2017 March Ethanol Producer Magazine

Page 1

INSIDE: ADDITIVE IMPROVES DDGS FLOWABILITY MARCH 2017

SUCCESS WITH E30

Ethanol Blend Enthusiastically Supported by South Dakota Challenge Participants Page 28

ALSO

RVP Waiver Denial DeďŹ es Logic

Page 34

Reconditioning Critical Plant Systems

Page 38

www.ethanolproducer.com

CONTENTS

MARCH 2017 VOLUME 23

DEPARTMENTS 6

AD INDEX

7

EDITOR'S NOTE

8

VIEW FROM THE HILL

President Trump: Putting American Energy First By Bob Dinneen

EVENTS CALENDAR

10

DRIVE

14

15

MIDLEVEL BLENDS

Passing the Test With Flying Colors

E30 challenge deemed smashing success in Watertown, South Dakota. By Ann Bailey

28 REGULATION

No Waiver? No Sense.

Celebrating Success, Finding Smartest Path Forward By Emily Skor

GRASSROOTS VOICE

Telling Our Story in DC By Brian Jenning

GLOBAL SCENE

One-pound waiver needed for E15. By Ann Bailey

34

Canada’s Climate Priorities By Jim Grey

RECONDITIONING

The Inside Story

CLEARING THE AIR

As ethanol plants approach the 10-year mark, aging equipment needs special attention. By Susanne Retka Schill

HEI Takes Hard Look at Ethanol vs Aromatics By David Hallberg

16

BUSINESS BRIEFS

18

COMMODITIES

22

DISTILLED

50

BUSINESS MATTERS

51

FEATURES

Blending the Rules By Tom Bryan

9

12

ISSUE 3

38 DISTILLERS GRAINS

Adding Flowability

DDGS additive saves energy and improves handling characteristics. By Debbie Sniderman

Point of Obligation Takes Center Stage in Hearing By Josh Andrews

MARKETPLACE

ON THE COVER

Andy Wicks, DynoTune Speed and Performance, provided technical expertise for the E30 Challenge. PHOTO: ML PORTRAITS, WATERTOWN

Ethanol Producer Magazine: (USPS No. 023-974) March 2017, Vol. 23, Issue 3. Ethanol Producer Magazine is published monthly by BBI International. Principal Office: 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. Periodicals Postage Paid at Grand Forks, North Dakota and additional mailing offices. POSTMASTER: Send address changes to Ethanol Producer Magazine/Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, North Dakota 58203.

4 | Ethanol Producer Magazine | MARCH 2017

42 CONTRIBUTION

48 CARBON DIOXIDE

Ethanol Industry Provides Critical CO2 Supply Replacement sources would be higher-emitting and less-economical. By Steffen Mueller

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VOLUME 23 ISSUE 3

ADVERTISER INDEX

EDITORIAL President & Editor in Chief Tom Bryan tbryan@bbiinternational.com Vice President of Content & Executive Editor Tim Portz tportz@bbiinternational.com Managing Editor Susanne Retka Schill sretkaschill@bbiinternational.com Associate Editor Ann Bailey abailey@bbiinternational.com News Editor Erin Voegele evoegele@bbiinternational.com Copy Editor Jan Tellmann jtellmann@bbiinternational.com

ART Art Director Jaci Satterlund jsatterlund@bbiinternational.com Graphic Designer Raquel Boushee rboushee@bbiinternational.com

PUBLISHING Chairman Mike Bryan mbryan@bbiinternational.com CEO Joe Bryan jbryan@bbiinternational.com

2017 International Fuel Ethanol Workshop & Expo BetaTec Hop Products

CPM Roskamp Champion

Vice President of Operations Matthew Spoor mspoor@bbiinternational.com Sales & Marketing Director John Nelson jnelson@bbiinternational.com Business Development Director Howard Brockhouse hbrockhouse@bbiinternational.com Senior Account Manager/Bioenergy Team Leader Chip Shereck cshereck@bbiinternational.com Account Manager Jeff Hogan jhogan@bbiinternational.com Circulation Manager Jessica Tiller jtiller@bbiinternational.com Marketing & Advertising Manager Marla DeFoe mdefoe@bbiinternational.com

52

Durr Systems, Inc.

3

Edeniq, Inc.

36

Fagen Inc.

25

Flottweg Separation Technology

16

Fluid Quip Process Technologies, LLC

24

Growth Energy

2

Hydro-Klean LLC ICM, Inc.

22

9

17

Lallemand Biofuels & Distilled Spirits

33

Mole Master Service Corporation Nalco Water

44

37

Phibro Ethanol Performance Group

47

POET LLC

13

R.S. Stover

49

RPMG, Inc.

32

StoneAge

23

Victory Energy Operations, LLC

Ringneck Energy Walter Wendland Little Sioux Corn Processors Steve Roe Commonwealth Agri-Energy Mick Henderson Pinal Energy Keith Kor Aemetis Advanced Fuels Eric McAfee Poet Scott Teigen Western Plains Energy Derek Paine

11 26-27

DuPont Industrial Biosciences

Syngenta: Enogen

EDITORIAL BOARD

41 45

D3MAX LLC

J.C. Ramsdell Enviro Services, Inc.

SALES

5

2017 National Advanced Biofuels Conference & Expo

20-21

30-31

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 anyone outside the United States. 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 sretkaschill@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

COPYRIGHT Š 2017 by BBI International TM

6 | Ethanol Producer Magazine | MARCH 2017

EDITOR'S NOTE

Blending the Rules On numerous occasions I’ve been told that E30 can be used in nonflex-fuel vehicle engines without concern, but until I read this month’s cover story I wasn’t sure we should be telling consumers to try it. After reading “Passing the Test with Flying Colors,” on page 28, I’m convinced that Tom Bryan

President & Editor in Chief tbryan@bbiinternational.com

modern engines are perfectly capable of using E30 without incident or risk. As EPM’s Ann Bailey reports, Watertown, South Dakota-based Glacial Lakes Energy LLC sponsored an E30 Challenge to empirically prove that the midlevel blend is compatible with modern engines. Through consumer education and sound automotive science—they used data loggers plugged into onboard vehicle diagnostics—the team made history. They proved that model year 1996 and newer vehicles are able to adapt to E30, and even perform better on it. Fuel economy stayed the same (compared to E10) and no mechanical issues or “check light” incidents were reported. In essence, the cars liked it. In “No Waiver? No Sense,” on page 34, we report on E15’s perplexing exclusion from the one-pound Reid vapor pressure (RVP) waiver given to its predecessor, E10. As Bailey reports, E15 actually has lower evaporative emissions than E10, so it almost defies logic that it wouldn’t be granted the same regulatory exception. To date, the U.S. EPA has said the Clean Air Act amendment that allows for the waiver applies exclusively to E10, an interpretation our industry disagrees with. That’s left E15 hamstrung by seasonal restrictions. Throughout much of the country, the fuel can’t be sold from June 1 to Sept. 15, which has encumbered its adoption. While legislative channels of opposition are possible, our trade association leaders now hope the Trump administration’s penchant for regulatory reform will yield a common sense one-pound RVP waiver for E15. Jumping from markets to maintenance, our page-38 story examines the unique challenges of repairing, reconditioning and rebuilding different types of ethanol plant equipment. In “The Inside Story,” EPM’s Susanne Retka Schill reports on how original equipment manufacturers (OEMs) and after-service companies keep centrifuges, dryers and regenerative thermal oxidizers running with optimal availability and reliability. We learn that timely cleanings, periodic rebuilds, close adherence to OEM instructions, and patience, keep major equipment running better, longer and more safely. On page 42, we introduce readers to a new product that is improving the flowability of DDGS and making the product more nutritionally valuable. Freelance writer Debbie Sniderman reports on a Minnesota-based company applying a mineral additive to DDGS with a plethora of benefits. The product encapsulates and pulls moisture away from DDGS while enhancing the coproduct’s mineral composition and color. Ethanol plants testing the product have reported many benefits including higher product yield, lower energy use, faster turns on rail equipment and less damage to rail cars. Sounds promising.

FOR INDUSTRY NEWS: WWW.ETHANOLPRODUCER.COM OR FOLLOW US:

TWITTER.COM/ETHANOLMAGAZINE MARCH 2017 | Ethanol Producer Magazine | 7

VIEW FROM THE HILL

President Trump: Putting American Energy First By Bob Dinneen

It’s the early days of the Trump administration and already the signs of change are apparent as the new president fulfills his promise to shake up the establishment in Washington and return government to the people. One change we do not expect to see, however, is any retreat on the nation’s renewable fuels policy. We believe the industry will continue to grow and thrive as President Trump puts America and American energy first. Why? Take what EPA Administrator Scott Pruitt said in his January confirmation hearing. “To honor the intent and the expression of the renewable fuel standard statute is very, very important. It's not the job of the administrator or the EPA to do anything other than administer the program according to the intent of Congress. And I commit to you to do so,” he told the Senate Environment and Public Works Committee. Other members of his cabinet, including Department of Energy Secretary Rick Perry and Agriculture Secretary Sonny Perdue, will echo Trump’s energy priorities. That’s because they have gotten the message—Trump understands the value of strong, American energy policies like the renewable fuel standard (RFS). While on the campaign trail, Trump said “the RFS…is an important tool in the mission to achieve energy independence to the United States. I will do all that is in my power as president to achieve that goal. As president, I will encourage Congress to be cautious in attempting to change any part of the RFS.” Trump knows there’s no reason to reverse course and we look forward to strong annual RFS rules under his administration. More importantly, we expect a heavy focus in the Trump administration on regulatory reform. Trump is committed to removing regulatory barriers that impede growth. Don’t we have a long list of those?! Among the issues we would like addressed is removing the unnecessary volatility restrictions that have discouraged market acceptance of higher-level ethanol blends like E15 and created unreasonable administrative burdens on gasoline marketers willing to offer these fuels to consumers.

