INSIDE: TANK CAR FIRE ILLUMINATES NEED FOR PREPAREDNESS december 2011
Outlook 2012
How Industry Executives Envision the Year Ahead
Export Outlook Spotlights Logistics
Page 46
Page 60
www.ethanolproducer.com
Rethink Tomorrow
LIFE CAN BE COMPLICATED LIQUOZYME® MAKES IT SIMPLE Running low pH? High pH? It doesn’t matter. Liquozyme is optimized to run as low as pH 5.0. Contact our Customer Solutions team and find out how you can get the most out of your corn, with the best-selling alpha amylase on the market.
¸
With Novozymes, we’ve been able to squeeze every drop of ethanol out of that bushel of corn.
www.bioenergy.novozymes.com
Novozymes is the world leader in bioinnovation. Together with customers across a broad array of industries we create tomorrow’s industrial biosolutions, improving our customers’ business and the use of our planet’s resources.
¹
JASON MARQUIS, PRODUCTION MANAGER, MARQUIS ENERGY, ILLINOIS, USA
contents
december issue 2011 VOL. 17 ISSUE 12
features 60
46
DEPARTMENTS 6
68
Editor’s Note
The Year Turns By Susanne Retka Schill
10 The Way I See It
Missing the Future While Clinging to the Past By Mike Bryan
11 Events Calendar
Upcoming Conferences & Trade Shows
12 View From the Hill State of Play By bob dinneen
14 Drive
Achieve Our Nation’s
OUTLOOK
Outlook 2012
Top industry executives share perspectives on the new year By Kris Bevill and Holly Jessen
LOGISTICS
By Train, by Truck or by Boat
A look at exports and emerging transportation issues By Kris Bevill
Energy Independence By tom buis
PREPAREDNESS
Plan for the Worst
Lessons learned from an ethanol tank car derailment fire By Kris Bevill
16 Grassroots Voice Setting Priorities to
Defend, Advance Policies By brian jennings
18 Europe Calling
Solving ILUC by Thinking
Contributions
Out of the Box By Rob Vierhout
20 Business Matters
76
80
Implementing
HACCP Systems By andrew anderson and diana palmer
22 Business Briefs 28 Commodities Report 32 Distilled 86 Marketplace OUTREACH
RISK MANAGEMENT
Techniques of other public awareness campaigns applied to FFVs By Burl Haigwood
Brokers play valuable role in risk management strategies By John Harangody
Educating Drivers about FFVs and Renewable Fuels
90 Ad Index
Mitigating Ethanol Market Risk by Monitoring Opportunities
INSIDE: TANK CAR FIRE ILLUMINATES NEED FOR PREPAREDNESS dEcEmbEr 2011
Outlook 2012 Ethanol Producer Magazine: (USPS No. 023-974) December 2011, Vol. 17, Issue 12. Ethanol Producer Magazine is published monthly. Principal Office: 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. Periodicals Postage Paid at Grand Forks, North Dakota and additional mailing offices. POSTMASTER: Send address changes to Ethanol Producer Magazine/Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, North Dakota 58203.
4 | Ethanol Producer Magazine | december 2011
How Industry Executives Envision the Year Ahead
Export Outlook Spotlights Logistics
Page 46
Page 60
www.ethanolproducer.com
On The Cover Ethanol industry executives talk about the challenges and opportunities in the year ahead starting on page 46.
editor’s note
With the year speeding to a close, it’s only natural that just as we may be tempted to peek into a wrapped package in December, we might also try to peek into the unwrit pages of the approaching new year. The editors of Ethanol Producer Magazine wonder what those pages will reveal and who better to consult than some top executives in the ethanol industry? We spoke with several who took the time to gather their thoughts and concerns and comment on the state of the industry. Many concerns are raised, but overall, the executives see opportunities ahead. Our columnists this month also highlight their priorities and give insight on important issues. The industry appears to have accepted the demise of the blenders credit and is far more concerned about efforts to dismantle or weaken the renewable fuel standard. In the past, such efforts gained little traction, but the political environment is far different right now, and nothing, absolutely nothing, can be taken for granted.
The Year Turns Susanne Retka Schill, Editor sretkaschill@bbiinternational.com
For industry news.
Associate Editor Kris Bevill covered an ethanol export conference a few weeks ago that she used as the basis of her feature this month, digging into the outlook for exports and the evolving logistics of how ethanol gets to its destination. Bevill also recounts the story, and the insights gained from, the train derailment that set several ethanol tank cars on fire in Tiskilwa, Ill. Dramatic photos of the scene accompany her story. The common wisdom to let the fire burnout didn’t apply in this case, and neighboring ethanol producers contributed their supplies of foam suppressant for the effort. It is an important lesson to heed, as 70 percent of ethanol in the U.S. is moved via rail.
Follow Us: twitter.com/EthanolMagazine
associate editors Associate Editor Holly Jessen talks to ethanol producers Walt Wendland and Todd Becker as well as the CEO of Propel, Matt Horton, to share their outlook for the year ahead in the ethanol industry.
6 | Ethanol Producer Magazine | december 2011
Associate Editor Kris Bevill shares insights from conversations with the leaders of BP Biofuels, Ineos Bio and a venture capitalist. Also, firefighters and ethanol producers recount the drama of an ethanol fire following a derailment and lessons learned.
EDITORIAL EDITOR Susanne Retka Schill sretkaschill@bbiinternational.com ASSOCIATE EDITORS Holly Jessen hjessen@bbiinternational.com Kris Bevill kbevill@bbiinternational.com COPY EDITOR Jan Tellmann jtellmann@bbiinternational.com
ART ART DIRECTOR Jaci Satterlund jsatterlund@bbiinternational.com GRAPHIC DESIGNER Erica Marquis emarquis@bbiinternational.com
PUBLISHING CHAIRMAN Mike Bryan mbryan@bbiinternational.com CEO Joe Bryan jbryan@bbiinternational.com VICE PRESIDENT Tom Bryan tbryan@bbiinternational.com
SALES VICE PRESIDENT, SALES & MARKETING Matthew Spoor mspoor@bbiinternational.com EXECUTIVE ACCOUNT MANAGER Howard Brockhouse hbrockhouse@bbiinternational.com SENIOR ACCOUNT MANAGER Jeremy Hanson jhanson@bbiinternational.com ACCOUNT MANAGERS Chip Shereck cshereck@bbiinternational.com Marty Steen msteen@bbiinternational.com Bob Brown bbrown@bbiinternational.com Andrea Anderson aanderson@bbiinternational.com Dave Austin daustin@bbiinternational.com Kelly Kilgore kkilgore@bbiinternational.com CIRCULATION MANAGER Jessica Beaudry jbeaudry@bbiinternational.com ADVERTISING COORDINATOR Marla DeFoe mdefoe@bbiinternational.com Senior Marketing Manager John Nelson jnelson@bbiinternational.com
EDITORIAL BOARD Mike Jerke Jeremy Wilhelm Commonwealth Agri-Energy LLC Mick Henderson Pinal Energy LLC Keith Kor Golden Grain Energy LLC Walter Wendland Chippewa Valley Ethanol Co. LLLP Cilion Inc.
Neal Jakel Illinois River Energy LLC Bert Farrish Lifeline Foods LLC Eric Mosebey Lincolnland Agri-Energy LLC Steve Roe Little Sioux Corn Processors LP Bernie Punt Siouxland Energy & Livestock Co-op
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 any country outside the United States, Canada and Mexico. To subscribe, visit www.EthanolProducer.com or you can send your mailing address and payment (checks made out to BBI International) to: Ethanol Producer Magazine Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You can also fax a subscription form to (701) 746-5367. 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 (701) 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 (701) 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 e-mail to sretkashill@bbiinternational.com. Please include your name, address and phone number. Letters may be edited for clarity and/or space.
Please recycle this magazine and remove inserts or samples before recycling TM
COPYRIGHT Š 2011 by BBI International
december 2011 | Ethanol Producer Magazine | 7
The New Ethanol. Refined, retailed, and rolling across America now.
>O` [OL 0UIPJVU )PVTHZZ 9LÄULY` PZ YLHK` MVY `V\Y I\ZPULZZ WSHU >L»]L WYV]LU V\Y JLSS\SVZPJ [LJOUVSVN` PU +LUTHYR ZPUJL WLYMVYTLK H[ KLTVUZ[YH[PVU ZJHSL PU 2HS\UKIVYN ZPUJL ZVSK ;OL 5L^ ,[OHUVS MVY :[H[VPS Z[H[PVUZ PU +LUTHYR ZPUJL (UK PU ^L»YL YVSSPUN V\[ 0UIPJVU )PVTHZZ 9LÄULYPLZ H[ JVTTLYJPHS ZJHSL HJYVZZ (TLYPJH HUK *HUHKH ( [`WPJHS WSHU[ ^PSS WYVJLZZ [VUZ H KH` ;OPZ `LHY < : MHYTLYZ HSVUL ^PSS WYVK\JL LUV\NO JVYU Z[V]LY HUK ^OLH[ Z[YH^ [V MLLK HIV\[ 0UIPJVU )PVTHZZ 9LÄULYPLZ 6Y Y\U YPJL Z[YH^ PU *HSPMVYUPH Z\NHY IHNHZZL HSVUN [OL .\SM *VHZ[ TPZJHU[O\Z PU 4PZZPZZPWWP HY\UKV PU ;LUULZZLL ZVYNO\T PU -SVYPKH IV[O Z[V]LY HUK Z[YH^ PU 5L^ @VYR ;V JVSSLJ[ [OL IPVTHZZ +HUPZO L_WLYPLUJL HUK (TLYPJHU PUNLU\P[` HYL JVTIPUPUN [V KL]LSVW H JVTWYLOLUZP]L Z`Z[LT
6\Y JVU]LYZPVU WYVJLZZ PZ KPMMLYLU[PH[LK I` P[Z V\[JVTLZ! [OYLL YLUL^HISL LULYN` Z[YLHTZ 0[»Z PKLHSS` Z\P[LK MVY PU[LNYH[PVU ^P[O NYHPU L[OHUVS WSHU[Z JVHS ÄYLK WV^LY Z[H[PVUZ HUK V[OLY */7 KYP]LU MHJPSP[PLZ *\Z[VTPaL MVY SVJHS JVUKP[PVUZ JVTIPUL ^P[O T\S[PWSL NYLLU [LJOUVSVNPLZ·I\PSK H ^PUUPUN I\ZPULZZ WSH[MVYT 4VZ[ WYVK\JL TPS SPVU NHSSVUZ VM ;OL 5L^ ,[OHUVS ZVTL 4> VM NYLLU WV^LY ZVTL OPNO ]HS\L ZWLJPHS[` JOLTPJHSZ HSS ZOYPUR [OL JHYIVU MVV[WYPU[ VM HU` I\ZPULZZ [OL` JVL_PZ[ ^P[O ,[OHUVS WYVK\JLYZ JHU PTWYV]L 3PML *`JSL (UHS`ZPZ SPNO[LU ./. LTPZZPVUZ JHW[\YL 905Z JVSSLJ[ 97: WYLTP\TZ MVY ZLSSPUN NYLLU LSLJ[YPJP[` [V [OL NYPK (ZR HIV\[ V[OLY PKLHZ [V YLK\JL LULYN` SVHKZ HUK LHYU OPNOLY PUJVTLZ MYVT OPNOLY ]HS\L LULYNPLZ :LYPV\Z PU]LZ[VYZ ZOV\SK HSZV HZR HIV\[ +HUPZO SVHU N\HYHU[LLZ MVY 5VY[O (TLYPJHU WYVQLJ[Z .V [V ^^^ PUIPJVU JVT MVY HU V]LY]PL^ VM 0UIPJVU [LJOUVSVN` -VY H Z[YVUN I\ZPULZZ JHZL JHSS ;OVTHZ *VYSL H[
,QELFRQ %LRPDVV 5HÀQHU\ 0DNLQJ HWKDQRO ZRUN IRU WKH ZRUOG 0UIPJVU 2YHM[]¤YRZ]LQ :R¤YI¤R -YLKLYPJPH ;LS
;OL 5L^ ,[OHUVS HUK 0UIPJVU )PVTHZZ 9LÄULY` HYL [YHKLTHYRZ VM 0UIPJVU ( : HUK +65. ,ULYN` ( : ^^^ PUIPJVU JVT
the way i see it
Missing the Future While Clinging to the Past By Mike Bryan It’s the 21st century and we still extract and process decayed plants as our primary source of energy. It does seem a bit prehistoric when one thinks about it. That’s the best modern technology has to offer? I suspect if we were able to move ahead 100 years, we would look back and laugh at the simplicity and folly of our energy strategy. The world has abundant resources in the sun, the ocean, the wind, geothermal and huge amounts of renewable biomass, yet we cling to the past like a child afraid to let go of mother’s leg, afraid of leaving the comfort of what we know. We desperately drill for more and more oil, deeper and deeper, in the four corners of the earth, fearful of running out of the precious and dwindling supply of precious mother’s milk. The irony is while we seem to subscribe to the “Drill Baby Drill” mindset, we largely ignore the bountiful amounts of free, clean and renewable energy available to us. The sun shines everyday
10 | Ethanol Producer Magazine | december 2011
on our earth, the oceans crash against our shores day and night. The wind blows relentlessly. A billion tons of biomass energy remains largely idle while we struggle with making a real commitment to unleash the power of this massive resource. Drill Baby Drill, that’s the motto we live by, that’s the prehistoric technology that we continue to pursue. It would take only around 0.3 percent of the world’s land area to supply all of our electricity needs via solar power. One large wind turbine can generate enough electricity for 600 homes. The oceans
We launch Congressional investigations over the money loaned to a company dedicated to producing clean solar energy panels that fell to foreign price cutters, yet we continue to pour billions of dollars into the oil industry, encouraging them to Drill Baby Drill. It’s all about big money, big business, high returns and take what we can get now and to hell with the future. It’s sad really, that we have only evolved in the past 50,000 years from burning a piece of wood to burning decayed plant life. It’s not much of a legacy of progress to leave to our
constitute the largest powerhouse on earth. Geothermal energy could produce 10 percent of U.S. electricity by the year 2050. In the updated billion-ton study, the U.S. DOE estimates that biomass resources could replace 30 percent of fossil fuel use by 2030. This should not be a partisan issue. Every single Congressman and Senator should be 100 percent onboard in their support of the development, support and commitment to clean renewable energy, without exception! Shame on those who support the exploitation of the world’s oil reserves to the detriment of renewable energy. At best it’s short-sighted, at worst it’s a self-serving act of unconscionable proportion.
grandchildren. That’s the way I see it!
Author: Mike Bryan Chairman, BBI International mbryan@bbiinternational.com
events calendar
Pacific West Biomass Conference & Trade Show January 16-18, 2012 San Francisco Marriott Marquis | San Francisco, California With an exclusive focus on biomass utilization in California, Oregon, Washington, Idaho and Nevada—the Pacific West Biomass Conference & Trade Show will connect the area’s current and future producers of biomass-derived electricity, industrial heat and power, and advanced biofuels, with waste generators, aggregators, growers, municipal leaders, utility executives, technology providers, equipment manufacturers, investors and policy makers. (866)746-8385 www.biomassconference.com/pacificwest
Theme for RFA in Orlando: Accelerating Industry Innovation 2/22
The Renewable Fuels Association’s 17th Annual National Ethanol Conference, based on the theme Accelerating Industry Innovation, will be held Feb. 22-24 in Orlando, Fla. The NEC is recognized as the preeminent conference for delivering accurate, timely information on marketing, legislative and regulatory issues facing the ethanol industry. With numerous networking opportunities, more business meetings are conducted and contacts made at this conference than any other ethanol conference. The program will highlight how the industry continues to evolve to meet the demands of a rapidly changing marketplace. With federal policy changing, the global, market-driven environment in which the industry must compete comes with new market challenges. Industry leaders and experts will address how we are meeting these new demands by accelerating innovation in technology, marketing, logistics and feedstocks for the production of advanced ethanol. This year’s keynote speaker is James Canton, CEO and chairman of the Institute for Global Futures, who will present “21st Century Energy Trends and the Marketplace.” Energy is mission-essential to the growth, social stability and security of all nations, he says, and oil overdependence and petro-fuel decline offer the world an incentive towards the discovery of renewable energy. At the same time, the biofuels industry is at a pivotal point existing simultaneously as a commodity and consumer good. Canton knows that engaging the consumer to grow demand and improve industry image has never been more important. He is a renowned global futurist, social scientist, keynote presenter, author and visionary business advisor. For over 30 years, he has been insightfully predicting the key trends that have shaped our world. This year’s featured lunch speakers are Karl Rove and Robert Gibbs. Rove and Gibbs provide intimate and insightful commentary as they both speak with great authority and accuracy from a White House insider’s perspective. Each speaker shines a dynamic light on the political issues of the day based on their unique relationships—Karl Rove from his years as one of President George W. Bush’s closest confidants and advisors, and Robert Gibbs from his years as a longtime advisor to President Obama. For more information, including program updates, online registration, sponsorship opportunities, off-site events, scholarships and a list of registered attendees, visit www. nationalethanolconference.com.
