INSIDE: ABENGOA REACHES FOR FURTHER INNOVATIONS DECEMBER 2014
Chicago’s E15 Crusader Building On Clean Fuel Victories In Windy City Page 44
Also
EH&S Managers Protect Employees, Profitability
Page 28
New Hazard Communication Rules Have Significant Impact
Page 34
Aiming For Safety Because ‘It’s the Right Thing To Do’
Page 40
www.EthanolProducer.com
THIS HOLIDAY SEASON, WE HAVE A LOT TO BE THANKFUL FOR.
THANKS FOR BEING SOME OF THE FIRST RETAILERS TO OFFER E15. Growth Energy commends CENEX, MAPCO, Minnoco, Protec Fuel and Petro Serve USA for their pioneering spirit and their efforts to expand consumer access to higher blends of renewable fuels. They are offering consumers a choice and savings at the pump, while at the same time supporting a homegrown industry that supports farmers across the country. Together we’re making progress towards the next generation of sustainable, renewable fuels.
Learn more at GrowthEnergy.org
31st ANNUAL
Speaker presentation ideas
will be accepted for the 2015 International Fuel Ethanol Workshop & Expo through February 6, 2015. Presentation ideas may be submitted in one of four tracks: • Production & Operations • Leadership & Financial Management • Coproducts & Product Diversification • Cellulosic & Advanced Ethanol
Submit at
www.FuelEthanolWorkshop.com
CONTENTS
DECEMBER 2014
VOLUME 20 ISSUE 12
DEPARTMENTS 6
EDITOR'S NOTE
Sharp-Eyed EH&S By Tom Bryan
7
AD INDEX
10
THE WAY I SEE IT
EVENTS CALENDAR
12
VIEW FROM THE HILL
16 18
SE
BAGHOU
BOILER
L THERMA ER OXIDIZ
DRYER
28
FLOW METER
Safety l Review Trip, Fal es Slip, at Updat g Hazm Trainin Safety Rail
dates
Up t Review t/Tagou Overview Lockou Space Entry fined Con
EH&S
34
SAFETY
Keepers of Compliance
Clear Sign of Confusion
By Tom Bryan
By Holly Jessen
40
42
Environmental, health, and safety managers talk about the challenges facing them day-to-day
What’s App-ening? By Bob Dinneen
New OSHA hazard communication requirements impact producers and chemical providers
DRIVE
A Year Makes a Big Difference By Tom Buis
GRASSROOTS VOICE
A Good Time for Truth By Ron Lamberty
GLOBAL SCENE
Brazilian Biofuels Policy Under a Second Rousseff Term By Leticia Phillips
20
BUSINESS BRIEFS
22
COMMODITIES
24
DISTILLED
52
BUSINESS MATTERS
54
s
nt Audit
Equipme
Government Intervention a No-Brainer By Mike Bryan
11
14
FEATURES
Q&A
CELLULOSIC
Cultivating a Culture of Safety
‘Welcome to the Future’
By Susanne Retka Schill
By Holly Jessen
Plant management should aim for a zero-loss scenario every year
Abengoa celebrates the start of a new era with the grand opening of its advanced biofuel plant
CONTRIBUTION
New Food Safety Rules Mean Big Changes By Andrew Anderson
MARKETPLACE ON THE COVER
44
PROFILE
HAZARD MITIGATION
Chicagoan Sets Her Sights on Clean Air
Proper Grounding Reduces Static Electricity Hazard
By Susanne Retka Schill
By Mike O’Brien
A push to require E15 is headed up by the same communication firm that helped ban leaded gasoline 30 years ago
PHOTO: JIM PRISCHING
46
Electrostatic voltage on a tank car being loaded with ethanol can quickly build to dangerous levels
Ethanol Producer Magazine: (USPS No. 023-974) December 2014, Vol. 20, Issue 12. Ethanol Producer Magazine is published monthly by BBI International. Principal Office: 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. Periodicals Postage Paid at Grand Forks, North Dakota and additional mailing offices. POSTMASTER: Send address changes to Ethanol Producer Magazine/Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, North Dakota 58203.
4 | Ethanol Producer Magazine | DECEMBER 2014
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EDITOR'S NOTE
Sharp-Eyed EH&S As we wrapped up this issue of Ethanol Producer Magazine, one of my sources emailed me with a small edit to our page-28 feature, “Coaching Compliance.” Corn Plus’s Mike Gustafson asked me to
Tom Bryan
President & Editor in Chief tbryan@bbiinternational.com
use commas to separate the words that make up the EH&S acronym—expressing it as “environmental, health, and safety” rather than “environmental health and safety.” The first comma was a must, but I wasn’t sure about the second. Our style rules don’t call for a comma after the next-to-last item in a series unless it’s needed for clarity. This is something only editors care about, or so I thought until Gustafson informed me that the omission of either comma in the full expression of EH&S might suggest that the responsibilities of his profession are more narrow than they are. A lack of delineation, he worried, might confuse the meaning of the job title or dilute one facet of the role. Before press time, both commas were added, if only for that story. I’m glad Gustafson’s comma request happened, not because it vexed our copy editor, but because it illustrates how astute, vigilant and engaging ethanol plant EH&S managers are. They care about the finest details—like commas—while overseeing the enormity of compliance. Splitting their time between permitting, regulatory documentation, plant audits, employee training and more, today’s EH&S managers bear long and growing lists of responsibilities. Despite their heavy workloads, they are raising the bar for the whole profession, actively collaborating with one another, gladly communicating with regulators, engaging their staffs with new responsibilities and building operational cultures steeped in safety cognizance. An EH&S manager’s job is never done, it seems, because regulations never stop changing. As we learn in Holly Jessen’s page-34 feature, “Clear Sign of Confusion,” changes to OSHA’s Hazard Communication Standard is just one recent example of how ethanol plant EH&S managers must pivot, adapt and teach when regulations are altered. For more depth on EH&S, Senior Editor Susanne Retka Schill visits with Nathan Vander Griend of ERI Solutions Inc., which handles loss control services, safety audits equipment testing and employee training for more than 70 U.S. ethanol plants. “In Cultivating a Culture of Safety,” on page 40, we learn just how much ethanol plant EH&S has advanced in the past decade. You may have noticed that our cover story isn’t about EH&S at all. We reserved the face of our final 2014 issue for a topic that will undoubtedly shape our industry’s nearterm future: E15 implementation. In “Chicagoan Sets Her Sights on Clean Air,” on page 44, Retka Schill introduces us to activist Marilyn Katz and the broadly supported effort to bring E15 to America’s third-largest city. Finally, on page 42, you'll find photos of the grand opening of Abengoa Bioenergy's 25 MMgy cellulosic ethanol plant. Congratulations Abengoa.
FOR INDUSTRY NEWS: WWW.ETHANOLPRODUCER.COM OR FOLLOW US: 6 | Ethanol Producer Magazine | DECEMBER 2014
TWITTER.COM/ETHANOLMAGAZINE
VOLUME 20 ISSUE 12
EDITORIAL
ADVERTISER INDEX
President & Editor in Chief Tom Bryan tbryan@bbiinternational.com
2015 International Fuel Ethanol Workshop & Expo
Vice President of Content & Executive Editor Tim Portz tportz@bbiinternational.com
2015 International Biomass Conference & Expo
Managing Editor Holly Jessen hjessen@bbiinternational.com
2015 National Ethanol Conference
Senior Editior Susanne Retka Schill sretkaschill@bbiinternational.com News Editor Erin Voegele evoegele@bbiinternational.com Copy Editor Jan Tellmann jtellmann@bbiinternational.com
ART
BBI Project Development BetaTec Hop Products Buckman DuPont Industrial Biosciences Fagen Inc. Fluid Quip Process Technologies, LLC Growth Energy
Art Director
Jaci Satterlund jsatterlund@bbiinternational.com
ICM, Inc.
Graphic Designer Raquel Boushee rboushee@bbiinternational.com
Iowa Economic Development Authority
INTL FCStone Inc. Iowa Renewable Fuels Summit
PUBLISHING
J.C Ramsdell Enviro Services, Inc.
Chairman Mike Bryan mbryan@bbiinternational.com
Louis Dreyfus
CEO Joe Bryan jbryan@bbiinternational.com
Nalco, an Ecolab Company Phibro Ethanol Performance Group
SALES
Vice President of Operations Matthew Spoor mspoor@bbiinternational.com Business Development Director Howard Brockhouse hbrockhouse@bbiinternational.com Senior Account Manager/Bioenergy Team Leader Chip Shereck cshereck@bbiinternational.com Sales & Marketing Director John Nelson jnelson@bbiinternational.com
Circulation Manager Jessica Beaudry jbeaudry@bbiinternational.com
POET-DSM Advanced Biofuels Renewable Fuels Association RPMG, Inc. Seneca Companies Syngenta: Enogen Tower Performance, Inc. Victory Energy Operations, LLC Vogelbusch USA, Inc
3, 49 48 13 39 8-9 26 56 17 37 2 11 47 19 55 27 33 30 5 15 38 31 20 53 24 25 21
Traffic & Marketing Coordinator Marla DeFoe mdefoe@bbiinternational.com
Customer Service Please call 1-866-746-8385 or email us at service@bbiinternational.com. Subscriptions to Ethanol Producer Magazine are free of charge to everyone with the exception of a shipping and handling charge of $49.95 for anyone outside the United States. To subscribe, visit www.EthanolProducer.com or you can send your mailing address and payment (checks made out to BBI International) to: Ethanol Producer Magazine Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You can also fax a subscription form to 701-746-5367. Back Issues, Reprints and Permissions Select back issues are available for $3.95 each, plus shipping. Article reprints are also available for a fee. For more information, contact us at 866-746-8385 or service@bbiinternational.com. Advertising Ethanol Producer Magazine provides a specific topic delivered to a highly targeted audience. We are committed to editorial excellence and high-quality print production. To find out more about Ethanol Producer Magazine advertising opportunities, please contact us at 866-746-8385 or service@bbiinternational.com. Letters to the Editor We welcome letters to the editor. Send to Ethanol Producer Magazine Letters to the Editor, 308 2nd Ave. N., Suite 304, Grand Forks, ND 58203 or email to hjessen@bbiinternational.com. Please include your name, address and phone number. Letters may be edited for clarity and/or space.
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DECEMBER 2014 | Ethanol Producer Magazine | 7
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5185 MacArthur Blvd., Suite 300 | Washington, DC 20016-33441 T: 202-777-4827 F: 202-777-4895 | www.betatechopproducts.com
THE WAY I SEE IT
Government Intervention a No-Brainer By Mike Bryan
During the global financial crisis, the federal government provided hundreds of billions of dollars to bail out Wall Street bankers. While I, like
most people, may have my own thoughts on the efficacy of those actions, I personally am not qualified to pass judgement. It is, however, confusing to observe the reluctance of the government to intervene in the current rail crisis in America. My natural cynicism would lead me to believe that the reason Congress is doing nothing more than saber rattling on this issue is because this crisis is largely affecting main street instead of Wall Street. I’m not an expert in transportation or the complexities of the rail industry. In my view, this is a national security issue, it’s an energy independence issue and it affects America’s economic well-being and very fabric of agriculture. If you want to talk about trickledown, anything that affects agriculture affects main street and when you negatively impact main street, it will eventually trickle-up to Wall Street. BNSF, for example, spending $5 billion on infrastructure enhancement may, in fact, be a drop in the bucket of what is actually needed. The Bakken oil reserve looks like it will be around for many years to come. As agriculture continues to produce more and more, it will continue to put pressure on the rail industry. More and more freight is being shipped via rail. The ethanol industry depends on rail to move billions of gallons of product every year. In other words, the health of America’s rail system is part and parcel to the health of America.