8 | Ethanol Producer Magazine | MARCH 2017

EPA’s regulations, which grant a summertime volatility waiver to E10 but not to any other ethanol blends, have created an uneven playing field for E15 and other higher-level blends. Under the Obama administration, EPA has stated it does not believe it has the statutory authority to extend the 1 psi RVP waiver to E15. We disagree and are hopeful the Trump administration is more amenable to this commonsense change. Meantime, we expect Trump and his administration to be much more supportive of our industry’s export efforts. Under the Obama administration, our industry had been hampered by the European Union’s illegal 9.5 percent antidumping duty. While the EU General Court last year invalidated certain ethanol duties, the European Commission has filed an appeal and the duties will be in place during that time. The U.S. Trade Representative under the Obama administration was reluctant to bring the case to the World Trade Organization. But this administration is all about American energy and we believe won’t be afraid to fight back against unlawful trade restrictions. For example, we anticipate Trump’s administration will vigorously oppose duties imposed by China on the coproduct of ethanol production, distillers dried grains. We look forward to having a strong ally in Terry Branstad, U.S. ambassador to China and the longest-serving governor of Iowa who, like Trump, understands the value of American agriculture. Trump is all about American business, American energy and American innovation. He will put America first. We look forward to working with his administration on ways to boost domestically produced ethanol, the lowest-cost, cleanest-octane transportation fuel on the planet. Author: Bob Dinneen President and CEO, Renewable Fuels Association 202-289-3835

EVENTS CALENDAR AOCS Annual Meeting April 30- May 3, 2017 Rose Shingle Creek Orlando, Florida The AOCS Annual Meeting is a premier international science and business forum on fats, oils, surfactants, lipids, and related materials. Known world-wide for its extensive technical program, the Annual Meeting features more than 650 oral and poster presentations within 13 interest areas. In addition to the three days of technical sessions, the Annual Meeting features a Hot Topics Symposia, Industry Showcases, a variety of networking events, and the Awards Plenary and Business Meeting. 217-693-4821 | annualmeeting.aocs.org

2017 International Biomass Conference & Expo April 10-12, 2017 Minneapolis Convention Center Minneapolis, Minnesota Organized by BBI International and produced by Biomass Magazine, this event brings current and future producers of bioenergy and biobased products together with waste generators, energy crop growers, municipal leaders, utility executives, technology providers, equipment manufacturers, project developers, investors and policy makers. It’s a true one-stop shop—the world’s premier educational and networking junction for all biomass industries. 866-746-8385 | www.biomassconference.com

2017 International Fuel Ethanol Workshop & Expo June 19-21, 2017 Minneapolis Convention Center Minneapolis, Minnesota From its inception, the mission of this event has remained constant: The FEW delivers timely presentations with a strong focus on commercial-scale ethanol production— from quality control and yield maximization to regulatory compliance and fiscal management. The FEW is the ethanol industry’s premier forum for unveiling new technologies and research findings. The program covers cellulosic ethanol while remaining committed to optimizing existing grain ethanol operations. 866-746-8385 | www.fuelethanolworkshop.com

2017 National Advanced Biofuels Conference & Expo June 19-21, 2017 Minneapolis Convention Center Minneapolis, Minnesota With a vertically integrated program and audience, the National Advanced Biofuels Conference & Expo is tailored for industry professionals engaged in producing, developing and deploying advanced biofuels, including cellulosic ethanol, biobased platform chemicals, polymers and other renewable molecules that have the potential to meet or exceed the performance of petroleum-derived products. 866-746-8385 | www.advancedbiofuelsconference.com

icminc.com |

MARCH 2017 | Ethanol Producer Magazine | 9

DRIVE

Celebrating Success, Finding Smartest Path Forward By Emily Skor

Growth Energy recently held its eighth annual Executive Leadership Conference in Miami. The conference is our forum for taking stock of where we are as an industry, where we need to go together, and how to get there. More than anything, it is an opportunity to unite as we celebrate our successes, diagnose our challenges and coalesce around the smartest path forward. In Miami, we convened an impressive group of industry experts who addressed diverse and important topics. We discussed how Growth Energy is facilitating E15 expansion and branding to sell more gallons of ethanol. We prioritized regulatory and legislative issues so industry has a clear sense of where we should focus our energy and resources for the greatest impact. And, we discussed advances in foreign market development and explored progress in engaging domestic consumers more thoughtfully and substantively. While together, we recognized the industry’s greatest victory this past year, which was in regard to the renewable fuel standard (RFS). For the first time in years, the U.S. EPA restored renewable volume obligations for conventional biofuel to the statutory level—15 billion gallons for 2017. Not since the RFS was expanded in 2007 have we won a more profound and clear-cut victory for our industry’s most important policy. As President Trump’s administration takes hold and the Republican majority in Congress establishes its priorities, we must be vigilant in making sure we don’t give any ground on the RFS, because it isn’t just a highly effective energy policy, it is a hugely impactful agricultural policy. In 2016, we broke barriers and achieved key milestones. Consumers drove more than 500 million miles on E15, and NASCAR drivers, racing under the most stressful driving conditions, surpassed 10 million miles on Sunoco Green E15. We doubled—to 28—the number of states where E15 is sold. As a result, the fuel is available at more than 600 gas stations. Prime the Pump’s initiative to help retailers pay for the blender pumps required to sell all ethanol blends from E15 to E85 continues to provide an immediate return on investment and we thank all those who support the effort.

10 | Ethanol Producer Magazine | MARCH 2017

We also explored the significance and implications of our new political landscape. Trump was a vocal supporter of ethanol and the RFS on the campaign trail, and polling results show that an overwhelming majority of Midwestern voters in critical swing states who helped put him in office, over 80 percent, agreed with the president’s position. We must make sure that the cabinet officials and their political staffs understand what it means to “support a strong RFS” from a policymaking perspective. In addition, we remain absolutely committed to securing a legislative fix for Reid vapor pressure (RVP). Given our success in expanding access to E15, it is paramount that retailers are not prevented from selling it year-round due to an arcane EPA rule. This is a message that should resonate beautifully with the reform-oriented incoming administration. To supplement our work in reaching policymakers, we also discussed how to engage consumers. We know through market research that when moms realize higher blends reduce the use of toxic additives, they will seek out this fuel. We know that when millennials know ethanol reduces greenhouse gas emissions they give it a second thought. These are our future customers. And Growth Energy is committed to meeting them in their preferred communications space with a message we know will resonate with their core values and beliefs. We are giving our members tools to share their stories with friends and neighbors, local press and social media communities. By empowering members and combining consumer outreach with advocacy, we ensure that our message becomes a call to action. It was an honor to be a part of such an energizing and inspiring event and I appreciate people taking the time to join us. The sharing of ideas among attendees and the obvious dedication to the industry exhibited by everyone in Miami left all of us at Growth Energy excited for what’s in store. Our industry’s strength comes from the people who live and breathe biofuels every day, and an event like the leadership conference certainly reinforces that notion.

Author: Emily Skor CEO, Growth Energy 202-545-4000 eskor@growthenergy.org

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GRASSROOTS VOICE

Telling Our Story in DC By Brian Jennings

Within the first 100 days of the Trump presidency, members and other supporters from all walks of life will join the American Coalition for Ethanol in Washington, D.C., for our annual grassroots fly-in, March 22-23. Participation in this event is critically important

because members of Congress will hold committee hearings this year about the future of the renewable fuel standard (RFS), and a new administration is willing to work with us on regulatory reform for higher blends of ethanol. During the fly-in, we are going to leverage the pivotal role that rural voters played in the election outcome and capitalize on that grassroots clout to help President Trump keep the promises he made during the campaign about keeping the RFS on track and removing restrictions on the use of E15 and higher blends of ethanol. We will emphasize how unleashing the ethanol industry to produce affordable and high-octane fuel for consumers nationwide will help restore some economic prosperity to key areas of the country that are suffering today. But before our fly-in, we have been busy providing the Trump cabinet and key administration officials with our list of priorities to address, including issues such as the RFS, Reid vapor pressure relief, the need to raise the minimum octane of gasoline, ensuring our trading partners play by the rules, updating the carbon intensity analysis for corn ethanol and correcting the MOVES (Mobile Vehicle Emissions Simulator) model. ACE members have also engaged the Senate as it has carried out its constitutional role to confirm new cabinet officials. While there is a school of thought that Scott Pruitt and Rick Perry will suddenly embrace ethanol as they take the reins of the U.S. EPA and DOE because their boss, Trump, supports our industry, you don’t need a long memory to recall that Barack Obama also supported ethanol during his campaign for president. In spite of this, Obama’s EPA administrator took the RFS off-track and refused to grant RVP relief to E15. Instead of hoping that Pruitt and Perry will have

12 | Ethanol Producer Magazine | MARCH 2017

a change of heart, ACE has worked closely with key Republican allies in the Senate to “trust, but verify” that they will help keep the promises made by Trump during the campaign. Several ACE members responded to our call-to-action urging senators to ask tough questions of Pruitt who will lead EPA. As a result, several senators got Pruitt to go on the record that he would follow the law when it comes to EPA’s implementation of the RFS. We expect to meet with Pruitt and other administration leaders about our priority issues during the fly-in later this month. In the same way “Make America Great Again” was the slogan for the Trump campaign, “Power by People” has been ACE’s brand, a motto which highlights that people are what makes ethanol great. The ethanol industry really began as a grassroots effort of neighbors helping each other at a time of economic crisis. While our industry is about dollars and cents, it is first and foremost about people—a profile in courage about ordinary people who committed their own money and time to help their families, neighbors and communities by building locally owned businesses in their towns. Jobs were created and profits stayed at home. Along the way, those farmers, small town businesses and rural citizens ended up developing the most successful renewable energy platform in the world, generating billions of dollars in economic activity and saving consumers billions of dollars at the pump. As in past years, Big Oil and other opponents will try to create an alternative reality about ethanol use in engines and complain about the RFS and RIN prices. But ACE members are uniquely positioned to combat that with their authentic voices and stories about why ethanol shouldn’t merely be measured by the barrels of foreign oil it displaces, it should also be valued based on the jobs it creates and human good it delivers to people of all walks of life. We look forward to helping you show and tell that story this year. Author: Brian Jennings Executive Vic President American Coalition for Ethanol 605-334-3381 bjennings@ethanol.org

GLOBAL SCENE

Canada’s Climate Priorities By Jim Grey

Climate change and greenhouse gas (GHG) emission reductions are genuine priorities for Canada’s federal government. Canada’s ambitious

commitments expressed in the Paris climate accord are to support the goal of keeping global warming below 2 degrees Celsius this century and to reduce GHG emissions 30 percent from 2005 levels by 2030. Given its geographic breadth, it is not surprising that the transportation sector is responsible for 23 percent of Canada’s GHG emissions. Canada will not achieve its Paris commitments without substantial reductions in transportation sector emissions. For more than three decades, Renewable Industries Canada has been the lead association representing Canada’s biofuels and biobased industries, which provide clean and innovative technologies that have contributed to curbing the growth of GHG emissions. Ten years ago, the federal government introduced renewable fuels regulations that required gasoline to be retailed in a blend that included 5 percent ethanol and petroleum diesel to be blended with 2 percent biodiesel. Some provinces have set their own volumetric requirements for ethanol in gasoline that exceed the federal government’s requirements, such as Manitoba at 8.5 percent and Saskatchewan at 7.5 percent. The existing volumetric requirements on renewable fuels have had an effect equivalent to removing 1 million vehicles from Canada’s roads every year. These gains have been achieved without any required change in driving behavior or increased consumer cost. Analysis of life-cycle GHG emissions has shown that ethanol can burn up to 62 percent cleaner than pure gasoline and that biodiesel is up to 99 percent cleaner than petroleum diesel, not to mention the economic benefits that our $3.5 billion industry has brought to the Canadian economy. Renewable Industries Canada is therefore advocating for the increased volumetric requirements with an

14 | Ethanol Producer Magazine | MARCH 2017

inclusion of up to 10 percent ethanol, and 5 percent biodiesel. These measures would remove the equivalent of an additional 1 million vehicles from Canada’s roads. In the United States, the renewable fuel standard (RFS) has been a remarkable success. According to a 2015 study by Californiabased Life Cycle Associates, “the RFS2 has resulted in the cumulative CO2 savings of 354 million metric tons over the period of implementation.” And the Jan. 12 USDA report found that “GHG emissions associated with corn-based ethanol in the United States are about 43 percent lower than gasoline…comparable to reducing GHG emissions in the U.S. transportation sector by as much as 35.5 million metric tons per year.” The study will be useful to policymakers tasked with reducing U.S. GHG emissions. Increased volumetric requirements also provide market certainty and business opportunity. In Ontario, Canada’s largest province, biodiesel producer BIOX acquired an additional facility that had been shuttered, thanks to the province’s Greener Diesel Mandate. At IGPC Ethanol Inc., construction begins this spring on a project that is intended to double production, due to the province’s announced intention to increase renewable fuel content in gasoline as part of its climate action plan. Ontario also recently launched consultations aimed at further reducing emissions from gasoline by an additional 5 percent. Ethanol is sure to figure prominently in this equation, and our industry looks forward to continued momentum on both sides of the border. Author: Jim Grey Chair, Renewable Industries Canada CEO, IGPC Ethanol Inc. 519-765-2575 jgrey@igpc.ca

CLEARING THE AIR

HEI Takes Hard Look at Ethanol vs Aromatics By David Hallberg

On a cold mid-December day in Chicago, while most people were getting ready for the holidays, 50 people gathered to talk about the effects of fuel composition on particulate matter (PM) emissions.