National Ethanol Conference February 22-24, 2012 Gaylord Palms Resort | Orlando, Florida Since 1996, the RFA’s National Ethanol Conference has been recognized as the preeminent conference for delivering accurate, timely information on marketing, legislative and regulatory issues facing the ethanol industry. With numerous networking opportunities, pivotal business meetings are conducted which bring together some of the most influential companies and organizations in the ethanol industry. (202)315-2466 www.nationalethanolconference.com
International Biomass Conference & Expo April 16-19, 2012 Colorado Convention Center | Denver, Colorado A New Era in Energy: The Future is Growing Organized by BBI International and coproduced by Biomass Power & Thermal and Biorefining 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. Presentation ideas are being accepted online through Dec. 23. (866)746-8385 www.biomassconference.com
International Fuel Ethanol Workshop & Expo June 4-7, 2012 Minneapolis Convention Center | Minneapolis, Minnesota Evolution Through Innovation Now in its 28th year, the FEW provides the ethanol industry with cutting-edge content and unparalleled networking opportunities in a dynamic business-to-business environment. As the largest, longest running ethanol conference in the world, the FEW is renowned for its superb programming—powered by Ethanol Producer Magazine. Presentation ideas are being accepted online through Feb. 10. (866)746-8385 www.fuelethanolworkshop.com december 2011 | Ethanol Producer Magazine | 11
view from the hill
State of Play By Bob Dinneen
The vast majority of progressive, forward-looking policies that have helped to build America’s ethanol industry into the largest alternative fuel industry in the world have emanated from Washington. Smart, productive policies such as the Volumetric Ethanol Excise Tax Credit and the renewable fuel standard (RFS) have in no small measure made the construction and operation of more than 200 ethanol biorefineries in 26 states possible. To be sure, debate over America’s ethanol industry will continue to be en vogue on Capitol Hill as we have seen by the numerous committee and subcommittee hearings on ethanol-related topics in the past year. Increasingly, the debate about the role of policy and America’s ethanol industry has moved into state capitals all across the country. In some cases, these debates are forward looking. For example, the state of Iowa has worked very hard to clear the way for the legal sale and use of E15 ethanol blends. So, too, has the state of Illinois. But far too often, the debate in state legislatures and governments around the country is focused on rolling back the progress we have made in reducing their dependence on oil and creating job opportunities. Rather than looking to build upon or continuing to incent the evolution
12 | Ethanol Producer Magazine | december 2011
of American ethanol production, some state legislators are seeking to pull the rug out from under critical investments that businesses have made to produce, distribute, and use a growing supply of ethanol derived from a diverse basket of feedstocks. Perhaps the most visible is the effort underway in Florida to repeal the state’s mandate for 9 to 10 percent ethanol. One state representative and one state senator have introduced legislation that would seek to unravel the web of investments made in renewable fuel production and infrastructure in Florida since the mandate was put into place in 2008. Given Florida’s importance to the gasoline market and the presence of the federal RFS, repealing the ethanol mandate may not materially impact ethanol demand in Florida. But such an outcome cannot be guaranteed. Nor can it be stated with absolute confidence that the progress of new ethanol production technologies just now taking hold in Florida would continue. In fact, were Tallahassee to reverse its position on renewable fuels, many of the projects underway in Florida may be dealt a death blow as would the jobs and economic activity that go along with them. The result would be a dramatic increase in both Florida’s demand for imported oil from nearby dictators like Hugo Chavez and higher gas prices for all Florida consumers. Florida is not alone. Earlier this year, the state of New Hampshire sought to ban the use of corn-based ethanol entirely.
And the state of Hawaii, perhaps providing the model for Florida, has sought repeal of its mandate. Similar anti-ethanol efforts are being seen in other state capitals. As America’s ethanol industry has grown, so too have the concentric circles on its back. And, as more of the gasoline market is constituted by a renewable fuel alternative, efforts to prevent the further loss of market share will be intense. As an industry, we have a strong track record of successful advocacy. Now is not the time to rest on those laurels. We must continue to be vigilant—both in the halls of Congress and in statehouses across the country—of coordinated efforts to undermine the progress our industry has made and to inaccurately portray the facts about domestic ethanol production. Challenges to our industry will only continue to increase as the industry grows and evolve. So, too, must our resolve to press forward. Now, for a much more cheerful subject: On behalf of the entire staff the Renewable Fuels Association, I wish you and yours a very happy, safe, and enjoyable holiday season! Author: Bob Dinneen President and CEO of the Renewable Fuels Association (202) 289-3835
We offer more than just chemistry — we deliver improved profitability. Armed with innovative chemistries and a thorough understanding of biorefining, Ashland is well positioned to help you operate more efficiently and profitably. Our state-of-the-art product portfolio for biorefineries includes: t 1SPDFTT 4PMVUJPOT – Corn oil extraction aids – Ethanol corrosion inhibitors – Liquid/solid separation aids t 8BUFS 5SFBUNFOU 4PMVUJPOT – Boiler water treatments – Cooling water treatments – Wastewater treatments To learn more, visit us online at ashland.com
® Registered trademark, Ashland or its subsidiaries, registered in various countries ™ Trademark, Ashland or its subsidiaries, registered in various countries * Trademark owned by a third party © 2011, Ashland AD-11031
With good chemistry great things happen.™
DRIVE
Achieve Our Nation’s Energy Independence By Tom Buis
Three years ago, leaders in the domestic ethanol industry gathered to announce the creation of a “new, fresh, aggressive voice in the energy debate”—Growth Energy. From day one, Growth Energy’s mission has been to drive the message of ethanol forward and debunk the myths and distortions fabricated and propagated by those who seek to perpetuate America’s addiction to foreign oil. Since inception, Growth Energy has taken great strides for our nation’s economy, our environment and our national security, but there are still a number of hurdles and challenges to overcome. In the coming years, we will build upon our successes and work to expand greater access to homegrown, renewable ethanol. Methods to achieve this goal include four main priorities. They are: Commercialization of E15: Today, the U.S. EPA is working toward implementation of its approval of Growth Energy’s Green Jobs petition for E15. This is one of our industry’s top priorities— expanding the market for ethanol by approving E15 in all cars built in the past decade. A full move to E15 will help our nation meet the goals of the renewable fuels standard (RFS). And by expanding the market for domestic ethanol, E15 can
14 | Ethanol Producer Magazine | december 2011
spur private capital investment into the development of ethanol from cellulosic biomass. With cellulosic ethanol, we can turn feedstocks, such as corn stover, citrus waste and even woodchips, into clean, renewable fuel. Defending the RFS: The RFS was designed to set a goal of 36 billion gallons of renewable fuels by 2022, with the majority of that being provided by a combination of grain ethanol and cellulosic ethanol. The industry that is taking the greatest strides toward making cellulosic ethanol a commercial reality is the grain ethanol industry itself, in part because it already has access to an abundant source of biomass as feedstock. Our industry needs to send Congress a clear message: keep the RFS intact. Weakening the RFS goals for cellulosic ethanol would not just block our progress toward a viable cellulosic ethanol industry, but it will put OPEC further in control of our economy. Changing the RFS just four years after enactment sends the wrong signal to those looking to invest in next generation fuels. A continued commitment to our nation’s renewable fuel industry will strengthen our energy security, generate more U.S. jobs that can’t be outsourced and improve our environment. Opening the fuels market: We in the ethanol industry recognize that the decision of which type of fuel to use should be left to consumers. This means encouraging the installation of flex-fuel pumps, and encouraging the production and sale of flex-fuel vehicles so the
consumer can make their fuel choice based on price and performance. An investment in ethanol infrastructure would tear the blend wall down completely and allow ethanol to compete in a fair and open transportation fuels market. Educating the public about ethanol: Today, there are still thousands of Americans who have yet to hear ethanol’s story. The American Ethanol partnership with NASCAR is a concerted effort by those within the industry to educate consumers about the benefits of ethanol and dispel the misinformation perpetuated by the special interests that don’t want to see ethanol succeed. The effort to market ethanol through NASCAR means tens of millions of TV viewers see our industry in a positive light every race weekend, particularly as every NASCAR racing vehicle is now using Sunoco Green E15 racing fuel. By putting American Ethanol into the victory lane every race weekend, we are proving E15’s effectiveness as a fuel for every American driver. Securing our energy future will take time, but America has the talent, ability and ingenuity to answer the economic, energy and environmental challenges we face. Growth Energy will continue to work with everyone in the industry to help achieve our nation’s energy independence goals. Author: Tom Buis CEO, Growth Energy (202)545-4000 tbuis@growthenergy.org
Introducing efficiency on a whole new level. New Enogen trait technology. It drastically reduces slurry viscosity, which significantly increases solids loading. And that dramatically improves throughput by 10% while reducing water and energy cost 8%-10%1. Learn more about how Enogen can change your world at 877-4ENOGEN. www.enogen.net TM
Š201 01 11 Syyngenta. ngen genta ta Enog En gen nTMM, tthe A Allian ian ance an e Frame am , tth he Pu urpo rpos p e Icon, pos pose Icon n and nd the he e Syng Syngenta log llogo o ar are trradem ademarks arks a rks of o a Syyn nge ngen ge en e nta Group Group oup p Com Co o panyy. om 1 Ba ased se on n 200707-2009 07 2 09 Syn 20 2009 S gen gent en a Tr Trials alss
GRASSROOTS vOICE
Setting Priorities to Defend, Advance Policies By Brian Jennings
As 2011 comes to a close, members of the grassroots American Coalition for Ethanol have been building a strategic roadmap for 2012 and beyond. ACE hosted a member planning workshop in November, with plants from across the country sending representatives to help contribute to the development of policy, market development and public relations priorities. Our board of directors discussed our path forward as well. An obvious short-term priority will be defense of the renewable fuel standard (RFS). Playing defense to protect the RFS may seem underwhelming. Many in our industry understandably prefer to go on offense and fine-tune the RFS so corn ethanol may qualify as an advanced biofuel (because the scientific data supports this adjustment). ACE members support this change, but they also appreciate that in politics, timing is everything, and the timing is poor for that particular change right now. Special interests that feel entitled to cheap corn forever have pushed for the introduction of several bills in Congress already to reduce or repeal the RFS and the drum beat will only continue in 2012. Moreover, an antiethanol congressional hearing took place in November, where the deck was stacked with witnesses who oppose the RFS.
16 | Ethanol Producer Magazine | december 2011
In the spirit of the holidays, when we remember the reason for the season and what we ought to be thankful for, ACE members are grateful for the RFS and are conscious of the fact that we did go on offense in 2005 and 2007 to enact this sweeping and historical policy change. We don’t feel ashamed for defending the RFS, for if we fail to play effective defense, unlike with the sacrifice of the Volumetric Ethanol Excise Tax Credit, the consequences would be destructive for our industry. But we’ve got to look beyond the short-term as well. Earth is now home to more than 7 billion people, and biofuels from a variety of feedstocks are poised to transform how we produce fuel and food in a sustainable way. Many midterm and long-term priorities need to be addressed as well. E15 represents the most important near-term opportunity to increase ethanol demand. ACE will work overtime with U.S. EPA and state regulators to ensure full implementation of E15 this year. ACE has made consumer fuel choice a priority for years, and we’ll continue to champion legislation to deploy more flexfuel vehicles (FFVs) and blender pumps in Congress and work with states and the USDA to carry out existing programs for blender pump infrastructure. Our industry went on the offensive to enact tax credits, the original RFS in 2005 and the larger RFS in 2007, because we assembled coalitions with like-minded groups and convinced a majority in
Congress these changes were critical to the future of our country. Going forward, ACE will build coalitions with new groups and mobilize grassroots support for ethanol outside the traditional Corn Belt to put more states in play so that ethanol can enjoy broader bipartisan support in Congress. This won’t happen overnight, but it is critical spade work that needs to be done. We can also capitalize on the 2012 election to build support for ethanol. While blender pumps and FFVs will help level the playing field for consumers, ACE wants to address unfair tax policies which today unnecessarily reward fuels of the past such as oil instead of doing what tax policy should: encourage fuels of the future such as cellulosic ethanol. Finally, new fuel economy rules will require automakers to modify engines in such a way that ethanol’s clean octane benefits, which are too often overlooked today, will become indispensable well into the future. Ethanol is poised to be the primary fuel to not only help achieve landmark fuel efficiency requirements but also to reduce harmful toxins emitted by today’s gasoline. ACE remains committed to making U.S. ethanol the consumer fuel of choice and we look forward to working with our grassroots members to fulfill this mission in 2012 and beyond. Author: Brian Jennings, Executive Vice President, American Coalition for Ethanol (605) 334-3381 bjennings@ethanol.org
Right Feedstock. Right Value.
More Ethanol per Bushel
Measuring the Results
Pioneer QualiTrak® System
Access to grain markets 24/7
® TM SM , , Trademarks and service marks of Pioneer Hi-Bred. DPPSM is a service mark of Farms Technology. All purchases are subject to the terms of labeling and purchase documents. © 2011 PHII. ENDUS021973P238AVAR1
Better Grain Quality DPPSM Grain Desk
Europe Calling
Solving ILUC by Thinking Out of the Box By Robert Vierhout
In various circles, the current thinking on indirect land use change (ILUC) is very much driven by negative perceptions. In the EU, the concern is that biofuel policy is counterproductive to what policymakers want to achieve in the first place: avoiding increases in greenhouse gas (GHG) emissions. Even though many will agree to the theoretic possibility that biofuel policy could cause unwanted changes in land use, it has not yet been proven. For the sake of the argument, let’s assume the concern is justified and that promoting biofuels would cause ILUC. Should a policymaker in such situation not try to consider all options, instead of looking at negative measures only? Because, that is what is happening. The measures under discussion are very punitive, resulting in penalties instead of rewards. A penalty, however, will not necessarily lead to a change in behavior or prevent ILUC from occurring; it merely results in certain biofuels not being used in Europe. It certainly doesn’t prevent these biofuels from being used somewhere else in the world. In the end, preventing unwanted land use change is not achieved by the policy. Assuming ILUC could occur, policymakers should go for measures that will not cause this leakage effect. They should go for a win-win situation
18 | Ethanol Producer Magazine | december 2011
and promote biofuels whilst, at the same time, adopting measures that promote only those biofuels without a high risk of unwanted land use changes. A consortium of nongovernmental organizations and industry was formed earlier this year to confront policy makers with this more positive, incentive-based approach. The partners, including Shell, Neste Oil, Riverstone Holdings LLC, the International Union for Conservation of Nature, Partners for Euro-African Green Energy and ePURE, commissioned Ernst & Young to study a policy approach that incentivizes ILUC-mitigation practices and supports best practices in the production of biofuels and crops for biofuels. All the policy options being studied by the European Commission have serious drawbacks. None encourage producers to adopt practices that reduce ILUC risks, nor do they improve investor confidence for biofuel development. By assigning a carbon credit to biofuels that prevent or reduce the risk of ILUC, Ernst & Young suggest, financial value can be created to incentivize the adoption of practices that prevent or mitigate ILUC. The Renewable Energy Directive already has a model in place. One of the annexes contains a bonus mechanism for biofuels produced from feedstock grown on severely degraded or heavily contaminated land—a carbon credit of 29 grams of CO2 equivalent per megajoule. This instrument could be extended to provide a carbon credit to those biofuels that meet specified ILUC mitigation
criteria. Examples include the use of biofuel coproducts to substitute animal feed, the production of biofuel feedstock crops on abandoned or degraded land, yield improvements and the use of wastes. The ILUC mitigation credit would make qualifying biofuels worth more to fuel suppliers as they need less physical volume to meet mandatory GHG emission reduction targets, and so create financial value without the need for fiscal intervention. Whether this fifth proposed option will be attractive to policymakers is still an open question. For now the European Commission does not want to look beyond the four policy options on the table. But there are good reasons for the member states to look at other options. After all, it doesn’t make a lot of sense to throw an ILUC penalty at an industry that is creating employment opportunities in times of economic crisis. If it is possible to develop a policy that would improve the GHG emission savings performance of biofuels and keep most of the industry up-andrunning at the same time, EU member states might well sign up. Author: Robert Vierhout Secretary-general, ePURE Vierhout@epure.org
business matters
Implementing HACCP Systems By Andrew Anderson and Diana Palmer
A hazard analysis and critical control point (HACCP) system is a systematic approach for identifying, evaluating, and controlling food safety hazards.
Federal regulations require that certain industries, including meat and poultry producers, retail food service providers, and juice manufacturers, implement an HACCP system, but there is no regulation or requirement at this time for the implementation of an HACCP system for feed manufacturers or ethanol plants producing distillers grain to be used as feed. Despite this lack of regulation, the Association of American Feed Control Officials recently published the “Verification Program for a Voluntary Hazard Analysis Critical Control Point Plan.” The basic steps in the program are an initial hazard analysis, establishment of critical control points that lead to each hazard, establishment of maximum limits for each critical control point, establishment of a monitoring system and corrective action plan for responding to deviations in the critical control points, and provision for a record-keeping system. AAFCO developed the framework for those feed producers interested in adopting an HACCP program—the verification program remains entirely voluntary. An online version of the AAFCO program may be found at the AAFCO website, http://www. aafco.org, in the “Regulatory Information” menu. In addition, AAFCO publishes a Guidance/Framework and Checklist for Best Management Practices, both of which may provide additional guidance as to appropriate and best practices in the feed manufacturing industry. 20 | Ethanol Producer Magazine | december 2011
So, if this is entirely voluntary, why should you consider an HACCP system? You may want to because the FDA has made grants to state officials to encourage HACCP adoption. The Iowa Department of Agriculture and Land Stewardship, for example, is set to complete the publication of its feed manufacturing HACCP materials in early 2012. Beginning in April through March 2015, IDALS will make on-site visits to 50 to 100 feed mills and ethanol plants in Iowa each year, surveying high risk behaviors at the facilities and providing information about implementing an HACCP system to reduce these behaviors. The results of the survey will be recorded in a database showing use of HACCP principles at these facilities over time. In conjunction with this type of survey, state officials may also be testing feed and grain at feed mills and ethanol plants for levels of heavy metals and mycotoxins. For example, the mycotoxins chosen for testing by IDALS are aflatoxins, vomitoxin (DON), zearalenone (ZON), and fumonisins. The FDA has previously issued maximum guidance levels for mycotoxins, and any samples that show levels higher than the maximum guidance level will be immediately reported to the regional FDA office. Heavy metals to be tested through the sampling program include mercury, lead and cadmium. Because there are no current FDA standards for heavy metal content in feed, only samples that show “unusually high levels of heavy metals” will be reported to the regional FDA office. Grain sampling has already begun, and between now and 2015, IDALS will take 80 grain dealer samples and 20 ethanol plant samples each
year. Each location will receive a mycotoxin guidance document, and the aggregate results for both mycotoxins and heavy metals will be recorded in a database. If your plant has not previously considered implementing an HACCP system, these FDA grant programs and onsite visits provide an ideal reason to open the discussion. Implementing an HACCP system prior to these on-site visits could help lead to early detection of high levels of mycotoxins and allow time for a corrective response if needed. The increased pressure on feed manufacturers to consider implementing an HACCP system also makes it likely that feed manufacturing HACCP systems could become a requirement in the future. In fact, state feed control officials in Texas and California are now accredited to certify feed operations that take part in the voluntary HACCP program. The European Union has also already made adherence to HACCP principles a legal requirement for “feed business operators” in EU Feed Hygiene Regulation (EC) No. 183/2005. Voluntary implementation now could help resolve any internal difficulties without penalty and prepare your plant for the upcoming visits from state officials. Authors: Andrew Anderson Partner, Faegre and Benson (515) 447-4703 aanderson@faegre.com Diana Palmer Associate, Faegre and Benson (515) 447-4715 dpalmer@faegre.com
Â&#x2014;
harvest the value of low pH liquefaction
Call 1-800-847-5311 for information www.genencor.com
business briefs People, Partnerships & Deals
Aaron Potter has been promoted to engineering manager for Innovative Processing Solutions. His responsibilities include customer relations, project manPromoted agement, systems and Aaron Potter has 14plus years experience component design, as a systems and and estimating. Indesign engineer for Innovative Processing novative Processing Solutions and its Solutions, an affiliate affiliate, Stedman Machine Co. of Stedman Machine Co., provides custom solutions for processing systems and specializes in enhancing bulk material-handling systems.
