CLEAN CLOUD Cost-Eï¬€ective Emissions Control | PAGE 16
Pumps: Go With the Flow PAGE 24
The Importance of Financial Planning PAGE 34
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SEPTEMBER 2019 VOLUME 25
More EPA Exemptions, Biofuel Plants Shuttered By Emily Skor
10 GLOBAL SCENE
Minding the Stack
Compliance with costs and operations in mind By Susanne Retka Schill
By Lisa Gibson
Trans-Atlantic Trade-Offs By Emmanuel Desplechin
The Heart of the Matter Pump designs for plant savings By Matt Thompson
12 GRASSROOTS VOICE
The Efficiency Issue
Whatâ€™s the Plan to Increase Ethanol Use? By Brian Jennings
14 BUSINESS BRIEFS 42 MARKETPLACE
PROFLOW PUMPING SOLUTIONS
Reinvestment and Risk Management
Leading producers have been planning since 2014 By Matt Thompson
ON THE COVER
Exhaust treated by an Eisenmann valveless regenerative thermal oxidizer streams from a stack. PHOTO: EISENMANN
Ethanol Producer Magazine: (USPS No. 023-974) September 2019, Vol. 25, Issue 9. Ethanol Producer Magazine is published monthly by BBI International. Principal Office: 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. Periodicals Postage Paid at Grand Forks, North Dakota and additional mailing offices. POSTMASTER: Send address changes to Ethanol Producer Magazine/Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, North Dakota 58203. ETHANOLPRODUCER.COM | 5
The Efficiency Issue Generally speaking, an ethanol plant that runs efficiently and isn’t using added measures to cut costs on emissions control devices will easily meet its emissions requirements. But the prospect of
saving up to a quarter of a million dollars per year on utility costs is alluring. It can be done by reducing temperature or recycling more process liquids, but that comes with decreased pollutant destruction efficiency. In our cover story, starting on page 16, freelancer Susanne Retka Schill explores the task producers face in controlling both emissions and costs. She addresses testing methods in detail and discusses the importance of maintenance and operations. “A lot of facilities try to walk the line between the lowest temperature they can run and still meet emissions limits,” one of her sources says. Those operating at 50 percent of limits and those operating at 90 percent of limits see substantial differences in their environmental control costs, he adds. Read the full story for the details. Keeping with our efficiency and monetary savings theme, next we slip into the world of pumps. The feature starting on page 24 takes a look at technologies that reduce leaks, offer a high turndown ratio and operate at lower speeds for simpler maintenance and increased safety. Associate Editor Matt Thompson also lists several key considerations for pumps, including material compatibility, explosion-proof ratings and slurry applications. If you’re evaluating pump options, you won’t want to miss this one. Last, we look at finances. With low margins plaguing our industry, a risk management and technology investment feature seems relevant and timely. Those plants that planned ahead around 2014 are the leaders today, experts say, and a combination of hedging and investing can restore cash reserves. A point I found particularly interesting is one from a consultant who says we’re in a margin trajectory, a “well-trodden path toward commoditization where tight, smart markets favor vertical economy of scale.” It’ll transform us into a “traditional, consolidated competitive structure composed exclusively of top quartile EBITDA performers.” Turn to page 34 and put your economist hat on. You’ll need it. Emissions, equipment, margins—they’re all about efficiency. Efficiency is king and we’ve addressed it along all these topics in this issue. We’ve also laid it out efficiently for your optimal reading pleasure. (See? It applies here, too.) Enjoy.
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More EPA Exemptions, Biofuel Plants Shuttered By Emily Skor
During President Donald Trump’s visit to Iowa for his long-awaited announcement on E15, he heard dire warnings from many of us in the agricultural and biofuel sectors. Updating regulations so retailers can offer
E15 year-round represents an incredible opportunity for growth, but farm communities will continue to suffer if the U.S. EPA fails to address the demand destruction of American biofuels. As regular readers know, news reports show EPA has been funneling special hardship exemptions to some of the nation’s largest and most profitable refining companies. These exemptions allow firms like Exxon and Chevron to sidestep the nation’s Renewable Fuel Standard and lock billions of gallons of homegrown biofuel out of the marketplace. That means less U.S. energy and higher fuel prices, but it also means EPA has eviscerated the market for nearly a billion bushels of U.S. grain. For rural families, it’s hard to imagine a worse time to come under attack by Washington bureaucrats. Farm income has been spiraling downward, exports are down, and flooding has demolished hopes for the next harvest in many communities. But through it all, we know the president was listening. U.S. Agriculture Secretary Sonny Perdue reports that Trump immediately told regulators, “We have got to take care of our farmers. We have got to take care of this.” He then called on the EPA administrator to explain, “How in the world does Exxon Mobil qualify as a small refiner?” That’s the same question Midwest champions such as Sens. Joni Ernst, R-Iowa, Chuck Grassley, R-Iowa, Amy Klobuchar, D-Minn., Deb Fischer, R-Neb., and Tammy Duckworth, D-Ill., have been asking for months. In response, refiners attempted to silence rural America’s voice in the president’s cabinet. A handful of oil-backed lawmakers threatened Trump’s rural agenda and sought to “prohibit the secretary of agriculture” from advising the president on issues that impact the farm economy. Refiners also aired ads suggesting that secretive refinery handouts were good for jobs. The facts say otherwise, and examples of EPA’s job destruction are piling up.