As someone who has spent many years working to protect public health through the use of cleaner burning fuels like ethanol, I was honored to participate as a director of Siouxland Ethanol, and an advisor to the Urban Air Initiative. It was an invitation-only workshop sponsored by the prestigious Boston-based Health Effects Institute. It opened a lot of eyes. Attendees included a “Who’s Who” from the auto industry, the U.S. EPA, the California Air Resources Board, refining industry, fuel experts and academia. It was candid and informative. There’s a glimmer of hope that we may have turned a corner with EPA on the increasingly important role higher ethanol blends have to play in making cleaner fuels. As its name implies, the Health Effects Institute is a research organization that funds and conducts research to understand the sources and effects of mobile source air pollution. As you might expect, HEI receives significant funding from EPA. I know that EPA’s failure to fairly assess ethanol’s true effects on gasoline emissions has had a lot to do with why HEI has not acted more quickly to deal with the health threat from gasoline aromatics. More than 15 years ago, HEI was charged with overseeing the EPA Blue Ribbon Panel on Oxygenates in Gasoline, which investigated the MTBE water contamination controversy in California and other states. Enormous progress has been made since then, including advances in agricultural practices, ethanol production technologies, vehicle powertrains and gasoline infrastructure and dispensers. Automakers are telling us that ethanol has superior octane properties that were not fully recognized until recently. Automakers have pleaded with EPA to provide them with higher-octane fuels that the turbocharged, downsized vehicles of the future will desperately need, but to no avail. Unlike private sector innovators, EPA regulators plod along at glacial speed. But as noted, we may be turning the corner. In Chicago, EPA officials grudgingly admitted that there is a direct connection between gasoline aromatics, particulate matter emissions and air toxics. They also conceded that direct injection could make those emissions worse unless gasoline composition was significantly improved.

Even while attempting to defend their defective models that perversely blame ethanol for aromatics’ PM emissions, EPA acknowledged that higher-octane ethanol splash-blends would reduce particulate-bound toxic emissions. In the real world, ethanol is splashblended, so EPA’s devotion to its much-maligned, match-blending protocols is curious, indeed. The more we reflect on the workshop, the more hopeful we are that consensus is beginning to emerge on many points: • Intelligent policy requires the use of real-world fuels and driving conditions and must be based upon real-world emissions. • When testing higher blends of ethanol, the differences between splash- and match-blending techniques cannot be ignored. When ethanol is splash-blended, emissions are reduced, as in the real world. When ethanol is improperly match-blended in the lab, harmful emissions get worse. • Rapid adoption of gasoline direct-injection technology will significantly worsen PM, secondary organic aerosols (SOAs), and polycyclic aromatic hydrocarbon (PAH) emissions unless fuel quality is improved, which ethanol accomplishes. • PAH emissions are regarded as an increasingly dangerous health threat. Ethanol replaces aromatics. • Gasoline aromatics are the predominant source of SOAs and PAH. Ethanol replaces aromatics. • Deposits pose a major challenge to gasoline direct-injection engines. Aromatics exacerbate deposits, thus another reason for higher levels of ethanol in fuel reformulation. • Fuels, power-trains and after-treatments must be addressed as an integrated system. The U.S. DOE’s Co-Optima work should be accelerated and incorporated into EPA’s thinking, which favors highoctane fuels, such as ethanol provides. • EPA’s failure to properly account for and control SOAs from gasoline aromatics requires immediate attention, for which ethanol is a solution. • Policymakers must find ways to allow cleaner fuels, such as higher blends of ethanol, in legacy vehicles, to improve our environment. This is progress. I believe it’s possible that HEI’s workshop opened a window for high-octane, low-cost fuels in 2017. Author: David Hallberg Siouxland Ethanol board member Urban Air Initiative advisor dehbiofuels@gmail.com

MARCH 2017 | Ethanol Producer Magazine | 15

BUSINESS BRIEFS People, Partnerships & Deals

Enerkem Inc. has appointed Dominique Boies as executive vice president and chief financial officer (CFO). Boies has more than 20 years of experiBoies ence in corporate and finance strategy, investment banking and operations. Prior to joining Enerkem, he was executive vice president and CFO at RONA where he was responsible for financial and corporate strategy, investor relations, accounting, financing, treasury and legal affairs. At RONA, he led the company’s turnaround as well as the transaction that resulted in the acquisition of RONA by Lowe’s valued at $3.2 billion. Prior to this, Boies held various senior executive positions at RBC Royal Bank and at the Caisse de dépôt et placement du Québec (CDPQ), one of the largest institutional fund managers in North America. Trident Automation has reached an agreement to merge with Trident Intech LLC, a software development company partially owned by Shane Seif and the founders of Trident Automation. Under the new agreement, Seif will be leading the new

software development and R&D initiatives for Trident Automation and will develop all proprietary software products for the company. Trident Intech has developed several products, including the Workbench Suite of products that is a data collection and reporting module; the KPI System that automatically collects key performance indicators; and the Lab Data Module that presents data in easy-to-read graphics.

tion as a vendor member. In the U.S., CTE Global works closely with the ethanol industry to optimize ethanol production. The company’s operations are based in Illionois. CTE Global also has a research and development lab in St. Paul, Minnesota, that provides analytical support to ethanol producers.

Petrobras Biocombustível S.A., a wholly owned subsidiary of Petrobras, has announced an agreement to sell its shares Premium Plant Serin Guarani S.A., a Brazil-based sugar and vices has hired James ethanol producer, to Tereos Participations Schwindeman to serve SAS, a company under French group Tereas vice president of opos, for $202 million. Tereos, a partner of erations. Schwindeman is Petrobras Biocombustível in Brazil, is the responsible for providing third-largest sugar producer in the world. strategic and tactical direc- Schwindeman Petrobras first announced it was beginning tion to improve the profitability, productivity, negotiations with Tereos in October regardsafety and efficiency of the company’s opera- ing the sale of its 45.9 interest in Guarani. tions. He is based at the company’s Hibbing, Minnesota, office. Before joining Premium Syngenta has announced that Ron Plant Services, Schwindeman spent several Wulfkuhle, head of GreenLeaf Genetics, years working in various roles throughout has been appointed the new head of EnoTexas for Halliburton Energy Services, gen corn enzyme technology. Wulfkuhle most recently as a principal field engineer. brings more than 30 years of agricultural industry experience to the position. He CTE Global, an enzyme provider, has started as an Arkansas-based sales rep for joined the Minnesota Bio-Fuels Associa- Ciba-Geigy in 1984 before taking on sales

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16 | Ethanol Producer Magazine | MARCH 2017

BUSINESS BRIEFSÂŚ

and marketing positions across a variety of commercial units and legacy companies of Syngenta. Most recently, he oversaw the significant growth of the GreenLeaf business after it was fully acquired by Syngenta in 2010. Syngenta also recently announced that it has reached agreements with ethanol plants with a combined total capacity of nearly 2 billion gallons for the use of Enogen corn. The alpha amylase enzyme found in Enogen corn hybrids helps an ethanol plant dramatically reduce the viscosity of its corn mash and eliminate the need to add a liquid form of the enzyme. U.S. Water Services has named LaMarr Barnes as CEO. The company is a wholly owned subsidiary of Allete Inc. Barnes replaces former CEO Allan Barnes Bly, who resigned his position after a 20-year career with the company. Barnes has more than 25 years of experience in industrial water treatment and technology management. Hired in 2010 as vice president of marketing, he assumed added responsibilities as vice president of marketing and business development be-

fore being named senior executive vice fers biofuel options such as E15, E85 president of marketing and strategy in 2015. and biodiesel at stores across 11 states, and more locations are added each year. LanzaTech has been selected by the Pacific Ethanol Inc. and Toledo, PeoDepartment of Energy’s Bioenergy Technologies Office to receive a $4 million award ria & Western Railway, a subsidiary of Gento design and plan a demonstration-scale fa- esee & Wyoming Inc., announced they have cility using industrial off gases to produce commenced unit train service from Pacific 3 MMgy of low-carbon jet and diesel fuels. Ethanol’s plant in Pekin, Illinois. Under the The facility will recycle industrial waste gases new service, the Tazewell & Peoria Railroad, from steel manufacturing to produce a low- a G&W-owned switching and terminal railcost ethanol intermediate Lanzanol. Both road that serves the Pekin plant, hauls the Lanzanol and cellulosic ethanol will then be plant’s daily output to Creve Coeur, Illinois, converted to jet fuel via the alcohol-to-jet where the connecting TPW has the track (ATJ) process developed by LanzaTech and capacity to aggregate the railcars and assemthe Pacific Northwest National Laboratory. ble unit trains of as many as 96 cars. The TPW, a 200-mile short line railroad, then In Denmark, on Dec. 15, the Dan- interchanges the unit trains with connecting ish Parliament voted to implement a 0.9 Class I railroads for delivery to final destinapercent blending mandate for advanced tions east of the Mississippi. biofuels in the transportation sector. The mandate is set to become effective in 2020. The Iowa Renewable Fuels Association has announced Kum & Go as its newest associate member. Kum & Go has been a leader among retailers, offering renewable fuels at the pump for nearly 20 years. The Iowa-based organization of-

SHARE YOUR INDUSTRY NEWS: To be included in the Business Briefs, send information (including photos and logos, if available) to Business Briefs, Ethanol Producer Magazine, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You may also email information to evoegele@bbiinternational.com. Please include your name and telephone number.