It’s not just agriculture that is being penalized for this rail crisis. The automobile industry, the oil industry, tens of thousands of other smaller industries and businesses that rely on rail service to move millions of tons of product every day are all being hit hard by this unnecessary delay in meaningful action by the rail industry and the federal government. Intervention by the federal government is certainly nothing new. They are actually quite good at it. History is replete with examples of government intervening to help industry, especially when matters of national security are at stake. Even I could make the argument that an over-burdened rail system is a threat to energy security, economic security, environmental security and, in fact, our national security. What happens if the rail industry over-builds and a couple of decades down the road (or rail in this case) we have more rail cars than we need? While I really don’t think that this is going to happen, even if it did, I would rather see the steel from thousands of unused rail cars being recycled than doing too-little too-late and needlessly creating devastating impacts on our economy. Clearly the government has spent billions of dollars on things that have far less of an impact on America then a few billion pumped into one of our country’s major transportation resources. This seems like a no-brainer to me, but then, like I said, I’m not transportation expert. That’s the way I see it.
Author: Mike Bryan Chairman, BBI International mbryan@bbiinternational.com
10 | Ethanol Producer Magazine | DECEMBER 2014
EVENTS CALENDAR National Ethanol Conference February 18-20, 2015 Gaylord Texan Resort & Convention Center Grapevine, Texas The NEC provides attendees with timely information on critical regulatory, marketing and policy issues facing the ethanol industry. Experts will speak to the current market situation, and address how we as an industry can continue to grow through innovation, new technologies and feedstocks, and by developing more diverse and global markets. 202-289-3835 | www.nationalethanolconference.com
International Biomass Conference & Expo April 20-22, 2015 Minneapolis Convention Center, Minneapolis, Minnesota Organized by BBI International and produced by Biomass Magazine, this event brings current and future producers of bioenergy and biobased products together with waste generators, energy crop growers, municipal leaders, utility executives, technology providers, equipment manufacturers, project developers, investors and policy makers. It’s a true one-stop shop—the world’s premier educational and networking junction for all biomass industries. 866-746-8385 | www.biomassconference.com
International Fuel Ethanol Workshop & Expo June 1-4, 2015 Minneapolis Convention Center, Minneapolis, Minnesota The FEW provides the global ethanol industry with cutting-edge content and unparalleled networking opportunities in a dynamic business-to-business environment. The FEW is the largest, longest running ethanol conference in the world—and the only event powered by Ethanol Producer Magazine. 866-746-8385 | www.fuelethanolworkshop.com
National Advanced Biofuels Conference & Expo October 26-28, 2015 Century Link Center Omaha Omaha, Nebraska Produced by BBI International, this national event will feature the world of advanced biofuels and biobased chemicals—technology scale-up, project finance, policy, national markets and more—with a core focus on the industrial, petroleum and agribusiness alliances defining the national advanced biofuels industry. 866-746-8385 | www.advancedbiofuelsconference.com
VIEW FROM THE HILL
What’s App-ening? By Bob Dinneen
I’m old school. I remember fondly the sound a typewriter carriage makes. I remember the days before cell
phones. That sure complicated my life on my wedding day when I ran out of gas and had to syphon gas from an amused farmer’s truck to get to the festivities because I couldn’t reach any of my buddies. True story. I remember 8-track tapes, party lines, UHF and Funk & Wagnells. I also remember how excited everyone was the day a thermal fax was introduced to the congressional office I worked in during the early ’80s. And that taught me an important lesson. Information is critical and the faster and easier information can be distributed, the more efficient everyone can be. That’s why the Renewable Fuels Association has always tried to be on the cutting edge of technology and information dissemination. The RFA started using email soon after Al Gore invented the Internet. We were the first in the industry with a website and Facebook page. The RFA staff are all prolific tweeters on Twitter. We make strategic use of webinars, can blog with the best of them and offer an RSS newsfeed to keep folks abreast of the latest ethanol news and information. I know that people are no longer waiting around for the afternoon edition of the Washington Times to find out what has happened on Capitol Hill that might affect their business or what new U.S. EPA regulation is going to cost them money. But with all that the RFA currently offers, I am particularly jazzed about our latest venture onto the information superhighway. The RFA now offers a mobile app that can be easily downloaded to your iPhone or Android-powered smartphone to put the most up-to-the-minute news, talking points, graphs, videos and infographics at your fingertips at all times. The app is interactive, allowing you to take action directly from the device to write your member of Congress or post on your social media pages. It is easy to navigate and it is free. We’ve designed this app to be an effective tool for ethanol advocates to have the timeliest information and factual support to address the issues policy makers, the media and the public want to know about. It will help those who want to respond to an oil companyinspired editorial or your neighbor who’s hung up about the food vs.
12 | Ethanol Producer Magazine | DECEMBER 2014
fuel canard or misinformation about ethanol’s energy balance. Most importantly, it will allow those inspired to do so to reach out and take action, employing their constitutional right to petition the government right from their phone. Is that cool, or what? All one has to do to take advantage of this new tool is go to the App Store or Play Store on your mobile device and type in “RFA Advocacy.” Then download the free app (did I mention it is free?) and begin enjoying the ready access to RFA’s impressive library of data, infographics and talking points. It’s so easy, even an old guy who knows Paul McCartney was in a band before Wings can use it! Mobile App Download Instructions iPhone: 1. Ensure that you have iOS 4.0 or above (Check settings > general > about > version). 2. Click the App Store icon on your iPhone. 3. In the search box, type in “RFA Advocacy” to find the app. 4. Touch free, then install to download. Android: 1. Ensure that you have Android 2.1 or above (Check settings > about phone and look for Android version or firmware version). 2. Click the Play Store icon on your Android phone. 3. In the Search box, type in “RFA Advocacy” to find the app. 4. Touch install. 5. Touch accept after reviewing the app’s permissions to download. Author: Bob Dinneen President and CEO, Renewable Fuels Association 202-289-3835
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DRIVE
A Year Makes a Big Difference By Tom Buis
As the year draws to a close, we are presented with an opportunity to look back on our successes and look forward to what lies ahead. 2014 has been a great
for the ethanol industry, and 2015 appears to be just as promising. While Washington wraps up its final items and we prepare for the holidays, I’d like to take a moment to reflect on where we are, how we got here and where we want to be. The renewable fuel standard (RFS)—our nation’s most successful energy policy in the past 40 years—came under heavy attack this year, and our industry rose to its defense time and time again. You also stepped up to the plate, literally, by taking part in our Step Up to the Plate campaign to defend the RFS. Tens of thousands sent letters to policymakers and hundreds flew to Washington, D.C., to attend more than 360 meetings on Capitol Hill and with the administration. We could not be happier to report that with these combined efforts, Congress headed home for the campaign season without making any legislative changes to the RFS. Our offense was just as good as our defense. E15 made inroads across the nation—from Texas to the Twin Cities—as major players like Mapco, Minnoco, Murphy USA, Protec, Petro Serve USA, Zarco USA and Cenex responded to strong consumer demand for a low-cost, high-performance fuel that improves the environment, creates jobs at home and strengthens our energy and national security. Retail leaders recognized the competitive advantage E15 offers and were eager to give consumers a much-needed choice and savings at the pump. The higher ethanol blend is compatible with the majority of cars on the road, and is also the most tested fuel in history. E15 has withstood 6 million miles of testing by the Department of Energy, more than 6 million by NASCAR and now millions by American motorists. The momentum we gained over the past year is unstoppable. Stations offering E15 will continue to pop up across the nation as we
14 | Ethanol Producer Magazine | DECEMBER 2014
work to make it a standard offering at the pump. Nationwide, moving to E15 will create another 136,000 American jobs that can’t be outsourced, reduce our demand for foreign oil by 7 billion gallons and reduce greenhouse gas emissions relative to regular gasoline, all while saving consumers between 5 and 15 cents per gallon at the pump. As we reflect on this past year and begin to look forward, installing the infrastructure and creating consumer demand for higher blends such as E15 will be among the industry’s top priorities. Additionally, three cellulosic ethanol plants began producing nextgeneration biofuels in the Heartland this year, proving that what some critics called a pipe dream could indeed become a reality. The extensive research and development pioneered by Poet-DSM, Abengoa and Quad County Corn Processors will soon be used across America and throughout the world to convert cellulose, the world’s most abundant organic compound, into energy that will not only fuel our cars, but fuel our future. When this column was written, the 2014 renewable volume obligations rule had not been finalized; however, we must continue to insist that the U.S. EPA move forward, not backward in meeting the goals of the RFS. It is the right thing to do for America, for jobs, for our environment, for our national security and for consumers. The coming new year is sure to bring new challenges and opportunities, and I am confident that we will meet them all with the ingenuity and resolve that our industry is known for. I’m looking forward to seeing what our talented, hardworking men and women will achieve next. From all of us at Growth Energy, we wish you a safe and happy holiday season. Author: Tom Buis CEO, Growth Energy 202-545-4000 tbuis@growthenergy.org
I B E LI EVE I N
For years, we’ve been told that cellulosic ethanol is a “fantasy fuel.” And it is.
And now it’s going to change the world. For real.
So we’ve spent a decade planning, researching, and working hard to make that fantasy a reality.
®
Advanced Biofuels
POET-DSM.COM
GRASSROOTS VOICE
A Good Time For Truth By Ron Lamberty
Just before Halloween, the American Coalition for Ethanol got to do what Fred Jones, Daphne Blake, Velma Dinkley and Norville "Shaggy" Rogers got to do every Saturday morning when I was a kid.
