September 2008 Ethanol Producer Magazine

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A r c h i t e c t u r e ,

C o n s t r u c t i o n ,

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inside

SEPTEMBER 2008 . VOLUME 14 . ISSUE 9

features 64 EQUIPMENT Beginning of the Blender Pumps

100 FRACTIONATION A Food and Fuel Technology Bundle

A group of South Dakota ethanol supporters knew they were onto something

ICM Inc. has proven its dry fractionation technology by colocating a food

when they came up with the idea to use blender pumps to increase ethanol

processing facility with an ethanol plant. The design firm is now ready to deploy

consumption. Today, despite a few setbacks, their idea is catching on.

its technology to dry-grind ethanol plants and, at the same time, quell the

By Erin Voegele

food-versus-fuel debate. By Ron Kotrba

72 INDUSTRY Overcoming E20’s Obstacles

108 USE Rocky Mountain E85

The momentum behind the effort to increase the standard ethanol blend level

The Colorado Governor’s Biofuels Coalition has accomplished its mission to

from 10 percent to 20 percent was revved up when Minnesota passed a law

increase the use of ethanol and biodiesel. With its help, the state has increased

requiring that its fuel consist of at least 20 percent ethanol by 2013. Several

the number of gas stations offering biofuels from 11 to nearly 100 in 1½ years.

tests are required, however, before that can happen. By Kris Bevill

By Timothy Charles Holmseth

Page 92

Page 100

Page 116

80 PROFILE Good Neighbors

116 POLITICS Food, Fuel and Politics

You won’t find any ethanol NIMBYs (Not in My Backyard) in Watertown, S.D.

The Grocery Manufacturers Association and others supporting the Food

The Glacial Lakes Energy LLC plant on the edge of this community is proof

before Fuel campaign say they aren’t against biofuels and are only concerned

that ethanol production can economically benefit rural communities and the

about consumers. The question is: Are the food companies really worried that

surrounding area. By Susanne Retka Schill

consumers are paying more for food, or are they more concerned about their own profits? By Anna Austin

92 TECHNOLOGY Challenge X: The Last Lap A four-year competition that involved students from engineering programs at 17 colleges and universities could result in some real-world applications for automakers. EPM talked with some of the competitors who used ethanol to fuel their vehicles. By Bryan Sims

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

7

© Novozymes A /S · Customer Communications · No. 2007-35469-02

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inside

SEPTEMBER 2008 . VOLUME 14 . ISSUE 9

departments

contributors

11 Advertiser Index

124 RISK

14 The Way I See It

By Mike Bryan Bioenergy Takes Emphasis over Biofuel

15 Letter to the Editor 20 Business & People 24 Commodities 26 A View from the Hill

By Bob Dinneen Americans See Through the Blame

27 RFA Update 28 eBIO Insider

By Robert Vierhout Food for Thought

30 Industry News & BIObytes

Six Traits of Successful Ethanol Producers: Keys to Effective Risk Management Escalating corn price volatility and legislative uncertainty, among other concerns, is creating market conditions that require detailed attention to risk management. Profitable ethanol producers typically share some common traits.

By Tom Wapp

130 POLICY

Measuring the Total Carbon Footprint of Biofuels Through Life-Cycle Analysis The United States and European Union have determined ways of measuring the greenhouse gas emissions of biofuels. The biggest question may be how the varying standards impact international biofuels trade and production.

By Kenneth J. Markowitz, Bernd G. Janzen and Emily C. Schilling

134 CONSTRUCTION

Applying Lessons Learned from Previous Construction Slowdowns While the primary causes may vary, the power industry construction slowdown of the mid-1990s offers a plethora of lessons for the current state of the ethanol industry. While problems may exist, proper planning may provide a bright horizon.

By Colin Reid

40 Plant Construction List 48 Our Plant

By Craig A. Johnson Demonstrating Speed, Accuracy

50 In the Field

By Susanne Retka Schill Matching Corn Buyers, Sellers Electronically

52 Up Front

By Kris Bevill Passionate About Enzymes

54 Flex Factor

By Timothy Charles Holmseth Adkins Energy, EPIC Team Up

56 Business

By Bryan Sims Venture Capital Remains Robust

58 Drive

By Toni Nuernberg Blender Pumps Offer Freedom of Choice

60 Legal Perspectives

By James Lodoen and George Singer Financial Restructuring Alternatives for Bioenergy Companies

138 Events Calendar 140 EPM Marketplace

Ethanol Producer Magazine: (USPS No. 023-974) September 2008, Vol. 14, Issue 9. Ethanol Producer 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 Ethanol Producer Magazine/Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, North Dakota 58203.

on the web EthanolProducer.com’s most-read Web exclusive news stories for July 1.

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Judge rules on Bateman Litwin lawsuit VeraSun postpones VE30 launch Brazil launches campaign to remove ethanol tariff Mascoma advances plans for Michigan plant U.S. Biofuels Exchange establishes marketplace RIN compliance surprisingly low Biomethodes, Virginia Tech sign agreement ABF, Mascoma to develop cellulosic ethanol Airgas to colocate carbon dioxide plant WASDE: Corn cash, future prices remain strong

BPA Worldwide Membership Applied for October 2006

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

9

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Ad Index 89 2009 International Fuel Ethanol Workshop & Expo 78 Advanced Biofuels Workshop 55 Afton Chemical Corp.

33 Agra Industries Corp.

53 American Petroleum Institute 4 American Railcar Industries Inc. 6 Anhydro Inc. 94 Aqua Power Inc. 23 Aquatech International 31 Barr-Rosin Inc. 128 BBI International Community Initiative to Improve Energy Sustainability (CITIES) 62, 91, 129 & 149 BBI Project Development 104 Best Energies Inc. 34 BetaTec Hop Products Inc. 70 Biodiesel & Ethanol 101 DVDs 106 Biofuels Australasia 114 & 125 Biofuels Canada 99 & 136 Biofuels Recruiting 84 & 110 Biomass Magazine 63 Buckman Laboratories Inc. 5 Burns & McDonnell 35 Calbrandt 121 Cereal Process Technologies LLC 111 Check-All Valve Mfg. Co. 112 Chemineer Inc. 36 Christianson & Associates PLLP 68 Clifton Gunderson LLP 71 Coverall Building Systems 113 Crown Iron Works Co. 79 dbc SMARTsoftware Inc. 59 Delta-T Corp.

86 & 150 Distillers Grains Quarterly 61 Eaton Filtration 69 Eisenmann Corp.

12 Electro Sensors 15, 88 & 122 ethanol-jobs.com 90 Ethanol Promotion & Information Council 85 Exothermics Inc. 3 Fagen Inc. 74 FCStone LLC 123 Fermentis 37 Energy from Biomass and Waste Expo & Conference 115 Genencor International Inc. 16 & 17 GreenShift Corp.

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

105 2 10 51 45 120 107 43 57 42 44 18 22 98 75 77 76 8 118 32 29 19 152 96 46 102 83 97 39 151 131 82 119 38 103 127 95 66 & 67 87 135 47 126 132 133 137

HEMCO Industries ICM Inc. Indeck Power Equipment Co. International Distillers Grains Conference and Trade Show 2008 Interstates Cos. Intersystems Inc. ITT Goulds Kennedy & Coe LLC Lallemand Ethanol Technology Mapcon Technologies Inc. McC Inc. Metso Automation Nalco Co. National Ethanol Conference Natwick Associates Appraisal Services Nestec Inc. Nexen Marketing USA Inc. Novozymes Ortman Ethanol Water Resources Paragon Enterprises LLC PhibroChem Pioneer Hi-Bred International Inc. Poet LLC Primafuel Inc. Pro-Enviornmental Inc. R&R Contracting Inc. RailWorks Track Systems Inc. Resonant BioSciences LLC Renewable Fuels Association Robert-James Sales Inc. SafeRack LLC Salco Products Inc. Seneca Waste Solutions Siemens Energy & Automation Inc. Smar International Corp.

Spraying Systems Co. Strongform Nationwide Industrial Builders Sulzer Chemtech USA Inc. TDC Dryers Trico TCWind Inc. Vaperma Inc. Victory Energy Operations LLC Vogelbusch USA Inc. Volkmann Railroad Builders Inc. WIKA Instruments Corp.

11

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Standard 4-20mA technology. Electro-Sentry™ utilizes standard 4-20mA signals, as opposed to proprietary software or “black boxes” which can be limiting or challenging to support. Two-wire, loop-powered 4-20mA temperature transmitters monitor belt alignment and bearing temperature. Shaft speed feedback sensor outputs a 4-20mA signal across the RPM range of the shaft.

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Call 1-800-328-6170 or go to www.electrosentry.com ©2008 ELECTRO-SENSORS INC. • 6111 BLUE CIRCLE DRIVE • MINNETONKA, MN 55343

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E D I TO R I A L

A RT

PUBLISHING & SALES

Jessica Sobolik Managing Editor jsobolik@bbiinternational.com

Jaci Satterlund Art Director jsatterlund@bbiinternational.com

Mike Bryan Publisher & CEO mbryan@bbiinternational.com

Dave Nilles Contributions Editor dnilles@bbiinternational.com

Sam Melquist Graphic Artist smelquist@bbiinternational.com

Kathy Bryan Publisher & President kbryan@bbiinternational.com

Rona Johnson Features Editor rjohnson@bbiinternational.com

Elizabeth Slavens Graphic Artist bslavens@bbiinternational.com

Joe Bryan Vice President of Media & Events jbryan@bbiinternational.com

Ron Kotrba Senior Staff Writer rkotrba@bbiinternational.com

Jack Sitter Graphic Artist jsitter@bbiinternational.com

Tom Bryan Vice President of Communications tbryan@bbiinternational.com

Jerry W. Kram Staff Writer jkram@bbiinternational.com

Matthew Spoor Sales Director mspoor@bbiinternational.com

Susanne Retka Schill Staff Writer sretkaschill@bbiinternational.com

Howard Brockhouse Senior Account Manager hbrockhouse@bbiinternational.com

Bryan Sims Staff Writer bsims@bbiinternational.com

Clay Moore Account Manager cmoore@bbiinternational.com

Kris Bevill Staff Writer kbevill@bbiinternational.com

Jeremy Hanson Account Manager jhanson@bbiinternational.com

Timothy Charles Holmseth Staff Writer tholmseth@bbiinternational.com

Chip Shereck Account Manager cshereck@bbiinternational.com

Erin Voegele Staff Writer evoegele@bbiinternational.com

Tim Charles Account Manager tcharles@bbiinternational.com

Anna Austin Staff Writer aaustin@bbiinternational.com

Chad Ekanger Account Manager cekanger@bbiinternational.com

Suzanne H. Schmidt Staff Writer sschmidt@bbiinternational.com

Marty Steen Account Manager msteen@bbiinternational.com

Ryan C. Christiansen Staff Writer rchristiansen@bbiinternational.com

Marla DeFoe Advertising Coordinator mdefoe@bbiinternational.com

Hope Deutscher Online Editor hdeutscher@bbiinternational.com

Jessica Beaudry Subscriptions Manager jbeaudry@bbiinternational.com

Jan Tellmann Copy Editor jtellmann@bbiinternational.com

Jason Smith Subscriber Aquisition Manager jsmith@bbiinternational.com

Craig A. Johnson Plant List & Construction Editor cjohnson@bbiinternational.com

Erika Wishart Administrative Assistant ewishart@bbiinternational.com

Amber Armstrong E-Media Coordinator aarmstrong@bbiinternational.com

Christie Anderson Administrative Assistant canderson@bbiinternational.com Nicole Zambo Receptionist nzambo@bbiinternational.com

HOW TO REACH US

LETTERS TO THE EDITOR We welcome letters to the editor. Send your letter to: Ethanol Producer Magazine Letters, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203 or e-mail to jsobolik@bbiinternational.com.

Letters should include the writer’s full name, address and telephone number, and may be edited for purposes of clarity and space.

SUBSCRIPTIONS Ethanol Producer Magazine is now free of charge to everyone with the exception of a shipping and handling charge of $49.95 for any country outside the United States, Canada and Mexico.

To subscribe, visit www.EthanolProducer.com or you can send your mailing address and payment (checks made out to BBI International) to: Ethanol Producer Magazine Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203.

You can also fax a subscription form to (701) 746-5367.

CUSTOMER SERVICE AND CHANGE OF ADDRESS For service, please use our Web site at www.EthanolProducer.com. You can also call (866) 746-8385, or write to: Ethanol Producer Magazine, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203.

BACK ISSUES AND REPRINTS Select back issues are available for $3.95 each, plus shipping. To place an order, contact Subscriptions at (701) 746-8385 or subscriptions@ethanolproducer.com. Article reprints are also available for a fee. For more information, contact Christie Anderson at (701) 746-8385 or canderson@bbiinternational.com.

ADVERTISING For advertising rates and our editorial calendar, visit www.EthanolProducer.com or call (866) 746-8385.

COPYRIGHT Š 2008 by BBI International

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

13

The Way I See It Bioenergy Takes Emphasis over Biofuel

T

here are marvelous options opening up to the renewable energy industry. Ethanol has helped carve a path forward to a future based in bioenergy. It’s an industry that expands far beyond the borders of ethanol and biodiesel.

Bioenergy covers such a vast array of new opportunities—anaerobic digestion, gasification, pyrolysis, algae, and combined heat and power, to mention a few. What is so exciting about these technologies is that many of them can be incorporated into the present ethanol industry to improve operating efficiencies, reduce production costs and improve our carbon footprint.

Some plants, such as Corn Plus LLLP in Winnebago, Minn., have already begun this process. General Manager Keith Kor and the board of Corn Plus have already incorporated a fluidized bed boiler, along with other advanced technologies, that will provide them with the ability to more effectively ride out the fluctuations in feedstock and energy commodity markets.

The development of smaller ethanol process systems that would provide fuel for individual communities is also in the near future. More states are demanding that landfill gas be captured and used to create power. Both federal and state programs are quickly being developed to help communities find ways to not only reduce their energy use, but to become more energy independent.

In short, the renewable energy industry has turned a corner, embarking on a new and exciting path, likely not fraught with as much opposition as we have most recently faced. The years ahead will see communities and private industry focused on greater sustainability and the capture of valuable carbon credits. The ethanol industry will no longer be judged strictly on its efficiency, but likely on a carbon number assigned to each production facility. This carbon number will be based on the type of feedstock used, the distance the feedstock is from the plant and how it’s shipped.

To be sure, how we embrace and incorporate these new and evolving technologies—bringing us closer to carbon neutrality—will be a major part of our continued success.

That’s the way I see it!

Mike Bryan Publisher & CEO mbryan@bbibiofuels.com

14

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

Letter to t h e

Editor

I

think your article in the August issue (“Where in the Northeast is E85?”) was excellent. I was not aware that New York was among the top E85-selling states.

I live near Albany, and I fill up with E85 whenever I'm in town. Unfortunately, there is a real lack of E85 stations in other parts of the state, especially western New York, which ironically has an ethanol plant.

I am currently commuting between Boston and my home, and I can attest to the general lack of E85 in the Northeast. However, there is now a station in Chelsea, Mass., which would be much closer to New Hampshire than Albany. Unfortunately, for me to get there, I would have to pay a toll to cross the Tobin Memorial Bridge, which would negate any savings.

Chris Keating Kinderhook, N.Y.

Correction from our August 2008 issue: In the feature titled “Breaking the Catalytic Barrier to Biofuels,” it incorrectly stated that Christopher Jones was working with Range Fuels. He will be working on a project to develop and improve heterogeneous catalysts used for transforming synthesis gas into cellulosic ethanol, but the project isn’t in collaboration with Range Fuels.

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

15

Take advantage of GreenShift’s turn-key Corn Oil Extraction and Biodiesel Production capabilities and chose between extracting oil for conversion at our new fully operational biodiesel facility or extracting oil and producing biodiesel onsite at your facility.

Generate over $8 million in additional income for a 50 million gallon per year facility and over $12 million for a 100 million gallon per year facility.

Capitalize by purchasing our Corn Oil Extraction System and Co-located Biodiesel Production to receive the greatest return on investment while increasing your renewable fuel production.

Removing oil from your DDG can also be expected to enhance dryer operation while reducing drying costs, reduce emissions of greenhouse gases and to enhance the marketability of your remaining DDG.

GreenShift is the original inventor and industry pioneer of Corn Oil Extraction technology.

With over 40,000 hours of operational run time on our systems and years of know how integrating extraction technology into corn ethanol plants, GreenShift has established its technology leadership and proven its reliability.

Participating in GreenShift’s corn oil extraction program is guaranteed to bring you the highest return, on the shortest lead time, at the lowest risk, and for the least amount of capital deployed.

Established Technology Leadership.

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Contact GreenShift for more information about the future of Renewable Fuel production.

GreenShift Corporation 1 Penn Plaza, Suite 1612 • New York, NY 10119 phone: 1 888 ETHANOIL • email: sales@greenshift.com

www.greenshift.com

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High performance starts in the field

For ethanol plants looking for higher returns, Pioneer® brand High Total Fermentables (HTF) ethanol hybrids help farm operators deliver more grain with more ethanol per bushel. The Pioneer QualiTrakSM system accurately predicts ethanol yield potential (EYP) for each load of corn delivered to an ethanol plant. QualiTrak reports the EYP in “gallons per bushel” and has found variation among different hybrids ranging up to 7 percent.

Many HTF ethanol hybrids contain the Herculex® insect protection traits, helping reduce insect damage and the presence of molds and mycotoxins. This protection helps ensure a more consistent supply of high-yielding, high-quality grain. ™

Pump more ethanol from your bushels with Pioneer and ... TECHNOLOGY THAT FUELS.

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Herculex® insect protection technology by Dow AgroSciences and Pioneer Hi-Bred. ® Herculex and the HX logo are registered trademarks of Dow AgroSciences LLC. All hybrids with Herculex traits also contain the LibertyLink® gene.

LIBERTY, LibertyLink and the Water Droplet logo are trademarks of Bayer. ^

See product label for provisions of this mark.

MARKET CHOICES is a certification mark used under license from ASTA.

® TM SM , , Trademarks and service marks of Pioneer Hi-Bred.

All purchases are subject to the terms of labeling and purchase documents. © 2008 PHII INDSL010514P238AVAR1

The DuPont Oval Logo, DuPont™ and The miracles of science™ are trademarks or registered trademarks of DuPont or its affiliates.

BUSINESS&PEOPLE

Business& People Ethanol Industry Briefs Business

PHOTO: BBI INTERNATIONAL INC.

PHOTO: DOUG WOLLIN

VeraSun wins award, postpones VE30 launch

Cellencor's mobile microwave test unit was on display at Corn Plus LLLP in Winnebago, Minn., in March.

Iowa company invests in DDGS drying technology Iowa Corn Opportunities LLC, a company owned by the Iowa Corn Growers Association, has made an investment in Cellencor Corp.’s microwave drying process for distillers grains. The microwave technology reduces drying time by dehydrating the feedstock from the inside out, saving ethanol producers up to 20 percent of operating costs.

Although Cellencor’s main focus is the cornbased ethanol industry, the system also dries other feedstocks. EP

Judge issues ruling in Bateman Litwin lawsuit In the pending lawsuit filed by Dutch energy company Bateman Litwin NV against Robert and Bibb Swain, cofounders of Virginia-based ethanol process technology firm Delta-T Corp., a magistrate judge ruled in favor of the Swains, recommending that the fraud aspects of the case be dismissed. The judge also recommended that the Swains be allowed to move forward with defamation claims brought against Bateman Litwin and certain company executives. The lawsuit was originally filed in the U.S. District Court for the Eastern District of Virginia on Dec. 21, 2007, by Bateman Litwin, which claimed the Swains misrepresented Delta-T’s financial status during the July 2007 sale of the company. EP 20

Novozymes' booth was named the best at the FEW.

Companies dole out post-FEW accolades At the 2008 International Fuel Ethanol Workshop & Expo, Seattle-based Harris Group Inc. made a “spirit of giving” donation to a charity in the name of a special drawing winner. This year’s recipient of the $500 donation was Wes Bolsen, vice president of business development at Coskata Inc. He requested that the money go to Menlo Park, Calif.based Kingdom First Ministries, a nonprofit organization that provides Christian knowledge at Stanford University and the surrounding communities.

In addition, Novozymes was selected to receive the award for Best Booth at the FEW expo. Connie Provick, trade show manager at BBI International Inc., said Novozymes’ booth was chosen through an informal poll of exhibitors and expo attendees. EP

Share your Industry Briefs To be included in Business & People, send information (including photos or illustrations if available) to: Industry Briefs, Ethanol Producer 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 jsobolik@bbiinternational.com. Please include your name and telephone number in all correspondence.

Brookings, S.D.-based ethanol producer VeraSun Energy Corp. received an Iowa Governor’s Volunteer Award for its outstanding contribution through volunteer service.

The company was selected for the award by the Iowa Department of Education because of the assistance that VeraSun Albert City in Albert City, Iowa, gave the Albert CityTruesdale Community School District.

VeraSun helped construct a playground, provided financial support for school activities and purchased equipment for the school. The award was presented during a June 12 ceremony in Storm Lake, Iowa.

In other VeraSun news, the company had planned a June 30 launch of its trademarked VE30 fuel, a blend of 30 percent ethanol and 70 percent gasoline, at Olson Oil Co.’s Get-NGo station in Sioux Falls, S.D. However, the launch was postponed indefinitely. EP

Company markets dust collector to ethanol producers Imperial Systems Inc. in Jackson Center, Pa., has begun marketing its Big Round Filter dust collector to ethanol producers. The company has supplied numerous baghouses to customers in the grain and seed industry, and has identified a need for dust collection in ethanol plant receiving facilities, according to Imperial Systems spokeswoman Tricia Craig. The Big Round Filter can process 75,000 cubic feet of air per minute, and the company claims the dust collector is simpler and more rugged than other systems. It includes a high-entry inlet for lighter loading applications that would be used in distillers dried grains loadout areas. EP

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

BUSINESS&PEOPLE

Sponsored by

Aventine sells auction rate securities

White Energy contracts Pavilion Technologies

Pekin, Ill.-based Aventine Renewable Energy Holdings Inc. has sold $127.2 million per value of its student loan-based auction rate securities to various unnamed parties for cash totaling approximately $97.1 million. In its first quarter of 2008, Aventine recorded an impairment charge of $21.6 million related to the remaining auction rate securities it held March 31 that it didn’t report to the U.S. Securities and Exchange Commission in time. Taking into account the most recent sale, the company will still record an $8.5 million loss on the sale of those securities. According to the company, the funds received from the sale of its auction rate securities will be used to fund plant construction. EP

White Energy Inc. has contracted with Pavilion Technologies, a company owned by Rockwell Automation Inc., to utilize Pavilion’s Model Predictive Control technology in order to increase production and efficiency at White Energy’s three ethanol plants in Russell, Kan.; Hereford, Texas; and Plainview, Texas. The MPC system will create comprehensive models of the facilities that will predict and analyze plant process steps in order to increase yields and reduce energy consumption, ultimately maximizing plant performance. Pavilion has installed the MPC in more than 30 ethanol plants. EP

HPD wins evaporator contracts HPD, a Veolia Water Solutions & Technologies company with offices in Plainfield, Ill., and Bilbao, Spain, will provide evaporation systems for Abengoa Bioenergy’s proposed ethanol plant in Rotterdam, Netherlands, and Ag Processing Inc.’s ethanol plant in Hastings, Neb. The stillage evaporation systems will employ a three-effect falling film evaporation train followed by a high-solids concentration unit to produce up to 35 percent total solids entering the dryers for the Abengoa system and up to 50 percent for the AGP system. A higher syrup concentration sent to the dryer significantly decreases natural gas consumption and increases throughput of distillers dried grains with solubles. EP

PHOTO: ANDUIN KIRKBRIDE MCELROY, BBI INTERNATIONAL INC.

Business

Renova owns Wyoming Ethanol LLC in Torrington, Wyo.

Renova reorganizes U.S. operations After filing for Chapter 11 bankruptcy protection in late June, Renova Energy PLC said it expects to continue operations of its Boise, Idaho-based marketing and distribution firm Renova Energy Inc., and its ethanol production facility Wyoming Ethanol LLC in Torrington, Wyo. After filing for bankruptcy, Renova received $4 million in operating capital to continue operations while reorganization continued. Company Chairman Chris Thomas attributed the financial crisis to cost overruns on now-suspended construction of its 20 MMgy ethanol plant in Heyburn, Idaho. The company is in negotiations for the sale of the partially constructed plant. EP

DOE creates E85 station locator The second issue of Vital was mailed July 7.

Poet launches publication Sioux Falls, S.D.-based ethanol producer Poet LLC has launched a new quarterly trade publication, Vital. Mailed on July 7, the second issue was circulated to more than 21,000 readers, including investors, government officials, grain producers and community members. The publication will include community profiles, industry information and environmental advancements.

It will also cover issues concerning the future of the ethanol industry. Vital can be viewed online at www.poet.com/vital. EP

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

The U.S. DOE has created an alternative fueling station locator on its Alternative Fuels and Advanced Vehicles Data Center Web site, which among other fuels includes international public and private E85 fuel stations. For the past 14 years, the center has been collecting data for the tool, which allows a user to search by address or zip code. Users in the United States have advanced options, such as a mapping feature that constructs a route from a specified starting point to a desired destination and provides information on the closest E85 stations along the way. To access the tool, visit www.eere.energy.gov/afdc/fuels/stations .html. EP 21

Business

People Emalfarb rejoins Dyadic

Environmental Sustainability, Process Efficiency.

Mascoma, ABF advance Michigan plant plans Boston-based Mascoma Corp. is collaborating with Associate British Foods to develop advanced conversion methods for use in cellulosic ethanol production. Mascoma will focus on engineering, fermentation and process development, while ABF will work on enzyme development and management of the enzyme supply chain. The collaborative goal is a simplified saccharification and fermentation process, which will require less capital investment and lower operating costs. Mascoma recently selected Michigan as the site of its first commercial-scale cellulosic ethanol plant.

The company expects to have a full-scale plant operational by 2012. The exact location was not yet finalized. EP

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22

™

Leading ethanol plant design/builder Fagen Inc. and Frontline BioEnergy LLC have announced a new partnership. “Kicking Gas with Biomass” is one of its slogans, and executives of both companies are hoping to help new and old ethanol plants significantly reduce natural gas consumption for process heat and steam, while laying the foundation for future ethanol production from biomass.

Frontline, a biomass gasification systems provider, is partly owned by Chippewa Valley Ethanol Co., a 47 MMgy ethanol plant in Benson, Minn., which installed a Frontline gasifier currently powered by wood waste.

CVEC General Manager Bill Lee said Fagen saw an opportunity to make the ethanol plants it has built better by incorporating Frontline technology. EP

Mark Emalfarb, who was fired from his position as chief executive officer of Dyadic International amid a tax scandal last year, has been reinstated as chairman and CEO. The decision came June 20 at Dyadic’s court-ordered annual shareholder meeting in Palm Beach Gardens, Fla., where a group of shareholders led by Emalfarb restructured the board in their favor. EP

VeraSun chairman resigns Brookings, S.D.-based ethanol producer VeraSun Energy Corp. announced July 1 that Gordon Ommen had resigned as the company’s chairman. Ommen, who formerly served as U.S. BioEnergy’s president and chief executive officer, was named chairman during the March merger of the two companies. He has been succeeded by Duane Gilliam, who joined VeraSun’s board in 2005. EP

Range Fuels makes additions Broomfield, Colo.-based Range Fuels has appointed former Federal Regulatory Commission Chairman Pat Wood to its board of directors. He has 20 years of energy regulation and infrastructure development experience.

In addition, John Wood Winter joined the company as the new vice president of process engineering. Previously, he worked for Evergreen Energy as vice president of engineering. He has 30 years of experience in Winter operating gasification plants, research and development, and process engineering, including process design and development optimization. “I liked what I saw, touched and heard,” he said, describing his first impression of Range Fuels. EP

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COMMODITIES REPORT Natural Gas Report

Finally, some price relief July 18—At press time, we were in the midst of the first meaningful natural gas and oil price decline of 2008. On July 7 the opening natural gas market price was $13.50/MMBtu. On July 17 the closing natural gas market price was $10.64/MMBtu, a 21 percent drop. Crude oil also experienced a drop, although not as dramatic. On July 7 crude opened at $144.27 per barrel and closed July 17 at $129.29 per barrel, a 10 percent drop.

The previous “big move” down for natural gas this year was mid-March when the market dropped from $10.23/MMBtu to $9.02/MMBtu. By mid-April prices rallied, reaching a high of $13.57/MMBtu in early July. Is the recent market decline for real

By Casey Whelan, U.S. Energy Services Inc.

and does it represent the beginning of even lower prices, or will we again rally back and blow through the high?

