out to other facilities within the industry. A company does not need to own multiple facilities for this to happen. While this is common within the industry, it is not universal. It does depend on the culture of the company.

The ethanol industry requires a marketplace to survive. One production facility is not capable of supplying the entire marketplace and government-mandated usage. This tends to aid the ethanol industry in functioning with a collaborated effort. It is not uncommon for one facility to contact another facility within any department. The relationships are built through organizations and previous experiences and the opportunity to assist another facility, if needed, is welcomed. Big River Resources participates in this, both within and outside of its own organization.

Big River Resources has contacted other ethanol companies for parts in an emergency breakdown and has eagerly assisted other companies in the same situation. The industry benchmarks wages and company stats, assisting facilities in finding the strengths and potential weaker areas. When a new project is being considered, it is not uncommon for a company to seek advice from another facility.

In a unique way, certain companies within the ethanol industry function as a team. If one team member needs something, the others are eager to oblige within the constraints of potential confidentiality agreements.

june 2013 | Ethanol Producer Magazine | 35

PERSONNEL

36 | Ethanol Producer Magazine | June 2013

PERSONNEL

67% say they are happy with their jobs

2013 US Ethanol Industry Salary Survey The latest salary survey includes data on everything from total plant payroll, previous job experience of employees, the most important factors in job satisfaction and more.

By Holly Jessen

In the years since Ethanol Producer Magazine conducted its last salary survey, which was carried out in 2009 and published in early 2010, readers have repeatedly asked when it would be updated. Wait no longer. The

results of the 2013 U.S. Ethanol Plant Personnel Compensation & Job Satisfaction Survey are in.

More than 2,000 emails were sent out to U.S. ethanol plant employees and 367 responded, a nearly 20 percent increase from the number of respondents in 2009. The online survey, which was open for about two and a half weeks, closed April 10. The survey was comprised of 38 questions.

Respondents who said they are corporate management or general managers

june 2013 | Ethanol Producer Magazine | 37

PERSONNEL

were directed to a separate set of questions regarding the plant as a whole, such as total payroll for the plant and the best methods for filling open positions at the facility.

The data was self-reported without random sampling techniques. While this means the results may not be representative of the ethanol industry as a whole it does provide an interesting snapshot of the ethanol plant employees who answered the survey.

Who Are They?

The survey reveals some basic demographic data about respondents. Nearly 39 percent—the highest percentage reported— work at midsize facilities with capacities of 40 to 59 MMgy. Another 37 percent work at 100 MMgy or larger plants. In contrast, the 2009 survey showed 47 percent were at midsize plants while only 28 percent were at 100 MMgy or larger plants.

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The highest percentage of respondents, or 77 percent, report that the ethanol plants they work at are operating at 90 to 100 percent of capacity. Only 5 percent, or a total of 17 survey takers, say the plant they work at is currently idle. Another 3 percent, or just nine people, say the plant is shut down.

A full 97 percent of the respondents work full time at a U.S. ethanol plant.

Male employees are much more prevalent, coming in at 77 percent of the total. The 23 percent of women respondents holds fairly steady from the 24 percent of women in the 2009 survey. Of current women respondents, 62 percent are lab managers, lab techs or environment health and safety workers. No female maintenance managers, plant managers, lead operators, operators or maintenance technicians responded to the survey.

More respondents, or a total of 41 percent, are college graduates than any other education category. More than 14 percent went on to do post-graduate work or completed post-graduate degrees. Another 30 percent have post-high school vocational/technical training or have taken some college courses and 13 percent have completed a high school degree or GED. Just four survey takers, or 1 percent of the total, had completed only some high school education.

Looking at years worked in the ethanol industry, the categories they’ve worked in of 7 to 9 years and 5 to say the ethanol industry for 5-9 years 6 years are tied for first place, with 27 percent of the total reporting each one. Another 17 percent have worked in the ethanol industry 10 to 14 years. Only 3 percent have worked in the industry 20 to 29 years and 1 percent 30 years or more. On the other end of the spectrum, 1 percent have worked in the industry less than one year.

The majority of respondents, or 68 percent, say they have only worked at one ethanol plant. Another 18 percent say they have worked at two ethanol plants in the

past 10 years. In answer to a question about in what industry they had received the majority of their experience, more respondents (36 percent) say the ethanol industry than any other category. The agriculture industry comes in behind ethanol, at 19 percent of the total. When management answers that question for the plant as a whole, the agriculture industry is the clear winner, with 66 percent saying their employees received the

majority of their experience in the ag industry before taking a job at an ethanol plant.

Let’s Talk Dollars

Undoubtedly, information on salary, benefits and bonuses draws a lot of attention. This year, for the first time, EPM asked survey takers with positions in management to report on total plant payroll, including benefits. Of the 29 corporate or general

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PERSONNEL

Twenty-nine ethanol plant managers were asked to select salary ranges for 15 positions.

The highest percentage in each salary category is highlighted for emphasis.

37%

Corporate management

(owner, partner, president, CEO, COO, etc.)

General manager

30%

Controller/CFO

4%

Commodities manager

26% 16%

25% 4%

45%

23%

16%

31%

32%

Lab manager

20%

12%

Operations manager Plant manager

8%

27%

28%

4%

Maintenance manager

11%

20%

42%

29%

21%

33%

8%

38%

33%

4%

27%

40%

13%

7%

13%

Boiler technician

18%

9%

4%

Environmental health and safety Lead operator

4%

Operator Lab technician

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Maintenance technician

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$200

40 | Ethanol Producer Magazine | June 2013

31%

4%

Plant engineer

$199,999

-$100,0 $149,999

$99,99

0 9-$75,00

40%

18% 23%

4%

,000

60 $74,999-$

PERSONNEL

11% 8%

4% 4%

28%

8%

8%

4%

4%

8%

4% 4%

4% 13%

7%

27%

47%

41%

50%

22% 11% 44%

0,000

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7%

59%

52% 41% 0 9-$40,00 9 ,9 9 4 $

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33%

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managers who answered, all but one report payrolls in the millions, with 20 of them saying it is in the $2 million to $3.8 million range.

Two say total payroll is $10 million or $10.5 million. The lowest total payroll is $125,000. It’s unknown if that figure is for an idled plant with a limited staff or perhaps a mistaken entry in the survey. The next lowest number is $1.5 million.

Managers reporting for the plant as a whole also gave salary ranges for 15 job titles. For some positions, there is a salary range that came out as a clear winner, with at least 40 percent or more managers reporting the same salary range for the job and the remaining answers spread out among the other categories at much lower percentage totals. The numbers show most managers report that

boiler technicians, operators and lab technicians are paid between $40,000 and $49,999. Most environmental health/safety employees and lead operators are in the $50,000 to $59,999 category. Lab managers are most often put in the salary range of $60,000 to $74,999.

Maintenance managers and plant engineers are most often in the $75,000 to $99,999 range. General managers fell into the $100,000 to $149,999 salary range.

The remaining job titles fell into more than one category of salary ranges. For instance, the salary of maintenance technicians is fairly evenly split between two categories, ranging from $40,000 to $59,999. Controllers/chief financial officers and operation managers also don’t fall into a clear salary range, instead the majority of man-

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june 2013 | Ethanol Producer Magazine | 41

PERSONNEL

agers report salary ranges for both jobs are spread across three categories, starting at $60,000 and topping out at $149,999. Finally, the most common salary ranges of commodities managers and plant managers lie across two categories, ranging from $75,000 to $149,999.

Going back to questions asked of all survey takers, 22 percent of respondents say their salary ranges from $100,000 to $149,999, the highest percentage total of all the categories. The ranges of $75,000 to $99,999 and $60,000 to $74,999 follow at 21 and 18 percent, respectively. Only 9 percent, or a total of 28 survey takers, have salaries of less than $40,000 and only 3 percent, or 10 survey takers, have salaries of $200,000 or more. The 2009 survey takers report somewhat lower sala-

Hours in a typical work week

6%

11% 55-59 hours

20% 50-54 hours

60-69 hours

33%

1% 70 hours

45-49 hours

or more

71%

not compensated for overtime

78%

of plant managers work 50+ hours per week

19%

19%

41-44 hours

paid time and a half

8% 40 hours

2%

Less than 40 hours

ries overall. At that time, the largest percentage of respondents were paid between $60,000 and $74,000 and another 17 percent were paid less than $40,000.

The majority of this year’s survey takers work between 41 and 54 hours a week.

The categories with the two highest percentages are 33 percent working between 45 and 49 hours and 20 percent working between 50 and 54 hours. Only 12 percent work between 55 and 59 hours and another 6 percent work 60 and 69 hours a week.