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MARCH 2017 | Ethanol Producer Magazine | 17

COMMODITIES

Prices & Market Analyses

Natural Gas Report

Rising drilling rigs set stage for production growth Jan. 22—The past 24 months have been difficult for U.S. natural gas producers, who have been faced with a historically low-price environment. A major price collapse in the first quarter of 2016 took the prompt-month NYMEX contract to an all-time, inflation-adjusted low of $1.61 per MMBtu, with forward pricing offering little incentive to invest in future growth. As a result, exploration budgets were slashed across the board and the number of gas-directed rigs fell to an all-time low of just 81 in early August. This decline in drilling resulted in the first year-on-year decline in U.S. production since 2005—a major departure from a decade-long trend of steady and reliable growth. Since then, however, the forward pricing environment has improved significantly, with pricing for the balance of 2017 now much more favorable for production companies. Drilling activity has responded as expected, with a total of 61 gas-directed rigs added from August through mid-January. While the rig count is still dramatically lower than it was in 2014 and 2015, it does appear that the industry is ready to shift

by Andy Huenefeld

back into “growth mode” to at least some degree in 2017. Additionally, increases across the board in drilling efficiency mean that fewer rigs will be required to grow production volumes than earlier in the decade. However, this has yet to translate to new growth in output, with most estimates placing current production volumes well shy of year-ago levels and trending downward since peaking last February. There is historically a time lag of between six and nine months before an increase in drilling activity results in increased gas production, so we may be poised to see greater volumes in the near term. Pipeline constraints and declining resources from more mature plays outside of the Northeast could place major hurdles in front of any significant production growth in 2017, limiting the ceiling for output. Overall volumes will likely need to rise to keep the market in balance and help fuel added pipeline and LNG exports. Otherwise, the market may be in the unfamiliar territory of a storage shortage going into next winter.

Corn Report

Good demand for corn helps to reduce supplies Jan. 22—The USDA released the January supply and demand report without much fanfare, lowering harvested acres and yield. Yield was pegged at 174.6 bushels per acre vs. 175.3 previously. Domestic demand placed feed and residual lower by 50 million bushels at 5.6 billion bushels. Corn for ethanol increased by 25 million bushels. Export demand remained stable at 2.225 billion bushels, an increase of 327 million bushels from a year ago. Export demand in the remainder of the marketing year will be interesting to follow as demand continues to outpace the current USDA projection. Carryout was placed at 2.355 billion bushels, a 16.1 percent carryout-to-use ratio. This is down slightly from the previous report. The potential increases to export projections could drop carryout in the coming months. Global corn stocks declined from 222.25 million metric tons to 220.98 million metric tons, mostly due to the decrease in U.S. stocks. The upcoming planting season is bringing full attention to acreage shifts. In January, the USDA reduced winter wheat seeding by 3.754 million acres. Couple this with the latest new crop soybean-corn price ratio, and one sees why soybean acres will garner attention this spring. Most wheat acres lost were in nonsoy-producing states, which does not imply more soybean acres in those areas but instead other commodities 18 | Ethanol Producer Magazine | MARCH 2017

by Jason Sagebiel

such as sorghum, cotton and forages, moisture pending. The March 31 prospective plantings report could have colossal influence on market action in the proceeding months. One must continue to monitor, because while this may be a soy complex issue, as one can see in the attached illustration, it can have direct influences on corn price action. Comments in this column are market commentary and are not to be construed as market advice.

Regional Ethanol Prices ($/gallon) Front Month Futures (AC) $1.490

DDGS Report

Transportation problems slow DDGS shipment Jan. 22—Midway through January was an interesting month. The new year started with cold weather in the Midwest and heavy rain and snow on the West Coast. Avalanches and rail washouts slowed train traffic headed that way, as did vessel loading delays due to rain. At the same time, trains moving to Mexico came to a standstill at some of the border crossings due to demonstrations by Mexican people protesting the ending of a governmental gasoline subsidy. Both of these situations hampered normal DDGS movement, which, in turn, backed up product into Midwest markets, depressing local prices. Domestically, most buyers are using DDGS at maximum inclusion rates. The

Ethanol Report

Spot

Rack

West Coast

1.507

1.725

Midwest

1.497

1.600

East Coast

1.546

1.490 SOURCE: DTN

by Sean Broderick

logistical challenges pushed prices to wellbelow recent historical relationships versus local corn, which incented those that had not yet fully utilized it. In mid-January when the weather and rail issues moderated, prices were quick to push off their lows. Export demand is still weak. The Chinese antidumping tariff is almost 100 percent of the landed price, which is choking demand there, and Vietnamese fumigation questions have negated them as a destination. The strong U.S. dollar is affecting the peso and the loonie, so two of our better export customers are more challenged to buy increased U.S. goods. Trade policy will be important, but our currency strength will affect our markets even more.

Regional Gasoline Prices ($/gallon)

Front Month Futures Price (RBOB) $1.565 Region

Spot

Rack

West Coast

1.580

1.650

Midwest

1.470

1.565

East Coast

1.580

1.610 SOURCE: DTN

DDGS Prices ($/ton) Mar. 2017

LOCATION

Feb. 2017

Mar. 2016

Minnesota

90

95

110

Chicago

105

110

140

Buffalo, N.Y.

105

120

130

Central Calif.

160

159

178

Central Fla.

148

152

153 SOURCE: CHS INC.

Corn Futures Prices (March Futures) Date

close, bu.

close, ton

Jan. 23, 2017

3.695

131.964

Dec. 23, 2016

3.458

123.482

Jan. 23, 2016

3.703

132.232 SOURCE: FCSTONE

by Rick Kment

Large supplies pressure ethanol prices Jan. 22—Ethanol prices turned into a major market free fall during January, dropping more than 15 cents per gallon since the beginning of the year and more than 25 cents per gallon since the yearly highs, which were set during the second week of December 2016. All of the focus that was placed on tighter supplies and aggressive demand through the last quarter of 2016 has been quickly unwinding during January. This shift is evidenced by rack ethanol market moves that fell 40 cents per gallon over the past month, and continue to see even more aggressive pressure than futures-traded markets. Ethanol futures prices are now trading at a 7-cent

Region

discount to the RBOB gasoline futures market, whereas prices spent most of 2016 at a premium to the gasoline market complex. The change in overall direction of the market has caused many traders to look at potential support levels for ethanol during the near future. It is expected that without a major fallout in either the corn or RBOB gasoline price levels, ethanol futures should be able to stabilize from $1.40 to $1.45 per gallon during early 2017. The potential for additional and aggressive downward market shifts will be tempered by the current cost of production due to corn price levels and elevated energy markets.

Cash Sorghum ($/bushel) Location

Jan.20, 2017

Dec. 22, 2016

Jan. 15, 2016

Superior, Neb.

2.75

2.55

3.08

Beatrice, Neb.

2.82

2.57

3.13

Sublette, Kan.

2.71

2.46

3.09

Salina, Kan.

2.97

2.77

3.26

Triangle, Texas

3.10

2.87

3.13

Gulf, Texas

4.05

3.83

4.21

SOURCE: SORGHUM SYNERGIES

Natural Gas Prices ($/MMBtu) Jan. 20, 2017

Dec. 28, 2016

Jan. 23, 2016

NYMEX

3.204

3.930

2.118

NNG Ventura

2.255

3.540

3.065

Calif. Citygate

2.260

3.745

3.200

LOCATION

SOURCE: KINECT ENERGY GROUP

U.S. Ethanol Production (1,000 barrels) Per Day

Month

End Stocks

Nov 2016

1,019

30,565

19,136

Oct 2016

993

30,797

20,005

989

29,675

20,099

Nov 2015

SOURCE: U.S. ENERGY INFORMATION ADMINISTRATION

MARCH 2017 | Ethanol Producer Magazine | 19

Ironically, the latest breakthrough in the field of energy, is a field. While most innovation begins with the seed of an idea, the greatest advance in the making of ethanol starts with a seed. The first corn seed technology specifically developed to increase the efficiency of ethanol production, Enogen corn can reduce costs by up to 10% and helps generate more ethanol per bushel than any corn feedstock ever grown. Recently named AgriMarketing’s Product of the Year, Enogen is definitely making waves in the field of energy. ®

©2016 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 1ENG6003_17.5 x 10.875 01/16

DISTILLED Ethanol News & Trends

Ethanol, DDGS export data Sept.-Aug. marketing year Total DDGS exports (million tons) DDGS exports to China Total ethanol exports (million gallons) Ethanol exports to China

2013-'14

2014-'15

2015-'16

12.00

11.63

11.73

6.18

5.37

3.37

786.47

859.53

858.36

6.89

14.35

190.52

SOURCE: U.S. GRAINS COUNCIL

China imposes duties on US DDGS

China’s Ministry of Commerce recently announced it will subject U.S. distillers grains with solubles (DDGS) to antidumping and countervailing duties. According to information released by the ministry, the duties were to begin being levied Jan. 12. China’s DDGS industry requested an antidumping and countervailing investigation in late 2015. The investigation began in January 2016. A preliminary ruling was made in September.

According to U.S. Grains Council President and CEO Tom Sleight, the announcement marks the latest in a rash of measures taken by the Chinese government to restrict access to that market for U.S. feed grains and related products, specifically corn, DDGS and ethanol. Sleight noted the DDGS announcement came only 10 days after China took action to dramatically increase tariffs on imported U.S. ethanol from 5 to 30 percent.

Iowa sets new annual production record Iowa’s 43 ethanol plants had another recordbreaking year, producing 4.1 billion gallons in 2016. The Iowa Renewable Fuels Association said the slight uptick in production from 4 billion gallons in 2015 is largely the result of an increase in gasoline demand, allowing more E10 blending and increased ethanol export opportunities. “Setting another annual ethanol production record is a testament to the efficiency and hard work of Iowa’s ethanol plants,� said Monte Shaw, executive director of the IRFA. “However, Iowa has the resources, both in corn and plant capabilities, to do much more. In order to unlock this wealth of untapped potential, we need to move beyond E10 and ensure that all consumers have access to higher blends of ethanol at the pump, like E15.� Shaw said the IRFA’s top state priority for this year is to secure funding for the Iowa Renewable Fuels Infrastructure Program to ensure more retailers are able to offer higher-ethanol blends.

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DISTILLED

Lesaffre launches new yeast product

EPA grants fuel pathway approval to Gevo

Lesaffre Yeast Corp. recently inaugurated a drying facility in Headland, Alabama, and celebrated the launch of Leaf – Lesaffre Advanced Fermentations’ new bioengineered yeast for ethanol production. The new yeast, ER-Xpress, is a robust enzyme-expressing yeast specifically developed for the U.S. ethanol industry. The new strain will be produced and dried at the new facility in Headland. “Lesaffre is pleased to invest and extend its industrial yeast manufacturing network in the USA. This new yeast-drying capacity will enable us to continue to develop tailored products and to address our white biotech customers’ development strategies,” Baule said. The Headland facility represents Lesaffre’s first yeast drying facility in the U.S. The company and Red Start Yeast, however, have operated a cream yeast facility in the city since the 1990s.