Across the heartland, 200 ethanol plants are under incredible strain. Many have already shut their doors or idled production as a result of historically low margins, driven lower by EPA mismanagement. Others have sold off assets or warned farmers they can no longer take deliveries. Recent estimates suggest that hundreds of millions of gallons of production remain offline, with plants impacted in Iowa, Illinois, Kansas, Minnesota, Florida, Virginia, Texas, Missouri and Nebraska. Reuters reports that more U.S. ethanol producers could be forced to “sharply curtail production” and Iowa Agricultural Secretary Mike Naig warns that policymakers must act quickly to “heal the self-inflicted wounds that have restricted demand for U.S. biofuels.” Each time a plant idles production, farmers across the region lose a competitive market for their crops. The impact can be felt across the entire rural economy. That’s why rural champions applauded the president’s ongoing commitment “to support our ethanol industry and to fight for the American farmer like no president has ever fought before.” But it’s time to go beyond promises and demand action from EPA. We cannot afford another season of demand destruction. That’s why Growth Energy launched a recent ad campaign that puts a face to the farm crisis across the country and gives a voice to those in rural communities who are most impacted by EPA’s failure to follow the law. The ads spotlight a fourth-generation corn and soybean farmer in Nevada, Iowa, who asks the president to continue listening to rural America: “President Trump has been our greatest champion for ethanol, for family farms, for rural America. We do not want President Trump to be undermined. These unelected bureaucrats at EPA are rigging the system for these oil companies on the backs of family farmers. We hope President Trump will continue to listen to us.” As I’ve said before, Growth Energy will not allow these exemptions to get lost in the noise while rural communities suffer. But there are already 38 additional refinery exemptions under review by EPA right now, and each one is another bullet aimed at rural growth. We must stand united and keep the pressure on this White House to demand EPA end its corrosive policies. Author: Emily Skor CEO, Growth Energy 202.545.4000 email@example.com
8 | ETHANOL PRODUCER MAGAZINE | SEPTEMBER 2019
Trans-Atlantic Trade-Offs By Emmanuel Desplechin
Eager to claim a political victory before leaving the presidency of the European Commission, Jean-Claude Juncker pushed to secure a trade deal between the European Union and the Mercosur bloc of South American countries. The effort paid off, but at a potentially significant cost for Europe’s ethanol industry and farming sector. Now more than ever, it will be crucial for policymakers to rethink long-term energy and climate strategy in a way that creates an EU ethanol market big enough to accommodate a flood of imports and sustain an important domestic industry. The rewards will be significant progress in the fight against climate change and a boost to the EU economy. Some backstory on the deal: The EU-Mercosur trade agreement had been bogged down in negotiations for 20 years over concerns about its impact on European farmers. Those concerns included some daunting numbers for the EU ethanol industry. As agreed, the deal will open the EU market to annual quotas of Brazilian sugarcane ethanol: 450,000 metric tons of duty-free ethanol for chemical uses, and 200,000 metric tons of ethanol for all uses at a much-reduced duty. That was a slight increase from the initial offer of a yearly quota of 600,000 metric tons at reduced duty that had been on the table until a last-minute push to finalize the agreement. Why are those numbers so significant and disproportionate? The offer of 600,000 metric tons was first made in 2004, based on a fast-growing market forecast that assumed a stable and well-managed EU biofuels policy. Needless to say, that has not materialized. Even if the 600,000-metric-ton offer had not been increased, it was already a better deal for Mercosur countries today than it was 15 years ago. The decision to increase both the offer and the access conditions has made its impact even more devastating. But there’s more at stake here than just one industry’s survival. In agreeing to open its markets to Brazilian ethanol, the EU is contradicting its own efforts to increase domestic renewable energy sources in
transport, killing incentives to invest in advanced ethanol, and making life even tougher for Europe’s already struggling farmers. The Mercosur deal isn’t the only setback for the ethanol industry on the EU trade front. The EU’s recent decision to repeal antidumping duties on fuel ethanol imports originating in the U.S. also risks having serious consequences for the entire value chain of the European renewable ethanol industry, which accounts for 55,000 direct and indirect jobs in the EU. It would also affect EU climate ambitions by favoring U.S. ethanol, whose greenhouse gas (GHG) savings do not match those of European ethanol. These actions come as other key U.S. export markets, including Brazil, China, Peru and Colombia, have introduced measures to protect themselves from unfair U.S. ethanol exports. This increases the risk that U.S. exporters divert exports previously targeting these countries to the EU. The negative impact of a surge in U.S. fuel ethanol exports to the EU would be felt not only by the European renewable ethanol industry, but also by European agriculture. It would hit European farmers at a time when the EU is proposing to drastically cut the budget and support for the sector under the Common Agricultural Policy. The U.S. has in parallel increased its support for the agricultural sector through the updated five-year farm bill that enhances the commodity programs and crop insurance tools for U.S. farmers. Still, while the EU-Mercosur agreement and repeal of antidumping duties on U.S. ethanol imports deal a serious blow to Europe’s ethanol industry, it doesn’t have to be a fatal one. In fact, EU policymakers can still make it a win-win by acting quickly to grow the European ethanol market to accommodate a flood of imports. That means aligning the EU’s environmental and renewable energy with its trade policy by, for example, ensuring that the EU’s long-term decarbonization ambitions include a stronger uptake of sustainable biofuels such as ethanol from crops and advanced feedstock. To achieve them, policymakers must do a better job of creating a growing market environment in which Europe’s ethanol industry can compete on a level playing field and, as part of the transition to the bioeconomy, contribute to the urgent fight against climate change. Author: Emmanuel Desplechin Secretary General ePURE, the European Renewable Ethanol Association firstname.lastname@example.org
10 | ETHANOL PRODUCER MAGAZINE | SEPTEMBER 2019
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What’s the Plan to Increase Ethanol Use? By Brian Jennings