Notably, 71 percent of survey takers say they are not compensated for overtime.

Only 19 percent say they are paid time and a half for overtime.

Overall, the survey shows that 64 percent of respondents feel they are compensated about right for their work. In comparison, 32 percent feel they are compensated

42 | Ethanol Producer Magazine | June 2013

PERSONNEL

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is deserved or not. The results of the 2009 salary survey also show that ethanol plant employees are receiving raises. At that time, 51 percent received a raise in the previous 12 months.

The most recent survey also shows that 69 percent of respondents received monetary bonuses in the past 12 months.

About 40 percent say their bonus was between $1,000 and $4,900. Another 13 percent say they got bonuses between $5,000 and $7,499. Interestingly, the next highest category is a tie, with exactly 11.61 percent receiving a bonus of less than $1,000 and another 11.61 percent getting $10,000 to $14,999.

On the benefits side, the majority of respondents report receiving health insurance (96 percent), 401(k) packages (92 percent), dental insurance (89 percent) and life insurance (88 percent). Another 75 percent are offered disability insurance and 60 percent

cell phones. The least commonly offered benefits are company vehicles, stock say promoting within options and incentive pay, the plant is most way to fill ranging from 11 percent to effective positions 6 percent.

When it comes to hiring, 59 percent of plant management answering for the plant as a whole say promoting from within is the most effective method of filling positions at their facilities. Another 34 percent say promoting from within is sometimes effective.

Next in the lineup comes word of mouth, which 24 percent say is very effective and 62 percent say is sometimes effective. Managers had the lowest confidence in job fairs, with none considering them very effective, 7 percent considering them sometimes effective, 10 percent neutral and 3 percent usually ineffective.

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too little. Notably, 2 percent, or 7 people, admit they are compensated too much.

Despite difficult times facing the ethanol industry, 68 percent say they have received a raise in the last 12 months. Of those receiving raises, most, or 31 percent, received a 3 percent raise. Between 9 and 11 percent received raises of 4 percent, 5 percent or 6 to 9 percent. Only 6 percent received raises of 10 to 14 percent while another 5 percent received a raise of 15 percent or more. Notably, 85 percent received their raises without being promoted or any change in responsibility. The vast majority (79 percent) say salary reviews are offered annually. Another 13 percent say there is no regular schedule for salary reviews. One person, who checked the other category, comments that all workers get the same 2 percent raise once a year, whether it

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69% received a raise in 68% the past 12 months received a bonus in the past 12 months

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64%

73%

of those who received a bonus were not compensated for overtime

say they are paid about right

of lab techs say they got raises and bonuses

40%

of bonuses were $1,000-$5,000

90%

of those who worked at a plant running 80%+ capacity, received a bonus

85%

say the raise is not a result of a promotion or change in responsibility

PERSONNEL

Compensation aside, how satisfied are you with your current position?

17% Extremely Satisfied

51% Very Satisfied

22% Somewhat Satisfied

4% Unsatisfied 6% Very Unsatisfied = One person

june 2013 | Ethanol Producer Magazine | 45

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46 | Ethanol Producer Magazine | June 2013

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Job Satisfaction

51%

Setting the issue of compensation aside, the said they were majority of survey tak- satisfied with the jobs ers report being happy with their jobs at ethanol plants. In all, 51 percent say they are very satisfied with their jobs and 17 percent are extremely satisfied. Another 23 percent are somewhat satisfied. The last two categories, very unsatisfied and unsatisfied, are made up of only 6 and 4 percent of the total.

Looking at what factors are most important in job satisfaction reveals that the No. 1 most important thing is job security, with 60 percent of the total rating it as very important. A positive atmosphere (49 percent rates this as very important), good benefits package (48 percent) and

competitive salary (47 percent), follows close behind. A challenging work environment is also important, with 40 percent of respondents rating this category as very important. A short commute is at the bottom, with only 14.8 percent rating this as very important to job satisfaction.

In all, 42 percent say they arenâ&#x20AC;&#x2122;t considering a new job, presently. Another 40 percent say they arenâ&#x20AC;&#x2122;t currently looking for a new job but would consider it, if a good opportunity came along. Only 11 percent are actively looking for a new job and 6 percent are strongly considering starting a job search.

Author: Holly Jessen Managing Editor, Ethanol Producer Magazine 701-738-4946 hjessen@bbiinternational.com

Human Resources

48 | Ethanol Producer Magazine | June 2013

Human Resources

More Than Just Staff Attracting and retaining a team of dedicated and motivated employees is integral to company success.

By hollyjessen

Like any industry, ethanol production companies face hiring challenges. For facilities located in rural areas, it can prove difficult to find experienced workers willing to relocate to small-town America.

Another potential frustration is putting time and company resources into training employees who can be lured away into industries who may be able to offer more competitive

june 2013 | Ethanol Producer Magazine | 49

Human Resources

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‘I get excited talking about our team.

We have a really good team and I could go on for a really long time.’

—Tom Griffin, Chief Technology Officer for Edeniq Inc.

compensation packages. “We have been a heck of a training ground for industries that can pay far more than we can,” says Tom Willis, CEO of Conestoga Energy Partners LLC, which operates three ethanol plants in Kansas and Texas.

The importance of hiring the right person for the right position adds another layer. Scott McDermott, a partner at Ascendant Partners Inc., puts it this way. “In the end you want to select the best talent not necessarily just staff,” he says.

Neal Jakel, general manager of Illinois River Energy LLC, tells Ethanol Producer Magazine that strong teams and employees aren’t created overnight. “It takes time and patience to find and develop a great team,” he says. He also points out that ethanol plants are highly technical businesses that require optimization, adding that it’s essential that the workforce has strong technical skills. “If you don’t have a technical work force from the information technology to the maintenance department, a facility will be leaving opportunity, i.e. money, on the table, which in these very tough economic times is not a prudent business practice.”

Brian Thome, CEO of Edeniq Inc., said developing the right team is of paramount importance to the development company—second only to safety. Edeniq, which is working on technologies for corn-ethanol facilities as well as secondgeneration cellulosic ethanol, doubled its workforce from 50 to 100 employees in

2012. The No. 1 focus during the hiring process is finding people who are a good fit for the team, he says. For Edeniq that means idea generators who work well in a team structure.

Tom Griffin, Edeniq’s chief technology officer, is passionate about the topic of finding the right employees and then keeping them motivated. For Edeniq, one make-or-break interview question is whether the applicant has a passion for biofuels, because those people are more likely to become sustained long-term employees. Asked to talk about an employee success story, Griffin said he started with a list of 15 employees and whittled it down to six coming from diverse backgrounds, experience and educational levels. “I get excited talking about our team,” he says, adding that he found it difficult to narrow the list down. “We have a really good team and I could go on for a really long time.”

Company Culture

One of the biggest difficulties facing employers is employees who come to work, punch a time clock and do as little as they can get away with until it’s time to go home, says Betsey Upchurch, CEO of P4 Consulting. They have complaints about the things their managers do but they, and often their managers, don’t have the skills or ability to create resolution.

“So they just kind of grumble, grumble, grumble and resist,” she says, in her soft

Human resources

‘In every company that we work with in any industry, people leave because of their boss most often. If you don’t want your good people to leave then you have to have talented management.’

—Betsey Upchurch, CEO of P4 Consulting

Southern drawl. “With margins like they are, you can’t afford that. You’ve got to have people there, working hard, paying attention and bringing things that are a problem—before they are a big problem—to your attention.”

P4 Consulting works with companies, including ethanol plants, on improving company culture for better success and profitability. Basically, it boils down to helping leaders lead and firing up employees so they are excited and engaged, rather than just punching a time clock, she says. The first step is assessing current company culture in four areas and identifying what it does well and in what areas it needs to do some growing. The list starts with evaluating the company’s mission or vision. “Do people know where they are going and why it’s important?”

she asks. Clear policies and procedures allow a company to be consistent in execution. The next key point is empowering employees to work, grow and develop.

Finally, there’s adaptability, which allows companies to move quickly in response to market signals and produce consistently quality products.

Improvement in weak areas starts with the leaders because the company culture, good or bad, is a direct reflection of what those at the top are doing. “In every company that we work with in any industry, people leave because of their boss most often,” she says. “If you don’t want your good people to leave then you have to have talented management.” In her line of work, Upchurch has encountered managers who run the gamut from terrible to marvelous. Some don’t have good management skills but they do have potential.

“With a little development work, they end up being great,” she says.

Changing company culture is about creating a senior team who know what the company values are and understand what they are asking of employees. The next step is helping middle management catch that vision and know their place in it. It’s about shifting power down, which ultimately gives senior leaders more power, although it can be a difficult transition.