We got to prove that monsters aren’t real, and that most of the time, they’re fabricated by someone with a self-serving agenda who scares people because the truth isn’t on his side. It was just like we were those “meddling kids” and their big talking dog, Scooby-Doo Actually, it was Gene Hammond and Mark Muncey, owners of Travelers Motor Club and Association Motor Club Marketing, who pulled the mask off the monster created by AAA. Hammond and Muncey heard the warnings of AAA about E15, and began monitoring their organizations’ service call records, and after two years, found nothing. In an Oct. 27 press release the two clubs, with 18 million members in 50 states, said that since E15 became available in the marketplace, none of their members has reported a problem related to E15. Two years earlier, AAA said they were concerned that consumers would be confused by the new blend. Rather than helping educate drivers about safe use of E15, however, AAA instead added to the confusion by parroting talking points from rigged and deliberately misinterpreted studies, spoon-fed to them by Big Oil. AAA recently repeated its call for the suspension of E15 sales, even as the number of vehicles built and warrantied for use of E15 went from 3 million to 16 million. Along with 17 million-plus flex-fuel vehicles, 15 percent of the car and light truck market can already use E15 under warranty. Meanwhile, real-world findings of Travelers and AMCM motor clubs mirror what fuel station owners who sell E15 have been saying. They’ve had no customer complaints, no breakdowns and no repair bills from drivers who fill up with E15. In fact, because E15 is a higher octane fuel that costs less than regular fuel, stations
16 | Ethanol Producer Magazine | DECEMBER 2014
with E15 are adding customers and E15 has become the second highest volume fuel in most of the stations that sell it. That fact alone—that E15 is the second highest volume fuel— proves that AAA’s misfueling concerns were misplaced. The real reason groups are worried about E15 misfueling is they think drivers will buy E15 because it costs less. But if that theory were correct, and price were all that matters, E15 would be the highest seller at those stations, not second. Shortly before the Travelers and AMCM announcement, a lawsuit containing similar anti-E15 claims, filed by Big Oil, automakers and the boat and small engine lobby, was thrown out by the U.S. Court of Appeals for the D.C. Circuit. In its terse ruling, the court pointed out—several times—that there was no evidence to support claims of misfueling or damage and at one point called claims against E15 “conjectural” and “hypothetical.” That’s judgespeak for “making stuff up.” It’s been more than two years since the first station started selling E15. With as much time and money as the oil and engine groups have spent on creating their E15 horror story, if there were any cars stranded because of E15, or a single warranty claim denied because of E15, we would know about it. The cars and their drivers would be household names. But they aren’t, because they don’t exist. E15 ghosts and monsters aren’t real. And the Freds, Daphnes, Velmas, and Shaggys continue to pull the masks off the imposters. The latter half of October was a good time for the truth, and hope remains that truth will win out over fear-mongering. Just as it did every Saturday morning. Author: Ron Lamberty Senior Vice President American Coalition for Ethanol 605-334-3381 rlamberty@ethanol.org
GLOBAL SCENE
Brazilian Biofuels Policy Under a Second Rousseff Term By Leticia Phillips
Brazil’s sugarcane ethanol industry has grown along with the U.S. industry to create a global market for clean and renewable biofuels, and Brazilian producers are poised to invest and increase exports. But they need the right policies to reach full potential. Brazil’s October presidential election will have a major influence on the future of its sugarcane biofuels industry. President Dilma Rouseff ’s policies have kept domestic gasoline prices below market averages, limiting new investment and creating problems for renewable fuel producers who want to increase output but face unfair market footing. Despite these headwinds, Brazil’s sugarcane ethanol output has grown in recent years, producing 7 billion gallons in 2013 on the strength of market-driven infrastructure investments and is on track to have up to 1.7 billion gallons of low-carbon sugarcane biofuel available to U.S. markets in 2020. Industry growth has been impressive, but it would have been even greater if not for the biggest policy challenge faced by our industry, artificially low gasoline prices. Brazil’s biofuels sector needs fair competition between renewable fuels and petroleum at market prices. Sugarcane producers hope Rousseff—fresh off her successful but narrow re-election—will adopt policies to boost domestic markets, grow Brazil’s economy and increase exports. One of Rousseff ’s main economic policies to keep inflation in check has been artificially limiting domestic gasoline prices to belowglobal market levels. This approach has decimated the alternative fuels sector. For context, consider that by November 2013, only 23 percent of flex-fuel car owners were regularly using ethanol, down from 66 percent in 2009. During her acceptance speech, Rousseff said she will be the president of dialogue and change, and is ready to talk to all sectors of the Brazilian economy. Sugarcane ethanol producers look forward to such an open and direct conversation. To her credit, we saw some positive signals during her campaign. The government approved the reinstitution of tax reimbursements for exports, and the Brazilian congress approved an increase to the level of ethanol blended into gasoline. But more needs to be done. We need a clear definition of the long-term role of biofuels and bioelectricity of Brazil’s energy mix. We also need a tax system that rewards renewable energy for being cleaner than fossil energy.
18 | Ethanol Producer Magazine | DECEMBER 2014
Brazil’s sugarcane-ethanol producers have shown enormous investment ability in recent years, provided the right market opportunities exist. For instance, when an influx of flex-fuel vehicles combined with rising export demand in 2003, the industry built more than 100 new mills from 2005 to 2011. This new capacity also doubled sugarcane production in less than a decade, demonstrating the sector’s ability to quickly expand and planting the seeds for even greater yields. According to the Center for Cane Technology, today’s sugarcane ethanol productivity is 7,100 liters per hectare but it will grow to 24,500 liters per hectare within a few years. Existing mills maintain vast ability to produce hydrous ethanol (sold at the pump as an alternative to gasoline) and anhydrous ethanol (blended into gasoline) with installed capacities of 105 million and 205 million liters per day, respectively. However, during the 2013-’14 harvest season, Brazil produced just 70 million liters of hydrous and 90 million liters of anhydrous ethanol per day. Most Brazilian mills are small- to midsized facilities and the 2008 financial crisis resulted in consolidation with international companies such as Bunge, Cargill, Shell, Petrobras and Noble, among others. Also, while some mills have been shuttered in recent years, a majority of them could easily go back online if domestic demand increases. Combined with prior investment trends, it’s a clear signal that rising demand will result in mill expansion to provide adequate supply. The industry has also invested in infrastructure and efficiency. More than $30 billion has gone toward boosting sugarcane-ethanol production capacity since 2004. In addition, more than $3.5 billion may be invested in pipelines and waterways within the next three years. These investments mean 90 percent of Brazil’s exports will be transported via pipeline or waterway, decreasing logistics costs. Brazilian sugarcane producers are eager to supply low-carbon solutions that meet the world’s energy and environmental needs. And like our American colleagues, we are active players in the international arena working to develop a global market for biofuels and bioproducts. But we still have plenty of work to do in our own country getting domestic fuels policy right for Brazil’s future. Brazil’s sugarcane industry is ready to engage in productive dialogue with the president and increase investment to provide those clean, sustainable and affordable solutions for Brazil and the world. We just need the right policies in place. UNICA congratulates the president and looks forward to the continuing opportunity to work with her to accomplish these important goals. Author: Leticia Phillips North American Representative, Brazilian Sugarcane Industry Association, UNICA 202-506-5299 leticia@unica.com.br
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BUSINESS BRIEFS Fluid Quip Process Technologies has announced the addition of Neal Jakel, who will lead the company’s strategy and technology growth efforts. In this role, Jakel will overJakel see the company’s current growth plans with the primary focus on bringing a broad array of technologies and solutions to the biorefinery and renewable chemical industries. He previously served as the general manager of Illinois River Energy and has more than 20 years of technical and operations expertise. Red River Energy LLC has signed an ethanol marketing agreement with Noble Mansfield Commodity Services, a marketing organization jointly owned by Mansfield Oil and Nobel Americas Corp. Energy Management Solutions, a subsidiary of ICM Inc., is managing the day-to-day operations and activities of the 25 MMgy plant located in Rosholt, South Dakota. Compagnie Industrielle de la Matière Végétale has signed a collaboration agreement with Dyadic International Inc. to commercialize second-generation biofuel and biobased
People, Partnerships & Deals
chemical technology. Taurus Energy AB cooperates with both companies and will provide the yeast.
tion program. Raymond Defenbaugh of Big River Resources LLC has been named leader of the Ethanol A-Team.
The European renewable ethanol association, ePURE, has appointed Robert Wright as its new secretary general. Wright has a more than 20 years of Vierhout experience working in EU public policy and public affairs. He has worked for the EU Commission and in the energy and technology sectors. Wright replaces Rob Vierhout, who officially stepped down from secretary general of ePURE in September.
Alan Germain has joined Blue Ocean Brokerage LLC in a business development role. A veteran trader at Hess Corp., Germain has been instrumental Germain in the development and growth of the U.S. biodiesel, ethanol and RIN (renewable identification number) over-the-counter markets.
U.S. Grains Council recently announced the members of the organization’s 2014-'15 Advisory Teams (A-Teams). This year, the USGC’s A-Team structure has Defenbaugh changed to include an Ethanol A-Team, which is designed to give a better focus and more in-depth attention to the USGC’s new ethanol export promo-
Syngenta has announced 52 new corn hybrids for the 2015 planting season, including six new Enogen corn hybrids. Enogen corn is bioengineered to enhance ethanol production. It enables ethanol plants to purchase alpha amylase enzyme in the form of high-quality grain directly from local farmers, increase ethanol yield and throughput, and decrease costs associated with natural gas, electricity, water and chemical usage.
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Doyal
Henderson
Wendland
The Renewable Fuels Association elected new leadership at its annual meeting in Des Moines, Iowa, in October. Randall Dinneen Doyal, general manager and CEO of Al-Corn Clean Fuel, has been selected as the next chairman of the board of directors. Mick Henderson, general manager of Commonwealth Agri-Energy, will serve as vice-chairman. Walter Wendland of Golden Grain Energy LLC was elected treasurer. Bob Dinneen, CEO of the RFA, was re-elected president. Ceres Inc.’s board of directors has elected Cheryl Morley to serve as its chair. She has served on the company’s board of directors since 2011. From 2003-2009, Morley was senior vice president of corpo-
rate strategy with Monsanto Co. She will replace Walter De Logi, former chairman of the board and co-founder of Ceres. The company also announced that former director Pascal Brandys has rejoined the board and will assume the chair of the company’s audit committee, a position previously held by Morley. Joule has announced its engineered photosynthetic biocatalyst has been shown to divert 95 percent of fixed carbon, normally converted to biomass, directly to fuel. The achievement was made at the company’s demonstration facility in Hobbs, New Mexico. Joule also recently entered into a memorandum of understanding (MOU) with Scatec Solar ASA. Terms of the MOU anticipate that Scatec Solar will become a preferred supplier and operator of photovoltaic power installations for Joule plants. A separate MOU was announced with DNV GL, a provider of technical assurance and advisory services to the energy industry. DNV GL and Joule will define specific areas of collaboration to accelerate the production of carbon dioxide-neutral fuels.
Lallemand Biofuels & Distilled Spirits has announced that Craig Ammann has been promoted to director of sales for the North American region. He is responsible Ammann for leading, communicating and directing the regional sales, technical, and product managers within this group. Ammann will also manage and direct new start-up business in the region and manage key customer groups. He has more than 15 years of sales and marketing experience, including experience working for a major biofuels project management and engineering company emphasizing the development of cellulosic ethanol production and optimization of existing ethanol production facilities. A new publication featuring spray guns and a detailed technical reference section on spray technology is available from Spraying Systems Co. GunJet Catalog 75 provides specific information on hundreds of low-, medium- and high-pressure GunJet spray guns that are widely used for cleaning and rinsing applications.
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DECEMBER 2014 | Ethanol Producer Magazine | 21
COMMODITIES
Prices & Market Analyses
Natural Gas Report
2015 faces strong risk of oversupply Oct. 27— It’s increasingly clear that the natural gas market is caught between risk of a cold winter in the short term and a growing imbalance between structural growth of natural gas supply and demand. Low inventories for the past 10 months are giving way to a realization that underlying market fundamentals are highly encouraging for end-users. The winter strip settled near $3.85 last year with inventory levels more than 250 billion cubic feet higher than at the end of October. Despite that inventory shortfall, the winter strip is priced at a discount to the 2013 level for the end of October. Supply is up and the high drilling rig count and planned pipeline capacity additions in the next year indicate that 2015 is in line to see growth similar to this year’s. At the same time demand is not keeping pace. Last winter provided a convenient hole in storage inventories to paper over the imbalance between supply and demand. Looking ahead, even another cold winter may not be enough to alleviate what is shaping up as an over-supplied market. Even with those strong assumptions built in to the model, at a middle-of-the-road assumption regarding supply growth, inventory levels still reach maximum capacity levels by October
by Ben Straus
of next year. While the numbers going into the model can, and will, be fine-tuned, the macro message is that 2015 faces a strong risk of oversupply. In that environment, prices will have to fall to levels that create an incentive for power generation demand to increase at the expense of coal-fired generation.
Corn Report
Demand for corn will be key, supported by low prices Oct. 27—As the old saying goes “the cure for low prices is low prices.” Demand and corn at five-year lows developed a low pricing point as of late October, despite a record yield and big carryout. Traders admit that a big crop looms on the horizon; however, when corn was sitting at the $3.20 price level and all corn consumptive users had profitable margins, demand was anxiously awaiting harvest. Unsuitable weather and a later maturing crop delayed harvest and left end-users anxious. In addition, low prices attracted new buying into the market place. So where is the big crop? The USDA is projecting a carryout of more than 2 billion bushels. Production is estimated at 14.475 billion bushels with a 174.2 bushel per acre yield. Ethanol demand is expected to consume 5.125 billion bushels, down 5 million bushels from last year’s 5.13 billion bushels. The U.S. is expected to export 1.750 billion, down from last year. A stronger U.S. dollar and larger world carryout will reduce global dependency on U.S. corn. The USDA projects an average farm price of $3.10 to $3.20 versus $4.46 last year. So what keeps corn supportive? Demand will be the key and lower prices will support that cause. Cash movement into the market. More storage availability and carryin the corn market will help producers and 22 | Ethanol Producer Magazine | DECEMBER 2014
by Jason Sagebiel
commercial entities hold onto bushels longer. Weather woes in South America, including whether there is a good or bad crop weather in Argentina and Brazil, could be very influential on U.S. grain and/or oilseed prices this winter.