Now that the highest federal hurdle to year-round E15 use has been cleared (assuming the U.S. EPA’s Reid vapor pressure rule prevails over the lawsuits from refiners who want to limit ethanol’s market share to E10), the next major public policy question confronting the ethanol industry is what’s the plan to increase domestic demand beyond E15? The answer should be the Renewable Fuel Standard. If the RFS were being carried out as specified by Congress, it would indeed drive demand for higher blends. Unfortunately, EPA’s mismanagement of the program has limited, rather than supported, ethanol use. Consider recent history: During the Obama administration, EPA reduced the RFS based on the “blend wall.” ACE and others were forced to sue. The court ruled in our favor and instructed EPA to restore 500 million gallons back to the 2016 statutory volume. So far, EPA refuses to comply with the court’s order. Under the Trump administration, EPA’s abuse of the small refinery exemption (SRE) provision has added insult to injury by waiving 2.61 billion gallons of RFS demand from statutory levels so far without reallocating the gallons to other refiners. We have been forced to sue yet again. While I am confident we will eventually win in court, EPA’s track record suggests it will refuse to reallocate the waivers. EPA’s mismanagement of the RFS has reduced the use of U.S. ethanol and stymied investment in advanced and cellulosic biofuel technologies. The consequences are dire for rural Americans already suffering from economic and weather-related crises. Where does that leave us? What’s the plan to increase ethanol use? Are we simply going to play defense on the RFS and hope the E15 market develops quickly, or can we turn the page, go on offense and initiate a new legislative or regulatory strategy to increase ethanol use far beyond current levels? ACE has discussed this topic with our industry allies for the past several months, trying to unify around a plan. We have also engaged our board of directors. In May, the ACE board passed this resolution: ACE supports legislative efforts to increase demand and certainty for ethanol
12 | ETHANOL PRODUCER MAGAZINE | SEPTEMBER 2019
through expansion of the RFS post-2022 and/or the establishment of a low-carbon octane standard, which takes advantage of ethanol’s life cycle greenhouse gas (GHG) emission and health benefits. Unfortunately, there appears to be insufficient support currently to try for RFS 3 in Congress. However, ACE is making progress on the idea of a new Low Carbon Octane Standard that would build upon the RFS to spur additional demand for ethanol by ensuring even greater GHG reductions compared to gasoline, and help automakers needing higher-octane fuel to meet fuel-efficiency targets. A LCOS would require all motor gasoline in the future to meet a minimum octane (such as 98 RON). To ensure refiners do not use aromatic hydrocarbons to meet the standard, the fuel would also need to meet a minimum threshold for reducing GHG emissions (such as 30 or 40 percent better than baseline gasoline) in order to qualify for the high-octane market. Importantly, the LCOS would require EPA to use the latest U.S. Department of Energy Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation (GREET) life cycle model to determine GHG emissions instead of the outdated and flawed model the agency uses under the RFS. There are several advantages to an LCOS. It gives ethanol a onetwo punch to gain new market share by capitalizing its low-carbon and high-octane benefits. It allows us to go on offense, appealing to the breadth and depth of political views on Capitol Hill and giving our champions in Congress something to be for. And, instead of sitting on our hands or playing defense on climate, the low-carbon feature allows us to proactively position corn ethanol as part of the solution to addressing climate change. We think an LCOS is a commonsense policy plan that can build upon the success of the RFS to increase the use of ethanol beyond E15 and provide even greater climate reductions in a way that spurs the rural economy and saves consumers money at the pump. We look forward to working with our industry allies and Congress in support of this new plan to increase the use of ethanol beyond current levels. Author: Brian Jennings Executive Vice President American Coalition for Ethanol 605.334.3381 email@example.com
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People, Partnerships & Projects
BIO hires new public affairs executive vice president The Biotechnology Innovation Organization has hired Rich Masters as its new executive vice president for public affairs, a restructured position that will focus on developing and implementing an integrated communications, branding and marketing strategy for the organization. “I am thrilled to announce that Rich Masters will be leading a restructured and expanded communications function within BIO, to enhance our ability to tell the inspiring biotech story in a compelling manner and to help us advance the interests of our members,” says Jim Greenwood, BIO president and CEO. “Our companies are fast, innovative and game-changing in their technologies, which are literally saving lives, feeding the world and powering the planet. BIO must have a public affairs operation that matches those efforts. Rich brings a wealth of public affairs experience from the private and public sectors that is as varied and creative as it is deep. I’m confident he will bring the same energy and drive to BIO that our membership brings to their life-changing innovations.” Masters comes from Qorvis Communications, a public affairs firm. Masters is recognized as one of America’s top political and media relations experts and has developed a method for delivering complex policy and political messages that resonate with middle America and audiences
around the world. His media training program for political debate messaging has been featured in Businessweek, the New York Times and Atlantic Monthly. He was an award-winning political journalist in Louisiana, joined the campaign of U.S. Senator Mary L. Landrieu, D-La., in 1996, and served as her legislative and Masters communications director for her first term. “Working for BIO is an opportunity of a lifetime because the companies that are BIO are the epicenter of every single life-saving innovation we will see for the rest of my life,” Masters said. “I will fight to ensure that political leaders understand that they can either work with these companies and be partners in innovation or they can be roadblocks that could delay or even kill that innovation. I’m excited to join Jim and the entire BIO team to tackle this critical challenge head-on.” As part of this restructuring and transition, BIO’s current senior vice president for communications, Ken Lisaius, is leaving the organization.
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Midwest AgEnergy celebrates safety records
Nelson Engineering reveals new name Nelson Engineering Inc. has changed its name and is now Nelson Baker Biotech Inc. An engineering, procurement and construction firm in the industrial biotech space, Nelson Baker Biotech has expanded into additional industrial biotechnology applications in recent years, including biomass processing, biochemicals and biogas. The new company name now better reflects its expertise. For the past 12 years, the company has partnered with innovators to design and build projects within the biofuels industry. “While we will continue to serve the biofuels industry, our team has developed expertise in other industries as well,” said Tiffany Trottman, business development manager. “As a full turnkey engineering, procurement and construction firm, we concentrate on projects from beginning to end, not just the engineering. We decided a company name that reflects this expertise was best.”