ERI Solutions Inc. acquired the environmental affairs department from ICM Inc. in July and, with it, Bill Roddy, Andrea Foglesong, Adrien Kogut, Lauren Taylor and April Lockwood, who have joined the ERI team. In addition, three process engineers have begun working to develop and tailor comprehensive process safety
Finance Officer Brian Conn has held executive positions with emerging and highgrowth companies for more than 20 years and has provided financial consulting services to life science companies in both the U.S. and Europe.
management programs for the ethanol industry. Jay Beckel, Jim Lane and Gary Lium have engineering and on-the-job experience working for ethanol companies. The lack of process safety is the leading cause of catastrophic events in the chemical processing industry, and is a current emphasis for OSHA inspections around the ethanol industry, says ERI spokesman Nathan Vander Griend. The company is staffing up to help meet industry challenges in tightening regulations from both the U.S. EPA and the Occupation Safety and Health Administration, he adds. Larry MacDonald has joined the board of Enerkem Inc. He will bring 30 years of experience at Nova Chemicals Corp. in senior executive functions to the cellulosic ethanol developer. “With his extensive knowledge of the chemicals market, Larry represents a strong addition to Enerkem’s board of directors”, said Vincent Chornet, president and CEO. “We will benefit from his global industry expertise as we strengthen our leadership in biofuels and chemicals.” Codexis Inc. named Achilles Antonio
Verdezyne Inc. appointed Brian Conn chief financial officer (CFO) and Steve Jackson chief operations officer (COO). As CFO, Conn will head up Verdezyne’s finance, human resources, information technology and corporate communications functions. Jackson will be responsible for the scale-up of manufacturing operations and commercial production of all biobased chemicals. California-based Verdezyne, an industrial biotechnology company, is developing yeast strains for cost-effective production of biobased chemicals and fuels.
22 | Ethanol Producer Magazine | december 2011
Expanded Role Steve Jackson has served as Verdezyne’s CFO and COO since 2008 and will now focus on leading operations and commercialization.
Clement director, Latin America. He will head the newly-formed Codexis do Brasil Participacoes Ltda., with responsibility for managing Codexis’ expanding role in Latin America. The announcement follows the signing of a joint development agreement between Codexis and Raizen Energia S.A, Brazil’s largest sugar and ethanol producer, to develop an improved first generation ethanol process with enhanced performance economics. Clement joins Codexis after working more than 40 years in operations, sales and business development with DuPont in Latin America. He was also active in developing new biofuels, including ethanol and butanol in the region. Illinois corn grower Gary Niemeyer, Auburn, is the new president of the National Corn Growers Association, taking office Oct. 1 at the start of the association’s fiscal year. Niemeyer emphasizes that his highest priority in 2012 will be the drafting of a farm bill that continues to protect growers from loss due to adverse weather, crop disease and volatile markets. He commends efforts to improve consumer knowledge on important subjects such as ethanol and food production, including the NASCAR partnership and the U.S. Farmers and Ranchers Alliance. The NCGA reached a record number of members at 37,160 this year, topping last year’s record of 36,216. ArborGen Inc. has named Edward Shonsey chairman of the board. He brings 38 years of senior management experience and has a track record in guiding emerging companies into commercial success. Shonsey is cofounder and CEO of L1 Agrosciences Inc., developing agricultural traits such as nitrogen utilization and drought and salinity tolerance in plants. He has had top executive positions with Diversa Inc., Novartis/Syngenta Seeds Inc. and
BUSINESS BRIEFS Sponsored by
Pioneer Hybrid Inc. ArborGen is working on woody feedstock development for cellulosic ethanol and advanced biofuels. Proterro Inc. recently established a three-member advisory board to aid the company in the development and commercialization of Protose, a fermentation-ready sugar feedstock using a novel microorganism and photoreactor system. Harrison Dillon is president and chief technology Patented Researcher officer of Solazyme Credited with six patents, Christos Inc., a renewable oil Popadopoulos led developer. Thomas research at Amoco as well as led programs Dries is founder and on intellectual managing partner of property strategies for new technology NCN Partners, condevelopment across BP sultants in the renewChemicals. able chemicals and fuels markets. He also worked as vice president of business development for Gevo Inc. Christos Papadopoulos, a chemical engineer with almost four decades of experience in petrochemical industry research and production, led BP Chemical’s efforts on the green olefins project.
Bill Brady, Mascoma CEO and chair of the Advanced Ethanol Council, was welcomed to the board and executive committee of the Renewable Fuels Association at its annual meeting held in October. Chuck Woodside, CEO of KAAPA Ethanol, Minden, Neb., was re-elected chairman. Also re-elected as officers were Vice Chairman Neill McKinstray, vice president and general manager, ethanol division of
The Andersons Inc.; Treasurer Randall J. Doyal, CEO of Al-Corn Clean Fuel, Claremont, Minn.; Secretary Walter Wendland, CEO of Golden Grain Energy, Mason City, Iowa; and President Bob Dinneen.
alignment of practice overlap, including energy and agribusiness, acted as a major factor for the merger, which will expand the depth of legal expertise to a broader geographical footprint.
Bin Yang, an assistant professor at Washington State University, received a Defense Advanced Research Projects Agency award, which is a two-year $300,000 grant supporting his research converting lignin into biobased jet fuel. Feedstock for processing could be accessed from lignin byproduct resulting from cellulosic ethanol production, among other sources. Colocating the production of cellulosic biofuels and lignin jet fuel creates efficiencies that drive down production costs, according to Yang.
Pinal Energy LLC constructed a $250,000 pilot plant to test sweet sorghum viability for ethanol production next to its 50 MMgy corn/milo ethanol plant in Maricopa, Ariz. Locally available, sweet sorghum potentially yields 900 gallons of ethanol per acre compared to 300 gallons from corn, according to Pinal Energy General Manager Keith Kor. As a joint venture with the University of Arizona, the plant operates as an ongoing research facility and is available for lease by other ethanol producers seeking future testing of various feedstocks.
In October, Chemetex announced developments on cellulosic ethanol projects—one under construction in Italy and the second planned in Brazil. The 13 MMgy plant under construction in Northern Italy, expected to be operational in June, was transferred to BETA Renewables, a joint venture between Chemetex, a wholly-owned subsidiary of Mossi & Ghisolfi Group, TPG Capital and TPG Biotech. The new company was formed to exclusively license the trademarked Proesa technology. In Brazil, Chemetex will collaborate with GraalBio Investimentos S.A. to develop and construct the country’s first industrial-scale cellulosic ethanol facility, which will produce 20 MMgy from bagasse with expected startup in 2013. Faegre & Benson LLP and Baker & Daniels LLP announced they will merge law firms to form Faegre Baker Daniels LLP effective Jan. 1. The consulting arm of Baker & Daniels will be changed to FaegreBD Consulting on the same date. The
Gevo Inc. received $5 million from the USDA’s National Institute of Food and Agriculture to develop biojet fuel from woody biomass and a $600,000 contract to supply 11,000 gallons of fuel to the U.S. Air Force. Gevo will use the funds to optimize its cellulosic fermentation process through research done at Washington State University. When operational, Gevo’s demonstration plant in Silsbee, Texas, will convert up to 120,000 gallons of isobutanol per year into jet fuel, which will be used for engine testing and demonstration with A-10 aircraft at the Wright-Patterson Air Force Base in Dayton, Ohio. Yokogawa released a new wireless multi-input temperature transmitter. Built on the ISA100.11a industrial automation wireless communication standard, the YTMX580 is battery powered and features eight analog input channels. The YTMX580 is a cost-effective way to measure multiple temperature points in distant plant
december 2011 | Ethanol Producer Magazine | 23
BUSINESS BRIEFS
locations where there is no signal cabling or power available for traditional wired instrumentation. The company also released a new touch screen operator interface as part of a new model series for its DXAdvanced R4 data acquisition and display station. On track to break ground soon on the proposed 36 MMgy advanced biofuels plant, Highlands EnviroFuels LLC announced receiving its air permit on Sept. 28 and completion of an economic impact
study on Oct. 4. The facility, which will be located near Lake Placid, Fla., will initially have a nameplate capacity of 30 MMgy and utilize locally derived sugarcane and sweet sorghum feedstocks. The project will generate 60 full-time and 700 indirect jobs while providing Highlands County with $51 million of gross domestic product annually. LanzaTech NZ Ltd., a New Zealand firm with a novel fermentation technology converting gases to ethanol and chemicals, has developed another joint venture in China. The partnership with Shougang Group and New Zealand Shougang TangMing will build a demonstration plant at
one of Shougang’s steel mills in China with plans to quickly scale to a fully commercial facility. Beijing-headquartered Shougang is one of the largest steel producers in China. LanzaTech received two global awards this fall for its technology, named to the Global Cleanteach Top 100 and Company of the Year Asia Pacific. It was also judged “Best Innovation by a Small or Mediumsized Enterprise” in the global ICIS Innovations Awards. ICIS, a global energy, petrochemical and fertilizer market intelligence provider, is part of Reed Business Information Ltd. ZeaChem Inc. was named to the Global Cleantech 100 list, produced by Cleantech Group, a research firm focused on global cleanteach innovation, in collaboration with the UK’s Guardian News and Media. To qualify for the list, companies must be independent, for profit and not listed on any major stock exchange. ZeaChem’s 250,000 gallon cellulosic ethanol demonstration plant is nearing completion in Boardman, Ore.
Safety Award Employees of Marquis Energy display their Thoroughbred Safety Award from Norfolk Southern Railroad. From left,Ty Hildum, Andy Lanxon, Robyn Louderback, Adam Kunkel and Jim Craig.
Cim-Tek Filtration announced its Hydroburn PSR has been used to restore more than $4 million worth of ethanolblended gasoline in less than two years. For years, the company has provided alcohol monitor dispenser filters to aid in detecting phase separation. The addition of the proper amount of Hydroburn PSR restores separated fuel, and eliminates the need to replace the fuel. An average station owner can save $19,000 to $27,000 on an underground tank containing 5,000 gallons of phase-separated fuel, according to the company.
Marquis Energy LLC, Hennepin, Ill., is a two-time recipient of the Norfolk Southern Railroad Thoroughbred Safety Award. The company qualified by having zero defects and at least 1,000 carloads of hazardous materials shipped without a shipper-caused incident. Marquis Energy actually exceeded the minimum requirements with 2,733 carloads of hazardous material, approximately 79.3 million gallons of ethanol, shipped without any safety incidents. Additionally, Marquis Energy in Illinois and Marquis Energy-Wisconsin LLC are celebrating new safety records. Marquis Energy-Wisconsin has gone more than 700 days without a lost time-incident and Marquis Energy over 370 days without any such incident.
Eco-Energy Inc. announced signing service agreements with several ethanol plants recently to provide value-added marketing and distribution services and international sales opportunities. Siouxland Energy and Livestock Cooperative, Sioux Center, Iowa, signed on in late September
24 | Ethanol Producer Magazine | december 2011
BUSINESS BRIEFS
and Utica Energy LLC, Oshkosh, Wis., in early November. Two others were added to the portfolio in 2011, Iroquois Bio-Energy Co. LLC, Rensselaer, Ind., and Aberdeen Energy LLC, (Glacial Lake Energy LLC, Mina, S.D). Verenium Corp. secured up to $16 million in new secured financings, which will allow it to borrow up to $10 million against its eligible foreign receivables and up to $3 million against domestic receivables and inventory. It also received up to $3 million in secured equipment financing to help support the planned build-out of its research and bioprocess development laboratories and corporate headquarters in San Diego. The developer of highperformance enzymes also announced it has repurchased its remaining secured 9 percent notes, leaving an aggregate $34.9 million in outstanding unsecured notes. The repurchase was part of its strategy to address debt, strengthen capital structure and promote growth. Dyadic International Inc. completed a private placement of $3 million in convertible notes. The company will use the funds for working capital as it continues the development of its proprietary technologies for the discovery and manufacturing of enzyme and protein products for the bioenergy, industrial enzyme and biopharmaceutical industries. Weaver LLP, an independent accounting firm in the Southwest, is expanding its energy credit brokering services as part of the renewable and energy compliance practice. Services include assisting clients with the purchase and sale of various energy credits, including renewable identification numbers (RINs), sulfur credits, benzene credits and Low Carbon Fuel Standard credits. These services will be managed by Sandra Dunphy, a director in Weaverâ&#x20AC;&#x2122;s energy compliance practice, and Candace Loesby, who recently joined the
firm from a multi-national energy company. Together, they will work with clients to market or purchase credits, negotiate and prepare contracts, prepare and upload transactional data and validate credits. Grundfos Pumps opened its Water Technology Center in Fresno, Calif., in September. The facility offers a space for government, academic institutions and startups to share and gather information on irrigation, water monitoring, wastewater treatment and other water technology. The center will offer research entities access to Grundfos resources, helping to catalyze solutions to water scarcity challenges. It will function as a hub for linking research with business development. BinMaster Level Controls introduced a newly designed Pro Remote capacitance probe that offers the ability to mount the sensorâ&#x20AC;&#x2122;s electronic components up to 75 feet away from the sensing probe. This point level indicator is designed specifically for hostile applications such as high temperatures or excessive vibration, featuring a unique split configuration that houses sensitive electronics away from extreme conditions that may interfere with proper probe operation. The Pro Remote can be used for high-, mid- and low-level detection of solids, liquids or slurries.
Rockwell Automation Inc. unveiled a new line of programmable automation controllers for process applications. The Allen-Bradley ControlLogix 5570 Se-
ries controllers significantly improve the amount of information that can be exchanged between the control and supervisory layers, while allowing more control strategies to be executed. Further model releases in the new line are being planned for December and January for safety-related functions and operations in extreme environments. The company unveiled the new line as part of the 20th annual automation fair hosted by Rockwell Automation, Nov. 16-17 in Chicago.
Indeck Power Equipment Co. has a new line of trailer-mounted O-Type rental boilers for planned or emergency outages. The new trailer-mounted fleet ranges in size from 40,000 to 60,000 to 75,000 PPH capacities with design pressures of 395 psig. While unforeseen power outages are devastating to plants, Indeck understands the critical mandate to keep a facility operating with boilers for emergency, temporary or back-up usage. The new O-Type boilers are designed for ease of delivery, installation and set-up. Installation of the boilers is simple with easily accessible piping connections and a single electric connection. Indeck also offers a no obligation, boiler emergency preparedness program.
Share your industry briefs To be included in Business Briefs, send information (including photos and logos if available) to: Business Briefs, Ethanol Producer Magazine, 308 Second Ave. N., Suite 304, Grand Forks ND 58203. You may also fax information to (701) 7468385, or e-mail it to sretkaschill@bbiinternational.com. Please include your name and telephone number in all correspondence.
december 2011 | Ethanol Producer Magazine | 25
INDUSTRY INNOVATION
FEBRUARY 22-24, 2012 Gaylord Palms Resort & Convention Center | Orlando, Florida
KEYNOTE SPEAKERS ANNOUNCED
Insider Perspectives on Election 2012 — The Presidency and Congress Karl Rove and Robert Gibbs Karl Rove served as Senior Advisor to President George W. Bush from 2000–2007 and Deputy Chief of Staff from 2004–2007. He is known as “The Architect” of President Bush’s 2000 and 2004 campaigns. Rove has been described by respected author and columnist Michael Barone in U.S. News & World Report as “…unique…no …unique…no Presidential appointee has ever had such a strong influence on n politics and policy, and none is likely to do so again anytime soon.” Fred d Barnes, executive editor of The Weekly Standard, d has called Rove “the greatest test political mind d of his generation and probably of any generation… He knows nows history, understands the moods of the public, and is a visionary on matters of public policy.” Robert Gibbs has been an advisor and strategist to President Obama from the early days of Obama’s ama’s 2004 Senate race to his sweep to the White House. Most recently, ntly, Gibbs has served as President Obama’s Press Secretary. Gibbs has traveled eled a long road with President Barack Obama, and his rapport and access ss to President Obama provides provid i es intimate and insightful commentaries. He is one of President Obama’s masterminds mastermiinds and he can speak with great eat authority and accuracy from a White House insider’s perspective on any ny of the issues that have crossed the President’s desk. His leadership of President resident Obama’s campaigns makes him a valuable commentator on n the upcoming 2012 elections.
NationalEthanolConference.com Conference.com
! W O N R E T S I G RE
-DQXDU\
)HEUXDU\
0DUFK
$SULO
0D\
-XQH
-XO\
$XJXVW
6HSWHPEHU
2FWREHU
1RYHPEHU
'HFHPEHU
OUR ADVANCED BIOFUEL TECHNOLOGY WORKS DAY AND NIGHT TO IMPROVE YOUR BOTTOM LINE. “ The Highmark IMUS™ technology is unlocking the door to the advanced biofuels market.” - Steve McNinch, CEO of Western Plains Energy Highmark’s patented† bioRefinery technology is used to build digesters that utilize open-pen feedlot manure, food processing and municipal waste. This enables you to hook your ethanol plant up to a bioGas plant to form an Integrated bioRefinery™, allowing you to: · meet or beat EPA and LCFS benchmarks (ask about IMUS™) · increase ethanol output by up to 10% (ask about EIEP™) · cut all your gas and electricity costs www.HighmarkBioGas.com
Patents are granted (US 7,927,491, US 7,014,768 and CA 2416690 and others) and pending in many other countries.
