INSIDE: THE REBOUNDING EFFECT OF GOOD ENERGY POLICY October 2011
Bioheat Buildout Rising Demand for Bioheat Keeps Infrastructure Developments Moving Page 24
Downstream Delivery Page 30
The Complexities of Biofuels Logistics Page 36
OCTOBER 2011 VOLUME 8 ISSUE 10
Building Out for Bioheat
Streamlining Downstream Delivery
The Complexities of Biofuels Logistics
BY BRYAN SIMS
BY LUKE GEIVER
If you build it, they will blend
BY ERIN VOEGELE
DEPARTMENTS 4 Editorâ€™s Note
BY RON KOTRBA 6 Legal Perspectives
Depreciation Opportunities Sunset Dec. 31
Small producers selling direct
A new modeling system emerges
Biodiesel Reaction and Separation Technology The science of biodiesel
BY CHRISTINA BORGESE AND MARC PRIVITERA
BY SHERRY JEAN LARSON 8 Talking Point
The Rebounding Effect of Good Energy Policy
BY RANDY OLSON 10 Biodiesel Events 12 FrontEnd
Biodiesel News & Trends
18 Inside NBB 22 Business Briefs
Companies, Organizations & People in the News
44 Marketplace/Advertiser Index Biodiesel Magazine: (USPS No. 023-975) October 2011, Vol. 8, Issue 10. Biodiesel Magazine is published monthly. Principal Office: 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. Periodicals Postage Paid at Grand Forks, North Dakota and additional mailing offices. POSTMASTER: Send address changes to Biodiesel Magazine/Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, North Dakota 58203.
EDITOR'S NOTE Experts in biodiesel-blended heating oil will converge in Pittsburgh on Oct. 11 for the Bioheat Northeast workshop, organized by BBI International in conjunction with the National Biodiesel Board. My editorial staff and I developed the solid agenda and we look forward to delivering it to you in October. The workshop will be co-located with BBI’s Northeast Biomass Conference & Trade Show. The oilheat industry made a commitment two years ago to green its image by embracing incrementally increasing Bioheat blends. In order to do that, several issues need to be worked out. On the policy side, the Northeast states—the region where most U.S. heating oil is consumed—are moving toward mandates that trigger when surrounding states pass similar legislation. Since the region is geographically compact but population dense, the distribution network crosses state lines all the time, making it necessary for New England states to have uniform heating oil regulations. A panel of experts will discuss these regional policy issues, as well as federal and local or citywide initiatives, in Pittsburgh. In addition to policy conducive to expanding the Bioheat market, there are technical aspects to consider in the oilheat industry’s move toward increasing Bioheat blends. These questions include: what are the industry plans for moving forward with higher levels of biodiesel in ASTM D396? What levels can be used in existing burners without changing equipment? What’s the industry’s “move forward,” or progressive, blend and why? How does biodiesel affect NOx in home heating oil applications? Other items of discussion at the Bioheat Northeast workshop will include a panel on the essentials for oilheat distributors who want to move toward Bioheat blends but don’t know where to start. Also, a panel for property owners and building managers regarding the switch to Bioheat will cover the need-to-know information to entice environmentally conscious tenants and businesses into your property. Register today at www.biomassconference.com/northeast today and we’ll see you in Pittsburgh on Oct. 11.
BIOHEAT NORTHEAST Ron Kotrba
Editor Biodiesel Magazine firstname.lastname@example.org
FOR MORE INFORMATION AND PERSPECTIVE, VISIT KOTRBA’S BLOG AT BIODIESELMAGAZINE.COM/BLOG/READ/
Associate Editors Luke Geiver looks into the development of a new analysis tool for biodiesel product delivery by researchers in “The Complexities of Biofuels Logistics” on page 36.
Erin Voegele writes “Building Out for Bioheat” on page 24, in which she discusses how companies are developing infrastructure in the Northeast to meet demand for Bioheat.
Bryan Sims keeps it local by talking to small-scale producers about them selling product directly to consumers in “Streamlining Downstream Delivery” on page 30.
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Depreciation Opportunities Sunset Dec. 31 BY SHERRY JEAN LARSON
Are you are considering purchasing a biodiesel plant or new equipment to expand or upgrade an existing facility? Don’t miss the opportunity to take advan-
tage of depreciation deductions since these federal tax advantages sunset this year on Dec. 31. Section 179 deductions enables small businesses to deduct 100 percent of the cost of an asset or portion of an asset in the year the asset is placed in service. To qualify for this deduction, the property must be tangible section 1245 property (not buildings) and can be new or used; income limitations may apply. Any excess section 179 is carried forward to future years. The section 179 expensing limits and thresholds are as follows: • For years beginning in 2010 and 2011, the expensing limit is $500,000. This limit is reduced by the amount that section 179 property placed in service in the tax year exceeds $2 million. • For years beginning in 2012, the expensing limit is $125,000 and the threshold is $500,000. • For tax years beginning after 2012, the expensing limit is $25,000 and the threshold is $200,000. Bonus depreciation allows 50 percent of the cost of an asset to be deducted in the year placed in service. To qualify for this deduction, the property must be new and have a recovery period of 20 years or less. This would not apply to most buildings as they typically have a recovery period of 39 years. The expensing percentages and dates are as follows: • The 2010 Tax Relief Act provided for 100 percent bonus depreciation on new assets placed into service Sept. 9, 2010 through Dec. 31, 2011. • 50 percent bonus depreciation will be available on new assets placed into service Jan. 1, 2012 through Dec. 31, 2012.
Regarding the 100 percent bonus depreciation, there is an election available for the tax year that includes Sept. 9, 2010, that allows a taxpayer to use 50 percent bonus depreciation for dates both before and after Sept. 8, 2010. What does this mean to biodiesel plant owners? According to Wayne Lee, CEO of Lee Enterprises Consulting, “It means that those in the industry that are looking at purchasing equipment for expansion, renovation, and those buying biodiesel plants, should all be exploring the opportunities that exist in 2011 that might not exist in the future.” Christianson & Associates PLLP is a strategic partner of Lee Enterprises Consulting, and handles accounting services for the group’s clientele. “As the world’s largest biodiesel consulting firm, it is important to us to have someone within our group that stays abreast of tax matters and upcoming changes, Lee said. “These kinds of changes can have very significant impacts on our clients, and keeping us informed is precisely why we chose Christianson & Associates as a strategic partner,” he said. Lee notes that everyone in the biodiesel industry should make certain to enlist the services of those accountants and attorneys that understand the tax code as it relates to the biodiesel industry. Biodiesel plant owners and purchasers should get competent advice to ensure that their purchases are structured correctly. For those purchasing biodieselrelated equipment, there is an opportunity available this year that will not be available after Dec. 31. Author: Sherry Jean Larson Manager of Assurance and Advisory Services, Christianson & Associates PLLP (320) 441-5513 email@example.com
The Rebounding Effect of Good Energy Policy BY RANDY OLSON
Rick Davis, general manager of Soy Energy in Mason City, Iowa, recently shared with me his challenges of the past several years. Shortly after hiring him, the company halted plans to build a biodiesel plant in Marcus, Iowa. They were already in early stages of construction. But this year, the implementation of the revised renewable fuel standard (RFS2) and the passage of favorable Iowa legislation gave them new hope to return to the biodiesel business. Rather than building a new facility, Davis and his board negotiated to buy a shuttered biodiesel plant in Mason City, Iowa. Soy Energy has since resurrected the 30 MMgy facility, transforming it into a state-of-the-art plant, able to handle many feedstocks. Davis expects it to be running at full capacity within a few months. This is just one of many stories of biodiesel facilities on the rebound. The implementation of the RFS2 has breathed new life into the struggling biodiesel industry, and nowhere is this more evident than in Iowa. Home to 15 plants with 315 million gallons of capacity annually, virtually all of our state’s plants shut down or operated at reduced capacity in 2010. Today, most of the same plants that held on by their fingernails are operating again, many at their full potential. Other idled plants have changed hands, and I am buoyed by the fact that they are not lost to us. The dreary silence of vacant plants will soon be replaced with the humming of American ingenuity—and our slow economic recovery. The RFS2 has also stimulated an investment in infrastructure, which is critical to the long-term success of biodiesel in our nation’s energy portfolio. In Iowa, Magellan Pipeline has announced plans to install equipment for biodiesel blending at its Des Moines terminal. Other Iowa terminals carrying biodiesel are in Mason City, Ottumwa and Fort Madison. The RFS2 serves as a stabilizing force that will make these investments pay off over the long-term. Despite claims of RFS2 opponents, the needed infrastructure is falling into place. For all our hard work, and everything we’ve done right as an industry, ultimately our anticipated record biodiesel production is the result of policy. It’s our lead-
ers who recognize our nation’s need for domestically produced, renewable advanced biofuel that have helped this important new industry thrive. I’m proud to say that Iowa’s entire congressional delegation signed on as sponsors to federal legislation to extend the biodiesel tax incentive for three years, a move that would support thousands of new U.S. jobs and spur economic growth in Iowa and across the country. Iowa is the first state to have a clean sweep of co-sponsors to the legislation. At the state level, Iowa successfully passed a bill this year that does three things to promote the growth of Iowa biodiesel. The legislation: • Extends and expands a tax credit to encourage retailers to make biodiesel available at the pump. • Provides a production incentive. • Helps fund infrastructure needed to move biodiesel in the state. Biodiesel champions in Iowa worked to pass a requirement, like a handful of other states, that would have ensured Iowa uses its own products while displacing foreign oil. Despite our disappointment in the legislators rejecting that effort, the legislation they passed is a step in the right direction. States that enact policies to make their own biodiesel industries a priority will be the states where the RFS2 is delivered. Davis, who is also a soybean farmer, told me that despite four years in limbo, he hasn’t wavered because he is still a believer. He believes in making Iowa the renewable energy capital of the world. He believes that we should use our own products, and in the importance of energy policy that reduces foreign oil. Why should we spend billions of dollars on foreign oil when our farmers can grow so much energy from their own fields, and our producers can deliver economic development through green energy? Let’s help our lawmakers keep that question at the front of their minds as they continue to make difficult decisions for America, while making economic development a priority. Author: Randy Olson Executive Director, Iowa Biodiesel Board (866) 683-4172 firstname.lastname@example.org
EVENTS CALENDAR Bioheat Northeast Workshop OCTOBER 11, 2011
Westin Convention Center Pittsburgh, Pennsylvania Presented by the National Biodiesel Board and Biodiesel Magazine, Bioheat Northeast will include agenda focusing on federal, state and local biodiesel oilheat mandates, ASTM specs, technical issues and solutions, biodiesel storing, blending, transporting, marketing and branding, reducing our carbon footprint, as well as an evening networking event and reception. (866) 746-8385 www.biomassconference.com/northeast
Northeast Biomass Conference & Trade Show
Steel City to Host Bioheat Northeast Show
Pittsburgh in the fall. It’s where you need to be to get the latest information on biodiesel-blended heating oil, the most promising residential heating alternative on the market. The oilheat industry has latched onto biodiesel as THE No. 1 green path forward for its industry. In order for this to happen―and in order for the oilheat industry to outperform natural gas on performance and environmental bases―there are technical questions that must be addressed. The experts presenting in Pittsburgh on Oct. 11 at BBI International’s Bioheat Northeast are the ones to answer them. The one-day workshop, in conjunction with the National Biodiesel Board and colocated with BBI’s Northeast Biomass Conference & Trade Show, will kick off with a general session conversation between NBB CEO Joe Jobe and the National Oilheat Research Alliance President John Huber. Following this, the seminar will feature four highly relevant panels in the Bioheat sector. Policy: The policy environment for biodiesel-blended heating oil is strong on all levels: national, state and local. Learn from the experts what policy opportunities exist today, what to expect tomorrow, and how to maximize your company’s bottom line with biodiesel. Technical: The biodiesel and oilheat industries have formed a Bioheat Technical Steering Committee to spearhead the technical effort needed to support higher levels of biodiesel in the Bioheat market. What are the industry plans for moving forward with higher levels of biodiesel in ASTM D396? What levels can be used in existing burners without changing equipment? What’s the industry’s “move forward,” or progressive, blend and why? How does biodiesel affect NOx in home heating oil applications? Come hear from this panel of industry insiders and technical masters to discover biodiesel-blended heating oil’s path forward. Distribution: As an oilheat dealer, do you want to follow your industry’s calling to make heating oil cleaner than natural gas, but don’t know where to start? Then this is a do-not-miss panel. Hear from those who have ridden the biodiesel learning curve and offer their experience and expertise to get you onboard with the revolutionary reinvention of heating oil. The essentials of success in this market will be revealed. Markets and Use: Building managers and property owners, learn what your peers are doing to go green with Bioheat. While wood pellets or other biomassderived heat and power are gaining popularity in industrial and niche applications, they hold no comparison to the seamlessness of integrating biodiesel-blended heating oil to green city buildings and complexes. It’s about cleaning the air around you, being a responsible property owner and attracting the growing population of environment-conscious tenants. Hear from biodiesel suppliers and building owners who have made the switch to cleaner-burning Bioheat. Register today for the one-day Bioheat Northeast workshop Oct. 11 in Pittsburgh at www.biomassconference.com/northeast. 10
OCTOBER 11-13, 2011
Westin Convention Center Pittsburgh, Pennsylvania With an exclusive focus on biomass utilization in the Northeast—from Maryland to Maine—the Northeast Biomass Conference & Trade Show will connect current and future producers of biomass-derived electricity, industrial heat and power, and advanced biofuels, with waste generators, aggregators, growers, municipal leaders, utilities, technology providers, equipment manufacturers, investors and policymakers. (866) 746-8385 www.biomassconference.com/northeast
Algae Biomass Summit OCTOBER 24-27, 2011
Hyatt Regency Minneapolis Minneapolis, Minnesota Organized by the Algae Biomass Organization and coproduced by BBI International, this event brings current and future producers of biobased products and energy together with algae crop growers, municipal leaders, technology providers, equipment manufacturers, project developers, investors and policy makers. It’s a true one-stop shop—the world’s premier educational and networking junction for all algae industries. (866) 746-8385 www.algaebiomasssummit.org
Southeast Biomass Conference & Trade Show NOVEMBER 1-3, 2011
Hyatt Regency Atlanta Atlanta, Georgia With an exclusive focus on biomass utilization in the Southeast—from the Virginias to the Gulf Coast— the Southeast Biomass Conference & Trade Show will connect the area’s current and future producers of biomass-derived electricity, industrial heat and power, and advanced biofuels, with waste generators, aggregators, growers, municipal leaders, utility executives, technology providers, equipment manufacturers, investors and policy makers. (866) 746-8385 www.biomassconference.com/southeast
Register Now! Attendees: Register by November 18 and Save $100! www.biodieselconference.org/2012
Biodiesel News & Trends
PHOTO: IMPERIUM RENEWABLES
TO THE SKY: Imperium is committed to the biodiesel industry but aspires to produce biojet fuel to the emerging market in a new facility co-located with its existing mega-sized biodiesel refinery.