Midwest AgEnergy, the parent company to Blue Flint Ethanol, near Underwood, North Dakota, is pleased to announce its employees have surpassed 12 years of safely working without a lost-time accident. A lost-time accident is defined as time lost when an employee is injured on the job and cannot return to the next regularly scheduled shift. Dakota Spirit, a Midwest AgEnergy biorefinery near Spiritwood, North Dakota, that opened in June of 2015, has never had a lost-time accident. “It has been great to be a part of such a dedicated and passionate team,” said Adam Dunlop, director of regulatory and technical services for Midwest AgEnergy. “We have gotten here because the group genuinely holds safety as a core value. Of course, what got us here may not be enough to get us to the next level. We recognize we need to continue to find ways to improve each day.”
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ETHANOLPRODUCER.COM | 15
Maintaining compliance while optimizing costs and operations is a balancing act for ethanol producers. By Susanne Retka Schill
Mastering the balance between emissions control and cost control is important for an ethanol plant. The targets for emissions control are set in the facility’s air permit, while the costs involve energy, maintenance and compliance testing. The energy cost in oxidizing volatile organic compounds (VOCs) at 1,600 degrees Fahrenheit can be significant. “The typical exhaust matrix from a dryer at an ethanol plant is 45 to 50 percent water,
and we’re talking 30,000 to 80,000 cubic feet per minute (CFM),” says Jordan Laster, vice president of analytical services at Alliance Source Testing. “It takes a massive amount of energy to keep temperatures up to maintain gas phase.” A well-run plant that is not trying to cut costs on control devices will generally meet emissions requirements without a problem, he says. Turning down the temperature or recycling more process liquids, however, can save as much as $250,000 per year in utility costs. But as the tem-
16 | ETHANOL PRODUCER MAGAZINE | SEPTEMBER 2019
STACK COLLECTION: In EPA’s Method 18, samples are manually collected from the stack for laboratory analysis of VOCs and HAPs—the most accurate method with the lowest nondetect results. Here, technicians from Alliance Source Testing prepare to recover a sample in Iowa. PHOTO: ALLIANCE SOURCE TESTING
ETHANOLPRODUCER.COM | 17
VOC DESTROYER: Air quality permits require ethanol plants to destroy emissions through oxidation. Pictured is an Eisenmann valveless regenerative thermal oxidizer where ceramic media gathers heat from exhaust to preheat inlet air from the dryers. PHOTO: EISENMANN CORP.
perature goes down or recycling goes up, the destruction efficiency goes down. “A lot of facilities try to walk the line between the lowest temperature they can run and still meet emissions limits,” Laster says. Some target operating at 50 percent of limits and some shoot for 90 percent of limits. “And
they do see a rather substantial difference in their environmental control cost.” Plants balancing control and cost often turn to stack testers using FTIR (Fourniertransform infrared spectroscopy—Method 320 in the U.S. EPA testing protocols). “It’s ideal for live results,” Laster says. “It’s great
for engineering and tuning—what happens when I turn this valve or change this flow rate? Plants can see how that changes emissions on a live basis.” FTIRs are also used for compliance tests, although Laster says he sees some misunderstanding of the test’s best applica-
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EMISSION MONITOR: Chris LeMay, president of Alliance Source Testing, watches the differential pressure readings for flow measurement inside a mobile laboratory, capturing the instrumental data used to identify and quantify emissions. PHOTO: ALLIANCE SOURCE TESTING
tion. “FTIR is very appropriate for scrubbers and process vents, because these typically have very low volumetric flow rates,” he explains. “If I get a nondetect there, I have to report that detection limit, but I’m multiplying it by a very low flow rate. The resulting mass emission rate ends up being
relatively insignificant when compared to the permitted emission limit.” The most common VOCs detected are ethanol, acetaldehyde, formaldehyde, ethyl acetate and, occasionally, methanol, Laster says. Air quality permits specify an allowable emission rate, generally stated in
pounds per hour. The challenge for emission control and testing, Laster adds, is that “what we are looking for is in the order of a couple parts per million and the emissions rates end up calculating to typically one to five pounds per hour of each of these things.”
T H E E T H A N O L IN D U S T RY’ S
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ETHANOLPRODUCER.COM | 19
EMISSIONS ria.” While regulatory agencies typically accept some method quality issues, too many test issues can trigger additional follow up by the agency and potential invalidation of the test report. Iowa Department of Natural Resources is an example of an agency that tightened its air quality oversight in the past three or four years, Laster says. “They didn’t go back in time, and it didn’t cause any liability to the facilities, but IDNR came down and said, ‘These are the only things we’ll accept, and all tests must be done this way moving forward.’”
DRAWING DETAILS: Inside the Eisenmann valveless regenerative thermal oxidizer, ceramic media gathers heat from exhaust to preheat inlet air from the dryers. PHOTO: EISENMANN CORP.