†
commodities Natural Gas Report
New supplies impact basis, transportation costs Nov. 1â&#x20AC;&#x201D;As the natural gas market has moved from concern about supply shortages to excesses over the past four years, market prices have naturally responded by steadily dropping. The reason for the swing is dramatic technology developments (horizontal drilling and high-pressure fracturing) that have allowed economic access to shale formations. Our resource base has grown significantly, and the U.S. is now producing more natural gas each month than ever. The improved natural gas supply picture has impacted regional basis prices and some pipeline transportation rates. Regional basis prices are now tracking NYMEX prices closer than in the past. For example, a common spot index price in the Midwest (Ventura Index) is now trading at a 4-cent-per-million Btu (MMBtu) premium to NYMEX for the next
year, while in 2008, it traded at a 66 cents per MMBtu discount. While the Midwest has still experienced overall price decreases, the degree of decrease isnâ&#x20AC;&#x2122;t as much compared to 2008, since the geographic basis has tightened. Much of the new shale production directly impacts pricing from the Gulf of Mexico, which is the physical location (Henry Hub, La.) of the NYMEX natural gas contract. Essentially, the market area representing Henry Hub pricing has experienced much more of a supply increase compared to the Midwest. Another interesting impact is that shale production is occurring within existing major markets, such as Pennsylvania and Ohio, where the need for long-haul transportation services from distant supply basins such as Western Canada and the Gulf has diminished. Some, such as TransCanada Pipeline and Tennessee
By Casey Whelan
Gas Transmission, requested significant rate increases to cover costs from a smaller base of customers who have naturally pushed back at being asked to pay much higher prices for the same level of service. On the other hand, pipelines have the regulatory right to cover all reasonable costs, even if higher costs are driven by factors beyond the control of either the pipeline or existing customers. Conclusion: Increased shale development and production clearly has been good for energy consumers across the nation. Some impacts, however, such as changes in traditional basis relationships and pipeline rate increases, have somewhat mitigated the full value for some energy consumers.
Corn Report
Bearish fall corn market still looking at tight supplies Oct. 31â&#x20AC;&#x201D;Corn exhibited bearish fundamentals at the end of September, coupled with global concerns to sell off December futures to just below $5.75. Demand changed as margins improved for ethanol and livestock, giving corn a lift back above $6. Harvest in the western Corn Belt moved along, but weather and a later-maturing crop slowed progress in the eastern Corn Belt, which resulted in a firmer cash market. While domestic demand remained steady, global demand for U.S. product slowed as more competitive feedgrains/ feedstuffs attracted feeders, indicated by news of China acquiring wheat from Australia and Japan buying feedgrains from the Ukraine. The USDA October supply/demand report left corn yields unchanged from the previous month at 148.1 bushels. Acreage harvested was reduced by only 100,000 acres
with production at 12.433 billion bushels. Carryin increased by 208 million bushels due to Sept. 1 ending stocks adjustments. The result was new crop carryout increased from 672 to 866 million bushels. Export demand decreased by 50 million bushels to 1.60 billion. Feed and ethanol demand for next year were unchanged from the previous month, though still lower than a year ago. At this time, the carryout-to-use ratio is 6.8, tighter than the 8.6 from last year. Note that at this same time last year, the new carryout was projected at 6.7. The market rationed corn demand and carry-out ascended. World corn carry-out was projected
28 | Ethanol Producer Magazine | december 2011
BY JASON SAGEBIEL
higher at 123.19 million metric tons (mmt) versus the previous 117.39. Corn production increased by 4 mmt in China, though domestic demand increased too, as illustrated in the accompanying graph.
report
Regional Ethanol Prices Front Month Futures (AC) $2.753 REGION
SPOT
RACK
West Coast
$3.025
$2.920
Midwest
$2.780
$2.800
East Coast
$3.010
$2.920 SOURCE: DTN
Regional Gasoline Prices
DDGS Report
Fall DDGS prices jump on tight supplies BY SEAN BRODERICK Oct. 31—Buyers were waiting for new crop to weigh on corn prices, which didn’t happen as in most years. Ethanol plants took normal fall maintenance downtime, although some went as long as 10 days. For a larger plant that meant 7,000 tons did not get marketed, which adds up. Consequently, prices jumped dramatically in late October, up as much as $20 per short ton delivered to California and $15 per short ton to Chicago. Obviously, the lack of supply was a factor, as was the cash price of corn, but buyers struggling to find quick replacement feed, rallied the spot market. As plants come back on line, and buyers explore alternatives such as feed wheat, we should see some leveling off.
Container exports remain strong, though bulk shipments continue to lag last year’s record pace. Mexico increased its usage, but China and South Korea continue to track well below 2010. With the majority of the world’s growing areas having had decent crops, DDGS is competing with Black Sea feed wheat and corn and more. DDGS prices have gained about 6 to 8 percent of corn’s value in the past month. Cold weather will soon dictate better feeding, and with strong margins for hogs and cattle, demand should pick up. Whether prices keep pace with a “normal” supply situation will be the story for the winter.
Front Month Futures Price (RBOB) $2.6822 REGION
SPOT
RACK
West Coast
$2.987
$3.134
Midwest
$2.641
$2.854
East Coast
$2.725
$2.873 SOURCE: DTN
DDGS Prices ($/ton) location
dec 2011
nov 2011
Minnesota
208
195
dec 2010 145
Chicago
227
215
165
Buffalo, N.Y.
232
225
162
Central Calif.
278
254
198
Central Fla.
246
238
180 SOURCE: CHS Inc.
Corn Futures Prices Date
Low
Close
6.57
6.45 1/4
6.55
6.36
5.92 1/2
5.92 1/2
5.85 1/4
5.75 1/4
October 28, 2011 Sept. 30, 2011 October 28, 2010
(Dec. Futures, $/bushel)
High
5.79 SOURCE: FCStone
Cash Sorghum Prices ($/bushel) LOCATION
Ethanol Report
oct 28, 2011
sept 29, 2011
oct 28, 2010
Economy, European debt issues play havoc with energies BY RICK KMENT
Superior, Neb.
6.33
5.93
5.39
Beatrice, Neb.
6.21
5.78
5.14
Sublette, Kan.
6.26
5.73
5.04
Salina, Kan.
6.60
6.05
5.27
Oct. 31—October was an odd month for ethanol and gasoline markets. While corn futures made an attempt to bounce back, outside market factors and questions of long-term demand undermined the overall tone of the market. Ethanol and gasoline markets posted mixed messages at month’s end. Prices posted moderate to strong gains through the ethanol futures rallying over 35 cents per gallon, while RBOB gasoline futures posted a 15-cent gain. Rack and spot markets, however, were all over the board, seeing 40-cent-per gallon increases in some regions, while others slipped. The disconnect in ethanol futures, corn futures, spot and rack follows a shift in noncommercial or speculative trader
Triangle, Texas
6.19
5.99
5.29
Gulf, Texas
6.93
6.68
5.44
interest in the futures market and retail and wholesale buyer activity in the cash market. It became evident just how challenging maintaining physical supplies can be for end users. The potential deal to stabilize the European debt crisis and latest round of economic reports has the energy market in a tizzy with wide price shifts delivered on good and bad news days. Late October can be summed up as having more active good days than bad. But the challenge is that this latest spike in market prices has the potential to be just a couple of bad days away from recent lows. Maintaining both risk management strategies as well as physical inventory levels is a challenge, and never as crucial.
SOURCE: Sorghum Synergies
Natural Gas Prices
($/MMBtu)
LOCATION
nov 1, 2011
oct 1, 2011
nov 1, 2010
NYMEX
3.52
3.76
3.29
NNG Ventura
3.77
3.77
3.47
CA Citygate
3.85
4.10
4.05
SOURCE: U.S. Energy Services Inc.
U.S. Ethanol Production
(1,000 barrels)
Per day
Month
End stocks
907
28,110
17,900
July 2011
891
27,624
18,700
Aug. 2010
870
26,964
17,380
Aug. 2011
SOURCE: U.S. Energy Information Administration
december 2011 | Ethanol Producer Magazine | 29
headline essence
GeneArt速 gene synthesis, build your
next breakthrough
headline brow
Experience the new generation of gene synthesis and assembly tools GeneArt速 solutions give you predictability, adaptability, and confidence. Whether increasing protein expression rates as much as 100X or assembling genetic constructs with unprecedented precision, GeneArt速 gene synthesis and assembly tools enable you to break through your most complex challenges.
Go to www.invitrogen.com/geneart 息2011 Life Technologies Corporation. All rights reserved. The trademarks mentioned herein are the property of Life Technologies Corporation or their respective owners. For research use only. Not intended for any animal or human therapeutic or diagnostic use. CO18747
distilled
Ethanol News & Trends
No Surprises
Expert committee finds industry unlikely to meet 2022 cellulosic goal The response from the biofuels industry regarding the content of a report released in October by the National Academy of Sciences on the potential economic and environmental effects of the U.S. renewable fuel standard (RFS2) was loud and clear: this is a report that should be digested with a large grain of salt and should in no way influence future policy. “You can read this report in a number of ways because the conclusions are based on variables that will undoubtedly change with technological advancements and innovation within the industry,” says Growth Energy CEO Tom Buis. The study “largely assesses ethanol and other biofuels in a vacuum and fails to appropriately compare the costs and benefits of renewable fuels to the impacts of the marginal petroleum sources they are displacing,” the Renewable Fuels Association adds. The report, “Renewable Fuel Standard: Potential Economic and Environmental Effects of U.S. Biofuel Policy,” is an independent assessment by 16 researchers of the economic and environmental benefits associated with achieving the goals set by the RFS2. Committee co-chair Wally Tyner, Report in Question energy economist, The ethanol industry professor of agriculhas a responsibility to question and tural economics at challenge, says Purdue University, Wally Tyner, energy economist at Purdue and co-director of the University. The experts university’s Center for writing the report have a responsibility to call it Research on Energy as they see it. Systems and Policy, says he’s not surprised by the ethanol industry’s reaction to the report. “They have a responsibility to protect their turf, if you like, and the people who do studies like this have a responsibility to tell it like we see it,” he says. “I don’t see a problem with that.”
It’s doubtful the industry can seriously dispute the finding that the industry is unlikely to meet the 2022 RFS2 mandate for cellulosic biofuel, although Tyner says that finding appears to be the most controversial. “The reality is that with zero gallons today, we’re not likely to get to 16 billion gallons of cellulosic by 2022,” he Impact The impact of dedicated energy crops such as switchgrass says. “If you look back, it Unknown on greenhouse gas emissions reductions will remain unclear until more crops was the Energy Tax Policy are established, according to a National Academy of Sciences report. Act of 1978 that provided the original impetus and since that time we’ve level; we’re saying you’re not going to meet it grown from 0 billion gallons to 14 billion by 2022.” gallons [of corn ethanol production], from Another finding included in the 446-page zero plants to over 200 plants, and that’s with report that drew significant attention was the a technology we knew and a relatively inex- conclusion that the RFS2 may be ineffective pensive feedstock. With cellulosics, we have a in reducing global greenhouse gas emissions. technology that we don’t know well, we have In order to reach this tentative conclusion, expensive feedstocks and no plants built, and however, the committee separated biofuels we’re expected to go from 0 gallons to 16 bil- into three feedstock categories, two of which lion gallons in 11 years when it took us 30 do significantly reduce emissions. Corn ethayears to go from zero to 14 billion gallons for nol is widely agreed to neither increase nor corn. That’s just not likely to happen.” decrease emissions significantly, Tyner says. Considering that the overwhelming ma- But when residues such as corn stover and jority of potential cellulosic ethanol produc- forest trimmings are used to produce biofuers agree that they are not likely to meet the els, the result is a major reduction. The im2022 RFS goal, it is reasonable to assume pact from the use of dedicated crops, the then that the underlying reason for the indus- third category, will remain unclear until more try groups’ dissatisfaction is a concern that crops are grown to serve as an example. the report will be used to support the moveEthanol industry representatives also ment to dismantle the RFS. Tyner says that questioned why the report did not include a while the report was prepared for policymak- comparison with petroleum. The answer is ers, it offers no policy suggestions and should simple: they weren’t asked to. The U.S. EPA “absolutely not” be used to support chang- and the California Air Resources Board are es to the mandates. “This report makes no beginning to conduct those comparisons, policy recommendations,” he says. “It’s just however, and Tyner assumes that biofuels findings. It doesn’t say anything about either will come out on top. He points out that the changing the RFS or keeping it the same. All committee was also not asked to evaluate the it says is we’re not likely to meet it. And that’s national security implications associated with just for cellulosics. We’re not saying you’re domestic fuel production. —Kris Bevill not ever going to meet that [16 billion gallon]
32 | Ethanol Producer Magazine | december 2011
distilled
USDA announces funding for producers not using corn Fourteen ethanol producers from Arizona, Indiana, Kansas, Missouri, Nebraska and Texas will receive a total of $11.5 million in payments through the USDA's Bioenergy Program for Advanced Biofuels program, the agency announced Oct. 31. Payments are calculated based on advanced biofuels produced from renewable biomass other than corn
Brazil Looks to Sweet Sorghum
Monsanto providing seed for off-season ethanol feedstock Every year, Brazilian sugarcane mills clear and replant about 1.7 million hectares (4.2 million acres) of cane. This year, some mills are planting sweet sorghum developed by Monsanto Co. in the off season. “This isn’t a replacement crop. It’s planted in addition to cane,” says Jose Carlos Carramate, business leader for CanaVialis, Monsanto's sugarcane breeding and technology program. Sweet sorghum was planted in October and harvested as early as February, a time when sugarcane plants have low sucrose levels and produce little ethanol. Monsanto expects to sell enough sweet sorghum for about 20,000 hectares of the secondary ethanol feedstock in Brazil this year. That’s enough to produce about 80 MMly (21.1 MMgy) of ethanol.
starch. Also on the list of producers that will receive payments are biodiesel and pellet producers as well as anaerobic digestion units Ethanol production from sorghum qualifies, according to the National Sorghum Producers. Participating producers are paid quarterly with an additional incremental production payment that’s calculated at the end of the fiscal year. Of the fourteen producers, White Energy Inc. had the highest award at more than $3.1 million. White Energy owns three plants with a total capacity of 275 MMgy. Two of the plants are located in Texas, White Energy Hereford LLC and White Energy Plainview LLC. The third plant is in Russell, Kan. The producer that received the smallest award was Central Indiana Ethanol LLC at $120,490. Sorghum is known as a drought-tolerant crop and was planted on about 4.8 million
acres in 21 states in 2010, according to the NSP. The top five sorghum producing states were Kansas, Texas, Oklahoma, Colorado and South Dakota. Kansas’ spot at the top of the list is clear, as the lion’s share of funding awards— eight total—were at Kansas ethanol plants. In fact, of the total $11.5 million awarded, nearly half went to Kansas ethanol producers. A 2009 study prepared for the United Sorghum Checkoff Program showed that 43 percent of the sorghum produced in Kansas and 23 percent of the sorghum produced in Texas is used to make ethanol. At the time of the study, all of the plants in Kansas and Texas planned to use some percentage of sorghum in producing ethanol and some of those plants use 100 percent sorghum. On average, the plants used 48 percent corn and 52 percent sorghum. —Holly Jessen
The company is working with 20 sugarcane mills and will either sell the seeds or take a cut of the profits in exchange for seed, Carramate says. Some farmers have had difficulty planting the small sweet sorghum seeds. On the other hand, sugarcane mills can use the same equipment to crush and process sweet sorghum as they do for sugarcane. A project to grow sorghum seed was first attempted in Brazil in 1980 but wasn’t considered successful due to low yields and sugar content. At that time, sugarcane was considered far more profitable for ethanol production. In 2004, Monsanto began a sorghum project for crossbreeding for biomass and sugar traits. In 2008, the Sorghum Seed Monsanto Co. is providing sugarcane mills in Brazil with sweet sorghum seed to supplement sugarcane for ethanol company acquired CanaVialis, production in the off-season. moving the work in Brazil even further forward. The company planted test sweet sorghum acres began March 17, with areas and evaluation fields in 2010, says Uru- the first Brazilian gallons of industrial-scale batan Klink, sorghum breeding leader for ethanol from sweet sorghum produced two Monsanto Brazil. The first harvest of those days later. —Holly Jessen december 2011 | Ethanol Producer Magazine | 33
PHOTO: MONSANTO
Sorghum Ethanol in Spotlight
distilled
Terminal Error
In October, a technical malfunction at a Magellan Midstream Partners LP terminal in Mankato, Minn., caused high percentages of ethanol to be blended with gasoline at the terminal. The unapproved fuel was then distributed in 108 truck loads to more than 60 retail gas stations and cooperatives over a four-hour period on Oct. 8, according to information the company provided to state officials Oct. 10. Magellan immediately shut down its terminal to prevent more highblend ethanol from being distributed and cooperated with state officials to recover the fuel that had already left the terminal. The process was time-consuming, in part, because some of the off-spec gasoline was delivered to bulk plants and secondary distributors. On Oct. 17, Magellan announced it had resumed gasoline loading operations at the terminal. “Virtually all of the remaining gasoline with high ethanol content which was distributed into the local marketplace last weekend has been recaptured and replaced with gasoline meeting the state standards,” the company stated, adding, “We have implemented additional measures to ensure the gasoline distributed from our facility meets state specifications.” It is unclear exactly what percentage of ethanol was in the blends delivered to Minnesota gas stations, but one fuel sample taken by weights and measures officials was shown to contain a 63 percent concentration of ethanol. Had the issue not been noticed and reported as soon as it was, consumer backlash from those who unknowingly filled their nonflex-fuel vehicles with high blends of ethanol could have easily been mistakenly directed at the ethanol industry. Fortunately, there have been no widely reported issues with consumer vehicles as a result of the error. Magellan has been directed by the Department of Commerce to provide details as
PHOTO: BBI INTERNATIONAL
Blending mishap sends incorrect blends to Minnesota stations
Mistakes Happen Magellan Midstream Partners LP acted quickly to correct an operational error at a Minnesota terminal that resulted in high ethanol blends being distributed to area gas stations.