A Sleeping Giant Awakens
Imperium Renewables poised to reemerge as a leader in the biodiesel, biojet industries To say that Imperium Renewables and its 100 MMgy biodiesel facility located on the Port of Grays Harbor in Aberdeen, Wash., is on the cusp of fading into obscurity compared to when it boisterously entered the market four years ago would be severely premature. In the past couple years, while the company struggled with unstable markets, lost contracts, layoffs, executive changes and other upsets, today’s more reliable markets are lending the company renewed enthusiasm and optimism to flourish again, says CEO John Plaza. “We’re really starting to be more bullish on the future,” Plaza tells Biodiesel Magazine. Plaza points to his company’s ability to supply canola-based biodiesel to regional markets in Oregon, and Alberta and British Columbia, Canada—all of which have mandates in place requiring a certain percentage of diesel to be from renewable sources—as a driving factor behind Imperium’s successful run to remain profitable for much of 2010 and into 2011. “We do a lot of export into Canada and also export on a global basis where the markets create the demand for highquality canola biodiesel such as ours,” Plaza says. Canola sourced in Canada is not yet an approved pathway for biodiesel production under RFS2, but Plaza notes that Imperium has been working with the U.S. EPA, the Canadian Canola Association and the Canadian government to green light it, adding that he expects a decision soon.
“It has sort of prevented us from playing in the RFS2 market because we can’t produce a RIN-qualified fuel, so really the only market we have is the export market,” Plaza says. “Luckily, the export market has been significant. Once the EPA approves Canadian biomass—which includes Canadian canola—that will give us a chance to supply that market.” With an established distribution channel stabilized to supply those markets for its canola-based biodiesel, Imperium intends to delve into the aviation fuel market, Plaza says. He testified before the U.S. Senate Aviation Operations, Safety and Security Subcommittee in August, where he announced plans for a $250 million renewable jet fuel production facility to be co-located on site with the company’s existing biodiesel facility in Grays Harbor. Plaza also advocated for the military to be allowed to sign longer-term offtake contracts for fuel, specifically biojet. Subsequent to Plaza’s subcommittee hearing, the U.S DOE, USDA and the U.S. Navy announced a $510 million, three-year expansion of the biojet market, an area to which Plaza, a former pilot, is no stranger. Plaza says that Imperium intends to become a participant in the biojet market. “The announcement is a significant milestone for the potential growth of the industry,” Plaza says. “It will likely be another year before actual volumes of biojet fuel enter the market, but we’re going to do everything we can to be the successful bidder of that opportunity, should it arise.” —Bryan Sims
More than Just an Incentive When the $1-pergallon federal blenders tax credit went away in 2010, Illinois’ biodiesel industry managed to thrive while producers in other states struggled. EDUCATING: Much of the credit NBB educational behind that success specialist Rebecca Richardson says rides on strong policy off-spec biodiesel in that supports biodiesel Illinois is a nonissue. production and consumption. Specifically, the state employs a sales tax exemption for biodiesel blends of B11 or higher sold by retail stations in the state, which is good through Dec. 31, 2013. Created in 2003, the policy also provides a sales tax exemption of 20 percent on biodiesel blends from B1 to B10. Blends above B10 receive a total exemption from the state sales tax of 6.25 percent, which essentially creates an Illinois-specific market for B11. B11 is a preferred blend sold by retail stations, and while consumers continue to use higher blends in their vehicles with ultra-low sulfur diesel (ULSD), Illinois has been fortunate to not have encountered serious issues related to performance in diesel vehicles, particularly those whose manufacturers typically warranty up to B5, says Rebecca Richardson, consultant for MARC-IV and regulatory and education specialist for the National Biodiesel Board. Richardson credits the success in minimal issues related to B11 usage to
the proactive work by the Illinois State Bureau of Weights and Measures under the USDA, which provides oversight on fuel quality control to assure the fuel meets proper ASTM specs mixing with ULSD to correct issues before the fuel enters a consumer’s tank. “Since 2003, there have been virtually no problems or complaints,” Richardson tells Biodiesel Magazine. “Occasionally, there will be a flash point out of specification or there’ll be some element of the specification that’s out, but by and large, the fuel samples they pull proactively for surveillance, virtually none of them are out of specification.” In 2006, Richardson organized the Illinois Biodiesel Stakeholder group, which meets collectively with OEMs, petroleum marketers and weights and measures personnel to proactively address concerns related to fuel performance and talk about fuel quality surveillance—before it becomes an issue. “So far it’s worked well,” Richardson says. “We have great partners that come to the table that do their own research.” In the event that fuel happens to be out of specification, Richardson explains, the weights and measures agency would take proactive steps to address the issue beginning at the retail station level. “When a fuel is out of specification,” Richardson says, “the agency would go back to the retailer and tell them their fuel is out of specification, and they would pay a fine depending on the type of violation.
PHOTO: ILLINOIS SOYBEAN ASSOCIATION
Illinois, B11 and Vehicle Warranties
ANY GIVEN STATION: Pull into any truck stop in Illinois and the diesel fuel of choice is B11, as a result of the state’s fuel tax exemption on blends above 10 percent.
If it’s a fuel quality issue, the fine is lower, but if it’s a [cetane] issue or something that could be perceived by the consumer that the retailer might be doing something on purpose, the fine would be higher.” Richardson says the majority of issues that pop up can be traced back to fuel handling, improper storage tank maintenance and so forth, in which case the Weights and Measures agency returns and reeducates those parties to remedy the situation. “It’s a constant educational process,” she says. —Bryan Sims
Renewables in the Heart of the Middle East A Dubai entity partners with McDonald’s to convert waste grease to biodiesel The Middle East is renowned for its crude oil production. Now, a new initiative spearheaded by the foreign investment promotion arm of the Dubai Department of Economic Development (Dubai FDI) will bring waste grease recycling and biod-
iesel production to the region. Dubai FDI-supported Neutral Fuels LLC, under a long-term contract, will convert used vegetable oil collected from fast-food chain McDonald’s Corp. outlets across the United Arab Emirates. The re-
sulting fuel will be used by the UAE in its logistics fleet to reduce emissions and cut the fleet’s carbon footprint. According to Dubai FDI, the new enterprise is the first commercial producer of biodiesel in the Middle East. —Erin Voegele
NBB Federal Affairs VP Eyes Industry Growth Anne Steckel is excited, energized and ready for the new rules of Washington she has lived in the nation’s Anne Steckel believes the capital and worked in a variety of political atmosphere in Washingpolicy-based roles. “I worked on ton, D.C., is fluid and unstable, Capitol Hill for nearly a decade but as the new vice president of on both the House and the Senfederal affairs for the National ate side,” she says. “I’ve done Biodiesel Board, she believes this is an exciting time for the energy and agriculture policy, industry. Steckel was attending a NEW BLOOD: NBB’s they’ve kind of been my specialties.” She has also lobbied for biodiesel retreat in Missouri, just new vice president both the American Farm Bureau two days into her new role, when of federal affairs, Anne Steckel, says and Growth Energy, one of two Biodiesel Magazine reached her to growing the industry leading trade organizations for ask about her experience, view is her No. 1 goal. the ethanol industry. Steckel's of the industry and goals for the most recent position was as chief coming months. of staff for U.S. Rep. Mike Thompson, DAlthough the easy assumption of Calif., and previously she served U.S. SenSteckel’s near-term focus might be based ate Majority Whip Richard Durbin, D-Ill. on renewing the biodiesel tax incentive set One might think the record year for to expire at the end of the year, Steckel explains that she has larger plans. “My big- biodiesel production may seem to be a gest goal is to grow the industry,” she says. great thing happening during a bad political time, but that isn’t how Steckel sees it. “The tax incentive is on my agenda, and “Members are very energized and excited, making sure the RFS is implemented corand so I’m thrilled to be part of an organirectly,” but she stresses, “the number one zation that is moving in the right directhing is to grow the industry.” tion,” she says. And although the political To do that, Steckel plans to draw on climate on the Hill is “very fluid,” she says her experience in Washington. Since 1997,
people have operated under a certain set of rules for a long time, but those times are changing. “I think we see that the old rules don’t really apply.” Her entrance into the Washington NBB office couldn’t come at a better time, she says, as Congress will be in recess, allowing her to get acclimated to her new home as she takes over for Manning Feraci, former vice president of federal affairs, who left for a role in the solar industry. In 2010, the NBB was able to get the tax incentive extended through a larger package of tax-based legislation, but given the uncertainty of the current climate (Steckel points to the near debacle with the debt ceiling as an example), she explains that she will be exploring all options for finding a vehicle of legislation to renew the tax incentive. “It depends on what is going to be moving in Congress,” she says. “There are not a whole lot of vehicles that are going to be moving through Congress, so assessing what is actually moving and how we can insert ourselves is something we will be looking at.”—Luke Geiver
A One-Pot Approach to Algae Biodiesel Yale grad student Lindsay Soh has the research to prove how it works There might be little need for a multistep algae-to-biodiesel method as long as Lindsay Soh of Yale University continues her research. Soh has developed a process that involves supercritical carbon dioxide (CO2) to extract the lipids from algae and through her work at the Zimmerman lab, led by Julie Zimmerman, associate professor of green engineering, Soh has also created what she refers to as one-pot biodiesel. The idea, as Soh explains it, combines the process of supercritical CO2 lipid extraction with the use of a solid catalyst, all in the same reactor. “You can actually put algae in your vessel and you will be getting biodiesel out,” she says, all of which will improve the efficiency of the process and cut down on the number of steps. 14
According to Soh, CO2 is a great solvent that is ideal for lipid extraction, and it is more environmentally friendly than chlorinated or industrial solvents. The use of CO2 also allows for a more selective extraction process resulting in a better end product, according to Soh. “We found that in our lipid extract, we had fewer pigments and less nitrogen,” which she says “will be better for combustion and it will create less NOx production. Once we transesterified, we were also able to find that the biodiesel we produced had basically the same properties as those produced using industrial solvents.” To this point in her research, Soh says the challenges have been finding the right temperature and pressure conditions
to make the process viable and occur in a reasonable amount of time. In addition to those challenges, she also points to the difficulty in finding a suitable solid catalyst that can be used to drive the reaction after the lipids have been extracted. Zimmerman calls the research based on the idea of a one-pot algae biodiesel method the most significant accomplishment of her three-year-old lab. “The nice thing,” Zimmerman says, “is that you can actually recycle your CO2 so that when you are at industrial-scale and you release your pressure, you can actually capture that CO2 and recycle it for the next extraction.” —Luke Geiver