Regional Ethanol Prices ($/gallon) Front Month Futures (AC) $1.6800
DDGS Report
Spot
Rack
West Coast
2.000
2.100
Midwest
1.720
1.984
East Coast
1.840
2.028 SOURCE: DTN
Regional Gasoline Prices ($/gallon)
Demand up with DDGS valued at 95 percent or less than corn Oct. 27—As we approached Halloween, prices rebounded a bit after having dipped to multiyear lows during the first half of October. The issues of China’s non-acceptance of DDGS containing Syngneta’s MIR 162 have not been resolved, which significantly lowered exported container volumes. Logistics issues plagued the industry in both the rail and the barge markets, the latter of which rose to seasonal highs. Railcars are still moving slowly and plants that did not have enough cars, and still had yet to see the seasonal movements of cattle into the feedyards, were forced to sell truckloads very cheaply. Domestically, we continue to see increased DDGS inclusion rates. Both soymeal and corn never got as cheap as buyers expected in the old and new crop
Region
by Sean Broderick
transition, with DDGS getting below 100 percent, and then 95 percent or below, the value of corn, buyers formulated it in to the max. Mexico demand has been affected in the same way and exports there have increased significantly in the past two months. While there is still product going into China, it is a fraction of what it was, and the market will need to displace that demand. We have seen some of that come from the other Southeastern Asia countries, but will need more or it from North and South America. There are still a lot of folks holding out for the Chinese to come in, and that may happen again—someday. In the meantime, valuations are going to continue lag what they were last year on a percentage to of corn basis.
Front Month Futures Price (RBOB) $2.182 Region
Spot
Rack
West Coast
2.164
2.372
Midwest
2.233
2.298
East Coast
2.253
2.356 SOURCE: DTN
DDGS Prices ($/ton) LOCATION
Dec 2014
Nov 2014
Dec 2013
Minnesota
95
100
210
Chicago
100
105
236
Buffalo, N.Y.
130
125
208
Central Calif.
170
169
273
Central Fla.
145
145
267 SOURCE: CHS Inc.
Corn Futures Prices
(Dec Futures, $/bushel) Date
High
Low
Close
Oct 27, 2014
3.63 3/4
3.48 1/2
3.63
Sept26, 2014
3.27
3.22 3/4
3.23
Oct 28, 2013
4.40
4.30 1/4
4.30 3/4 SOURCE: FCStone
Cash Sorghum ($/bushel) Location
Ethanol Report
Seasonal bottom may be set with falling supplies Oct. 27—Ethanol prices shifted higher in a moderately aggressive manner through the middle of October, fed by renewed buyer support in the corn complex as well as a three-week pull-down in overall ethanol inventories across the country. After hitting a five-year market low of $1.50 per gallon at the end of September, moderate to strong buyer support redeveloped through the ethanol complex. Although there seems to be some building strength at the end of October, upward momentum in the market could be limited by still soft
by Rick Kment
seasonal demand as well as continued pressure from the RBOB gasoline market. This seasonal pattern of ethanol pressure is not unusual or unexpected, but traders are closely focusing on the short-term direction of ethanol production and inventory levels through the months of November and December. With ample corn available from expected record production, the fear is that ethanol producers could easily get into an oversupply situation during the winter months, which could depress prices through early 2015.
Oct 25, 2013
Sept 26, 2014
Oct 24, 2014
Superior, Neb.
4.30
3.03
3.63
Beatrice, Neb.
4.00
2.72
3.28
Sublette, Kan.
4.20
2.93
3.30
Salina, Kan.
4.40
3.18
3.70
Triangle, Texas
4.23
3.16
3.48
Gulf, Texas
5.38
4.53
5.03
SOURCE: Sorghum Synergies
Natural Gas Prices ($/MMBtu) LOCATION
July 31, 2014
Oct 31, 2014
Oct31, 2013
NYMEX
3.58
3.87
3.84
NNG Ventura
3.71
4.07
3.69
Calif. Citygate
4.45
4.02
3.88
SOURCE: U.S. Energy Services Inc.
U.S. Ethanol Production (1,000 barrels) Per Day
Month
End Stocks
Aug. 2014
925
28,665
18,471
July 2014
959
28,759
18,664
Aug. 2013
848
26,279
16,945
SOURCE: U.S. Energy Information Administration
DECEMBER 2014 | Ethanol Producer Magazine | 23
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Ethanol News & Trends
ADVANCING TECHNOLOGY: Drystill has opened a pass-through-distillation pilot plant in Mississauga, Ontario. PHOTO: DRYSTILL HOLDINGS INC.
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Drystill pilots advanced separation technology Drystill Holdings Inc. has developed a pilot plant in Mississauga, Ontario, that demonstrates the performance of the companyâ&#x20AC;&#x2122;s trademarked thermally integrated evaporation and gas adsorption technology platform, along with its patented stripping adsorption module (SAM). The technology has application in manufacturing bioproducts like ethanol and in other industries. During testing the system proved to be stable and resilient to variable operating conditions, with results exceeding expectations. Drystill's pilot plant is among the first in the world to exploit an emerging chemical process technology called pass-through distil-
lation. The test program was carried out in collaboration with Fielding Chemical Technologies, a Canadian solvent-recycling company. The hybrid process permits highly efficient and economical, room-temperature distillation. It separates water and other volatiles at temperatures below 86 degrees Fahrenheit. The process works by recycling heat from an intermediate absorption fluid through highly efficient, thermal conductors, or heat pipes, volatiles to be removed from a slurry and transferred into a clean liquid for optimal processing.
EPA improves RFS pathway petition process The U.S. EPA has taken action to improve and streamline the pathway petition process under the renewable fuels standard (RFS). In March, the agency said it would take approximately six months to improve the petition process for new biofuel pathways. That process is now complete. Improvements include a new website that features new tools and information resources, such as the Pathway Screening Tool, which gives parties a way to receive tailored information from the EPA before they start
preparing their petitions. A secure online portal has also been developed to allow petitions to be submitted electronically. An Efficient Producer petition process has also been launched. It is designed to expedite processing of the large number of petitions submitted by corn starch and grain sorghum ethanol producers. An EPA spokeswoman said that when used appropriately, the tool could enable new corn and ethanol pathways to be approved in as little as a few weeks.
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WR OE KU
RINs
Volume
Ethanol
35,473
35,473
Renewable gasoline
44,168
29,445
CNG
5,117,631
5,117,631
LNG
5,927,176
5,927,176
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Cellulosic RIN generation takes off Cellulosic ethanol production could contribute up to 9 million cellulosic D3 renewable identification numbers (RINs) in 2014, if active plants achieve full capacity in the last four months of the year, Genscape says in a recent white paper. Biogas could contribute an additional 67.5 million D3 RINs by the end of the year. If full capacities are reached in 2015, the report predicts cellulosic ethanol facilities could generate 91 million RINs next year, with biogas facilities generating an additional 162 million RINs.
Cellulosic biogas has the potential for rapid expansion, the report says. Citing information released by the the Coalition for Renewable Natural Gas, Genscape estimates the current production of transportation-specific liquid natural gas and compressed natural gas for this year would amount to 40 million ethanolequivalent gallons from 38 facilities, and the coalitionâ&#x20AC;&#x2122;s members have committed to increasing that capacity to 141 million by the end of the year.
Class I railroads face new weekly reporting requirements In order to help mitigate problems associated with rail delays and service issues, the Surface Transportation Board published a decision in October announcing Class I railroads will be required to publically file weekly data reports on service performance. Certain data on ethanol and grain unit train shipments are among the new reporting requirements. According to the STB, the reports will promote industry-wide transparency, accountability and improvements in rail service. The board has taken this action in response to concerns raised at recent hear-
ings, including one that featured testimony from two South Dakota-based ethanol producers who highlighted the significant business costs and operational problems that can result from inadequate rail service. Class I railroads began submitting the required data Oct. 22. The STB currently intends to collect this data on a temporary basis. However, a rulemaking will be initiated in the near future to determine whether to institute permanent data reporting requirements on service performance.
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New first-generation ethanol plant proposed in South Dakota
Walt Wendland and Chris Schwarck, landowners in South Dakota, are proposing to build a new corn and milo ethanol plant in the central region of the state. If built, the facility will join North Dakota-based Dakota Spirt AgEnergy LCC, as the only first-generation ethanol plants to break ground since 2008, according to Ethanol Producer Magazine archives. Wendland pointed to favorable corn prices in the area, noting that, as of Sept. 18, corn prices were $1.25 a bushel less than prices in Northeast Iowa. “That’s a very deserving area,” he said. “It seems like it shows a lot of potential components for what it takes to have a good project. We just need to make sure all the pieces fit together the way we think they will, raise the equity and get financing. We’re a long way from the finish line but we’re definitely excited about giving it all we’ve got.” Feasibility and grain origination studies are currently under way. The hope is the proposed 70 MMgy plant could be producing by mid-2016.
Ethanol industry GHG emissions No. of ethanol plants reporting
Total GHG emissions (million metric tons of CO2e)
2013
163
17
2012
166
17
2011
163
18
2010
160
18
SOURCE: U.S. EPA
EPA data shows downward trend of GHG emissions from ethanol plants The U.S. EPA has released updated data gathered through its Greenhouse Gas Reporting Program, which details greenhouse gas (GHG) pollution trends and emissions broken down by several category types. Ethanol producers are among the industrial facilities addressed in the program. Last year, the program collected data on 163 U.S. ethanol facilities, which emitted a combined 17 million metric tons of carbon dioxide equivalent (CO2e). Emissions
Some chemical companies focus on this
levels for individual plants range widely, from as low as 0 tons of CO2e to as high as 693,224 tons of CO2e. Overall, EPA reports that GHG emissions levels from large industrial facilities were 20 million metric tons higher last year than in 2012. That is a 0.6 percent increase for 2013. More than 8,000 emitters reported GHG data for 2013. Power plants remain the largest source of emissions with 2.1 billion metric tons of CO2e last year.
or that
Buckman takes a wider view. Some chemical companies focus only on process. Some focus solely on water treatment. Buckman takes a comprehensive approach and looks at the bigger picture — return on investment and environment. We look at every aspect of your plant’s operation,
© 2014 Buckman Laboratories International, Inc. All rights reserved.
26 | Ethanol Producer Magazine | DECEMBER 2014
tailoring chemistries to boost production and increase profitability — from evaporator efficiency to corn oil recovery to water treatment issues. To find out more or to schedule a system audit, contact your Buckman representative or email ethanol@buckman.com.
.
DISTILLED
Corn use in ethanol sets marketing year record
Ethanol production for the most recent corn-marketing year—September 2013 through August 2014— reached a record 14.15 billion gallons and used a record 5.125 billion bushels of corn, according to a data analysis by University of Illinois economist Darrel Good in a recent FarmDocDaily posting. According to Good, ethanol production during those 12 months was 1.3 billion gallons more than the previous marketing year and 354 million gallons more than the previous record production during the 2011’12 corn marketing year. His analysis also determined that domestic stocks of ethanol increased an estimated 35 million gallons during the corn marketing year just closed, compared to the previous year’s decline of 94 million gallons. Good also estimated that ethanol consumption during the most recent marketing year reached 13.6 billion gallons, 443 million gallons higher than the previous record consumption in 2012-’13.