In early January, the U.S. EPA posted a notice to its website announcing the agency has approved a fuel pathway filed by Gevo Inc. for the production of butanol from corn starch and grain sorghum. The pathway approval applies to both D5 advanced biofuel and D6 renewable fuel renewable identification numbers (RINs). Within the approval, the EPA states that Gevo’s butanol produced from corn starch feedstocks appears to already qualify under an existing pathway for the production of D6 RINs, assuming the company satisfies the pathway specifications and other requirements specified in the Clean Air Act and regulations. The EPA also said it has determined that butanol produced by the Luverne facility from grain sorghum feedstock can qualify for D-code 6 RINs, and butanol produced by

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Life-cycle GHG emissions reductions when compared to baseline gasoline Corn starch butanol, natural gas fired dry mill, 2022 average plant

31.1%

Corn starch butanol produced through the advanced Gevo Luverne corn process

50.3%

Grain sorghum butanol produced through the advanced Gevo Luverne grain sorghum process

54.6%

SOURCE: U.S. EPA

the Luverne facility from corn starch and grain sorghum feedstock can qualify for D-code 5 RINs if the fuel meets certain conditions and regulatory provisions.

DISTILLED New corn ethanol plant to break ground in Iowa

US ethanol production breaks record 4 times in 6 weeks The U.S. ethanol industry broke production records for three consecutive weeks in December and January. Production reached a new record the week ending Jan. 13, with production averaging 1.054 million barrels per day, according to data released by the U.S. Energy Information Administration.

The previous record, set the week ending Jan. 6, was at 1.049 million barrels per day. That record replaced the one set the week ending Dec. 30, when production reached 1.043 million barrels per day. Prior to Dec. 30, the record was set the week ending Dec. 9, when production averaged 1.04 million barrels per day.

Elite Octane LLC, a company formerly known as Farmers Energy Cardinal LLC, is expected to kick off construction of a new corn ethanol plant in Cass County, Iowa, in early 2017. Nick Bowdish, president and CEO of N Bowdish Co. LLC, will serve as CEO of Elite Octane following the project’s development. Development of a proposed ethanol plant on the project site began more than a decade ago when a group of farmer investors formed Amazing Energy Atlantic LLC. They invested millions of dollars in site preparation, concrete piers and an office building. However, the group was unable to complete fundraising for the project, and left the site midconstruction. Ron Fagen bought the site in early 2012. According to Bowdish, the nameplate capacity of the plant will be 120 MMgy. The air permit obtained from the Iowa Department of Natural Resources, however, allows for production of up to 150 MMgy. Bowdish also confirmed that financing for the project is already complete and that Fagen Inc. will be the designbuilder of the facility.

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DISTILLED Queensland moves forward with ethanol project, mandate

Renewable Developments Australia Pty Ltd. has announced it is nearing delivery of the first of its five planned large-scale ethanol farms and production facilities to supply ethanol for the Australian and export markets. The proposed project will have the capacity to manufacture 190 MMly (50.19 MMgy) of ethanol fuel produced from sugarcane and sweet sorghum grown near the town of Charters Towers in north Queensland. Queensland began implementing a biofuel mandate Jan. 1. The mandate requires fuel retailers to ensure up to 3 percent of their total regular unloaded and ethanol-blended fuel sales each quarter are biobased ethanol. Larissa Rose, managing director of the Queensland Renewable Fuels Association, said the implementation of a biofuels mandate will allow consumers greater opportunities to support local industry and agriculture, while investing in building strong regional industries for the future.

Report finds improved GHG benefits for corn ethanol

In January, the USDA released a report showing the greenhouse gas (GHG) emissions associated with U.S. corn ethanol are currently approximately 43 percent lower than gasoline when measured on an energy equivalent basis. Given current trends, the report said by 2022 the GHG profile of corn ethanol is expected to be almost 50 percent lower than gasoline, primarily due to improvements in corn yields, process fuel switching and transportation efficiency. Under certain scenarios, the report predicts the GHG benefits of corn ethanol could increase even further, reaching a reduction of approximately 76 percent when compared to gasoline. The USDA said there are several reasons its report found greater life-cycle GHG benefits from corn ethanol than several earlier studies, including indirect land use change. Based on new data and

Gallons of ethanol produced per bushel of corn Year

Gallons/bushel

2007

2.74

2008

2.78

2009

2.76

2010

2.75

2011

2.75

2012

2.76

2013

2.75

2014

2.81

SOURCE: USDA

research, the USDA said there is compelling evidence that while land use changes have occurred, the actual pattern of changes and innovation within the farm sector have resulted in these indirect emissions being much lower than previously projected.

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PASSING THE TEST with Flying Colors Glacial Lakes Challenge demonstrates E30 is a winner. By Ann Bailey

The E30 Challenge passed the test—from the organizers to the participants, praise was heaped on the program sponsored by Glacial Lakes Energy LLC in Watertown, South Dakota.

The E30 Challenge, which ran from fall 2015 to fall 2016, was designed to show motorists they could safely use E30 fuel. The study focused on two aspects: dynamometer testing to show that modern vehicles can adapt and use higheroctane fuels, and collection of real-world, on-road data showing vehicles fueled with E30 still operate within the vehicles’ calibration range set up by the manufacturers’ engineers. Watertown was an ideal location for the challenge because it has one of the largest, if not the largest, infrastructure of blender pumps in the United States, says Marcy Kohl, Glacial Lakes Energy corporate communications manager. “We have

over 40 blender pumps in Watertown and we’re the size of about 22,000 people. We thought we would be the perfect fit because we had the infrastructure.” The E30 Challenge was launched to increase awareness of the fuel and where to get it, and to encourage people to try using E30 in their vehicles, whether they were flex fuel or not. “We knew it would work, but we wanted other people to try it,” she says. Before Glacial Lakes Energy launched the challenge, it wanted to be sure key people were well-informed, Kohl says. “We could promote E30 all day long and get consumers to use it, but the first time they went to their auto technicians and they say, ‘That stuff is junk, don’t use it,’ our efforts are in vain.” Challenge organizers talked to area technicians, the automotive department at the Lake Area Technical Institute, retailers and car dealerships. Talking to area auto technicians and giving them information about E30 was key, because many times they blame

ETHANOL BOOSTER: Glacial Lakes Energy treasurer Dale Christensen served on the E30 Challenge organizing committee. PHOTO: ML PORTRAITS, WATERTOWN

28 | Ethanol Producer Magazine | MARCH 2017

MIDLEVEL BLENDS

MARCH 2017 | Ethanol Producer Magazine | 29

MIDLEVEL BLENDS

CHALLENGE LEADERS: Marcy Kohl and Brad Brunner, employees at Glacial Lake Energy in Watertown, South Dakota, took the lead on organizing the E30 Challenge. PHOTO: NABP

check engine lights on the ethanol content of the fuel, says Andy Wicks, owner of DynoTune Speed and Performance in Watertown. Wicks provided professional expertise and helped conduct the E30 Challenge. “We were able to dispel a lot of myths. We were trying

to provide them with good information that is real so the technicians can use it to repair vehicles properly, rather than having them say, ‘Don’t use ethanol because you’re going to have a problem.' We’re actually showing them what’s going on and that’s why the program is

so successful, I believe. A lot of those technicians actually stated using E30 in their cars based on our findings,� Wicks says. Besides educating auto technicians and others working with vehicles, Glacial Lakes Energy also worked to inform organizations operating fleets of vehicles. “We worked with the Watertown Police Department. They have a large group of vehicles. Theirs were flex fuel, but they weren’t using flex fuel,� Kohl says. “We worked with some electrical cooperatives. We’re a farmer-owned cooperative and so are they." The challenge organizers also reached out to the Watertown Trolley which operates in the city during the summer. “We thought it was a great way to advertise and to prove the trolley runs on E30,� Kohl says.

Data Collection

After Glacial Lakes Energy launched the educational part of the E30 challenge, it purchased data loggers. “We wanted to have some sound evidence to submit to the U.S. EPA to prove that E30 works in nonflex-

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fuel vehicles,â€? Kohl says. The data loggers— memory boxes that plug into the vehicles’ Onboard Diagnostic—were the same kind EPA uses to record data. Once the data loggers were ready, the E30 Challenge advertised for participants. “They couldn’t be a shareholder or connected to the ethanol industry in any way," Kohl says. "We had participants driving all makes and models." The 40 vehicles in the challenge were labeled so that everyone would know they were test vehicles. During the Challenge, participants filled their tanks three times with E10 and three times with E30 and then were asked to talk about how their vehicles drove with the fuels. Meanwhile, the data loggers recorded statistical information about the vehicles’ performance. The official test results showed: • Modern vehicles filled with E30, could adapt to higher octane to improve performance and increase power. • All vehicles tested adapted to E30 staying within the OEM computer calibration range.

• No difference in average miles per gallon was found, with smaller engines showing the best response. • Savings amounted to .0137 cents per mile, with a projected annual savings of more than $200 per vehicle. • There were no check engine lights as a result of using E30. “What we found is all cars ’96 and newer have enough capacity in the factory fuel injection (system) to accommodate up to 30 percent ethanol—no check engine lights, no drivability problems,â€? Wicks says. Wicks, long a believer in using ethanol to fuel vehicles, was not surprised at the E30 Challenge study results. “At DynoTune Speed and Performance, we concentrate on highperformance, mostly fuel-injected street cars—Corvettes, Mustangs, Camaros, things like that. In 2005, 2006, we started using E85 and a number of ethanol blends as a substitute for racing fuel. We were comparing $12- to $15- a gallon race gas with the fuel that was available at the pump in the high performance cars. We were able to transi-

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HIGH-PERFORMANCE PROOF: Andy Wicks discovered ethanol's benefits when he switched from expensive race fuels to E85 in the high-performance cars he works with. PHOTO: ML PORTRAITS, WATERTOWN

MIDLEVEL BLENDS tion a lot of engines efficiently and safely and we made some pretty significant horsepower (improvement) with it,” Wicks says.

Testimony

Jared Landmark, CEO of Sioux Valley Co-op station in Watertown, participated in the E30 Challenge using three vehicles, a 2007 GMC company pickup truck, a 2014 Ford F150 company pickup and his own 2006 Nissan Armada. All three were nonflex-fuel ve-

hicles. None of them had performance issues during or after the challenge, Landmark says. “No mechanical issues, no warning light.” Another reason to use E30 is that the corn used to produce the ethanol is grown locally by the farmer-owners of the Sioux Valley Co-op, he says. “It’s a no-brainer. I think this teaming up with the local Glacial Lakes Energy has been a great thing. We wanted to get out to the public what this product is about.” Business hasn’t seen a drop since the

E30 Challenge, so people apparently were convinced about the merits of the fuel, Landmark notes. “People got a taste of what it is: it increases horsepower, is good for the environment and cheaper. I always like to get the less expensive in as a last note. But it really is a consumer choice based not only on other factors, but on price, too.” Glacial Lakes Energy spread the word about the positive findings of the study through personal testimonies from the participants via radio, television and print advertisements. Challenge organizers believed that having the people who participated in the challenge telling about how their vehicles performed using E30 was more powerful than the organizers talking about it, Kohl says. Now the E30 Challenge is completed in Watertown, she adds, Glacial Lakes Energy hopes to launch it elsewhere. “From here we would like to find the next Watertown. We think somewhere out there, there has to be another town in the United States that has a similar infrastructure with blender pumps and an ethanol plant. We would like to roll this out town by town, getting more people to use [E30],” Kohl says. The trend of using E30 fuel is going to grow, Landmark says. “I think it starts here in the grass roots of South Dakota and becomes bigger.” Informing people about E30 is key to increasing usage and the results of the study provides sound, positive information to present to them, says Brad Brunner, Glacial Lakes Energy marketing manager. “We continue to present the information, and hopefully, if you tell your story long enough, people realize it’s better for America to use E30 and higher-octane fuels, in general, and to support American-made products. The [E30 study] gives us great confidence we’re on the right path.” Author: Ann Bailey Associate Editor, Ethanol Producer Magazine 701-738-4976 abailey@bbinternational.com

32 | Ethanol Producer Magazine | MARCH 2017

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34 | Ethanol Producer Magazine | MARCH 2017

REGULATION

NO WAIVER?