Upchurch describes it as asking leaders to “quit being in the doing end of things and be in the inspiring, directing, creating, strategic end of things, and leave the execution and tactical stuff to supervisors, leads and front line.”

Upchurch talked about two specific projects at ethanol plants, in which P4 Consulting was able to help management empower employees with positive results.

In the first example, teams of four to five people became involved in the interviewing and hiring process for operator and entry level jobs. When teams, including supervisors and leads, are in on in-

june 2013 | Ethanol Producer Magazine | 51

Human Resources

terviews there were fewer hiring misfires.

“What happens is, they pick better to begin with,” she says. “They ask hard questions because it’s not fun for them when they get someone that’s not good to be on the team.” The second project took place at an ethanol plant where employees were grumbling about pay levels. The feeling was that

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there was no clear system for determining how much people got paid. A task force of employees was assembled, with the direction that the executive team didn’t want to pay for seniority but rather ability and capability. The group examined each job and assigned monetary value for knowledge and skill levels. Under this system, employees

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don’t get raises on specific timetables, but when they reach specific markers.

“Essentially, if someone comes to work for the company, they know on day one what they have to do to get raises,” she says. “It works because one, they created it, and two, they know what they have to do to make more money.” Turnover and employee grumbling went down significantly after the project was completed and it was revealed the plant’s pay scale was actually pretty consistent.

“Mostly people were in pretty much the right spot but the difference was that they knew they were, instead of guessing,” she says. “Basically when people don’t have information they just guess the worst sometimes.”

Conestoga Energy understands the importance of cultivating a positive company culture, Willis says. Established in 2006, the company spent the first two years trying to build a business, not a culture, and as a consequence didn’t work well as a team. In fact, Willis says, the turnover rate in the first two-plus years was about 90 percent. By focusing on improving its company culture, training, teamwork and empowering employees, Conestoga Energy now has a 24 percent turnover rate for its plant employees, a number that is below industry average.

To get where it is today, the company spent a lot of time developing and defining its core values. Beyond just creating policies based on those values, Conestoga Energy takes the extra step of explaining why it’s important and how it impacts employees (who they prefer to call teammates) and the company in day-to-day operations. “Under the old corporate model of 25 years ago,” Willis says, “the boss asked you to do something—why? Because I told you so.”

When employees understand the why and are given the opportunity to give their input on decisions, it leads to bet-

Human Resources

ter buy in and performance. â&#x20AC;&#x153;We have a saying that we succeed or weâ&#x20AC;&#x2122;ll fail as team,â&#x20AC;? he says.

Of course, not every person will fit into Conestoga Energyâ&#x20AC;&#x2122;s unique family atmosphere, Willis explains. And not every team member is 100 percent happy every day. â&#x20AC;&#x153;But for the most part I think our people would tell you they feel empowered, they know where weâ&#x20AC;&#x2122;re going, why weâ&#x20AC;&#x2122;re going there and what their role is,â&#x20AC;? he says, adding that the company still has a long ways to go. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s like golf, the quest of impossible to ever play a perfect round of golf,â&#x20AC;? he says. â&#x20AC;&#x153;Every day itâ&#x20AC;&#x2122;s, â&#x20AC;&#x2DC;How do we get better?â&#x20AC;&#x2122;â&#x20AC;?

McDermott agrees that itâ&#x20AC;&#x2122;s very important to have clear company goals that tie into management goals and goals for staff. â&#x20AC;&#x153;They want to believe that their leadership has a vision for the future for the businesses, so they are not just kind of swinging in the wind,â&#x20AC;? he says.

Training, Compensation

Speaking about the difficulty of competing for skilled workers with other industries with deeper pocketbooks, Willis said Conestoga Energy works around this by hiring untrained workers and training them on the job. â&#x20AC;&#x153;I can tell you this,â&#x20AC;? he says, â&#x20AC;&#x153;itâ&#x20AC;&#x2122;s a heck of a lot easier to try to grow them inside than it is to go outside and try to recruit all the time.â&#x20AC;?

The key is to hire people with potential, desire and heart, things that cannot be coached. Thatâ&#x20AC;&#x2122;s where on-the-job training and continuing education come in. â&#x20AC;&#x153;Youâ&#x20AC;&#x2122;ve got to invest in your people,â&#x20AC;? he says. â&#x20AC;&#x153;You can spend all the money you want on technologyâ&#x20AC;&#x201D;and weâ&#x20AC;&#x2122;ve spent a lot of money in capital investment in technologyâ&#x20AC;&#x201D;but they are only as good as the people that run them.â&#x20AC;?

Thome and Jakel also mentioned the importance of professional development. Edeniq sets aside a budgeted

amount for ongoing professional development for each one of its employees. At Illinois River Energy, in addition to the training opportunities at a local community college, the company is developing its own in-house skill block program.

A challenging market environment takes a toll on bonus and incentive pro-

grams, McDermott says. However, as the labor markets improve, itâ&#x20AC;&#x2122;s important that ethanol plants stay competitive, ideally with compensation programs that combine performance incentives and profit sharing.

Companies that pay out only basic hourly salary face challenges in keeping employees motivated. â&#x20AC;&#x153;What we have seen is, people

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PHOTO: EDENIQ

Human Resources

Stover Lesson Edeniq employee Cam Cast talks about feedstocks for cellulosic ethanol. Edeniq doubled its workforce from 50 to 100 in 2012.

are not as engaged to make these improvements to keep these plants competitive in that old structure,” he says.

Companies are at an advantage when they understand that it is in their best interest to make sure employees are offered performance incentive bonuses to help the plant reach for improvement milestones—even when margins are tight. “Frankly, it’s the difference between these guys making money and losing money these days,” McDermott says.

And, it’s important that those bonus plans aren’t based exclusively on the company’s financial performance, says Donna Funk, a member of the accounting and consulting firm Kennedy and Coe LLC. “The plant production employees, they can’t control

54 | Ethanol Producer Magazine | June 2013

what you buy your grain for or what you sell your ethanol for,” she says. Reward metrics based on what employees can control, such as plant cleanliness, safety and ethanol conversion rates, tend to motivate better.

Of course, it isn’t just about money. There’s no replacement for management telling employees when they have done well, McDermott says. “Staff knows when these companies are not doing well and even if you aren’t able to necessarily compensate them, you need to have recognition,” he says.

There are a multitude of things companies can do to show their employees they appreciate them. At Conestoga, Willis takes the time to send each employee a personal birthday card as well as quarterly meetings to thank team members. Jakel says Illinois River Energy gives awards for buying flex-fuel vehicles and clothing.

Then there’s food, which Jakel referred to as the No. 1 motivator, adding that “a well fed employee is a happy employee.”

On the day that EPM interviewed Thome, Edeniq was having a barbeque, as part of a monthly employee luncheon schedule. On National Pi Day, one of the employees brought in pies to share.

And two or three times a year the company plans family outings.

The next one on the schedule is a company softball game and barbeque. “We work hard on making the environment fun for people to be around and spend time together even outside the working environment,” Thome says.

Author: Holly Jessen Managing Editor, Ethanol Producer Magazine 701-738-4946 hjessen@bbiinternational.com

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PROFILE

Whirlwind Work In a 1,000-hour run, the ICM laboratory technicians who support the pilot plant keep busy running multiple tests from samples they collect around the clock.

PHOTO: ICM

58 | Ethanol Producer Magazine | June 2013

PROFILE

Gen

1+1.5+2

Equals Process Progress A closer look at cellulosic R&D by ICM Inc.

By Susanne Retka Schill

The Beast is parked along a wall near the door.

Auntie Em and Dorothy are rolled off to the side, out of the way, as the number and size of reactors have grown to demonstration scale at ICM Inc.â&#x20AC;&#x2122;s research facility in St. Joseph, Mo. The laboratories packed with analytical machines hum at a fast pace.

Even on a quiet day between big integrated runs, more than a dozen people were running system trials, pulling samples to test and evaluate the data. On that March day, pilot plant supervisor Jon Licklider and scientists Chris Gerken and Laers Malburg gave Ethanol Producer Magazine a behind-the-scenes look at the research facility.

ICMâ&#x20AC;&#x2122;s work on cellulosic conversion technology began in earnest in 2009, with a $25 million grant awarded by U.S. DOE. The Kansas

june 2013 | Ethanol Producer Magazine | 59

PROFILE

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technology provider and engineering company that teamed up with Fagen Inc. to build nearly two-thirds of the capacity in the U.S. ethanol industry was shifting gears to join the ranks of companies designing the next generation of cellulosic ethanol processes.