to how the error occurred and what it plans to do to ensure it doesn’t happen again, but at press time the report had not yet been made available to the public. Mike Turchi, president of Georgia-based Petroleum Measurement Equipment Co., says that while he’s not familiar with the specifics of this incident, in general, this type of operational malfunction could be caused by any number of equipment failures, although they are rare, he stresses. “There are inventory systems, checks and balances that [are conducted] on a daily basis to ensure that,” he says. “The industry as a whole is very compliant and has very rigid, sound methods to ensure that you catch these mistakes as quick as you can.” Terminals primarily use one of two methods for ethanol blending: ratio or sequential. Ratio blending consists of sideby-side meters that dispense gasoline and ethanol. Batch controllers pace the flow of ethanol from one meter to create the specified blend based on the amount of gasoline flowing from the main meter. Turchi says ratio blending is typically the preferred method at terminals because it ensures that the correct percentage of ethanol is mixed with gasoline, even if the batch is cut short for
34 | Ethanol Producer Magazine | december 2011
some reason. With sequential blending, one meter is used to dispense both ethanol and gasoline. Ethanol is dispensed first, so if the load is stopped before the correct amount of gasoline has entered the tank, the ethanol blend will be higher than intended. “You can fix that, but generally that’s the reason why companies will choose ratio blending over sequential,” Turchi says. Larger terminals may still opt for sequential blending, however, because it is a faster method than ratio blending. Blending mishaps can also be caused by a flow meter malfunction, a control valve malfunction or an issue within the computer system. Whatever the problem, Magellan took action to immediately correct it, which falls in line with its reputation for being one of the best in the business, Turchi says. “Magellan is one of the best operators in the country and they’ve got some of the best engineers and equipment,” he says. “I suspect that their operating methods are consistent with, if not above, what the rest of the industry does.” —Kris Bevill
distilled
Fighting for the Farm Bill
Renewable groups take action to protect energy programs Par for the course, House and Senate Agriculture Committees missed a Nov. 1 deadline they set for themselves to provide policy recommendations to the Joint Select Committee on Deficit Reduction detailing its suggestions to cut $23 billion from the 2012 Farm Bill. Ahead of the specific policy recommendations release, details as to which programs would be targeted for reduction and/or elimination were sparse. Paul Winters, communications director for the Biotechnology Industry Organization said the committees’ work on the issue had been “a little bit of a black box,” with very little information leaking out to interested parties. But despite the lack of indicators, renewable energy groups decided to launch an aggressive campaign to convince congressional members that the Farm Bill’s energy programs should be spared the chopping block.
The renewable energy sector is a diverse one, and often becomes splintered as individual industries fight to retain support for their causes in an era of scant federal financial opportunities. The Energy Title of the Farm Bill provides support to all sectors, however, so representatives of biofuels, biomass, wind, forestry and other industries decided to join together to form the new Ag Energy Coalition. Winters says the coalition allows the groups to speak with one voice as to the importance of renewable energy. “That’s why the coalition was formed,” he said. “To unify our voice and say that the Energy Title as a whole and all the programs are important, rather than try to fight for individual programs.” Programs housed within the 2008 Energy Title include the Rural Energy for America Program, the Biomass Crop Assistance Program, the Biorefinery Assistance Program and the Biobased Markets Program. In a letter sent to House and Senate ag committee leaders, as well as the 12 members of the joint select committee, the newly formed Ag Energy Coalition pointed out that the popular energy programs have helped fund thousands of projects in rural areas throughout the country. While they have had high impact, the programs carry a relatively low price tag, totaling less than 1 per-
Cuts and attacks The ethanol industry is gearing up for a battle to retain beneficial Farm Bill programs as well as maintain support for the renewable fuel standard and E15.
cent of total outlays, according to the group. Secretary of Agriculture Tom Vilsack addressed the importance of the Energy Title during a speech delivered in October to agricultural equipment manufacturers at the John Deere Des Moines Works facility in Iowa. “Rural America has done a great job of helping to develop the domestically produced renewable energy and fuel,” he said. “That job must continue because when we create those opportunities, we create jobs, we reduce our reliance on foreign energy sources, and we enhance our national security. USDA has to have the tools to be able to continue to help this biobased and biofuel and renewable energy economy, and we need to make sure that it's vibrant in all regions of the country. Continuing our investment in renewable energy, biofuel, and biobased products will improve the bottom line for farmers as we find creative ways to use that which they grow.” The joint select committee is scheduled to identify more than $1 trillion in budgets cuts over the next 10 years by Nov. 23. Congress is then expected to vote on the super committee’s budget reduction plan by Dec. 23. Meanwhile, some members of Congress have moved ahead with plans to overhaul the renewable fuel standard (RFS) and delay the introduction of E15 into the marketplace. Rep. Jim Sensenbrenner, R-Wis., introduced a bill that would require an independent scientific analysis to be conducted on the implications of E15 use in vehicle, marine and small engines. Sensenbrenner said he has “serious concerns” with the U.S. EPA’s approval of E15 for some vehicle models and feels that the introduction of E15 into the marketplace is being rushed. The EPA is currently the defendant in multiple lawsuits filed by opponents of E15, including small engine manufacturers and petroleum refiners. On Oct. 5, Reps. Jim Costa, D-Calif., and Bob Goodlatte, R-Va., introduced legislation that would place limitations on the corn ethanol portion of the RFS based on biannual USDA reports on the corn stocks-to-use ratios. In the case of tight corn supplies, the corn ethanol portion of the RFS would be reduced. Ethanol representatives say this approach would place the industry in jeopardy and have no effect on corn prices. —Kris Bevill
december 2011 | Ethanol Producer Magazine | 35
distilled
IMAGE: RONALD DE VRIES, CBS-KNAW FUNGAL BIODIVERSITY CENTRE
Turn Up the Heat
Researchers explore heat-resistant enzymes Researchers representing the U.S. DOE Joint Genome Institute, Novozymes A/S and Concordia University in Montreal, recently concluded a genome sequencing project for two heat-resistant fungi that is expected to provide solid base information for future biofuels-related enzyme research. Thielavia terrestris and Myceliophthora thermophila had each already been known to thrive in environments with temperatures above 113 degrees Fahrenheit. Researchers had also previously documented the fact that enzymes in those fungi remained active at temperatures ranging up to 167 F, but little else was known about cellulase enzymes produced by the fungi, says Randy Berka, a director at Novozymes in Davis, Calif. “Thermophilic fungi can be found worldwide, most commonly in habitats where self-heating of plant material results in high temperatures, such as compost heaps, municipal waste, plant straw, and animal dung,” he says. The two species selected for this project were chosen because of their ability to produce enzymes that degrade cellulosic materials at higher temperatures than enzyme blends from nonthermophilic fungi. Samples of the strains used for this project were obtained from culture collections that were originally isolated from soil, Berka says. The benefits of using enzymes from thermophilic fungi to produce ethanol and other biofuels as well as biochemicals are economical. Enzymes become more active at higher temperatures, so having the ability to turn up the temperature of the production process will mean faster production times and more volume. “The major interest in these enzymes lies in their application for the biochemical/enzymatic route to cellulosic biofuels,” Berka says. “Because the rates of enzyme reactions increase with temperature—sometimes doubling with an increase of just 10 degrees Celsius—a way to 36 | Ethanol Producer Magazine | december 2011
Hot Bug An enhanced view of the thermophilic fungus M. thermophila.
reduce the production costs of ethanol from lignocelluloses is to carry out the enzymatic hydrolysis at higher temperatures. This could potentially reduce the reaction time, the retention time in a reactor and the required enzyme loading.” Researchers also tested the enzymes’ effectiveness at breaking down flowering plants under a variety of temperatures and found that the enzymes from those two species of fungi performed well in a variety of temperatures. “Since these thermophiles are much more efficient than other cellulose degraders in breaking down cellulosic biomass, their enzymes are likely to be more active than known cellulases and/or they have developed new strategies for biomass degradation,” says Adrian Tsang, biology professor and director of the Center for Structural and Functional Genomics at Concordia University. “These thermophilic fungi represent excellent hosts for biorefineries where biomass is converted to biofuels as an alternative to modern oil refineries,” says Igor Grigoriev, leader of the DOE JGI’s Fungal Genomics Program. “The fact that these organisms not only deliver a broad spectrum of heat-tolerant enzymes but can also host new enzymes and be optimized for industrial processes holds great promise for significant improvements over existing systems.” Following the genome sequencing, researchers now must produce and test the enzymes in pilot-scale conditions to simulate industrial applications. Berka says it’s hard to estimate when the results of this research may be visible in the marketplace, but adds that the findings can be used to advise future enzyme selections and has the potential to decrease the discovery cycle for enzymes from these fungi by up to one year. —Kris Bevill
distilled
SOURCE: FREEDOM FILM POSTER
ARE YOU
Road Trip Rebecca and Josh Tickell filmed a documentary that focuses on clean energy solutions, including ethanol.
Ethanol Hits Red Carpet Documentary film premieres in DC
Coming to the end of a three and a half month tour of 50 cities, Freedom, a documentary film focusing on clean energy solutions, premiered in Washington, D.C., Oct. 26. Also on hand at the film’s screening was the freedom bus, which runs on ethanol, has 19 solar panels and includes a high-tech mobile learning lab. Participating in a post-screening debate and Q&A were Dennis V. McGinn, retired vice admiral and the president of the American Council on Renewable Energy and retired four-star general Wesley Clark, co-chairman of Growth Energy. They aren’t the only big names associated with Freedom. Presidential hopeful and former Speaker of the House Newt Gingrich, singer/songwriter Jason Mraz and actress Michelle Rodriguez are some examples of the famous faces that show up in the documentary. The film was directed by husband and wife team Josh and Rebecca Tickell and looks into green solutions such as advanced biofuels like cellulosic ethanol, plug-in hybrid electric cars and other sustainable technologies. “Freedom is the first documentary to show a clear path for how the United States can end its oil
dependence, turn its foreign debt into a surplus of cash, make over $3 trillion a year and put 8 million Americans back to work,” Rebecca Tickell says. “The answer is simple— replace what’s in the gas tank of every one of the 250 million cars on the road today with a high-tech fuel made in America.” It sounds simple—but, as Freedom shows, “the United States has been going about it the wrong way.” Many well-known companies in the ethanol industry are listed as partners in the project, including Green Plains Renewable Energy Inc., Propel Fuels, Marquis Energy, Poet LLC, Patriot Renewable Fuels and many more. “This is the first documentary that truly showcases the potential of home-grown, renewable ethanol for our economy, our environment and our national security,” says Tom Buis, CEO of Growth Energy, also a sponsor. “Josh and Rebecca Tickell’s film clearly illustrates the dangers of our dependence on fossil fuels and showcases ethanol as the one solution that can set America on the path to freedom.” The documentary points out that Big Oil and environmentalists, who would seem to be extremely divided on the issue of oil, often work together to thwart green fuels. Recent efforts to modify the renewable fuel standard (RFS) are a case in point, they say. “How ironic that oil and environmentalists would fight the RFS when the RFS is the only hope we have to get us beyond corn and toward using waste as fuel,” Josh Tickell says. —Holly Jessen
STOCKED? When you need to perform maintenance, time wasted is money lost.
Reduce downtime—make your spare parts inventory THE prime directive of your maintenance department. We will handle all of your hammermill spare parts needs. Call our parts sales department today for the professional service and expert advice you have come to expect from Roskamp Champion. Preserve the integrity of your mills. Use original replacement parts. Buy genuine Roskamp Champion parts.
800-366-2563 | WATERLOO, IOWA
WWW.CPM.NET december 2011 | Ethanol Producer Magazine | 37
distilled
China to the Rescue
U.S. project developers look to China for financial support The U.S. federal government continually names China as being a country to beat in the clean energy race. However, increasingly, cellulosic ethanol producers and technology developers are coming to view China not as a competitor, but as a collaborator. In late October, BlueFire Renewables Inc. signed a memorandum of understanding with China Huadian Engineering Co. Ltd., one of Chinaâ&#x20AC;&#x2122;s largest utilities, to finance its 19 MMgy biorefinery in Fulton, Miss., and to potentially finance five other projects in the U.S. Huadian and BlueFire are also considering collaborating on projects in similar projects in China, using BlueFireâ&#x20AC;&#x2122;s technology and Huadianâ&#x20AC;&#x2122;s electricity generation expertise.
The meeting between BlueFire and Huadian was facilitated by the Washington, D.C.based, nonprofit National Center for Sustainable Development. Formed in 2001, the organizationâ&#x20AC;&#x2122;s mission is to reduce greenhouse gas emissions through the development of sustainable projects and programs that demonstrate the economic benefits of positive environmental practices. In 2009, the NCSD joined with the China Clean Development Mechanism Fund Management Center (CDM Fund) to launch the China-U.S. Low Carbon Development Cooperation Program as a way to promote the implementation of low-carbon projects in both countries. It was through this program that NCSD was able to pair BlueFire with Huadian. Mitchell Stanley, president and trustee of the NCSD, says the China-U.S. program is designed to introduce U.S. developers of technologies that are practical and scalable to potential counter-parties in China at a high level. â&#x20AC;&#x153;In China, you have to start at the top and work your way down. You cannot start at the bottom. Thatâ&#x20AC;&#x2122;s just the way it works,â&#x20AC;? he says. The CDM
and Chinese government officials approved of BlueFireâ&#x20AC;&#x2122;s approach to biomass-fired power generation, biofuels and biochemical production, which opened the door for a partnership with Huadian, he says. Huadian was selected as a potential partner for BlueFire because of its interest in biomassfired power generation. Stanley says one area of focus at NCSD is to find â&#x20AC;&#x153;creative matchingâ&#x20AC;? solutions to pair a U.S. companyâ&#x20AC;&#x2122;s strengths with a Chinese firm that has a particular interest in those strengths. â&#x20AC;&#x153;The Chinese companies have a variety of investment options,â&#x20AC;? he says. â&#x20AC;&#x153;They can go anywhere on the planet and invest anywhere they want to. [But] I think the Chinese genuinely feel that America is the market they need to be in. They have tremendous world-class companies, but you have to make it in the United States to know that you have arrived.â&#x20AC;? The agreement between BlueFire and Huadian was the NCSDâ&#x20AC;&#x2122;s first cellulosic ethanol-related project and its most significant renewable energy project to date. â&#x20AC;&#x201D;Kris Bevill
Fueling a Sustainable Future Advanced biofuels are the way of the future. Investing in them now gives you the edge in developing the most sustainable and economic biofuels solutions. Let Burns & McDonnell help you create a sustainable future. All feedstocks. All fuels. All technologies. All industries. All services.
Comprehensive Services r 4JUF TFMFDUJPO r 5FDIOPMPHZ FWBMVBUJPO r 'SPOU FOE QMBOOJOH r &OHJOFFS QSPDVSF DPOTUSVDU r 4UBSUVQ BOE DPNNJTTJPOJOH Ron Jones 1-314-682-1571 ronjones@burnsmcd.com
38 | Ethanol Producer Magazine | december 2011
Engineering, Architecture, Construction, Environmental and Consulting Solutions
Ethanol Less Volatile
IndyCar crash would have been more fiery with gasoline The death of IndyCar driver Dan Weldon was a tragedy that rocked the racing world. Weldon was killed Oct. 16 in a 15-car accident at Las Vegas Motor Speedway. While there’s nothing good about what happened, Dan Schwartzkopf, a former drag racer who started using ethanol in the early 1990s, points out that things could have been much worse if IndyCar races weren’t fueled by E100. Vehicles fueled by gasoline would have been more susceptible to fire as it is more volatile than ethanol and ignites more easily. According to information published by Argonne National Laboratory from a study done for the
U.S. DOE, gasoline ignites at 495 degrees, methanol at 800 degrees and ethanol at 850 degrees. The IndyCar Series has been running on E100 since 2007 and will switch to E85 in 2012. Depending on price and availability, some races may use ethanol produced in Brazil from sugarcane. The Iowa Corn Indy 250, however, is sponsored by the Iowa Corn Growers Association and fuels up Fatal Crash A public memorial was held for Dan Weldon at the strictly with corn-based ethanol. In Coseco Fieldhouse on Oct. 23. 2010 the IndyCar Series used about 70,000 gallons of ethanol—the equivalent of EPM. Ethanol and methanol burn invisibly unless a 2 percent denaturant is added. about 142 acres of corn planted in Iowa. IndyCar is working on a two-phase investiSchwartzkopf, today an account manager for ICM Inc., has a rich history in encouraging gation of the crash. "We must continue to move ethanol use on the racetrack. He’s the former forward with a thorough investigation," says owner of Renova Racing’s six-car team and was Randy Bernard, CEO, IndyCar. "Fortunately, involved in helping the Indy Racing League that has already begun, and we have the protoswitch from methanol to ethanol—among oth- cols in place to get this done. This was a tragic er things. The drawback to using ethanol in race accident, and IndyCar needs to understand evcars is the same is with using methanol, he tells erything possible about it." —Holly Jessen
december 2011 | Ethanol Producer Magazine | 39
PHOTO: DANIEL INCANDELA
distilled
distilled
Divergent Feedstocks
One pine tree as good as another? Guess again In the process of researching various feedstocks for their startup company clients, Golden, Colo.-based Hazen Research Inc. noticed a trend. Feedstocks are not all created equal—even if that feedstock bears the same plant name. In an independent study, Hazen discovered differences among lodgepole pine trees, says Brian Cooper, senior process engineer. Specifically, beetle-kill lodgepole pine trees respond differently to pretreatment and produce different products than healthy wood. “You could convert either one with relative ease with the known processes now,” he tells EPM. “It’s just that if you designed a process around one
flavor of feedstock and then you switch to a different one, you could run into some pretty big problems.” In a cost-benefit analysis, Hazen determined that for an integrated biorefinery producing ethanol and pyrolysis oil, revenues only varied by $13 depending on the output of the two products. Hazen calculated this based on a 2011 National Renewable Energy Laboratory model, which showed total revenues ranging from $269 to $256 based on $1.79 per gallon ethanol and $1.05 per gallon pyrolysis oil. Yield, however, varied widely, ranging from 783 pounds of ethanol and 382 pounds of pyrolysis oil compared to 1,759 pounds of pyrolysis oil and no ethanol. The lesson is, pick your process based on your feedstock, Cooper says. Beetle-kill pine produces low-grade pyrolysis oil, so it would be better to maximize ethanol yield with that type of feedstock. With inefficient or non-existent hydrolysis of feedstock, however, pyrolysis is the better process. “The revenue differences are not that great, so you should consider both of those options,” he says.