No Sense. Ethanol industry sees one-pound waiver for E15 as a no-brainer. By Ann Bailey

Perplexed about why E15 does not get a one-pound waiver?

That’s a sign you clearly understand the issue, says Monte Shaw, Iowa Renewable Fuels Association executive director. People who ask questions are seeking logical explanations for why E15 does not get the one-pound waiver and there just aren’t any, Shaw says. “The situation doesn’t make sense. When I try to explain it to people, I’ll go through it step by step and then they’ll look at me, confusedly, and say ‘Huh?’ and then I’ll say ‘Exactly, you’ve got it.’” Congress amended the Clean Air Act in 1990 to allow blends of ethanol to get a one-pound waiver to accommodate for 10 percent ethanol being “splash blended” with gasoline. When 10 percent ethanol is added to 9.0 psi gasoline, the Reid vapor pressure (RVP) of the mixture rises to near 10 pounds per square inch (psi). As gasoline

evaporates, volatile organic compounds enter the atmosphere and contribute to ozone formation, a problem that is exacerbated by warmer air temperatures. Without the one-pound waiver, gasohol, as the fuel was called then, would have required a base gasoline with an RVP of about 1 percent lower to stay below the 9.0 psi allowable maximum for air quality. The ethanol industry successfully argued that producing a special low-RVP blendstock would be costly and cause logistical problems. “It was a well-intentioned rule and they (Congress) never thought the day would come when there would be a higher blend than 10 percent,” says Mike O’Brien, Growth Energy vice president of market development. But that day did arrive and, as the ethanol industry sees it, it only makes sense that E15, which has lower evaporative emissions than E10, should be granted the onepound waiver. However, the U.S. EPA regu-

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PHOTO: ML PORTRAITS, WATERTOWN SD

lation implementing the one-pound waiver applies it only to fuel blends of gasoline with 10 percent ethanol. In an enclosure to a Dec. 22, 2016, letter EPA sent to several Midwest governors, the agency says the one-pound waiver applies only to E10: “The revised statutory language in section 211(h)(4) specifically provides for a 1psi waiver exclusively for fuel blends of gasoline and 10 percent ethanol...,” a sentence of the letter reads. The EPA added the word “exclusively” to the sentence, notes Brian Jennings, American Coalition for Ethanol executive vice president. “That’s their interpretation of the statute. That’s where the disagreement is between the ethanol industry and EPA. They think that authority is exclusive to E10. We argue they have the authority to apply it to grant the one-pound waiver to E15.”

Seasonality Issue

Because E15 does not get the onepound waiver, it cannot be sold during the RVP season which runs from June 1 to Sept. 15. “During that time, they limit the volatility of gasoline to reduce evaporative emissions which can lead to ground-level ozone—smog,” Shaw says. “Currently for conventional gasoline areas, the limit is lower. That is, generally along the East and West coasts, some of the larger cities have cleaner-burning gasoline.” E10 was given the one-pound waiver because, when ethanol is added to gasoline at low concentrations, the volatility is increased typically by less than one pound, although it varies by

gasoline blendstock, Shaw says. “[Congress said] we want to get ethanol into the fuel supply, we don’t want to complicate it by making you have special gasoline to use ethanol and special storage tanks and distribution.” The ethanol industry argues E15 burns cleaner than E10 and thus is better for the environment, so not granting E15 a waiver defies logic. “There are additional tail pipe emissions with E10 versus E15. Therefore, there will be less evaporative emissions with E15. Yet, you can’t sell E15. By not giving the E15 the one-pound waiver, and having consumers buy E10, you’re increasing emissions,” Shaw says. While E10, which has much fewer emissions than E0, is a great fuel, it is not as clean as E15, he says. “That’s the frustration, with all of the science, all of the environmental benefits, all of the attributes of the fuel—everything EPA should be looking at—granting the E15 the one-pound waiver is a no brainer.” Jennings concurs. “By narrowly interpreting the statute the way EPA does, they are actually preventing a fuel that has fewer evaporative emissions from being used in most of the country during the summer months, which is a huge problem” he says. “We have had legal opinions written that suggest EPA is narrowly interpreting that statute, and that, indeed, that statute gives it authority to extend that one-pound waiver to any blend of ethanol that’s approved for use, which would include E15.” Being prevented from selling E15 during the summer months is not only costly to the environment, it has a negative eco-

REGULATION nomic impact on the ethanol industry and on consumers, Shaw says. “We lose a ton of sales in the summer when those sales are restricted to flex-fuel vehicles We have large retailers right here in Iowa—and I’m sure it’s not just Iowa—who have told us ‘We like E15 but we don’t want to monkey with the summer-winter thing confusing our consumers. When I can sell it year-around, I’ll do it.” The RVP season also is challenging for retailers who do sell E15, says O’Brien. “They do a great job of getting the sales going, everything is going great. Then they have to do something different come summertime and, in the fall, they have to revamp to ramp up the sales again.” Besides causing logistical challenges for retailers and resulting in reduced sales during the summer, the RVP season also hurts consumers, O’Brien says. “Just about all of the retailers we work with are selling E15 at a 3- to 10-cent discount versus unleaded 87. The consumer is losing because in the summertime, when the price of gas tends to go up, the lowest price grade of gasoline is not available to them. Everybody feels that RVP impact across the board.”

Jennings is hopeful for a change in interpretation. “I think under a new administration, we have opportunity to perhaps have the political appointees at EPA interpret that provision differently,” he says. “We think we have a very genuine opportunity, under the Trump administration, to get a new look at this, to get them to interpret this a little more broadly than we have in the past. We intend to work on that.” The Iowa Renewable Fuels Association will continue to address RVP, Shaw says.

“What we have to do is take a deep breath and step back and look at the markets, the implications. For retailers selling E15 today, they have to lose a vast majority of those sales for three and a half months in the summer because of lack of RVP parity.” Author: Ann Bailey Associate Editor: Ethanol Producer Magazine 701-738-4976 abailey@bbiinternational.com

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After “going around and around” with the EPA and getting nowhere, the legislative route appears to be the best one to take to get changes made to the rule, O’Brien says. “The long and short of it is, after a couple of years of debating it with EPA, with the help of several senators and congressmen, we started the legislative process to give the one-pound waiver to higher blends of ethanol, including E15. There are governors supporting it with letters. There are retailers supporting the change as well, including NACS (the association for convenience stores and fuel retailers).” The Iowa Renewable Fuels Association encourages the legislative approach, Shaw says, with a cautionary note. “You also have to be careful how a bill would go through Congress and what might get attached to the bill. The easiest thing would be for our EPA to admit they have the regulatory authority.”

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MARCH 2017 | Ethanol Producer Magazine | 37

INSIDE STORY: As ethanol plants reach the 10-year mark, the ceramic media inside the regenerative thermal oxidizer can become plugged and need replacement. PHOTO: DURR

38 | Ethanol Producer Magazine | MARCH 2017

RECONDITIONING

The Inside Story

Examining the state of affairs with repairs for three critical pieces of equipment in the back end of the ethanol process. By Susanne Retka Schill

Keeping plants running with minimal downtime is no small feat. Maintenance teams work hard to keep ahead of bearing wear

and other routine upkeep, looking for indications of systems that may need more extensive reconditioning. Most plants schedule downtime in the spring and fall for cleaning and repairs, with one eye on keeping equipment in top condition and the other on keeping costs down. Ethanol Producer Magazine looks at three critical systems—centrifuges, dryers and RTOs (regenerative thermal oxidizers)—to learn about the challenge of keeping ethanol plants up and running. Each system has unique challenges in the types of needed repairs and in how the companies doing the rebuilds work with plants. The centrifuges that separate whole stillage into liquids and solids ahead of the dryers get a workout. Hundreds or even thousands of gallons a minute of hot stillage, typically 185 degrees Fahrenheit, move through the centrifuges for dewatering. “The rotating assemblies weigh between 5,000 and 10,000 pounds and can spin at 3,000 to 4,000 RPM,” says Dan Ellis, president of Flottweg Separation Technology Inc. “You have high solids and high temperatures—it’s a high-demand application in all aspects.” “We tell customers, if you want the maximum availability and reliability, it has to be a two-way working relationship. We look at their facility and how they have to run it, and they work with us on our recommendations on how to best run the machine,” Ellis says. Startup and shutdown procedures are important to do correctly. Timely cleaning and close attention to how the unit sounds while running are important and, at least once a shift, operating data should be recorded. “Over the years, we’ve trended critical variables so you can predict when the unit should be rebuilt,” he says. Flottweg recommends rebuilds be planned every 12 to 18 months due to the demanding operating conditions. Most plants run multiple units and keep a spare on hand so one

MARCH 2017 | Ethanol Producer Magazine | 39

REBUILDERS: Ethanol plants send their centrifuges in to the shop for refurbishment. Given the demanding conditions in plants, Flottweg recommends it be done every 12 to 18 months. PHOTOS: FLOTTWEG

centrifuge can be taken down and switched out while the plant is running. Ellis is a firm believer that plants should work with the original equipment manufacturer (OEM) for repairs. “Nobody knows the equipment as well as the OEM,” he says. Going with other shops may save money on the initial repair, he admits, but unsatisfactory repairs begin to multiply problems. “You never bring it back up to full OEM operating specs, so each time you do the repair it gets progressively worse. If it gets to a certain condition, you have to get a very expensive repair to get all the machine components back to OEM specs.” Maintaining proper tolerances is especially important, for example, and somewhat tricky as the metal components in the high-speed rotating equipment expand with the hot stillage flows. Flottweg may be unusual in setting a goal of retaining 80 percent of the after service for the equipment it sells, Ellis says. And, in an age where many companies trim inventories to the minimum, he is committed to keeping replacement parts on hand for all machines. “A big thing with us is making sure that regardless of the part size or cost, if somebody does have a failure, a 40 | Ethanol Producer Magazine | MARCH 2017

quality repair can be done as quickly as possible.” The average lifespan of a centrifuge is 20 to 25 years, and it’s not uncommon to service machines that are more than 30 years old, Ellis says. Working with the OEM helps with reaching the maximum lifespan. Another advantage of working with OEMs, he adds, is that new features can be incorporated. His company, for instance, has developed a Recuvane system that recovers energy from the liquid discharge to reduce power consumption in each machine by 13 to 18 percent and a new scroll design is coming out that increases performance capacity while minimizing vibration issues to increase mechanical viability.