Unfortunately, I think the answer rests to a greater degree on what happens with oil prices than with underlying natural gas market fundamentals. Arguably, natural gas market fundamentals are as good as or better than one year ago. Liquefied natural gas receipts are off somewhat. However, incremental domestic production appears to have more than made up the short fall. In addition, weather has been moderate. In spite of relatively good fundamentals current natural gas market prices are 63 percent higher than one year ago. The market closing price on July 18, 2007, was $6.53/MMBtu. Oil prices are 72 percent higher than one year ago. The July 17, 2008, price was $129.29 per barrel and the July 18, 2007, price was $75.05 per barrel. The relevant question becomes: Where are oil prices going? The answer: It depends. If the U.S. dollar continues to weaken and the world economy continues to be robust, oil prices will likely remain high. However, if the U.S. dollar rallies and/or the world economy falters, oil prices may decline further.

Our recommendation is to begin looking at coverage for this fall and next winter, preferably using option structures. EP Casey Whelan, vice president of strategic initiatives, can be contacted at cwhelan@usenergyservices.com.

Corn Report

CRP, input costs raise ’09 concerns July 18—The corn market experienced a massive sell-off into early July as funds liquidated financial commodities. Improved crop and weather conditions allowed traders to feel that the threat from the early June floods has eased. Speculators became sellers in this quick market environment.

The USDA July supply and demand report was released, and as expected carry-out increased for both old crop and new crop corn. Old crop corn carry-out increased 165 million bushels versus last month.

New crop corn carry-out increased by 160 million bushels versus the previous estimate of 673 million bushels. The June 30 plantings report placed the latest projection at 87.3 million acres, which equates to 78.9 million harvested acres. The USDA reduced the yield by 0.5 bushels to 148.4 bushels per acre. So why did the carry-out increase? That was due to a reduction in corn use in the ethanol and feed sectors. Ethanol was projected to use 50 million less bushels of corn in both the current and next marketing years. The feed sector is expected to consume an additional 50 million bushels versus the previous estimate.

The big concerns going into the 2009-’10 crop year is what will the USDA do with Conservation Reserve Program acres and how much would actually return to production agriculture? If so, what 24

By Jason Sagebiel, FCStone

grain/oilseed commodities will be impacted? This is why new crop corn prices in 2009 will become a potentially volatile situation. With the recent price devaluation in corn and inherent higher input cost for corn production, what will the financial situation be for producers to make a decision going into next year’s planting season? Therefore, December, January and February prices may trigger a high volatility scenario between corn and soybeans. EP ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

COMMODITIES REPORT DDGS Report

By Sean Broderick, CHS Inc.

Prices dip with corn during mid-summer lull July 21—As mid-July hit, distillers grains prices, which ratcheted up with the rally in corn futures, were falling with them as well. Ingredient buyers, many of whom jumped in as corn looked to easily rally to $8 per bushel, were sitting on the sidelines buying only what they needed and as near term as they could safely manage. Any conversation of forward buying was accompanied by questions of discounts. The lack of forward buying was unprecedented, both in near-term and new-crop slots. Generally, in mid summer, 50 percent to 70 percent of the next year’s new crop production has been sold. This year, it has been estimated that less than 10 percent has been contracted.

Despite the price uncertainty, export demand remains robust, no doubt due to the lead time associated

with logistics for the container and bulk business. In the bulk market, Asian demand will be affected by the spread of shipping rates from the Pacific Northwest versus the Gulf of Mexico, as distillers grains will most commonly move in conjunction with corn cargoes.

A lot will depend on the margin structures for ethanol plants. Many had their summer corn bought early at favorable numbers and enjoyed the run-up in ethanol prices, as it is common for plants to be in the spot market in the summer months. Poor margins may lead to slowdowns or shutdowns and will definitely be on the minds of those plants still under construction. In the end, there will be no doubt that supply—the excess or lack thereof—will be as much of an influence on prices as the Chicago Board of Trade. EP

Regional Ethanol Prices (Monthly averages in cents per gallon)

BULK SPLASH/ TRUCK (rack) TOP OFF (rack)

REGION

SPOT

West Coast

295.658

294.21

297.76

Midwest

280.605

284.08

287.772

East Coast

295.684

----

328.87 Source: OPIS

Regional Gasoline Prices (Monthly averages in cents per gallon)

REGION

SPOT

RACK

RETAIL

West Coast

342.733

359.936

441.958

Midwest

336.399

345.792

402.924

East Coast

330.268

345.357

406.097 Source: OPIS

DDGS Prices ($/ton) AUG. 2007

AUG. 2008

JULY 2008

Minnesota

165

175

90

California*

202

230

134

Chicago, Ill.

155

165

103

Buffalo, N.Y.

163

170

115

Central Florida

195

205

131

LOCATION

*Central Valley

Source: CHS Inc.

Corn Futures Prices (September corn, $/bushel) HIGH

LOW

CLOSE

July 16, 2008

6.37 1/4

6.08 1/4

6.09 1/2

June 16, 2008

7.72 1/4

7.38 1/2

7.46 3/4

July 16, 2007

3.38

3.34 3/4

3.34 3/4

DATE

Source: FCStone

Ethanol Report

Ethanol in midsummer swoon July 18—With petroleum markets finally appearing to end its 2008 bull run and corn also coming back down to earth, any supportive sentiment for ethanol seemed to disappear as July ethanol markets turned sharply lower across the country.

The post-Independence Day reversal was most severe in New York Harbor.

Driven by cargo delays, empty tanks and immediate blending needs, spot ethanol prices for July shot up to $3.25 per gallon going into the long holiday weekend.

However, by late July, Harbor ethanol threatened to break below $2.70 per gallon—a 55 cent reversal in a little more than two weeks.

Market sources explained that once rail problems were worked out from the vestiges of Midwest flooding along with arrival of overseas material, big buying

By Spencer Kelly, OPIS

turned to big selling, reportedly led by a petroleum major before others joined in.

Still, losses were not confined to New York. Chicago ethanol for July traded to the lower $2.40s per gallon heading into the latter part of the month, representing a price drop of 40 or more cents since June. August and fourth-quarter prices mirrored prompt-month losses, often several cents under July.

At Midwest racks, ethanol prices also started to come down but remained generally higher than at the end of June.

Iowa ethanol racks, averaging $2.90 per gallon by late July, dropped about 7 cents from its highpoint over the month, but still held a 3 cent advantage versus the end of June. EP For more information, contact OPIS Ethanol & Biodiesel Information Service at (888) 301-2645.

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

Cash Sorghum Prices ($/bushel) Superior, Neb. Beatrice, Neb. Sublette, Kan. Salina, Kan. Triangle, Texas Gulf, Texas

JULY 2008

JUNE 2008

JULY 2007

5.07 5.12 5.27 5.12 5.39 5.16

6.19 6.44 6.39 6.44 6.61 6.77

2.93 3.03 2.71 3.23 2.95 3.41 Source: Sorghum Synergies

Natural Gas Prices ($/MMBtu) JULY 18, 2008 JUNE 19, 2008

JULY 18, 2007

NYMEX

10.66

12.87

6.53

N. Ventura

10.12

11.67

6.06

Calif. Border

10.42

12.36

5.99 Source: U.S. Energy Services Inc.

U.S. Ethanol Production Output (barrels/day) April 2008

562,000*

March 2008

561,000

April 2007

391,000

*all-time monthly high

Source: U.S. Energy Information Administration

25

VIEW FROM

THE HILL

Americans See Through the Blame By now, you’ve heard the same lines over and over: Ethanol is causing the rise in food prices. Corn is being diverted to ethanol production which means less food for the world’s hungry. Milk over $4? It must be ethanol’s fault.

Even the Organization of Petroleum Exporting Countries has jumped into the fray.

President Chakib Khelil recently commented that ethanol is causing a 40 percent rise in gasoline prices. How’s that for manufactured hysteria? Coming from an organization that represents those who most profit from high oil prices, his figures definitely seem dubious. He has yet to offer any explanation for the method which he employed to arrive at this percentage.

Have you ever wondered, though, if those words were actually sinking in? Does your neighbor actually believe that his or her eggs cost double what they did last year due solely to the increased production of biofuels? Are biofuels the pariah OPEC claims?

According to a new poll, the answer is no.

Democratic pollsters Greenberg Quinlan Rosner Research and Republican pollDinneen sters Public Opinion Strategies polled 1,200 registered voters from June 23 through July 1 about the use and impact of ethanol on the economy. By an overwhelming factor of 2 to 1, the voters responded that they are supportive of increasing the use of ethanol.

That’s right. Despite well-funded and coordinated anti-ethanol campaigns, they have failed to persuade the American people into believing their rhetoric. Indeed, the agreement on ethanol stretches across party and economic divides to unite Americans from all sections of life.

“Asked if they favor or oppose continuing to increase use of ethanol, an impressive 59 percent come out in favor, while just 30 percent oppose,” according to the poll results. “Support is even higher (63 percent) among environmentalists. Men and women, older voters and younger voters, high school educated and college graduates, and voters from all regions in the country support this alternative fuel. Most impressive, though, at a time when Democrats and Republicans cannot seem to agree on anything, they agree on the increased use of ethanol.”

The poll also revealed that half of Americans blame oil for the high cost of food. Leaders of oil-producing nations and even some lawmakers here at home have worked tirelessly to propagate misinformation at a time when lies like this become more dangerous every day. However, remarkably, fewer than 1 in 10 voters actually blame ethanol for higher food prices, the poll found.

The public cannot be fooled. The poll showed that Americans are more likely to support a candidate for president who supports the increased use and production of biofuels than a candidate who does not.

The American people have always shown that in times of great stress and sadness they can persevere. Clearly, they have seen through massive public relations campaigns to the truth.

Those are some words to let sink in.

Bob Dinneen President and CEO Renewable Fuels Association

26

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

RFA UPDATE

Industry leaders respond to import tariff opposition Responding to recent calls to repeal the secondary tariff on imported ethanol, U.S. farmer, commodity and ethanol leaders wrote to President George W. Bush, calling his attention to the importance of a growing ethanol industry to the nation’s energy, economic and environmental security, and reiterating support for the tariff so that U.S. taxpayers aren’t asked to subsidize imports.

The American Coalition for Ethanol, Ethanol Producers and Consumers, National Association of Wheat Growers, National Corn Growers Association, National Farmers Union, National Sorghum Producers and the Renewable Fuels Association pointed to factors such as oil prices, rising demand, drought and the declining value of the U.S. dollar as having more effect on the price of food than biofuels. They urged the president to avoid yielding to misguided efforts to blame ethanol for rising prices and to prevent American taxpayers from subsidizing foreign products.

“The 54 cent-per-gallon secondary tariff was enacted by Congress in 1980 to offset any incentive for imported ethanol to benefit from the 54 cent-per-gallon tax credit for ethanol blended into motor fuel,” the letter said.

“This tax credit is taken by refiners who blend ethanol into motor fuel, not ethanol producers. The purpose of the secondary tariff is to protect American taxpayers from subsidizing imports, not to protect domestic ethanol producers.”

The entire letter is available at the RFA Web site, www.ethanolrfa.org.

The Organization for Economic Cooperation and Development recently released a study, “Economic Assessment of Biofuel Support Policies,” that estimates the potential worldwide impact of removing all governmental support for biofuels production and use. The report offers a number of recommendations, including a call on world governments to remove tariffs on biofuels and to consider “alternative policy approaches.”

However, an analysis of the report finds that the data generated do not support the conclusions or policy recommendations made by the OECD. Nor do the data support OECD officials’ calls for a moratorium on biofuels.

Rather, the data support the conclusions that biofuels policies are having a minimal impact on food prices and result in reducing greenhouse gas emissions.

The OECD credits ethanol produced from corn starch with a 30 percent reduction in greenhouse gas emissions if using natural gas, and a 50 percent reduction if the facility is biomass-powered. Based on this finding, a moratorium is unwarranted.

In addition, the modeling included in the report suggests that a 28 percent drop in world oil prices would cause a 12 percent reduction in world coarse grain prices, underscoring the fact that skyrocketing oil prices are the largest driver behind increasing grain prices. By contrast, removing biofuels mandates such as the renewable fuels standard would reduce coarse grain prices by just 1 percent.

More information on the report is available at www.ethanolrfa.org.

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

www.ethanolRFA.org

Review of OECD biofuels report confirms significance of oil prices

27

eBIO INSIDER

Food for Thought

By Robert Vierhout

E

uropean Union regulators are still debating a rather complicated and detailed set of rules on how to promote and use renewable energy in transport. The discussion on biofuels sustainability criteria began more than a year ago, triggered by concerns at the parliamentary level due to a proposed law on fossil fuel emissions standards, which some politicians suspected would result in high volumes of imported biofuels from tropical areas. An unholy alliance of environmental non-governmental organizations and the food industry, concerned about pressured profit margins, started campaigning against biofuels, calling for a worldwide moratorium on their production. Failing that, they called for the highest possible sustainability standards.

Their campaign was supported by oil industry life-cycle analysis showing not only poor greenhouse-gas savings but a negative energy balance for non-sugarcane ethanol. The final piece of the anti-biofuels jigsaw was “evidence” of devastating land use changes. For some, the Searchinger, et al study, “Use of Croplands for Biofuels Increases Greenhouse Gases Through Emissions from Land-Use Change,” was the ultimate argument to declare biofuels dead. The research undermined the clear thinking of many European politicians. Those who embrace this not-so-rigorous science seem to forget that land use change effects are not a new phenomenon.

The perfect storm against biofuels occurred when agricultural commodities prices increased. The result was an incredibly biased discussion on the impact of biofuel production on food availability and food prices by international bodies such as the International Monetary Fund, World Bank, Organization for Economic Cooperation and Development, and the Food and Agriculture Organization. Some non-governmental organizations, vested interests, media and politicians happily joined in.

For more than a year we have seen one hostile report after another followed by negative and damaging media coverage.

However, the tide is turning. More people are now convinced that the bigger evil is fossil fuel. A crude oil price of more than $140 per barrel has not missed its effect on fuel and food prices. Transport emissions also keep rising. Something

28

needs to be done to curb this, and biofuels are the only shortterm solution, which more people seem to realize.

Fewer than six months ago a majority of EU politicians called for scrapping the proposed EU mandatory target of biofuels (10 percent by 2020). These voices have now become a minority, but the political debate is not over. The price to be paid for keeping the target is an ever-growing number of rules/criteria on environmental and social-economic sustainability. In the European Parliament 1,500 amendments on the Renewable Energy bill has been tabled, of which an overwhelming majority is on biofuels. What we see is a kind of number-throwing contest on greenhouse gas savings, penalties for land use change effects and the level of the biofuels target that needs to be achieved by 2020.

In all of this there is at least one potentially positive thing.

If biofuels must meet a long list of sustainability criteria, why then not apply similar criteria to crops grown for food, feed, fiber or fuel? It shouldn’t stop there: if Big Oil clears land for drilling or shaking up the seabed should we then not apply sustainability criteria as well?

Did all those non-governmental organizations, food industry groups and politicians open a Pandora’s box, or will biofuels become the first truly sustainable sector setting a standard that other sectors have no option but to follow? I am convinced that one day the biofuels industry will be heralded as the industry that brought about true environmental change. That’s food for thought.

Robert Vierhout is the secretary-general of eBIO, the European Bioethanol Fuel Association. Reach him at vierhout@ebio.org

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

BIObytes

INDUSTRYNEWS

Ethanol News Briefs Pennsylvania law requires cellulosic E10

RFS waiver in limbo

A Pennsylvania law signed by Gov. Edward Rendell on July 4 as part of the state’s 2008-’09 budget provides new incentives for cellulosic ethanol producers. The Biofuel Development and InState Production Incentive Act requires all gasoline sold in Pennsylvania to consist of 10 percent cellulosic ethanol one year after in-state production has reached 350 MMgy and has been sustained for three months on an annualized basis. Corn-based ethanol requirements were left out of the legislation.

the council wrote, “The renewable In the 30 days after Texas Gov. fuels standard has distorted the Rick Perry submitted a request to market and has imposed severe the U.S. EPA asking for a 50 pereconomic harm on companies in cent waiver of the U.S. renewable our industry through dramaticalfuels standard (RFS) for 2008 ly higher costs, and is imposing due to high corn prices, the EPA harm on the general public in the received more than 15,000 comform of higher prices.” ments from the public. According to Pilgrim’s Pride Corp., the largest the agency, this was the reason the EPA postponed its ruling, which was scheduled for chicken company in the United States, also wrote to the EPA in support of Perry’s July 23.

Two days before the EPA was scheduled request. According to the Internal Revenue to announce its decision, EPA Administrator Service, the company’s cofounder Lonnie Pilgrim gave $100,000 to the Stephen Johnson announced the Republican Governor’s Association, delay of the ruling until early of which Perry is chairman.

August. According to his press secSeveral poultry and meat proretary Jonathan Shradar, more time ducers sponsored a study that is required to finalize analysis of the blamed the RFS for increasing the comments received, speak with officost of biofuel production well past cials at the USDA and U.S. DOE, what the marketplace would have and conduct final analysis of the Perry allowed. The report, titled “Biofuel effect that spring floods had on crops and food prices. According to Shradar, Support Costs to the U.S. Economy: The Key the analyses have begun. “It’s just pulling Role of the RFS in a Feedstock Shortage them all together to have a definitive answer Scenario” by Thomas Elam, said the wet spring and poor crop predictions prove furthat remains to be done,” he said.

Perry requested the waiver in April. He ther reason to lower the RFS mandate for later said the request was also a response to 2008 and that maintaining current levels the spring flooding experienced in parts of would harm the economy.

In support of the RFS, Renewable Fuels the Midwest. The Energy Independence & Security Act of 2007 requires 9 billion gallons Association President Bob Dinneen said of ethanol to be consumed in 2008. Perry’s Perry’s request was “incomplete, legally insufrequest would lower that requirement to 4.5 ficient and factually misdirected.” The American Farm Bureau Foundation said the billion gallons nationwide.

After the request was submitted, the EPA EPA must consider what an RFS waiver was obligated to ask for comments from the would mean for the entire nation, not just for public for a period of 30 days. An EPA Texas. The Biotechnology Industry spokesman told EPM that most of the com- Organization commented in its letter to the ments were repetitive statements submitted EPA that “abandoning the RFS today would by individual members of large companies. send a signal to the market that could underHowever, all comments had to be taken into cut ongoing research and development in biotechnology.” consideration.

The National Chicken Council was among the organizations that responded in —Kris Bevill support of the waiver. In its letter to the EPA,

TMO introduces process demonstration unit TMO Renewables Ltd., headquartered in the United Kingdom, has opened a pilot-scale ethanol plant near Surry, England. The aim of the facility is to demonstrate the core efficacy of the ethanol fermentation process using TMO’s unique thermophilic bacteria, in particular how quickly the bacteria can produce ethanol under elevated heat.

“The reason the organism is particularly useful is that it has a very broad appetite,” said TMO Renewables Chief Executive Officer Hamish Curran.

RINSTAR notes low RIN compliance A survey recently conducted by the RINSTAR Renewable Fuel Registry showed that 81 percent of renewable fuels suppliers are out of compliance with U.S. EPA regulations. When 134 survey participants were asked if they receive RIN transfers on the same day as the product transfer document, as required by the EPA, only 19 percent said yes. Reports of low compliance prompted the EPA to reissue a warning to ethanol producers and RIN traders, reminding them that fines for noncompliance are $32,500 per day.

continued on page 32 30

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

INDUSTRYNEWS

Corn market settles after Midwest weather woes Corn buyers breathed sighs of relief in mid-July as the corn market retreated from the $8-per-bushel spike caused by fears of crop losses due to flooding in the Midwest.

Heavy rains caused flooding in key parts of the Corn Belt with Iowa hit the hardest.

Abnormally heavy 10- and 12-inch rains sent Iowa rivers over their banks, and heavy rains from the same storm systems left sodden cornfields in southern Wisconsin, southeastern Illinois and southern Indiana, raising fears of extensive drown-out. The June rains added to the market jitters caused by a cool, wet spring that delayed planting across much of the Corn Belt.

Trying to gauge the extent of the damage, the USDA’s National Agricultural Statistics Service reinterviewed approximately 1,200 farmers June 23-25 to supplement data collected in the normal survey procedure for the June Grain Stocks and Acreage Report.

Because the flood damage didn’t affect the numbers reported by the USDA as much as expected and there was a slight increase in corn planting from the acres reported in the spring planting intentions report, the corn market began its dive. Good weather in July improved production prospects, adding to the downward trend. By late July, the corn market had dropped $2 from the peak.

Corn-friendly temperatures and adequate moisture were needed in July for pollination, which occurred nearly two weeks later than usual and into August for replanted acres, according to Iowa State University Extension corn specialist Roger Elmore. Once the corn finished pollinating, he said yields will be closely tied to fall temperatures. Corn growth models run by Elmore show a year reminiscent of 1999 with a warm fall and a late frost that could produce yields near 96 percent of normal. However, drastic temperature swings or an early frost could cut yields to as low as 45 percent of normal.

The combination of crop development and actual final acres harvested will determine

the size of the crop. “People are still wondering [about] the NASS update,” said Darrel Good, extension economist for the University of Illinois. “They think farmers reported what they expected to get replanted, and the question is whether that got done. My guess is the market has built in a slightly smaller harvested acres number than what the USDA reported in June.”

Overall, Iowa’s ethanol industry was lightly affected by the flooding. Archer Daniels Midland Co.’s plant in Cedar Rapids, Iowa, suspended production for a few days due to interrupted water supplies from the city. Penford Products Co. had just completed work on a new 45 MMgy ethanol wet mill prior to the flood, according the Iowa Renewable Fuels Association, and anticipated it would be the end of August before it would begin manufacturing significant volumes. A third unnamed plant in Cedar Rapids experienced rail disruptions from a washed out Union Pacific rail line.

Several main and branch rail lines, especially east-west routes, were closed or curtailed due to washouts of tracks and bridges under water. Some railroads had trains stranded between washouts. Monte Shaw, executive director of the IRFA, said the situation was especially challenging in mid-June. There were delays, he said, and producers ended up paying more to ship their product to market using alternative rail routes through Canada or trucks instead of railcars. “I take my hat off to the marketers and logistics folks in the industry,” Shaw said. “We took a 500-year flood and from the customer’s standpoint didn't miss a beat, but that doesn't mean we didn't work really hard to make that happen. I don’t want to minimize a flood, but after taking a step back, the decimal point [for production] doesn’t change. The amount of production that was offline for a few weeks is almost back up to full capacity.”

—Susanne Retka Schill and Ryan C. Christiansen

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

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31

INDUSTRYNEWS

Ethanol News Briefs

Advanced Biofuels Workshop to feature author Zubrin

continued from page 30

Louisiana to pursue hydrous ethanol, blender pumps The Louisiana Department of Agriculture and Forestry’s Division of Weights and Measures will monitor the performance of blender pumps and hydrous ethanol blends in separate four-year pilot programs established in the state’s new advanced biofuels initiative. The initiative calls for a decentralized network of small advanced biofuel plants and offers income tax credits on the first 10 MMgy through 2012. The legislation targets state-grown crops other than corn that require less water and nitrogen than corn while being tolerant to extremes in moisture, high temperatures and marginal soils.

GIS tool indicates potential Illinois plant sites Funded with a grant from the Illinois Department of Commerce and Economic Opportunity, the Illinois Value-Added Sustainable Development Center has developed an interactive geographic information system mapping tool designed to aid in selecting feasible locations for new ethanol or biodiesel plants in Illinois. The continued on page 34

Leading-edge speakers and topics will be the focus of BBI International Inc.'s Advanced Biofuels Workshop & Trade Show to be held Sept. 28-30 at the Minneapolis Convention Center. Because the federal renewable fuels standard requires that 21 billion gallons of advanced biofuels be consumed by 2022, the event will address where and how these biofuels will be produced and marketed.

Robert Zubrin, author of Energy Victory: Winning the War on Terror by Breaking Free of Oil, will be the keynote speaker at the workshop. In his book, Zubrin shows how the United States could be using money spent on fuel to help domestic and international farmers instead of sending it to countries with ties to terrorism. He will offer a new vision of how switching to alcohol-based fuels could help safeguard homeland security, and provide solutions for global warming and thirdworld development.

Leading companies in the biochemical and thermochemical conversion of biomass into fuel are invited to present how they have brought their technologies to the edge of commercial viability.

Breakout sessions will also address managing feedstock logistics, future feedstock options, markets for advanced biofuels and biofuels technologies of the future. The workshop is aimed at giv-

PHOTO: BBI INTERNATIONAL INC.

BIObytes

Robert Zubrin, author of Energy Victory: Winning the War on Terror by Breaking Free of Oil, will be the keynote speaker at the Advanced Biofuels Workshop to be held in Minneapolis on Sept. 28-30.

ing investors, project developers, engineering companies, technology providers, feedstock suppliers and policymakers an opportunity to examine leading-edge biofuel technologies.

Advanced registration is available until Sept.

15. Interested parties can register, view the agenda and find more information at www .advancedbiofuelsworkshop.com. Booth sales and sponsorship opportunities are also available. For more information about sponsoring the event, email abwsponsors@bbiinternational.com. For more information about booth sales, e-mail abwexhibits@bbiinternational.com.

—Jerry W. Kram

INDUSTRYNEWS

Canadian RFS opens doors for new markets and an additional 124 MMgy is On June 26, the Canadian under construction, according to Senate passed Bill C-33, which data compiled by BBI requires Canada to include 5 perInternational Inc. The federal cent renewable content in gasomandate requires 528 MMgy (2 line by 2010 and 2 percent renewbillion liters per year) of ethanol able content in diesel fuel by production using domestic 2012. sources and 84 MMgy (320 million In the wake of the landmark Quaiattini liters per year) of biodiesel probiofuels bill, Canada’s ethanol industry is actively embarking on a new era duction. As a result, the CRFA expects the to produce sufficient volumes of ethanol— creation of 20 new biofuels facilities to both corn-based and cellulosic—in order to meet this requirement.

Quaiattini added that provincial biofufulfill the new mandate. According to Canadian Renewable Fuels Association el mandates should create an even wider President Gordon Quaiattini, the new market for more energy-efficient ethanol renewable fuels standard is expected to plants that are looking to comply with strinprovide a solid foundation on which pro- gent carbon-reduction standards put in ducers in the country can expand the exist- place by provinces such as Ontario, which ing ethanol market. “We’re quite excited is moving toward a 10 percent carbon about the fact that we now have a national reduction target by 2020.

Only two Canadian provinces have standard that will be brought into effect,” he said. “Pursuing larger targets in the ethanol mandates currently in effect: future becomes that much easier now that Ontario and Saskatchewan. Ontario enactwe have a legislative mandate and a frame- ed an E5 mandate in January 2007, while work in place in order to be able to do Saskatchewan enacted in October 2006 a requirement that at least 7.5 percent of that.”

Currently, Canada produces approxi- gasoline must contain ethanol.

Meanwhile, Canada’s largest ethanol mately 246 MMgy of corn-based ethanol,

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

producer GreenField Ethanol Inc. has partnered with Enerkem, a Quebec-based leader in the gasification and synthesis of biofuels from municipal solid waste and forest residues, to build a production plant in Edmonton, Alberta. The first stage of the project calls for construction of a 10 MMgy facility that will utilize Enerkem’s gasification, sequential gas conditioning and catalysis technology.

Calgary, Alberta-based CR Fuels Inc. has obtained all of its key permits for the development of an integrated biofuels complex in Strathmore, Alberta, where it plans to build a 25 MMgy ethanol plant and 30 MMgy biodiesel plant on the same site.

Construction is scheduled to begin in March 2009, according to CR Fuels President and Chief Executive Officer Gordon Hart. “Even if there wasn’t a mandate, there should be a desire for this product because of our limited carbon dioxide footprint and the way we’ve put this package together, although the national mandate definitely helps,” he said.

—Bryan Sims

33

BIObytes

INDUSTRYNEWS

Ethanol News Briefs

Iowa funds blender pumps

program provides a detailed view of more than 182 resource “layers” such as rivers, roads, population and existing plants. The free tool is available online at www.illinoissiteselectiontool.org/SiteTool.

On June 26, Iowa’s Renewable Fuel Infrastructure Board approved 21 new awards totaling $777,600 for E85 and biodiesel retail and terminal infrastructure. The grants were awarded to 17 companies, three of which will install ethanol blender pumps. These three companies are Popkes Car Care Center Inc. in Rock Rapids, Iowa; Oak Street Station LLC in Inwood, Iowa; and Galva Holstein Ag LLC in Galva and Holstein, Iowa.