The initial work was done with the refrigerator-size, flask-scale reactor called the Beast. That soon scaled up to two reactors capable of handling 50-gallon batches, dubbed Auntie Em and Dorothy. The Wizard of Oz theme is most appropriate, as many in the ICM research and development team pulled up stakes from the heart of Kansas, where ICM is headquartered at Colwich, to move across the Missouri River to St. Joseph, Mo. As work progressed, the tanks grew bigger and more numerous and personalized naming got dropped in favor of numbered tanks. In all, there are five 15,000-gallon pilot fermenters and four 35,000-gallon hydrolysis/fermentation reactors housed in the pilot facility on the LifeLine Foods LLC campus.

Once owned by a large oats processor, the warehouse and processing plant were turned into a food-grade corn products facility by the farmer cooperative AgraMarke Quality Grains. ICM installed a 50 MMgy

ethanol plant to add value to excess starch supplies, acquiring a 49 percent share in LifeLine in the deal. With much of the old warehouse standing empty, ICM utilized unused space for both its starch-based and cellulosic research and development.

In late November, the R&D team completed a six-week, continuous, integrated run of the Generation 1.5 process.

Doing a 1,000-hour run is a whirlwind experience. â&#x20AC;&#x153;The laboratory is filled with people running tests, all day and all night,â&#x20AC;? says Malburg. More than 2,000 samples were pulled during the continuous run, with about 10 tests run on each sample.

Some tests needed to be done as the run progressed, while other fractions could be labeled and set aside for later analysis.

Data was collected at every pump and every valve as well via the distributed control system. In all, the data report was more than 900 pages long in March, and growing.

The patent-pending Gen 1.5 cellulosic technology is built on two trademarked and proprietary technologies that can be implemented in stages: Select Milling Technology and Fiber Separation Technology. Select milling has been installed at about a dozen ethanol plants, demonstrating enhancements of 2 to 3 percent

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PHOTO: ICM

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Starting Small ICM scientist Chris Gerken stands by the Beast, the flask reactor used in the early stage of the companyâ&#x20AC;&#x2122;s cellulosic ethanol research.

PROFILE

PHOTO: BBI INTERNATIONAL, SUSANNE RETKA SCHILL

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Data Points Pilot plant supervisor Jon Licklider explains data collection and analysis lies at the heart of researching new processes.

Stepping Up Technologies

Gen 1.5 is built on ICM’s trademarked and proprietary Selective Milling Technology, a process enhancement designed for first-generation corn-ethanol plants that offers a 2 to 3 percent ethanol yield boost and a 10 to 20 percent oil increase in the dozen or so plants that have added the system so far. Going the next step with the new wet fractionation technology, trademarked Fiber Separation Technology, will add another 2 to 3 percent increase in ethanol yield and 15 to 20 percent on oil, says Kurt Dieker, ICM director of product development. Each of those steps have been designed for a targeted payback of around a year.

Rather than going to a finer grind, the ICM process backs off to a coarser grind from the hammermills to keep fiber sizes larger, followed by a secondary grind once the grain is slurried and before liquefaction. “The goal is liquefy everything but the insoluble fiber,” he explains.

“There’s a reason we went with wet fractionation. When you grind corn dry, the fiber grinds just as well as everything else. When you grind corn wet, the fiber doesn’t tear as easily. We also want to macerate the germ because germ has 85 percent of the oil.” By freeing the oil and keeping the fiber molecules larger, he adds, “that allows us to separate it more easily and get the same or larger yield with less horsepower.”

Efficiencies are gained in targeting solids, he says. A 56-pound bushel of corn amounts to 47 pounds of solids when moisture is subtracted. That is reduced in a prescreening step to 9 to 10 pounds going through selective milling. By concentrating the stream, horsepower requirements and operational costs are reduced, he points out. The next step takes the 10 pounds down to 4 or 5 pounds of actual fiber content.

In shifting commodity markets and an uncertain political environment, giving the customer options is important, says Dieker. The fiber can simply be separated and added back to the distillers grains, creating more fermentation space by removing the unfermentable fiber solids. The separated fibers can also become a new feed coproduct. “For some markets that will be preferred, in that it is a high-fiber, lower-protein supplement and they can add specific components back in. Dairies, for instance, add specific fats for the positive impact on milk.”

The third choice is to send the fiber into Gen 1.5 for conversion to cellulosic ethanol, starting with a dilute acid pretreatment before going through enzymatic hydrolysis. Once again, there are options. More than 80 percent of C5 sugars can be converted by first fermenting the fiber mash with GM yeast, before sending it to the corn starch fermenter to complete the C6 fermentation. If the producer wants to avoid the use of GM yeasts for C6 conversion, forfeiting that ethanol yield boost, another option is to send the hydrolyzed fiber to the corn mash for fermentation with conventional yeasts. The fiber conversion achieves a rate of greater than 100 gallons per ton, while the overall gain is about 10 percent more ethanol per bushel of corn on top of the gains from selective milling and fiber separation.

ICM estimates the Gen 1.5 payback will be a little under two years, if the value of the cellulosic renewable identification number (RIN) stays high. If it doesn’t, it would be closer to three years, Dieker says. “It also depends on what market you’re in—what you’re getting for your coproducts and what you value your fiber as,” he says, adding that he suspects regional patterns will develop based on feed market preferences.

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more ethanol and 10 to 20 percent greater oil recovery. Similar enhancements may be gained in ethanol and oil yields from removing the fiber with the newest technology, even without taking the fiber to the cellulosic conversion step. (See sidebar.)

Going the final step of converting the fiber to cellulosic ethanol brings the total gain from Select Milling Technology, Fiber Separation Technology and Gen 1.5 to 14 percent in ethanol production and about a 70 percent increase in oil recovery. Or, as the ICM team likes to put it, allowing the same ethanol production from 14 percent less corn.

Ethanol producers going the cellulosic route will have a few more tasks on the front end, says Gerken, whose scientific focus on the team is pretreatment and enzymatic hydrolysis. A dilute acid pretreatment step hydrolyzes hemicellulose to xylose while also fluffing the cellulosic structure for the enzymatic action that breaks down the cellulose to glucose. From there, the pretreated fiber can take one of two paths. In the hybrid hydrolysis and fermentation, the pretreated and hydrolyzed fibers are first fermented in separate tanks using genetically modified (GM) yeasts for C5 conversion before being introduced into the plant’s main fermenters. “Some ask why we do that,” says Gerken about the

INT

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PHOTO: ICM

PROFILE

Driving Data Ongoing trials at ICM’s pilot cellulosic biorefinery means a steady stream of samples need analysis in the multiple laboratories supporting R&D.

two-stage fermentation, “but you get some added efficiencies, and you don't get to 14 percent unless you do that.” If the producer doesn’t want to go the GM route and is willing to give up the C5 conversion, the pretreated, hydrolyzed fiber fraction can be sent directly to the corn starch-based mash being fermented by conventional yeast.

From there on, the two processes are comingled through the back end of the plant.

Malburg, a yeast specialist on the team,

explains that ICM has worked with several companies that are developing GM yeasts for C5 conversion. The GM yeasts, however, will require federal approval before they can be used commercially because they end up in the distillers grains feed coproduct.

“Those [yeast] suppliers are in different stages in the regulatory path,” Malburg says. “But, we think within a year there will be more than one GM yeast approved.”

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62 | Ethanol Producer Magazine | June 2013

cess goes far beyond pretreatment, enzymes and yeasts. One of the first challenges in the Gen 1.5 development was figuring out how to handle the highly viscous material on the front end. Licklider says they quickly began using flexible hoses, rather than piping, and installed motors, valves and pumps on skids that could be moved aside with forklifts. “We can make changes on the fly,” he explains. “We have fabricators, electricians, and computer programmers on staff.” They also make a point to use the same suppliers of the various components as the starch-based designs.

Systems were developed individually until the big test of the integrated run last winter. “When running continuously you get buildups you don’t see in batches,” Malburg says. “We knew it was there and would be coming, but we didn’t have a good idea of the scale of the scale.” For a time, the ICM team thought they might be looking at a new polymer coproduct, he adds wryly, but as the process was refined, the team altered the pretreatment to avoid the issue.

With the 1,000-hour run on the integrated corn fiber process under their belts, the team is preparing for a similar run on the Gen 2 cellulosic ethanol process in late summer, initially using energy sorghum as feedstock. Once hydrolyzed, the sorghum behaves much like the corn fiber, Malburg

PHOTO: BBI International, Susanne Retka Schill

PROFILE

Fluffing the Fiber ICM senior scientist Laers Malburg illustrates how cellulose fiber is structured and the principle underlying pretreatment systems designed to open the structure for enzyme action.

adds, but the two cellulosic feedstocks handle quite differently when mixed with water and pumped through the front end. “Corn fiber is more like a flake, like wheat bran,” Malburg says. “Sorghum is more stick-like.