Dryers

The situation for major dryer repairs is very different from centrifuges. For one, there aren’t multiple units, with a spare kept on hand. Some plants do have two dryers, but if one is shut down for unplanned repairs, the plant has to cut production, says Bill O’Connor, president of O’Connor Kiln & Dryer Inc. As plants reach the 10-year mark, the big challenge is reconditioning dryers in the time allotted. “Typically an eth-

anol plant has a yearly shut-down for five to 10 days, but the refurbishing can’t be completed on the big dryers in that amount of time,” O’Connor says. “We do the best we can with the time they allow us and come back in another year to do a little more, to keep them running the best we can. It's very challenging. Sometimes I make a bid and we’ve got five days, then we run into all sorts of unseen stuff. Then I go confront them about it and we decide let’s do this and this. At the end of five days, we pull everything out and start up, whether we’re finished or not.” The pressure to keep the plant running can be detrimental, O’Connor says. The internal flighting, for example, can break loose and start flopping around. If plants don’t shut down to investigate, the loose parts not only damage the inside of the dryer drum, but can seriously damage the screw. The worst cases, though, are when plants experience dryer fires. “A fire inside is hard to put out,” he says, “and when the fire fighters come, they start hosing down the outside.” The result can be severely warped metal. Over the years, he’s seen a variety of issues with DDGS dryers when it comes time for major repairs. When some plants were built, the dryer was put in place and the building constructed around it with minimal working space inside. He has seen poorly designed pier mounts and improperly aligned systems. With a rotating drum that’s large enough for a man to stand inside, major issues can develop as the system begins to wear. “With a rotary dryer you have a big steel ring that goes around the outside of drum, which I call the tire. Then to run your tire on, you’ve got rollers underneath called the trunnions.” Whenever the trunnions are changed out, the slope of the drum must be correctly maintained. “The alignment of these things is real crucial,” O’Connor says. “Most plants do pretty dang good watching [their dryers],” he says, although he adds most also don’t totally understand how to properly set them. “Everything they do is in a big, mad hurry. If they lose a bearing or got to change a trunnion, they want it done in five minutes, which is impossible. You have to jack it up, take the old one out and

RECONDITIONING put the new one in.� Then there’s the temptation to start it up again without properly checking everything. “As soon as they get the base bolts in and the bearings tightened down, they start it up and run. Sometimes it can run too hard up or down against the thrush rollers and you can start tearing the thrush rollers or the tire, and you’ve got to replace it—it’s a big challenge out there.�

RTO

A system next in line behind the dryers presents an equally big challenge to refurbish when the time comes. The regenerative thermal oxidizer burns off the volatile organic compounds (VOCs) contained in the exhaust air coming off the dryers. A primary air pollution abatement system, the RTO insures the exhaust coming out of the plant’s stack is virtually pure steam. RTOs are huge systems that can tower five-stories high with a footprint of 30 by 100 feet in a large plant. As many plants approach the decade mark in operations, the ceramic media in-

side the RTO is plugging, explains David Sorensen, senior key account manager at Durr Systems Inc.’ Clean Technology Systems. “The purpose of the media is to store energy,� he explains. Combustion burners start the reaction, heating the airstream coming off the dryer to temperatures of 1,500 to 1,600 degrees Fahrenheit needed to oxidize the VOCs. The heated airstream passes through the media which stores the energy, regenerating the reaction to continue VOC destruction. Most RTOs have the ability to bake-out, much like a self-cleaning household oven burns up deposits leaving a residual ash. “In the RTO, over time, that residual ash gets built up in the media and can’t be baked out,� Sorensen says. “The material has already been oxidized and that’s where the plugging begins to occur over years of operation.� While changing out the media is a big expense, there are advantages to installing the new media that has been developed since the days when most RTOs in the ethanol indus-

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try were installed. “Right now there are more efficient media that have better heat transfer rates,� Sorensen says. While an improvement from 92 percent to 95 percent or better may not seem like much, he says, “With Thermal efficiency, the percentage isn’t linear to cost savings—two points could be a 15 percent operational cost savings.� As with dryer refurbishments, the big challenge is accomplishing the RTO reconditioning during the allotted time. “It’s always a challenge. Once you’ve removed all the old media, there’s usually a surprise or two that you find. It puts additional pressure on us to resolve the issue and have an engineered fix and still maintain the schedule. No one wants to go to a plant manager and tell them I need two more days. It’s just not acceptable.� Author: Susanne Retka Schill Managing editor, Ethanol Producer Magazine sretkaschill@bbiinternational.com 701-738-4922

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MARCH 2017 | Ethanol Producer Magazine | 41

DISTILLER GRAINS

SAVINGS VIEW: NABP's Todd Seaton, left, Ryan Carter, Tharaldson Ethanol, and Bill Paulsen, ICM Plant Services, review Vertex energy cost savings calculator spreadsheet. PHOTO: NABP

42 | Ethanol Producer Magazine | MARCH 2017

DISTILLER GRAINS

Adding

FLOWABILITY New DDGS additive saves ethanol plants energy and improves flowability. By Debbie Sniderman

A new mineral additive technology offering energy and yield benefits to DDGS processing has been developed by Nucleus Ag & Bio Products, Lakeville, Minnesota. The anticaking agent absorbs

moisture allowing ethanol plants to lower the relative moisture of their outgoing DDGS, with multiple benefits. Todd Seaton, NABP U.S. sales manager, says, “Many plants over-dry the grains to load or unload them from rail cars and trucks. If they’re not dry enough, they are difficult to unload. Because plants want flowability, they dry their grains to 9.5 or 10 percent moisture, losing yield in the process. Over-drying the grains uses more energy, and drying longer than needed wastes energy.” The additive also

improves the nutritional value of the DDGS, Seaton says. “Any one of these benefits alone could add profitability to an ethanol plant.” Vertex DDGS Enhancer is composed of finely ground food-grade minerals. It works by micro-encapsulating DDGS fibers to keep them from sticking together. The added minerals adhere to the grains like a coating and absorb excess moisture, allowing the DDGS to flow. The treatment adheres best to the grains when blended with DDGS after they are dried and cooled. Improved safety is an additional benefit, as reduced clumping aids front-end loading operations. A patent-pending delivery system applies the precise amount of mineral blend using rotary valves, airlocks and screw conveyors. NABP offers indoor and outdoor versions of the Vertex Sys-

MARCH 2017 | Ethanol Producer Magazine | 43

DISTILLER GRAINS tem to accommodate different plant configurations. Vertex changes the nutritional profile of DDGS increasing iron, calcium and other minerals and acts as a natural intestinal detoxifying agent. The natural additive in Vertex also enhances the color of DDGS, making it lighter and scoring higher on the Hunter L scale. Seaton says the feed industry recognizes there is value to the color of feed and prefers this color enhancement.

The Hunter L score of DDGS at the Tharaldson Ethanol customer site increased five or six points with the addition of Vertex, he says, opening new markets. Seaton adds Vertex has generally recognized as safe status and is compliant with the new Food Safety and Modernization Act regulations. Seaton worked in the ethanol industry for more than 35 years. After retiring, he and his wife Susan Seaton, the product’s inventor, knew of some problems and

where to add value in the ethanol industry. They wanted to help, and together created the Vertex product. “NABP exists to bring added value to our friends in the ethanol industry,” he says. “During trials, one plant was able to use more syrup in their DDGS, which helped increase DDGS yield.” When NABP started in March 2015, it delivered the product in Supersacks, which took a long time to load and resulted in expensive freight charges. Unloading into an auger blending machine was labor intensive. NABP cut costs by moving to 25-ton pneumatic bulk loads delivered to plants for storage in silos. “At first, the costs of sourcing, blending and drying the minerals and getting them to the plant and applying them were high. It took a while to perfect,” Seaton says. “But now, costs are competitive with what the end user pays for DDGS. Ethanol plants can recover up to 100 percent of their costs and increase their DDGS yield, so it makes sense.”

First Adopters

Jeff Wilson, vice president of chemical sales at NABP describes Vertex as an earlystage product. Plant trials have been completed at 100 MMgy and 50 MMgy cornethanol plants, with one commercial system running and another in the startup phase. “Plymouth Energy in western Iowa is excited about the technology and a system is currently being installed there. Four trials were also done at GPRE in Fergus Falls, Minnesota, who also loved the product,” Seaton says. Tharaldson Ethanol, Casselton, North Dakota, was NABP’s first customer and pilot facility. Tharaldson produces 168 million gallons of ethanol and about 450,000 tons of distillers grains each year, and operates its own fleet of DDGS rail cars. Vertex additive is applied after the dryers while the coproduct is conveyed to the storage building. The additive system includes an outdoor storage tank, a screw delivery system, a baghouse and feeder bin. According to Bill Paulsen, general manager of ICM Energy Management

44 | Ethanol Producer Magazine | MARCH 2017

PNEUMATIC HANDLING: NABP realized big savings when it moved from Supersacks to pneumatic transports, shown above delivering the Vertex DDGS additive at Tharaldson Ethanol. PHOTO: NABP

Solutions, which manages Tharaldson Ethanol, the Vertex technology adds value through energy savings and faster turns on rail equipment, accompanied by less damage to rail cars. “After adding this product, we were able to increase paybacks to the facility in multiple ways.� Paulsen says the most important factors for deciding to use it were issues with rail shipments. Before using Vertex, the unloading time for customers in the South took longer, and they had to vibrate or beat on the cars to get the distillers out. The trains took longer to get back to the ethanol facility, and there were time constraints for getting cars loaded. “Our biggest problems were when the DDGS were sitting in a hot rail line for three days in the humidity. They would settle and get hard, and it was painful for our customers to unload,� Paulsen says. “In the 22 months since we started using Vertex, we haven’t seen any more issues like these. There are no problems flowing, and the flowability lasts. We visited one customer in Texas and they have nothing but compliments about the product and how well it now comes out of cars. The turns of getting rail cars back from that customer have been phenomenal. That’s what allowed us to make the decision quickly.� Reductions in damage to cars has been significant, says Ryan Carter, general man-

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MARCH 2017 | Ethanol Producer Magazine | 45

DISTILLER GRAINS

INDOOR SYSTEM: Tharaldson Ethanol uses the indoor blending Vertex System. PHOTO: NABP

OUTDOOR SYSTEM: Plymouth Energy, Merrill, Iowa, has installed NABP's outdoor Vertex System, shown above. PHOTO: NABP

46 | Ethanol Producer Magazine | MARCH 2017

ager of Tharaldson Ethanol. “We see a large value in not getting the cars beat up and having to repair them, since each car is repaired at different times, and no repair is less than $10,000.” He estimates they have seen a two-day faster turn on facility rail cars, allowing them to downsize their fleet. “We’ve become a preferred provider to all of our customers because of the flowability and consistent product. We took a good product and gave it an additional boost that competitors today don’t have,” Carter says. On the energy side, using Vertex allowed Tharaldson to run year-round at increased moisture, which meant not running the dryers as hard. “This cut the energy usage in the facility, creating a better bottom line. It reduced the natural gas used per gallon of ethanol produced,” Carter says. “We used to run our dryers at 100 percent. Now, with Vertex, they run at 90 percent, which is a decrease of about 6 to 8 decatherms per hour, which saves 5 to 10 percent on dryer gas,” he says. “We used to have to run 9 percent moisture in the feed to make it flow. Today, running 12 percent moisture, the drying time is still the same, but it helps dryer efficiency.”