Sustainability at the Pump Is Here Biodiesel quality assurance at the retail level is important to the SBA Since 2006, the Sustainable Biodiesel Alliance advocated an independent certification system for sustainable biodiesel sold at the pump, and the program is now beginning to take shape. Introduced last year to provide sustainability during music tours, the organization, alongside Small Business Association members in three states, unveiled the first retail locations scored through the program for biodiesel at the pump, marking the first time a sustainability assurance program has been implemented for an alternative fuel at the retail level in the U.S. SBA business members participated in the new system that scores biodiesel based on a host of requirements that include feedstock type and origin, how the fuel was produced and how far it traveled to the point of sale. These questions and many others determine a numeric score for the fuel that
translate into a bronze, silver, gold or platinum rating for biodiesel. The SBA teamed up with Piedmont Biofuels of Pittsboro, N.C., Pacific Biodiesel in Hawaii and SeQuential Biofuels in Oregon where they began offering SBA-scored sustainable biodiesel at eight retail locations in three states in August. In addition to the eight locations, the SBA plans to announce more retail sites across the country throughout the rest of the year. “We’ve been waiting for a sustainability labeling system for years and we’re delighted that our fuel scored at the top,” says Lyle Estill, president of Piedmont Biofuels. “Not all biodiesel is created equal. Thanks to the SBA, the driving public now has a way to discern the difference between one biodiesel and another.” According to SBA Executive Director Jeff Plowman, the purpose of the sustain-
ability scorecard was to provide transparency for consumers to make informed decisions when they purchase biodiesel at the pump. “This scoring tool will help American consumers make informed decisions about their fuel choice, and I’m confident we will see people choosing a more sustainable product,” Plowman says. While the SBA is still working on an independent third-party certification system, the retail biodiesel scoring system is a first step toward accomplishing this goal. The SBA intends to mirror successful certifiable programs that have taken hold in consumer markets such as the Organic Food Certification and Free Trade Certifications and believes sustainable, locally produced fuel is a natural next step in efforts to drive purchasing decisions toward environmentally and socially friendly products. —Bryan Sims
USDA Canola Statistics 2011
PRODUCTION, MEASURED IN $
PRODUCTION, MEASURED IN LB
YIELD, MEASURED IN LB / ACRE
*Data sourced from USDA National Agricultural Statistics Service
Flooding Out Canola Production USDA revises projections, acreage down While canola oil is gaining traction as both a biodiesel feedstock and edible oil, the vast majority of the U.S. crop is grown in North Dakota and Minnesota, where this year’s flooding has affected crop production. The U.S. Canola Association estimates that approximately 90 percent of crops grown in the U.S. are planted in these two states. USDA statistics show a decrease in the acres of the canola planted and harvested this year compared to last year, and significant spring and summer flooding events
in the Northern Plains have clearly played a role in this year’s reduced production. According to the USDA, the area of planted canola in 2011 is estimated at 1.09 million acres, which is down 4 percent from the department’s June estimates, and a 25 percent reduction when compared to last year’s statistics. The area for harvest has been forecasted at 1.07 million areas, which is also 4 percent down from June’s report. Planted area in North Dakota is currently estimated to be 890,000 acres. This is a 5 percent reduction from June estimates and
a 30 percent reduction when compared to 2010. “Excessively wet spring weather conditions prevented canola growers from planting the intended 1.4 million acres forecast earlier this year in the March 30 Projected Plantings Report,” said the Northern Canola Growers Association in a release reacting to the new USDA figures. “Tight supplies of canola are expected to result in continued strong demand for canola.” —Erin Voegele
A Bullish Run Biodiesel RINs remain high
of biodiesel. Producers are making While the 2011 return of the biodiesel tax credit was expected to the highest margins on record, downstream blenders are seeing result in depressed RIN prices, this has not happened. “The current wholesale biodiesel prices 30 to 40 cents under rack, and both of these market for 11D4’s (2011 biodiesel events are tied to the current high RINs) is extremely bullish,” says Sam Gray, a fuel trader with Ft. RIN price. Any producer or blender not seeing a positive bottom line Worth, Texas-based VICNRG UNEXPECTED: Sam LLC. “And, when prices start run- Gray, a fuels trader is completely out of touch. If the ning as they have recently, you must with VICNRG LLC, RIN buying from obligated parties says biodiesel RIN was correlated to producer and look to see how the oil majors are prices this year have blend margins—both at historical going to deal with such increases in done opposite of highs—then there may be some compliance cost.” what he and many others expected. contraction of these margins and According to Gray, many of the obligated parties that are short RIN prices would be much lower. However, short is short, and a short squeeze 2011 biodiesel RINs have not adequately can persist in this market for some time.” developed a wholesale market to distribute product. “Either they develop such markets, Regarding the expectation that RIN pricpurchase other marketers that have developed es would drop with the 2011 reinstatement of the biodiesel tax credit, Gray notes that such markets, or continue to be short RINs and go to the open market to buy complithe RIN prices behaved completely opposite of what he was expecting. He also says that ance,” he says. the real shocker was seeing the overall lack of As we near the next RFS2 compliance domestic infrastructure available to get biodieperiod, Gray says he expects RIN prices to sel blends to the end user. “The industry had continue to climb. “There is simply debeen spoiled for too long with a splash and mand that is staying ahead of supply, and dash model whereby U.S. taxpayers subsidized this demand is tied to mechanical buying Europeans to purchase our fuel and there was rather than producer or blender margins,” he no feeling as to what other domestic blender explains. “Plain and simple, 2011 is the year
margins would have to be to entice marketers to splash diesel with biodiesel,” he says. “Clearly this margin is well above the historic margins seen by petroleum diesel marketers, and the size of this margin this year has guaranteed that infrastructure would be added to achieve necessary blends.” The pending expiration or renewal of the biodiesel tax credit in 2012 will likely impact the price of RINs next year. According to Gray, whether RIN values have to rise proportionally to compensate for the lack of the $1 tax credit will depend, in part, on how much value is carved out of a pound of feedstock in the event the credit vanishes. He also says it’s conceivable that RIN values could be reduced in 2012 due to the wildcard factors of biodiesel imports from Argentina, Malaysia and Indonesia, now that those countries have received permission to export biodiesel to the U.S. and generate RINs. Alternatively, Gray says if the biodiesel tax credit is reinstated for 2012, we’ll simply continue to have subsidy on top of a mandate. “This will ensure that biodiesel feedstocks continue to carve out their profit share of volumes up to and above the RFS mandated volumes of biomass-based diesel,” he says. —Erin Voegele
Setting a Record
PHOTO: DYNAMIC FUELS LLC
How the Dynamic Fuels renewable diesel plant is hitting full stride Dynamic Fuels LLC, a 50/50 joint venture between Syntroleum Corp. and Tyson Foods Inc., achieved a significant milestone in July when Syntroleum reported in its quarterly earnings report that the jointly owned renewable diesel facility in Geismar, La., achieved record production of 5.4 million gallons for the month. While Dynamic Fuels’ Geismar plant has a maximum installed capacity of 75 MMgy, the facility is on pace to produce 65 MMgy if it demonstrates similar production rates to July. “We have focused 100 percent of our energy since last October on bringing our first-of-a-kind advanced biofuels plant up to commercial production rates,” says Syntroleum CEO Gary Roth. “Now that we have accomplished this, we intend to focus our efforts on
PRIMED: The largest stand-alone renewable diesel plant in the U.S., Dynamic Fuels in Geismar, La., hit 5.4 million gallons of production in July. BIODIESEL MAGAZINE z OCTOBER 2011 16
optimizing the plant’s performance, enabling us to produce more and more of the drop-in renewable fuels needed to meet the growing demand for biofuels.” The plant, which broke ground in 2008, uses Syntroleum's proprietary Bio-Synfining technology to produce renewable diesel from nonfood-grade animal fats produced or procured by Tyson Foods, including beef tallow, pork lard, chicken fat and greases. In addition to renewable diesel, the plant is also capable of producing high-value specialty distillate chemicals that can be used in a wide variety of applications such as base oils, solvents and ink toner. —Bryan Sims
The (Bad) Case for Algae?
UVA study shows algae’s high-energy, high-environmental impacts It might be a cliché, but the old saying “it takes money to make money” still applies to algae—sort of. A research team from the University of Virginia has completed a study, “Environmental Impacts of Algae-Derived Biodiesel and Bioelectricity for Transportation,” which indicates that although algae-based biodiesel may be more energy intense than a canola or switchgrass alternative, the end result of using algae-based energy will always be linked to the idea that it takes petroleum to make petroleum energy replacements. Unfortunately, that link, as the study shows, means that algae can have a greater negative impact on the environment because of the petroleum required to turn algae cultures into algae fuels. “This suggests,” the study states, “that both cultivation and conversion processes must be carefully considered to ensure the environmental viability of algae-toenergy processes.” One of the researchers who worked on the study, Lisa Colosi, assistant professor of civil and environmental engineering at the university, might have put the entire study into the best perspective possible. Colosi says that it all comes down to “value-driven questions.” As she puts it, “Do we value driving long distances in SUVs that require a lot of fuel? If so, we need to look at algae so we can produce as much fuel as possible.” —Luke Geiver
INTENSE: University of Virginia researchers say algae’s footprint and energy balance may not be the panacea everyone has hoped it would be.
Hajek Motorsports broke two land speed records in August with a 2011 Ford F-250 Super Duty truck fueled with biodiesel and diesel. The team used a mostly stock truck with a new 6.7-liter Power Stroke V8 and achieved a speed of 182 mph using soy-based B20 and 171.123 using regular diesel. The new records were set at the Bonneville Salt Flats. The prior land speed record for biodiesel was 130.614 mph. According to Ford, every 6.7-liter Power Stroke turbo-diesel can run on a fuel mix containing up to 20 percent biodiesel. To prepare the truck for the event, Ford engineers teamed up with Hajek Motorsports to design and install modifications. Information released on the new land speed records notes that changes were made only to the top-end components of the engine. This includes the high-pressure fuel pump, fuel injectors and turbochargers for more fuel flow. The compression ratio was also modified. “Super Duty has always been the leader in the heavy-duty truck segment,” said Brian Rathsburg, Ford Super Duty marketing manager. “Breaking these records reinforces our leadership position, allows us to raise awareness around the truck’s biodiesel capabilities, and gives us an opportunity to reach out to enthusiasts in a fun and engaging way.” —Erin Voegele
PHOTO: FORD MOTOR CO.