What we’re learning now is what it will take to get our front end humming along with energy sorghum.”

For Gen 2, ICM is targeting a scale that would co-locate 25 MMgy of cellulosic ethanol production with a 100 MMgy firstgeneration plant. Gen 2 will include new

levels of energy integration, Gerken says.

“There will be a lot more unit operations that take energy loads. With the co-located approach—cellulosic and starch plants— we’re looking at the energy needs of the entire process and how to make the best use of the lignin.”

While Gen 1.5 is going to add some complexities to the front end of a first generation plant primarily in the pretreatment step, Gerken cautions that Gen 2 is going to be a 20-fold increase in complexity. “As

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PHOTO: BBI International, Susanne Retka Schill

PROFILE

LifeLine Campus A conveyer transports cellulosic feedstock across the street into ICM’s cellulosic pilot facility, housed in a former warehouse on the LifeLine Foods campus. Part of the LifeLine corn processing facility is in the background.

a result, we’re trying to automate as much as possible,” Malburg adds, explaining the team is testing several kinds of probes in multiple locations.

As the R&D work continues on Gen 2, Licklider says his team of plant operators are preparing standard operating procedures for Gen 1.5 and getting ready to go out in the field as the first Fiber Separation Technologies and Gen 1.5 systems are installed. Indeed, the first ethanol producer in ICM’s early adopter group was running water through the system to check for leaks in mid-April before starting up its Fiber Separation Technology. A full announcement and more details on the process will be released at the International Fuel Ethanol Workshop & Expo set for June 10-13 in St. Louis.

Author: Susanne Retka Schill Senior Editor, BBI International publications 701-738-4922 sretkaschill@bbiinternational.com

64 | Ethanol Producer Magazine | June 2013

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EFFICIENCY

66 | Ethanol Producer Magazine | June 2013

EFFICIENCY

Ethanol Industry Snapshot The results of a 2012 corn-ethanol survey reveal progress in yield, energy and water use.

By CHRIS HANSON

To capture an image of where the ethanol industry is going, it is imperative to understand where it has been. In the past five years, the

industry persevered through an economic bust, maintained vigilance in its recovery and steeled itself against tight margins with greater efficiencies and valuable coproducts.

To learn how the industry is currently faring, researcher Steffen Mueller with the Energy Resources Center at the University of Illinois-Chicago and John Kwik, president of Dominion Energy Services, surveyed ethanol producers to gauge the industry progress in reducing the energy and environmental footprint of corn-ethanol production.

The 2012 corn-ethanol survey was sponsored by the National Corn Growers Association and the Illinois Corn Marketing Board. Additional support came from the Renewable Fuels Association, Growth Energy member plants

PHOTOS: BBI INTERNATIONAL, SUSANNE RETKA SCHILL

june 2013 | Ethanol Producer Magazine | 67

EFFICIENCY and the Nebraska Ethanol Board. Out of 162 plants operating in 2012, ranging from 30 to 111 MMgy in production capacity, 84 responded to the survey. The report notes that plants smaller than 30 MMgy and those processing mixed feedstocks were excluded from the analysis.

Historical Comparison

Since the last survey reported by Mueller in 2008, corn-ethanol plants have incrementally improved performance in thermal energy application, water usage and ethanol yield. The study shows that modern energy and processing technologies have reduced the energy footprint of the process, including sophisticated heat integration, combined heat and power (CHP) technologies, variable frequency drives, advance grinding technologies, various combinations of front- and back-end oil separation, and innovative ethanol and distillers dried grains (DDG) recovery.

The 2012 survey shows that ethanol yield has increased 1.43 percent to 2.82

gallons of undenatured anhydrous ethanol per bushel of corn. The progress in ethanol production can be credited to innovations being adopted across the industry despite economic downturns, Mueller says. Through plant retrofits, the producers were able to increase ethanol yields on a per-bushel basis and utilize electricity and thermal energy more efficiently. New technologies in corn production, such as slow-release fertilizers and sophisticated corn hybrids and machinery, have also reduced the overall energy and environmental footprint of the corn ethanol industry.

“What the survey shows is that the ethanol industry is still very dynamic,” he says.

“Despite economic downturns, the industry has increased yield while simultaneously reducing overall energy consumption at the plant level.”

According to the 2008 report, the average plant utilized 26,206 Btu of thermal energy per gallon produced. The latest findings indicate an 8.95 percent decrease to an average of 23,862 Btu per gallon. Mueller

says this figure represents a snapshot across all ethanol plant technologies, coproduct drying practices and geographic locations.

To put it in perspective, a 50 MMgy ethanol plant will save more than 117 billion Btu per year in thermal energy compared to five years ago. The energy efficiency improvement is even more dramatic when compared to a 2001 USDA commissioned survey that showed 36,000 Btu thermal energy was used per gallon produced.

Not surprisingly, corn oil yield increased significantly. The survey shows an average of 0.53 pounds of separated corn oil is produced per bushel—a nearly fivefold increase from the 0.11 pounds per bushel reported in 2008. It’s also notable that the jump in corn oil production resulted in a 0.5 percent decrease in DDG yield and a 2.7 percent increase in electricity usage.

Water use has declined by 0.74 percent since 2008 to 2.7 gallons of water used per gallon of ethanol. Although less than 1 percent change might not seem a large adjust-

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EFFICIENCY

By the Numbers Ethanol Yield

2.82 gallons/bushel of corn in 2012 2.78 in 2008

ment, itâ&#x20AC;&#x2122;s more than a 50 percent reduction of water per gallon of ethanol produced in 2005, as reported by the Minnesota Department of Natural Resources.

Emerging Technology Summaries

Going beyond the average reported among those returning the survey, the report digs into the impact on ethanol yield and efficiencies for 15 emerging technologies. Some of the most promising tech-

nologies for improved ethanol production, Mueller says, are CHP operations, diversification of corn oil recovery systems, better grinding techniques and carbon dioxide scrubbers.

The report describes two CHP turbine configurations that operate at pressures between 150 and 600 pounds per-square-inch gauge. In these models, a steam turbine generates electricity to offset the power bought from the grid while meeting the plantâ&#x20AC;&#x2122;s thermal energy requirements for

Thermal Energy 23,862 Btu/gallon in 2012 26,206 in 2008

Electricity

0.75 kWh/gallon in 2012 0.73 in 2008

Water use

2.70 gallons/gallon ethanol in 2012 2.72 in 2008

DDGS (dry basis, including corn oil)

15.73 pounds/bushel in 2012 15.81 in 2008

Corn oil

0.53 pound/bushel in 2012 0.11 in 2008

june 2013 | Ethanol Producer Magazine | 69

EFFICIENCY process heat. In some locations, the systems are scaled up to generate electricity as a coproduct sold to a local utility.

Both front- and back-end corn oil recovery methods are summarized in the report. The Brix oil separation process for front-end oil recovery increases oil yield from 0.4 to 0.48 pounds per bushel, but at the added cost of increased electrical usage of 0.02 kilowatt (kW) per gallon of ethanol. Higher recovery rates for corn oil can be achieved by combining the traditional oil recovery process with new technology.

As an example from the seven back-end oil recovery technologies briefly reviewed, one hybrid system boosts yield to 1.2 to 1.4 pounds of oil per bushel of corn. The process puts together a front-end oil recovery system with back-end oil technology to increase oil yield.

Carbon dioxide scrubbers are another technology featured within the report.

This technology involves installing a new condenser ahead of the CO2 scrubber to

remove trapped ethanol and return it to either the beerwell or into the rectification column. By utilizing the newer CO2 scrubber technology, plants report a yield increase of 0.1 gallon of ethanol per bushel.

Plant Configurations

Besides describing the separate emerging technologies, the report takes a closer look at four plant configurations that all yield more ethanol than the reported average. This section of the report was designed to assist plant owners in determining the direction they would like to take their plant, Kwik explains. The plants serve as models for assessing improvement opportunities.

Two configurations are among the most common, differing only in the treatment of the distillers grains. The first utilizes the traditional corn dry-mill process plus back-end oil extraction and 100 percent DDGS. The best performing facilities in this configuration yield 2.85 undenatured

ethanol gallons, extract 0.75 pound of corn oil and produce 13.7 pounds of DDGS on a dry basis from every bushel of corn processed.