The better choice for testing high volumetric sources—regenerative thermal oxidizer (RTO) stacks and distillers dried grains with solubles bag houses—is to use a manual method, such as EPA’s Method 18 or a National Council for Air and Stream Improvement method, where the gas is bubbled through reagents and/or adsorbent tubes that are sent off for laboratory analysis. While more costly, primarily because of the required off-site lab work, the greater accuracy with lower limits makes a big difference, Laster says. The reason lies in how the regulations say nondetectable compounds are to be handled, he explains. “In stack testing, there’s no such thing as zero.” When a testing method returns a nondetect for a certain compound, the number recorded is just below the threshold that the particular
test could detect. For example, if a test can’t detect 1 part per million (ppm) or less, a nondetect test result enters a one and not zero. A more accurate test method, with a limit of 0.5 ppm, would record 0.5 ppm. “The worst-case scenario is after a stack test is completed and a bunch of nondetect results are added up, the resulting emission rate is above the permitted limit,” Laster says. “And that can happen, and does happen without proper pretest planning.” Another consideration when evaluating test methods is the quality assurance/quality control (QA/QC) performance. Laster says he’s found the NCASI self-validating methodology to be much cleaner than EPA Method 18. “It’s very difficult to get all of the QA/QC parameters,” he says. “Even on a very good test, you might have some compounds that don’t meet all QA/QC crite-
20 | ETHANOL PRODUCER MAGAZINE | SEPTEMBER 2019
The balance between cost controls and emission targets is only part of the battle. Maintenance and operations also require attention. With many plants running hard, at 110 or 120 percent of capacity, John McDowell, sales engineer with Eisenmann Corp., cautions plants to keep a close eye on their abatement equipment. Distillers grains dryer exhaust is a challenging application, he says, with water- and corn oil-laden exhaust coming from the dryers that can condense on surfaces, and high particulate matter (PM) and carbon dioxide levels that can create acids. The maintenance issues differ depending on the type of system used: thermal oxidizers paired with heat recovery steam generators (TO/ HRSG) or an RTO. In RTOs, a ceramic bed acts as a heat exchanger. Exhaust enters the RTO and passes across hot ceramic media and into the combustion chamber operating around 1,600 degrees to destroy PM and VOCs. The exhaust air then flows across a second ceramic bed that captures the heat until the exiting temperature is close to the inlet temperature. Periodically, the flow switches direction so the hot outlet bed becomes the preheating inlet bed and the warm inlet bed becomes the heat recovering outlet bed. “Over time, the PM in the dryer exhaust air
EMISSIONS can build up on the ceramic media, creating channels and restricting flow,” McDowell explains. “You may need to replace ceramic media.” In a TO/HRSG, after passing through the combustion chamber, the exhaust moves through the HRSG’s fin tube bundles to generate the plant’s steam. “Eventually, you will begin to see wear on the fins, with them getting shorter and reducing heat transfer,” McDowell says. “Also, PM starts building up and, unless you remove it, you’ll see a reduction in efficiency and you may need to replace tube bundles.” While the maintenance issues differ, the primary means of monitoring performance are the same for both systems. One basic measure is to track temperatures over time, observing whether the difference between inlet temperature and stack outlet temperature begins to widen—an indicator that efficiency is beginning to drop. “It’s very measurable in the field,” McDowell says. “Engineering efficiencies can get complicated with mass flow, temperatures and fancy calculations, but any operator can look at this and say, ‘What are my temperatures across the system?’” Pressure profiles are another indicator, using trends in the force pulling from the dryer upstream and the inlet pressure versus the outlet pressure. “You’ll see an increase in pressure drop across the ceramic bed or HRSG tube bundle as it fouls,” McDowell says. “For people who don’t have pressure gauges in the right places, you can look at fan speed or amps drawn by the big blower. As that goes up, it’s telling you the system is getting fouled.” McDowell also recommends plant maintenance teams take photos during semiannual cleaning and inspections. Surface degradation and wear become apparent when compared to previous photos. “It’s easy when doing the inspections to overlook something, but when you’ve got the photos, you see what new looks like, compared to today.” With plants running hard and taxing
their oxidizers, plus an increasing interest in reducing carbon intensity, some are looking at replacing TO/HRSG systems with RTOs, McDowell reports. Separating the plant’s steam generation from the thermal oxidizer can make it easier to optimize both operations. While plants do run well with a TO/HRSG, some struggle. “Not all plants operate at steady state,” McDowell says. “If you’re drying more DDGS, you may over-
produce steam. Conversely, if you’re making wet cake and not drying, you may need to over-fire the TO to generate enough steam for the front end and distillation.” Author: Susanne Retka Schill Freelance Journalist email@example.com
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THE HEART OF THE
MATTER Increasing efficiency by taking advantage of the latest pump designs and technology. By Matt Thompson
George Gregorowicz, seal division manager at ProFlow Pumping Solutions, has seen his share of leaky pumps. “I have been
at plants where a leaking seal has flooded an area,” he says. “I’ve been down in the Permian Basin and seen hundreds and hundreds of gallons of oil laying in a field. Then you have remediation issues there and it has to be cleaned up.” Having spent more than 40 years in the seal business, he’s become familiar not only with the mechanical seals used on pumps in many ethanol plants, but a type of pump designed to be leak-proof: the canned motor pump. “What we’re finding is, especially a lot of [ethanol plants] located up in cold
country, use a lot of centrifugal pumps for tank unloading and tank transfer, and cold weather has an effect on those seals up in those areas,” Gregorowicz says. “So canned motor pumps will eliminate a lot of headaches in terms of emissions and motor alignment.” A typical O-ring in mechanical seals can handle temperatures down to -15 degrees Fahrenheit, he says, but temperatures in some parts of the Midwest hit -40. Canned motor pumps—also called hermetically sealed pumps—are leak-proof because they are completely self-contained. The pump and the motor operate as one unit, and the fluid being pumped is sealed inside. Canned motor pumps are also free of mechanical seals. Failure of those seals is often the cause of leaks. “The weak link in most of these pumps will be the mechanical seal,” Gregorowicz says.