40 | Ethanol Producer Magazine | december 2011
What about the recent research from the University of Florida that will allow pine tree breeders to create a new pine variety in only six years, slashing the time element by more than half? Could this genetic technique revolutionize the bioenergy industry, because researchers can accurately predict traits for specific uses, such as ethanol or other biofuel production? Theoretically, yes, Cooper says. Especially if researchers could design a pine tree where the lignin component could be easily modified in the pretreatment or fermentation process. “That would be a watershed,” he says. For now, however, revenues for producing ethanol out of softwood aren’t great enough to justify cultivating and harvesting a specific crop. Most economic models today are based on selective forest harvesting or waste wood—not cultivating new pine crops. “I would be afraid that your costs of that biomass would be so great that they would offset any yield improvements that you would get,” he says. —Holly Jessen
distilled LDCommodities.com
Validation
USDA report confirms value of distillers grains A recent USDA report echoes what ethanol producers have said for years: distillers grains are a valuable addition to the nation’s feed supply and can be used to reduce any impact of increased corn use for ethanol by replacing more than its share of corn or soymeal. The USDA Economic Research Service report, “Estimating the Substitution of Distillers’ Grains for Corn and Soybean Meal in the U.S. Feed Complex,” finds that, on average, one metric ton of distillers dried grains with solubles (DDGS) can replace 1.22 metric tons of corn and soybean meal in the U.S. Because only the starch of the corn kernel is used for ethanol production, the remaining fat and fiber in DDGS are increased by a factor of three compared to unprocessed corn, the report states. “The value of the animal feed produced by the ethanol industry has long been misunderstood, understated and misrepresented,” said Geoff Cooper, vice president of research and analysis at the Renewable Fuels Association. “While some critics of the ethanol industry attempt to downplay the role of DDGS, the facts simply can’t be ignored.” The report found that DDGS surpassed soybean meal to become the No. 2 feedstuff in the 2010-’11 crop year. Corn remained the most widely used animal feed. “While ethanol expansion raised demand for corn, DDGS from the dry-mill production process partially offsets the impact on the feed market,” the report’s authors state. “Consequently, the net effect in the domestic feed market of a bushel of corn being used for ethanol production is less than a bushel.” The market for distillers grains is also expected to continue to grow, with beef cattle remaining the main consumers of the product, followed by dairy cattle, swine and poultry. “Some in industry or other researchers believe that consumption of DDGS by dairy cattle is nearing maximum use levels,” the report’s authors say. “We do not find such a constraint at this time.” The authors also dispute claims that smaller cattle, hog and poultry operations will not be able to accommodate truckloads of distillers grains, stating that those farm operators could devise creative solutions. —Kris Bevill
Creating Opportunity Since 1851.
Partnership Connecting Your Supply to the Domestic and Global Marketplace.
Community Active Participation in the Communities Where We Live and Work.
Commitment
PHOTO: Susanne Retka Schill, BBI International
Supported by the Reliability and Financial Security of Louis Dreyfus Commodities.
Valued Feed A recent USDA study finds 1 ton of DDGS replaces 1.22 tons of corn or soy in livestock rations. december 2011 | Ethanol Producer Magazine | 41
distilled
Halting Harmful Invaders
Research identifies acceptable biofuel feedstocks Good biofuel feedstocks are highly productive, have low input requirements and are widely adaptable. Unfortunately, those same traits are also common with invasive species. Language addressing invasive species is included in the Biomass Crop Assistance Program. The proposed farm bill, the Rural Economic Farm and Ranch Sustainability and Hunger Act introduced in mid-October, would widen the number of eligible plant species by striking the phrase “noxious or has the potential to become invasive or noxious” from the definition. If passed into law, only invasive plants would be excluded from BCAP, not plants with the potential to become invasive or noxious. On the other side of the coin, there is concern from some that efforts to replace fossil fuels with biofuels from alternative feedstocks not create one environmental problem in place of another. In other words, if a biofuel feed-
stock becomes a harmful invader, it could undo species every year,” Doria Gordon, one of the the good of producing alternative fuel from study’s four authors, tells EPM. “Our climate and abundant water means that many plants that feedstock. In order to evaluate the invasive potential can become established here. So it’s critical that of 12 biofuel species proposed for Florida and we not purposely introduce known or high the U.S., researchers from the University of probability invaders over the acreage that bioFlorida’s Nature Conservancy used the Aus- fuels will be planted.” Although plume grass, sugarcane, sweet tralian Weed Risk Assessment system. Their research identified four plant species—all sorghum and miscanthus were identified as acgrasses—that have a low risk of invasiveness. ceptable species, the study did point out that “Overall, the results of this study are consistent miscanthus and sweet sorghum are derived from with those reported elsewhere: some bioenergy species that are documented invaders that have crops pose greater risk of invasion than do oth- had environmental impacts in North America ers,” the study says. “A precautionary approach and Europe. “The result that these taxa (plant that involves weed risk assessment is being sug- groups) have a low probability of being invasive gested by both U.S. and international organiza- assumes that they will not exhibit the invasive traits of the related species and relies on limited tions.” Damage and control efforts for invasive data for the hybrid,” the study says. “As a result, plants cost the U.S. an estimated $34 billion cultivation of these taxa should be accompaevery year. On the other hand, only about 0.1 nied by long-term monitoring for changes in to 1 percent of introduced species actually be- fertility and other traits.” —Holly Jessen come invasive and it should be possible Species Evaluated for Risk of Invasiveness to identify bioenergy corps that won’t have harmful effects on new habitats. Plume grass accept Sweet sorghum accept Sugar cane accept Miscanthus accept Potential biofuel crops should be assessed across a variety of geographies, Cabbage gum evaluate as species have been known to grow Giant Reed reject Leadtree reject for decades without becoming invasive Red river gum reject Elephant grass reject only to rapidly become a serious probRose gum reject Castor bean reject lem when moved into a new habitat. Jatropha/physic nut reject “Florida incurs substantial ecological SOURCE: STUDY ASSESSING INVASIVE PLANT POTENTIAL PUBLISHED IN and economic impacts from invasive BIOMASS & BIOENERGY
42 | Ethanol Producer Magazine | december 2011
Energy Sorghum
Researchers develop high-biomass sorghum that bypasses flowering What happens when sorghum doesn’t have to put energy into flowering and grain production? High-biomass sorghum that grows up to 20 feet tall, that’s what. Texas AgriLife Research, part of the Texas A&M University System, is the home of hybrid sorghum, says Adam Helms, assistant program director. Researchers there recently identified a genetic marker to help develop high-biomass sorghum by prohibiting reproduction, or the flowering/grain stage, allowing that energy to go toward biomass accumulation. “This annually planted feedstock would add another tool to the toolbox for the producer,” he tells EPM. “When cellulosic ethanol conversion facilities become widespread, this feedstock would allow a producer to produce a grain, fiber or highbiomass crop.” The sorghum hybrid accumulates as much as three times the amount of leaves and stems as grain sorghum. Among two
90-day-old plants, a nonflowering high-biomass sorghum was 10 feet tall, while a typical grain sorghum variety was 3 feet tall. “That is a striking difference,” says Rebecca Murphy, a research team member and a biochemistry doctoral student at Texas A&M University Genetic mapping techniques were used to locate a genetic determinant of flowering time, first discovered by AgriLife Research scientists in 1945. “Flowering time is important for sorghum no matter what type of sorghum is grown,” Murphy says. “In the case of bioenergy sorghum, you want Got no Grain Researchers at Texas AgriLife Research have discovered to delay flowering because the the gene that controls flowering in sorghum and allows them to grow more you delay flowering, the high-biomass sorghum without grain. The plants can grow up to 20 tall and could be an ideal feedstock for products such as cellulosic more biomass sorghum will ac- feet ethanol. cumulate.” She added that the new discovery allows sorghum breeders to biorefinery industry. In the meantime, redetermine at a plant’s flowering genotype at searchers will continue to develop hybrids, a very early stage, before the plant matures. much as new corn hybrids have increased It will take time before high-biomass yields over the years. “Breeding and develsorghum is grown widely, says John Mullet, opment are likely to make steady improveAgriLife Research biochemist. For one thing, ments in crop design over at least the next 10 there’s not a big demand right now as it will years,” he says. —Holly Jessen take time for full-scale build out of the U.S.
CD B6II:G L=6I NDJÉG: <GDL>C<! L:ÉAA =:AE NDJ 8JAI>K6I: NDJG 7JH>C:HH#
Ndj YdcÉi ]VkZ id `cdl ?d]chdc HnhiZb id WZ [Vb^a^Vg l^i] djg ldg`# 6h dcZ d[ i]Z XdjcignÉh aZVY^c\ bVcj[VXijgZgh d[ XVilVa`h! idlZgh! VcY hjeedgi higjXijgZh! djg egdYjXih XVc WZ hZZc dc [Vgbh VcY ^c V\g^XjaijgVa Wjh^cZhhZh [gdb XdVhi id XdVhi# 6cY djg Xdbb^ibZci id hjeZg^dg egdYjXih VcY jceVgVaaZaZY hZgk^XZ XVc WZ hZZc dc i]Z hb^a^c\ [VXZh d[ ZVX] VcY ZkZgn dcZ d[ djg hVi^hÒZY XjhidbZgh# >[ ndj lVci \gV^c hidgV\Z egdYjXih i]Vi ldg` Vh ]VgY Vh ndj Yd! k^h^i jh Vi lll#?d]chdcHnhiZb>cX#Xdb idYVn dg XVaa -%%".+'"&).*#
&-... J#H# =LN ', CDGI= B6GH=6AA! B> ).%+-
december 2011 | Ethanol Producer Magazine | 43
PHOTO: KAY LEDBETTER, TEXAS AGRILIFE RESEARCH
distilled
Introducing Distillers Grains Production & Markets The leading source for distillers grains industry information. Ad Space is Now Available Contact us today to explore your new opportunities.
Produced by Ethanol Producer Magazine, Distillers Grains Products & Markets is the only publication to exclusively cover the diverse, growing international industry of distillers grains production, marketing and use. This exciting publication provides in-depth feature articles, news, information and analysis targeted toward professionals interested in the principal coproduct of dry grind ethanol production. Distillers Grains Production & Markets provides departments and/or features focused on: • • • • • •
Product innovations and new uses Testing and analytical methods Energy and drying Compliance and regulations Marketing Commodities
• • • • •
Feed trials Storage and logistics Research and development Process technology Equipment
Reserve Your Advertising Space Now for the Winter Issue - February 2012 Insertion Date: December 19, 2011 Bonus Distribution: • National Ethanol Conference • International Biomass Conference & Expo
For more information, contact us at 866-746-8385 or service@bbiinternational.com Follow us: twitter.com/EthanolMagazine
e n e rg y grains fo o d s
Resources for enriching lives.
W i t h t h e r i g h t p a r t n e r, a n y t h i n g i s p o s s i b le . As an ethanol producer, you need a marketing partner who knows where you’re coming from and offers a collaborative approach to get you where you want to go. Through CHS Renewable Fuels Marketing, you’re gaining a financially stable and transparent partner with extensive experience marketing ethanol and distillers grains. Our size and scope create the broadest range of options to maximize your plant’s netbacks. To move your business in the right direction, call 800-851-7949 or email RenewableFuelsInfo@chsinc.com. © 2009 CHS Inc. CHS is listed on NASDAQ at CHSCP.
OUTLOOK
46 | Ethanol Producer Magazine | december 2011
OUTLOOK
Outlook 2012 Insights and perspectives from ethanol industry executives By Kris Bevill and Holly Jessen
As the calendar turns over to 2012, itâ&#x20AC;&#x2122;s time to reflect on the year behind and consider the year ahead. Sky-high corn prices caused deep worries in an industry where the single biggest input cost is feedstock. Those worries ultimately turned out to be unwarranted as high oil prices balanced the market, giving ethanol producers opportunities to lock in favorable margins. The loss of the Volumetric Ethanol Excise Tax Credit is now considered inevitable, and some, as this yearâ&#x20AC;&#x2122;s selection of CEO interviews show, even welcome it. Far more worrisome are the attempts to dismantle or weaken the renewable fuel standard. And, while Big Oil is often seen as an instigator, our executive from BP Biofuels sees such attempts as a real threat to the investments her company has made in the future of renewable fuels. The challenges for cellulosic ethanol developers are daunting, but the executives representing those firms see the opportunities far outweighing the challenges and are quite optimistic for the year ahead. Indeed, all the executives in this series of outlook interviews are fundamentally optimistic. The industry is healthy and ready to face the challenges that 2012 will present. Read on to learn the particulars.
december 2011 | Ethanol Producer Magazine | 47
PHOTO: GPRE
OUTLOOK
Fighting Vigorously to Defend the RFS
Todd Becker, president, CEO, Green Plains Renewable Energy For every gallon of ethanol sold, that’s one gallon of gasoline that Big Oil doesn’t sell. And that, says Todd Becker, president and CEO of Green Plains Renewable Energy Inc., doesn’t make the petroleum industry happy. As a result, the renewable fuel standard (RFS) will remain under attack. “We’re going to have to fight vigorously to defend the RFS, because they are going to come after it,” he tells EPM. Becker considers that battle the single most important issue facing the ethanol industry today. Minus a market for U.S.-made
fuel, it would mean a mandate for $3 corn and unprofitable agricultural producers. “All they want to do is move the profitability off the farm and into their hands, and I think that’s absolutely wrong,” he says. Defending the RFS isn’t just about ensuring a market for corn-based ethanol, such as what GPRE produces at its nine ethanol plants with a total capacity of 740 MMgy. It’s also about reaching goals for the future. “If you blow up the RFS, you blow up any chance of next-generation fuels hitting the market,” he says.”I think that’s the basic issue at hand.”
48 | Ethanol Producer Magazine | december 2011
GPRE regards 2012 optimistically due to five fundamental factors. First on the list is the RFS mandate for 13.2 billion gallons in 2012. Next is the E15 waiver, which was approved by the EPA but has not yet resulted in retail sales at the pump. “Hopefully we see some early implementation with early adopter states,” Becker says. Another area where ethanol has found a market is blending with 84 octane gasoline—which, without ethanol’s octane boosting power wouldn’t even be allowed to leave the terminal. This is allowing refiners to switch over refining capacity to producing more conventional blendstock for oxygenate blending, commonly known as CBOB, which creates a market for ethanol producers, Becker says. Then there are ethanol export opportunities to consider. Export totals through August show that U.S. ethanol producers are on track to export a whopping 900 million gallons by the end of 2011—a dramatic increase from 2010, which was also a big increase from 2009. Notably, exports to Brazil have been up due to short sugar cane harvests and increased domestic demand, an issue that doesn’t appear will quickly selfcorrect. “We expect that ethanol will remain competitive to Brazil and the world,” Becker says. Last but not least, GPRE believes blend economics are positive—even without the Volumetric Ethanol Excise Tax Credit, which is widely expected to sunset at the end of the year. GPRE has long lobbied for VEETC reform, even when that position wasn’t popular. As one of the few publically owned ethanol producers, GPRE often faces the misconception that ethanol producers receive the tax credit directly when in fact VEETC is a blenders credit. “We always think we have a bull’s-eye on our back when we walk into investor meetings, “he says. “They always ask us how much of the tax credit do we get. It gets a little tiring after awhile and we’re very happy to see it go away.” Ultimately, GPRE has faith in the product. “We believe that ethanol can compete with oil on a head-to-head basis for a place in the motor fuels supply,” he said. Looking back on 2011, there’s no doubt it was
OUTLOOK
‘In general, we’re a lot healthier as an industry then we were in the past. We’re finding more and better ways to more efficiently run our ethanol plants and finding new areas of growth within the kernel of corn.’ —Todd Becker
a year of volatility. Still, the industry as a whole did fairly well. Becker believes that’s because of a more disciplined approach to managing the margins. “In general, we’re a lot healthier as an industry then we were in the past,” he says. “We’re finding more and better ways to more efficiently run our ethanol plants and finding new areas of growth within the kernel of corn. We’re not afraid to deploy capital to improve our operations, and I think overall, that’s all just going to be good for the industry.”
GPRE was profitable in 2011 for the third year in a row. “We expect that 2012 will be no different from that perspective,” he says. “We expect to remain profitable, driven by our low-cost platform and our risk management systems.” The company will continue to look for ethanol plants to acquire. “We think scale is meaningful and it is very cost effective,” he says, adding that with each acquired ethanol plant, GPRE has been able to drive down costs in a significant way. And, GPRE will continue to focus on vertical integration with its other agribusiness segments. “Don’t forget, we’re not just an ethanol company, we make over $50 million dollars a year of additional operating income from other businesses,” he says. “We are going to look for opportunities to grow each and every component—not just the ethanol component. We believe that all of those are important to make any profitability through times of volatility.”
7!34% ./4().' Lower your cost per gallon, improve plant operabiility and lower your carbon footprint.