The second one is identical to the first, with the exception that half the distillers grains are dried and half are sold wet. Both can attain the same ethanol and corn yields and use the same amount of electricity per gallon. However, the second configuration yields, on a dry basis, 6.85 pounds each of wet and dry distillers per bushel while using 16 percent less thermal energy. The report notes the distillers grains yield is lower than the average in both models due to higher ethanol yields.

The next two configurations described in the report illustrate where the industry is heading, Kwik says. One focuses on the production of multiple coproducts utilizing multiple technologies and yields 2.89 gallons of undenatured ethanol, 3.25 pounds of protein, 0.48 pounds of front-end oil, 0.8 pounds of back-end oil and 9.47

EFFICIENCY pounds of DDGS per bushel, on a dry basis. These facilities utilize multiple technologies to produce the diverse coproducts. In addition to standard dry milling, the model employs batch fermentation, either high or low temperature cooking, advanced grind technology, front-end and back-end oil recovery with advanced systems and protein recovery. “Because of some of the grinding technology, we enhance the coproducts,” Kwik explains. “You also achieve the benefit of additional ethanol and oil.” He adds this creates a metric for achievable goals that can be used by plant owners in their own revenue calculations and to help with comparative analyses of the different technologies.

Kwik says for producers not ready to handle multiple coproducts, the fourth model demonstrates a more efficient plant that produces the highest ethanol yield with lowest overall thermal requirements of all configurations studied, while still producing DDGS. This model yields 2.85

Grown on one-third less water and producing an equal amount of ethanol per bushel as comparable feed grains, sorghum is paving the way to a brighter, more sustainable future.

gallons of ethanol, 0.75 pound oil and 13.7 pounds of DDGS per bushel, on a dry basis, but only uses 19,500 Btu of thermal energy and 0.75 kW of electricity per gallon of ethanol. Although the list of employed tools is not as extensive as the third model, it does utilize batch fermentation, either high or low temperature cooking and backend oil recovery. Where this model stands apart is that it utilizes a superheated flash dryer to bring DDGS down to 11 to 12 percent moisture. About 85 percent of the thermal energy input is recovered by condensing evaporated vapors in an external heat exchanger and by recycling the latent heat of vaporization back into the process.

Condensing vapors from the dryer, however, does require the facility to process the excess condensate that cannot be recycled as backset through anaerobic digestion or waste treatment.

Many factors will influence which direction plants take as they plan for future enhancements, Kwik says, with the most

prominent being location and finances.

“What you do with your plant is really dependent on your geographic location,” he says. He cites facilities in Iowa and Illinois where the cattle-feeding needs of distillers grains customers limit how much oil they can extract, while others near dairy operations are able to extract more oil without affecting distillers grains value.

Although the report offers milestones and methods to producers wanting to increase their ethanol yield, the biggest challenge might be to secure capital to fund projects. The technology is ahead of the financial stability of the current ethanol market. “We have the technology to make plants more sustainable,” Kwik says. “We just can’t get the capital to implement the technologies even with attractive returns.”

Author: Chris Hanson Staff Writer, Ethanol Producer Magazine 701-738-4970 chanson@bbiinternational.com

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1 Based on 2007–2012 Syngenta Trials. © 2013 Syngenta. Enogen,® the Alliance Frame, the Purpose Icon and the Syngenta logo are trademarks of a Syngenta Group Company. Syngenta Customer Center: 1-866-SYNGENT(A) (796-4368). www.FarmAssist.com MW 11CR3009-SS-R 5/13

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“I think Enogen has the potential to change the face of the ethanol industry.”

—Joe Williams, Lab Manager Quad County Corn Processors

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The best way to make more energy is with less energy.

Enogen ® trait technology is the only genetically modified output trait in corn developed specifically for ethanol production. The trait helps produce more ethanol per bushel and helps increase efficiency throughout the entire ethanol plant. And since it first hit the market, this unique grain has been exceeding the expectations of plant managers and growers alike.

See how it works.

Look for featured videos at Enogen.net.

FINANCE

CONTRIBUTION

Lessons Learned From Past Downturns Protecting shareholder value during periods of margin stress

By Scott McDermott

Due to the continued challenging economic climate, we now see a new level of stress for many ethanol companies. The challenging downturn that began in 2012 has continued into this year.

Although there has been some relief as of late,

most analysts are projecting tight margins in the second half of the year, or at least until new crop harvest (assuming we get a good corn crop). This will be the fourth challenging margin period the industry has faced in the past 20 years. Independent ethanol companies have learned a lot about

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).

74 | Ethanol Producer Magazine | June 2013

maneuvering through tough markets over the years, and this has helped protect shareholder value.

The ethanol industry entered 2012 expanding production to new heights. The increased production, as well as a shift from being a net ex-

FINANCE

porter to net importer, caused U.S. ethanol stocks to build and start to pressure ethanol production margins. The oversupply of ethanol, the end of the blending credit and the short corn crop this past harvest have again deteriorated the financial condition of some ethanol producers. Fortunately, companies are better positioned than in the past. Many have learned from the mistakes made in the previous downturns.

The worst downturn in ethanol was in the mid-1990s (Period 1) when the U.S. had a very severe drought and ethanol had heavy competition from methyl tertiary butyl ether (MTBE). The lack of pricing power against MTBE as an oxygenate substitute caused over half of the capacity to be idled, restructured or sold during this period. Period 2 in the early 2000s was difficult, but, instead of a sustained downturn like the mid1990s, there was a mix of bad and good margin months. Ethanol companies had learned to idle or slow the business during negative margin months to minimize losses and most ran during stronger months. This allowed the companies to preserve cash through the downturn. The other important lesson that many plants learned from the mid-1990s challenge was to avoid selling in distressed periods.

In Period 1, the independent ethanol companies that were forced to sell saw plant values cut in half. The industry was much smaller then, at about 1.4 billion gallons of production capacity, which included wet mills and dry-grind ethanol plants. Even though the average ethanol producer had earning power of about 90 cents to $1.10 per gallon, these plants were sold for 50 to 60 cents per gallon or even idled permanently in some cases. The low plant values could be attributed to a lack of potential buyers, the size of the industry, the lack of lenders and the fear the industry would not come back.

A number of companies that had liquidity problems in Period 2 were not forced to sell because they learned to raise additional capital instead of selling in a crisis. These capital injections from debt, equity or both saved these independent ethanol companies from destroying shareholder value. Many also learned that their options for debt are very limited in times of distress. The banks lending to the industry only extended credit to very low-leveraged and well-run ethanol companies. The banks were unwilling to lend if there was even marginal risk they would

Historical Average EBITDA Margins Per Ethanol Gallon 1.20

1

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0.6

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Period 2

Period 3

Period 4

SOURCE: Ascendant Partners Inc.

12 Greenway Plaza | Suite 1100 | Houston TX 77046 Toll Free: 1 855 8HIMARK (1 855 844 6275) | e-mail: info@HimarkBioGas.com

june 2013 | Ethanol Producer Magazine | 75

FINANCE

16,000 15,000 14,000 13,000 12,000 11,000 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0

US Annualized Production Capacity Equivalent (Million Gallons)

MTBE SOURCE: Ascendant Partners Inc.

not be covered in a forced liquidation.

We also saw mergers and bankruptcies play some role during these periods. The mergers, however, were not mergers of “equals.” They usually entailed material dilution of the existing shareholders. Several companies took on equity partners rather than lose the asset through foreclosure, the thought process being: if the bank

is going to force a sale of the business and the likely market value would be at or below the debt against the asset, the company would be better off diluting its equity with an equity partner rather than losing everything in a bank-led sale.

Although this is not a common occurrence, there are numerous examples of independent ethanol companies that have lost everything because they

were unwilling to consider this option.

The downturn after the 2006 ethanol margin boom (Period 3) exposed new challenges for the ethanol industry. The industry was two-thirds the way through a 10-fold expansion, from about 1.4 billion to almost 15 billion gallons of capacity, when prices and margins came crashing down from all-time high corn and ethanol prices. Corn prices at the time were approaching $7 per bushel and ethanol prices were approaching $3.50 per gallon when the prices fell as fast as they had risen. It wasn’t negative margins that caused distress in this period, it was the collapse in prices and margins. When margins compressed, all weaknesses of the new ethanol companies were exposed.

By 2007, the rush to build plants and the strong global demand for construction materials drove construction costs from well below $2 per gallon for a 100-plus million gallon plant to $2.30 to $3 per gallon on an installed basis. The expansion in margins and fervor to build plants brought in new and inexperienced lenders, which also drove up leverage on these higher-cost facilities. A number of the plants sold under distress in 2008 and 2009 were very competitive plants. The challenges for these companies were the relatively high capital costs and high debt levels to be serviced in a

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lower-margin environment. Operating plant values again approached the 50-cent-per-gallon level, which brought a number of new companies into the ethanol industry.