According to Galva Holstein Ag General Manager Delayne Johnson, his company wouldn’t have installed the blender pumps at this time if grant money wasn’t available to help cover the cost. At press time, he expected the pump at the company’s station in Galva to be ready for use by late August. The pump at the station in Holstein was slated to be operational in September. “We feel the pumps will give more diverse options to consumers,” Johnson said. “We also think it will allow people to use more ethanol.” He explained that although many of his customers aren’t currently aware of ethanol blender pumps, many have inquired about the availability of E85. “We live in rural northeastern Iowa, an area where people understand ethanol and the importance of using products made in the Midwest versus the Middle East,” he said. “I believe that once the consumer understands [the pumps] exist, they will support and utilize them in a tremendous way.”

Over the next three years, $13 million will be allocated by the Renewable Fuel Infrastructure

Utica settles lawsuit with Wisconsin regulators The Wisconsin Department of Natural Resources has settled a lawsuit filed against ethanol producer Utica Energy LLC in Oshkosh, Wis., for violating the state’s air and water pollution control laws. Under the terms of the settlement, Utica Energy will pay a total of $75,000 in penalties, fees and other costs. A complaint claimed Utica Energy violated numerous requirements of its air pollution control permit and wastewater discharge permits, including discharges into an unnamed tributary of Sawyer Creek.

Hunter-Reay wins IndyCar race at Watkins Glen Ryan Hunter-Reay, driver of the No. 17 Ethanol Dallara/Honda/Firestone car, won the IndyCar Series Camping World continued on page 36

PHOTO: SUSANNE RETKA SCHILL, BBI INTERNATIONAL INC.

continued from page 32

Ethanol blender pumps, which dispense mid-level ethanol blends, are now eligible for funding under Iowa’s Renewable Fuels Infrastructure Program.

Program to improve consumer access to renewable fuels in Iowa. In May, legislation signed by Iowa Gov. Chet Culver expanded the original 2006 program. The new legislation allows funding for ethanol blender pumps, and also allows retailers to receive funding for both E85 and biodiesel infrastructure. In addition, it calls for the Iowa Office of Energy Independence to create a statewide renewable fuels marketing plan aimed at flexible-fuel vehicle owners.

—Erin Voegele

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INDUSTRYNEWS

Genencor, Novozmyes beef up services in Midwest

PHOTO: NOVOZYMES INC.

said. “This plant will sit there for the Two world leaders in enzyme next 50 years, so take this as a comproduction—Genencor, A Danisco mitment to a long-term developDivision and Novozymes Inc.—are ment to bioenergy and biofuels in building new facilities in the the Midwest.”

Midwest. Novozymes is focusing on Genencor is planning its Center the corn-based and cellulosic ethanol of Excellence in Cedar Rapids, markets, while Genencor is developIowa. “The Center of Excellence ing an education center to address will be an application and training questions on fuel-grade ethanol and center, and it will be a place where carbohydrate processing. Although customers can come in and work on each company has a different focus, their real-world problems,” said both said they are committed to producing enzymes for the United Novozymes’ new facility will be located in Blair, Neb. Plans are to break ground Genencor USA media contact Jennifer Hutchins. “It provides them States and are dedicated to renewable in 2008 and begin enzyme production in 2010. hands-on access to our technology energy. “open to new technologies as we get into the and experts.” The building won’t address secAccess to customers and environmental considerations played a role in Novozymes’ manufacturing of those enzymes,” Nielson ond-generation ethanol.

Genencor’s facilities are strategically plans to build an enzyme production facility in said. The plant is scheduled to begin operation Blair, Neb. “We started looking at the entire in 2010 and will produce enough enzymes to located within the Corn Belt to be in close globe, and considered Latin America and supply demonstration-scale cellulosic ethanol proximity to the company’s main customers.

China,” said Peder Holk Nielson, executive plants. “Now it is a question of whether the “This is another step in serving our grain- and vice president of Novozymes’ enzyme busi- demonstration plants will be ready for those carbohydrate-processing customers, and ness. The search for a site ended in the United enzymes in 2010,” Nielson said. “It may be shows dedication to the region and our customers,” Hutchins said. The 20,000-squareStates. “We found that Nebraska had great more like 2011.”

Other ideal logistics in Blair included rail- foot facility will be operational in the spring of conditions for both the raw materials for fermentation, starch and soybean meal, and ener- road and river access, and adequate water sup- 2009. ply. The plans to build the plant also signify a gy at the right price,” Nielson said.

The new facility will produce enzymes sense of permanence in the production of —Suzanne H. Schmidt for corn-based ethanol. Later, Novozymes enzymes and the ethanol industry. “We are plans to focus on cellulosic ethanol but is doing this as a long-term investment,” Nielson

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

35

BIObytes

INDUSTRYNEWS

continued from page 34

Plymouth Oil to extract corn oil

Grand Prix at Watkins Glen International in Watkins Glen, N.Y., on July 7, breaking a four-year victory drought for Rahal Letterman Racing Team Ethanol. It’s the third season that ethanol has sponsored a Rahal Letterman Racing team and the second season that the IndyCar Series has raced with E100 in the race cars’ tanks.

The win boosted Hunter-Reay into ninth in the IndyCar Series point standings.

With its 55 MMgy ethanol plant near completion in Merrill, Iowa, Plymouth Energy LLC is already looking ahead at expanding its product offering. A sister company named Plymouth Oil LLC has been formed to produce food-grade corn oil from fractionated corn germ and will send the starch from the corn to the ethanol plant for fermentation, according to Dave Hoffman, a board member of both companies and founder of Plymouth Oil. Hoffman said the new fracPlymouth Energy LLC is under construction in Merrill, Iowa. tionation and extraction unit will help to address the food-versus-fuel debate by producing both. “The cent to 47 percent, Hoffman said, making them only thing removed in the ethanol process is the more usable in the poultry and swine markets. carbohydrates to make ethanol, and so all of the “The balance of our dry product from this extracother nutrition is there,” he said. “Part of that tion will be a dry product that we can feed to hogs nutrition is going for food.” and other livestock species, and so we think we Plymouth Oil will use solvent extraction to will have some value here,” he said. produce the corn oil and defatted germ, Hoffman Hoffman said the companies are exploring said. Plymouth Energy will supply approximately the potential for removing the oil that remains in half of Plymouth Oil’s capacity of 400 tons of the distillers grains for sale to biodiesel plants, as corn per day. Plymouth Oil will produce approxi- well. mately 80 tons of corn oil per day.

Removing the germ and oil increases the —Ryan C. Christiansen protein content of the distillers grains to 45 per-

Gallagher Review calls for biofuels use to decrease In July, the U.K. Renewable Fuels Agency released a report, titled “The Gallagher Review of the Indirect Effects of Biofuels Production,” which examined the indirect effects of biofuels on greenhouse gas emissions, land-use change and food prices. Among other points, it concluded that the introduction of biofuels should be slowed until effective controls are in place to prevent land-use change and higher food prices. It acknowledged that there is a future for a sustainable biofuels industry, but creating the right policy framework is challenging and will take time. The report can be viewed at www.renewablefuelsagency.org/ reportsandpublications/reviewoftheindirecteffectsofbiofuels.cfm. EP

36

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

PHOTO: EARL DRAAYER, LITE PLAINS INC.

Ethanol News Briefs

INDUSTRYNEWS

Brazil launches campaign to remove ethanol tariff The Brazilian Sugarcane Industry Association, known as UNICA, launched a campaign July 4, targeting U.S. Independence Day travelers to encourage Congress to revisit the 54-cent-per-gallon ethanol import tariff.

The “Are We There Yet?” movement suggested that the American public should convince the U.S. Congress to eliminate or lower the tariff in order to reduce the cost of gasoline. “Americans are being denied an opportunity to save money at the pump,” said Joel Velasco, chief representative for UNICA. “Eliminating or even reducing the tariff on cane ethanol could provide immediate relief, particularly in states like California and Florida, where this form of fuel is already in use.”

UNICA said that although the United States imported 189 million gallons of Brazilian sugarcane-based ethanol in 2007, consumers aren’t seeing the benefits they should, as sugarcane-based ethanol is cheaper to produce than corn-based ethanol in the United States. The tariff was first imposed in 1980, and while subsidies to the U.S. ethanol industry were reduced from 51 cents per gallon to 45 cents per gallon in the 2008 U.S. farm bill, the ethanol import tariff remains at 54 cents.

U.S. Sens. Dianne Feinstein, D-Calif., and Judd Gregg, R-N.H., introduced a tariff reduction measure to legislation one month before UNICA’s campaign launch.

“This bill would essentially level the playing field and ensure that U.S. refiners are able to purchase cheaper and climate-friendly ethanol, no matter where it comes from,” Feinstein said. Gregg made similar suggestions. “This legislation introduced today on a bipartisan basis offers a reasonable solution that lowers the tariff on ethanol, keeping prices more competitive for American consumers and steering us in the direction of more affordable energy alternatives,” he said.

Coalitions of meat industry groups, and food and beverage manufacturers, have also sent letters to the Bush administration in support of suspending the tariff, with hopes of corn price reductions.

In opposing the campaign, a large number of commodity and ethanol leaders sent a letter to President George W. Bush, expressing disapproval of a removal or reduction of the tariff. “The 54-cent-pergallon secondary tariff was enacted to offset any incentive for imported ethanol to benefit from the 54-cent-per-gallon tax credit for ethanol blended into motor fuel,”

the letter said. “This tax credit is taken by refiners who blend ethanol into motor fuel, not ethanol producers.” The letter, which was signed by the American Coalition for Ethanol, Ethanol Producers and Consumers, the National Association of Wheat Growers, the National Corn Growers Association, the National Farmers Union, the National Sorghum Producers and the Renewable Fuels Association, stated that the purpose of the tariff is to protect American taxpayers from subsidizing foreign-produced ethanol and not to protect domestic ethanol.

RFA President Bob Dinneen added that removing the tariff wouldn’t lower food prices. Instead, such an action would halt development of new ethanol technologies, and take the jobs and economic opportunity being generated by the domestic ethanol industry to foreign countries. “I strongly encourage President Bush to recognize that skyrocketing oil prices play a far greater role in the complex issue of food prices than ethanol and to reject the efforts to remove the secondary tariff.”

—Anna Austin

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ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

37

NEW PROJECT

PROJECT COMPLETE

PLANT EXPANSION

EXPANSION COMPLETE

INDUSTRY

Ethanol Plant Construction Construction Continues at a Steady Pace

T

hanks to a stint of dry weather in July, especially compared

announced groundbreaking. During this same time in 2007, 40 plants

with June, many project developers were able to make more

broke ground. Two facilities completed construction in the past month.

progress than they had initially anticipated. Several projects

Terra Grain Fuels Inc., a 150 MMly (40 MMgy) plant in Belle Plaine,

on this list reported that construction was nearly complete

Saskatchewan, is using wheat as a feedstock. VeraSun Hankinson

and could be finished within a month’s time.

also started production after halting start-up due to unfavorable market

Several plant and project managers have voiced concern

conditions. VeraSun continues to delay start-up at its facilities in

over corn prices. Few, if any, expect significant adjustments in the next

Harley, Iowa, and Welcome, Minn. Including these two plants, 37 facil-

12 months. One project manager admitted that construction of his plant

ities have completed construction or announced start-up since

was nearly complete, but it may not start production right away. “We’re

January. Altogether, these 37 plants account for 2.63 billion gallons of

hoping the price of corn goes down or the price of ethanol goes up,” he

additional production capacity per year. Compared with the same peri-

said. “It’s going to take some time before we see any change.”

od in 2007, only 27 plants have come on line, increasing to 38 by the

Many plants are starting to assemble staffs, and three facilities on

end of 2007.

this list were in the midst of employee training. In particular, Edgar Seward and his team at Indiana Bio-Energy LLC traveled to the com-

—Craig A. Johnson

pany’s sister facility Green Plains Renewable Energy Inc. in Shenandoah, Iowa, for training. GPRE’s similar design gave the new staff a firsthand look at how the plant in Bluffton will operate.

At press time, the ethanol industry was approaching a 10 billiongallon capacity. Ninety-two percent of that capacity is corn-based, while milo or a combination of corn and milo make up approximately 7.5 percent. On the plant construction list, there are another two projects that intend to use a combination of corn and milo as their primary feedstocks. However, Louisiana Green Fuels LLC intends to use sugarcane bagasse and sweet sorghum. Although interest in other unique feedstocks is growing, only this plant is currently planning to do so.

On a historical basis, it's evident that plant construction has slowed. So far this year, nine companies have started construction or

40

EPM will remove seemingly inactive projects from this list if: 1. Our good faith attempts to contact project representatives go unanswered for three straight months.

2. Through exhaustive means, we are unable to verify the continued advancement of a project.

3. The Renewable Fuels Association, as well as project representatives, are notified and given a reasonable amount of time to verify the project’s current status.

To provide updates to this list, contact Craig A. Johnson at (701) 738-4946 or cjohnson@bbiinternational.com.

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

Construction Represents 3.42 Billion Gallons Annually

Archer Daniels Midland Co. Location General contractor Process technology Capacity Feedstock

Cedar Rapids, Iowa undeclared

undeclared 275 MMgy corn

Cardinal Ethanol LLC Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Archer Daniels Midland

undeclared undeclared June 2007 first quarter 2010

Synopsis of progress No further information was available at press time.

Location Design/builder Process technology Capacity Feedstock

Union City, Indiana Fagen Inc. ICM Inc. 100 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Murex CHS Inc. N/A February 2007 fall 2008

Synopsis of progress Rail work is nearly complete. Switch work that will tie in the main line was set to begin Aug. 1. The pipe rack is complete, and additional piping, pumps and motor work is underway in the tank farm. Load-out swing arms and conveyors are being installed in the grain-receiving area.

Archer Daniels Midland Co. Columbus, Nebraska undeclared

undeclared 275 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Archer Daniels Midland PHOTO: AVENTINE RENEWABLE ENERGY-AURORA WEST LLC

Location General contractor Process technology Capacity Feedstock

undeclared undeclared July 2007 third quarter 2009

Synopsis of progress No further information was available at press time.

Aventine Renewable Energy-Aurora West LLC Location General contractor Process technology Capacity Feedstock

Aurora, Nebraska Kiewit Energy Co. Delta-T Corp.

100 MMgy corn

Ethanol marketer Aventine Renewable Energy Distillers grains marketer Aventine Renewable Energy Carbon dioxide marketer N/A Broke ground September 2007 Target start-up date first quarter 2009

Synopsis of progress Work on the tank farm continues. Foundation work for the process building and energy center is underway.

Aventine Renewable Energy-Aurora West LLC

Aventine Renewable Energy-Mt. Vernon LLC Mt. Vernon, Indiana Kiewit Energy Co. Delta-T Corp.

100 MMgy corn

Ethanol marketer Aventine Renewable Energy Distillers grains marketer Aventine/Consolidated Grain and Barge Carbon dioxide marketer N/A Broke ground September 2007 Target start-up date first quarter 2009

PHOTO: AVENTINE RENEWABLE ENERGY-MT. VERNON LLC

Location General contractor Process technology Capacity Feedstock

Synopsis of progress Foundation work for the process building and energy center continues. Construction of the tanks and piping is ongoing.

Bridgeport Ethanol LLC Location Design/builder Process technology Capacity Feedstock

Bridgeport, Nebraska ICM Inc. ICM Inc. 50 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Poet Ethanol Products Colorado Agri Products

undeclared September 2007 September 2008

Synopsis of progress All buildings are erected, and nearly all piping work is complete. Most of the work that remains is wiring.

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

Aventine Renewable Energy-Mt. Vernon LLC

41

Cilion Ethanol LLC Location General contractor Process technology Capacity Feedstock

Keyes, California Harris Construction Praj Industries Ltd. 55 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

undeclared undeclared N/A July 2006 third quarter 2008

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

undeclared undeclared N/A January 2008 June 2009

PHOTO: GREENFIELD ETHANOL

Synopsis of progress Piping and electrical work continues at the site.

Clean Burn Fuels LLC Location General contractor Process technology Capacity Feedstock

Raeford, North Carolina Biofuels Design/Clean Burn Fuels Katzen International 60 MMgy corn

Synopsis of progress Foundation work continues.

GreenField Ethanol

Ethanol Grain Processors LLC Location Design/builder Process technology Capacity Feedstock

Obion, Tennessee Fagen Inc. ICM Inc. 100 MMgy corn

GreenField Ethanol Ethanol marketer Aventine Renewable Energy Distillers grains marketer CHS Inc. Carbon dioxide marketer N/A Broke ground December 2006 Target start-up date October 2008

Synopsis of progress N/A

Location General contractor Process technology Capacity Feedstock

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Commercial Alcohols Commercial Alcohols

undeclared October 2006 December 2008

Synopsis of progress With more than 270 workers on-site, construction continues in the grain handling and receiving areas, energy center, process building and tank farm.

First United Ethanol LLC Location Design/builder Process technology Capacity Feedstock

Johnstown, Ontario SNC-Lavalin Group ICM Inc. 200 MMly (53 MMgy) corn

Camilla, Georgia Fagen Inc. ICM Inc. 100 MMgy corn

Hawkeye Renewables Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Synopsis of progress N/A

Eco-Energy First United Ethanol undeclared January 2007 summer 2008

Location Designer/builder Process technology Capacity Feedstock

Menlo, Iowa Fagen Inc. ICM Inc. 110 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Eco-Energy undeclared N/A July 2007 fourth quarter 2008

Synopsis of progress Progress is being made, but no further details were available at press time.

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Hawkeye Renewables Location Designer/builder Process technology Capacity Feedstock

Shell Rock, Iowa Fagen Inc. ICM Inc. 110 MMgy corn

Indiana Bio-Energy LLC Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Eco-Energy undeclared N/A July 2007 first quarter 2009

Synopsis of progress Progress is being made, but no further details were available at press time.

Location Design/builder Process technology Capacity Feedstock

Lamberton, Minnesota Fagen Inc. ICM Inc. 50 MMgy corn

Integrated Grain Processors Cooperative Inc. Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

undeclared undeclared N/A November 2007 spring 2009

Synopsis of progress N/A

Location General contractor Process technology Capacity Feedstock

Aylmer, Ontario North America Construction Ltd. ICM Inc. 150 MMly (40 MMgy) corn

undeclared undeclared undeclared August 2007 late 2008

O'Neill, Nebraska Adams Construction Vogelbusch 100 MMgy corn

Kawartha Ethanol Inc. Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target completion date

undeclared undeclared N/A July 2007 late 2008

Synopsis of progress N/A

Location General contractor Process technology Capacity Feedstock

Havelock, Ontario Profab International Delta-T Corp.

80 MMly (21 MMgy) corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

undeclared Thompson's Ltd undeclared October 2007 December 2008

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

undeclared undeclared undeclared April 2008 June 2009

Synopsis of progress N/A

Homeland Energy Solutions Location Design/builder Process technology Capacity Feedstock

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Synopsis of progress Construction is moving into the final stages while piping and wiring continue. Staff members were being trained in last July. The plant expected to begin receiving corn in mid-August.

Holt County Ethanol LLC Location General contractor Process technology Capacity Feedstock

Ethanol marketer Aventine Renewable Energy Distillers grains marketer CHS Inc. Carbon dioxide marketer N/A Broke ground November 2006 Target start-up date August 2008

Synopsis of progress Electrical and piping work continues. Rail loop is nearly complete. Staff training is underway at the company’s sister facility Green Plains Renewable Energy Inc. in Shenandoah, Iowa.

Highwater Ethanol LLC Location Design/builder Process technology Capacity Feedstock

Bluffton, Indiana Fagen Inc. ICM Inc. 101 MMgy corn

Lawler, Iowa ICM Inc. ICM Inc. 100 MMgy corn

Louisiana Green Fuels LLC Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

undeclared undeclared N/A May 2007 January 2009

Synopsis of progress N/A

IN AN EVER-CHANGING BIOFUELS INDUSTRY, IT’S EASY TO FEEL LIKE YOU’RE GETTING NOWHERE.

Location Lacassine, Louisiana General contractor Praj Industries Ltd. Process technology Louisiana Green Fuels Capacity 100 MMgy Feedstock sugarcane bagasse/sweet sorghum

Synopsis of progress The company received a shipment of processing equipment from Praj Industries in June. Foundation work continues.

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ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008 KAC.10442_EPM_Cir_7.5x3.375_4C 1

43 7/24/08 11:05:51 AM

NEDAK Ethanol LLC Location General contractor Process technology Capacity Feedstock

Atkinson, Nebraska Delta-T Corp.

Delta-T Corp.

44 MMgy corn

One Earth Energy LLC Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Eco-Energy Frahm and Deitloff N/A June 2006 third quarter 2008

Synopsis of progress Construction is nearly complete with final electrical and piping work underway. Hydro-testing has begun. Staff members were being trained at the end of July.

Location Design/builder Process technology Capacity Feedstock

Ulysses, Kansas ICM Inc. ICM Inc. 40 MMgy corn/milo

Eco-Energy Ag Motion Inc. N/A October 2007 second quarter 2009

Pacific Ethanol Stockton LLC Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

undeclared undeclared undeclared August 2007 late 2008

Synopsis of progress N/A

Location General contractor Process technology Capacity Feedstock

Stockton, California W.M. Lyles Co. Delta-T Corp.

50 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Kinergy Marketing Pacific Ag Products LLC

undeclared April 2007 third quarter 2008

Synopsis of progress Construction continues. No further information was available at press time.

Northeast Biofuels LLC Location General contractor Process technology Capacity Feedstock

Volney, New York Lurgi Inc. Lurgi Inc. 100 MMgy corn

Patriot Renewable Fuels LLC Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Noble Americas Corp.

Perdue Farms BOC Gases July 2006 2008

Synopsis of progress N/A

Location Design/builder Process technology Capacity Feedstock

Location General contractor Process technology Capacity Feedstock Synopsis of progress N/A

Annawan, Illinois Fagen Inc. ICM Inc. 100 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Murex undeclared undeclared February 2007 2008

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Provista UBE Ingredients N/A November 2006 September 2008

Synopsis of progress N/A

Northwest Renewable LLC

44

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Synopsis of progress Construction of the distillers grains building is complete. All tanks have been erected. Water piping was underway at the end of July.

Nexsun Ethanol LLC Location Design/builder Process technology Capacity Feedstock

Gibson City, Illinois Fagen Inc. ICM Inc. 100 MMgy corn

Longview, Washington Makad Construction Corp.

Lurgi Inc. 55 MMgy corn

Platinum Ethanol LLC Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

U.S. Ethanol LLC Lansing Trade Group undeclared November 2006 fourth quarter 2008

Location Design/builder Process technology Capacity Feedstock

Arthur, Iowa Fagen Inc. ICM Inc. 110 MMgy corn

Synopsis of progress Roads are being paved, and buildings are being insulated. A corn grinding date is scheduled for Sept. 18.

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

Poet Biorefining-Fostoria Fostoria, Ohio Poet Design & Construction Poet Design & Construction 68 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Poet Ethanol Products Poet Nutrition N/A August 2007 fourth quarter 2008

PHOTO: SOUTHWEST IOWA RENEWABLE ENERGY LLC

Location Design/builder Process technology Capacity Feedstock

Synopsis of progress Construction continues. Hiring is underway, but no further information was available at press time.

Poet Biorefining-Marion Location Design/builder Process technology Capacity Feedstock

Marion, Ohio Poet Design & Construction Poet Design & Construction 68 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Poet Ethanol Products Poet Nutrition N/A May 2007 December 2008

Synopsis of progress Construction continues. Hiring is underway, but no further information was available at press time.

Southwest Iowa Renewable Energy LLC

Southwest Iowa Renewable Energy LLC

Poet Biorefining-North Manchester Location Design/builder Process technology Capacity Feedstock

North Manchester, Indiana Poet Design & Construction Poet Design & Construction 68 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Poet Ethanol Products Poet Nutrition N/A third quarter 2007 first quarter 2009

Synopsis of progress Construction continues. Hiring is underway, but no further information was available at press time.

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

undeclared undeclared N/A October 2007 2008

Synopsis of progress N/A

Council Bluffs, Iowa ICM Inc. ICM Inc. 110 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Lansing Ethanol Group

Bunge undeclared November 2006 August 2008

Synopsis of progress N/A

Project Complete

Route 66 Ethanol LLC Location Tucumcari, New Mexico General contractor APS/United Stainless Process Technology Process technology United Stainless Process Technology Capacity 10 MMgy Feedstock corn/milo

Location Design/builder Process technology Capacity Feedstock

Location General contractor Process technology Capacity Feedstock

Terra Grain Fuels Inc. Belle Plaine, Saskatchewan Ethanol marketer EllisDon/VCM Contractors & Engineers Distillers grains marketer

Delta-T Corp.

150 MMly (40 MMgy) wheat

Carbon dioxide marketer Broke ground Target start-up date

undeclared undeclared undeclared September 2006 July 2008

Synopsis of progress This plant has completed construction. Congratulations Terra Grain Fuels Inc.!

1-800-827-1662 • www.interstates.com

ELECTRICAL CONSTRUCTION • ELECTRICAL ENGINEERING • AUTOMATION • INSTRUMENTATION ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

45

Tharaldson Ethanol LLC Location General contractor Process technology Capacity Feedstock

Casselton, North Dakota Wanzek/Valley Engineering Vogelbusch 100 MMgy corn

VeraSun Janesville Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

undeclared undeclared N/A June 2007 December 2008

Synopsis of progress Progress is being made, but no further information was available at press time.

Location Design/builder Process technology Capacity Feedstock

Location Design/builder Process technology Capacity Feedstock

Provista UBE Ingredients N/A January 2007 third quarter 2008

White Energy Plainview LLC

Dyersville, Iowa Fagen Inc. ICM Inc. 110 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Provista UBE Ingredients N/A November 2006 2008

Synopsis of progress Construction continues, but no further information was available at press time.

Project Complete

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Synopsis of progress Construction continues, but no further information was available at press time.

VeraSun Dyersville Location Design/builder Process technology Capacity Feedstock

Janesville, Minnesota Fagen Inc. ICM Inc. 110 MMgy corn

Location Design/builder Process technology Capacity Feedstock

Plainview, Texas Fagen Inc. ICM Inc. 100 MMgy corn/milo

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Murex The Scoular Co. undeclared October 2006 2008

Synopsis of progress N/A

VeraSun Hankinson Hankinson, North Dakota Fagen Inc. ICM Inc. 110 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Provista UBE Ingredients N/A August 2006 July 2008

Synopsis of progress This facility started production once local market conditions improved. Congratulations VeraSun Hankinson!

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ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

:OU R P L A N T 48

PHOTO: ROBERT SHIPP, SHOW ME ETHANOL LLC

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

N

ot many people knew about the small town of Carrollton, Mo., with a population just over 4,000 on the banks of the Crooked River. In the past few years, however, that’s begun to change. In 2005, Carrollton was named an All-America City—one of 10 across the country—and in that same year, investors began to imagine what the little town might look like with an ethanol plant.

Show Me Ethanol LLC is owned by a group of 550 agricultural investors.

Ten percent is owned by Central Missouri Energy LLC, a proposed biodiesel plant in Fulton, Mo., while Ray-Carroll County Grain Growers Inc. controls another 20 percent. Since raising equity is no longer as easy at it once was for some projects, Show Me Ethanol’s equity drive was especially impressive. The initial offer began in mid-2006, and the company was able to secure financing by the end of that year. The plant broke ground March 26, 2007. ICM Inc. was on-site by mid-April, and construction was fully underway by mid-June.

Once construction began, work moved rapidly by industry standards.

“That’s the work of Ted Nuncio, our site superintendant,” says General Manager Greg Thomas. “He did an outstanding job coordinating the [subcontractors]. The plan wasn’t to start operations until July 2008, but we were able to complete construction and start producing May 23—two months ahead of schedule.” Even with a harsh winter, wet spring and a rash of electrical storms that threatened the construction site, crews stayed active. Show Me Ethanol had an average of 250 workers on the site and experienced no significant delays. “The spirit of cooperation was unlike anything I’d ever seen,” says Thomas of the subcontractors. “They

SHOW ME ETHANOL LLC LOCATION DESIGN/BUILDER PROCESS TECHNOLOGY CAPACITY FEEDSTOCK ETHANOL MARKETER DISTILLERS GRAINS MARKETER CARBON DIOXIDE MARKETER BROKE GROUND START-UP DATE

coordinated their activities so that the scope of work was maximized. It was so well-run.”

In addition to the success the company realized in exceeding its construction timeline, Thomas also considers the hiring process a major triumph.