24 | ETHANOL PRODUCER MAGAZINE | SEPTEMBER 2019
The lack of mechanical seals removes other costs, as well. “Typically, you’re running a lot of double-seal, so you’re running probably a seal support system with a barrier fluid, so you eliminate all of that,” Gregorowicz says. “I sell these to refineries where the seal support system is $15,000 to $20,000.” Canned motor pumps are commonly used in the biodiesel industry, but aren’t as widely used in ethanol. “Typically, a canned motor pump is going to be more money than a centrifugal pump, so dollars and cents do all the talking,” he says. The pumps excel in 190- and 200-proof applications, feed water, hot oil and corn oil, according to Gregorowicz. Canned motor pumps offer an environmental advantage, too. Emissions requirements are becoming more stringent,
PUMPING OUT EFFICIENCY: Grundfos Pumps’ smart digital dosing pumps include stepper motors, giving plants finer control over chemical feed operations. Technologies with stepper motors and canned motor pumps allow ethanol plants to run more efficiently. PHOTO: GRUNDFOS PUMPS
and “it’s going to be very hard to hit those emissions requirements with seal pumps,” Gregorowicz says. He cites a refiner in Indianapolis that switched from traditional pumps, which operated at 1,075 PSI, to canned motor pumps to accomodate its caustic. “Single sealed would work, but when a single seal leaked at 1,000 PSI, it had a tendency of spraying,” he says. “So they tried double-
sealed. They would go through three or four seals a year at $10,000 to $12,000 a seal. We put in a canned motor pump—dropin replacement, no piping modifications, nothing—and that pump’s now been running for about 2.5 years. It pays for itself. The pump was $70,000, $80,000.” The challenges of working with ethanol present the perfect opportunity for the canned motor pump, Gregorowicz says.
“Ethanol is some of the toughest stuff to seal. When it’s hot, it’s sticky. It’s abrasive. It changes when it gets too hot, and it changes when it gets too cold.”
A Step Up
Ethanol plants can also take advantage of pump technology in their dosing systems, says Jared Gabel, product manager at Grundfos Pumps. He says by coupling a ETHANOLPRODUCER.COM | 25
LIMITING LEAKS: Because the pump and motor in a canned motor pump are integrated into one unit, costly and dangerous leaks are eliminated. Pictured is a 200-proof application. PHOTO: PROFLOW PUMPING SOLUTIONS
dosing pump with a stepper motor, plants can realize several advantages, including gaining better control over expensive chemicals used in the processes. â€œA stepper motor is really advantageous because it can be very accurately controlled in terms of the speed at which it turns and then the rotational angle,â€? he says. â€œThat translates into some more features and benefits and things
that we can start to realize from a capabilities perspective and how we can build technologies around a chemical feed pump.â€? He adds that stepper motors are ideal on pumps that feed antiscalant or biocides into cooling towers. One of the advantages stepper motors offer is the turndown ratio. Because the turndown ratio is so high, Gabel says
the same pump can be used in several applications within the plant. â€œItâ€™s not too cumbersome for them to maintain that piece of equipment ongoing with one style of pump that can handle several different applications because we have such a large turndown ratio,â€? he says. Colin Cummings, direct sales manager at Grundfos, agrees. â€œBecause of the step-
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WINBCO TANK “On Line On Time”
SEALING IN THE YEARS: George Gregorowicz, shown here performing a pump audit at an Illinois ethanol plant, has been in the seal business for 40 years. PHOTO: PROFLOW PUMPING SOLUTIONS
per motor and the turndown ratio that we have within these pumps, I can actually size one pump for all of their applications, rather than having a specific pump for each application.” That feature is the one ethanol plants tend to like the most, he adds. But there are other benefits, including how the pumps operate at low speeds. “If you were running a pump at its furthest turndown, so its slowest speed, and it’s microstepping at that low, you basically won’t know that that pump’s running,” he says. Because the pump has minimal vibration, it results in lower maintenance costs throughout the system and increased safety, Gabel adds. “If it’s a smooth discharge into the line instead of a quick one that you would get from a conventional type of solenoid pump, then you can start reducing the vibrations that are happening on the system, which will allow that pipework to last longer and not break as easily.” Gabel says sensors can also be added to the pumps, which can help fine-tune operation automatically. “We can take a sensor, measure something, and then we can do something with that signal in terms of the speed of the motor, whether or not
we need to slow it down or speed it up to maintain a set point to continue dosing at an accurate, reliable feed rate,” Gabel says. That automated adjustment on Grundfos pumps is called AutoFlowAdapt. AutoFlowAdapt allows plant personnel to set the pumps to alert the engineers when they sense an increase in pressure, which may indicate a maintenance issue, such as plugged injection quills. “The pump is rated for 232 PSI, but I want the pump to tell me when the pumps sees 100 PSI because I know my injection quills for this process line may be starting to plug, or build up a little bit, so I need to have a maintenance guy go out there and do a little bit of preventative maintenance on the injection quill to clean it,” Cummings says. “That’s one of the features that you can use the pump to prevent things downstream.” The pumps with sensors are also useful in preventing vapor lock and loss of prime, Gabel says. “If a pump is in standby, it’ll move the diaphragm to shake the bubbles up to the top and then be able to keep the pump primed, basically. So that really is a way that most plants have been switching to this type of technology, be-
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GOOD VIBRATIONS: Pumps like these, shown here dosing peracetic acid in a food processing facility, are beneficial to ethanol plants, as they can run more quietly and smoothly than traditional pumps. PHOTO: GRUNDFOS PUMPS
ETHANOL ACCURACY: While these pumps are installed in a food processing facility, dosing pumps like these with stepper motors offer the ability to accurately control the chemical feeds in ethanol plants. PHOTO: GRUNDFOS PUMPS
cause they don’t want to have to go reprime the pump and that requires a manual operation. When a pump can stay primed and the sensor’s in there looking at that, that directly relates to savings in time and money for the plant.”
Cummings agrees. “The No. 1 reason, probably, why our pump gets inserted into an existing application would be a degassing situation,” he says. “If you’re looking at a bleach pump, bleach chemical usually degasses pretty easily, and they’ve run into
vapor locking with the pump that they have, so we’ll go in there and try to offer our solution.” Gabel says plants may also be able to remove unnecessary pieces of equipment by using digital dosing pumps with sensors.