GHG emissions from land use change reduced The estimation of greenhouse gas (GHG) emissions due to land use change (LUC) for corn ethanol has been reduced by Argonne National Laboratory. The recently published manual for the Carbon Calculator for Land Use Change from Biofuels Production puts that value at 7.6 grams of CO2e per megajoul (gCO2e/MJ), down from 9.0 gCO2e/MJ in last year’s modeling. The new figure is also significantly lower than the 28 gCO2e/MJ value used by the U.S. EPA in determining GHG reduction relative to gasoline for the renewable fuels standard (RFS). The reason the corn numbers in this modeling are significantly lower than other
estimates is the use of soil organic matter modeling, explained Steffen Mueller, principle economist at the University of Chicago’s Energy Resource Center and a co-author on the CCLUB paper. “CCLUB was developed to help GREET users and the biofuels community understand how land use change emissions are calculated,” explained Jennifer Dunn, biofuels life cycle analysis lead at ANL. Argonne’s greenhouse gases, regulated emission and energy use in transportation (GREET) model is widely used for life cycle analyses. CCLUB can be used as module within GREET when analyzing certain feedstocks.
DECEMBER 2014 | Ethanol Producer Magazine | 27
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EH&S
Coaching Compliance
While every EH&S manager’s playbook is unique, safeguarding human health and protecting the environment are their common goals. By Tom Bryan
When Mike Gustafson took a job at Corn Plus in the summer of 2011, he became the environmental, health, and safety manager at an 18-year-old ethanol plant still in recovery. After two decades in the compli-
ance business, the longtime EH&S consultant joined the management team of the Winnebago, Minnesota, facility knowing the plant wasn’t just old, but working to resolve a number of issues. By 2010, Corn Plus faced a series of challenges, including financial stress from increasing corn prices, regulatory issues, and a recent change of senior management. Ultimately, the farmer-owned cooperative decided that rather than sell the plant or simply shut its doors, it would invest an additional $21 million in upgrades to keep the facility competitive. That also meant it had to work through the environmental, legal and enforcement actions it was facing. Today, the dust has mostly settled at Corn Plus and Gustafson’s job is beginning to resemble that of a typical EH&S manager. “Until
now, my role has been to fix, recover, replace and repair, rather than only hold compliance,” he says. “We’ve made progress, and I’m not just putting out fires now.” Gustafson’s initial assignment at Corn Plus bears little resemblance to the experiences of EH&S managers at newer, larger ethanol plants. It does, however, illustrate the range and variability of the profession. Tyler Schwarck, for example, has had a less adventurous tenure running EH&S at Absolute Energy LLC in St. Ansgar, Iowa. Splitting his time between safety and environmental compliance, Schwarck oversees employee training, plant audits, and just about every regulatory issue the 125 MMgy ethanol facility faces. On any typical day, Schwarck says, he might be found on the phone with the Iowa Department of Natural Resources, in a briefing about a new technology trial, or walking the plant floor examining rigging, hoses and fire extinguishers. Down at E Energy Adams in southeast Nebraska, Joe Oswalt also has to manage big issues while keeping an eye on the little things. “We’re constantly on the watch for potential hazards,” he says, describing what he looks
DECEMBER 2014 | Ethanol Producer Magazine | 29
EH&S
'The nice thing about the ethanol industry is that we’re not one of OSHA’s high-risk industries.' Oswalt
for when he walks through the 60 MMgy facility. “Is all of our motor and conveyor guarding in place? Are there any ‘slip, trip and fall’ hazards present—hoses laying out, slick floors or strung out extension cords?” Like Schwarck, Oswalt wears many hats. E Energy Adams has managed multiple capital projects over the past two years, including a grain storage expansion this year, so Oswalt’s focus has been weighted toward environmental permitting lately.
He is, of course, responsible for the ethanol plant’s overarching environmental and safety compliance, including the requirements of state agencies like the Nebraska Department of Environmental Quality and federal agencies including the U.S. EPA and the Occupational Safety and Health Agency. Additionally, because Oswalt has spent a portion his career working in the rail industry, he manages E Energy Adams’ rail safety and logistics program. Back in Minnesota, Corn Plus is doing better these days and Gustafson says his EH&S responsibilities are, in fact, becoming more orthodox. But he’s still got his hands full. “There’s OSHA and EPA, DNR, DOT and Homeland Security … emergency response, fire brigade, confined space rescue, HAZWOPER and HAZMAT,” he rattles off. “Where would you like to start?”
'Use your state regulatory agency as a resource. Just be honest with them.'
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30 | Ethanol Producer Magazine | DECEMBER 2014
Schwark Staying on top of it all is a challenge made easier by teamwork and interplant communication. Oswalt is part of an EH&S managers’ group in Nebraska that meets on a semiregular basis, and Gustafson says he communicates regularly with fellow EH&S managers in Minnesota. Most ethanol producers outsource their environmental permitting work. Likewise, dozens of them work with ERI Solutions Group, which administers safety programs and plant safety audits (see Q&A on page 40). Working with the Kansas-based firm allows plants like Absolute and Corn Plus to operate with a streamlined EH&S structure. E Energy Adams handles its safety training in-house these days. At the plant, Oswalt administers computer-based safety
EH&S
Gustafson
'Despite Corn Plus’ turbulent past, the plant has an impeccable safety record. The facility has exceeded 1,600 days without a lost day due to accident or injury.'
training regularly, as well as twice-a-year classroom sessions. “Those semiannual meetings are face-to-face, all-day training meetings where I get up in front of the team and talk about plant issues driven by anything that’s happened over the last six months,” he explains.
Gustafson agrees. “I can’t be here 24/7, so I need their help with inspections, monitoring and data collection,” he says. “It needs to be a part of their job, too.”
Motivation Matters
EH&S managers say ethanol plants with enviable safety cultures find ways to incorporate EH&S into everyone’s job and then incorporate prudent incentives for compliance-driven behavior. Most prefer to
use carrots over sticks, Schwarck says, adding that Absolute has a record of very few safety related incidents since its startup in 2007. “We’ve created a culture that keeps people engaged with safety, rather than enforcing by sheer discipline,” he says. “You can be a cop or a coach in this profession. I’ve chosen to be more of a coach.” Despite Corn Plus’ turbulent past, Gustafson says, the plant has an impeccable safety record. The facility has exceeded
Team Approach
Even with the help of outside companies, EH&S managers must lean heavily on their in-house staff to achieve their safety and compliance objectives. At Absolute, Schwarck’s safety committee assists him with facility audits, for example. “It’s helpful to have those extra eyes on the plant,” he says. Every ethanol plant is, in fact, required to have a safety committee that includes a variety of personnel, and just a few managers. “You want open dialogue,” Gustafson says. “Sometimes the more management that is on a committee like that, the less effective it is.” Oswalt agrees, explaining that E Energy Adams has both exempt and nonexempt employees on its safety committee. “We typically have two managers and three to four hourly employees,” he says. “Every department has a team member on the safety committee—production, maintenance, lab and EH&S, as well as the administrative group.” Increasingly, ethanol plant safety committee members have real, on-the-floor compliance responsibilities. Oswalt wants the members of his plant’s safety committee to carry out specific monthly safety audits at E Energy Adams. “If you can engage people, you should,” he says.
DECEMBER 2014 | Ethanol Producer Magazine | 31
EH&S
Nebraska DEQ DOT
Iowa DNR U.S. EPA
HAZWOPER Minnesota PCA HAZMAT Homeland Security OSHA 1,600 days without a lost day due to accident or injury. “That’s nearly four and a half years,” he says, explaining that Corn Plus is in the top five plants that ERI tracks in that category. Gustafson and Schwarck agree that when a plant goes long periods of time without experiencing safety related issues, it has a reinforcing effect. “It boosts morale and prolongs what you’re achieving,” Schwarck says. “Your team will want to maintain that record and everyone essentially helps enforce it.” Safety is a part of E Energy Adams’ individual performance appraisals, too, but the plant’s management has deliberately kept some distance between safety and pay. “Completing 100 percent of your safety training is a requirement here, but we don’t have a defined incentive program for safety,” he says, explaining that OSHA discourages overt compliance enticements because they can stymie incident reporting. Whatever E Energy Adams is doing is working. The plant has gone five years without a reportable or recordable incident. “Whenever we reach another year, we do something for the employees,” Oswalt says, explaining that safety milestones should be acknowledged, even celebrated, but not turned into a cornerstone of a plant’s approach to safety. “It’s not what drives our program,” he says.
Rigid Regulations
As onerous as plant safety regulations can be, it is rarely a problem for most U.S. ethanol plants. “The nice thing about the ethanol industry is that we’re not one of OSHA’s high-risk industries,” Oswalt says. “They don’t spend a lot of time in our facilities. Ethanol plants are pretty safe.” Environmental regulation, on the other hand, weighs more heavily on producers. “We have more exposure with the state and the federal environmental agencies just because of what we do,” Oswalt explains. “We have boilers. We have dryers. We have fermentation scrubbers. We have baghouses. We have a lot of things 32 | Ethanol Producer Magazine | DECEMBER 2014
that fall under those environmental controls. We’ve been here for seven years and I have seen pretty much every inspection you can think of on the environmental side.” EH&S managers say the agencies that define and enforce the ethanol industry’s environmental regulations knew relatively little about the industry during its construction boom six to eight years ago. Some ethanol plants even worked with state agencies to create the baseline environmental standards that are today’s tough regulations. In fact, EH&S itself, became a prevalent ethanol plant management position during the pinnacle of the industry’s expansion. As the ethanol industry grew, Schwarck says, regulators began to realize that it needed its own regulations. “Before that, regulators classified ethanol plants like grain elevators,” he says. “Those agencies really didn’t know what we did or how we did it. We worked with them, and in some ways we educated them.” In his consulting days, Gustafson wrote some of the ethanol plant inspection forms initially used by the Minnesota Pollution Control Agency (MPCA). “They didn’t know what to look for,” he explains. “Their eyes weren’t really calibrated to the industry.” Oswalt worked with the state, too, inviting Nebraska regulators into E Energy Adams to learn about the components of ethanol plants that are subject to environmental permitting. “At least then, when they’re writing permit language about a baghouse or a thermal oxidizer, they could picture what it was,” he says. “Our hope was that education would lead to better permits.” The openhandedness that ethanol producers have afforded the agencies that regulate them hasn’t necessarily been reciprocated the way many had hoped. Nebraska environmental regulations for ethanol plants, for example, became more stringent than the federal EPA’s rules. That has perplexed Oswalt and other EH&S managers in the state. “It’s hard to understand why that is,” he says, explaining the wide regulatory variation among the four states within EPA’s Region 7—Nebraska, Kansas, Iowa and Missouri. In Minnesota, Gustafson says, the MPCA’s rules and enforcement activity are also more aggressive than producers think they need to be. For example, he says, the agency views administrative missteps in the same light as actual pollution. “Sometimes it seems to me that the MPCA almost treats missing a flow meter reading as just as serious a matter as an actual spill or emission," he says. "We treat our record keeping responsibilities seriously, of course, but we get concerned that our regulator sometimes loses perspective.” When inspections do occur, they are usually unscheduled. Oswalt says federal regulators rarely make impromptu plant visits, but the Nebraska DEQ does them frequently. “They won’t tell you they’re coming,” he explains. “They’ll show up on your doorstep and say, ‘We’re here to do an air permit audit today.’” EH&S managers say having your records in order makes surprise inspections less stressful. “If you can’t produce what the auditors are looking for, expect them to take a more in-depth look at your facility,” Oswalt says.