A biodiesel-powered Ford F-250 sets land speed record
NEW RECORD: A 2011 Ford F-250 Super Duty fueled on soy-based B20 has set a new land speed record.
2012 National Biodiesel Conference & Expo: THE biodiesel event of the year Where will you be Feb. 5-8? If you are in the biodiesel business and you said anywhere besides the 2012 National Biodiesel Conference & Expo in Orlando, you may want to reconsider. After the enormous turn around the industry had this year and the huge market potential created by the federal renewable fuel standard, it is imperative you attend the 2012 National Biodiesel Conference & Expo. Last year at this time, we were operating in a high level of uncertainty with the extension of the tax credit languishing in Congress. Last year at this time, the biodiesel industry was mostly shuttered with the limited production headed towards mandated markets in just a handful of states. Last year at this time, the RFS2 had just been implemented and hadn’t had any impact on volumes or renewable identification number (RIN) values, leaving everyone to wonder how the market would react. What a difference a year can make! Last year’s conference was, in fact, a springboard for the industry as production and market demand began to rise sharply soon after. That rise has continued ever since. The U.S. biodiesel industry is on pace for this to be a record year of production. As the RFS2 continues to be the main federal policy supporting the biodiesel industry, it is important to know the ins and outs of the program. Biodiesel’s role as the only U.S. EPA-designated advanced biofuel to reach commercial-scale production nationwide will become increasingly important to the industry for future growth. The National Biodiesel Board continues to work with the EPA to promote a sustainable level of growth in the biomass-based diesel program. The industry is on pace to meet the 2011 standard of 800 million gallons. NBB testified at an EPA hearing this summer on the proposal to increase the biomass-based diesel volume to 1 billion gallons in 2012 and almost 1.3 billion gallons in 2013. We are confident that we can meet these production goals as an industry and will continue the job creation the industry has seen in 2011. The RFS2 was developed to wean our country off foreign oil with cleaner homegrown fuels, and we believe that for the first time the program is working as intended. Last year’s conference sessions had bits of the RFS2 riddled throughout. Two general sessions were devoted to federal policy and RINs, two track sessions hit RFS2 basics and managing RINs in a commodity market, and the conference closed out with a three-hour, in-depth RFS2 workshop. While the
format may be different at the 2012 conference, the importance of the RFS2 and the markets it creates for biodiesel will be just as prevalent. Over the years as the biodiesel industry has evolved, the conference has evolved with it. From the beginnings in 2004 in Palm Springs, where most in attendance were there to learn about this thing called biodiesel, to now, where Donnell Rehagen, our annual conference is ground zero for the Chief Operating Officer, National growing business of biodiesel. As the conference has evolved, it is no lon- Biodiesel Board ger just a place to learn the latest and greatest information affecting the biodiesel industry; it is becoming a place to do business. I have heard from many of our regular exhibitors that the deals they make at our conference in early February affects their company balance sheet for the entire year. The National Biodiesel Conference & Expo is the only event that gathers biodiesel decision makers from across the U.S. and the world to explore governmental policy, technical issues and marketing trends in the biodiesel industry. This conference truly has developed into an annual “meeting of the minds” that includes all aspects of the supply chain from the feedstock, production and petroleum industries. The biodiesel business in 2012 will be done at this year’s conference. Those who are there will be two steps ahead of their competitors. I hope you can join us Feb. 5-8 for this can’t-miss event. See you in Orlando! Donnell Rehagen, Chief Operating Officer, National Biodiesel Board
Register at www.biodieselconference.org/2012 by Nov. 18 and save $100!
NBB New vice president of federal affairs The National Biodiesel Board welcomes new Vice President of Federal Affairs, Anne Steckel. [Ed. note: Check out the FrontEnd article on page 14 of this issue to learn more about Steckel, and look for additional coverage of the NBB federal affairs team in an upcoming issue of Biodiesel Magazine. Also, plan to attend the NBB membership meeting in Washington, D.C., Nov. 14-16.]
Biodiesel sustainability program has new tools in arsenal The National Biodiesel Board Sustainability program works to build science and awareness to ensure that biodiesel production meets today’s needs for environmental stewardship, economic prosperity and quality of life. The industry is tasked with doing this without compromising future generations’ ability to meet these needs for themselves. NBB has recently added a few new tools to use in biodiesel sustainability awareness efforts. In July, a new study from the University of Idaho and USDA showed an increase in biodiesel’s energy balance. The study found that for every unit of energy needed to produce biodiesel, the return is 5.54 units of renewable energy. “This study shows the clear trend that biodiesel production continues to improve when it comes to efficient use of resources,” said Don Scott, director of sustainability for NBB. “No other fuel available in the U.S. comes close to such a high energy balance.” The U.S. DOE and USDA completed two other comprehensive life-cycle assessments for U.S. biodiesel production. The first in 1998 found a 3.2-to-1 energy balance. It was updated in 2009 and improved to 4.56-to-1. “In addition to improved energy efficiency at processing facilities, soybean growers have accomplished greater yields with lower inputs of water and fertilizer per bushel, even as cropland has declined,” said Jim Duffield, USDA senior agricultural economist, who co-authored all three life-cycle analysis studies. “Biodiesel deserves some credit for this progress—the demand it creates is helping to drive the new technologies that make American agriculture more efficient.” Along with the new research data, the NBB sustainability program has added new avenues to get information out to the public. This fall, a Biodiesel Sustainability Blog was launched at www.biodieselsustainability.com. This forum allows NBB director of sustain-
The top three things responsible for the leap in biodiesel’s energy balance from 4.5:1 to 5.5:1 are:
1 2 3
New data from USDA and the NBB show that soybean crushing facilities and biodiesel production plants have become increasingly energy efficient. Soybean farmers have adopted energy-saving farm practices, such has minimum tillage. Increases in soybean yields through new technologies.
ability Don Scott to distribute information to the online community. Studies such as the University of Idaho/USDA energy balance can be distributed online to a much broader audience and create an online dialogue on the sustainability of biodiesel. The biodiesel sustainability blog will also be the online-home for the Next Generation Scientists for Biodiesel, another resource for NBB sustainability programs. The next generation of scientific thought leaders are gearing up to lead America’s energy efforts. Student scientists from all across the country have signed on to be a part of the initiative. The group has formed to demonstrate and grow support for biodiesel among tomorrow’s scientific leaders. To see the list of founding members and co-chairs, or to sign on to the declaration, visit the biodiesel sustainability blog. As biodiesel production continues to increase, it is extremely important that the industry grow in a sustainable, responsible manner. The NBB sustainability program continues to use science and awareness to ensure that happens.
NBB social media booms under Advanced Biofuel Initiative online outreach The main component of the National Biodiesel Board’s newest project, the Advanced Biofuel Initiative, is a comprehensive advertising campaign. The campaign includes a 30-second TV spot, radio and print media ads, and an online outreach campaign. The online outreach campaign works to complement the other advertising forms as part of the overall campaign goal to establish biodiesel as an advanced biofuel among opinion leaders and likely detractors. The three main components for online outreach are Google, Facebook and targeted blog outreach. The goals of the online outreach campaign are to drive “Likes” to the NBB Facebook fan page and visits to www.americasadvancedbiofuel.com, the home page for the Advanced Biofuel Initiative campaign. During eight weeks of the campaign over the summer, Google AdWord buys resulted in 77,855 impressions and 1,596 clickthroughs to the website. Facebook ad buys resulted in 20,873,103 impressions and 5,322 new “likes” on the NBB fan page. Targeted blog ads resulted in 1,438,947 impressions and 1,536 click-throughs to the website. “To get over 22 million online impressions in just under eight weeks of ads is really impressive,” said Kaleb Little, NBB communications specialist. “Online advertising is a very cost-effective way to complement a traditional advertising campaign and a great way to reach a large audience.” One of the biggest changes as a result of the online ad campaign is the makeup of the NBB Facebook fan page. Before the ads began driving traffic the page had around 400 followers. It is now a
The online outreach campaign helped drive traffic to the Advanced Biofuels Initiative landing page and the NBB Facebook fan page.
place where more than 6,000 biodiesel enthusiasts exchange information on a daily basis. “The Facebook fan page is another opportunity for NBB to get the message out about biodiesel being America’s advanced biofuel to a constantly growing audience,” said Little. “As technology grows, it is increasingly important to have a voice in the online community.” NBB’s Advanced Biofuel Initiative is designed as a three-year project to establish biodiesel as an advanced biofuel among educated audiences. The project began in January and is slated to run through December 2013.
NBB, petroleum industry team up in Texas for regulation change The biodiesel industry scored a win in Texas with a change made to a motor fuel tax reporting rule in the state. The change makes it easier for petroleum companies to take advantage of a tax exemption for blended biodiesel. The percentage of biodiesel blended with petroleum diesel fuel must be disclosed on invoices, storage tanks and retail pumps. To receive the tax exemption for biodiesel, the blend percent previously required reporting to the nearest tenth of a percent. The amendment allows for reporting to now be to the nearest whole percentage or whole gallon. The change was a result of efforts by the National Biodiesel Board along with NBB member company Renewable Energy Group Inc., the Texas Oil and Gas Association, Valero Energy Corp., and the Texas Petroleum Marketers and Convenience Store Association. 20
“The change in the tax code language in Texas is a great example of cooperation among the biodiesel industry, petroleum industry and state regulators,” said NBB Chairman Gary Haer. Haer added that many obligated parties weren’t taking advantage of the tax exemption because it was simply too complicated to track, record and report the biodiesel blends to such a small percentage, and frankly impossible to enforce. “This seems like a small change on paper but will make all the difference in real-world reporting,” said Haer. “It makes it much easier for diesel retailers to offer biodiesel blends and will likely lead to increased markets in Texas.” The rule change, effective Aug. 1, was posted in the Texas Register. The NBB State Government Affairs program works on biodiesel issues, both legislative and regulatory, in all 50 states.
Biodiesel Ambassadors program launches with top experts volunteering A new program is mobilizing the nation’s top third-party biodiesel experts to contribute to the biodiesel industry’s education efforts. The National Biodiesel Board launched the Biodiesel Ambassadors program in August. The Biodiesel Ambassadors is a group of volunteers independent of the biodiesel industry representing a broad array of stakeholders. The Ambassadors include fleet managers, academics, scientists and more. Its mission is to help leaders stay informed about the biodiesel industry in the context of technical, market and sustainability issues, and expand the reach of NBB’s education and outreach. Founding members of the Biodiesel Ambassadors include: • Theresa Alleman, National Renewable Energy Laboratory. • Joe Biluck, Medford, N.J., School District. • Chris Case, Pictured Rocks National Lakeshore. • Jim Duffield, USDA. • Jim Evanoff, Yellowstone National Park. • Michael Ferrante, Massachusetts Oilheat Council. • David Harris, Harvard University. • Ramiro Lopez, City of Irving, Texas. • Robert McCormick, National Renewable Energy Laboratory. • Angela Tin, American Lung Association of the Upper Midwest. Ambassadors may be called upon to speak about biodiesel at conferences and meetings, mentor potential users, provide input on biodiesel programs and messaging, and work within communities
Founding Biodiesel Ambassador Ramiro Lopez shows off the biodiesel fleet he manages in Irving, Texas.
or professional circles to enhance biodiesel awareness. The NBB will provide ambassadors with materials such as template PowerPoint presentations, briefing documents, talking points, and exclusive webinar trainings/updates from NBB. The program, led by NBB, is supported by the Biodiesel Alliance through the United Soybean Board. If you would like to nominate someone for this important effort, please e-mail Jenna Higgins Rose: Jenna@RoseMedia.biz.