“One of my concerns was what kind of people would be available to run the place,” he says. “Over the course of my first few months, I probably talked to 40 or 50 people who were interested in working at the plant. When the plant manager came on board, he started advertising for employees, and of those 50 people, only two didn’t make the first cut, which says a lot about the quality of the workforce here.” Once the management team felt it had a superior pool of candidates, it started the hiring process, bringing new employees in at the end of March 2008. The staff now includes 36 above-average salaried workers. “It was a very pleasant surprise for me,” Thomas says.

ICM recommends that new plant employees complete an eight-week training course before a facility goes into full operation. Show Me Ethanol’s management team took advantage of the training in the spirit of giving the venture “every possible chance to succeed,” Thomas says. After the new hires were trained, ICM reported that Show Me Ethanol’s team was one of the best they’d trained.

According to Thomas, the plant averaged 81 percent of it total 55 MMgy capacity during its first 30 days. “We reached 105 percent of nameplate capacity in about 12 to 14 days of startup,” he says.

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

Carrollton, Missouri ICM Inc. ICM Inc. 55 MMgy corn Eco-Energy Inc. Ray-Carroll County Grain Growers N/A March 2007 May 2008

Overall, the current economics of ethanol production are troubling for plants coming on line in 2008, and Thomas takes a pragmatic view of these concerns. “We have bought corn and sold ethanol at a positive margin for a period of time,” he says. “The economics of ethanol continue to be mixed, and no one has a crystal ball that tells them what oil prices and corn prices are going to do. If everything moves in tandem, we can continue to move forward.

If something unforeseen was to cause an astronomical rise in the price of corn or a precipitous drop in ethanol’s price, it would certainly have an adverse effect on the company. However, it’s going to have an adverse affect on every ethanol company. It’ll be all of us in that boat.” On the positive side, Show Me Ethanol brings a combined economic impact of $1.5 million to $2 million to the local economy.

Thomas and his team foresee many more successes down the road.

Time will tell if the group’s hard work will pay off, but Show Me Ethanol is off to a solid start.

—Craig A. Johnson

:OU R P L A N T

Demonstrating Speed, Accuracy

49

:INTHEFIELD

A

Matching Corn Buyers, Sellers Electronically

fter a six-month trial with approximately 300 farmers and 13 grain buyers in south-central Nebraska, a new online corn marketing system will be made available throughout Nebraska and Iowa this fall. Pioneer Hi-Bred International Inc. developed the corn marketing tool, called MarketPoint, which can be found on the Pioneer GrowingPoint Web site.

“We wanted to prove the concept,” says Joe Foresman, Pioneer’s senior marketing manager of biofuels. “Would farmers come to the site to offer corn to multiple partners? Would buyers come to the site to originate corn?” The buyers included a mix of ethanol plants, livestock producers and elevators.

Pioneer partnered with Farms Technology LLC in Overland Park, Kan., to deliver the user-friendly electronic platform for executing transactions. For the farmer, Foresman says it allows offers to multiple buyers, specifying the quantity, quality and a target price on the farm. The farmer can also establish a freight matrix adjusting delivery costs according to the current price of fuel.

In turn, corn buyers such as ethanol plants can use maps that show where corn is for sale. Each green point indicates a zip code, and the size of the point’s shadow shows the relative quantity available at that location. Through MarketPoint, the corn buyer can also locate high-starch varieties to help maximize efficiency. The major benefit for the plant is the efficiency of using the Web platform. “The buyer can originate grain with six keystrokes rather than 300 calls,” Foresman says. A bid can

be electronically delivered to a farmer’s computer and cell phone. If the farmer isn’t at the computer, he can call a toll free number to accept the bid. Other features for the buyers include the ability to put quotas on a bid so they don’t overbuy, as well as tying an electronically placed hedge to a purchase to eliminate slippage in risk management.

With the trial period concluded in south-central Nebraska, Foresman says the program is ready to expand. The Pioneer sales staff began enrolling farmers in the rest of Nebraska and Iowa in late summer, and once a sufficient number is enrolled, Pioneer will begin signing up buyers. “At this point, there is no fee to either party,” Foresman says. “What we want is the opportunity to earn the farmers’ business and learn what grain buyers are looking for.” It also appears that the system will award farmers using Pioneer’s high total fermentable corn varieties with better pricing. MarketPoint will allow growers to trade corn hybrids other than Pioneer products but will post quality characteristics based on genetics such as ethanol yield potential and digestible energy for livestock feeders only on Pioneer products.

Pioneer is also offering farmers a best practices training program in harvest, storage and delivery to preserve grain quality. Those who take the course and sign a commitment for quality get a “Grain Quality Certification” designation on their MarketPoint listing. Growers participating in MarketPoint have access to reports summarizing their grain sales for the year, as well as cell phone text message alerts on commodity prices, daily basis ranges and bid acceptance.

MarketPoint is an additional service offered on Pioneer’s GrowingPoint Web site. Growers don’t have to be customers to access the information on the site such as crop management tips, weather forecasts and data, market information, and agricultural news.

—Susanne

Retka Schill

PHOTO: SUSANNE RETKA SCHILL, BBI INTERNATIONAL INC.

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ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

I N T E R N A T I O N A L

DISTILLERS GR AINS CONFERENCE & TRADE SHOW

a BBI International event October 19 – 21, 2008 Indianapolis Marriott Downtown Indianapolis, Indiana, USA

www.distillersgrainsconference.com

:UP FRONT

Passionate About Enzymes

J

ay Shetty was “pleasantly surprised” to hear his name as the Award of Excellence recipient was announced during the 2008 International Fuel Ethanol Workshop & Expo held in Nashville, Tenn., in midJune. The award, established by BBI International Inc. in 2000, is presented annually to someone who has contributed significantly to the ethanol industry through research, technical advisory or development. Honorees are selected by a group of industry professionals and academic scientists.

Shetty has dedicated the past decade of his life to work at Genencor, a division of Danisco, and has contributed to more than 35 patents and numerous research publications during his career in the ethanol industry.

Michael Ardige, head of research and development at Genencor, said Shetty is a “joy to be around,” and that he brings a level of energy and excitement to the industry that few people can match. “Jay is one of the more inventive people in our organization,” Ardige says. “He bridges the marketplace and the basic technology. He knows the customers, their plants and their problems, and he brings that back to the [research and development] team in a way that stimulates product design and invents something useful to the industry.” Because of Shetty, Ardige says Genencor is assured that its inventions have realworld applications.

Q: What does being selected as the recipient of the Award of Excellence mean to you?

A: Receiving this award has been a great honor to me. It is also the recognition and appreciation from the ethanol industry that I share with my many colleagues at Genencor for their contributions.

Q: When did you start work at Genencor, and what were you originally hired to do?

A: I began working at Genencor in September 1996. My responsibilities

at that time included developing a new application and market for specialty enzymes.

Q: How has your job changed since you started working with the company?

A: I started in research and development. Then, as the years went by, there was a natural progression in my career into marketing and sales. I became head of marketing and sales for the Asia Pacific Region for grain processing. Then, the perfect progression occurred when I moved to head the Global Grain Processing Application and Technical Group.

Q: What are you currently working on?

A: I am currently involved with several projects, including the development of novel enzyme technologies resulting in reduced energy consumption, increased fermentation carbon conversion efficiency (raw materials) and value-added coproducts in ethanol production using agricultural raw materials. I’m also working on a new enzymes application for producing value-added functional ingredients from carbohydrates.

Q: What have been some challenging experiences in your career in the ethanol industry?

A: Moving technical advances in processing technologies into traditional processes, which are influenced by many factors.

Q: What is the most rewarding aspect of what you do for a living?

A: I most enjoy training and motivating freshly employed young coworkers to get excited during the discovery phase of their careers because a good foundation is great for a strong future.

Investing in people captures the values in all directions.

Q: What do you see in store for the ethanol industry in the next five and 20 years?

A: Within the next five years, ethanol plants will transform into biorefineries that are capable of producing both fuel and value-added food ingredients. In 20 years, there will be a shift in feedstocks as agricultural nonfood feedstocks are developed for the sole use of fuel production.

—Kris Bevill

Name Jay K. Shetty Title Application Fellow/Vice President Company Genencor, A Danisco Division Hometown Pleasanton, Calif.

Career Genencor Palo Alto, Calif.

Application Fellow/Vice President 1996-present Solvay Enzymes Elkhart, Ind. Vice President/Head of Research and Development 1989-1996 Miles Laboratory Elkhart, Ind. Senior Staff Scientist 1981-1986 Cornell University Ithaca, N.Y. Senior Research Fellow 1977-1981

52

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

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:FLEXFACTOR 54

Adkins Energy, EPIC Team Up

W

ith the price of gasoline rising and no end to this trend in sight, consumers may be considering trading in large gas-guzzling vehicles for smaller, more economically friendly ones. Flexible-fuel vehicles (FFVs) are one option that Adkins Energy LLC and the Ethanol Promotion and Information Council want consumers to know more about.

To help educate consumers about E85 and FFVs, the 43 MMgy ethanol plant in Lena, Ill., and EPIC recently teamed up to organize a promotion consisting of information, incentives, contests, golfing and pizza that aims to educate consumers around Lena about ethanol, engines and what their best vehicle options are. EPIC also invited eight local auto dealerships to participate, representing General Motors, Ford and Dodge, along with several used vehicle lots. The promotion began May 1 and at press time was slated to end July 31.

Michelle Gibilisco, promotions and inventory specialist for EPIC, says the campaign was designed to get information to car dealerships that sell FFVs and consumers who buy FFVs. “The goal was to educate everybody on every level so they knew where they could find [ethanol] and get the information they needed," she says.

EPIC recognized that FFV purchases start at the dealerships. “We created a quick sales guy reference,” Gibilisco says. “[We prepared information] so [the salespeople] could have it there at their desks. When customers were asking questions, they could just look it up.” The decision to purchase a new vehicle is not a small one, she points out. “When you buy your Sony plasma TV, you’re going to research it before you buy it because you’re making a large purchase and you don’t want to make the wrong decision,” she says. “If consumers knew more about [FFVs], they will be more likely to purchase that car.”

In addition to providing car lots with literature and information, a tool was added to EPIC’s Web site at www .drivingethanol.com that offers an easy-to-use test to educate people on ethanol and FFV engines. Mechanics at participating dealerships have been encouraged to visit the site, and the dealer with the highest percentage of visitors will receive a $75 pizza party. “The results are not in yet on that,” Gibilisco noted at press time. As for car sales, the dealerships’ top salesperson for each month will receive an 18-hole golf outing package, which includes Adkins Energy and EPIC merchandise.

Joan Humphrey, accounting and human relations manager for Adkins Energy, says the goal was to move FFVs off the car lots and encourage consumers to put ethanol in their fuel tanks after they leave. Both goals were achieved. “[FFV] sales in May were tremendous,” she says. “Approximately 50 were sold that month.” In fact, she said she often hears complaints that there aren’t enough FFVs being manufactured. As for the purchase of E85, Gibilisco acknowledges Adkins Energy’s role. “We wanted [consumers] to know where to find E85 and use it,” she says. “So Adkins Energy hooked up with a local gas station to give $40 fuel cards to [consumers] so they would use E85.” Also, hangtags in the FFVs purchased at the dealerships instruct consumers where they can fill up with E85.

Indeed, it appears that the pain at the pump caused by high gas prices has pressured more consumers to ask, “What are these flex-fuel vehicles everyone is talking about?” In the Lena area, thanks to Adkins Energy and EPIC, that question is being answered.

—Timothy Charles Holmseth

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

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:BUSINESS 56

Venture Capital Remains Robust

T

here’s an old adage derived from the venture capital community: “The money will follow innovation.” Venture capitalists follow this fundamental investment principle by supporting growth in emerging technology-dependent markets. This philosophy could also apply to investment in the ethanol industry.

According to a MoneyTree Report released in April by PricewaterhouseCoopers and the National Venture Capital Association—based on data provided by Thomson Reuters—venture capital firms raised $625 million in the cleantech sector in the first quarter of this year.

“Cleantech” is a broad term used to categorize alternative energy and fuel markets such as biofuels, solar power, wind power and biotechnology sectors. Ethanol and cellulosic ethanol fall under this large umbrella, according to John Taylor, vice president of research and financial affairs for the NVCA. Taylor says that since 2002, venture capital funds have been hitting the “$20 billion to $30 billion range annually” across the cleantech sector, which isn’t abnormally high and right where it should be. “At the moment, we’re bumping up against the upper end of that range,” he says. “I don’t think there are a whole lot of folks that feel it should be higher than that simply because there’s nothing happening in the exit markets right now. This is not an easy time to be investing.”

In contrast to the venture capital exuberance exhibited during the corn-based ethanol industry build-out of 2005-’06, venture capitalists appear to be focusing their attention and investment efforts on emerging technologies that will advance the cellulosic ethanol industry. Attention to this market has also been heightened in light of the Energy Independence & Security Act of 2007, which was signed by President George W. Bush in December.

“I haven’t seen a lot of activity by venture capitalists, nor do I hear a lot of interest by venture capitalists right now in traditional corn-based ethanol production,” says Rob Day, a principal with Boston-based @Ventures, a venture capital group that invests in early-stage and mid-stage technology companies.

Day asserts that venture capitalists who are paring back their original investments in corn-based ethanol aren’t completely divesting but rather “betting on new

Cleantech Investments in 1Q 2008

SOURCE: NATIONAL VENTURE CAPITAL ASSOCIATION

bets,” he says. “Venture capitalists are typically looking for brand new technologies to bring to market, and with the current corn-based ethanol market appearing to mature, they are now exploring other markets,” Day says.

A strong initial public offering (IPO) market is critical to venture capital investors who depend on the public markets to cash out of their investments. This year hasn’t been the case as only five IPOs were filed in the first quarter of this year. Conversely, there were none filed in the second quarter—the first time in 30 years this has happened—and it can be largely attributed to the economic crunch being experienced in the past six to eight months, according to the NVCA. According to Day, the nonexistent IPO market is temporary. Moreover, the current state of the IPO market could present an opportunity for venture capitalists wishing to enter the later stages of an emerging cellulosic ethanol company.

“Temporarily, you’re seeing an increase in

later-stage venture capital dollars being put into cleantech and cellulosic ethanol companies because the IPO window is temporarily closed,” Day says. “Everybody is seeing that as a means of waiting out the turmoil in the stock market to make sure that when the IPO gets out there, there’s an open set of investors or a possible acquisition offer.”

For now, Day says venture capitalists are actively focusing their attention on four emerging markets: cellulosic ethanol, solar power, algal biodiesel and second-generation biofuel such as biobutanol. “Any one of these could potentially take off, depending on the ease of which they can scale up to meet commercialization expectations within the particular business model that venture capitalists are involved in,” he says. “Only time will tell.”

—Bryan Sims

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

: DRIVE 58

Blender Pumps Offer Freedom of Choice

By Toni Nuernberg

T

here is nothing more American than independence. Our country was founded on individual liberty and the freedom to make our own choices. For U.S. drivers, motoring has always been about freedom.

Now, blender pumps that offer drivers whatever blend of ethanol they like are giving consumers who drive flexible-fuel vehicles (FFVs) even more choice. This new frontier in fuel retailing means consumers have the ability to choose E10, E20, E30, possibly E40, or E85—freedom of choice that will help build even more demand for ethanol to help our country reach the goal of energy independence.

Choosing ethanol is just one component of the energy independence initiative that calls for using only domestically produced fuels from Jan. 1 through July 4, 2009. By using domestic ethanol, conserving fuel and using domestically produced oil, the United States could fuel auto transportation for 186 days in 2009 before needing to import oil.

The ability of consumers to choose higher blends of ethanol hinges on the availability of blender pumps, particularly as the number of FFVs continues to increase. In fact, General Motors will offer 18 FFVs in model year 2009. This is a sharp increase in the number of E85-compatible vehicle models and follows GM’s commitment to making at least half its line E85-compatible by 2012.

In a press release, Beth Lowery, GM vice president of environment, energy and safety policy, reiterated the company’s belief that producing biofuels, specifically E85, is the most significant thing we can do in the near-term to offset future energy demands. She confirmed GM is on target to make 50 percent of its vehicles flexible-fuel capable

the blender pump webiby 2012, with one nar button near the botcaveat—that the fueling tom of the page and folinfrastructure is in place. low the directions to regToday there are more ister. You’ll then be able than 1,600 E85 refueling to hear and see the full pumps in the United presentation.

States. Through efforts of The availability of organizations such as the higher blends of ethanol Ethanol Promotion and via blender pumps is also Information Council, the important to support the goal is to double this numNuernberg efforts of other ethanolber within the next 18 to 24 friendly companies such as months.

Building the ever-important Enterprise, which has made a fueling infrastructure is where pro- pledge to be a better environmental grams such as EPIC’s Blender steward.

Nationally, the Enterprise fleet Pump Program come into play. The EPIC Blender Pump Program sup- offers 73,000 FFVs. Unfortunately ports the installation of fuel dis- many of these cars never run on pensers that offer a combination of ethanol because E85 fueling staat least two mid-range blends such tions aren’t available. Fueling the as E20, E30 and E40, in addition to autos with E85 is just part of Enterprise’s corporate campaign to E85.

The program also offers retail- become more environmentally ers tax incentives up to $5,000 per friendly. Last year, the family-owned dispenser installation. In addition, business and nation’s largest car EPIC provides qualified retailers with rental company gave $25 million to free media training, talking points, create the Enterprise Institute for stylized “e” branding materials and Renewable Fuels, which will other promotional materials. To research biofuels.

Join the fight for energy indereceive funding, retailers must use the approved stylized “e” brand label pendence. Offer customers the freefor all blends. Retailers with existing dom to choose higher blends of blender pumps are also eligible for ethanol by installing a blender pump funding as reimbursement for instal- at retail locations. lation expenses. Promotional efforts tied to blender pump grand opening Toni Nuernberg is the executive events are a key tactic in raising pub- director of the Ethanol Promotion and lic awareness for higher blends of Information Council. Reach her at tnuernberg@epicinfo.org or (402) ethanol.

932-0567.

I invite retailers to review full details of the South Dakota program through a webinar at http://www .drivingethanol.org/promotions/state _southdakota.aspx. Simply click on

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

:LEGALPERSPECTIVES 60

Financial Restructuring Alternatives for Bioenergy Companies

By James Lodoen and George Singer he commodity prices and other economic considerations challenging virtually all bioenergy companies are triggering the following questions: How does a bioenergy company maximize cash flow and make debt payments in the current environment? Be proactive instead of reactive.

There are almost always expenses available to cut, and most distressed companies wait too long to cut them. This could include reducing employees and contracting with third parties that provide management or operational services.

Keep the project lender informed with good and bad news. The current lender is the best option for additional financing, or for modification of loan covenants and repayment schedules.

Open and proactive communication is critical.

Explore raising capital from current investors or from domestic or international private equity funds as a way to recapitalize the business. Reduced ownership in a viable entity is almost always preferable to increased ownership in a failed venture.

T

Lodoen

Singer

Consider leasing the facility to a viable entity or entering into a sale, merger or joint venture.

Is Chapter 11 bankruptcy a solution? Sometimes. It creates a short-term reprieve to prevent creditors from foreclosing, may eliminate lender and creditor payments in the short run, and may allow for use of cash collateral if a lender refuses to allow continued use of receipts for operations. However, if the company cannot live off its current cash, Chapter 11 does not generate new sources of revenue absent agreement of the current—or new—lender voluntarily advancing new financing.

Chapter 11 is expensive. Lawyers, accountants and other professionals for the company, creditors’ committee and sometimes the secured creditor all need to be paid. It is also difficult to successfully reorganize or liquidate in a Chapter 11 proceeding without the cooperation—to at least some degree—from the major lender(s). It is a last resort, but sometimes a necessary one.

Whom do I need to call for help?

Turnaround/restructuring consultants generally work exclusively with financially distressed companies and quickly analyze and implement steps to resuscitate, stabilize and either restructure, liquidate or sell a financially-stressed company.

They are adept at the art of managing cash-flow. They typically are certified public accountants, former lenders, chief

executive officers, chief financial officers and even lawyers. Their skills translate throughout any industry.

Lawyers with experience in corporate reorganizations and bankruptcy law are a critical piece of the solution.

Negotiations with creditors and lenders are often measured against what the various constituents can accomplish in a bankruptcy proceeding. They work handin-hand with current management and turnaround consultants.

Investment bankers may be required, but are often used to find new financing or capital, or to find potential merger partners or a buyer.

What are the three major mistakes financially troubled bioenergy companies make? 1) Not identifying or responding to the first signs of financial distress, 2) waiting too long to retain outside professionals to address financial problems, and 3) not retaining the best professional help available.

James Lodoen and George Singer have extensive restructuring and agribusiness experience, and are partners in the corporate reorganization and bankruptcy group at Minneapolis-based Lindquist & Vennum PLLP. Reach Lodoen at jlodoen @lindquist.com or (612) 371-3234.

Reach Singer at gsinger@lindquist.com or (612) 371-2493.

This article is only a general summary for information purposes and does not constitute legal advice. Consult a qualified and experienced legal advisor for your specific situation or particular questions.

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

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EQUIPMENT

BEGINNING OF THE

BLENDER PUMPS

A grassroots biofuel revolution that’s been brewing in South Dakota for years is on the verge of sweeping the country. Ethanol blender pumps, considered by many as a means to increase the demand for ethanol while reducing America’s dependence on foreign oil and mitigating high gasoline prices, are popping up in various Midwest locations.

By Erin Voegele Photos by Susanne Retka Schill

Sioux Valley Co-op’s Watertown, S.D., station, located along U.S. Hwy 212 on the east end of town, advertises the price of its midlevel ethanol blends on the station marquee.

64

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

EQUIPMENT nspired by fuel pumps capable of blending No. 1 and No. 2 diesel, a group of South Dakotans wondered whether it would be possible to blend ethanol and gasoline in the same manner. In the mid 1980s this group, which included Owen Jones, Orrie Swayze and Merle Anderson, who retired from farming 16 years ago and lobbies for ethanol interests, met while serving on the original board of the American Coalition for Ethanol. Together with Allen Kasperson, an engine specialist who has been working with ethanol for nearly 30 years, they began exploring the possibility of blending ethanol and gasoline at the pump. “Many of us had been doing our own splash blending for some time,� Swayze says, referring to the fact that he, and others in South Dakota, had been blending E85 and unleaded fuel in the tanks of their vehicles for years. Swayze is a founding member and past president of the South Dakota Corn Growers Association and farms near Wilmont, S.D. Jones, who serves as the ACE treasurer and is part owner in Penrhos Farms in Britton, S.D., approached Dave Andresen, manager of the 4 Seasons Co-op in Britton, S.D., with the idea. After bringing the matter to the co-op board, they decided to push ahead. The co-op contacted WestMor Industries LLC, a Morris, Minn.-based supplier of fuel blenders and dispensers, who agreed to install the pump.

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ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

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EQUIPMENT

According to CHS Inc., ethanol blender pumps located at Cenex brand retail sites must be clearly labeled to show that mid-grade ethanol blends are for use in flex-fuel vehicles only.

In March 2006, the first ethanol blender pump in the nation was in operation at the 4 Seasons Co-op. “We knew at the time of the installation it was a groundbreaking situation, and we certainly had no idea what lay ahead of us,” Jones says.

The pumps give consumers a choice, Swayze says. That’s especially important today as E85 and other midlevel blends are priced lower than regular-unleaded gasoline. According to Kasperson, the pumps also stimulate the local economy because many of the stations work with local ethanol suppliers.

Ethanol blender pumps are designed to use existing technology in a new way.

Similar pumps have been used for years to blend unleaded gasoline and premium gasoline into a mid-grade product. What is new is that the equipment is now being used to make midlevel ethanol blends such as E20 or E30 available to consumers.

Although the technology isn’t new, there were some concerns about using a single hose to pump different levels of ethanol blends. When a retailer offers regu-

lar unleaded gasoline, E10, E30 and E85 through a single hose and someone fills their tank with fuel, two-tenths of a gallon of fuel remains in the hose after each fill. If one person uses the pump to dispense E85, and the next uses the pump to purchase regular unleaded, the person trying to dispense regular unleaded will deposit twotenths of a gallon of E85 into their fuel tank. This probably wouldn’t impact a vehicle tank, but a smaller amount of fuel for use in a motorcycle or lawnmower could cause problems.

This problem can be avoided by using a multi-hose configuration. “We’ll set them up so unleaded and E10 are always in a separate hose, away from the higher blends of ethanol,” says Steve Kleespies, WestMor Industries’ field service manager. “By making sure we never run E85 in the same hose as the straight unleaded or E10, we’ve eliminated that problem.”

UL Certification As the blender pumps and pumps dispensing E85 started to catch on, they

EQUIPMENT

attracted the attention of the Underwriters Laboratories Inc. In October 2006, UL suspended its authorization to use the UL seal on components used in devices dispensing fuels containing more than 15 percent ethanol. Currently, no blender pumps or fuel dispensers are approved by the UL for E85 or any fuel containing more than 15 percent ethanol.

Dresser Wayne Inc., a Texas-based fuel equipment supplier, has submitted fuel dispensing equipment that meets the specifications and guidelines recommended for E85 for UL approval. The equipment is made using stainless steel and nickel plated metals rather than aluminum and aluminum alloys. Rubber components and seals have also been upgraded to materials capable of resisting the corrosive nature of E85. “Basically anything that touches the fuel is different,” says Scott Negley, Dresser Wayne’s director of North America project management. “We are probably within a month now of having a UL approved E85 dispenser.” Until that happens, numerous states have allowed gas station owners to

use standard fuel dispensing equipment to allow the sale of E85 and midlevel ethanol blends before UL approved equipment becomes available. The South Dakota Department of Weights and Measures was one of the first agencies to face the issue.

Knowing UL approval was being addressed, the department chose to allow the use of standard equipment so long as the pumps are proven to dispense accurately. A position paper outlining specific requirements and recommendations was also supplied to station owners. In Kansas, a pilot program administered by the state’s Department of Agriculture is giving station owners the opportunity to install ethanol blender pumps. As part of the program, the pumps are monitored to ensure suitability and verify that measurements are accurate.

It is unclear what will happen when the UL approved equipment becomes available. Ron Lamberty, ACE’s vice president of market development, says he believes in most cases pre-existing pumps will be grandfathered in, but any ethanol

blender pumps that are replaced will need to be UL approved. However, it will likely be up to each state to decide how to regulate pumps already in operation.

Assistance Programs Despite the lack of UL-approved equipment, some states are offering incentives to station owners to install the blender pumps. A grant program in South Dakota has been established to assist station owners in purchasing and installing ethanol blender pumps, with the goal of adding 100 new pumps within the next year.

Station owners can receive $2,500 from the South Dakota Corn Utilization Council and an additional $2,500 from the ethanol industry to purchase the pumps.

Another program, developed by the Iowa Renewable Fuel Infrastructure Program, awards grants to stations owners in that state to help cover the expense of installing E85 dispensers, blender pumps and biodiesel dispensers. So far three blender pumps have been included in the program.

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In addition, state programs in Georgia, Idaho, Indiana, Maine, Michigan, New York, Ohio, South Carolina and Tennessee are providing assistance to station owners implementing E85 infrastructure.

Station owners may also be eligible for assistance from the federal level. Section 244 of the Energy Independence & Security Act of 2007 calls for the establishment of a grant program to help retail and wholesale motor fuel dealers with the installation, replacement or conversion of infrastructure used exclusively to store and dispense fuel blends that contain between 11 percent and 85 percent renewable fuel.

Resistance and Legal Considerations Station owners who have installed ethanol blender pumps acknowledge that some people are using midlevel ethanol blends in their nonflexible-fuel vehicles, but there have been no known consumer complaints regarding midlevel ethanol blends or vehicle damage. “The people who have had blender pumps the longest tell us they have not had a single complaint or warrantee issue,” Lamberty says.

Although the U.S. EPA has ruled that it’s legal to sell midlevel ethanol blends for use in flexible-fuel vehicles, it is illegal to use fuel containing more than 10 percent ethanol in standard vehicles. In a letter written to the South Dakota Petroleum and Propane Marketers Association in November 2006, Margo Tsirigotis Oge, EPA’s director of the Office of Transportation and Air Quality, wrote that while the sale of midlevel ethanol blends for use in flexible-fuel vehicles is legal, “the use of such blends in gasoline-only vehicles is prohibited under the Clean Air Act. … The retailer who has variable ethanol percentage pumps may be liable for causing such violation, whether the misfueling occurs at self-serve or fullserve pumps.”

“We are actively investigating and inspecting retail outlets to determine if fuel containing more than 10 percent ethanol is being ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

EQUIPMENT

introduced into vehicles designed for gasoline only,” says Erv Pickell, team leader for EPA Fuels Enforcement. “We expect to continue to perform such inspections and investigations, including where we get tips about specific stations possibly having violations.”