EH&S
When regulators visit ethanol plants, they tend to come in pairs. “You’ll typically see two auditors,” Oswalt says. “One will focus on your regulatory paper trail and the other will go out and walk the plant, looking at equipment—your baghouses, your thermal oxidizer, your [continuous emissions monitoring equipment]. They’re looking for red flags.” Schwarck says surprise inspections aren’t a problem for producers who don’t cut corners. “Review permits, slow down and do things the right way,” he advises. Oswalt says producers who don’t put compliance first will usually pay a price later on. “Getting a fine is more than a checkmark next to your name for being bad,” he says. “It can jeopardize lending on your next big project. Banks look at regulatory compliance, and they don’t like bad actors. You need to be driven by your permitting.” When in doubt, Schwarck says, talk to regulators and be candid with them. “Use your state regulatory agency as a resource,” he says. “Just be honest with them.” For Schwarck, establishing an open dialogue usually starts with a simple phone call to the Iowa DNR field office in Mason City. “A lot of times, I’ll call and simply ask a question,” he says. “My experience with that has almost always been very good. The more willingness you show to be compliant, the more they are usually willing to help you achieve your goals.” Gustafson, who is also the ethics officer at Corn Plus, has plenty of experience communicating with state agencies. Negotiating with regulators was essentially his full-time job when joined Corn Plus three years ago. Once, he and another Corn Plus executive went straight to the top officer of the MPCA with a blunt request. “We told him that we perceived that the agency had a predisposed mindset about Corn Plus, and that they needed to respect our new management and our focus on environmental compliance and give us a chance to prove ourselves," Gustafson says. “You know what, it helped.”
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Author: Tom Bryan Editor In Chief, Ethanol Producer Magazine tbryan@bbiinternational.com 701-746-8385
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DECEMBER 2014 | Ethanol Producer Magazine | 33
SAFETY
34 | Ethanol Producer Magazine | DECEMBER 2014
SAFETY
Clear
SIGN of Confusion
Changes to OSHS’s hazard communication rules will standardize classification and labeling of chemicals globally in an effort to protect workers. At the same time, it’s creating confusion during the transition to the new system. By Holly Jessen
Employees who work with chemicals are accustomed to watching for higher hazard rating numbers, indicating a more severe hazard. Now, with the changes to OSHA’s Hazard Communication Standard, workers will have to adapt to a different rating system that makes a lower number the high risk. “It’s going the opposite way,” said Bob Yule, product launch manager for Solenis, formerly of Ashland Water Technologies, during a presentation at the International Fuel Ethanol Workshop & Expo. Complicating things even further, the Hazardous Materials Identification System from the American Coatings Association and the National Fire Protection Association will continue to use the hazard rating scale that sets higher numbers as higher risks. That’s one area of potential confusion created by OSHA’s changes to hazcom, which it is making in order to align it with the United Nation’s Globally Harmonized System of Classification and Labeling of Chemicals. Another is the differences in the Department of Transportation's pictograms and the new hazcom pictograms. “They are very similar but yet very different,” says Kristi Ross, environmental, health and safety manager for U.S. Water Services.
DECEMBER 2014 | Ethanol Producer Magazine | 35
SAFETY
Pictograms and Hazards Explained A pictogram is intended to help workers who speak or read any language to understand chemical hazards.
Health Hazard
• Carcinogen • Mutagenicity • Reproductive toxicity • Respiratory sensitizer • Target organ toxicity • Aspiration toxicity
Corrosion
• Skin corrosion/ burns • Eye damage • Corrosive to metals
Flame
• Flammables • Pyrophorics • Self-heating • Emits flammable gas • Self-reactives • Organic peroxides
Exploding Bomb
• Explosives • Self-reactives • Organic peroxides
Exclamation Mark
Gas Cylinder
• Irritant (skin and eye) • Skin sensitizer • Acute toxicity (harmful) • Narcotic effects • Respiratory tract irritant • Hazardous to ozone layer (not mandatory)
Flame over Circle
• Oxidizers
• Gases under pressure
Enviroment (Not Mandatory)
• Aquatic toxicity
Skull & Crossbones
• Acute toxicity (fatal or toxic)
SOURCE: OSHA
Just the fact that the standard is changing will create some confusion, at least at first. Mike Mowbray, U.S. Water’s marketing and technology manager, says it currently takes him longer to find information in the new safety data sheets, although he believes that will change as he gets more familiar with the new system. Ross agrees. “I think with any new regulation, especially one of this magnitude, there is always going to be a little bit of confusion and wrinkles that need to be ironed out as it rolls out,” Ross says. “... As people get used to it, and understand how to apply it to their industry, that will become more second nature for them.” The GSH is being implemented in Canada, the European Union, Australia and Japan, according to OSHA. But, because it’s a voluntary standard, not all countries are adopting every section in exactly the same way or in exactly the same timing, Ross says. During his FEW presentation, Yule further explained that the U.S. is lagging in the global standardization process. “It’s kind of like the metric system, we’re a little bit behind the times and catching up,” he said. The changes to hazcom in the U.S. incorporate version three of 36 | Ethanol Producer Magazine | DECEMBER 2014
the GSH standards, while the rest of the world is on version five. “So there is going to be more of this change going on,” he said. In the U.S. employers were already required to train employees by last Dec. 1. Looking ahead, all chemical manufacturers, importers, distributors and employers must comply with the final rule by June 1, 2015, with the exception that distributors can ship containers without the new product labels until Dec. 1, 2015. This effects ethanol production companies, whose employees must understand the new system and who must swap out old chemical labels and safety data sheets (under the old standard, material safety data sheets) as chemical supply companies comply with the new requirements. It’s also having a big impact on companies like U.S. Water, which is having to revise more than a thousand safety data sheets. This is a difficult and time-consuming process, Mowbray says. At ethanol plants, the transition period is likely to be confusing, especially while safety information and labels of both old and new formats are in use. Generally, ethanol plants store safety information both electronically and, by law, around the plant, where the chemicals are
SAFETY
Hazcom at a glance The new standard applies to more than 43 million people working to produce or handling hazardous chemicals in more than 5 million U.S. workplaces. The changes to the standard are expected to prevent more than 500 on-the-job injuries and 43 deaths a year. Major changes: â&#x20AC;˘ Hazard Classification: Chemical manufacturers and importers are required to determine the hazards of the chemicals they produce or import. Hazard classification under the new, updated standard provides specific criteria to address health and physical hazards as well as classification of chemical mixtures. â&#x20AC;˘ Labels: Chemical manufacturers and importers must provide a label that includes a signal word, pictogram, hazard statement and precautionary statement for each hazard class and category. â&#x20AC;˘ Safety Data Sheets: The new format requires 16 specific sections, ensuring consistency in presentation of important protection information. SOURCE: OSHA
used, so workers can access the information. As chemical supply companies start rolling out the new safety data sheets, in advance of the compliance date, this will create work in the ethanol plants. â&#x20AC;&#x153;They will have to go through the bookkeeping exercise of getting rid of all the old versions and replacing them with the new ones,â&#x20AC;? Mowbray says, adding that itâ&#x20AC;&#x2122;s very important that old information is expunged and replaced with new information. Despite the work it involves and the potential for confusion, standardizing the format of hazard warnings and labels is a positive step in the right direction, agree Ross and Mowbray. Thatâ&#x20AC;&#x2122;s the case for companies like U.S. Water, that do business internationally, as well as within the United States. â&#x20AC;&#x153;For many years there have been different definitions for hazards, which can lead to unsafe situations for people that are handling chemicals,â&#x20AC;? she says. So this ... brings everybody under the same definition, which is a good thing.â&#x20AC;? Even within the U.S., thereâ&#x20AC;&#x2122;s been a wide range of formats used by various companies, for safety information on chemicals, Mowbray adds. â&#x20AC;&#x153;This will standardize it, which helps certainly internationally, but I think itâ&#x20AC;&#x2122;s going to have some impact domestically as well,â&#x20AC;? he says. The goal of both old and new standards is human health, Yule said at FEW. Having a better understanding of the hazards is about protecting the workers. The company takes very seriously the task of providing very concise and precise information in the new labels and safety data sheets. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s all about safety, reducing injuries,â&#x20AC;? he said. Author: Holly Jessen Managing Editor, Ethanol Producer Magazine 701-738-4946 hjessen@bbiinternational.com
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DECEMBER 2014 | Ethanol Producer Magazine | 37
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Q&A
Cultivating a Culture of Safety Companies should take steps to improve safety, compliance and loss control because it's the right thing to do, rather than simply to avoid citations. INTERVIEW BY SUSANNE RETKA SCHILL
Nathan Vander Griend joined ERI Solutions Inc., in 2007, just a few months after Bruce Pearson launched the company as an offshoot of the original insurance program he started in 2003. ERI now manages Ethanol Risk Management SPC Ltd. With its roots in insurance, ERI offers several environmental, health and safety and loss control services, and at its core, ERI is about sharing lessons learned on compliance, safety and property protection. Vander Griend became president of the company two years ago and in that role has a unique perspective to share on some of the challenges the ethanol industry faces.
Can you describe how ERI has evolved over the years, and how that reflects the changes in the ethanol industry? Our original goal was simply to drive down the insurance rates for the ethanol industry. From there, our goal was to make an insurance company successful for the owners, which in our case are the ethanol companies insured. In order to accomplish that goal, ERI Solutions was formed to make sure they have resources at their fingertips. That is why we perform the environmental, health and safety and loss control services we do. In 2010, we responded to a need in the industry and added process safety management services, and in 2011, we started doing nondestructive testing of assets in critical areas handling highly hazardous or flammable materials. As plants age, equipment is wearing and some kind of testing throughout the life of the equipment is important so you can tell when it’s getting close to end of life. We also are seeing it’s quite a long time since some operators have received some kind
40 | Ethanol Producer Magazine | DECEMBER 2014
of formal training. In business seven to 10 years, the first operators were trained by the original equipment manufacturer or design engineer and, since then, there’s been a lot of tribal knowledge passed on from operator to operator. The concern we have is that someone operating a plant is pushing a button because he was told to push this button when this level hits X. If the operator doesn’t know why and doesn’t know what’s going on when the button is pushed, he may not know what kind of risk is involved. As a result, we are working on making more formal education available to operators. As a whole, the ethanol industry has come a very long way since I became involved. The “when it breaks, we will fix it” and “that will never happen to us” mentality is mostly gone, leaving an industry that is open to understanding its risks and making the necessary changes and investment to protect against them.
The industry has seen a couple of significant events with dryer and RTO (regenerative thermal oxidizer) explosions. Can you discuss what you’ve learned about the root causes? To summarize, the important points are preventative maintenance, training in standard operating procedures and ensuring equipment is run within design parameters and not altered. It goes beyond just property damage when these things happen. Company management at affected companies will tell us they had an issue with their employees being worried about coming to work—they didn’t know if they were going to retain everybody after an explosion. The employees had always
thought that piece of equipment was this docile thing fluffing grain. They soon found, it can turn into a bomb. It’s a miracle, at this point, that we haven’t had a fatality from these gas-fired equipment explosions, and we plan on making it good engineering and common sense, rather than a miracle, for why we don’t have fatalities going forward.
In handling workers’ compensation claims, you keep track of trends in the ethanol industry in order to share that with the ethanol plants you work with. What is the most significant issue you’ve observed recently? In the past 12 months, we’ve seen a trend in people improperly lifting things—a lot of strains and sprains. You can’t always work ergonomically correctly, but you can do things to be sure you don’t have an ergonomic injury. As an example, if you are bending over in a compromised position in order to do a job, it doesn’t mean you have to get hurt. You can stop every minute or so and make sure you stretch your back to avoid an injury.