BIOGAS-TS
Author: Holly Jessen Associate Editor, Ethanol Producer Magazine (701) 738-4946 hjessen@bbiinternational.com
Clean Air & Energy Technology
PHOTO: GPRE
www.eisenmann.us.com es.info@eisenmann.com
Green Power Todd Becker, president and CEO of Green Plains Renewable Energy Inc., speaks April 15 during the unveiling of the Grower Harvester Technology Bioreactors at the GPRE ethanol plant in Shenandoah, Iowa. At left is Secretary of Agriculture Tom Vilsack. december 2011 | Ethanol Producer Magazine | 49
OUTLOOK
PHOTO: MATTHEW PUTNEY
erative agreement for shared management. That profitability was a bit of a surprise. “The industry has its ups and downs,” Wendland tells EPM, “and I’m thinking that this was a much better year than what we thought it might be.” Record-breaking exports of ethanol were another pleasant surprise for 2011. “We knew we were going to produce probably somewhere around a billion gallons more than what the RFS required and that could be a real downer for prices,” he says. “But with the export opportunities to Brazil, Canada and Europe, we really had a nice balance between production and demand.” With the Volumetric Ethanol Excise Tax Credit set to expire at the end of the year, profits might be down somewhat in 2012. That built-in Walt Wendland, president, CEO, cushion between the Golden Grain Energy, Homeland price of gasoline and the price of ethanol Energy Solutions will disappear with the 45-cent credit. In a year of $7 corn, higher oil prices Still, Wendland’s outlook for 2012 remains led the way to higher ethanol prices, which fairly positive. “This year was an up—next added up to profits for the ethanol indus- year may be a little bit down as we kind of try. Golden Grain Energy LLC and Home- reposition ourselves to operate without land Energy Solutions LLC, 80 MMgy and VEETC,” he says. Without the blenders 100 MMgy corn-ethanol plants located in credit, the RFS becomes more vital than northeastern Iowa, each had an “extremely ever for the ethanol industry. “We’re depengood” year, says Walt Wendland, president dant far more on the RFS staying in place and CEO. The two companies have a coop- because that becomes the most important
Pleasant Surprises in 2011
50 | Ethanol Producer Magazine | december 2011
‘The industry has its ups and downs, and I’m thinking that this was a much better year than what we thought it might be.’ —Walt Wendland thing keeping our product included into the fuel supply,” he says. In another bit of good news for 2012, despite concerns about possible corn shortages due to poor growing conditions, north central and northeast Iowa’s corn crop looks great. “We have a near bumper crop in this area, so we do have ample feedstock ability to keep the ethanol plants going through 2012,” he says. Wendland predicts the battle of misinformation about E15 will continue, as the industry works to get the fuel ready for sale at retail stations. Big Oil has been doing everything it can to keep that from happening. “If they could stall E15, they could create a reason to open up the RFS because there wouldn’t be a market for ethanol,” he says. “It really seems like they have made this a real important line in the sand that they are defending. They don’t want to give up any more of their market share so they are really pulling out all the stops to try to stop E15.” While E15’s opponents have a myriad of excuses why E15 shouldn’t become part of the mainstream fuel supply, NASCAR’s partnership with American Ethanol says otherwise. Golden Grain is one of many financial contributors to the six-year sponsorship deal that made it possible to put E15 in every NASCAR racecar at every race— among other things. “When everybody is saying [E15] won’t work, NASCAR said, ‘We’ve run it a million miles and it works fine,’” he said, referring to the sanctioning body’s September announcement. Author: Holly Jessen Associate Editor, Ethanol Producer Magazine (701) 738-4946 hjessen@bbiinternational.com
OUTLOOK
Patience is a Virtue Peter Williams, CEO, Ineos Bio
The stage is set for 2012 to be a very exciting year for Ineos Bio. Earlier this year, Ineos made history when it broke ground on its first-of-its-kind 8 MMgy cellulosic ethanol plant and renewable energy production facility at Vero Beach, Fla., and by early October, construction of the facility was 30 percent complete, according to Ineos Bio CEO Peter Williams. The project is on schedule and on budget so far, and if things continue to go as planned, the plant will be mechanically complete in April and will be continuously churning out waste-based ethanol by the second half of the next year. Anticipation is high at Ineos Bioâ&#x20AC;&#x2122;s joint ventureâ&#x20AC;&#x201D;Ineos New Plant BioEn-
december 2011 | Ethanol Producer Magazine | 51
OUTLOOK
ergy LLC—as well as at its parent company, global petrochemical firm Ineos. “We see this as a very important project for the Ineos group as a whole,” Williams says. “There’s a huge amount of work left to do, and a huge amount of capability that we have to bring to that, but we are doing it.” It may seem like the Ineos project will have been a long-time coming when it begins to produce ethanol next year, but Williams suggests that that would be a misconcep-
FRACTIONATION
•
EXTRACTION
tion. While it may seem to some that there is a significant lag-time between project announcement and construction, the fact is these innovative facilities require a healthy dose of engineering and machinery design, all of which needs to be completed before any steel can be put in the ground. This is what Ineos and other project developers have been earnestly working on in the past few years as they prepare for commercial production, he says. So while there may not yet be many fa-
•
OIL PROCESSING
•
DEMO FACILITY
CROWN IRON WORKS COMPANY Call 1.651.639.8900 or visit www.crowniron.com 52 | Ethanol Producer Magazine | december 2011
cilities to point to as proof of the cellulosic ethanol’s feasibility, Williams says a little patience may soon pay off as engineering activities are settled and construction projects take off. “It’s not like the IT industry. This requires engineering, it requires attention to all of the safety, health and environmental aspects,” he says. “There’s a certain timeline between discovery and commercial execution of the actual plant. There will be a gestation period and we have to allow companies the time they require to become a commercial reality. For sure, many will fall by the wayside, but we have to allow time for those that can become a reality to actually be converted to a commercial reality.” In August, Ineos New Planet BioEnergy LLC received a $75 million USDA loan guarantee, without which the company would have had a more difficult time carrying out its project. Financing is unquestionably the No. 1 problem facing cellulosic producers today, even those with deep-pocket backers such as Ineos, but Williams suggests that developers need to possess a suite of tools in addition to access to capital if they want to succeed in the industry. “It’s insufficient just to have the idea,” he says. “You need the idea plus the ability to scale that idea, to engineer that idea, to convert it into a commercial reality. If you look at the three companies that have closed out on loan guarantees—Poet, Abengoa and ourselves—we’re all companies that have been able to bring existing capabilities to the process.” As far as competition in cellulosic ethanol goes, the game is friendly for now because each company’s singular advancements provide a boost to the entire industry. Williams would extend that concept to incorporate other countries including China, which is repeatedly identified by U.S. government officials as the country to beat in the clean energy race. “There is competition in the world, but that’s always going to happen,” he says. “As for energy independence and security, we’ll never really get it unless other nations have it too. So while there is competition from China and others in this industry, it’s probably not so bad that there are multiple participants in the race.” As Ineos nears the final stages of
OUTLOOK
preparation for its first plant, the project has attracted plenty of on-lookers who are also interested in applying Ineos’s waste-toenergy technology for converting vegetative and municipal solid waste to their own projects. “We’re seeing very strong interest, both within and outside the U.S.,” Williams says. “I think this theme we’ve taken of using waste materials and converting them to biofuel and renewable energy resonates not just with the people we traditionally deal with—the petrochemical companies—but also with the communities in which we work and communities that we touch with our other products.” Even as the Vero Beach facility, dubbed the Indian River BioEnergy Center, begins operating, Ineos will already be moving ahead with licensing agreements and project opportunities in other areas of the U.S. and beyond. “Clearly we’d like to replicate our technology throughout the U.S. and around the world,” he says. “We’d like to introduce [it] at a community level wherever there are waste materials and where waste is collected. We think we
‘There’s a certain timeline between discovery and commercial execution of the actual plant. There will be a gestation period and we have to allow companies the time they require to become a commercial reality.’ —Peter Williams
provide an extremely efficient solution to that waste management problem.” Of the handful of most promising cellulosic ethanol projects, most have now made public their plans to produce biochemicals in addition to fuel. This move toward chemical production has largely been viewed as a finan-
cial necessity because although the markets for some chemicals are much smaller than ethanol, they bring in much more revenue per gallon. Williams agrees with this strategy and predicts that biochemical production and technology partnerships will be emerging trends in the next year or two. Ineos has been quiet so far on its plans for biochemical production, but with its vast knowledge of petrochemical markets, it would seem the perfect candidate to branch out into bio-based chemical production as well. Does it have any plans to become the leader of the pack? “From our perspective, we are definitely of the view that we would like to develop the chemical products,” Williams says. “We’re in a position where we understand exactly the economics required as well as the sustainability criteria to make those routes attractive. So, yes, we’re certainly interested.” Author: Kris Bevill Associate Editor, Ethanol Producer Magazine (701) 540-6846 kbevill@bbiinternational.com
december 2011 | Ethanol Producer Magazine | 53
OUTLOOK
scalable solution for liquid transport going forward. Thus BP formed a business to try to pursue that opportunity.” Now five years into the process, BP’s biofuels arm has more than 4,000 employees in locations around the globe and has invested hundreds of millions of dollars in the Brazilian and U.S. industries. And it’s just getting started. To date, most of BP’s high-profile biofuels activities have taken place in Brazil. The company was the first oil major to enter Brazil’s biofuels space, forming a joint venture known as Tropical BioEnergia in 2008. According to Ellerbusch, Brazil offers three significant benefits to ethanol that attracted BP to invest in the space: it’s an existing industry with existing assets that can be purchased and used Sue Ellerbusch, president, to scale up the company’s presence rapBP Biofuels North America idly and the industry is strongly supported by Few companies have expanded their the government. “It’s a very attractive place biofuels interests as rapidly as oil major BP to enter into because we know the industry has over the past five years. BP Biofuels was exists, we know how the players exist, the strategically formed in response to the 2007 model is there, and if you look at things like renewable fuel standard, commonly referred sugarcane, we understand the economics of to as RFS2, with the intent of identifying that,” she says. “It’s attractive from an ecowhich technologies and regions would be nomic aspect and also from a greenhouse best suited to comply with the mandate. gas standpoint. It fits a lot of the opportu“We saw the opportunity for change in how nities for us to have low-cost, low-carbon, liquid transport fuel would be delivered in scalable technologies.” the future,” says President of BP Biofuels In September, BP paid $100 million to North America Sue Ellerbusch. “We thought gain operational control of three ethanol biofuels was going to be the most near-term, mills in southern Brazil that it had already
Big First Step
54 | Ethanol Producer Magazine | december 2011
invested hundreds of millions of dollars in, including the mill it operated as part of the joint venture. In the coming year, Ellerbusch says BP will work to increase the three mills’ combined crushing capacity to 15 million tons. “Of course that won’t all happen in a year, but there will be work going on to expand in Brazil,” she says. Expanding production capacity is also a near-term focus in the U.S., although at a smaller scale. Currently, BP controls just 1.4 MMgy of ethanol production in the U.S., in the form of a demonstration-scale facility in Jennings, La., but its main priority for 2012 will be to advance its $400 million, 36 MMgy cellulosic facility project in Highlands County, Fla., Ellerbusch says. This year BP began building out what will eventually become a 20,000-acre farm growing energy cane to supply the facility. “That is a primary goal— to continue to advance the construction of the farm,” Ellerbusch says. “We look to break ground on the industrial facility late next year as well.” Working in conjunction with Lykes Bros. Inc., one of Florida’s largest landowners, BP expects to have about 1,500 acres of energy cane planted in areas surrounding the production facility site by the end of this year. Energy cane has a 10-1 planting ratio, Ellerbusch says, so while the company hasn’t settled on its exact planting plan for 2012 yet, it will have the potential to plant up to 15,000 acres of feedstock. The ethanol plant is expected to begin production in 2013. As with everything BP does, the decision to focus on energy cane and other tall grasses was a strategic one. Research funded by BP has shown that energy grasses can yield four times as much ethanol per gallon as corn, up to 2,000 gallons of ethanol per acre of feedstock. Also, energy grasses are particularly well-suited for growing in southern regions, which matches well with BP’s targeted area for biofuel production along the Gulf Coast. The citrus, cotton and rice producers along the lower Gulf Coast have struggled in recent years and Ellerbusch says the chance to partner with BP to grow energy grasses will offer a way to revitalize those communities. The company is currently scouting plant sites in
OUTLOOK
‘This is a technology that is not competitive with fossil fuel today. Therefore, we need to have some form of a market targeted by the government in order to incent those to produce.’
PHOTO: BP BIOFUELS
—Sue Ellerbusch
Expanding Acres BP’s energy cane and tall grass feedstock for its Florida cellulosic ethanol facility will eventually be grown on 20,000 acres of land surrounding the facility site.
Texas, Louisiana and Florida, knowing that it will take several years to establish the feedstock. “We’re going to start initially in the Gulf Coast—it has the right weather and climate—and look to move a bit further to the north, but still in the South, as we expand our portfolio of grasses,” she says. Another priority of BP Biofuels officials in the coming year will be to maintain a clear path on the regulatory front, Ellerbusch says. The RFS2 has been a vital element to every player in the biofuels industry, she says, and without it she questions whether BP would have accelerated its pace in the arena as much as it has. “This is a technology that is not competitive with fossil fuel today. Therefore, we need to have some form of a market targeted by the government in order to incent those to produce,” she says. There is no doubt that it will be challenging for cellulosic biofuel producers to meet the 2022 RFS2 goal of supplying 16 billion gallons of fuel to the market, but if efforts to revoke the policy are successful, it will likely deliver a crushing blow to an industry that is just now beginning to gain ground. “I think I can point to [BP] and several other players—Poet, DuPont, Abengoa, Ineos—that have recently started to get government funding or their own funding to move their projects forward,” she says. “This is the first step in establishing the industry.” Author: Kris Bevill Associate Editor, Ethanol Producer Magazine (701) 540-6846 kbevill@bbiinternational.com
www.intlfcstone.com
december 2011 | Ethanol Producer Magazine | 55
OUTLOOK
This is the situation of many technology developers in the cellulosic ethanol industry, including, until earlier this year, Massachusettsbased Qteros Inc., developers of a technology platform centered on what it calls the Q microbe—a microorganism with a love for all things biomass and a natural ability to produce ethanol. This little bug has attracted the attention of multiple investors and last January Qteros announced a strategic partnership with global engineering firm Praj Industries Ltd. to commercialize cellulosic ethanol facilities using Qteros technology within the next two years. Through the partnership, Qteros is expected to finally have the steel in the ground with which to promote its capabilities. Jason Matlof, a partner at venture capital firm Battery Ventures and leader of the company’s cleantech team, is a member of the board at Qteros and was also the company’s first institutional investor. He declined to specify how large Battery Venture’s stake in Qteros is, but he is passionate about promoting the company and its potential for return on investment. “We as a firm are fundamentally opposed to investing in companies that require many hundreds of millions of dollars to get to commercial scale,” he says. “There’s not enough equity in the venture capital world to fund those types of businesses. So you have to figure out a model that works. Qteros has done that in that they’re licensing like a biotech company would do to a big pharmaceuticals company.” Financing continues to be a major holdup in the commercialization of second-generation ethanol, and Matlof says Battery Venture’s team is always on the lookout for new
Taking 2G Technology to Task Jason Matlof, partner, Battery Ventures
Finding investment dollars for secondgeneration biofuels has been challenging for all, so EPM sought out a venture capitalist to share his perspective on the industry. For a technology developer, the biggest selling point when seeking investors might be that the business model does not require hundreds of millions of dollars to build a production facility. The company’s success is beholden to someone else building the facility to use that technology, however, and, until they build it, the company is unable to prove its own technology and reap the licensing benefits of having a proven, successful process.
56 | Ethanol Producer Magazine | december 2011
‘The real opportunity is outside of the U.S. and the lack of Congressional incentives with any teeth is ensuring that’s the case.’ —Jason Matlof opportunities, but they have to meet a few strict criteria. As mentioned, the firm refuses to invest in building facilities. Secondly, once the firm places its bets on a certain technology, it won’t play with a competing company. “We don’t ever invest in conflicting, competitive players,” Matlof says. “Most people do. And we just won’t do an investment where there’s not a presumption that you can build a company to get it to profitability and exit on traditional capital investment dollars, which are $25 million to $75 million typically. That is an absolute sacrosanct requirement.” If you can meet those criteria, there is one other major stipulation to Battery Ventures’ biofuels investment policy that may trip you up: the firm has a strict “no sugar allowed” rule. “As much as the market ebbs and flows in the short term, the long-term market for producing biofuels from waste biomass is an enormous market opportunity,” Matlof says. “Anything that’s using biomass as a feedstock is very interesting, but at the same time, we’re not going to invest in technologies that use sugar as a feedstock. I just think that’s a fool’s errand.” Oh, and one more thing. If your company’s business model is based on projects being built only in the U.S., your chances of attracting big investors are probably slim. “The reality is that the market is international,” Matlof says. “That’s where the biomass is. We don’t have nearly as much biomass as in the tropic regions. The real opportunity is outside of the U.S. and the lack of Congressional incentives with any teeth is ensuring that’s the case.” Author: Kris Bevill Associate Editor, Ethanol Producer Magazine (701) 540-6846 kbevill@bbiinternational.com
PHOTO: PROPEL FUELS
OUTLOOK
VEETC is Old News
Matt Horton, CEO, Propel Fuels From the standpoint of Matt Horton, CEO of Propel Fuels, efforts in 2011 to extend the Volumetric Ethanol Excise Tax Credit imperiled the future of the industry. “For so long, the industry has been focused on preserving that credit for the entire ethanol industry that I think we’ve backed ourselves into a bit of a corner,” he says. The Redwood City, Calif.-based company firmly believes the future is high-level blends and advanced ethanol. The company owns and operates a network of self-serve filling stations in California and Washington state, with plans to add more than 200 additional sites in the next two years. First-generation ethanol has done a fantastic job of filling the need for E10,
Horton says. As the industry moves forward into 2012, however, there needs to be an aggressive and massive build out of infrastructure to handle higher blends of ethanol. Secondly, cellulosic and other advanced ethanol products need to begin entering the marketplace. “We’re at a critical transition point in the industry. We need to recognize that what got us to this point is not going to be able to carry us forward in a fast-growth kind of way that I think we want to see,” he tells EPM. “The industry is beginning to shift but we’ve got to come together and focus on the future of our industry. I believe that if we do that, the future for the ethanol industry is unlimited. We will become a true substitute for gasoline, and we will
be the leading fuel in this country to offset imported petroleum.” Horton feels the single most critical issue for the industry is a tax credit for E85. That’s why the company is a part of the Coalition for E85, which is lobbying for the fuel to receive a 50-cent-per-gallon tax credit as part of the Alternative Fuel Credit. Currently, compressed natural gas, propane and hydrogen are eligible for the tax credit. “If we are going to continue to grow, we’ve got to be able to competitively price E85,” he says. As for E15, although Propel focuses on getting the highest ethanol blends to market, it does also offer its customers midlevel blends where there is demand.
december 2011 | Ethanol Producer Magazine | 57
‘Individual consumers driving flex-fuel vehicles have shown their enthusiasm for this product and they have been coming out in droves to buy the product. That sends that strong market signal that when we have ethanol products that PHOTO: PROPEL FUELS
are competitively priced with gasoline, consumers will prefer them and will
Choice at the Pump Propel Fuels owns and operates a network of self-serve filling stations in California and Washington state and is working to expand reach. 10:52 PM Page 1 LWC628-RJS-0446 Biorefining Ad #2that1/8/11
buy them.’ —Matt Horton
The reality is, however, most of the gasoline retailers Propel has talked to just aren’t interested in making the move to E15, he says. Again, infrastructure investments are needed and Propel is committed to making those kinds of investments and doing what it takes to push the market forward until it gains traction. “In general, our mission is to increase the amount of renewable fuels in the market and that’s easiest to do with high-level blends,” he says. “We want to see oil replaced by ethanol.” For 2012, Propel saw record sales of ethanol thanks to strong support from the state of California as well as the public. “Individual consumers driving flex-fuel vehicles have shown their enthusiasm for this product and they have been coming out in droves to buy the product,” he says. “[That] sends that strong market signal that when we have ethanol products that are competitively priced with gasoline, consumers will prefer them and will buy them.” Although there are negatives, Horton
IN-STOCK STAINLESS PVF From 1/8" to 36" Expansion or maintenance needs??? With over 40 years of experience selling into your market, we know and have what you need...when you need it.