The U.S. DOE’s Web site clarifies that research is underway to find out whether midlevel ethanol blends can be used legally in standard nonflexible-fuel vehicles. For midlevel ethanol blends to be approved for use in standard vehicles, the EPA must approve a waiver to the Clean Air Act that classifies the blends as “substantially similar” to gasoline.

As the blender pumps become more popular, some resistance has surfaced from small-engine manufacturers and dealers, who worry that pumps could be mislabeled. They also wonder what station owners are doing to prevent people with nonflexible-fuel vehicles from using fuel containing more than 10 percent ethanol. Kris Kiser, the Outdoor Power Equipment Council’s vice president of public affairs, says his organization is concerned about product failures, safety issues and engine build-up. “The last thing we want is E30 in any product not designed for it because it presents a safety risk to the user and a risk to the equipment,” Kiser says. He goes on to explain that his organization is “not antiethanol, but what we don’t like is a proliferation of different kinds of fuels.”

CHS Inc. requires that all ethanol blender pumps located at Cenex branded retail sites be clearly labeled that the fuel is for use in flexible-fuel vehicles only. “Our decaling reads that any alternative fuel blends are for dispensing only in flexiblefuel vehicles, it is a requirement not a recommendation,” says Doug Dorfman, CHS manager of marketing and retail development. “Any mis-fueling would be a violation of the federal Clean Air Act.” It is imperative that station owners label their blender pumps properly and accurately. It is also important to educate consumers about the fuel. Even though

many people are using midlevel ethanol blends in their regular vehicles without experiencing any problems, it is currently illegal and will negate the manufacturer’s warrantee on the vehicle.

Looking Ahead While the small-engine manufacturers are skeptical, station owners are pleased with the response they’ve received once the blender pumps were installed. Since the ethanol blender pumps were installed, the Watertown, S.D.-based Sioux Valley Co-op has experienced a reduction in sales of regular unleaded gasoline, while sales of E10 have remained consistent and sales of E30 and E85 have increased each month. “We are happy with it,” says Gary French, Sioux Valley Co-op’s manager. “If we were to acquire another station—or build another station—we would definitely put in the same type of pumps we have at our other four locations.”

Other stations have experienced similar results. “We’ve seen quite an increase in sales,” says Tammy Satrang, controller at the Britton, S.D.-based 4 Seasons Co-op.

“Not just in sales through the blender pump, but gas in general at our facility. We have a lot more traffic coming through our station, a lot more customers just because the blends are offered here.”

Since the installation of 4 Season Coop’s ethanol blender pumps, dozens of Midwest stations have begun to implement the technology. According to Kleespies, WestMor Industries has seen a sharp increase in interest during the past 16 months, selling approximately 50 ethanol blender pumps during that time.

Considering Minnesota’s plan to require the sale of E20 fuel, and various state programs being developed to encourage the growth of E85 infrastructure, it is clear that the use of ethanol blender pumps will become more widespread. EP Erin Voegele is an Ethanol Producer Magazine staff writer. Reach her at evoegele@bbiinternational.com or (701) 373-8040.

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E20’S O B S T A C L E S As E10 has gained acceptance as a standard fuel in the United States, efforts are moving ahead to increase the amount of ethanol to 20 percent. Several studies have tested the effects of midlevel ethanol blends on vehicles, but more work remains to convince naysayers that midlevel blends are efficient, environmentally friendly and safe to use.

By Kris Bevill

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n 2005, Minnesota passed unprecedented legislation requiring that the state’s fuel consist of at least 20 percent ethanol by 2013. The state already enforces an E10 mandate and is home to more than 300 E85 fueling stations.

To raise total fuel consumption to a level of 20 percent, the state has two choices—consume enough E85 to total 20 percent of all fuel consumed or convince the U.S. EPA to grant a waiver to the Clean Air Act and allow E20 to be used in all gasoline.

Expanding E85 availability is a feasible option, but has maximum capabilities for ethanol usage. An E20 waiver, on the other hand, would affect not only Minnesota but the entire nation. If the EPA agrees to consider E20 as a new additive, the agency will certify it and the waiver will apply on a national level.

The process toward gaining an E20 waiver, however, is a long one. Many studies need to be conducted before the EPA can determine whether a 20 percent blend of ethanol is safe for all engines. While midlevel blends are available in some parts of the Midwest via blender pumps, any blend of ethanol/gasoline greater than 10 percent has been deemed illegal by the EPA unless it is used in flexible-fuel vehicles. The agency needs to make sure that any proposed fuel operates sufficiently and meets its standards by gaining input from engine manufacturers and researchers.

A study to explore the effects of midlevel ethanol blends was recently concluded by the state of Minnesota and the Renewable Fuels Association. The University of Minnesota, the Minnesota Corn Growers Association, the Council of Great Lakes Governors and others also participated in the year-long study.

According to Ralph Groschen, marketing specialist for the Minnesota Department of Agriculture, the study was intended to focus on five areas of concern related to E20—materials compatibility, drivability, emissions, toxicology and durability. A $100,000 budget from the state allowed researchers to conduct materials compatibility and drivability tests. The RFA supplied funding for emissions testing. However, the

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

INDUSTRY

money ran out before toxicology and durability tests could be conducted and further emissions testing is also needed. “It takes millions of dollars to do many of these things Groschen and we understand that the [U.S.] DOE is doing a lot of different kinds of testing that will answer some of the questions about durability and the rest of the emissions testing,” Groschen says. He believes the EPA has covered the toxicology aspects in its health effects study that tested the effects of E10. Groschen says the results of the EPA study were supposed to be released in 1995, but have yet to be made available. He hopes once that data is finally released, those numbers can be modified to show the effects of E20 without having to complete a new study.

As for the portions of the Minnesota study that were completed, the results look promising. For the drivability testing, researchers used 40 matched pairs of fuelinjected and hybrid-model vehicles from Ford Motor Co., DaimlerChrysler, General Motors Corp. and Toyota—model years ranging from 2000 to 2006. One vehicle from each pair was fueled with nonoxygenated gasoline, while the other was fueled with E20. Unlabeled refueling cards were provided for each vehicle to maintain drivers’ unbiased opinions. Vehicles were driven by both ordinary individuals and experts in drivability performance. Research at the end of one year concluded that E20 was effective at powering vehicles and that the fuel was undistinguishable in performance compared with nonoxygenated gasoline.

The materials compatibility portion of the Minnesota study concluded that the use of E20 does not present problems for current automotive or fuel dispensing equipment. Researchers compared gasoline, E10 and E20 on metals, elastomers, plastics, fuel pumps and sending units. Of the 19 metals tested, only two showed measurable corrosion rates. All eight elastomer samples showed some degree of swell in all three test fuels. Of the plastics tested, only those that are currently not recommended for use with

ethanol showed significant deterioration.

Groschen, who has been involved in testing and marketing midlevel ethanol blends since Minnesota’s E20 legislation was passed in 1995, says no conclusions can be reached until more testing is completed. He believes it was vital to conduct the vehicle testing before moving on because if the results had come back negative, there would be no point in moving ahead. "We don't have the lion's share of it done, but we have made progress, and there's a lot of interest in the concept of certifying 20 percent blends across the nation,” he says. He believes that the RFA and the Minnesota governor will officially request a waiver from the EPA as soon as more significant testing has been completed. "In order to make that come about we are participating with the RFA and the DOE and others to bring about data that would indicate to the EPA that there is no reason why they shouldn't approve 20 percent ethanol gasoline,” he says. Groschen says in order to trigger Minnesota’s E20 mandate, the EPA needs to pass a waiver by 2010.

Some of the federal testing is being conducted at the DOE’s Oak Ridge National Laboratory in Tennessee. Ron Graves, director of ORNL’s Fuels, Engines and Emissions Research Center, has been involved with intermediate ethanol blend studies since June 2007. While testing has yet to be completed, some key preliminary findings have been reached. First, Graves says his research team has yet to confirm the so-called “sweet spot” that other testers of ethanol blends claim exists. Previous researchers have said that certain blends of ethanol, E30 for example, provide better mileage than nonoxygenated fuel. ORNL research contradicts those claims and instead has shown that as the percentage of ethanol is increased the mileage rate decreases, consistent with the change in energy density.

Another key finding of ORNL research echoes the results of the Minnesota study.

When it comes to drivability, the average driver cannot tell the difference between vehicles fueled with E20 or non oxygenated gasoline.

“That doesn’t mean there aren’t subtle differences,” Graves says. “But that’s what our research is all about.”

Some of the initial ORNL findings have

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INDUSTRY

surprised to researchers. Of the 13 vehicles tested with intermediate ethanol blends for an interim progress report, none have shown evidence of clogged fuel filters or of malfunction warnings from the vehicle’s computer. That’s a positive. On the flip side, testing of catalytic converter temperatures at full-throttle conditions has shown that most of the vehicles do not apply the learned fuel calibration for ethanol content at all operating conditions, which can result in catalysts that run between 25 and 35 degrees Celsius (77 and 95 degrees Fahrenheit) hotter than normal. Those results have caused some concern among researchers, but the question remains of how much of a problem that might be over the course of a vehicle’s life.

To answer that question, catalytic converter aging will be the subject of a much larger test. Researchers will test the effects of nonoxygenated gasoline, E10, E15 and E20 on 10 different types of vehicles to better determine the long-term effects of higher temperatures under certain operating conditions. A total of 80 vehicles will be tested. In

mid-July, Graves expected a contract for the content in gasoline you're going to increase test to be awarded by the end of the month. the heat in the combustion chamber,” says John McKnight, director of environmental safety and compliance for the National Fuel: Not Just for Cars While support for E20 may be growing Marine Manufacturers Association. “Our among standard vehicle operators, another engines run at very high speeds." His organsector of the motoring public is harder to ization won’t be satisfied until extensive sciconvince. Small-engine manufacturers are entific testing on those types of engines is concerned about ethanol blends and they’re conducted by a third party.

Bob Adrience, technical director at the not afraid to voice their opinions. Shortly after the Minnesota study was released, a Boat Owners Association of the United coalition of alternative engine associations, States, agrees that more testing is needed by manufacturers and consumer awareness independent parties before any kind of waivgroups issued a response saying that the er can be granted. "There's already a lot of study was far from complete because it neg- talk that ethanol eats up this and ethanol eats lected to include small engines. Motorcycles, up that,” he says. “Let's find out before it's snowmobiles, boats, lawnmowers, generators introduced. A lot of people feel like they got and all other types of small-engine devices blindsided by E10."

It’s common knowledge now, but can’t be forgotten when considering a nationwide change in fuel, they say, and the Adrience points to the detrimental effects EPA needs to take those engines into consid- E10 had on fiberglass fuel tanks in boats when the fuel was first introduced a few years eration before making a decision.

“We don't have a problem with ethanol ago. He conducted his own testing on a as far as E10 goes, but we do know that, at “couple of tanks” and found that E10 not some point, when you increase the ethanol only destroyed the tanks, but also caused

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INDUSTRY

major damage to the boat motors. Fiberglass tanks were installed in boats from the mid1960s until the mid-1980s and today make up less than 1 percent of the total number of boats being used, according to Adrience.

More recently manufactured fiberglass tanks are resistant to ethanol. However, it’s not uncommon for boats to remain in use for more than 20 years, so there is a possibility that a new fuel could have long-term effects on boat owners. Adrience says even though the main problem experienced by boaters who use ethanol-blended gasoline is a temporary clogging of fuel filters, many are still upset. “I think they won't be up-in-arms about it a year from now, once their tanks are clean,” he says, adding that making the leap to E20 would be a major difference. McKnight says the boating population can get behind E10 on a national level, “but when we start to get to the increase of [ethanol], there are a lot of questions.”

Motorcycles also have yet to be tested with E20. The American Motorcycle Association is a member-driven organization

and does not conduct scientific studies, but Imre Szauter, government affairs manager for the association, says he receives anecdotal reports from motorcycle riders who say they’ve experienced problems with ethanol.

His association has two major concerns when it comes to intermediate blends of ethanol—reliability and emissions. “Any kind of testing, whether it's done by people in the ethanol industry or disinterested third parties, needs to be done openly so folks can see what's going on,” Szauter says. “[They need to] test a broad range of engines so that when the results come back they can say they are representative of what's being used in the field. Then we can say with some certainty what to expect. Unless it’s really a broad sample of what's out there, we don't believe that it will really address all of the issues that will surface and in the end it's the consumer who will pay for this one way or the other."

Groschen says Minnesota is leaving small-engine testing up to the DOE, because it is better funded and well-equipped to handle such an extensive study. Graves says the

DOE conducted small-engine testing last fall, but only tested small generators, a leaf blower and a line trimmer. More recently, a concerted effort was completed in which 16 engines were run to full useful life. This larger effort involved a pressure washer, a leaf blower, a line trimmer and a small generator.

Testing on motorcycles, boats and snowmobiles is in the planning stages and should begin in a few months, Graves says. Tests are expected to be conducted for about one year.

It’s clear that many discussions and studies need to occur before the United States can set standards for a higher blend of ethanol.

“As far as the national initiative is concerned, we've started the ball rolling in that direction,” Groschen says. “If it didn't happen until 2015, well that would still be progress wouldn't it? If we got 15 percent instead of 20 percent—15 is more than 10. We’re just trying to make progress.” EP Kris Bevill is an Ethanol Producer Magazine staff writer. Reach her at kbevill @bbiinternational.com or (701) 373-8044.

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PROFILE

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PROFILE

Good Neighbors Residents of Watertown, S.D., are basking in the benefits that have accompanied the building of an ethanol plant on the edge of town. From lower utility bills for city residents to plentiful feed for surrounding dairy farmers and cattle feeders, Glacial Lakes Energy LLC has had a positive impact on the community.

Story and Photos By Susanne Retka Schill

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A

n ethanol plant on the edge of a community might seem to be a recipe for conflict with neighbors, but residents of Watertown, S.D., have embraced Glacial Lakes Energy LLC. Perhaps it’s because everyone knows the ethanol plant paid back the original investors better than two-to-one in dividends. Perhaps it’s because they’ve gone above and beyond what it takes to be good neighbors. That’s no small feat for a plant that requires more than 150 trucks to deliver corn Monday through Friday. To ensure there are no line-ups that could disrupt traffic, the deliveries are timed so there’s a steady stream of trucks throughout the 10-hour day.

Furthermore, initial concerns that the plant would have an odor problem never materialized. Standing in the parking lot of the 100 MMgy ethanol plant on a hot summer day, one can detect only a mild odor that can’t be detected at all a few blocks away.

The Benedictine sisters, who live in the Mother of God Monastery across the field from the ethanol plant, say the smell is nothing compared with the rendering plant that used to operate on the south edge of town. There has been an increase in traffic, and of

‘It does impact the environment, but is it severely disturbing our life? No.’ —Sister Romona Fallon, prioress of the Mother of God Monastery

course, a change in the view from the hill where the monastery overlooks Watertown. Sister Ramona Fallon, prioress of the community, wryly notes the view of the industrial park and added truck noise does make promoting retreats at the monastery for its peace and quiet a bit contradictory. “It does impact the environment, but is it severely disturbing our life? No,” Fallon says.

Certainly the livelihood of area farmers has improved with the addition of a new market for their corn, which

is widely credited for boosting commodity prices. Farmers aren’t the only ones who have benefitted from the ethanol plant. Every resident of Watertown has been affected because they not only have the opportunity to purchase lower-priced midlevel ethanol blended fuel but they also have lower utility bills. Having an ethanol plant keeps utility rates in the city of 20,000 reasonable, says Geoff Heig, general manager of Watertown’s municipal utilities. In comparing Watertown’s natural gas rates with other municipal utilities

PROFILE

The ethanol plant uses twice the natural gas as the whole town uses collectively.

—Geoff Heig, general manager of Watertown’s manicipal utilities

of the same size, he estimates that residents get a 5 percent savings. On $33 million in total natural gas purchases, that amounts to $1.5 million in annual savings, he says. “The plant’s load is the same every day, summer and winter,” Heig explains. “In natural gas, the more you buy in the summer results in a better price in the winter.” Glacial Lakes Energy’s impact on the city’s utilities is significant. “Of our $60 million budget, $25 million comes from the ethanol plant,” he says. Of the $25 million, roughly $22 million is for natural gas,

$2 million for electricity and $1 million for water. The ethanol plant uses twice the amount of natural gas as the whole town uses collectively, Heig says. While many people are concerned about the water demand from an ethanol plant, Heig says at 500 gallons per minute, the plant is the city’s largest customer, “but it’s not a significant amount like the gas usage.” The city is currently building a new water plant, he adds. “We’re glad to have a customer [like the ethanol plant] that’s helping to pay for it.” The plant also directly benefits the city in

another way, Heig adds. In addition to the utility bill, the city collects a 2 percent sales tax, which amounts to $500,000 a year, for the city’s general fund from the ethanol plant alone.

Craig Atkins, president of the city’s economic development committee, Focus Watertown, cites a number of other positive impacts from the ethanol plant. “It’s helped at every level of the local economy,” he says. “With the difficult economic times of the last couple of years, Watertown’s economy has been stable.” The 70-plus jobs at

PROFILE

‘It’s helped at every level of the local economy.’

—Craig Atkins, president of Focus Watertown

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Glacial Lakes Energy don’t make it the largest employer in town, but they are quality jobs with high average salaries, Adkins says. The farming community’s increased prosperity is also a plus for retailers in town.

From Atkins perspective, a lot of synergies have developed with the advent of the ethanol plant. For example, the rail spur built to service the plant to transport ethanol and distillers grains shipments has attracted a plastics molding plant that receives its resin by rail. The development group continues to recruit new businesses, looking for opportunities to utilize the ethanol plant’s carbon dioxide supply. Atkins also credits the presence of the ethanol plant in helping the city land federal funding for a truck bypass around the south end of town that had been sought long before the ethanol plant was built.

Big on Ethanol Blends With an ethanol plant in town, Watertown residents support the use of ethanol blends. Shortly after Glacial Lakes Energy began producing ethanol in 2002, John Sperry started tinkering with the go-karts that race around the Thunder Road Family Park, which he owns with a brother and brother-in-law. Sperry took one go-kart, drilled out the jets and adjusted the carburetor so it

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

PROFILE

‘As far as I can tell, we’re the first ones with concession karts that run on E85.’

—John Sperry, co-owner of Thunder Road Family Park

could run on E85. After successfully converting one, he switched over all 26 of the 6.5 horsepower Honda engines and seven double carts with 9 horsepower engines. “As far as I can tell, we’re the first ones with concession karts that run on E85,” he says.

The town’s other big promoter of E85 has a long history with ethanol. “Sioux Valley [Co-op] was the first [gas station] in South Dakota to offer E10 back in the early ’70s,” says Manager Gary French. The cooperative installed a blender pump three years ago at its station on the east side of Watertown. “It wasn’t six months after that and people were asking, ‘When are you getting them over at our other locations?’” French says. There’s been a steady increase in the gallons of ethanol sold by the cooperative, which receives its ethanol directly from Glacial Lakes Energy. French says that the sale of unleaded gasoline without ethanol has dropped while E30 sales have increased each month. E10 sales are holding steady and E85 has increased some. The ethanol plant is accepted in the community, he adds. “A lot of times when something like this comes to town you have people badmouthing it,” he says. “That’s pretty much nonexistent.”

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PROFILE

‘A lot of times when something like this comes to town you have people bad-mouthing it. That’s pretty much nonexistent.’

—Gary French, left, manager of Sioux Valley Co-op, with Vincent Ries, chairman of the co-op.

On the Farm From the farmer’s point of view, the ethanol plant has been good, says Vincent Ries, chairman of the board at Sioux Valley Co-op. “It’s brought the price of corn up for farmers,” he says.

As he fills his pickup with $55 worth of E85, he points out that the price would have been $20 higher if he were filling up with regular gasoline, and perhaps even more. “They say fuel would be even higher if it weren’t for ethanol,” he says referring to studies including a paper published by Iowa State University saying that ethanol production has reduced gasoline prices at the pump from 29 to 40 cents a gallon, depending on the region.

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While in some areas livestock producers oppose using corn to produce ethanol because it has contributed to an increase in prices, in Watertown, they see the plant as one big feed processor. Brothers Greg and Jim Moes are expanding their dairy farm east of Watertown so they can bring a fifth generation into the operation.

They hope to move into a new facility this fall and build their herd up from 350 to 2,200 cows. Shortly after the ethanol plant opened, the Moes began purchasing distillers grains to feed their own dairy cows and soon were mixing custom rations for other cattle producers who wanted to use distillers grains.

They now have five live-bottom trucks

that haul six to eight loads daily from Glacial Lakes Energy’s plants in Watertown and Redfield. Their venture has created new jobs and supported growth in livestock feeding in the area.

“It used to be everybody was shipping livestock out to the big feed yards,” Greg Moes says. “Now you go up and down the road and they’re feeding distillers grains. They used to have to grind corn if they were going to feed, but now they haul corn to the ethanol plant and bring it back already processed.” Moes says the modified wet grains is a good product to feed with alfalfa and makes for a consistent feed that the cows like. It also eliminates the need to add high-priced min-

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

PROFILE

‘It used to be everybody was shipping livestock out to the big feed yards. Now you go up and down the road and they’re feeding distillers grains.’

—Greg Moes, right, dairy farmer, with his brother Jim Moes

erals and soybean protein supplements.

With their heifers, they’ve taken it a step further and replaced the corn and alfalfa ration with distillers grains mixed with corn stalks and wheat straw.

His only concern is that because of the growth in the livestock industry, there may not be enough distillers grains to supply all of them.

Lakness Land and Cattle, 20 miles southwest of Watertown, sells about a third of its corn crop directly to ethanol plants, including Glacial Lakes Energy and others in eastern South

Dakota. Another portion is sold to local elevators that ask the Laknesses to deliver the corn to ethanol plants.

Like the Moes, the Lakness family sells corn and brings back distillers grains for the cattle. “The cattle know if you don’t have it in the feed,” Marietta Lakness says. “It’s sweet and it has high energy.” Marietta handles the finances for the operation, which consists of her and her husband Nathan, his brother Joe and wife Renee, and the brothers’ parents Milton and Benita Lakness. She remembers well the

research that went into their decision to invest in ethanol when times were difficult. “We were faced with low commodity prices and coming off a couple of years recovery from flooding,” she says. The Laknesses had invested in other projects in the past that hadn’t worked out, so they researched ethanol and attended several meetings before investing. Although they were well-schooled in the ethanol process by the time it came to invest, it still meant borrowing money after a streak of bad crop years. Even though the point of investing in ethanol is to build a local market, farmers are most likely to invest in land and machinery.

“It was a risk for a lot of farmers to invest in ethanol, to diversity their dollars,” she says. The minimum investment was for 5,000 shares at $2 per share. Ultimately, Glacial Lakes Energy attracted 4,000 investors from across South Dakota, with the majority coming from the immediate region. The plant was built at the right time, and in the good years paid back 200 percent to investors. According to Glacial Lakes Corn Processors’—the cooperative that wholly owns Glacial Lakes Energy—Web site nearly $50 million has been paid out in dividends since

PROFILE

‘It was a risk for a lot of farmers to invest in ethanol, to diversity their dollars.’

—Marietta Lakness of Lakness Land and Cattle

the plant opened. “These are returns that stayed in the state,” Lakness says.

“How many times did that turn over in the community?” In her opinion, ethanol is a great opportunity. “We’re investing in a multimillion dollar company that’s 20 miles away, and we can

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go to the annual meeting. We have the opportunity to have hands-on involvement. We have neighbors on the board of directors and what they’ve learned they can carry back to their own operations.”

Lakness points out that many local

elevators also benefitted by investing in the plant and by purchasing grain to deliver to the plant. “Our dividends from local co-ops have increased,” she says. The rural economy has benefited by the grain sales staying local, and by the narrowing basis—an indication of how the spread between the futures market and the local cash price has narrowed due to increased local demand.

In rural communities such as Watertown, S.D., it is apparent ethanol has benefited corn farmers and the livestock industry, and proven that an ethanol plant can be a good neighbor. EP Susanne Retka Schill is an Ethanol Producer Magazine staff writer. Reach her at sretkaschill@bbiinternational.com or (701) 738-4922.

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

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TECHNOLOGY

X

Challenge : The Last Lap

The Challenge X: Crossover to Sustainable Mobility competition completed its fourth and final year in May. EPM talked with some of the teams who used E85 to gauge their opinions about using the renewable fuel.

By Bryan Sims Photos By Roy Feldman

Texas Tech University’s car, left, and University of Akron’s car compete during the acceleration portion of the Challenge X competition in Englishtown, N.J., in May. 92

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

TECHNOLOGY

A

s the U.S. automotive industry strives to meet increased Corporate Average Fuel Economy standards as prescribed by the 2007 Energy Independence & Security Act, some of the brightest college minds across North America have been tapped to help achieve these goals.

Their assignment is to change the future of the automotive and transportation industries by reinventing a vehicle and making it more environmentally friendly and energy efficient. The resources the students had to work with were a Chevrolet Equinox, $25,000 in seed money, a General Motors Corp. adviser and the freedom to deploy any novel technology they choose. This is the task that GM and the U.S. DOE gave to 17 student engineering teams across the United

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

States and Canada during the Challenge X: Crossover to Sustainable Mobility competition. Since 1987, the DOE, Natural Resources Canada and various academic and industry partners have sponsored more than two dozen engineering competitions.

For the Challenge X competition, students followed a modified version of GM’s Global Vehicle Development Process—the automaker’s real-world vehicle development and engineering process—to guide their design and development activities using a GM-donated 2005 Equinox. The event challenged students to develop innovative advanced propulsion systems to maximize the vehicle’s fuel economy and reduce emissions and greenhouse gases (GHGs) while maintaining or exceeding the vehicle’s stock utility and per-

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TECHNOLOGY

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formance. The challenge was co-sponsored

by GM and the DOE along with several others, who supplied cutting-edge technology and support, including software and hardware components.

The first year of the program, which began in 2004, focused on vehicle simulation, modeling and subsystem development, and testing. Year two focused on powertrain development and demonstration of the energy use and emissions goals of the competition. The third year required further refinement with the goal of delivering a “showroom” vehicle that was appealing to consumers. In this, the fourth and final year, students focused on customer acceptability, and over-the-road reliability and durability of their advanced propulsion systems. The vehicles were then tested by participating in drag racing, autocross and a 400-mile road rally from New York City to Washington, D.C. Mississippi State University, for the second consecutive year, took first place honors using B20 in tandem with a 2.0-liter fourcylinder spark ignition engine. The other 16 teams that participated included: University of California, Davis; Michigan Tech University; University of Akron, Ohio; Texas Tech University; Pennsylvania State University; University of Waterloo, Canada; University of Michigan; University of Tennessee; RoseHulman Institute of Technology; West Virginia University; University of Tulsa; Virginia Tech University; San Diego State University; University of Texas; Ohio State University; and University of Wisconsin, Madison.

MSU earned 817.1 points out of a possible 1,000 while the runner-up, the University of Wisconsin, was awarded 742.8 points.

Ohio State University came in third, while the University of Waterloo and the University of Tulsa came in fourth and fifth respectively to round out the top five. Twelve teams used some sort of biodiesel blend while only three teams—Texas Tech University, Virginia Tech University and the University of California, Davis—used E85 in their tanks. UC-Davis was the only team to employ plug-in hybrid technology as its energy source in conjunction with E85.

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

TECHNOLOGY WWW.STRONGFORM.NET

P.O. BOX 315 208 BAKER ST. N. Mississippi State University engineering students pose for a photo in the back of their vehicle before the start of the Challenge X competition. Pictured in front, left to right, are team leader David Oglesby, Michal Trcalek and Matthew Young; in back, left to right, are Liza Sisson and Jenna Grantham.

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GM recognizes how valuable the competition is for advancing the growth of tomorrow’s vehicles. Not only do the students gain precious knowledge from hands-on experience, they also acquire the skill sets needed to find a career with automakers such as GM, according to Forrest Jehlik, Challenge X lead technical coordinator and research engineer for the Advanced Powertrain Research Facility at Argonne National Laboratory, a competition sponsor.

“The forefront of everything anybody in the industry is doing, these students are doing right out of the gate and some of them have rapidly become experts in this field,” Jehlik tells EPM. He is also a veteran competitor of the event and participated in the 1997 Propane Vehicle Challenge and the 1998 Ethanol Vehicle Challenge. He was the team captain for both years for UCJehlik Davis.

“Simply because of the competition, they’re able to get that skill set, where they can jump right in and get to work and make a significant contribution immediately to the industry,” he says.

The teams that used E85 addressed the advantages and disadvantages they

encountered in their efforts to improve the future of E85-capable vehicles.