What have you learned about creating a culture of safety? What does it take to change, if the safety attitude isn’t strong enough? One of the things we always say is, if it’s acceptable to management to have a loss, it will be acceptable to employees. There are people who put enough focus on it and really do believe there should be a zero-loss scenario every year. Three-quarters of the plants we work with have never had a property claim. And over half of them have never had a workers’ comp claim. So the mentality that
Q&A
“things happen, they happen to everybody,” doesn’t hold water. We’ve seen the culture change in facilities where the top level manager has changed, but if you can change the culture of all those people by changing one person, you should also be able to do it by changing the attitude. Managers have to stick to their guns and they have to walk the walk. They need to set the right incentives and, in order to do that, they need to understand how each of their employees are wired, or what makes them tick, and align incentives based on that. This sounds tedious, but the extra effort will pay dividends.
As the industry’s culture of safety has evolved, what’s happened with the role of the environmental, health and safety manager? I’ve seen a huge change when it comes to the respect and the authority that the folks in these roles are given today. Company managers have experienced or heard about the citations that have occurred or they’ve experienced or heard of claims and they realize the importance of the things that could have prevented them. It also has a lot to do with seeing the level of work that needs to go into being an environmental, health and safety person. There has been a transition. We used to work with plants where the lab manager was the EHS manager and, when they weren’t doing that, they were the purchasing manager. It’s so much different now. We have plants that have a two- or maybe three-person environmental, health and safety team.
There are so many regulations and rules and things get dropped, if they don’t have somebody in that role.
People often complain about regulations and the accompanying paperwork and expense. With your interest in avoiding claims for injuries or property loss, what is your take on that issue? We do get that and it’s true in some aspect, but I also think it’s about how things are presented. These past three months we were focusing on how to effect those significant dryerrelated explosions and fires. When we work with our companies, we have the full ability to mandate measures or we can’t work with them, we can’t insure them. The much better approach is to educate them on the risk, how things actually occurred and how these things you implement will keep them from happening. The popular way for people to get these requirements done is to say, “If you don’t do it, you’ll get a citation.” The likelihood that EPA or OSHA is going to walk through the door this year is a nominal percent. People need to do these things because it’s the right thing to do. It’s a tell-tale sign for us that they do have the right culture, if their response is “We need to do this because we’re concerned about the safety of our staff, and we want to be able to sleep at night. We want our staff to know that we care.”
PHOTO: DARRIN HACKNEY PHOTOGRAPHY
DECEMBER 2014 | Ethanol Producer Magazine | 41
Abengoa's grand opening celebration was held Oct. 17 in Hugoton, Kansas. PHOTOS: ABENGOA
Danny Allison, plant manager, at right, leads a group through the pretreatment area. Below, an Abengoa employee displays corn stover. PHOTO: ABENGOA
Abengoa CEO Manuel Sanchez Ortega, second from left, and U.S. Secretary of Energy Ernest Moniz, third from the left, pose with other VIPs. PHOTO: ABENGOA
CELLULOSIC
‘Welcome to the Future’
Construction on Abengoa’s self-powered cellulosic ethanol facility is complete. But that doesn’t mean efforts to innovate are over. By Holly Jessen
Hugoton, Kansas—Javier Garoz Neira, CEO of Abengoa Bioenergy, told attendees at the company’s grand opening celebration they were witnessing the first step into the start of a new era. “It is,
The company is aiming for full capacity production of 25 MMgy by the second quarter of next year. PHOTO: HOLLY JESSEN, BBI INTERNATIONAL
without question, a major achievement and we believe that it will revolutionize the biofuel industry and our future,” he said. “Welcome to the future of biotechnology and the bioindustry.” Garoz Neira was one of several speakers at the company’s Oct. 17 event at it's newly completed facility, which will, at full capacity, produce 25 MMgy of cellulosic ethanol. He gave audience members a quick timeline of the project, starting in 2007, with Abengoa’s announcement that it planned to build a cellulosic ethanol plant. Less than a year later, the company had successfully produced biofuel at its biomass pilot plant in York, Nebraska, and, by 2009, the demonstration facility in Spain began operations, he said. 2011 was the year that the company received a $132.4 million loan guarantee from the U.S. DOE to help build the Hugoton plant. Since that time, Abengoa has completed four biomass harvests and about two years of construction with as many as 1,500 construction workers employed on site. The facility can convert a variety of feedstocks into biofuel, including corn stover, wheat straw, prairie grasses and more utilizing enzymes developed by the company. Those enzymes work equally well on
municipal solid waste, which the company has been converting to ethanol at its Spain demo plant since July 2013, Garoz Neira said. Abengoa is also working on new uses for the sugars extracted from cellulosic materials so that it can produce new products, such as replacement materials for the petroleum in plastics. Chris Standlee, executive vice president of Abengoa Bioenergy, told Ethanol Producer Magazine the company was in a unique position in the industry. First, using the high-lignin material left over after the ethanol production process, the facility is able to produce all the process steam and electricity it needs to power the plant, plus sell between 5 and 10 MW of electricity to the grid. Another unique aspect of Abengoa is that the company provides every aspect of the technology from start to finish. That includes its proprietary enzymatic hydrolysis technology as well as in-house engineering, procurement and construction services. Further, the company is 100 percent owner of six U.S. first-generation ethanol plants as well as partially or fully owned facilities in Europe and Brazil. That gives Abengoa 30 years of experience in maintaining and operating ethanol plants, including trading, marketing and hedging. “Really, nobody else has all of those aspects, from total start to finish,” he said. “So that really sets Abengoa apart.” Author: Holly Jessen Managing Editor, Ethanol Producer Magazine 701-738-4946 hjessen@bbiinternational.com
DECEMBER 2014 | Ethanol Producer Magazine | 43
PROFILE
CITIZEN ACTIVIST: Marilyn Katz led the campaign that made Chicago the first city to ban leaded gasoline in 1984. She is now working on making Chicago the first to require gas stations to offer E15. PHOTO: JIM PRISCHING
44 | Ethanol Producer Magazine | DECEMBER 2014
PROFILE
Chicagoan Sets Her Sights on Clean Air
Having led the charge to ban leaded gasoline 30 years ago, Marilyn Katz is leading a campaign to require E15 in the Windy City. By Susanne Retka Schill
Marilyn Katz’s activism on clean fuels goes way back. In 1984, she led the successful campaign that made Chicago the first city to ban leaded gasoline. Today,
her firm, MK Communications, has been retained by the nonprofit Americans United for Change to lead the effort to make Chicago the first city to require E15. The ordinance introduced in the finance committee in July would require self-service filling stations to offer E15, with exemptions for small-volume stations and those who would have to replace incompatible underground tanks. Early in November, amendments were accepted that would exempt marinas and stations with annual sales volumes of less than 850,000 gallons and give a year for compliance instead the originally proposed six months. Katz says there’s a strong prospect the ordinance will be adopted when it comes up for final testimony and a vote, now scheduled for Dec. 8. “We think we have the majority of the alderman going into the finance committee,” she says, “even though they are being heavily lobbied by the American Petroleum Institute with big money during an election
year.” She reports 28 aldermen have already cosigned, “but we would like to get up to 35.” With a 50-member city council, Chicago politics are very local, she explains. “We’ve had to really go retailer by retailer to assure the retailer, and therefore the alderman, that business in his or her ward would not be negatively impacted.” She points to the broad group of supporters, which includes environmentalists, health advocates, the former city commissioner of the environment, labor groups and scientists from the University of Illinois, among others. “The only people on the other side are the American Petroleum Institute and the Illinois Retail Merchants Association.” Katz finds the retail merchants’ opposition puzzling. “We’ve given them the facts. That, this is really good for station owners,” she explains. “You know, Chicago has the highest price gas in the country and a tax rate higher than anywhere else, including in the suburbs. By being able to offer a better quality fuel at 10 or 15 cents less than regular, it would actually make Chicago gas stations more competitive.” “When the ordinance first came up, the petroleum institute guys sent out a scare notice to retailers,” she continues. “As we’ve being doing our work, speaking to alderman
DECEMBER 2014 | Ethanol Producer Magazine | 45
PROFILE
Polling the Voters:
55% 69% 67% 60% Support requiring area gas stations offer an E15 option
Say reducing air pollution in the City is a very important priority
Say reducing gas prices is very important
Say the U.S. should significantly increase its use of renewable energy
SOURCE: BENENSON STRATEGY GROUP
and groups, we’ve spoken to individual retailers.” In addition to explaining the exemptions, she says, “Once they’ve learned we put together a $10 million fund to defray any costs, and that we will help them become more competitive with the suburbs, they’re very happy with this.” She doesn’t expect the full $10 million to be needed, however. The size of the fund was targeted to answer the biggest objection raised by the American Petroleum Institute—that it would cost $80,000 for stations to convert. Although those numbers are exaggerated, she says, it did influence the size of the fund. “We took a number of $40,000, which is high—most stations are only going to need something like $1,000— but we said, if every station of the 250 that are eligible needed $40,000 that would be $10 million,” she says. “That comes from
corn growers, the lung association and from the ethanol industry—the Prime the Pump program.” When asked to compare the E15 campaign to the one she led in 1984 to ban leaded gasoline, Katz says the atmosphere has changed. “E15 is an important, but incremental improvement. So it’s not on the top of anyone’s list of economic or environmental issues. In 1984, kids were getting poisoned by lead and lead poisoning was major issue in the city. There was a passionate group of moms and health care folks who were really concerned.” One strategy of the 1984 campaign, she recalls, was to test the level of lead in the playground soils next to the expressways. “The lead levels were astronomical. It was very graphic.” Today, she says, the sky is mostly blue, the steel mills are gone and the last coal
plant was shut down. “It’s not something people feel nervous about, even though, in fact, in communities west of the expressway, the cancer rate and asthma rates are much higher.” Chicago has long been a leader in clean fuel causes, Katz says. In 2000, the city was the first to ban the oxygenate MTBE (methyl teritary butyl ether). That time, it was a slam dunk, she said. The city council overwhelming approved the ban. This time, the issues aren’t so easy to visualize. “You don’t see carbon dioxide,” Katz says. “The positive environmental impacts [for E15] are very clear, but it’s definitely not the same sort of popular cause. That said, it’s such a sensible thing to do. You get a huge, up to 85 percent, improvement in air quality, and very importantly, you get the reduction in particulate mat-
Chicago Clean Air Choice Supporters Abengoa Bioenergy Advanced Biofuels Research Advanced Ethanol Council American Coalition for Ethanol American Council on Renewable Energy American Lung Association of Illinois Archer Daniels Midland Company Argonne National Laboratory Association of Equipment Manufacturers Biotechnology Organization Carbon Green Chicago Area Clean Cities Chicago Wilderness Citizen Action DuPont
46 | Ethanol Producer Magazine | DECEMBER 2014
Environmental Law & Policy Center Fuels America Gen. Wesley K. Clark (Ret.) Governors’ Biofuels Coalition Growth Energy Health & Medicine Policy Research Group Illinois Corn Growers Association Illinois Farm Bureau Illinois Renewable Fuels Association Illinois Science & Technology Coalition Jim Houlihan, former Cook County Assessor NASCAR National Corn Growers Association National Corn-to-Ethanol Research Center
National Farmers Union Novozymes Poet LLC Power Energy Prime the Pump Renewable Fuels Association Third Way United Auto Workers University of Illinois at Chicago Professor, Steffen Mueller Urban Air Initiative Vote Vets
PROFILE
terâ&#x20AC;&#x201D;cancer causing particulates. This time around, itâ&#x20AC;&#x2122;s the health professionals, the environmentalists and folks like the veterans who are intimately involved with the issues who get it.â&#x20AC;? An example of one of those more complex arguments in todayâ&#x20AC;&#x2122;s campaign involves the greenhouse gas (GHG) benefits. Steffen Mueller, principle economist at the University of Illinois Energy Resources Center, was asked by the Illinois Corn Growers to weigh in on the technical side. In July, he testified at the finance committee hearing, providing updates on the carbon intensity of corn ethanol and estimating the GHG reduction potential for the Chicago E15 proposal. Assuming 20 percent of annual fuel consumption in the city of Chicago becomes E15, an estimated 138.8 million gallons per year, â&#x20AC;&#x153;the total CO2 savings from E15 over E10 for the Chicago market would be 20,690 metric tons CO2 equivalent annually. As these assessments are often stated in terms of EPAâ&#x20AC;&#x2122;s Greenhouse Gas Equivalency Calculator, this would equate to the carbon sequestered by 17,000 acres of forests annually,â&#x20AC;? Mueller testified. The measure, Mueller says, â&#x20AC;&#x153;would be a step in the right direction.â&#x20AC;? Explaining that the midlevel pump is underutilizedâ&#x20AC;&#x201D;the 89 octane between 87 and 93 octane blendsâ&#x20AC;&#x201D; â&#x20AC;&#x153;why not put it to use with a biofuels blend that improves greenhouse gas emissions?â&#x20AC;? Katz adds that she was surprised to learn in her research that just 4 percent of total sales come from the 87 octane pump and just 3 percent from premium. Joining Mueller as scientists weighing in on the proposal, Jennifer Dunn and Michael Wang from the Argonne National Laboratory wrote an op-ed column in support of Chicago E15. â&#x20AC;&#x153;We wanted to express that we viewed it as a small but positive step in tapping the potential of biofuels in reducing greenhouse gas emissions,â&#x20AC;? says Dunn, who leads the biofuels life cycle analysis team at ANL. â&#x20AC;&#x153;The incremental reduction in GHG emission could be small, but even a small change, if adopted broadly can have a bigger impact.â&#x20AC;? Introducing a higher blend of ethanol could help increase over-
all acceptance of biofuels, she adds. â&#x20AC;&#x153;Also, if the market for ethanol would expand, it would help new technologies like cellulosic ethanol and increase its deployment.â&#x20AC;? â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s a good step,â&#x20AC;? concurs Katz. â&#x20AC;&#x153;It doubles the amount of renewables and opens the market for cellulosic and nextgeneration fuels. We can envision a time when much of our waste can be converted to fuel. What a boon for cities that would be.â&#x20AC;? While the economic benefits can be
somewhat abstract, the problem of city garbage is a real issue, she says, but you have to create a market to insure the more efficient creation of fuel. â&#x20AC;&#x153;Making room for the cellulosic and second generation fuelsâ&#x20AC;&#x201D;thatâ&#x20AC;&#x2122;s going to drive the industry.â&#x20AC;? Author: Susanne Retka Schill Senior Editor, Ethanol Producer Magazine 701-738-4922 sretkaschill@bbiinternational.com
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3URGXFHG %\ DECEMBER 2014 | Ethanol Producer Magazine | 49
HAZARD MITIGATION
Proper Grounding Reduces Static Electricity Hazard
Codes of practice outline best practices for reducing risks when loading ethanol tank cars.