The other two challenges exposed during Period 3 were poorly structured contracts and over-extended hedging positions. A number of companies were long corn or did not have the adequate liquidity to support margin calls in their hedging program. The speed and the size of the fall in prices caught many off guard. For some, many millions of dollars of financial damage occurred in a matter of days and weeks. A number of independent ethanol plants were again able to endure this stress because they had strong balance sheets or capital infusions. Others werenâ&#x20AC;&#x2122;t so fortunate and were forced to sell.

The second challenge exposed in the dramatic margin compression was in poorly structured and poorly written contracts that many independent ethanol companies had written in order to get their projects from concept to construction.

Many companies are still working through these challenging contracts today. The challenges include high priced or uncompetitive origination and marketing contracts, extremely long-term contracts, partnerships or contracts that were one-sided and/ or created dependencies that put the company at a disadvantage, contracts that did not consider counterparty risk, and contracts that companies simply did not understand.

Many ethanol companies have spent considerable time and resources restructuring, canceling or fighting these contracts. They are now much better at vetting and negotiating mutually beneficial agreements.

The final area where many independent ethanol plants have made material progress toward building or preserving shareholder value is their relentless pursuit to improve the core business. These improvements have come from better management and better intelligence used to run the business.

Most ethanol plants today have at least some understanding of their cost competitiveness or what we at Ascendant Partners Inc. refer to as EBITDA (earnings before interest, taxes, depreciation and amortization) competitiveness. Most are constantly looking for ways to improve plant efficiencies, origination programs, product marketing and logistics. They constantly assess the adoption of new commercial technology and the upgrading of coproduct streams.

All of these lessons have positioned independent ethanol companies to not only endure, but to thrive during this period of compressed margins. We have seen very few forced sales in this fourth period relative to earlier downturn cycles.

The independent ethanol companies have used the lessons learned over the past 20 years to maneuver through the current tough markets.

Although we will certainly see distressed sales, we will likely also see more consolidation strategies that allow companies that choose to exit the business to receive value commensurate with their earnings and others that merge, partner or adopt new technology to position the business for greater value in the future.

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Author: Scott McDermott Partner, Ascendant Partners Inc. 303-221-4700 Mcdermotts@ascendantpartners.com

Setting i A New w Industry Standard. june 2013 | Ethanol Producer Magazine | 77

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SUSTAINABILITY

CONTRIBUTION

PHOTO: SIEMENS

The concept of sustainability has been around for decades, though only recently felt on a large scale. Many companies are showing

Monitoring Pressure Siemens’ Sitrans P pressure transmitters, mounted on pipes, monitor steam in the plant.

Instrumentation, Control Systems Contribute to Sustainability Process controls underlie effective water, energy saving strategies in ethanol production.

By Leigh Parnell

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).

80 | Ethanol Producer Magazine | June 2013

that environmentally friendly and economically sound are not mutually exclusive concepts.

Siemens AG has estimated that its products and services have enabled its customers to substantially reduce their greenhouse gas emissions. In 2011, Siemens helped its customers reduce annual CO2 emissions by about 320 million tons, an amount equal to the total annual CO2 emissions of Berlin, Delhi, Hong Kong, Istanbul, London, New York, Singapore and Tokyo combined.

There is much discussion in the media today about green business, sustainable initiatives, and the like. But it can be difficult to decipher how these issues are being played out at the individual and community level. The good news is: sustainable business practices are happening in villages, towns and cities around the globe.

Take Havelock, Ontario, for example. This small central-eastern Ontario community is home to Kawartha Ethanol Inc., a midsize ethanol producer. Kawartha Ethanol began operations in 2010, and has a production capacity of 80 MMly (21 MMgy)—enough to fill more than 1.4 million average-size vehicle gas tanks. The company’s aim is to operate in the most sustainable way possible. How it achieves that goal, bringing sustainable business to smalltown Ontario, is a story that both Kawartha Ethanol and Siemens are proud to tell.

From Grain to Greener Gasoline

Fuel-grade ethanol, which is 99 percent pure alcohol, has a number of important properties that make it an excellent automotive additive. It is clean-burning and has a high percentage of oxygen (35 percent), which means fuel combustion is more efficient. When used in vehicles, ethanol decreases carbon monoxide emissions by up to 30 percent, according to the Canadian Renewable Fuels Association. Ethanol is not in itself a complete solution to global warming but, with an average daily consumption of 88.6 million barrels of oil around the world, as reported by the International Energy Agency in 2012, this type of greenhouse gas reduction is an important step on the path to sustainability.

So, how do Kawartha Ethanol’s production processes contribute to a greener environment? The primary focus is in three areas: reducing water usage, reclaiming heat and saving energy. Control systems and multiple analytical devices play a significant role in these sustainability solutions.

SUSTAINABILITY

PHOTO: SIEMENS

When Tom Sage and his team work with customers on parts and service, it’s more than a buyer-seller relationship— it’s a partnership.

Measuring Flows Dozens of flowmeters measure water, chemical dosing and material flow throughout the ethanol production process.

Water Usage Reductions

While it takes 1,851 gallons of fresh water to produce a single barrel of crude oil, most ethanol plants can reuse about one-third of the total water they consume says the CRFA. At Kawartha Ethanol, plant designers have gone above and beyond this in their water reuse initiatives.

The plant has four containment areas surrounding its chemical storage vessels and another two surrounding its fuel storage tanks.

These concrete barriers prevent chemicals from leaching into groundwater in the event of a spill. Since these areas are outside, they naturally collect rainwater. None of this water goes to waste. Pumps move rainwater back into the ethanol process, at the stage where corn is mixed with water to make a slurry. Reusing this water from the containment areas is a water-saving solution created by Kawartha Ethanol—and an effective one at that.

Containment areas, of course, serve to prevent damage from accidental spills. In addition, if a spill occurred in the containment area, any rainwater that had been gathered would be contaminated and could become unusable for the mixing stage of the ethanol process. Kawartha Ethanol has implemented a number of safety measures to prevent spills in these areas. The plant uses digital pressure transmitters for continuous level monitoring on its chemical storage vessels. These trans-

mitters monitor the hydrostatic pressure in the vessels and convert the measurements to level readings. Vibrating point level switches are used as backup for the facility’s continuous systems, providing overfill protection for the chemical vessels and throughout the production process. To monitor recirculated water, as well as other material moving from process to process, Kawartha Ethanol uses a number of flowmeters combined with transmitters.

We take a genuine “interest in what our

customers are producing and want to help them be profitable. – Tom

”

Get your parts right from the source—directly through CPM. Call 800-366-2563 today for genuine replacement parts from your Partner in Productivity.

Tom Sage, Customer Service Manager

Heat Reclamation

During the manufacturing process, temperature and pressure control is crucial to ensuring a quality final product and a safe working environment. Throughout ethanol production, temperature measurement is most important to operators.

Kawartha Ethanol uses product-to-product heat exchangers to redistribute thermal energy throughout the plant. Heat exchangers circulate high-temperature liquids or slurries with low temperatures, without mixing these materials.

Following are three examples of where heat exchangers are used in the process: • In hydrolysis, enzymes break down the corn mash into simple sugars, creating a great deal of heat. The mash must be cooled from 85 to 41 degrees Celsius (185 to 106 degrees Fahrenheit ) before moving to the fermentation stage. Cooling waters circulate in order to lower mash temperatures to within the opti-

Sales@CPMRoskamp.com june 2013 | Ethanol Producer Magazine | 81

PHOTO: SIEMENS

SUSTAINABILITY

Sustainable Process Kawartha Ethanol saves energy and water through multiple initiatives at its plant in Havelock, Ontario.

mal range. This process can reclaim more than 40 C of heat without using extra energy to cool the mash. â&#x20AC;˘ After distillation, centrifuges separate the whole stillage into cake and liquid, which is then concentrated through a series of evapo-

rators that use waste heat from distillation. The two products are then recombined to form distillers grains. â&#x20AC;˘ In the energy center, flash steam is created in the boiler condensate system, where liquid moves from a high-pressure to lower-

pressure areas. Instead of using energy to heat process water for use during ethanol production, heat exchangers circulate water with flash steam.

Temperature and pressure control instruments play an important role in these heat rec-

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82 | Ethanol Producer Magazine | June 2013

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SUSTAINABILITY

lamation systems. Kawartha employs temperature transmitters to monitor the mash cooler, making sure that the slurry enters the fermentation stage at the correct temperature.