NBB members guide the biodiesel industry year-round Over the course of the year, National Biodiesel Board members have many opportunities to set the direction of their trade association. While overall industry priorities are set once a year, there are many opportunities throughout the fiscal year to communicate with NBB leadership and staff through less formal avenues. One platform for feedback is regional membership meetings. NBB leadership has conducted a number of meetings across the country with the goal of providing regional perspective to the national issues the industry is facing and to offer an opportunity for members to provide feedback directly to NBB leadership. “The meeting in New York offered an invaluable opportunity for one-on-one interaction with our industry’s trade association staff,” said NBB member Steven Levy, Sprague Energy. “It is nice to be able to put a face with the organization and to see that they really care about our input and local issues.” Staff participation varies depending on key issues in a region, but often includes CEO Joe Jobe and any number of NBB program managers and staff members. “The RFS2 and the biodiesel tax incentive are important to all producers, but the other major issues could vary greatly depending on where a producer is located,” said Doug Whitehead, NBB
membership director. “If you are producing in California, your top issues could be very different than someone producing in Texas or New York. We try very hard to address those regional needs as well as the greater national issues.” The next opportunity for participation is at the NBB board meeting Nov. 14-16 in Washington, D.C. NBB conducts its annual review and update to the organization’s Resolutions and Position Handbook. NBB members have an opportunity prior to the November board meeting to review the current industry positions. The agenda at the meeting then offers time for committee considerations and, ultimately, a governing board vote on potential changes to existing resolutions and the adoption of new resolutions. Members constantly provide input throughout the year to NBB through informal communications as well as with staff and board members. “If you have a question or input, I would encourage you to pick up the phone and call the NBB office,” Whitehead added. “As a staff, we are here to serve the needs of the membership.”
A new fuel terminal in the Minneapolis metro area will offer biodiesel-blended fuels. The Rosemount Clean Energies facility, which sits on a 50-acre industrial site, will offer biofuel injection blending. According to information released by the company, the new site will provide local marketers and end-users increased savings and flexibility to customize products. The terminal, which features a rail spur and 400,000 barrels of fuel storage capacity, is able to receive and ship product via rail, truck, tank and pipeline. The site also includes insulated, heated tanks for biodiesel. Minnesota will increase its biodiesel mandate from 5 to 10 percent next spring. A court case in Canada regarding the 2008 release of methanol by a High River, Alberta-based biodiesel producer has finally been resolved. On Aug. 16, Alberta Environment announced that the Provincial Court of Alberta has fined Western Biodiesel Inc. $160,000 under the province’s Environmental Protection and Enhancement Act for releasing wastewater containing methanol into the environment, and for providing false or misleading information to investigators. According to Alberta Environment, Jason Freeman, a former manager at the plant, pled guilty to directing the release of contaminated wastewater and knowingly providing false or misleading information to investigators. He was sentenced to four months of house arrest. A statement released by Alberta Environment notes that Freeman directed workers to release the methanol-laden wastewater on Oct. 27, 2008. The flammable waste was released onto the ground at the back of Western Biodiesel’s property. The statement further explains that a welder, who was unaware of the release, ignited the wastewater the following day. While nobody was injured, Alberta Environment noted that Freeman denied that a release had occurred
Companies, Organizations & People in the News
when investigators arrived in response to an anonymous complaint. Brazilian oil and gas conglomerate Petrobras, through its wholly-owned biofuel subsidiary Petrobras Biocombustivel, plans to invest $2.5 billion in increasing biodiesel and ethanol production between 2011 and 2015. The total amount is part of $4.1 billion earmarked for its total biofuel business, with its business plan calling for investments totaling approximately $224.7 billion in the next five years. Although increasing ethanol production will be a priority for Petrobras—accounting for nearly 76 percent of the total investment in biofuels production in the four-year span—the company intends to invest $600 million to bolster its biodiesel and agricultural supply segments in hopes of maintaining a 25 percent domestic market share in the coming years. This figure, according to the company, would take into account the organic growth in demand for diesel and Brazil’s B5 regulation currently in effect. In a move that would strengthen its European oilseed processing, food manufacturing and biodiesel capabilities, Decatur, Ill.-based agribusiness giant Archer Daniels Midland Co. signed a public tender offer to purchase a majority share in Elstar Oils S.A., a Warsaw-listed company that specializes in the production of quality refined vegetable oils and fats for the food industry and biodiesel market. The purchase is subject to approval by relevant antitrust authorities. Elstar Oils, located in northern Poland, operates a rapeseed crushing, refining, solid-fat packaging and oil bottling facility in Czernin and a 100,000-metricton-per-year biodiesel facility in Malbork.
Elstar’s core business activity primarily involves rapeseed and other vegetable oils production where the products are directed at the domestic, business-to-business market and industry customers throughout the country. The company’s subsidiary, Biopaliwa S.A. located in Malbork, has produced biodiesel since 2008. In that same year, the Elstar Group completed the last stage of a four-year-long investment process that resulted in a doubling of annual rapeseed crush capacity from 200,000 to 400,000 metric tons.
PHOTO: RENEWABLE ENERGY GROUP INC.
DELIVERY ONE: Trail’s Travel Center picked up its first biodiesel fill from REG Albert Lea, in late August.
Biodiesel is now available via truck and rail from Renewable Energy Group Inc.’s newly acquired facility, REG Albert Lea LLC. The first truckload of biodiesel exceeded ASTM D6751 and was picked up for the Trail’s Travel Center truck stop in Albert Lea, Minn., along I-35. Customers have the option to pick up either B99 or B100 at the 30 MMgy facility. REG was the general contractor and manager for the refined vegetable oil feedstock biodiesel plant that began production in April 2005. With
BUSINESSBRIEFS Sponsored by
immense multifeedstock technology and upgrade experience, REG officials noted the facility could be upgraded in order to process a wide variety of lower-cost natural fats and oils including used cooking oil, inedible corn oil from ethanol production, and high free fatty acid materials. Ontario-based biodiesel producer Biox Corp. secured funding from Farm Credit Canada to upgrade its existing 67 MMly (17.7 MMgy) biodiesel plant located in Hamilton, Ontario, to improve the quality of glycerin from crude to technical grade. Farm Credit Canada agreed to replace Biox’s existing term debt loan with a new loan that will include approximately $4.8 million for the final design and construction costs of a standalone glycerin refinement facility co-located on site of the Hamilton biodiesel production plant. Biox has already completed pilot plant testing and evaluations of its glycerin refinement solution. The mechanical, piping and structural upgrades to the Hamilton facility are scheduled to coincide with the company’s fall semiannual maintenance shutdown. Installation of major equipment is expected to begin in early 2012 during its spring maintenance. The company is working to market its own technical-grade glycerin, which is used in a variety of industrial applications such as chemical and pharmaceutical manufacturing. Artisan Industries is offering a vertical version of its mechanically aided thin film processor, the Rototherm V. The company cites three main benefits to using a vertical thin film processor as opposed to a horizontal
version. First, it minimizes floor space required. Second, it’s cheaper to build and operate. Third is the size to which either can be built. A horizontal version can total only 200 square feet approximately, while a vertical unit can be built to 1,500 to 2,000 square feet. A drawback of the vertical versus the horizontal processor is the ability of the vertical design to process the concentration to a dry state. The horizontal version can completely dry the material, while the vertical units cannot go as far. The Rototherm V is suited for concentration, evaporation and stripping applications in the food, chemical, oleochemical, pharmaceutical and polymer industries, and the machine is able to work with high-viscosity, heat-sensitive and solids-containing materials.
Redwood City, Calif.-based fuel retailer Propel Fuels signed a multi-year partnership with Pacific Convenience and Fuels to co-locate Propel’s network of green-built, self-serve filling stations—called Clean Fuel Points—with PC&F gas stations and convenience stores throughout the Western U.S. Propel and PC&F have identified more than 80 potential locations for Clean Fuel Points throughout PC&F’s network of 300 stations in California, Washington, Oregon and Colorado, which operate under various brands including Chevron, 76, Conoco and Circle K. Propel’s partnership with PC&F is expected to provide consumer and fleet vehicles across the Western states with greater access to biodiesel and other renewable fuels and enable both companies to accelerate their respective expansion plans.
The prize for this year’s winner of the Google-sponsored Green Flight Challenge will be $1.65 million, the largest ever for the competition. NASA will pay the bill for the prize for the competition, which requires participating teams to travel at least 200 miles in the air going at least 100 mph and reaching at least a 200-passenger milesper-gallon level. A research and flight testing organization known as the CAFE Foundation (Comparative Aircraft Flight Efficiency) will conduct the event, which will include several innovative aircrafts fueled by everything from electric power to biodiesel. In addition to the main prize, teams will also be eligible to win a biofuels prize and a special Lindbergh prize for the quietest aircraft, according to CAFE. Teams competing for the biofuels prize must achieve at least 80 mph and get at least 160 mpg. Two teams from California will use a biodieselelectric hybrid engine for power, and one team from Montana will run straight biodiesel. The only other biofuel team eligible to win the $150,000 prize, is a team from Kansas that will run ethanol.
A new study by Lux Research Inc. has found that although investment in alternative fuels remained flat last year, funding for feedstock-agnostic and end-product flexible technologies was more common. In 2010, investors contributed $930 million to alternative fuel startup companies, which represented a fouryear low. Conversely, investment dramatically climbed to an all-time high of $698 million for companies that are flexible in terms of feedstock and end products. Lux Research notes that as this trend continues, startups with less flexible technologies will be forced out of the industry. To complete the study, Lux Research compiled a comprehensive database of all the investments in the alternative fuels space since 2004. The study also contrasted and compared investments that have been made by corporate investors with those made by institutional investors such as private equity firms and venture capitalists. SHARE YOUR BUSINESS BRIEFS To be included in Business Briefs, send information (including photos, illustrations or logos, if available) to: Business Briefs, Biodiesel Magazine, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You may also fax information to (701) 746-5367, or e-mail it to rkotrba@ bbiinternational.com. Please include your name and telephone number in each correspondence.
Building Out for Bioheat Northeast infrastructure developments facilitate a larger market for Bioheat BY ERIN VOEGELE
The market for biodiesel-blended heating oil is growing swiftly as oilheat dealers look for ways to green their offerings and supply a product that offers comparable economic benefits to natural gas. The lack of proper storage and blending infrastructure in some Northeast markets, however, may make local oilheat dealers less willing and able to offer the product to customers. Fortunately, several companies in the region are taking initiative and investing in infrastructure that promises not only to serve today’s demand, but provide valuable transportation, blending and storage services once biodiesel mandates in the region ramp up, creating additional demand for the product. Paul Nazzaro, petroleum liaison for the National Biodiesel Board, notes there are several different ways that an organization can approach biodiesel blending. “Any petroleum terminal can take control of biodiesel and either blend it directly into a diesel fuel or heating oil tank and make up a blend onsite,” Nazzaro says. “Or they can go to electronic injection and handling systems to bring it in, store it in a fuel vessel, and on-demand bring a specific blend—B2 to B99.9— to the rack. That’s where we want to go as an industry. We want the electric rack blending facilities, because they, without a shadow of a doubt, will ensure the industry the most competitive, operationally sound blend.” OCTOBER 2011
Nazzaro points out that electronic blending equipment is expensive, though. In fact, adding that type of infrastructure to a facility to handle biodiesel can cost anywhere from $750,000 to several million dollars. A company or organization needs to have a strong business case for making that type of investment. “The spread runs a parallel track with how much volume is going to go through the terminal,” Nazzaro says. It is much easier to build a business case for making the investment in areas where biodiesel mandates and incentives have already gone into effect. According to Nazzaro, the NBB estimates there are between 87 and 90 electronic blending facilities nationwide for biodiesel today, which is a small minority of the roughly 1,200 core terminal loca- BETTER BLEND: Sprague Energy’s new terminal features 132,000 gallons of bulk storage and state-of-the-art rack injection, ensuring a homogeneous blend of fuel. tions that are estimated to be located across the U.S. The vast majority of the locations that do blend biodiesel electronically are located in and structure issues with getting good product into a series of small dealaround states and municipalities with biodiesel mandates in force, ers,” says John Huber, president of the National Oilheat Research such as Minnesota. “Every key pipeline terminal [in Minnesota] with- Alliance. out a doubt has to have biodiesel configured in their terminal,” adds Huber points out that proper infrastructure isn’t just important Nazzaro. from a handling point of view, but it also plays a role in ensuring fuel The Northeast oilheat market offers some distribution chal- quality. “We have to make sure we have a quality biodiesel product lenges not typical to the fuel transportation market. Specifically, a that is ASTM qualified coming in, and that it’s blended uniformly,” large percentage of heating oil dealers in the region is relatively small, Huber says. “That, to an extent, requires significant infrastructure family owned operations. “In the Northeast, we obviously have infra- improvements at the significant terminals on the East Coast. I think
PHOTO: SPRAGUE ENERGY
INFRASTRUCTURE have identified the business opportunity the city’s pending biodiesel mandate will create and have made investments to serve the growing Bioheat market. Infrastructure development, however, is not limited to inline blending. One company in particular has invested in rail-to-truck transloading infrastructure to more economically bring biodiesel to the region.