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EQUIPMENT “Because of the stepper motor, we’re drawing in chemical fast, but then we’re pushing out very slowly. So we can start to reduce unnecessary pieces of equipment also in the plant, like a mixer or a variable frequency drive for example, which does take some energy, and because they do have motors, that would directly reduce that need to buy that piece of equipment.”
The Right Tool for the Job
While the stepper motors for digital dosing pumps come with advantages, there are factors to consider. “They are basically small computers, so they don’t directly have an explosion-proof rating,” Gabel says. “It’s good to be aware of the technical specifications around equipment, especially these types of metering pumps, and their enclosure ratings.” He adds that Grundfos has installed the pumps in explosion-proof enclosures. “It’s not that it’s a deal breaker, it just takes another step,” he says. “If you
really want that control that a smart digital stepper motor type of pump would offer, there are ways to get it in the application with an enclosure.” Gregorowicz says canned motor pumps aren’t typically recommended for slurry applications in ethanol plants, although there are some models designed to pump slurries. “They do have a slurry version that has a seal that seals off that bearing end, then they have to use some type of lubricant to be injected into the bearing area,” he says. “A lot of plants may not be set up for that.” As plants explore different cleaning chemicals and applications, material compatibility becomes important for any type of pump. Gregorowicz says canned motor pumps can be fabricated out of nearly any material. “The metallurgy of the pump itself can be made in anything. It can be steel, it can be a high chrome alloy, stainless steel,” he says. “Most of the pumps that we sold are CD4MCu or some other duplex stainless.”
Gabel says compatibility is an important consideration for Grundfos as well. “Most metering pumps out in the market will be offered in several different kinds of plastic, PVC, PVDF, polypropylene and also stainless steel, so your high 3/16-inch stainless steel,” he says. “That is definitely something we consider and is a very important piece to selecting which model variant of pump to go with.” Author: Matt Thompson Associate Editor, Ethanol Producer Magazine 701.738.4922 firstname.lastname@example.org
ETHANOLPRODUCER.COM | 29
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WEATHER WOES: Following a wetter-than-normal spring and a slow start to planting in the Midwest, the quality and quantity of this year’s corn crop could have an effect on ethanol producers’ already low margins. But benchmarking data show some plants are still making enough money to cover operating expenses. PHOTO: FILE PHOTO
34 | ETHANOL PRODUCER MAGAZINE | SEPTEMBER 2019
Reinvestment and Risk Management Plants that planned ahead when margins were better are leading the industry today. By Matt Thompson
While some ethanol plants are struggling to cover their operating expenses, Connie Lindstrom, senior biofuels analyst with Christianson CPAs & Consultants, says there is also reason for optimism in the industry. “There are
plants that are hanging in there and they’re doing fine,” she says. Lindstrom presented Christianson’s industry benchmarking numbers at the 2019 Fuel Ethanol Workshop & Expo in June and says the data doesn’t point to a specific factor for plants’ success or failure, such as size or location. “We have solidly performing plants that are any size or that are in many locations,” she says. “There are ways to be successful, even in times like this where the margins are so tight. I think just having an awareness of that is something that’s important for plants to keep in mind.” Fundamentally, planning is key for plants, she says. “The plants that seem to be doing the best are the ones that have been making regular reinvestments in their plant and some regular conversation about the future of the facility and their organization,” she says. “The plants that were thinking about what things might be like in 2018 in 2014, when they had money to reinvest, those are the plants that are in that leader category now.” Another factor in many plants’ success is the experience of upper management. “Many of these plants have extremely experienced leadership teams that understand what needs to be done to optimize the performance at a facility, and hanging on to those people and listening to them and making
ETHANOLPRODUCER.COM | 35
SOURCE: CHRISTIANSON CPA & ASSOCIATES
a plan going forward is the most important thing they can do,” she says. Lindstrom notes another reason for optimism is the amount of value plants have been able to extract from corn in recent years. She says increased corn oil and ethanol yields are consistent across the industry, and allow plants to lower their carbon intensity scores, while boosting efficiency. “The more energy you can get out of the same bushel of corn, the lower the carbon intensity is for those products,” she says. That’s an advantage as more plants look to sell into California for its Low Carbon Fuel Standard, or prepare for similar programs in other areas of the country, Lindstrom says. “As it becomes clear that other areas will probably develop some kind of carbon-impact scoring for their products and that that will probably also add value, it’s something that’s becoming more and more feasible for everybody to think about.”
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Apart from seeking new market opportunities and considering the costs associated with efficiency gains, plants can also take steps to manage their risk, according to Chip Whalen, vice president of education and research at Commodity & Ingredient Hedging. Considering input costs and forward contracts for ethanol can help hedge against the uncertainty in the corn market, he says. “We have futures contracts that are listed out for several months, years, on corn as well as natural gas and at least several months into the future on ethanol as well,” Whalen says. “If we can identify what we would call a positive crush margin, or that difference between the revenue value on the one hand and the input cost on the other, go ahead and protect that as a single unit of risk.” But with the current markets, maintaining a positive crush margin can be difficult, if not impossible. So, Whalen says, it becomes important to look at individual risk factors, such as the price of corn. He says a strategy he encourages is creating a diverse portfolio of contract options. “Maybe I’m laying off some of the risk by trying to have those increased forward commitments with the grower in the cash market, or trying to lay off another piece of the risk by using futures and options or using basis contracts and kind of spreading the risk across a number of different strategies or contracting alternatives.”