Carter estimates the return on investment at Tharaldson is less than a year, noting that ROI will be different for every plant. “Going to the max of 12 percent moisture means more water is sold out the back end. It’s heavier feed, so there’s a quicker payback. There are also lower emissions from using less natural gas, which reduces the [carbon intensity] score and helped us move forward going for our low carbon fuel standard permit and EP3 petition for efficient producers. Any project like this helps in the long run,” he says. Carter says DDGs are sent out for nutritional testing every day, and the values of calcium and iron increased. “This is one less thing the end user has to do, purchase calcium or iron to supplement into their feed. It’s a cost the consumer is getting back that we’re taking care of,” he explains. “We have not had one complaint about this product, and have had a lot of compliments on quality and the appearance of the feed. We are hoping to add Vertex at more facilities,” Paulsen adds. Author: Debbie Sniderman CEO, VI Ventures LLC info@vivllc.com

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ETHANOL INDUSTRY PROVIDES CRITICAL CO2 SUPPLY Carbon dioxide sourced from corn-ethanol plants is not a wasterecovery product but a coproduct that, in many regions, can only be replaced by higher-emitting, lesseconomical resources. A reduction in

U.S. ethanol production (for example, in response to policy changes) would inadvertently pose a significant disruption to the billion-dollar carbon dioxide industry, and the U.S. food industry. Fermentation from corn-ethanol plants is the largest single-sector CO2 source for the U.S. merchant gas markets. A valuable commodity, it averages $95 per ton with a large number of applications led by food and beverages and dry ice applications. Light industrial users in the merchant market include metal welding, chemicals, pH reduction and CO2 fracking applications in oil and gas. Ethanol sources have become so popular that major industrial gas companies have added

new CO2 sources. Notable additions from Air Products, both completed in 2014, were the 400 ton-per-day (TPD) plant sourcing gas from Southwest Iowa Renewable Energy, Council Bluffs, Iowa, and the 250 TPD plant at Big River Resources in Boyceville, Wisconsin. Nearly 43 percent of domestic CO2 byproduct for refinement and liquefaction is derived from 48 ethanol plants, mostly in the Midwest. While several regions in the U.S. are saturated, more ethanol plants will be tapped for carbon dioxide feedstock in the future as the U.S food industry continues to expand. For example, Continental Carbonic this fall announced a new CO2 plant to be colocated with ethanol producer Pennsylvania Grain Processing in Clearfield. The Pennsylvania project is an example of a strategically located CO2 source that cannot be replaced by other sources in an affordable and clean manner. The 2016 U.S. CO2 merchant market is estimated at 9.63 million short tons, the largest in the global 22 million-tons-per-year market. Domestic prices average $95 per delivered ton,

Strategically located ethanol sources cannot be economically replaced. By Steffen Mueller

sold in a wide range of containers from 105ton rail cars to 24-ton, over-the-road tankers, as well as smaller 500-pound microbulk tanks and 20-pound cylinders. The captive market is led by enhanced oil recovery (EOR) with White Energy, Russell, Kansas, the only dedicated source. Captive supply of CO2 has been evaluated for other projects such as delivery into the EOR pipeline infrastructures owned by Denbury Resources in the mid-South, and Kinder Morgan in the Southwest. Other captive markets include enhanced coal bed methane, sodium bicarbonate, methanol and, potentially, urea. The total CO2 market is estimated to approach $1 billion, broken out by segment in the accompanying table.

Location, Location

Carbon dioxide sources are highly sensitive to location, shown in the accompanying map. Due to a lack of strategically located alternatives, the current ethanol plant fleet cannot be economically replaced. For example, there

CONTRIBUTION: 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).

48 | Ethanol Producer Magazine | MARCH 2017

CARBON DIOXIDE are not enough ammonia plants, the secondlargest CO2 source, available to replace ethanol sources. The drought of 2012 illustrated the major scramble required to meet the potential disruption of CO2 supply during the peak summer-to-fall period. Ultimately the industry impact was contained to the mid-Atlantic and Eastern U.S., but large consumers of CO2, including a major food producer, considered buying or leasing a fleet of CO2 trailers until they found a suitable refrigerant replacement. The loss of CO2 from ethanol would result initially in product shortages, driving up costs for refrigeration and other applications. Any new sources would be much more expensive due to the lack of strategic location. Many of the cryogenic freezing, chilling and allied applications now utilizing CO2 would have to go to other methods such as liquid nitrogen, requiring major reconfigurations. Nitrogen requires air separation plants with high power demands. Many other unique cases exist for CO2 application where replacing the commodity could not be achieved by conventional means.

Evaluating Alternatives

Ethanol byproduct cleanup is generally less technology- and equipment-intensive than other sources, and there is significantly more experience in the construction of CO2 plants from ethanol than other sources in recent years. Other CO2 sources include 21 ammonia plants, 18 reformer refineries, 15 natural sources and a handful of others such as flue and natural gas. Natural geological sources can be the cheapest of all types. When source quality and well-head pressure is ideal, the feedstock is extremely clean, requiring only minor carbon filtration, and the elimination of a feed compressor can save half the power demand. In many cases, however, natural sources also contain hydrocarbons, heavy sulfur and benzene, all of which are expensive or difficult to remove, as in the case of benzene. Natural sources are in specific limited markets and cannot replace the predominately Midwestern-located ethanol sources. Traditional technologies for ammonia production can yield some of the cleanest raw CO2. Ethanol fermentation raw gas, in comparison, usually contains several constituents not found in ammonia, such as trace sulfur compounds and acetaldehyde. Newer ammonia technologies are said to produce an intermit-

tent raw stream that present new engineering and production challenges, leading to higher costs. Numerous ammonia projects were slated to be constructed (usually with international principals) in recent years, but never progressed beyond the drawing board. Power requirements are similar for ethanol and ammonia sources. Power demand at the first new commercial ammonia plant in 30 years built in the Midwest was estimated at between 145 Kwh/ton and 153 Kwh/ton of production for 540 TPD CO2 recovery. In comparison, the power demand at a proposed 400 TPD ethanol plant was estimated between 135 Kwh/ton and 142 Kwh/ton of CO2 produced. A project with a power demand of about 150 Kwh/ton is considered reasonable; scaled-down projects between 100 and 250 TPD can have a power demand between 160 and 170 Kwh/ton. There are just two 250 TPD flue gas plants in the U.S. A federal law in the 1980s allowed qualifying independent cogeneration plants to

combine the relatively expensive MEA recovery plant with the power project itself. As a result, these two currently operating CO2 plants do not have to amortize those capital costs. A flue gas CO2 recovery plant costs between $20 million and $30 million, which compares with the $3 million to $5 million cost for a similarly sized ethanol system. Power consumption for the flue gas plant is estimated to be at least double that of traditional plants. If ethanol byproduct disappeared, large processors and other consumers would ultimately be forced to abandon CO2 utilization or to switch to higher-emitting, more costly sources. Author: Steffen Mueller, PhD Principal Economist, Energy Resources Center University of Illinois at Chicago (312) 316-3498 muellers@uic.edu Conributing author: Sam Rushing President, Advanced Cryogenics rushing@terranova.net

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MARCH 2017 | Ethanol Producer Magazine | 49

BUSINESS MATTERS

Point of Obligation Takes Center Stage in Hearing By Josh Andrews

During the confirmation hearing of Oklahoma Attorney General Scott Pruitt for EPA administrator, the renewable fuel standard (RFS) was one of the most frequently raised topics. Members on both sides of

the aisle who support the program peppered Pruitt with questions about enforcing statutorily prescribed mandates and the timely release of annual renewable volume obligations (RVOs). But the tensest back and forth may have been the exchange between freshman Sen. Tammy Duckworth, D-Ill., and Pruitt when she attempted to pin him down on his views regarding the point of obligation debate pending before the U.S. EPA. While Pruitt declined to answer the question specifically because there is an open comment period on the question, Duckworth’s persistence on the issue demonstrates its importance. The question surrounding point of obligation began last winter with a request for the EPA to reconsider the definition of “obligated party.” In November, the EPA responded with its intention to deny the request, while initiating a public comment period, which was extended once to Feb. 22. How the Trump administration responds to the comments will be the first key test to how it views the RFS program. Supporters of the program have cause for concern given Pruitt’s previous comments and views questioning the RFS. However, President Trump pledged his continued support for the program throughout the campaign and Pruitt has vowed to follow the president’s lead. Pruitt’s answers throughout the hearing on the RFS were positive, to the point where he seemed to question whether the EPA was being judicious enough with its waiver authority. His comments on implementing the program, as prescribed, were what supporters needed to hear. But given the EPA’s authority to revisit the issue through the extended comment period, his refusal to offer thoughts on the question at hand did not calm fears. The question of moving the point of obligation from refiners and importers to blenders would be a major disruption to the RFS and the way the program has effectively run the past 11 years. Such a move would turn the program on its head, adding enormous complexity to the program’s implementation and enforcement by greatly expanding the

50 | Ethanol Producer Magazine | MARCH 2017

number of companies obligated. In EPA’s own analysis, it was unable to determine a final number of entities that would be included under a new definition of obligated parties and, in fact, noted that the type of company that would become an obligated party could extend as far as to railroads and big store chains. Companies that have not historically fallen under these compliance obligations would need to staff up to address these new issues and roles. Established business relationships and deals would need to be revisited. As in all considerations related to the RFS, it is worth noting the impact that such a change would have on ongoing investments in infrastructure and in the technologies leading us into second-generation biofuels and increased efficiencies in existing production. A major change in the structure of the program at this stage in its implementation would chill investments. The market will wait to see how the industry responds to the new structure and the resulting impact on commercial producers, as well as pilot and lab-based testing and production. Debate over the RFS will undoubtedly continue as the new Congress gears up. The inability for the previous Congress to enact comprehensive energy legislation and a new administration with wildly differing views from its predecessor only adds more incentive to consider such legislation. Add to that the beginning of the next Farm Bill reauthorization and comprehensive tax reform and there will be a number of opportunities for this administration to reinforce its support of the RFS. It will be important for the industry to make it clear to Congress and the administration, that adhering to the volumes mandated by law is only one aspect to supporting this vital program. Support for the volumes will mean nothing if the program is broken down from within through a change in the point of obligation definition. On the flip side, a strong stance on this issue from the new administration will go a long way in quelling fears of its long-term intentions on the RFS.

Author: Josh Andrews, Director, Faegre Baker Daniels Consulting 202-589-2819 Joshua.Andrews@FaegreBD.com

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