PHOTO: SPRAGUE ENERGY
In May, Ultra Green Energy Services LLC celebrated the grand opening of a new biodiesel transload facility, located on a site owned by the Morristown and Erie Railway, in Whippany, N.J. The facility features rail-to-truck transloading, red dye capabilities and is designed to handle CELEBRATING SUCCESS: Attendees at the opening of Sprague Energy’s biodiesel and bioheat handing and store up to 50 railcars at a time. location at the Sunoco Logistics Newark Terminal in New Jersey pose by a biofuel delivery truck. According to Michael Cooper, UGES’s vice president and director of sales and marketing, profit margins we all understand that, for the size of the market we are talking about, in the fuel industry are directly related to transportation costs. The having infrastructure improvements made at the terminal level are new transloading facility developed by UGES has been specifically critical just because they a have the ability to do quality control on the designed to enable affordable biodiesel handling and delivery. This fuel coming in, know who the supplier is and have the correct type economic benefit is due, in part, to UGES now being in the posiof equipment to keep the biodiesel at the right temperature, and then tion to manage its overhead costs for biodiesel. “In Whippany, in our facility, we have a fixed cost of doing business,” Coopers says. have it blended uniformly into the heating oil.” One area where biodiesel infrastructure development is tak- “We have the transload costs. We have the facility that we own, and ing place is the New York City metro region. Several organizations the equipment that we own. We can store our railcars there as long
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INFRASTRUCTURE as we need. We’ve established those costs and we know those costs, and we can sell forward using those costs whereas at many other locations in the region, there would be a higher cost to transload, a higher cost to transport and a higher overhead.” UGES has added several pieces of equipment to the site that make it uniquely equipped to handle biodiesel. “Ultra Green has built a self-contained heating and pumping apparatus,” Cooper says. “We are able to
heat two railcars at a time and then those get moved to the pumping area, where trucks come in and load from the railcar.” The pump, which can itself be fueled with biodiesel, can move 600 gallons of biodiesel per minute. Cooper also notes the importance of a truck scale his company has added to the location. “Biodiesel has a different characteristic than diesel fuel” regarding expansion and contraction related to temperature, he
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says. “In New York, all product is adjusted to 60 degrees for volume, and biodiesel is a different volume at 60 degrees than diesel fuel. So by using a scale, we can absolutely be sure how many gallons of product [are loaded into a truck] because the weight of the product can be calculated by the specific gravity.” According to Cooper, the vast majority of the fuel that flows through the station will be transported to biodiesel storage tanks at regional fuel terminals for blending. It is possible some customers may splash blend on site, he notes, adding that UGES has two more biodiesel rail-to-truck transloading facilities in the works and is looking for more possible infrastructure development opportunities in the Northeast region as well.
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Whether biodiesel enters the Northeast via rail, barge, pipeline or truck, the fuel needs to be stored and blended. In June, Sprague Energy announced the opening of a new biodiesel and Bioheat handling location at the Sonoco Logistics Newark Terminal in New Jersey. “This will be the largest biodiesel blending terminal in New Jersey for all types of rack loading,” says Steven Levy, managing director of Sprague. The facility has the ability to provide multiple biodiesel and Bioheat blends for ultra-low sulfur No. 2 diesel and heating oil. In the future, the terminal will also handle ultra-low sulfur kerosene No. 1 diesel fuel. The location offers B2, B5, B10, and B20 blends. It features 132,000 gallons of bulk storage and utilizes state-of-the-art rack injection. According to Levy, injecting biodiesel with the automated rack blending system saves time and money while ensuring a homogeneous blend. Biodiesel blended at the location will be sourced from a variety of producers, including those manufacturing product using vegetable oil, recycled cooking oils or animal fats. According to Levy, Sprague expects government and private fleets to initially make up a significant portion of the demand for biodiesel-blended fuel from the
INFRASTRUCTURE terminal. However, he also notes the location will likely be a big player in the residential heating oil market. “This particular facility is a key strategic point because it allows distribution of all types of distillate fuels to central and northern New Jersey,” Levy says. “We were already selling regular distillate product out of this terminal. Now it gives us the opportunity not only to have the biodiesel readily available, but it also reduces our trucking costs as well as our customers’ trucking costs so they don’t have to go long distances to obtain a specific blend that they might require. Newark and central New Jersey are very high-demand areas, so you will find wholesalers who will buy from Sprague. We deliver to end users but we also have our wholesale customer base. It just opens up a whole new world for them.” Like UGES, Sprague is looking to expand its biodiesel infrastructure. “We are looking at many other terminals,” Levy says. The New York metro area and its surrounding regions are not, however, the only markets in the Northeast where biodiesel infrastructure is being developed. At least one company in Vermont recently made an infrastructure investment. Bourne Energy was recently awarded a $40,000 grant through the Vermont Sustainable Jobs Fund to support the development of injection blending infrastructure for biodiesel that will allow the company to supply B5, B10, B20 and B99.9 blends of fuel. In an effort to utilize locally sourced products, the company’s president Peter Bourne noted the facility will blend biodiesel manufactured in New Hampshire using recycled cooking oil. “We try to get our supplies as local as we can to support the local economy, and also for the carbon footprint, so long as it is financially practical,” Bourne says. Prior to the addition of the blending infrastructure, Bourne says biodiesel was splash blended by his company’s wholesaler. “We were having to buy it preblended at a B2 or B5,” Bourne says. “Now we’ll be able to blend it to whatever the customer wants or whatever we want to put out there to the consumer.”
Matt Cota, executive director of the Vermont Fuel Dealers Association, also notes that the Vermont Sustainable Jobs Fund has been working with farmers who are growing oilseed crops to help them establish small-scale, on-farm biodiesel production. “Vermont fuel dealers envision a time in the future were we can produce much of this product on the farm locally,” Cota says. “Vermont is a rural state and the idea that farmers are diversifying, and the
family run fuel dealers are also diversifying, and that at some point in the future the fuel dealers could pick up their fuel on the farm and deliver it throughout their town, is a wonderful vision for sustainability.”
Author: Erin Voegele Associate Editor, Biodiesel Magazine (701) 540-6986 email@example.com
Brian Roberts, president of the Cowichan Bio-Diesel Cooperative, shows attendees of the Collective Biofuels Conference in Duncan, Vancouver Island, British Columbia, how the co-opâ€™s new cardlock biodiesel pump works. PHOTO: BRYAN SIMS, BBI INTERNATIONAL
Streamlining Downstream Delivery Selling direct can improve a small-scale producerâ€™s bottom line BY BRYAN SIMS
DISTRIBUTION Economically, the prospect of producing biodiesel on a small or community scale certainly comes with its challenges. Aside from producing biodie-
One of the biggest advantages about the idea of a direct marketing approach for blended product or B100, according to Hill, is that it can accelerate a producer’s ability to get product out more rapidly to generate revenue. Additionally, direct distribution, he adds, also allows a producer to customize the scale of transactions and the type of customer interaction much better than if a producer relied on distributors. “I think that it’s actually more important for a small producer to go direct than a large producer, because a small producer is going to take longer to build up critical mass,” Hill tells Biodiesel Magazine. “It just takes longer to do that. It also gives you that ability to call your local mayor to get people who will come and they’re going to have a relationship with you and it might get you a little bit more margin in the end. A relationship is an opportunity to build a brand.” Some producers, like Midlands Biofuels LLC, a 300,000-gallon-per-year biodiesel plant in Winnsboro, S.C., prefer to work with third-party distributors to deliver their blended fuel to municipalities and small businesses. In addition to relying on distrib-
PHOTO: PROMETHEAN BIOFUELS
sel, however, producers are faced with unpredictable swings in feedstock price and availability as well as fees associated with equipment maintenance, transportation, administration, permitting and numerous other ancillary expenses. Not only can upstream and midstream costs cut into the bottom line of a small producer, but downstream costs can equally make or break an operation if an effective distribution model isn’t in place to support growth and development of the business. Because the operation is demand-driven, an increasing number of small-scale biodiesel producers have employed, or are at least considering, unique distribution approaches that allow for speedy, cost-effective delivery of B100 bulk or blended product to customers— sometimes without relying on brokers or distributors. Failing to control or at least possess some ownership of downstream distribution of product could translate into
biodiesel producers being at the mercy of the feedstock suppliers. Typically, biodiesel is picked up at a facility by a distribution company, blended at a rack with a computerized system, and then brokered and distributed to local retail fueling stations where pockets of supply might be limited. When biodiesel is not offered at a rack, fuel distributors that want to offer it typically splash blend it themselves and maintain their own storage equipment. While rack blending biodiesel might offer significant benefits to fuel distributors and potential consumers because of the $1-per-gallon blenders tax credit in place, effectively employing the direct sales approach might carry with it several advantages, depending on a producer’s resources and cash flow situation, according to Todd Hill, president and founder of Promethean Biofuels Co-op Corp., a 2.1 MMgy biodiesel facility in Temecula, Calif., that uses waste vegetable oil as feedstock. While Promethean Biofuels is currently relying on distributors to get its biodiesel out to customers, Hill says he would like to employ the direct sales approach.
LOADING UP: A tanker truck fills up at Promethean Biofuels’ 2.1 MMgy facility in Temecula, Calif., for local distribution.
DISTRIBUTION utors, however, Midlands Biofuels also offers B100 on-site where customers can fill their tanks. While relying on distributors might be considered burdensome for some, co-founder Brandon Spence finds that working with a distributor allows his company to focus strictly on biodiesel production while it streamlines the billing process. “Another advantage of working with a local distributor for us,” Spence says, “is that we get on a good production schedule. Our production schedule is based on a predetermined amount that’s usually on a weekly basis.” According to Hill, a direct distribution approach could be an advantageous proposition for those who are, or are considering, delving into blending biodiesel with diesel fuel in order to monetize RINs and other state incentives. Doing so, he says, might give a producer more ownership of the end product rather than passing on the incentive to the blender at a rack or distribution terminal. “If you want to commoditize your RINs, that is not a B99 solution—that’s a B80 solution,” Hill says, cautioning that small producers should evaluate appropriate administrative resources, personnel and funding in order to maintain accurate RFS2 reporting requirements before considering a direct sales approach for blended product. “From that perspective, you also need to perhaps have some metering equipment, depending on where you are, to make sure you can guaranDIRECT APPROACH: tee that when you say it’s B80, it really is B80. Todd Hill, president Regardless, you still need to have a process and co-founder of Promethean in place that allows you to say that you’re deBiofuels, says, livering a known quantity of biodiesel into a even though known quantity of diesel fuel and that there’s Promethean is not there yet, a direct reasonable assurance that we’ve got good marketing approach mixing. You’ve got to keep that inventory can accelerate a separately.” producer’s ability to move product and For producers like Cowichan Bio-Diesel generate revenue. Co-op, a member-owned small-scale producer located in Duncan, Vancouver Island, British Columbia, deciding on the best model to market and distribute biodiesel from its 365,000-liter-per-year (96,000-gallon-per-year) production facility was never a question, according to President Brian Roberts. For six years, the member cooperative, which officially started up its Bing’s Creek Biofuels Facility on the site of the Cowichan Valley Regional District Solid Waste Management facility in July, had been supplying biodiesel from waste vegetable oil to its members in jugs through local farmers’ markets. In response to increased demand for biodiesel, the company now offers B100 to its members at a cardlock fuel pump. Cowichan Bio-Diesel sold about 5,000 liters at the cardlock pump since it opened in November 2010, and “we could’ve sold more,” says Roberts. While selling biodiesel directly to its member-customers was a necessary—and not an optional—approach for Cowichan Bio-Diesel, Roberts says that it serves as a springboard for expanding customer relationships outside its core members.