Taking on Technical Challenges and Reaping the Benefits The participants employed several novel ideas into their designs, and used technologies that could lead to realworld solutions to reduce well-to-wheel energy consumption, petroleum consumption and tailpipe and GHG emissions, and increase pump-to-wheel fuel economy. In addition, all 17 teams selected hybrid vehicle designs, some of which go beyond those being considered by the original equipment manufacturers (OEMs). Their designs spanned the scope of parallel throughthe-road designs and other hybrid electric vehicle series designs.

During the program’s first year, Virginia Tech’s Hybrid Electric Vehicle Team, which took eighth overall in the event and first place in 2006, decided to use a split-parallel hybrid architecture that would use E85 fuel with the help of two electric motors. Its high-voltage belted alternator/starter (BAS) was belted directly to a SAAB 2.3-liter engine coupled to a five-speed manual transmission that powered the front wheels. At the same time a rear traction motor supplied power to the rear

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TECHNOLOGY

Virginia Tech's hybrid vehicle competes during the acceleration portion of the Challenge X competition.

wheels in order to maintain all-wheel-drive capabilities and to provide performance assistance. The configuration also enabled the vehicle to use both motors in parallel power paths to assist the engine or allow use of a series of power paths when the BAS is used to charge the 336-volt nickel metal hydride battery pack.

According to Mark Johnson, a mechanical engineering graduate student and Challenge X team leader for Virginia Tech, his team took advantage of E85’s inherently high octane level.

“Our engine is calibrated by SAAB and it’s manufactured to run

at a higher power level on E85 compared with premium unleaded so we get about 25 extra horsepower—or about 10 percent extra power using E85,” Johnson says.

As for disadvantages, Johnson says the team had to increase the size of the fuel tank because E85 isn’t as energy dense as regular gasoline. “That’s the disadvantage of the energy content and the upstream energy content of the fuel,” Johnson says.

“Since we were judged on a well-to-wheel basis, the production energy required to make E85 was a big hindrance to us.”

Despite encountering an electrical system failure, Virginia Tech had one of the highest well-to-wheel petroleum displacement evaluations this year. Last year, the team achieved a 77 percent reduction in petroleum energy use, which was a critical win for the team, according to Johnson. “I’d say the major improvement from 2007 to 2008, despite the fact that we broke down at the competition, was reliability,” Johnson says. “We had put a few thousand miles on the vehicle during the spring semester, which is something we never did in the past. We were able to get a lot of test data from that and to really refine our system.”

Eleventh-place finisher Texas Tech just completed its 20th year as a participant, designing a hybrid-electric vehicle powered by a GM-donated 2.4-liter I-4 (L61) SI engine fueled with both hydrogen and E85. According to Tim Maxwell, Texas Tech’s mechanical engineering faculty adviser for the Red Raider Challenge X team, the students chose hydrogen with E85 mainly as an assist for cold starts. The team also tried injecting small

TECHNOLOGY

amounts of hydrogen in cruising conditions with E85 being used later, he says.

“We chose E85 with hydrogen because of the well-topump and the pump-to-wheels advantages and they seem to match because we got the carbon dioxide reductions from the E85 and then we got clobbered a bit for the hydrogen on board,” Maxwell says. “We wanted to get the best power we could. We didn’t do anything to the engine other than change the injection system so we probably lost a little power there.”

UC-Davis designed a front powertrain by replacing the stock 3.4-liter engine with an E85 tuned 1.5-liter Atkinson cycle engine, a UC-Davis-specific custom design continuously variable transmission (CVT) and a UQM Technologies Inc. electric motor. The vehicle’s battery pack was an easily rechargeable 346volt, 16 kilowatt per hour GAIA Technologies lithium-ion battery that provided 40 miles of electric range. The team placed 16th overall in the field.

“UC-Davis probably had one of the most complex configurations with their plug-in hybrid,” Jehlik says. “That team came a long way this year.”

Looking Ahead to ‘NeXt’ Year With the Challenge X series completed, the students are now turning their focus to next year’s competition aptly dubbed “EcoCAR: The NeXt Challenge.” Students who participate in EcoCAR will design and build advanced propulsion systems

into a GM-donated 2009 Saturn Vue crossover based on the California Air Resources Board’s zero emission vehicle regulations. Similar to Challenge X, students are encouraged to explore a variety of solutions, including electric, hybrid, plug-in hybrid and fuel cells. Additionally, they will incorporate lightweight materials, improve aerodynamics and utilize alternative fuels such as ethanol, biodiesel and hydrogen. Some schools have already begun the initial design work of their vehicles for the new three-year competition.

As for Challenge X, the hard work that went into it by the students, their advisers, sponsors and everyone involved won’t be forgotten, according to Jehlik.

“It’s been an amazing competition and it’s been an honor to work with these students and sponsors who have put their hearts and souls into the event,” Jehlik says. “At the end of the day, for every ounce of sweat and tears, these students are coming out and going into the industry becoming the change that we all need and want to see.”

Maxwell echoes Jehlik’s sentiments. “It’s been a lot of fun,” he says. “The students learn a tremendous amount that you just can’t learn in the classroom.” EP Bryan Sims is an Ethanol Producer Magazine staff writer. Reach him at bsims@bbiinternational.com or (701) 738-4950.

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FRACTIONATION

An aerial view of the food processing and ethanol production complex in St. Joseph, Mo., owned by ICM and LifeLine Foods, where ICM's food and fuel technology package was born.

PHOTO: ICM INC.

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ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

FRACTIONATION

Food and Fuel Technology Bundle Two years ago, ICM Inc. began a project to integrate a 40 MMgy ethanol plant with an existing food-processing facility. The same engineering firm that standardized the dry-grind ethanol plant design now prepares to deploy its latest technology packageâ&#x20AC;&#x201D;and dry fractionation is just the beginning.

By Ron Kotrba

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

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thanol producers know how ridiculous the food-versusfuel debate is, considering a third of the incoming corn they process goes out the back door as animal feed for cows, pigs and chickens.

Do the mainstream media know these cows and chickens are raised to be eaten by humans, making them food? If the notion of “fuel and feed-for-food production” isn’t clear enough ICM Inc., a leader in dry-grind U.S. ethanol plant process design, is doing its part to clarify any confusion. It’s not doing this as charity to the industry though.

Not long ago ICM downsized by 750 employees, a striking impact of the industry’s slowdown. At the May 2008 Distillers Grains Technology Council symposium in Kansas City, Mo., Dennis Vander Griend, the brother of ICM’s Chief Executive Officer Dave Vander Griend, said very clearly “We’re looking for work.” He meant that the the building bubble of 2005-2006 had burst and ICM needed to roll out its next successful design—the food-and-fuel technology package that it’s calling the PKO process. “It’s just an acronym we gave it,” Dave Vander Griend says. “It doesn’t stand for anything.”

ICM officially unveiled PKO in Nashville, Tenn., at the International Fuel Ethanol Workshop & Expo in mid-June, where the company hosted meetings with 28 private ethanol plants wishing to learn more. “From those, we received seven letters of interest,” Vander Griend says. “Now we’re going to the next level with those plants to look specifically at what makes the most sense for those facilities.” The company calls dry fractionation the “key facilitator” to its new technology bundle of varying fashions.

E

Part One: Dry Fractionation The PKO display model is in St. Joseph, Mo., where more than two years ago ICM bought 49 percent of a

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food-processing cooperative called LifeLine Foods, and colocated a 40 MMgy ethanol plant on-site. Dry fractionation separates some of the corn starch to produce snack grits and corn meal for companies like Frito-Lay to make its corn chips, and the remainder is diverted to industrial ethanol processing. According to Jeff Scharping with ICM product development, who gave a presentation at the DGTC symposium, the St. Joseph plant also sells its germ to Cargill Inc. for $350 a ton, and Tyson is purchasing the low-germ, low-fiber distillers grains for $225 a ton (May 2008 price). The plant has been in operation for eight months. In that time, Vander Griend says, “We’ve been determining the life cycle of the equipment—the reliability, performance and the efficiency of the dry fractionation portion—and we now have that information, and we’re comfortable with it.

We’re comfortable enough to say we’ve done enough research and monitoring to take it to market.”

The National Corn-to-Ethanol Research Center receives endosperm samples from the ICM dry fractionation process, and an Vander Griend NCERC researcher during this year’s 2008 DGTC conference said there are variations, which was cause for concern. Dennis Vander Griend responded, saying there is still work to accomplish in quality control. When EPM asked Dave Vander Griend about this, his response was “You will always have a wide variation in starch based on the particular hybrid—the type of corn being grown. That won’t change. The ability to understand it with infrared technology and such that both Monsanto and DuPont have come out with, the ability to understand the different varieties and different oil, starch

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

Subsequent Pieces to the Technology Package There are advantages available beyond new food processing capabilities through dry fractionation, ICM says. “A guaranteed increase in ethanol production capacity; reduced natural gas consumption; decreased enzyme usage; a platform for emerging technologies; and a bridge to cellulosic ethanol,” according to an announcement the company released in June. The increase in ethanol production results from passing only starch through the fermentation tanks instead of whole ground corn. Scharping said a 100 MMgy to 115 MMgy ICM ethanol plant when outfitted with dry fractionation, could produce 130 MMgy. Of course, this necessitates the purchase of more corn.

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

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and protein concentrations, will allow for selection and compensation to the farmer—but it’s not something we’re doing today.”

The LifeLine project converted a food-processing facility to house an ethanol plant. With its operating experience there, ICM now seeks to replicate the success by outfitting existing fuelgrade ethanol plants with dry fractionation technology meeting (food-grade standards). “What we’re trying to do in our front-end fractionation technology is to maintain AIV standards—foodgrade standards—so options are not limited down the road; so the plant can go food grade if, say, its location is right and the marketing opportunities at the particular site would allow production of a coproduct for sale to a food processor in the area,” Vander Griend says. “If the plant has the cleaning and separation equipment and everything else, they can pull off a stream of corn grits or meal for that purpose. If you’ve

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FRACTIONATION

The St. Joseph plant is gasifying its corn hulls, and Bill Tietze with Primenergy, the company that supplied the gasifier for the ICM LifeLine Foods plant, says every hour 14,000 pounds of dry-fractionated separated corn fiber is fed to the Primenergy gasifier, making 60,000 pounds of steam per hour—about half the steam required to operate the plant.

Reducing natural gas consumption as a result of ICM’s food and fuel technology bundle would largely arise from the installation of a biomass gasifier utilizing the fractionated corn fiber, or hulls, for process steam. “Some will want to take the fiber and put it into cattle feed as a supplement,” Vander Griend says. “But most ethanol plants are located were the grain is—Iowa and Illinois—where there’s not a lot of cattle.” The St. Joseph plant is gasifying its corn hulls, and Bill Tietze with Primenergy, the company that supplied the gasifier for the ICM LifeLine Foods plant, says every hour 14,000 pounds of dry-fractionated separated corn fiber is fed to the Primenergy gasifier, making 60,000 pounds of steam

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per hour—about half the steam required to operate the plant.

Enzyme reduction work is going extremely well, according to Vander Griend. “We’re looking at different enzyme combinations and cocktails that improve the performance of the plant,” he says. “We’re also continuing to refine the dry frac process to recover more starch,” which would help boost the conversion ratio from 2.67 gallons of ethanol per bushel closer to the 2.8 number ICM guarantees in its dry-grind plant design.

Dry fractionation is also a bridge to cellulosic ethanol production from corn fiber—ICM was on the list of companies awarded a “10 percent” cellulosic ethanol demonstration plant award from U.S.

DOE—and will support additional and perhaps more imminent emerging technologies.

Today, pilot work moves ahead on what ICM is calling its PEX unit, which like PKO stands for nothing in particular.

The PEX unit is being developed for efficient corn oil recovery from the dry fractionated germ. ICM is concurrently conducting pilot work on its single-cell protein system.

“What we’re doing in our pilot work at St. Joseph is taking our syrup product and aerobically growing protein on it,” Vander Griend says. “We’re converting that fiber to a protein so it’s a higher-valued feed product. Rather than selling something that’s currently selling dried at

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

PHOTO: ICM INC.

FRACTIONATION

Spouting carries material from one floor to the next via free-fall gravity, and cyclones drop solids out of airflow inside the LifeLine Foods dry fractionation facility in St. Joseph, Mo. If bran is being pneumatically conveyed, a cyclone spins the air out the top and the solid bran falls out the bottom.

it and send the endosperm to the ethanol plant,” he says. Even though this could double the cost of a facility, the revenue stream could triple.

While this food and fuel technology package from ICM appears ideal for plant retrofitting, it is also available for greenfield projects and those partially under construction. “Investors won’t even look at a standard plant in Iowa today,” Scharping said, adding that dry fractionation would be a good way for financiers to differentiate projects from conventional dry-grind plants. It's also ideal for plants that are half-way built but are having trouble with revenue, Scharping said, “Coming back and re-wrapping dry fractionation technology on it may help add new, additional funding to complete the plant.” EP Ron Kotrba is an Ethanol Producer Magazine senior writer. Reach him at rkotrba @bbibiinternational.com or (701) 738-4942.

10 cents a pound in distillers grains, we could be selling it at 25 cents a pound in the form of a protein.”

The process design company is prepared to sign contracts and get the ball rolling on retrofitting dry-grind ethanol plants, whether those facilities were originally ICM-designed or not. The benefit to retrofitting an ICM plant is that the company knows the design intimately, and can therefore integrate the dry fractionation equipment quicker, more easily and for less money. Downtime is virtually nonexistent during the integration period, and can be arranged around planned maintenance shutdowns, the company says. In its dry-grind design Vander Griend says ICM knew its dry fractionation technology would hit the market at some point, so space was reserved at some of the plants in between receiving/storage and the ethanol plant to accommodate any additional buildings and/or equipment.

“Somewhere between those two locations you’ll pull the corn off, preprocess

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Rocky Mountain

E85

From a good idea, to a better idea, to a comprehensive governor’s coalition, the state of Colorado has invested in an ethanol economy that’s a long way from the Corn Belt, but motorists, business owners and foreign countries are taking note of Rocky Mountain E85.

By Timothy Charles Holmseth

W

hen Colorado leaders set out to make E85 available to motorists in their state, they unwittingly developed a recipe for success that other states can use.

In May 2006, Colorado Gov. Bill Ritter Jr. established the Governor’s E85 Coalition, which was subsequently re-organized into the Governor’s Biofuels Coalition to include biodiesel in its efforts. In February 2007, Ritter charged the GBC with quadrupling the number of biofuels stations and doubling the amount of biofuels sold in 2006.

Stacey Simms, biofuels and local fuels program manager for the Governor’s Energy Office, says the GBC took the governor’s request and ran with it. “In February 2007, Colorado had 13 public-private stations selling biofuels,” she explains. “Today, after more than a year-and-a-half, the Governor’s Biofuels Coalition is proud to announce that Colorado has 94 stations either open or under construction.” That number represents growth not expected until the end of 2008, she adds.

In the spring of 2007, the coalition’s success caught the media’s attention. One of the first stations to add both biodiesel and E85 was in Evergreen, Colo., and was featured in an article in The Denver Post. “This article served as a business case and testimonial for other station owners considering adding biofuels,” says Megan Castle, director of communications for the Governor’s Energy Office.

Rocky Mountain Market in Evergreen, Colo., became a popular gas station for Coloradans when its owner, Roger Guzman, installed E85 and biodiesel pumps.

PHOTO: THE DENVER POST

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Roger Guzman, a former GBC member who owns Evergreen Mountain Market, the business featured by The Denver Post, says biofuels gave him, as a small-business owner, a way to fight back when he was faced with a big-box retailer installing pumps right down the road. “All those guys are selling gas as a loss-leader,” he says, referring to the marketing technique of losing money on a product to lure consumers.

“We had to compete with that, so we had to have some kind of a niche that they didn’t have and biofuels was the solution.”

The results were not only positive but compelling.

In April 2007, total fuel sales were up 66 percent at Guzman’s store, compared with the same time period the previous year.

The basis for the sudden spike in traffic was mostly out of support from the public.

Motorists who didn’t even own flexible-fuel vehicles were coming in, he says. “They would come here [to] support what I was doing.”

The attention that Guzman received

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PHOTO: THE DENVER POST

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Roger Guzman added E85 and biodiesel pumps at his Rocky Mountain Market to compete with a big-box retailer that was selling its fuel as a loss-leader. In April, 2007, Guzman’s fuel sales had increased 66 percent, compared with the same time period the previous year.

after making biofuels available at his gas station was anticipated in advance by the GBC during its strategic planning. As each new

station adopts biofuels, the coalition sees that as an opportunity to reach the public with a positive message about biofuels.

People in the communities where these stations are located are invited to a grand opening event. “This event highlights the work done by the station owners, educates customers on the benefits and availability of biofuels and gives local officials the opportunity to highlight the community’s successful public-private partnerships,” Castle says.

Although biofuels and E85 are an attractive option for business owners, the coalition acknowledged that installing the infrastructure was expensive and devised a way to provide some assistance. “The coalition offers funding support to the maximum of 35 percent of the net project costs after tax incentives, but no more than $15,000 per applicant for E85 infrastructure and $10,000 for biodiesel infrastructure may be awarded,” Simms explains.

The idea of adding E85 had been in the back of Guzman’s mind for some time, but it wasn’t something that he financially

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could have easily done on his own. “I got a ton of help from the governor’s office,” he says, explaining the financial assistance he received from both the federal and state government. “[I received] federal grants for half the cost and the write-off from the state.” The governor’s office also assisted in public awareness, he says. He also received a lot of publicity as his story appeared on the local television news in addition to The Denver Post article.

The GBC’s efforts have led to an increase in E85 consumption. “With very few exceptions, sales of E85 have grown

each and every quarter,” Simms says, referring to positive sales numbers posted by partnering stations through April 2008.

Although volume data hasn’t been gathered for April through June 2008, she says, “preliminary results show that E85 sales in the state is trending over 1.2 million gallons a month.”

Fleets Choose Biofuels Gas station owners aren’t the only ones who are benefitting from the GBC’s work in Colorado. Art Hale, fleet manager for the state Colorado and fleet representa-

tive on the GBC, says flexible-fuel vehicles have become a significant part of the 6,000 vehicles in the state fleet. “We currently have more than 700 flex-fuel vehicles in the fleet and plan to order several hundred more over the next year,” he says. “We just completed the installation of our first E85 fuel site in downtown Denver that we expect to help us meet our plan to reduce petroleum consumption 25 percent by 2012.”

Hale firmly believes that the United States should be energy independent.

“You need to first ask yourself, ‘What are

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my options?’” he says. “Do we continue to buy petroleum from unstable Middle Eastern countries where 70 percent of our current U.S. supply is imported from … or will our money be better spent by buying a product that is renewable and produced here in the U.S.?”

Alan Brown manages a 270 vehicle fleet for the city of Littleton, Colo., and his desire to use biofuels led him to take a position on the governor's coalition. “I got the reputation of being a ‘groupie’ because I attended meetings persistently as a nonmember while requesting financial support for E85 infrastructure,” he says.

Brown says Littleton currently runs 23 flexble-fuel vehicles and pumps E85 at its facility. “We are consciously trying to purchase flex-fuel vehicles as we need to replace vehicles.”

When E85 comes up in conversations in Colorado coffeeshops, Brown says he’s sometimes the only one in the know. “The most important question I answer is which vehicles can use E85,” he says. At the same time, he tries to educate people. “I point out that ethanol has environmental and economic advantages and, while I avoid the food-versus-fuel issue, I try to dispel some myths,” he says.

Meeting the Challenges Putting their success aside, Simms says there have been obstacles to clear and there will probably be more. In October 2006, prompted by the need to establish comprehensive safety require-

PHOTO: GOVERNOR’S BIOFUEL COALTION

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Colorado Gov. Bill Ritter Jr. addresses a crowd at a grand opening celebration for the Western Convenience Store in Fort Collins, Colo.

ments for an entire E85 dispenser system, Underwriters Laboratories Inc. suspended its certification for individual parts that compose an E85 fuel dispenser. Because of the obvious implications this would have on developing an E85 infrastructure in Colorado, meetings were held with the Colorado Division of Oil and Public Safety, the Colorado Division of Fire Safety and the Fire Marshal’s Association of Colorado. The matter was resolved by developing published guidelines for E85 pumps until proper testing and certification could be completed.

“Another barrier was to develop an application and funding

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matrix to fairly evaluate project proposals for both public and private entities,” Simms explains. “The GBC collaborated to create these criteria from the different entities in determining the funding allocations for projects.”

Simms notes that the GBC quickly addressed any issues that presented themselves, and any challenges that lay ahead will probably be in the public relations area. “The current hurdle is addressing the media and the public regarding biofuels,” she says. As consumers become more frustrated with the rising price of fuel and food, corn-based ethanol has taken its fair, and unfair, share of criticism. “The GBC is working to inform media, local officials and the public regarding these negative and often misleading media attacks on biofuels,” Simms says.

Indeed there has been controversy and confusion surrounding biofuels as the nation begins to turn to renewable home-grown energy sources. Simms says the GBC recognizes that corn ethanol is a bridge to cellulosic ethanol, and that there are other options.

“Biofuels, such as E85 and biodiesel, are not the lone solution to our energy, fuel and transportation issues,” she says. “Biofuels, which are a clean, domestic resource, are a part of the solution that includes hybrid-vehicle technology, increased mass transit and higher mileage vehicles.”

An E85 Model The GBC believes the steps it’s taken to increase Colorado’s use of E85 can be emulated by others. “This group has enabled the

state to grow the infrastructure of biofuels sites from 11 more than a year ago to almost 100 sites today,” Hale says. “I would like to continue to increase the number of all government agencies that have partnered toward these common goals, and continue to search for opportunities that expand infrastructure of all alterative fuels and alternative transportation technologies.”

It seems that Colorado’s success hasn’t gone unnoticed. “In the past year, I have been contacted by eight other state energy offices, dozens of local communities throughout the nation, and officials from Brazil and Puerto Rico, who want to learn about our work here,” Simms says. “What has happened in Colorado—a state outside of the Corn Belt—has been inspiring.”

In 2006, Colorado was awarded a Maximizing Alternative Fuels grant from the U.S. DOE to work on the development of E85 in the state. “By leveraging this with other funding sources, and publicizing the state and federal tax incentives for infrastructure support, Colorado’s program has been recognized as a model for promoting biofuels,” Simms says.

Simms says the state currently has some 300,000 FFV owners and they will continue to educate the public on the benefits of utilizing biofuels and Rocky Mountain E85. EP Timothy Charles Holmseth is an Ethanol Producer Magazine staff writer. Reach him at tholmseth@bbiinternational.com or (701) 738-4952.

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POLITICS

Food, Fuel and Politics The Food before Fuel campaign—designed to convince the public that biofuels are responsible for rising food costs and to press the government to rein in its renewable fuels’ mandate—has caused a lot of heartburn. The question is whether consumers believe that the companies supporting this campaign are looking out for their best interests.

By Anna Austin

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I

n the past year, global food prices have increased more than 40 percent and gasoline prices have nearly doubled. It’s no wonder people are frustrated and looking for someone or something to blame as their bank accounts dwindle. It didn’t take long before a finger was pointed in ethanol’s direction, aided by the Grocery Manufacturer Association’s Food before Fuel campaign.

The Food before Fuel Web site says that the organization was “created to urge public officials to revisit and restructure policies that have increased our reliance on food as an energy source, and to carefully address how to develop alternative fuels that do not pit our energy needs against affordable food and environmental sustainability.” Specifically, Food before Fuel supports Texas Gov. Rick Perry, who in late April asked the U.S. EPA to grant a 50 percent waiver from the Renewable Fuels Standard ethanol mandate.

The Web site provides various studies, news items and information about food prices and the environment all geared toward convincing visitors that biofuels production is the No. 1 cause of rising food prices. More than 55 different organizations ranging from the National Chicken Council to the Tortilla Industry Association are listed as supporting members.

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produced in April 2008 to show how much biofuels have contributed to the increase in food prices. â&#x20AC;&#x153;Congressional policies mandate the conversion of more than one-third of all U.S. corn to ethanol, with additional subsidies and tariffs further promoting the diversion of food to fuel,â&#x20AC;? the press release said. â&#x20AC;&#x153;Food policy experts broadly agree that these policies have contributed to record food price inflation, and the International Monetary Fund reports that U.S. food-to-fuel policy is responsible for more than 30 percent of food price inflation globally.â&#x20AC;?

In their letter, Bodman and Schafer addressed the IMFâ&#x20AC;&#x2122;s information stating that the percentage of retail food costs to consumers varies from country to country depending on diet, and the proportion of staples versus highly processed food consumed. â&#x20AC;&#x153;The IMF global food commodity price index is often quoted as an indicator of the change of global food prices,â&#x20AC;? the letter said. â&#x20AC;&#x153;It is unclear how the list of commodities and the prices used in the

Although some visitors to the Web site may be convinced that biofuels are eating into their food supply, the U.S. Congress doesnâ&#x20AC;&#x2122;t seem to be biting. The Senate Energy and Natural Resources Committee held a hearing on June 12 to analyze the relationship between the U.S. renewable fuels policy and food prices at the campaignâ&#x20AC;&#x2122;s request. The committee recommended that the RFS ethanol mandate remain as is. Sen. Jeff Bingaman, DN.M., who chairs the committee, read a letter from U.S. Energy Secretary Samuel Bodman and Agriculture Secretary Ed Schafer, which responded to questions posed by Bingaman concerning the relationship of biofuels to food prices and the affects of gasoline prices. It was noted in the letter that ethanol and biodiesel consumption accounts for only a 3 percent to 4 percent increase in retail food prices.

In a press release dated two days before the hearing, the Food before Fuel campaign used a number generated by the International Monetary Fund in a report it

IMF index relate to the foods purchased and the prices paid for food items by consumers in less developed countries.â&#x20AC;?

The letter from the secretaries also concluded that without biofuels, gasoline prices would be 20 to 35 cents higher per gallon than the current price, citing a Texas A&M University study titled â&#x20AC;&#x153;The Effects of Ethanol on Texas Food and Feed.â&#x20AC;?

This study concluded that higher energy prices are the major contributor to higher food prices. â&#x20AC;&#x153;The underlying force driving changes in the agricultural industry, along with the economy as a whole, is overall higher energy costs, evidenced by $100 per barrel oil,â&#x20AC;? the report found. â&#x20AC;&#x153;The ethanol industry has grown in excess of the RFS, indicating that relaxing the standard would not cause a contraction in the industry.â&#x20AC;?

Joe Outlaw, a professor and agricultural economist at Texas A&M and one of the authors of that study addressed the Senate Energy and Natural Resources Committee hearing, as well as several other energy and agricultural representatives.

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POLITICS

While none of the biofuels’ critics attended the hearing, a new report “Rising Commodity Prices and their Impact upon U.S. Food Inflation” by Bill Lapp, principal of the consulting firm Advanced Economic Solutions, was posted on the Food before Fuel Web site once again blaming biofuels for increased food prices.

“The underlying driver of the higher commodity prices in past years (2002-2006) included global economic expansion, rising energy prices, as well as the weak dollar,” the report said. “While these price drivers remain intact today, the rapid expansion in the use of corn to produce ethanol is currently the most significant factor driving corn and other agricultural commodity prices to record levels.” Lapp is a former chief economist for ConAgra Food Inc. and Advanced Economic Solutions clients include restaurant chains, food manufacturers, distributors, investment firms, agricultural producers and government agencies, according to the company’s Web site.

Consumer Concern The Food before Fuel campaign claims it’s not anti-biofuels and is only concerned about consumers. When contacted

by EPM, a GMA representative said, “We are all for biofuels, but are supportive of alternative energy policies that will not pit our fuel needs against our food needs.”

Not everyone is convinced that the GMA and other food organizations and companies are looking out for the best interests of consumers, however, and some of the nations' farm groups aren't happy with the tactics that the campaign is using. In May, the National Corn Growers Association sent a letter to the GMA requesting that it “stop blaming American farmers and questioning our collective ability to rise to the opportunity and challenge, as we always have, to produce plenty of food, feed, fiber and fuel.” The NCGA also said that it respected the GMA’s right to its opinion regarding America’s biofuels policies and its perceptions of the cost

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

increase for the grains they use as inputs.

“However, those concerns can be shared in a rational manner and need not be promoted via falsehoods regarding food price increases, starvation and environmental concerns,” the NCGA said. “Please know that your campaign is sowing seeds of deep anger throughout farmer and rural communities toward food companies.”

The letter was also signed by the American Soybean Association, National Association of Wheat Growers and National Sorghum Producers.