The pressure created during the ethanol process also needs to be closely monitored.

Pressure transmitters measure areas such as the boiler condensate system. Because too much pressure can be dangerous, these devices are equipped with safety functions and advanced diagnostics to ensure accuracy. Valve positioners accompany all of the temperature and pressure transmitters in the facility and provide intelligent diagnostics.

All of the process instruments monitoring these pipes and vessels at Kawartha are connected through a Profibus network, sending information to a distributed control system (DCS); Kawartha uses Siemen’s Simatic PCS 7 system. In the control room, operators can see immediately if a piece of equipment requires maintenance, and respond quickly. The system provides high-performance engineering tools, with features such as alarm management, process safety and asset management. As Bill Harris, electrical supervisor at Kawartha Ethanol sums up, “Our process includes hundreds of Siemens instruments measuring flow, level, pressure, and temperature—all feeding back Energy Savings to a centralized DCS system via the Profibus Ensuring that no heat is lost in transport network. We rely on the accuracy and dependis another important initiative for plant design- ability of this system to ensure that we operate ers at Kawartha Ethanol. Customized insula- efficiently and safely.” tion wraps are secured around pipes and vessels containing heated material. If operators Support for Sustainability Two decades ago in his book, “The Ecolever need access to instruments, they can easily unwrap the insulation, perform any needed ogy of Commerce: A Declaration of Sustainability,” Paul Hawken declared: “Leave the maintenance and then rewrap it.

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world better than you found it; take no more than you need; try not to harm the environment; make amends if you do.”

These words echo the drive behind the sustainability initiatives currently in place at Kawartha Ethanol. If anything, the need for greener practices in industry has only increased over the past two decades, and will not soon disappear. Siemens process instruments play an important role in helping companies like Kawartha Ethanol operate their plants efficiently, by providing operators with precise process information.

Recently named one of Canada’s Greenest Employers for 2012, Siemens Canada demonstrates its corporate values as well as its products are aligned with sustainable practices. Striving to “leave the world better than they found it,” Kawartha Ethanol and Siemens prove that green business is indeed possible, both in small towns and on a global scale.

Author: Leigh Parnell Sensors and Communication Manager, Siemens Canada 905-315-6933 leigh.parnell@siemens.com

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june 2013 | Ethanol Producer Magazine | 83

OPTIMIZATION

CONTRIBUTION

Clean Flow The photo on the left shows the mineral fouling present shortly after chemical treatment began. The other photos were taken after implementation, with no hydroblasting being done for 18 months.

PHOTOS: Buckman

Absolute Energy Tackles Evaporator Fouling Proper treatment resolves multiple bottlenecks caused by mineral deposits.

By Jerry Tegels and Kevin Mundell

In northern Iowa, Absolute Energy LLC was experiencing heavy mineral fouling issues at its 115 MMgy ethanol plant. Fouling in the

evaporators resulted in elevated steam pressures that inhibited the plant from increasing production rates. Sulfuric acid was being utilized to lower the pH in an attempt to alleviate the fouling. Chemical and maintenance costs, along with

employee exposure to dangerous chemicals, were increased, while frequent cleaning in place (CIP) and hydro-blasting were required to keep the plant operating at less-than-desired production rates.

Many industrial processes are prone to mineral fouling, the severity of which depends on water pH and process temperatures. Fouling creates insulating deposits on hot metal surfaces that reduce heat transfer efficiency. In ethanol plants,

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).

84 | Ethanol Producer Magazine | June 2013

the sources of the problematic minerals, calcium and magnesium, are primarily incoming corn and water. Ethanol plants and distilleries around the world have always dealt with calcium oxalate deposits (commonly referred to as beerstone) given the nature of the processes they employ.

Action

Buckman Laboratories International Inc. was asked to analyze the mineral deposits at Ab-

OPTIMIZATION

9 Months

15 Months

SOURCE: Buckman

solute Energy and come up with a solution that would reduce or eliminate the need for sulfuric acid. Buckman performed qualitative and quantitative analyses on the deposits, ultimately determining that calcium oxalate was the main cause of the fouling, even though there were other minerals present, as well as organics.

As a chemical solutions company working on process and water treatment needs in multiple industries, Buckman has developed Bulab 8301, a special blend of polymers that reduces calcium oxalate deposition in process operations where high temperatures exist in conjunction with relatively higher pH ranges.

At Absolute Energy, Bulab 8301 was fed into the thin stillage stream with the use of a programmable metering pump. The amount used needs to meet allowances set by the U.S. Food and Drug Adminstration that are intended to maintain the safety of animal feed and thus ultimately, the human food supply. Buckman uses an outside consultant to evaluate the suitability of ethanol process treatments for safe use. Based on this analysis and the FDA allowances, Bulab 8301 is used as an evaporator deposit control additive up to 20 parts per million, based on thin stillage flow to the evaporators.

Evaporated Pressure Graphs

These graphs give a historical snapshot from the distributed control system of the Absolute Energy plant. In each, the top line represents the incoming steam pressure to the first effect evaporator that fluctuates with the steam demand for distillation and is directly related to production levels. The bottom line represents the steam pressure to the second effect, which increases if fouling occurs in the evaporator tubes. If the differential pressure between the effects (the delta-P) is maintained or decreased when incoming pressures increase, it's a good indication that fouling is not occurring. If the delta-P increases, causing the bottom line to move farther from the top line, itâ&#x20AC;&#x2122;s an indication that fouling is occurring. The reduced heat exchange efficiency will cost the ethanol producer more in fuel costs as more steam is required. Both graphs show that a delta-P was maintained, with a few exceptions caused by events such as a power outage or a sensor freeze-up during cold weather.

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OPTIMIZATION

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Results

Using the treatment, the plant was able to reduce sulfuric acid usage by 45 percent (0.75 truckloads per week), decrease CIP frequency, increase process pH, increase syrup solids, improve water balance, significantly decrease hydro-blasting down to none in the past 30 months, operate the beer column more consistently, thus reducing steam usage and base losses, decrease employee exposure to acid handling, reduce maintenance costs associated with acid pumps and piping and maintain lower sulfur levels in the distillers grains.

Buckman and Absolute Energy personnel have collaborated for more than four years in an effort to maximize the benefits to the process from the treatment. Over time, it has been discovered that starting with extremely clean metal surfaces gives the best results. Minimizing mineral fouling also reduces the amount of organic fouling as the organics need something to bind to in order to build up—an important key to reducing the need for hydroblasting. Absolute Energy also believes the corn oil centrifuges stay cleaner with the treatment system, although it doesn’t have a baseline to measure against since oil extraction was implemented after the antifouling measures were taken. With other plants making the same observation, Buckman is now seeking verification. Bulab 8301 has the potential to help with beerstone deposits in other areas of the process, such as the beer column top trays and beer mash exchangers. Data is currently being collected to verify the application economics.

The recent addition of phytase-based products to the ethanol process has somewhat masked beerstone concerns, as high phytase dosages have resulted in elevated levels of magnesium phosphate, which precipitates onto hot metal surfaces. This fouling is more significant than typical beerstone levels as it builds deposits quickly, resulting in increased evaporator pressures that many times require ethanol operators to reduce operating rates and increase hydroblasting and CIP frequency. The challenge for the ethanol plant manager is to minimize overall mineral deposits as much as possible by reducing phytase addition and then treating areas of deposition with the correct chemical application. Understanding which mineral deposition is occuring is crucial. Bulab 8301 targets beerstone deposition, so plants that are challenged with both calcium oxalate and magnesium phosphate fouling benefit from combination products.

Mineral depositions create many challenges within the ethanol plant and producers should choose their chemical applications carefully to ensure they are giving their process the best chance to produce every gallon as economically as possible.

Authors: Jerry Tegels District Manager, Buckman ggtegels@buckman.com 515-249-9637 Kevin Mundell Ethanol Manager, Buckman krmundell@buckman.com 515-708-2411

86 | Ethanol Producer Magazine | June 2013

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Wastewater Treatment Services ICM, Inc. 877-456-8588

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Wastewater Treatment Buckman 800-937-5548

Finance Appraisals

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ERI Solutions, Inc. 316-927-4294

erisolutions.com

Lender Representatives BBI Consulting Services 866-746-8385 www.bbiinternational.com

Legal Services Attorneys BrownWinick Law Firm 515-242-2414 johnson@brownwinick.com

Media Publications Platts 1-800-PLATTS-8

www.platts.com/biofuels

june 2013 | Ethanol Producer Magazine | 93

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