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DISTRIBUTION erative is a really good vehicle for being able to develop something like what we have,” Roberts adds. “It kind of provides a neat cocoon to work within and it’s kind of a little forgiving along the way.”
PHOTO: MIDLANDS BIOFUELS
Straight from the Factory
PRODUCTION FOCUSED: Midlands Biofuels founders “Bio” Joe Renwick, left, and Brandon Spence say working with local distributors allows them to focus on fuel production and streamlining billing.
“The cardlock itself is probably a more expensive option because we’re focused on trying to distribute to a number of smaller consumers of the product,” Roberts says, “but now that we’re growing, we’re starting to look at fleets more and they’re starting
to approach us.” He adds that the barrier for biodiesel entering a given community or municipality is much less when selling direct compared to relying on distributors to supply its customer base. “A direct marketed community coop-
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Sirona Fuels, a 1.5 MMgy plant in Oakland, Calif., is offering B99 to its customers straight out of pumps installed on the premises of its production facility. It’s a model that’s working after previously relying on selling biodiesel to distributors and retailers for two years, according to President Paul Lacourciere. By selling biodiesel direct, Lacourciere says he’s been able to offer biodiesel cheaper than what’s being sold at a regular retail station. Employing this approach, he adds, mitigates the core pressure points that come with incoming feedstock costs and fluctuating diesel prices downstream. Lacourciere says Sirona Fuels monetizes RINs and also began monetizing California Low Carbon Fuel credits.
PHOTO: SIRONA FUELS
ON-SITE FUELING: Sirona Fuels President Paul Lacourciere says selling direct to customers from its on-site pump reduces customer costs by $500 to $5,000 a month.
“My retail price of biodiesel tends to run anywhere from 10 cents to 70 cents below diesel prices,” Lacourciere says, adding that selling blended biodiesel straight from the site of the production plant could, or should, become more commonplace in the industry. “From a business model standpoint, I actually think it’s the best way to go because by putting distributed energy production facilities in your community, you keep more dollars in your community,” Lacourciere
says. “The margins are better for the local producer, and the prices are better for the suppliers and for the fuel customers. By having local production, we keep more money in the community and everyone can be enriched by that.” Author: Bryan Sims Associate Editor, Biodiesel Magazine (701) 738-4974 firstname.lastname@example.org
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“I’ve saved my customers anywhere from $500 to $5,000 a month,” Lacourciere says, adding that his company was able to sell 1,000 gallons to new customers in just the first 10 days of offering biodiesel at its plant. “That’s a huge win for my customers,” he says, “and that’s a huge win for the environment because they’re going over to an environmentally friendly fuel—and that’s a win for me because I can get a price that’s at least reasonably profitable, at least for making margin, and [I can] stay in business that way.” Like many small-scale producers, the challenge is to maintain equilibrium when it comes to supply of biodiesel relative to demand for customers. While Sirona Fuels is capable of producing 80,000 to 100,000 gallons each month, demand is outstripping supply, according to Lacourciere, “I’ve got orders for probably more than 20,000 gallons of fuel that I can’t supply,” he says. While local biodiesel production may carry with it inherent benefits in avoiding transportation costs, selling direct from the production facility, Lacourciere says, has enabled his company to improve the margin while selling biodiesel for significantly less compared to what it would otherwise be priced at a retail station.
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Logistics Can an intricate modeling system solve the problems of getting biofuels to the pump? BY LUKE GEIVER
LOGISTICS The difference between running a biodiesel blend in the 850-unit fleet of AthensClarke County, Ga., and not, all came down to roughly the distance of a marathon, or 26.6 miles. In 2006, Steve Hinsch, fleet management superintendent for the Athens-Clarke County fleet, began running a B5 blend as part of a pilot program, eventually increasing the blend to B10. “This program went well, and with very few fueling issues for approximately two years,” Hinsch says. In 2008, however, after two successful years running biodiesel blends in his fleet through that pilot program, Hinsch was forced to stop using biodiesel. What happened is a reminder that, for all of biodiesel's production efficiencies, novel catalysts, feedstock pretreatment and tax credits, there is always one overriding factor that can dwarf everything else. “The cost then became prohibitive,” Hinsch says, “when our local vendor dropped biodiesel due to lack of adequate sales.” The cost Hinsch refers to wasn’t the price of biodiesel, though, it was the cost to transport the biodiesel he had purchased for his fleet from the production site to his fueling station at fleet headquarters. “Our closest vendor was then about 80 miles,” Hinsch explains, and because of the additional costs related to the added transport distance, the Athens-Clarke County fleet stopped using biodiesel. Luckily, Hinsch’s fleet, which consists of a multitude of vehicles and equipment including trailers, concrete saws, large trucks and heavy equipment, is running biodiesel again, however, thanks to Down to Earth Energy, a biodiesel producer that just recently came online. More importantly, this producer is only about 26.6 miles away. Hinsch began working with the University of Georgia on a grant to research and use certain diesel particulate filters, and, as Hinsch says, one afternoon at the university, the operators of the Down to Earth Energy facility “happened to be in a meeting that preceded our meetings.” Introductions were made, Hinsch says, and he 38
later met with them to gather preliminary information on their operation. “I was immediately taken by their story, vision and passion,” he explains, but even more so, the dollars and distance were right. Now the two are working together. While the story of Athens-Clarke’s biodiesel usage may have ended well, thanks to Down to Earth Energy, there are many similar fleets throughout the U.S. that continue to face the same problem Hinsch did: trying to make the price of biofuels transport and logistical issues make sense when it comes time to fill out the yearly budget. Nearly 170 miles away from Hinsch and the Down to Earth Energy facility in Georgia, Professor Jae-Dong Hong of South Carolina State University and his team are getting closer to having the information they need to create a tool that will help fleet managers calculate the costs of biofuels logistics—and include more biodiesel in their budgets—using the most “regret-free” biofuels logistics plans.
The Cost of Getting Biofuel to the Pump Hong, an industrial and electrical engineering professor at SCSU, will be joined by other economics professors at the university to conduct the three-year study, which will be funded by a $449,921 grant awarded by the USDA’s National Institute for Food and Agriculture. The goal of the research is linked to the larger intent of the James E. Clyburn University Transportation Center at SCSU, which is to establish practical and economical ways to reduce logistics costs of transporting fuels. Hong estimates that nearly 25 percent of the cost to make biofuel is related to transportation, which he says must be minimized. Yaunchang Xie, a member of Hong’s team, says that biofuels “get a lot of subsidies” that ultimately help lower the cost of biofuels used today. In recent years, Hong explains, a number of bioenergy studies have been conducted, most of which focus on either the optimization of bioenergy production facility location or feedstock collection, storage or transport operations. Hong’s
work sets out to combine the different areas, starting with the investigation of how a biofuels logistics network could be integrated with optimal feedstock areas, collection centers, blending stations, transportation availability and possible inventory quantity strategies. “In this research,” he says, “we will develop a novel formulation for an integrated, robust design of biomass and biofuels logistics network. The model,” he adds, “will be able to capture location, transportation and inventory decisions in a multi-period planning setting. This model will also be able to consider the uncertainties in biomass supply.” Although the task to complete the network design might seem daunting, the end result, according to Hong, could be significant. “Our model will be instrumental not only in producing solutions to biomass and biofuels logistics problems, but also in developing and testing various bioenergy policies such as biomass pricing, supply-demand matching and various incentive programs to encourage farmers’ participation.” When Biodiesel Magazine first spoke with Hong, he was on the campus of Texas A&M working on this research with another member of the team, Halit Uster, an optimization model researcher and industrial and systems engineering associate professor. Uster will help Hong develop a biofuels logistics model that will feature five major components. The first major feature will focus on the uncertainties involved in biofuels logistics modeling, including the uncertainties in farmer participation and biomass yield, establishing a number to quantify the upper and lower limits of participation levels and biomass yields. The second area of the network model will essentially model the amount of regret a certain logistical model or approach would bring the user, or, in other words, how successful or unsuccessful a certain approach would be. The regret is defined as the difference between the optimum objective value of a scenario and the objective value for the robust solution,
LOGISTICS according to Hong. To find the level of regret, Hong says, his team will not only take into account the biofuels being transported, the inventory and storage cost of that particular fuel, but more importantly, the model will look at how those types of factors change from situation to situation. The third focal point of Hong’s research involves creating a model that can “handle” multiple periods of time. The model, he explains, could potentially generate a robust solution for each period of time. “The solution includes robust assignment of farms and collection centers, vehicle routing and inventory decisions for each period.” The model can be reoptimized when accurate and reliable parameter values such as biomass yield for a future year (or period) is made available. “Our model will be general enough to capture this re-optimization as a special case,” he explains, and in doing so, “it will ensure that many important constraints, such as storage limitations of the collection centers…are not violated.” Fourth, the modeling will take into consideration the optimization of operational decisions such as inventory control and vehicle routing for feedstock collection and the transportation of biofuel. And, most importantly, the fifth area of focus will look to design, or minimize, total logistics costs (TLC). Those costs, he says, consist of total fixed costs of locating facilities used for collection of feedstock, production sites or even blending facilities, along with transportation costs of both feedstock and biofuels. Although the research sounds complex given the modeling strategy and the various factors the team hopes to include in their work, the end result isn’t only about how to potentially improve current logistical problems. Both Xie and Hong voiced their belief that the model could help future investment in bioenergy based on the predictive capabilities and logistical problem-solving ability of the research. “If producing or selling biofuels is not profitable,” Xie says, “the private sector will not come in.” Xie shouldn’t have anything to worry about though, according to Hong.
“The mathematical model can be used as a decision-making tool for investors in the biofuels industry,” he says, “as it will estimate the real cost of the business.” The biofuels logistics study will take a few years, and if the complex modeling system does what they say it will, it could help people like Hinsch understand how the logistics costs, inventory strategies and policy decisions all factor in to the use of biodiesel in his fleet. Until then, Hinsch has his own thoughts on how the difficulties of using biodiesel and the link to getting the fuel from point A to point B, so another user can burn that fuel to get from point C to point D, can be overcome. “As of now,” he explains, “we are paying the same cost of biodiesel as we were for our ultra-low sulfur diesel. This was part of our agreement with our local biodiesel producer. In working with biodiesel and the intricacies of budgets and my customer base, I would first say that the product has to
be well developed, and the price has to be right.” Then, he says, “You have to coddle the customers” because most people in his position are skeptics. When Hong and his team finish the research, the findings will most likely continue to be on display at the NIFA Waterfront Center where the proposal for the work is now. Even though everyone in the entire biofuels landscape may welcome a predictive modeling system that includes an exhaustive list of factors, all of which will be calculated to show which approach will present the least risk—regret—there might be no need for any of it. Unless someone disagrees with Hinsch’s ways to help expand biodiesel use. Author: Luke Geiver Associate Editor, Biodiesel Magazine (701) 738-4944 firstname.lastname@example.org
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Biodiesel Reaction and Separation Technology The chemistry and engineering behind the biodiesel process BY CHRISTINA BORGESE AND MARC PRIVITERA
Biodiesel reaction and separation methods range from the time-honored large batch tanks with long residence time reactions and water washes for product separation to intensification, enzymatic, and supercritical reactions coupled with distillation and mechanical separation methods. Selecting the best reaction and separation method for the process depends upon the feedstock characterization, a process we covered in the August
issue of Biodiesel Magazine. This installment highlights the specific drivers behind selecting the best reaction and separation techniques while considering process throughput, overall conversion efficiency and plant economics. The biodiesel reactions have three elements for driving the conversion of the feedstock to the finished product: mixing, molar ratio, and residence time. In simple terms, you have to present the reagent molecules with the opportunity, enough energy and enough time to react. Itâ€™s kind of like a seventh-grade school dance.