Ironically, the bottom lines of some of the groups supporting the Food before Fuel campaign haven’t suffered greatly in light of higher commodity prices. In June, General Mills reported that in its fiscal year that ended May 25, 2008, net sales grew 10 percent to $13.7 billion and operating profits were up 6 percent to $2.4 billion. In its first quarter report for 2008, Kraft Foods Inc. said its net revenues increased 20.8 percent to $10.4 billion and that operating incomes in the fist quarter increased

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POLITICS

3.8 percent from the previous year to $1.2 billion. Kellogg Co. reported 2008 first quarter sales at $3.3 billion, an increase of 10 percent from the first quarter of 2007 and operating profit at $545 million an increase of 9 percent. Kellogg credited its profits to “business momentum, recent price increases and focus on productivity.” When contacted by EPM, Kellogg declined to comment when asked to elaborate on its “recent price increases.”

Brooke Coleman, executive director and co-founder of the New Fuels Alliance

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and a food price expert, says the companies that are pressing for an ethanol mandate waiver and insinuating that their main concern is consumers, have a much different agenda. FoodPriceTruth.org was launched in response to the Food before Fuel campaign. Several energy, environmental and agriculture experts, including David Morris, who served as an adviser and consultant to the energy departments of presidents Gerald Ford, Jimmy Carter, Bill Clinton and George W. Bush, and Lee Lynd, a professor of engineering sciences at Dartmouth

College who has advised policy-makers regarding biofuels and served on an advisory committee to former President Bill Clinton’s administration, are members of FoodPriceTruth.org.

“Something to think about is what will happen if the mandate is removed?” says Coleman, who has been involved with transportation fuels at the regulatory and policy-making levels in California and other states since 1998. “Yes, these companies say the price of food is so high because of biofuels, but nobody is saying that they will lower their prices for consumers if corn prices are lowered, which is silly and won’t happen,” he says. “What you are going to get by suspending biofuel policies is no impact on corn or international grain prices, but the price of food will increase because fuel prices will rise.”

Coleman says these big food companies are simply pretending to be on the side of consumers. “These are the same companies who have been shrinking the boxes of their products, and charging customers the same price or more,” he says. “They are profiting at the hands of a crisis. This whole thing is about money to them.”

Regarding food needs, Coleman says it shouldn’t be a concern. “Anyone who knows anything about agriculture or hunger knows that farms are not at full capacity—the whole idea that the agriculture sector is operating beyond their means, and that is the cause of world hunger, is absurd,” he says. “Trade allocations and poverty among other factors cause world hunger.”

The Renewable Fuels Association, Canadian Renewable Fuels Association and the European Bioethanol Fuel Association agree. “The world’s farmers can meet the challenges of today’s crisis,” the associations wrote in a letter to Food and Agriculture Organization General Director Jacques Diouf and other world leaders in June. “The world does not lack for arable land or highly efficient food production methods.

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

POLITICS

What it lacks are sound international agricultural policies that allow farmers, especially in food importing countries, to meet the food demands of their fellow citizens. Increasing the production of food and expanding biofuel production are not mutually exclusive activities.

They are complimentary.” The organization also added that the two commodities most often associated with today’s food crisis are wheat and rice.

“Neither commodity is a major source of biofuel production, nor are they competitors for acres with corn and other biofuel feedstocks,” according to the letter. “You do not produce corn or sugarcane in a rice paddy. The factors driving the price of wheat and rice higher are independent of efforts to develop a biofuels industry. These include weather-related problems, rising demand and the price of oil.”

higher food prices.” Pilgrim’s Pride currently owns 25 percent of the U.S. poultry market, and earned a gross profit of nearly $294 million in 2007.

Coleman isn’t surprised that the poultry industry is pushing for the waiver.

“Factory farms and the chicken and livestock industries have built their empires on the backs of cheap corn, and have made billions as a result,” he says. “They enjoyed paying low prices; now they are going to spend millions beating up ethanol.” The high cost of poultry and livestock feed has

prompted several producers to join the antiethanol campaign.

Coleman says biofuels supporters should speak up, talk to legislators and make their voices heard. Although it may not have reached everyone yet, the truth is emerging on its own, he says. EP Anna Austin is an Ethanol Producer Magazine staff writer. Reach her at aaustin@bbiinternational.com or (701) 7464968.

Hidden Agendas?

The Houston Chronicle recently discovered, after obtaining 596 pages of records from the Texas governor's office through the Texas Public Information Act, that six days before Perry requested the 50 percent RFS waiver from the U.S. EPA, Texas poultry producer Lonnie “Bo” Pilgrim donated $100,000 to the Republican Governors Association. The association is chaired

by Perry. The EPA has not made a ruling on the request, but has received more than 10,000 comments. Pilgrim, who is the founder, chairman and principal owner of Pilgrim’s Pride the largest chicken producer in the United States, was later allowed to speak to several Republican governors during a private energy conference in Grapevine, Texas.

In a letter in support of Perry’s waiver request Pilgrim had this to say, “Soaring feed-ingredient costs fueled by the federal government’s ethanol mandate has created a crisis in our industry, the true effects of which are only just now beginning to be felt by consumers in Texas and other states in the form of

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Six Traits of Successful Ethanol Producers: Keys to Effective Risk Management

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oday’s economic environment is filled with soaring corn prices, a heated food-versus-fuel debate, legislative uncertainty and other factors dramatically affecting market prices and stability. These market conditions require greater attention to risk management than in the past.

No one can predict the markets’ behaviors, but chance favors the prepared mind—and so do profits.

Ethanol profitability depends on outstanding commodity price risk management. The most effective risk management program is custom-tailored to an individual plant, taking into account its actual corn purchases, ethanol and distillers grains sales, the local market conditions for corn supply, the cash positions that a plant has or will have, and the impact of broader energy markets. Additionally, plant managers should avoid comparing their plant’s strategies to those of another plant as if they are comparing apples to apples. Without knowing the underlying motives for their positions, it’s difficult to decode any significant meaning from someone else’s risk management strategies.

The overall goal of any risk management program, of course, is to maximize profitability and competitiveness—not only in calm markets but, more importantly, among waves of extremely volatile market conditions. Several factors influence a successful risk management strategy, but I’ve identified six common traits present in successful (that is, profitable) ethanol plants.

T

No. 1: A producer needs a willingness to use a variety of tools to manage adverse price moves. Not every strategy or tool works the same in every situation. Using a variety of hedging and risk management tools gives the plant the flexibility to match its own needs with the needs of the marketplace. Some of the tools ethanol producers use to protect against adverse price moves are traditional, such as futures and options contracts. These are particularly useful for managing corn positions.

Tools available for ethanol hedging have Wapp arisen more recently, which limits some of the comfort that comes with familiarity. Futures and options for ethanol can be thinly traded, if at all, making them difficult to use.

Many ethanol producers have instead turned to over-thecounter hedge structures that are less well known. In many cases, the liquidity in the over-the-counter market can be many times greater than traditional futures markets. Chicago Platts ethanol swaps are an example of an over-the-counter trade that is actually placed in the ethanol company’s hedge account and cleared by the New York Mercantile Exchange. This clearing function reduces the counter-party risk that can be available in over-the-counter transactions.

Some plants may find over-the-counter transactions to be

The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Ethanol Producer Magazine or its advertisers.

All questions pertaining to this article should be directed to the author(s).

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RISK

unfamiliar and therefore are reluctant to use them as part of a disciplined hedging strategy. The first thing these plants

should do is diligently learn all they can about any unfamiliar tool or strategy before it’s time to utilize the trade.

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

Decide beforehand, based on a working knowledge of the strategy, if it is a tool that plant managers are comfortable using. Don’t wait until decision time to become educated about the tools available to the plant. Doing so means running the risk of severely limiting the plant’s risk management options.

No. 2: Know that one can’t outguess the markets. Modesty is a virtue when it comes to managing financial risk. To effectively plan for and protect against certain undesired outcomes, acknowledge that even having years of commodity market experience does not mean that one can successfully outguess the markets. Admit that you don’t know what you can’t know, and find a way to hedge against negative circumstances that might arise from changing weather, unforeseen factors affecting demand for inputs, changes in legislation and subsidies, and so on.

No. 3: Acknowledge the unpredictable. Similarly, avoid saying things such as: “In my experience, whenever X event occurs in the marketplace, the

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RISK

Often an individual outside of the plant has a clearer picture of what needs to be done and can make a more rational decision.

result is always Y.” The word “always” can get even the best risk managers into bad positions. When one starts thinking in terms of absolute reactions, he or she blocks out the potential to protect against perhaps uncommon but unavoidable adverse reactions. Be prepared to react to a surprise that changes the market’s dynamics. No plant will always be perfectly positioned for every unpredictable event, but any plant can be prepared to quickly acknowledge and analyze changing circumstances to judge

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whether they require a change in the plant’s hedging plan.

No. 4: Know the role of the risk managers. Define the roles and responsibilities of the decision makers in a plant’s risk management implementation. Self-doubt about authority to enter positions leads to reluctance, which leads to missed opportunities. It’s good to have oversight, as no one person should have complete authority and responsibility for a plant’s risk management strategy and execution, but deci-

sion makers need to have well-defined parameters within which they can work well and avoid second-guessing. Those defined parameters can include price, time, volume or some combination of the three.

No. 5: Decide to act, even if it means doing nothing. Making no decision at all is the same as passively deciding to do nothing. In some situations, doing nothing is the best course of action, but doing nothing should never be the result of failing to make an

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

RISK active decision. Sometimes, a marketchanging event will occur that leaves plant managers uncertain about what the impact will be from a price standpoint. A passive approach would be to wait and see how the market responds before discussing the change in the market with fellow decision makers within the organization.

A more responsible approach would be to raise the concern with those who should be involved in making decisions as soon as the market-changing event is discovered. If the decision is then made to do nothing, at least an open dialogue and discussion were encouraged. You won’t always make the right decision, but successful companies do not generally succeed on passive approaches.

No. 6: Get an opinion from an outsider. Plant personnel have a vested interest in the success of the plant, which is generally a good thing.

However, when it comes to risk management, that vested interest can often

get in the way of making good decisions. Often an individual outside of the plant has a clearer picture of what needs to be done and can make a more rational decision. This also helps to avoid the mentality of “looking out your window” to make a decision. When you do this for yourself, all you see is what is right in front of you, and the bigger picture is often overlooked.

Conclusion Managing commodity risk in the ethanol industry can be incredibly challenging. The two primary commodities—corn and ethanol—have historically had low correlation to one another.

This increases the need for a risk management structure that is fluid and able to quickly adjust to the changing market dynamics.

In managing the commodity price risk that is inherent in the ethanol industry, first acknowledge the unpredictable nature of commodity prices and that you will not be able to outguess the mar-

Experts in Spray Technology

kets all of the time. Do not let personal ties to the business cloud the view of the issues driving the market.

One of the most important keys in commodity risk management is for the decision makers involved to clearly know their roles and responsibilities.

Many times, this is where an effective risk management program will break down. When the time comes to make decisions and execute, be familiar with the tools available to make quick and efficient decisions. The above six traits of successful risk management for ethanol plants can increase the likelihood of achieving goals in this difficult environment. EP Tom Wapp is the commodity price risk manager at United Bio Energy, a company that provides risk management consulting and market advisory services for ethanol producers. Reach him at twapp@unitedbioenergy.com or (316) 616-3558.

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POLICY

Measuring the Total Carbon Footprint of Biofuels Through Life-Cycle Analysis

By Kenneth J. Markowitz, Bernd G. Janzen and Emily C. Schilling

I

n recent years, lawmakers in the United States and the European Union have embraced biofuels as a key element of their respective strategies to combat climate change and promote energy independence. However, just as these two major markets are beginning to agree on technical standards for biofuels, as shown in the white paper on “Internationally Compatible Biofuel Standards” that the United States and EU lauded at the recent EU-U.S. Summit of 2008, controversy is emerging in both markets on the tough question of how to show that biofuels represent life-cycle greenhouse-gas emissions savings as compared to traditional fossil fuels. The issue is sensitive because the greenhouse-gas emissions savings of different biofuels vary substantially.

Life-cycle greenhouse-gas emissions analyses for renewable fuels seek to quantify the greenhouse-gas emissions created by the manufacture of the fuel, including its inputs, through transportation to the consumer, use and disposal. In the United States, under the 2007 Energy

Independence and Security Act, biofuels only qualify for the new renewable fuels standard (RFS) if all carbon emissions associated with their production and use result in emissions savings of at least 20 percent.

In the EU, the Proposed Directive on the Promotion of Energy from Renewable Sources provides that biofuels must represent emissions savings of at least 35 percent in order to be taken into account in the EU’s renewable energy targets. These emissions savings thresholds have become mired in controversy. Technical challenges in measuring life-cycle emissions savings, combined with political uncertainty in both jurisdictions, threaten to stall implementation of these thresholds in both markets.

The controversy also may threaten international trade and investment flows in biofuels.

U.S. Implementation Challenges Under the 2007 Energy Independence and Security Act, renewable fuels must meet life-cycle greenhouse-gas emissions reduction targets in order to qualify for the RFS.

Any renewable fuel produced in a facility under construction as of December 2007 must meet a threshold 20 percent reduction from a 2005 baseline, which is generated by measuring the 2005 life-cycle greenhousegas emissions of traditional fuels. Beginning in 2009, the subcategories of renewable fuel (cellulosic biofuel, advanced biofuel and biodiesel) created by the act must meet lifecycle greenhouse-gas emissions reductions of between 50 percent and 60 percent from the 2005 baseline before consideration for the RFS. Compliance with these thresholds cannot be determined, however, without a resolution of just how to measure life-cycle greenhouse-gas emissions. The act obligates the U.S. EPA to complete a rulemaking by December 2008, which would establish the appropriate model and inputs for estimation of life-cycle greenhouse-gas emissions and finalize emissions reduction targets.

The controversy surrounding how best to measure life-cycle greenhouse-gas emissions, coupled with the shifting political landscape, make it unlikely that consensus

The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Ethanol Producer Magazine or its advertisers.

All questions pertaining to this article should be directed to the author(s).

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will be reached by the December deadline.

The sheer complexity of the analysis, including disagreements as to the appropriate methodology for measuring greenhouse-gas emissions, will make EPA’s rulemaking a difficult endeavor. Indeed, the EPA decided against using a life-cycle greenhouse-gas emissions analysis in 2007 because of the complexities and uncertainties inherent in such an analysis. In its rulemaking establishing the 2005 RFS, the EPA determined that “the current state of scientific inquiry surrounding life-cycle analyses is not sufficiently robust to warrant its use.” The science has not developed sufficiently over the past year to allow for consensus on this issue, and any rulemaking on the issuance of uniform methodology is likely to be controversial.

In order to undertake a comprehensive rulemaking on a controversial topic, the EPA will need time to consider the science and policy objectives of the RFS, and the agency has limited time remaining this year to conduct a thorough analysis. The EPA indicated earlier this year that it will not issue a proposal for comment until late summer, which would give the agency less than four months to consider lengthy and complex comments and publish a final rule—an unlikely feat. The impending change in presidential administrations is an additional complicating factor. The Bush administration’s selfimposed deadline for issuing proposed regulations passed on June 1 and final regulations will not be published until later than Nov. 1.

Although there may be some flexibility in these deadlines, it is unlikely that a significant final rulemaking such as this one will be published in the final days of the Bush administration. Thus, a new administration will have to address the issue, further delaying publication of a final rule and creating additional uncertainty for the biofuels industry

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

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In light of the controversy surrounding the 35 percent greenhouse-gas emissions savings threshold, the Proposed Directive in its current form should be seen as the opening salvo in a debate that will take many months to resolve, and may well result in final legislation in a substantially different form. as the 2009 requirements for the RFS approach.

EU Implementation Challenges The biofuels market in the EU reflects similar uncertainties. The comparable legislation in the EU is the Proposed Directive on the Promotion of Energy from Renewable Sources, introduced in January and currently the subject of heated debate.

The Proposed Directive provides, at Article 15.2, that biofuels must represent greenhouse-gas emissions savings of at least 35 percent in order to be counted toward the EU’s renewable energy targets. Article 17 specifies a variety of tests for determining whether a given biofuel meets this savings threshold. First, for most biofuels “production pathways” used in the EU, the

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Proposed Directive specifies deemed “default” emissions savings percentages.

For example, the deemed emissions savings percentage for rapeseed biodiesel, one of the principal biofuels produced in Europe, is 36 percent, just above the required threshold. In the case of palm oil biodiesel produced outside the EU, the Proposed Directive specifies a deemed emissions savings percentage of 16 percent, well below the required 35 percent threshold.

For biofuels for which no deemed emissions savings percentage is provided, the Proposed Directive provides a complicated formula for calculating emissions savings. In a nutshell, the formula attempts to capture, for each distinct biofuel production pathway, emissions resulting from eight processes along the field-to-tailpipe pathway. These include emissions from cultivation and processing of the raw material, and emissions from the transport, distribution and use of the fuel. The formula then compares the total emissions to a fossil fuel comparator. The comparator must be based on fossil fuel data as gathered by the EU, or if those data are not available, a specified value of 83.8 grams of carbon dioxide equivalent per megajoule (gCO2eq/MJ).

However, it remains far from clear that the proposed 35 percent greenhouse-gas emissions savings threshold, or the methodology proposed for calculating emissions savings, will become law. The draft is cur-

rently under review as part of the EU’s “Co-Decision” procedure, in which both the EU Parliament and Council may propose changes. The Parliament has already proposed a major shift in direction for EU biofuels policy, urging more analysis of the impact of biofuels incentives on food security and environmental sustainability in developing countries where biofuels are produced. Also, industry groups have sharply criticized the 35 percent emissions savings threshold. In a recent position paper on the Proposed Directive, the European Biodiesel Board raised multiple concerns with the 35 percent threshold, arguing, among other things, that the current methodology for calculating greenhousegas emissions savings is overly restrictive and could exclude biofuels production pathways that will be critical in reaching the EU’s overall greenhouse gas reductions goals.

Another European biofuels industry group, the European Bioethanol Fuel Association, has also raised multiple criticisms of the Proposed Directive. One is that the proposed comparator used to calculate compliance with the 35 percent emissions savings threshold (83.8 gCO2eq/MJ) is based on light conventional crude oil, rather than more polluting oils also widely used in fossil fuel production. Accordingly, the comparator should be adjusted upward to properly account for the use in fossil

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

POLICY fuels of oil other than light conventional crude.

In light of the controversy surrounding the 35 percent greenhouse-gas emissions savings threshold, the Proposed Directive in its current form should be seen as the opening salvo in a debate that will take many months to resolve, and may well result in final legislation in a substantially different form.

Prospects for Transatlantic Friction?

Setting the Threshold for Future Fuels The United States and EU continue to implement greenhouse-gas emissions requirements on biofuels. The U.S. 2007 Energy Independence and Security Act set life-cycle greenhouse-gas emissions requirements on biofuels based on 2005 baseline standards. The EU is considering a similar directive that would require biofuels to have a 35 percent greenhousegas emissions savings in order to be viable for EU’s renewable energy targets. The Proposed Directive on the Promotion of Energy from Renewable

The United States and the EU have made considerable progress in developing and harmonizing biofuels standards. This ongoing work is intended to—and should—facilitate increased biofuels investment and trade. However, divergent approaches to life-cycle emissions analysis in the United States and the EU may drive a new wedge into the economic relationship between these two major biofuels markets.

Biofuels market uncertainty is likely to persist until the United States and EU can settle on methodologies for measuring biofuels life-cycle emissions. EP

Sources is under debate.

Kenneth J. Markowitz is senior counsel, Bernd G. Janzen is counsel and Emily C. Schilling is an associate in the Washington, D.C., office of law firm Akin Gump Strauss Hauer & Feld LLP.

account for their relative global warming potential.

The U.S. act is based on the following definitions: Baseline life-cycle greenhouse-gas emissions: The average lifecycle greenhouse-gas emissions for diesel fuel sold or distributed as transportation fuel in 2005.

Life-cycle greenhouse-gas emissions: The aggregate quantity of greenhouse-gas emissions (including direct emissions and significant indirect emissions such as those from land use changes) related to the full fuel life cycle. This life cycle takes into consideration all stages of fuel and feedstock production and distribution, from feedstock generation or extraction, through the distribution and delivery and use of the finished fuel, to the ultimate consumer. Mass values for all greenhouse gases will be adjusted to More information on the U.S. act and EU’s directive is available here: http://ec.europa.eu/energy/climate_actions/doc/2008_res_directive_en.pdf and here: http://thomas.loc.gov/cgi-bin/bdquery/z?d110:h.r.00006.

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CONSTRUCTION

Applying Lessons Learned from Previous Construction Slowdowns

By Colin Reid

O

ne of the top mediators in the country used to start his mediations by saying, “If I do my job, everyone will leave here equally unhappy.”

While this always drew a laugh, there was a truth at the heart of the joke: the secret to surviving difficult situations is often to adjust expectations from what you would like to what you can actually live with.

Companies in the ethanol industry should be pondering this truism right now.

It’s no secret these are trying times from the industry boom that began in 2006 with President George W. Bush and others touting American-produced ethanol as a way to independence from foreign oil—a plentiReid ful, renewable fuel that could drive us well into the 21st century.

Fast forward two years, and things have quickly changed for those building and supplying new plants. Companies whose bal-

ance sheets depend on the success of new ethanol plants are facing a significant— albeit expected—slowdown in construction projects.

However, all is clearly not lost. Ethanol production will not stop, and most companies have found ways to continue profitably running traditional corn-fed ethanol plants.

Even so, many producers feel the future is in cellulosic-based feedstocks.

Fortunately, many owners and developers who answered the call to make ethanol the fuel of the future had the foresight to purchase larger tracts of land than were absolutely necessary for their corn-fed plants. Thus, in the long run, many of the companies currently facing economic difficulties may be able to retrofit the front end of their plants to allow for commercialscale cellulosic or sugar-based ethanol production. Meanwhile, everyone who has been involved in the ethanol plant development industry for the past few years needs to figure out how to stay strong until that build-out period arrives.

Lessons from the Power Industry Those caught up in the current difficulties can take comfort from the experience of plant owners, contractors, engineers and suppliers in the power plant construction industry in the late 1990s and early 2000s. Remember when Vice President Dick Cheney said in 2001 that we’d need a new power plant to come on line every week for the next 20 years to meet vastly increasing power demands?

A lot of people had the same view, resulting in an unprecedented construction boom, which was followed by increases in natural gas prices, problems with distribution and storage of gas and power, and revelations that Enron Corp. and others had manipulated supply to create the illusion that demand vastly exceeded supply. Plants were mothballed in mid-construction, completed plants sat rusting, and the scramble was on just to stay alive.

The good news is that many of these players in the gas-turbine power plant industry survived and are now doing quite

The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Ethanol Producer Magazine or its advertisers.

All questions pertaining to this article should be directed to the author(s).

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plants that were producing little or no revenue.

Almost all ethanol plant construction contracts contain terms allowing the owner to suspend work or terminate the contract for convenience. Proper use of these clauses may allow the owner to stop incurring costs that it does not currently have the means to pay. However, these clauses should be used with caution, since they will usually result in higher project completion costs.

Ability to Complete Plants

well. How was it done? The answers are as varied as the companies involved in the ethanol industry, but there are some common themes.

Owners’ Concerns, Cash Crunches For owners who have cash coming in from other sources, the ethanol crunch may

be creating temporary cash flow problems that can be dealt with by negotiating extended payment terms with creditors, including contractors, with appropriate security. This technique was used successfully during the power bust by a number of power plant owners that had lucrative contracts, deals or ventures, but were in a temporary crunch due to the cost of developing new power

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

If a project is incomplete and there is concern about the contractor’s ability to complete the work, there may be several avenues open for consideration. Of course, if the contractor posted bonds, letters of credit or other security, look to those means to ensure performance. A word of caution in dealing with bonds—strictly follow all requirements and procedures stated in the bond. Failure to follow the bond to the letter can result in the loss of all rights under it.

Even if there is no security, the law of many states permits a “request for adequate assurances” even if no such right is stated in the contract with the contractor. If the contractor does not respond with reasonable assurances of its ability to complete the

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Number of Ethanol Plants Starting Construction 8 7

Number of plants per month

6 5 4 3 2 1

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5/08

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3/08

2/08

1/08

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11/06

10/06

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Date 8/06

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SOURCE: BBI INTERNATIONAL INC.

work, the owner may have a right to declare the contractor in default. This doctrine is discussed in more detail below.

For some owners and developers, bankruptcy is inevitable—the economics just don’t work. In extreme cases, bankruptcy may take the form of liquidation, or it may take the form of a Chapter 11 reorganization that allows the debtor some breathing room from claims by creditors, and may

allow the debtor to reduce or shed some bad debts while retaining profitable operations and relationships.

Contractor, Supplier Concerns If a project is incomplete, many contracts (such as the American Institute of Architects or AIA forms) give contractors the right to request that the owner demon-

strate adequate evidence of the owner’s continuing ability to pay for construction.

This right exists in many states even if it isn’t stated in the contract. Called a request for adequate assurance, it was created for situations such as those affecting some in the ethanol market.

If a contractor has reason to believe that the owner won’t be able to pay for the work when payment is due, perhaps a large

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Controllers

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

CONSTRUCTION

retainage payment at the end of the job, the contractor doesn’t have to keep working and running up costs just because the owner hasn’t yet breached the contract by failing to pay.

Instead, a letter can be sent stating the reasons for concern and requesting reasonable assurances of the owner’s continuing ability to pay. If the owner fails to provide such evidence within a reasonable time period, the contractor or supplier can then treat that as a breach and stop work. This allows them to avoid incurring additional costs that may never be reimbursed. This approach enables cost savings, but should be exercised with caution and advice from a knowledgeable attorney.

If the owner is already late in making payments, the contractor may have a right to suspend work to avoid additional costs. The contractor may also have the right to notify the project lender of non-payment and require the lender to set aside loan funds for unpaid invoices. Again, caution is required and counsel should be consulted before acting.

subcontract includes an enforceable pay if paid clause, subcontractors should be able to collect payment for their work from the prime contractor even if the owner is insolvent. Also, there may be a payment bond, which allows recovery if neither the owner nor the contractor can pay.

The Best Tools: Communication, Realistic Expectations All of the tools highlighted above were used by victims of the power bust to stay afloat and even remain profitable. Many more tools are available, but probably none is better than simple communication.

Communication does not solve all problems. Sometimes there is simply no money and nothing will make it appear. However, if the parties become secretive and adversarial when trouble hits, there is no chance the

parties will be able to come up with creative solutions that everyone—owner, lender, engineer, supplier and subcontractor—can live with.

Having represented and negotiated with numerous companies during both the gas-turbine bust and the current ethanol plant construction situation, it’s apparent that solutions can best be reached on many projects if everyone is open and honest about the problems, and everyone is communicating and willing to compromise. You may not walk away happy, but at least you can walk away with your business intact. EP Colin Reid is a member of the Construction Industry Practice Group at Sherman & Howard LLC, a Denver-based national law firm. Reach him at creid@shermanhoward.com or (303) 299-8230.

Payment for Completed Work A mechanic’s lien rights exist in all states. It’s important to determine whether the lien trumps the lender’s mortgage. If not, the lender’s first position mortgage may render the lien worthless.

In some cases, it may not be clear who has first position, which opens the door to negotiations. One particular value of the mechanic’s lien is that it often creates coveted secured creditor status if the owner goes bankrupt.

Also, if the project has been finished with undisbursed construction loan funds, contractors, subcontractors and suppliers may have rights to a portion of these funds.

Access to these funds may exist even if the owner files bankruptcy because such funds often are not treated as property of the bankruptcy estate.

Subcontractors and suppliers, who are below the design/build contractor or prime contractor in the contracting chain, may have other sources of recovery. Unless the

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Ethanol & Biodiesel Management University

Biofuels Markets Americas

September 8-9, 2008

Hotel Emperador Buenos Aires, Argentina

Renaissance Houston Hotel Houston, Texas This two-day training course focuses on how to purchase, handle, hedge and manage renewable fuels. Expert instructors will discuss which fuel technologies present future opportunities. Agenda topics will include an overview of supply, demand and policy factors; imports and exports; feedstocks; distillers grains; transportation and storage; blending; the federal renewable fuels standard and credit trading systems; and federal tax law.

(866) 620-5940 www.opisnet.com/ethbiomgmt

EVENTS

September 9-10, 2008

European Forum for Industrial Biotechnology September 15-17, 2008 Hotel Bloom Brussels, Belgium

Officially supported by the Argentine Biofuels and Hydrogen Association, last year’s inaugural event focused on the biodiesel market. Due to popular request, this year's event has been expanded to include BioPower Americas, a concurrent event.