By Mike O’Brien
Static electricity is virtually always generated at hazardous locations––commonly called hazloc–– in process industries. Static accumulators are materials known to be powerful attractors of electrons from other materials that also resist letting go of those electrons. Ethanol is among a host of chemicals and petroleum products categorized as static accumulators. In a typical operation, ethanol is transferred from a storage tank via a rack loading system into a receiving tank car. As the ethanol makes its way through the transfer system, the molecules become electrostatically charged. If the tank car is not grounded, contact with the charged ethanol will cause it to become electrified, presenting a potentially serious source of ignition in the presence of flammable ethanol atmospheres. As the tank car builds up electrostatic charges on its surface, the voltage present on the tank car can rise very quickly and dramatically. This excess potential energy seeks the most efficient way of discharging excess electrons, with the best object being the earth or something directly connected to it—something grounded. Grounded objects in close proximity to charged objects are good targets for electrostatic sparks. Allowing the uncontrolled accumulation of static electricity in a hazloc atmosphere is no different than having an engine’s spark plug exposed to a flammable atmosphere. The energy in a static spark is a product of the capacitance of the tank car and the voltage present on the tank car. The electrostatic
voltage on the tank car is a combination of the charging current generated by the flow of the liquid, the capacitance of the tank car and the tank car’s isolation from ground. Increased flow rates and turbulence can increase the size of the charging current, but even at safe, recommended flow rates the electrostatic voltage of the tank car can build up to hazardous levels in less than 20 seconds if the transfer system is not grounded. The potential spark energy from a tank car charged to 20,000 volts can be as high as 1,000 millijoule (mJ). When compared with the minimum ignition energy for ethanol, which is 0.23 mJ, it’s easy to see why the tank car and any equipment connected to it, like flexible hoses and piping, should be bonded and grounded. Grounding and bonding are not simply achieved by connecting alligator clips on wires back to the loading rack. Because of the serious ignition hazard that static electricity presents to a wide range of hazloc operations, industry codes of practice aim to control the risk of fires and explosions.
Codes of Practice
The National Fire Protection Association and the American Petroleum Institute publish codes of practice. NFPA 77 “Recommended Practice on Static Electricity” (2014) and API RP 2003 “Protection Against Ignitions Arising Out of Static, Lightning,
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).
50 | Ethanol Producer Magazine | DECEMBER 2014
HAZARD MITIGATION
Earth-Rite ground status indicators pulse continuously when grounding is in place.
The schematic shows the key elements in a tank car loading rack installation utilizing Newson Gale’s static grounding system, Earth-Rite Plus. The tungsten carbide teeth on the grounding clamp are the contact points for the signal that verifies if the tank car is bonded to the loading rack (or skid) to 10 ohms or less.
and Stray Currents” (2008) are publications written by committees of hazloc industry professionals who are recognised experts. In the codes, grounding is defined as the act of ensuring the tank car is connected to an object that has a verified connection to the general mass of the earth. Article 250 of NFPA 70, the National Electrical Code, describes these points as “ground electrodes.” Typical ground electrodes include metal rods buried up to 8 feet in the ground, pipes in direct and continuous contact with the earth for more than 20 feet and structures such as loading racks, which should be grounded for electrical fault protection and lightning protection purposes. Grounding provides a continuous and uninhibited path for charges generated during the transfer operation to flow to earth. What is clear from the recommendations of NFPA 77 and API RP 2003 is that 10 ohms in the grounding and bonding circuit is the maximum resistance recommended for equipment at risk of electrostatic charging in hazloc atmospheres. API RP 2003 goes one step further in recommending 1 ohm or less, but if a grounding system with signal lights is in use, 10 ohms is satisfactory. This is because the grounding system continuously monitors the resistance and notifies the operator of the potential hazard if it rises above 10 ohms. Another important recommendation is to use interlocks wherever possible, to ensure the transfer does not take place if grounding is not present. By halting the movement of product, the charge generation source is eliminated, thus preventing additional charging of the tank car.
To comply with the recommendations found in NFPA 77 and API RP 2003, grounding systems should do the following: 1. Monitor the grounding circuit to 10 ohms or less. 2. Provide operators with a visual reference that indicate a GO/NO GO action via red and green indicators. 3. Provide dry contacts to interlock the grounding system with the loading rack pump or control system. 4. Display the full range of hazloc approvals with the mark of a nationally recognized testing laboratory. One of the main problems with static electricity is that it is not something the operators can see, smell or hear which, unfortunately, can foster an attitude of “it can’t happen to me” or “it doesn’t exist” amongst personnel operating skids and loading rack systems. An effective means of controlling the risk is a grounding system that combines a simple visual indicator utilizing a traffic-light style of GO/NO GO communication along with interlock control capability. Interlocking the transfer system with the grounding system is probably the ultimate layer of protection one can take to ensure a tank car is properly grounded. Author: Mike O’Brien Head of Product Marketing, Newson Gale Inc. Contributing author: Richard Puig, Regional Manager Richard.Puig@newson-gale.com 732-606-7717
DECEMBER 2014 | Ethanol Producer Magazine | 51
BUSINESS MATTERS
New Food Safety Rules Mean Big Changes By Andrew Anderson
The Food Safety Modernization Act grants the Food and Drug Administration significant new authority and imposes significant new requirements on facilities producing animal feed, including ethanol facilities that produce animal feed coproducts. Since 2011, when FSMA was signed into law, FDA has been busy drafting various proposed rules and reviewing industry feedback. In September, FDA released supplemental proposed regulations, including key changes to the current good manufacturing practice (CGMP) and hazard analysis and risk-based preventive controls for food for animals regulation (also known as the preventive controls for animal feed rule). These proposed changes have the potential to impact all ethanol producers, and the industry should be thinking about how facility procedures should be amended to ensure future FSMA compliance. Although several rules may impact ethanol facilities, the preventive control rule is the one likely to have the most significant impacts on dayto-day operations. Two key components of this rule form the basis for the required written food safety plan that each facility will be required to implement and maintain. The first is the hazard analysis and preventive controls section. Very generally, this section would require that covered facilities (a) perform a hazard analysis to identify and evaluate known or reasonably foreseeable feed safety hazards; (b) establish preventive controls to prevent or significantly minimize any “significant” hazards (hazards for which a person knowledgeable in food safety would establish controls); (c) monitor the preventive controls (including written procedures); (d) verify the controls are working; (e) maintain a written food safety plan that incorporates all of the above elements; and (f) maintain records regarding the monitoring and verification steps. Ethanol facilities without existing feed safety expertise will need to engage outside technical experts, as the hazard analysis and a number of the related steps must be done by a qualified individual. All of this will need to be in writing and maintained for review by FDA upon request. The second key aspect of this rule is the CGMP requirement, something that has been required for many years for food facilities, as well as feed facilities manufacturing medicated feeds. However, this is the first time they have been applied broadly to all animal feed facilities. The CGMPs form the basic principles upon which a facility’s food 52 | Ethanol Producer Magazine | DECEMBER 2014
safety system is built. As revised, the CGMPs would cover areas such as plant personnel (hygienic practices), plant construction and grounds (waste disposal, ventilation, easy to clean facility), sanitation (maintaining plant in good and clean repair, effective pest control), sanitary facilities and controls (clean/adequate water supply, properly designed plumbing system, hand wash facilities), equipment and utensils (able to be cleaned and well maintained), plant operations (proper procedures to prevent contamination), and holding and distribution (proper containers to avoid contamination, inspection of incoming containers). Just one example of a rule that may significantly impact ethanol facilities is proposed 21 CFR Section 507.17, which, among other things, would require facilities to: “protect animal food stored outdoors in bulk by any effective means, including (i) Using protective coverings; (ii) Controlling areas over and around the bulk animal feed to eliminate harborages for pests; and (iii) Checking on a regular basis for pests and pest infestation.” At first glance, this would appear to require ethanol facilities to cover DDGSs and other coproducts stored outdoors, control the pests (birds, rodents, insects, etc.) around the bulk storage, and regularly check for pest infestation. Although there are a few exemptions to these requirements, they primarily apply to very small businesses, farms and certain facilities engaged solely in holding feed products. It is unlikely these exemptions will apply to many, if any, ethanol facilities. As a result of a lawsuit by a consumer activist group against FDA, followed by a court-issued consent decree, FDA must release a final preventive controls for animal feed rule by Aug. 30, 2015. Once the final rules are released, ethanol facilities that produce animal feed coproducts will have one year to become FSMA compliant. Given the detailed and potentially onerous requirements of these rules, we highly recommend that facilities take concerted steps to engage technical experts to assist with implementing CGMPs and preventative controls well before the 2016 compliance deadline. Author: Andrew Anderson, Partner, Faegre Baker Daniels 515-447-4703 andrew.anderson@FaegreBD.com Contributors: Steve Toeniskoetter, Associate Rachael Dettmann Spiegel, Associate
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