Mixing is the first operation to consider. Mixing drives the reagent interface surface area. The interface surface area is increased by decreasing through shear the dispersed phase liquid droplet size to the smallest size possible. In the usual batch reactor, the mixing is motivated by an agitator. Many high-shear flow strategies have been successfully employed to intensify phase interaction. The number of molecules motivated to react is driven by the surface area of the two immiscible phases. The smaller liquid droplet sizes will create a greater sur-
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The trick is to minimize the excess alcohol needed to attain the desired conversion. Due to economic and environmental drivers, alcohols should be recovered, and the post reaction alcohol separation required is an energy hog. face area for the phase interface. The proper application goes back INTENSIFICATION: Co-founding to the feedstock and engineer of what is being carried PreProcess Inc., forward through the Christina Borgese, says the ability to reaction. For example, shear the phases clean, dry feedstock to the optimum (the classic 1 percent liquid droplet size that maximizes MIU, or moisture, reaction conversion, impurities and unsabut minimizes post ponifiables, and 1 perreaction product separation effort, cent free fatty acid, or is where the real FFA, feedstock) reacts money lies. easily in a batch given the accepted residence time. Feedstocks containing phospholipids, high moisture, high FFA, and other contaminants may be more difficult to sepaRESEARCH FOCUS: rate than clean and dry Marc Privitera, cofeedstock. It has been founding engineer demonstrated, when of PreProcess Inc., says reaction rate employing high-shear optimization using and external energy various catalysts will methods, that over remain an active research topical area shearing can form too for years to come. small a liquid droplet size and create an emulsion that is very difficult to separate. The real money is in the ability shear the phases to the optimum liquid droplet size that maximizes reaction conversion but minimizes the post reaction product separation effort. In-line high-shear mixers, high-shear orifices, high-pressure pumps, ultrasonic cavitation, and ultrasonic intensification methods have all been employed in this service to varying degrees of success. Mixing energy is not enough to provide
economic conversion efficiencies. Catalytic energy is required. The classic way to add this energy is through the addition of caustic. Recently, heat and pressure energy has been demonstrated in a supercritical catalytic reactor. The supercritical reactor has the added advantage of having the reagents in a single miscible phase as the polarity of the alcohol is minimized in the supercritical state allowing the oil and water to mix with infinite surface area, and separated in later distillation steps. Molar ratio is the amount of one reagent compared to another, sort of like the boy-girl ratio at the dance. Increasing the molar ratio of the alcohol to the triglyceride/FFA in the reaction increases the probability of the alcoholâ€™s availability for reaction. Only the stoichiometric limit of alcohol will be consumed in the reaction. The excess alcohol drives the reaction towards the product side of the reaction equation as per LeChatlierâ€™s Principle. The trick is to minimize the excess alcohol needed to attain the desired conversion. Due to economic and environmental drivers, alcohols should be recovered and the post reaction alcohol separation required is an energy hog. Most alcohols have boiling points in the mid-100 to 200 degrees Fahrenheit range. The energy to boil them is high and the recovery of this heat in the cooling condensation is not favorable. Alcohol will distribute itself in both the water and the glycerol byproduct phases. The glycerol will also have a higher solubility in the oil phase in the presence of the alcohol and higher concentrations of alcohol at this step will leave a greater amount of glycerol to be removed from the fuel in the downstream refining operations. The residence time is dependent upon
the reaction kinetics and is one of the key driving economic factors in any chemical process. The slower the reaction, the larger the vessels or the slower the flow rate of the system. In batch reactors, residence time is defined as the time it takes the reagents to complete conversion into products. In flow reactors, this is described as the space time or space velocity. In any case, the flow rate, reaction time and reactor volumes are the related physical principles. Backyard biodiesel systems can have residence times on the order of days. Common commercial system residence times are on the order of hours, whereas a supercritical plug flow reactor could have a space time on the order of seconds. Determining the reaction rate is critical to the economics, and reaction rate optimization using various catalysts will remain an active research topical area for years to come. Transesterification proceeds in three steps. Breaking up the triglyceride molecule into diglycerides is an easy first step thermodynamically and kinetically. The statistically deterministic reaction intermediate ratios then drive the reaction rate of the second step, which is the diglyceride degradation to monoglycerides. The monoglyceride to FAME is the slowest step in the reaction chain as the linear nature of the monoglyceride contributes to the carbon backbone stability. A free fatty acid converts more readily than a monoglyceride at higher temperature and pressures so the reaction strategy is a balance between FFA and available catalyst versus the use of just temperature and pressure without any homogeneous catalyst. This reaction progression difficulty is also the reason many low-tech reactor systems have such a hard time in the final refinement of the fuel to meet the ASTM
standards. Many biodiesel plants have great conversion to 95 percent but getting the final conversion is difficult and the separation techniques needed to remove the unreacted monos have many economic penalties. Many times the monos are hidden in the oil/ glycerin separation step and, in that case, it may appear to the producer that the reaction is fine, but, in truth, monoglycerides are emulsifying agents that inhibit the disengagement of the FAME from the unreacted reagents and undesirable byproducts. A strategy of using a two-step reaction to optimize the reaction conditions for the tough third mono-to-FAME step has been employed using many methods. Not to be mistaken with the acid base two-step that is commonly employed to convert high FFA material, this two-step reaction first separates the base catalyzed product from the water and glycerin and then the remaining fuel, glycerin, and triolein is finished in a second series reactor. Conversion reactions are affected by the feedstocks and the impurities that are present in the reactor. Water will reverse the transesterification reaction, but water formation is unavoidable in the high-FFA reaction as it is a byproduct of the reaction. It has been demonstrated that rapid removal of any formed moisture will increase yield from the transesterification reaction. In high-FFA reactions, one technique to sequester the water back from reaction is introducing alcohol in excess. The high molar ratio alcohol blocks the water from reacting with the oil due to statistical probabilities. Alcohol-to-oil molar ratios of 50:1 have produced high-yield, short residence time reaction performance, but distillation of the 50:1 alcohol to the purity required for its reuse is usually detrimental to the economics. Many operations have learned how to sneak in 5 to 6 percent FFA feedstocks for reaction. One key factor in single digit FFA feedstock conversion is ensuring that the reagents are bone dry. A centrifuge separation
or another dehydration method could help alleviate the problem of moisture-laden feedstock. In one application, fats, oil and grease (FOG) was separated using common pumper techniques where the feedstock oil was dewatered by conventional low-temperature methods; however, the coagulation polymers and the various associated chemicals in those processes need to be considered prior to introduction to the reaction system. Water is completely miscible in most alcohols used with biodiesel production. The water formed in the transesterification will fully associate with the alcohol, requiring distillation of the alcohol for its recovery and reuse. Pervaporation separation techniques have been developed to reduce the energy requirements of the distillation chemical methods. Pervaporation will not replace the needed distillations, but implementation could reduce the energy required. Gross dehydration of the alcohol can be accomplished by pervaporation with final distillation returning the alcohol to the usable dehydrated state for reuse in the transesterification reaction. This strategy can fit well with smaller scale, community-based decentralized biodiesel efforts. While water is an unavoidable byproduct of high-FFA feedstocks, sulfur is an unavoidable contaminant. The classic method to remove sulfur from petroleum feedstocks is through the use of hydrogen. In a largescale refinery, this technique can be supported. On the local-scale, sulfur can be removed but it requires a series of steps and careful processing techniques while tracking the sulfur disposition. Sulfur can exist in multiple species. Usually most sulfur species are soluble in the biodiesel fraction of any separation. Water washes and cold surface absorbent techniques will remove a fraction of the sulfur, but not enough when employing sulfur-laden feedstocks. Sulfur removal is definitely an area for an integrated process
system strategy as it may take multiple steps or multiple unit operations to get the sulfur to the needed finished product specification. Sulfur species are split in a range of light, mid, or heavy compounds. The sulfur is usually most concentrated in light and heavy fractions, working to the advantage in considering distillation. One technique that has been successful in removing sulfur is to have a series of distillation steps for the finished fuel. Careful control of the column pressure and temperature will allow the removal of the lights in the first distillation step and will leave the heavies behind in the second distillation step. Fuel distillation increases energy consumption, but the refining also allows removal of various residues such as unreacted glycerides and minerals that often prevent the fuel from meeting the ASTM D6751 specification. The sulfur specifications for both ASTM D6751 and ASTM D975 fuel are 15 ppm. A stretch goal to chase for overall favorable biofuels economics might be to produce a specialized diesel fuel that can meet a 1 ppm sulfur level. As with most specialty chemicals, sulfur that meets a 1 ppm standard commands premium pricing. Oilseed feedstock has lower sulfur levels, so most operations have no problem hitting the 15 ppm specification. Feedstock that has a high-FFA percentage typically also has a high sulfur level. This is not the case everywhere, but high-FFA material is degraded trigycerides and many of these feedstock sources come from materials that pick up a wide variety of sulfur-containing degradation products. As more high-FFA waste feedstocks have been introduced into systems through blending or complex reaction techniques, sulfur has become a rising concern. Authors: Christina Borgese, Marc Privitera Founding Engineers, PreProcess Inc. (949) 201-6041 firstname.lastname@example.org
The Liquid Controls Group (LCG) provides a simple, straightforward solution to the perfect biodiesel blend— Toptech Systems’ MultiLoad load rack controllers, Corken pumps, Liquid Controls positive displacement, and Sponsler turbine ﬂowmeters. Toptech Systems’ MultiLoad II’s new 2-meter internal I/O board provides just the right amount of control for biodiesel blends. And selecting blending recipes is easy. With the MultiLoad II’s full alphanumeric keypad and intuitive user interface, you can access the correct recipe in seconds. Toptech’s family of MultiLoad products are available in Division I and Division II enclosures, so you can choose the best load rack control system at the best price. The user-friendly performance and versatility of Toptech Systems’ controls is guaranteed on the rock-solid foundation of Corken pumps and Liquid Controls positive displacement and Sponsler turbine ﬂowmeters. The companies of LCG are constantly working to create custody transfer solutions, like simple biodiesel blending, that ensure your success, making your investments and your efforts worth more.
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KNOCK OUT COLD FLOW PROBLEMS.
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January 16-18, 2012 Westin Place Hotel San Francisco, CA
Call For Speakers Make It Your Conference Take advantage of the targeted audience at the Pacific West Biomass Conference & Trade Show San Francisco, CA. This event will allow you to present and connect with biomass producers and industry professionals in your region. Presentation abstracts will be accepted for the Pacific West Biomass Conference & Trade Show through September 23, 2011. Abstracts may be submitted in one of four categories (tracks) including: • Electricity Generation (dedicated power) • Industrial Heat and Power (CHP, thermal energy) • Biorefining (advanced biofuels, chemicals) • Project Development and Finance Visit our website and submit today! www.biomassconference.com/pacificwest 866-746-8385 email@example.com Follow Us: twitter.com/#!/biomassmagazine
Exhibit Space and Sponsorships Now Available Reach Biomass Decision Makers Don’t miss this once-a-year opportunity to reach hundreds of people in the biomass industry in search of solutions. There is simply no other means of meeting with this many biomass-related decision makers, influencers and stakeholders in the Pacific West. Exhibiting at the Pacific West Biomass Conference & Trade Show will deliver real value toward your bottom line. Contact an account representative today for more information, or to learn about exhibit space and sponsorship opportunities.
October 2011 Biodiesel Magazine