The joint general session will include discussion of the “bio revolution,” the global industry, climate change, energy supply and demand, finance and investment, sustainability, and feedstocks. The second day of the event will break the agenda into the two groups: biofuels and biopower. +44 207 801 6333 www.greenpowerconferences.com

This inaugural event aims to bring together a senior and international group of biotechnology producers, chemicals and plastics suppliers, biomass and biorefinery representatives, end users from a wide variety of industries, and academia. Topics of discussion will include biofuels, biorefineries, biobased products, Europe’s knowledge-based bioeconomy, Asia’s perspective, chemicals, financing and commercialization, among many others. +44 (0) 1372 802101 www.efib2008.com

CALENDAR

Next Generation Biofuel Markets

International Distillers Grains Conference & Trade Show

World Biofuels Symposium

October 6-7, 2008

October 19-21, 2008

Hotel Okura Amsterdam, Netherlands

Indianapolis Marriott Downtown Indianapolis, Indiana

Tsinghua University Beijing, China

This fourth annual event will bring together key players to address the latest developments in creating the cost-competitive, industrial-scale production of next-generation biofuels technologies.

Agenda topics will include commercialization, financing and investing, global developments, cellulosic ethanol and other biomass-based fuel, and feedstocks such as switchgrass and sorghum. +44 207 801 6333 www.greenpowerconferences.com

This event will seek to educate and empower the end users of distillers grains, and enhance customer outreach activities worldwide. The agenda includes topics such as distillers grains supply and demand; exports, particularly in Asia; fractionation; and global feeding trends, especially in poultry, swine and cattle.

(719) 539-0300 www.distillersgrainsconference.com

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October 19-21, 2008

This fourth annual event, organized by BBI International Inc., will explore the world energy issues that China currently faces, specifically in regard to biofuels. Agenda topics will include biofuels policy in China compared with Brazil, the United States, Europe and Singapore; Chinese agriculture and food supply; life cycle analyses; blending; feedstocks; cellulosic ethanol; enzymes; coproducts; and plant optimization.

(719) 539-0300 www.worldbiofuelssymposium.com

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

Biofuels Markets East Africa September 16-18, 2008 Kilimanjaro Hotel Kempinski Dar Es Salaam, Tanzania This inaugural event will particularly focus on Tanzania, Uganda and Kenya. The case-study-led agenda will include presentations and panels that review the current status of the biofuels market in this region, and address the expanding opportunities for the production of feedstocks and biofuels for use in Africa and for export. Agenda topics will include financing; sustainability; feedstocks; biofuels production; and blending, marketing, distribution and transportation. +44 207 801 6333 www.greenpowerconferences.com

Biofuels Markets Africa

Texas Biofuels Conference & Expo September 17-18, 2008 Hilton Austin Airport Austin, Texas This third annual event will take an in-depth look at the latest regulatory, agricultural and technical developments impacting the renewable fuels industry in Texas. Special attention will be given to the Energy Independence & Security Act of 2007 and the impact it will have on the future of renewable fuels in Texas.

(512) 358-1000 www.biofuelevents.com

The Alcohol School September 28-October 3, 2008 The Intercontinental Hotel Montreal, Quebec The weeklong program is designed for lab, plant and management personnel, and is organized around lectures, laboratory demonstrations, seminars and plant visits. The program will cover the process of ethanol production from milling and mash preparation through fermentation and distillation.

Enzyme usage, yeast biology, and bacterial contamination and control will also be discussed, along with other issues currently affecting the industry.

(800) 583-6484 www.ethanoltech.com

Canadian Renewable Fuels Summit

National Ethanol Conference

December 1-3, 2008 Cape Town, South Africa

December 1-3, 2008

San Antonio Convention Center San Antonio, Texas

The approval of the Biofuel Industrial Strategy for South Africa in December provides fresh impetus for the country’s biofuels market, along with a foundation and road map to push the market forward.

The initial 2 percent biofuels penetration scenario totaling 105 MMgy will create 25,000 jobs, according to the strategy. This third annual event will bring together executives from across Africa to discuss strategies that will enhance the development of a sustainable, regional biofuels industry. +44 207 801 6333 www.greenpowerconferences.com

Hilton Hotel Lac Leamy Hull, Quebec Themed “Growing Beyond Oil,” the Canadian Renewable Fuels Association’s fifth annual event will continue to discuss the progress, challenges and opportunities facing the Canadian biofuels market. It will focus on policy and marketing, and will be attended by a number of industry representatives from all levels of the ethanol and biodiesel industries.

(519) 576-4500 www.canadianrenewablefuelssummit.com

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

February 23-25, 2009

This event will cover the industry’s impact on the U.S. economy, the environment, food prices and the international market. A record of nearly 2,500 people attended in 2008. An agenda will be available as the event approaches.

(202) 289-3835 www.ethanolrfa.org

139

EPM MARKETPLACE Ag Products & Services

North American Bioproducts Corporation 866-342-7026 www.na-bio.com

Summit Industrial Products 800-749-5823 www.klsummit.com

Grain Origination Services

Cleaning

Agnetic, LLC 317-696-2824

blog.agnetic.com

Dryer Systems Hydro-Klean, Inc. 515-283-0500

Hybrid Corn Pioneer Hi-Bred International, Inc. 800-247-6803 www.pioneer.com

Associations/Organizations Trade API Credit Exchange 202-682-8192

Inland Waters 313-841-5800

www.hydro-klean.com

www.sublimedescaler.com www.inlandwaters.com

Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

Ductwork www.api.org/ace

Ethanol Promotion & Information Council (EPIC) 402-932-0567 www.drivingethanol.org

Hydro-Klean, Inc. 515-283-0500 Inland Waters 313-841-5800

Chemicals PhibroChem 800-223-0434

www.lactrol.com

www.hydro-klean.com

www.inlandwaters.com

Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

Emergency Spill Response

Anti-Microbial North American Bioproducts Corporation 866-342-7026 www.na-bio.com

Hydro-Klean, Inc. 515-283-0500 Inland Waters 313-841-5800

SAFELY DISSOLVES THE TOUGHEST DEPOSIITS OF ...lime, magnesium, calcium, dirt, corrosion & rust.

• NSF Registered & Biodegradable • Non-Hazardous • Non-Corrosive • Changes color when spent

800.749.5823 P.O. Box 131359 Tyler, TX 75713 www.klsummit.com

Hydro-Blasting Hydro-Klean, Inc. 515-283-0500

www.hydro-klean.com

Inland Waters 313-841-5800

www.hydro-klean.com

www.inlandwaters.com

www.inlandwaters.com

Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

Fans Hydro-Klean, Inc. 515-283-0500 PhibroChem 800-223-0434

www.lactrol.com

www.inlandwaters.com

Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

CIP Univar USA Inc. 402-733-3266

www.univarusa.com

Filter Media Hydro-Klean, Inc. 515-283-0500

Desiccant Gordon Technologies 570-279-8086

www.gtsieve.com

www.hydro-klean.com

Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

Heat Exchanger

Water Treatment Fremont Industries Inc. 952-445-4121

www.fremontind.com

Hydro-Klean, Inc. 515-283-0500 Inland Waters 313-841-5800

Yeast Ferm Solutions 859-402-8707

Inland Waters 313-841-5800

www.hydro-klean.com

www.ferm-solutions.com

www.hydro-klean.com

www.inlandwaters.com

Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

Fermentis-Division of SI Lesaffre 800-558-7279 www.fermentis.com 140

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

EPM MARKETPLACE Plate-Frame Hydro-Klean, Inc. 515-283-0500

Insulation www.hydro-klean.com

Mavo Systems 763-788-7713

www.mavo.com

Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

Mayes Coatings, Inc. 866-93MAYES www.mayescoatings.com

Railcars

Miller Insulation Co, Inc. 701-258-4323 www.millerinsulation.com

Hydro-Klean, Inc. 515-283-0500 Inland Waters 313-841-5800

www.hydro-klean.com

Mechanical

www.inlandwaters.com

JIC

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JOULÉ Industrial Contractors

Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

OVER 40 YEARS OF PROVIDING QUALITY COST EFFECTIVE SOLUTIONS TO THE INDUSTRIAL INDUSTRY.

Smoke Stack Hydro-Klean, Inc. 515-283-0500 Inland Waters 313-841-5800

www.hydro-klean.com

www.inlandwaters.com

Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

Tank Cleaning Equipment Spraying Systems Co. 630-665-5000

www.spray.com

Tank Cleaning Services Hydro-Klean, Inc. 515-283-0500 Inland Waters 313-841-5800

www.hydro-klean.com

www.inlandwaters.com

Professional Environmental Cleaning Services 402-212-0949 www.professionalECS.com

We provide: • Experienced Supervision • Multi-craft Staff • Logistical Support For: • Plant Outages • Plant Construction and Expansion • Relocations • Capital Projects • On and off site pipe Fabrication To: • Ethanol and Alternative Fuel Plants • Pharmaceutical Manufacturers • Food Plants • Building Material Facilities Toll Free: (800) 445-6853 email-bbosher@jouleinc.com

Mid-States Mechanical Services, Inc. 800-950-0279 www.mid-statesmechanical.com W. Soule & Company 1-877-976-8531

Fabrication Macomber Welding & Fabricating, Inc. 616-698-0819 www.macomberwelding.com

Plant Construction

VAL-FAB Inc. 877-482-5322

Agra Industries, Inc. 715-536-9584

W. Soule & Company 1-877-976-8531

www.valfab.com

www.wsoule.com

CYC Construction 402-333-1652

Grain Storage Coverall Building Systems 800-268-3768

Agri-Systems 406-245-6231

www.coverall.net

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Mortenson, a leader in ‘green’ renewable energy construction, seeks individuals that can thrive in a culture built upon the pillars of ingenuity, expertise, and exceptional people.

ENGINEERING, SUPERINTENDENT, & MANAGEMENT POSITIONS AVAILABLE NATIONALLY. We invite you to BUILD your career

JIC

Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

Construction

www.wsoule.com

at Mortenson. Contact us today!

• • • •

Innovative Benefit Programs Career Growth Opportunities Family-Owned Company Industry Leading Career Learning and Development

www.agraind.com Your Career Choice.

www.agrisystems.net

www.cycconstruction.com

Send resume to energyjobs@mortenson.com or call toll free 1-877-MORTENSON www.mortenson.com Mortenson is an EOE.

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

141

EPM MARKETPLACE Reimer Welding Inc. 218-773-0886

Environmental

Quality Assurance

Air Resource Specialists,Inc. 970-484-7941 www.air-resource.com

Eurofins Scientific, Inc. 551-580-9140

www.reimerwelding.com

Wanzek Construction,Inc. 701-282-6171

www.eurofinsus.com

wanzek.com

Railroad Tracks

ICM, Inc. 316-796-0900

www.icminc.com

Inland Waters 313-841-5800

www.inlandwaters.com

Seneca Companies 800-369-5500 www.senecacompanies.com TKDA 651-292-4602

Optimize the Value of Your Co-Products

www.tkda.com

Feasibility Studies

Harris Group Inc. 206-494-9422

www.harrisgroup.com

Groundwater Services

504-297-4330 ethanol@eurofinsus.com

Leggette, Brashears & Graham, Inc. 651-490-1405 www.lbgweb.com

Personnel Recruiting

Grading, sampling, mycotoxins, proximates, residues, GMOs. QA / QC Consulting: HACCP, GMPs, SOPs, NIR calibration Co-products: Quality assurance testing; Lot certification; Export assistance

Regulatory

SearchPath of Chicago 815-261-4403 www.searchpath.com/chicago

Plant Optimization

Air Resource Specialists.Inc. 970-484-7941 www.air-resource.com

Risk Management National Fuel Marketing 303-996-6781 www.NationalFuelMarketing.com

Education R & R Contracting, Inc. 800-872-5975 Railworks 913-888-4091

Iowa BioDevelopment 641-969-4167 www.iabiodevelopment.com www.rrcontracting.net

www.railworks.com

Volkmann Railroad Builders, Inc. 262-252-3377 www.volkmannrr.com

Tanks DCI, Inc. 320-252-8200 Eagle Tanks, Inc. 888-678-0698 WINBCO Tank Company 641-683-1855

www.dciinc.com

www.eagletanks.com

www.winbco.com

www.harrisgroup.com

Harris Group Inc. 206-494-9422

www.hobbstowne.com

The Richmond Group USA - BioEnergy Search Division

jim.plautz@verizon.net

www.harrisgroup.com

Lanser Public Affairs, LLC 262-797-7876 www.lanserpublicaffairs.com www.icminc.com

Hobbs & Towne 610-783-4600x108

SearchPath of Chicago 815-261-4403 www.searchpath.com/chicago

Project Development Ethanol Productions 813-968-6867

Employment Recruiting

Harris Group Inc. 206-494-9422

Public Relations

Business Plans

142

Granatus Consulting, Inc. 218-773-0005 www.granatusinc.com

Terratec Biofuels of Solutia 800-742-1476 www.TerratecBiofuels.com

Consulting ICM, Inc. 316-796-0900

Iowa Biofuels Training International 641-969-4167 www.biofuelstraining.org

804-285-2071

www.trgbioenergy.com

Engineering Civil Antioch International, Inc. 402-289-2217 www.antioch-intl.com TKDA 651-292-4602

www.tkda.com

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

EPM MARKETPLACE Control Systems

(WKDQRO 3ODQW :LGH &RQWURO 6\VWHPV Â&#x2021; )URP SUHOLPLQDU\ HQJLQHHULQJ WKURXJK FRPPLVVLRQLQJ Â&#x2021; ([SHULHQFHG ZLWK DOO PDMRU HTXLSPHQW EUDQGV Â&#x2021; &6,$ &HUWLILHG Â&#x2021; (OHFWULFDO GHVLJQ EXLOG VHUYLFHV Â&#x2021; 6HDVRQHG H[SHULHQFHG HWKDQRO HQJLQHHULQJ WHDP

Equipment & Services

Centrifuge Repair

Air Pollution/Odor Control

Nosnhoj Services Inc. 317-887-6436

Ceco Abatement Systems, Inc. 630-493-0624 www.cecoenviro.com/Abatement ICM, Inc. 316-796-0900

www.icminc.com

www.nosnhojinc.com

Centrifuges Westfalia Separator,Inc. 201-784-4322

www.wsus.com

Combustion Equipment Eclipse.Inc. 815-637-7213

www.eclipsenet.com

John Zink Company LLC 800-421-9242

www.johnzink.com

Compressors FlaktWoods 716-845-0900

Â&#x2021; )D[ ZZZ DXWRPDWLRQDOOLDQFH QHW Bachelor Controls 785-284-3482

Computer Software dbc SMARTsoftware, Inc. 770-427-7633 www.dbcsmartsoftware.com

www.bachelorcontrols.com

Control System Integrators, Inc. 319-377-6538 x19 www.csystemi.com

Encore Business Solutions 204-989-4330 www.encorebusiness.com

Design/Build

John Deere Agri Services 770-238-5100 www.johndeereagriservices.com

Agra Industries, Inc. 715-536-9584 Agri-Systems 406-245-6231

www.agraind.com

www.deltatcorp.com

ECE Design 312-235-6960

www.ecedesign.com

Ethanol Productions 813-968-6867

jim.plautz@verizon.net

GS CleanTech Corp.

678-566-3588

www.gs-cleantech.com

ICM, Inc. 316-796-0900

www.icminc.com

Wanzek Construction, Inc. 701-282-6171

wanzek.com

Process Design

ChemSim 781-248-5057

Summit Software, Inc. 800-433-5724 x 181

www.agrisystems.net

Delta-T Corporation 757-941-0188

Agri-Systems 406-245-6231

www.flaktwoods.com

www.agrisystems.net

www.chemsim.com

Process Engineering Associates, LLC 865-220-8722 www.processengr.com

www.summit-soft.com

Control Systems Automation Alliance 205-271-9743 www.automationalliance.net Kahler Automation Corp.

507-235-6648 www.kahlerautomation.com

Analytical Instruments Anton Paar +1-804-550-1051

www.anton-paar.com

SoftPLC Corporation 512-264-8390

www.softplc.com

Blowers & Fans

Control Systems-Distributed

Robinson Industries, Inc. 724-452-6121 www.robinsonfans.com

Control System Integrators, Inc. 319-377-6538 x19 www.csystemi.com

Boiler Systems

Conveyorsâ&#x20AC;&#x201C;Enclosed

Factory Sales and Engineering, Inc. 985-867-9150 www.fsela.com

Grisley Components, Inc. 303-756-6474

Rentech Boiler Systems, Inc. 325-794-5701 www.rentechboilers.com

Conveyorsâ&#x20AC;&#x201C;Pneumatic

www.grisley.com

Catwalks

Blower Engineering 800-388-1339 www.blowerengineering.com

Lean Technologies LLC 701-352-9620 www.leantechnologiesllc.com

Gusmer Enterprises, Inc. 847-277-9785 www.gusmerenterprises.com

Vogelbusch USA, Inc. 713-461-7374 www.vogelbusch.com

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

143

EPM MARKETPLACE Decanters

Filters Eaton Filtration 800-656-3344 ext 581 BruceCLaw@eaton.com Larox 301-543-1200

www.larox.com/cpi

Filtration Equipment BWF America 800-733-2043

www.bwf-america.com

W.S. Tyler 1-800-321-6188

www.wstyler.com

Fractionation—Corn Buhler Inc. 763-847-9900

www.buhlergroup.com/us

Cereal Process Technologies 217-779-2595 www.cerealprocess.com FEECO International, Inc. 920-468-1000

Distillation Equipment SRS Engineering Corporation 800-497-5841 www.srsengineering.com

Dryers-Flash Barr-Rosin,Inc. 630-659-3980

Davenport Dryer, LLC 309-786-1500 www.davenportdryer.com

Dryers-Ring www.barr-rosin.com

Barr-Rosin,Inc. 630-659-3980

MonitorTech Corp.

866-682-6771

FWS Technologies 204-487-2500 Sturtevant Inc. 781-829-6501

www.fwsgroup.com

www.sturtevantinc.com

Gas Detectors UE Systems, Inc. 914-592-1220

www.monitortechgrp.com

www.uesystems.com

Gaskets Allegheny Coupling Company 814-723-8150 www.alleghenycoupling.com

Continuous Emissions Monitoring Systems Easiest installation, operation and maintenance Meet or exceeds EPA requirements NOx, O2, CO, SO2 and others Turnkey systems for under $100,000.00 P.O. Box 9271, Columbus, Oh 43209 866-682-6771 sales@monitortechcorp.us

Grain Handling & Storage Sukup Manufacturing Co. 641-892-4222

www.sukup.com

Heat Exchangers Custom Metalcraft Inc. 417-862-0707 www.custom-metalcraft.com

Emissions Testing & Reduction Lantec Products, Inc. 617-265-2171

Dryers—Rotary Drum Aeroglide Corporation 919-851-2000

Ronning Engineering Company, Inc. 913-239-8118 www.ronningengineering.com

www.aeroglide.com

Dryers-Other

Barr-Rosin,Inc 630-659-3980

www.icminc.com

Emission Monitoring Systems www.barr-rosin.com

Dryers-Fluid Bed Aeroglide Corporation 919-851-2000

ICM, Inc. 316-796-0900

www.feeco.com

www.lantecp.com

EPM MARKETPLACE

www.aeroglide.com

Evaporators

With all contact information placed in

GEA NIRO Inc 410-997-8700

one convenient location, Ethanol

www.barr-rosin.com

Reach your customers

www.niroinc.com

Producer Magazine not only contains

HRS Process Technology, Inc. 623-915-4328 www.hrs-americas.com

top editorial content but also a useful directory in each publication. Whether a first-time advertiser wanting to raise

Fermentors

awareness of your business or a Your Solution. Advertise Today.

EPM MARKETPLACE

WINBCO Tank Company 641-683-1855

www.winbco.com

frequent display advertiser looking for added exposure, EPM Marketplace is the perfect solution.

144

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

EPM MARKETPLACE

Pressure Gauge Solutions for the Ethanol Industry

Loading Equipment Hemco Industries, Inc. 877-347-7106

www.hemcocpm.com

SafeRack 866-761-7225

www.saferack.com

Lubrication Systems

Summit Industrial Products has lubricants and greases for conveyors, dryers, cooling tower pumps, gearboxes, blowers, compressors, motor bearings and CO2 recovery.

Contact Hardy Orzikowski for more information and to schedule your free instrument review.

888.945.2872 ext. 5127 ethanol@wika.com

Call today for a distributor in your area.

800.749.5823 P.O. Box 131359 Tyler, TX 75713 Made in the U.S.A.

www.klsummit.com

www.wika.com

Maintenance Services Munters - Des Champs Products 540-291-1111 www.deschamps.com

Jouleâ&#x20AC;&#x2122; Industrial Contractors bbosher@jouleinc.com www.jouleinc.com

ProSonix Corporation 800-849-1130, x. 801

Instrumentation

www.pro-sonix.com

Maintenance Software

Instrument Associates 708-597-9880 www.instrumentassociates.com Process Sensors Corp.

508-473-9901 www.processsensors.com Shimadzu Scientific Instruments 800-477-1227 www.ssi.shimadzu.com WIKA Instrument Corporation 888-945-2872, x5127

Jet Cookers

www.wika.com

Your Ad HERE Your Solution. Advertise Today.

EPM MARKETPLACE

Laboratory-Equipment Astoria-Pacific International 800-536-3111 www.astoria-pacific.com

Mapcon Technologies, Inc. 800-922-4336 www.mapcon.com

Mills-Hammer Laboratory-Supplies Midland Scientific, Inc. 800-642-5263

CBT Wear Parts, Inc. 888-228-3625 www.midlandsci.com

Laboratory-Testing Services Eurofins GeneScan, Inc. 504-297-4330 www.gmotesting.com Midwest Laboratories 402-334-7770 Romer Labs, Inc. 636-583-8600

www.prater-sterling.com

CPM/Roskamp Champion 800-366-2563 www.cpmroskamp.com

Millwright www.midwestlabs.com

Agri-Systems 406-245-6231

www.agrisystems.net

www.romerlabs.com

Reach your customers

SGS North America, Inc. 281-478-8234www.sgs.com/alternativefuels

Your Solution. Advertise Today.

Trilogy Analytical Laboratory 636-239-1521 www.trilogylab.com

EPM MARKETPLACE

Prater-Sterling 630-679-3254

www.cbtwearparts.com

Mixers KINEMATICA, INC. 631-750-6653

www.kinematica-inc.com

Moisture Analyzers Sartorius Mechatronies-Omnimark 800-835-3211 www.sartorius-omnimark.com

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

145

EPM MARKETPLACE Molecular Sieves

QA Test Products

Gordon Technologies 570-279-8086 Vaperma, Inc. 418-839-6989 Zeochem, LLC 502-634-7600

www.gtsieve.com

www.vaperma.com

www.zeochem.com

Phenomenex 310-212-0555x3328

www.phenomenex.com

Trico TCWind, Incorporated 320-693-6200 www.tricotcwind.com

Lantec Products, Inc. 617-265-2171

www.lantecp.com

Eco-Tec, Inc. 905-427-0077

American Stainless & Supply 800-845-5511 www.americanstainless.com

SimplexGrinnell 800-746-7539

www.eco-tec.com

Robert-James Sales, Inc. 800-666-0088

www.rjsales.com

Pipe-Fittings

www.bmt-tank.com

www.cmc-letco.com

Greenberry Industrial 541-757-8458 www.greenberryinc.com Paragon Trailer Sales 800-471-8769 www.paragontrailer.com

www.simplexgrinnell.com

Seals www.isco-pipe.com

CMC Letco Industries 417-831-1528

www.agraind.com

Federal Equipment Company 800-652-2466 www.fedequip.com

Safety

Pipe

Agra Industries, Inc. 715-536-9584 Brown-Minneapolis Tank 281-252-9809

RTO Media

Resource Recovery

Motors

ISCO Industries 800-345-4726

Tanks

WINBCO Tank Company 641-683-1855

www.winbco.com

Thermal Energy

Aesseal Inc. 865-531-0192

www.aesseal.com

Utex Industries, Inc. 432-333-4151/800-873-0946 www.utexind.com

American Waste Removal 505-417-9933 www.americanwasteremoval.com

Thermal Oxidizers Sensors

Robert-James Sales, Inc. 800-666-0088

www.rjsales.com

St. Louis Pipe & Supply 800-737-7473 www.stlpipesupply.com

Electro Sensors 800-328-6170

www.electro-sensors.com

Separation Equipment Pipe-Flanges

Puritan Magnetics, Inc. 248-628-3808 www.puritanmagnetics.com

Robert-James Sales, Inc. 800-666-0088

www.rjsales.com

Separators Pressure & Temperature WIKA Instrument Corporation 888-945-2872, x5127

Westfalia Separator,Inc. 201-784-4322

www.wsus.com

Steel Suppliers Chapel Steel 800-320-6042 www.winbco.com

Process Control Harris Group Inc. 206-494-9422

www.harrisgroup.com

Pumps ITT Industries Goulds Pumps 315-568-2811 www.gouldspumps.com Watson-Marlow Bredel Pumps 800-282-8823 www.watson-marlow.com Yamada America, Inc. 800-990-7867 www.yamadapump.com

146

for VOC, CO & PM ABATEMENT

www.wika.com

Pressure Vessels WINBCO Tank Company 641-683-1855

PROVEN RELIABILITY

EISENMANN Corporation Crystal Lake, Illinois davidj@chapelsteel.com

Outokumpu Stainless 847-517-4050

815.455.4100 es.info@eisenmann.com

www.outokumpu.com

Sandmeyer Steel Company 215-464-7100 www.sandmeyersteel.com

Storageâ&#x20AC;&#x201D;DDGS Laidig Systems, Inc. 574-256-0204

www.laidig.com

Structural Fabrication Cherokee Steel Fabricators, Inc. 903-759-3844 www.cherokeesteelfabricators.com ICM, Inc. 316-796-0900

www.icminc.com

ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

EPM MARKETPLACE Pro-Environmental, Inc. 909-989-3010

Wastewater Treatment Services

Insurance

Biothane Corporation 856-541-3500x501

Armor Companies, Inc. 612-501-5654 acline@armorcompanies.com

www.pro-env.com

Turbines-Gas Kawasaki Gas Turbines 281-970-3255x18 www.kawasakigasturbines.com

www.biothane.com

Chubb Insurance 312-454-4250

Water Treatment Aquatech International Corporation 724-746-5300 www.aquatech.com

Used Equipment

chubb.com

ERI Solutions, Inc. 316-927-4294

erisolutions.com

Siemens Water Technologies 800-525-0658 www.siemens.com/water

Lender Representatives

Ethanol Production

Greenman Funding 888-802-7678 greenman.funding@verizon.net

Existing Producers Louis Dreyfus Commodities 402-844-2680 LDCommodities.com

Mergers & Acquisitions Thomas Group Capital 404-504-6050

www.thomassec.com

Future Producers Syntec Biofuel, Inc. 604-648-2092

Risk Management www.syntecbiofuel.com

Finance

First Capitol Risk Management 800-884-8290 www.firstcapitolrm.com

Accounting

R.J. O’Brien 800-621-0757

www.rjobrien.com

Christianson & Associates PLLP 320-235-5937 www.christiansoncpa.com

R.J. O’Brien 800-621-0757

www.rjobrien.com

Kennedy and Coe, LLC 800-303-3241

Software-Accounting www.kcoe.com Encore Business Solutions 204-989-4330 www.encorebusiness.com

Appraisals

Summit Software, Inc. 800-433-5724 x 181

www.summit-soft.com

Legal Services Attorneys BrownWinick Law Firm 515-242-2400 www.biofuellawyers.com

VOC Scrubbers Lantec Products, Inc. 617-265-2171

Dorsey & Whitney LLP 612-343-8275

www.dorsey.com

Natwick Associates Appraisal Services 800-279-4757 www.natwick.com

Faegre & Benson, LLP 612-766-6930

www.faegre.com

Due Diligence

Stoel Rives LLP 612-373-8800

www.lantecp.com

Valve Actuators Rotork Controls,Inc. 585-247-2304

www.rotork.com

www.stoel.com/biofuels

Valves

Harris Group Inc. 206-494-9422

Central States Group 800-318-2747 www.centralstatesgroup.com

Equity Procurement

Distillers Grains

Greenman Funding 888-802-7678 greenman.funding@verizon.net

CHS, Inc. 651-355-6271

www.chsinc.com

Jordan, Knauff & Company 312-254-5900 www.jordanknauff.com

Gavilon 402-595-5678

www.gavilon.com

Check-All Valve Mfg. Co. 515-224-2301 Metso Automation 508-852-0215

www.checkall.com

www.metsoethanol.com

www.harrisgroup.com

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Utilities

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Producer Magazine not only contains

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ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

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22

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