FINANCE Those alternatives could be futures, forward contracts, options, or other alternatives. With uncertainty from weather conditions and ongoing trade negotiations in the current market, managing that risk is a difficult prospect. This year’s corn crop is a significant contributing factor. The U.S. Department of Agriculture’s July Crop Progress and Condition report for corn (the most recent available at press time) showed 2019’s crop condition was at its lowest since before 2015. As of July 7, 98 percent of the corn crop had emerged in the 18 largest corn-producing states. But only 8 percent was silking. The average for silking for the 20142018 crop years is 22 percent. Seventy-five percent of the crop was rated good or excellent. While this year’s corn crop might provide challenges, Whalen says the trend in the past several years has been declining margins. “Since 2014, the margins have been much more compressed, and it’s been more difficult, and I think this may be a function of the industry maturing,” he says. “I think plants might have to be a little more proactive in trying to manage those forward margins. So, for example, historically a 30- or 40-cent margin might have been really, really strong. Now it’s maybe more of a 15- or 20-cent margin.” With conditions like those, Whalen says, it becomes more important for plants to manage both their input costs and the prices they get for their ethanol and coproducts.
Standing Out Through Evolution
Nick Lurty, principal consultant at n Solutions, says the ethanol industry won’t see a return to the higher margins that were common before 2014. “I often hear and read about margin cycles within the ethanol industry,” he says. “Our view is we are in a margin trajectory—a well-trodden path toward commoditization where tight, smart markets favor vertical economy of scale. This trajectory will transform a disparate, unorthodox competitive structure characterized by many singular, independent producers with broad EBITDA performance to a more traditional, consolidated competitive structure composed exclusively of top quartile EBITDA performers.” To stay viable in a maturing industry, Lurty says the first step is to maintain operational effectiveness (OE). “OE determines
SOURCE: CHRISTIANSON CPA & ASSOCIATES
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today’s profit and foundational-to-financial performance leadership,” he says. “Sustainability favors the lowest-cost producer for profitability and resiliency against volatility. Prior to expanding or seeking other value creation mechanisms, OE squeezes every bit of value from existing assets promoting capital efficiency. Thus, OE must be a first priority, core competency in your organization.” While being an efficient and low-cost producer through optimizing OE is key, it alone isn’t enough for ethanol plants to be sustainable. The cost advantages gained through OE are temporary and eventually reach a point of diminishing returns. Lurty says plants, particularly smaller plants, need to differentiate themselves in order to remain sustainable. And, he says, the way to do that is to move from ethanol plants to biorefineries and offer products for different markets. Sugar production for biotechnology is one of those markets. “The most expensive aspect of biotechnology, I don’t care what market you’re in, is the substrate cost, the sugar cost.” And because ethanol producers can produce a lowcost sugar, Lurty says they should leverage that strength, combined with the capability of bioengineered organisms, to produce a variety of products. “That’s a core competency, that’s a competitive advantage for the industry and it is technology, and so we want to leverage that ability and there’s certainly a lot more dialogue in sugars,” Lurty says. But the sugar market is just one example. Lurty says n2’s goal is to help plants create an innovation plan, which he says starts with planning for the future. Whether that innovation includes entering a new market or investing in a new technology, Lurty says the decisionmaking process needs to be sound. “When we talk to clients, we see that there seems to be a gray area in explaining that process of deci-
sion-making—the investigation process, what other things they investigated and why they chose that one over an alternative investment. I think that’s what we’re trying to pitch here. Not going out there and inventing a mouse trap for yourself, but structuring your decisionmaking process for the next technology.”
The Costs of Efficiency
As plants seek to make their operations more efficient, Brittany Ferguson, senior associate at KCoe Isom says there are costs associated with efficiency gains that may not always be appreciated. “Sometimes you have to think more of the qualitative versus the quantitative and where the value is really at,” she says. “For example, when you think of implementing a new technology, that’s fine if it’s going to increase your yields and you’re going see better margins and profitability. But what if your plant managers don’t want that technology, and if they don’t want it, you don’t have their buy-in, you lose employee morale, and then you start having turnover. You just added technology to increase your yields, but did you just also create a massive turnover which then is going to decrease your profitability because you’re scrambling, you’re losing skill sets.” So, it’s important for plants to consider all consequences of implementing new technologies or processes. “It’s going to impact some sort of aspect of your company,” Ferguson says. “So make sure you have been very thoughtful and mindful and make sure you have considered all the benefits, all the costs, all the quantitative and qualitative factors.” And that’s something Ferguson says more ethanol plants are becoming attuned to. “I think I’ve seen more ethanol plants realize the importance of what I would call valueadded aspects of the business versus just going through the motions and building yield—doing things for the plant that is beneficial long-
38 | ETHANOL PRODUCER MAGAZINE | SEPTEMBER 2019
term and brings overall value to the firm,” she says. “In the last 18 months or so, while margins have been tight, plants have been forced to look at these value-added tasks, or nonvalue-added tasks and eliminate them.” Two value-added opportunities plants have are IT audits and documentation of processes and procedures. The IT assessment is important, Ferguson says, in identifying potential weaknesses. She says several of KCoe’s ethanol plant clients have seen virus attacks in recent months. “The value that’s truly there to be able to identify those weaknesses in an anticipatory fashion or proactive fashion, versus having to be reactive,” she says. Documenting a plant’s processes and procedures is also important in identifying potential impacts to profitability, she says. “If you start digging into all of the procedures and everything that’s going on in the business operation, then you can make sure that your operations, one, are maintaining a sense of internal control but, two, are also playing to the biggest strengths of your employees,” Ferguson says. Examples include matching employees with tasks that align with their strengths, as well as distributing workload more evenly among employees. That plays into a large qualitative factor that can impact a plant: employee morale. She says most of the plants KCoe works with don’t have morale issues because they have good cultures. “Creating that tone at the top is critical,” she says. “We’ve got a saying here at KCoe that communication is a core business process. And what we mean by that is just communication across all levels of management, communication across the firm, the clients, it’s really about a culture of communication.” Author: Matt Thompson Associate Editor, Ethanol Producer Magazine 701.738.4922 email@example.com
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