No order is too small.
www.rjsales.com Buffalo, NY Cleveland, OH Chicago, IL Cranbury, NJ
58 | Ethanol Producer Magazine | december 2011
800-666-0088 800-777-0820 800-777-2008 800-777-1858
Indianapolis, IN 800-777-0510 Minneapolis, MN 800-777-1355 Raleigh, NC 800-565-5525
Author: Holly Jessen Associate Editor, Ethanol Producer Magazine (701) 738-4946 hjessen@bbiinternational.com
PHOTO: PROPEL FUELS
says it’s the opportunities that keep him awake at night. “We think that there’s just a huge untapped market out there for highblend ethanol,” he says. “There are still huge pockets of the nation that really don’t have much access to high-level blends of ethanol, so we think there’s a tremendous opportunity to effectively market the product in new markets.” The other exciting thing is the potential for movement in advanced ethanol production. “We’ve also seen a number of the better-funded, cellulosic ethanol startup companies continue to make great progress on their production facilities and getting their financing lined up,” he says. “We think 2011 was a great year of preparation for those companies and we’ll look for 2012 to hopefully be a breakout year for the advanced ethanol industry.” Choose Home Grown Fuels Propel Fuels signed an agreement in August with Pacific Convenience and Fuels to co-locate Propel “Clean Fuel Points” with PC&F retail stations throughout the western U.S.
DOWN Evaporator Costs S Scale can quickly build up on equipment surfaces s and dramatically interfere with the heat h transfer efficiency of an evaporator, lowering l capacity and productivity while raising r maintenance costs. Buckman’s B antiscalant programs prevent or o reduce fouling, extending the operating time between off-line maintenance cleanings and softening remaining deposits so they are easier to clean. Use of these programs improves the heat transfer capacity of the evaporator and results in increased production. Let Buckman help you maximize evaporator performance and cut your plant’s total operating costs.
december 2011 | Ethanol Producer Magazine | 59
For more information call 1-800-BUCKMAN (1-800-282-5626) or visit buckman.com ©2011 Buckman Laboratories International, Inc.
LOGISTICS OUTLOOK
60 | Ethanol Producer Magazine | december 2011
LOGISTICS OUTLOOK
By
Train, By Truck or By Boat How ethanol moves and where itâ&#x20AC;&#x2122;s going By Kris Bevill
2011 will go down in history as being one of the best years for U.S. ethanol exports in the industry to date. In July alone, U.S. producers sent 127.4 million gallons of ethanol out of the country, setting a new monthly record for exports. Much of it was delivered to Canada, which has been the No. 1 outside market for U.S. ethanol. However, a series of poor sugarcane harvests combined with high sugar prices led to a shortage of fuel in ethanol-thirsty Brazil, which emerged as a major new market for U.S. ethanol this year. European Union countries that would have otherwise received Brazilian ethanol also became large consumers of U.S. ethanol as a result of Brazilâ&#x20AC;&#x2122;s shortages.
december 2011 | Ethanol Producer Magazine | 61
LOGISTICS OUTLOOK
The Specialist in Biofuels Plant Appraisals • • • •
Valuation for financing Establishing an asking price Expert witness testimony Partial interest valuation Few certified appraisers in the United States specialize in ethanol plant and related biofuels properties. The firm of Natwick Associates offers more than 50 years of worldwide experience. Your appraisal will be completed by a certified general appraiser and conform to all state and federal appraisal standards.
Long Haul Truck transport continues to play an important role for ethanol producers, particularly in areas that still require rail-to-truck logistical solutions.
The export boom came just in time. Many believe the U.S. is at or very near its ethanol blend wall and without the implementation of E15 into the market yet, producers need to find other ways to expand their market. In September, Ed Hubbard, legislative counsel for the Renewable Fuels Association, addressed the topic of ethanol exports
‘Over the last few years, the ramp up in ethanol has occurred as the economy has been plummeting. As the economy improves, more goods will be shipped via rail and truck,
Call us for a free, no-obligation consulation today.
1-800-279-4757 Natwick Associates Appraisal Services 1205 4th Ave. S., Fargo, ND 58103 www.natwickappraisal.com natwick@integra.net
62 | Ethanol Producer Magazine | december 2011
so you could see turntimes increasing, more congestion on the rail and more fuel to haul by truck.’ — Chad Conn, vice president operations, Eco-Energy
during a presentation at an ethanol logistics conference held in New Orleans. He noted that the amount of ethanol exported from the U.S. this year exceeded everyone’s expectations and served as a stabilizer for the industry. “We think it’s going to continue, and continue aggressively,” he said. Others have a more cautiously optimistic view toward ethanol exports in the coming year, based on some known and several unknown factors, which will play out over the next several months. In October, the European Union took action to reclassify E90 as a fuel rather than a chemical, a move that resulted in increased import duties. Maelle Soares Pinto, director, Europe and Africa, at Hart Energy’s Global Biofuels Center, says the higher tax could have a negative impact on U.S. exports to EU member states. Part of the reason the U.S. enjoyed demand for its product in the EU this year was because Europe’s high grain prices resulted in more expensive domestically produced ethanol. “Wheat in particular was quite high last year and that’s why U.S. corn ethanol had a much higher advantage on the market,” Soares Pinto says. “Whether it’s going to continue, I’m not sure. Taxes will increase, yes, but if European grain prices stay high, I think U.S. ethanol could still find a market in Europe.” Pinto believes that the EU’s newly en-
LOGISTICS OUTLOOK
forced sustainability requirements could be of great consequence to U.S. ethanol producers next year. “If producers were not in production by 2008, they will have to meet a 35 percent greenhouse gas saving threshold,” she says. “For those who were operating before 2008, they don’t have to bother with the greenhouse gas-saving threshold until 2013, so it won’t affect them next year. But they still have to be certified.” In July, the EU belatedly approved seven global certification schemes meant to assure a fuel’s sustainability as required by the EU’s Renewable Energy Directive. After announcing the approval of the seven schemes, EU Energy Commissioner Günther Oettinger noted that the 27 EU member states have the highest sustainability standards in the world and said the schemes are necessary to guarantee the sustainability of the entire biofuels production and supply chain. While some of the member states have upheld sustainability requirements previously, the commission’s approval of sustainability schemes means that U.S. producers looking to the EU for market opportunities need to make certification a priority. “Producers should really be concerned with trying to certify their production because so far it has not really been enforced in member states, but now we have seven schemes that have been recognized at the EU level,” Soares Pinto says. “I think many producers are forgetting this aspect of the mandate in Europe and [certification] would help them increase the value of their product on the European market.” Brazil’s ethanol demand is somewhat
of a wildcard for the coming year. The government there took action this fall to address the country’s ethanol supply shortage and temporarily reduced the nationwide blending mandate from 25 percent to 20 percent. It appeared to have an immediate downward impact on demand for U.S. ethanol, but Adhemar Altieri, communications director for UNICA, the Brazilian Sugarcane Industry Association, says demand for fuel in Brazil continues to increase due to sustained economic growth, so it is unclear how deep the blow will be to U.S. producers as a result of the reduced mandate. It is anticipated that Brazil will reinstate the 25 percent blending mandate after the next sugarcane harvest in the spring, provided that the harvest is a good one and depending on the relative price between sugar and ethanol. What happens in Brazil will have a direct impact on how well U.S. producers do in markets worldwide. Markets in Japan and elsewhere in Asia have traditionally been served by Brazil but have been open to receiving imports from the U.S. in light of nonexistent Brazilian supplies. Brazil has historically been the preferred supplier for EU states as well, but as long as U.S. producers follow through with certification requirements, low-cost corn ethanol could continue to fill their need.
Blame It on the Bakken
But no matter the ultimate destination, the location of the vast majority of U.S. ethanol production, in rural areas in the center of the country, means that the
Transport Shift More ethanol is being moved by rail today than three years ago, due in large part to markets in the Southeast opening up for ethanol blending. SOURCE: ECO-ENERGY INC.
• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •
• • • • • • SELL • RENT• LEASE • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • 10HP TO 250,000#/hr • • O 250,000#/hr Nebraska 750 psig 750 TTF • • 150,000#/hr Nebraska 1025 psig 900OTTF •• 150,000#/hr Nebraska 750 psig 750OTTF •• • 150,000#/hr Nebraska 350 psig • • • 115,000#/hr Nebraska 350 psig • • 80,000#/hr Nebraska 750 psig • O 80,000#/hr Erie City 2000 psig 800 TTF •• • 75,000#/hr Nebraska 350 psig • • 70,000#/hr Nebraska 750 psig 750OTTF • • • 60,000#/hr Nebraska 350 psig • • 40,000#/hr Nebraska 350 psig • • 20,000#/hr Erie City 200 psig • • 10-1000HP Firetube 15-600 psig • • • ALL PRESSURE AND TEMPERATURE • • COMBINATIONS SUPERHEATED • • AND SATURATED • • • • RENTAL FLEET OF MOBILE • • TRAILER-MOUNTED BOILERS • • 75,000#/hr. Nebraska 350 psig • • 75,000#/hr. Optimus 750 psig 750°TTF • • 60,000#/hr. Nebraska 350 psig • • • 50,000#/hr. Nebraska 500 psig • • 40,000#/hr. Nebraska 350 psig • • 30,000#/hr. Nebraska 350 psig • • 75-300HP Firetube 15-600 psig • • • ALL BOILERS ARE COMBINATION GAS/OIL •• • ENGINEERING • START-UP • • FULL LINE OF BOILER AUXILIARY • • SUPPORT EQUIPMENT. • • Electric Generators:• 50KW-30,000KW • • • • WEB SITE: www.wabashpower.com • 847-541-5600 • FAX: 847-541-1279 •• E-mail: info@wabashpower.com • • • • POWER • EQUIPMENT CO. • • 444 Carpenter Avenue, Wheeling, IL 60090 • •
BOILERS
24 / 7 EMERGENCY SERVICE
IMMEDIATE DELIVERY
CALL: 800-704-2002
wabash
december 2011 | Ethanol Producer Magazine | 63
LOGISTICS OUTLOOK
fuel is traveling long distances to get to the market. The rule of thumb is that 70 percent of all U.S. ethanol is hauled by rail, 20 percent by truck and 10 percent by barge. But, while rail is the undisputed ruler of U.S. ethanol transport, bottlenecks and tank car shortages have led to many headaches over the past year that will likely continue for some time. Just a couple of years ago, tank cars could be leased for around $250. In recent
months, that price has spiked to nearly $1,000. Why? An oil boom in the Bakken Formation in western North Dakota that has caused demand for railcars to skyrocket can be blamed in large part for the increase. Additionally, when the ethanol industry bust occurred in 2008, tank car manufacturers halted production. Since the industry has begun to recover, ethanol producers, too, have needed more cars to transport their product. Tank car manufacturers have re-
Build for Your Future
With BROCK Grain Management Systems
Market Price
30,000 Gallon GP Tank Cars 900 $825
Existing Cars New Cars
800 700
$700
$775
600 500
$500
400 $350
300 $250
200 100 0
0
0
2008
2009
2010
2011
ÂŽ
%URFNÂśV HQJLQHHULQJ H[SHULHQFH DQG GHVLJQ DGYDQWDJHV SURYLGH WKH PDQDJHPHQW HGJH \RX QHHG IRU HIÂż FLHQW XQORDGLQJ RI Ă&#x20AC; DW ERWWRP ELQV XS WR IHHW P LQ GLDPHWHU %URFN¡V 02'(/ $%&Â&#x152; %LQ 6ZHHS JHQWO\ PRYHV XS WR EXVKHOV PHWULF WRQV SHU KRXU
Offers Zero-Bin y r t n E Options
+\GUDXOLFDOO\ 3RZHUHG 'ULYH DQG DJLWDWRU V\VWHP VKRZQ JHQWO\ PRYH JUDLQ
3DWHQWHG &UDZOHU 7UDFN 'ULYH RSWLRQ LV K\GUDXOLFDOO\ GULYHQ DQG ZRUNV JUHDW ZLWK KDUGHU WR Ă&#x20AC; RZ JUDLQV
%URFN 6:((3 75$&.(5Â&#x160; &RQWURO DXWRPDWLFDOO\ FRQWUROV WKH VZHHS GULYH
8VH %URFNÂśV H[SHULHQFH WR KHOS \RX WDNH FRQWURO RI \RXU JUDLQ DQG PD[LPL]H \RXU SURÂż WDELOLW\ %URFN *UDLQ 6\VWHPV $ 'LYLVLRQ RI &7% ,QF 3KRQH ( PDLO ELRIXHO#EURFNJUDLQ FRP 'LIIHUHQW %\ 'HVLJQÂ&#x152;
&DOO XV RU YLVLW ZZZ %URFN*UDLQ FRP WR OHDUQ PRUH DERXW %URFN SURGXFWV 64 | Ethanol Producer Magazine | december 2011
&7% $'9(57,6,1* $G 1R %5 + %URFN *UDLQ 6\VWHPV
Lease Inflation Rail car lease prices have skyrocketed in recent months and are expected to remain high until manufacturers are able to produce more tank cars to supply growing demand from several sectors. SOURCE: ECO-ENERGY INC.
sponded by ramping up their production, but itâ&#x20AC;&#x2122;s likely to be some time before they can provide any relief to the situation, says Chad Conn, vice president of operations at ethanol marketing firm Eco-Energy Inc. â&#x20AC;&#x153;I donâ&#x20AC;&#x2122;t think this is something that is going to change any time soon,â&#x20AC;? he says. â&#x20AC;&#x153;I think it will affect how we go into the next year as well as the next few years.â&#x20AC;? The tank car shortage will likely result in producers having to increase their ethanol prices as they struggle to maintain profitable operations, he says, adding that he believes this scenario may already be occurring. Unit trains, already a popular mode of rail transport for many producers, are expected to become increasingly important due to their efficiency and discounted rates. Conn estimates that about 70 percent of ethanol producers are able to ship ethanol via unit train. However, he says only about 35 percent of all terminals are capable of receiving them. Terminals are responding to this situation by building out capabilities to service that type of train, which could cause issues for the minority of ethanol producers who are unable to use unit trains. â&#x20AC;&#x153;As unit trains become more and more a part of the logistics chain, I would expect that to reduce
LOGISTICS OUTLOOK
where plants that are single manifest train capable are actually able to get into,” Conn says. For example, Dallas is a market that was once served primarily by single manifest trains, he says. Today, there are two unit train facilities serving the entire market. “If you were once a single manifest player serving the Dallas market, because of what’s happened over the past couple of years, this would be a market that you now just can’t economically serve,” he says. Other terminal operators, particularly in the South, are in the midst of expansion projects to enable them to service unit trains. Eco-Energy has branched out to become involved in this area and, along with its partner J.T. Russell & Sons Inc., is developing an ethanol unit train and storage facility in Denton, N.C., that is expected to become operational in early 2012. The company is expected to embark on several similar projects in the Southeast in the coming year, although Conn declined to offer specific details. He says Eco-Energy believes unit train and rail access in general is a bottleneck in that area and, as an advocate of the ethanol industry, the company believes it is important to open up those markets. In areas such as Atlanta, rail tie-in projects have increased in necessity as terminal operators seek to find a way to get rail back to their facilities. “Here you have an area of the country that were very small markets 75 years ago when the gasoline terminals were being built,” he says. “If you go to these cities today, you’ll see that rail exists into these terminals. The problem is that if you were to walk about three miles up that track you’ll find that there’s now a shopping mall.” For ethanol producers currently using single manifest modes of transport, Conn suggests that they could try to collaborate with a neighboring producer to form a unit train. But he cautions that railroad companies aren’t particularly receptive to this type of creative solution. In the face of sustained high rail car prices, more producers may forget about rail transport entirely and seek out trucking alternatives, but the downfall of truck transport is that trucks just can’t cover the long distances as efficiently as trains can. Conn says there are also limitations as to
which cities can handle truck deliveries and which can use rail. Barge transport has obvious limitations and isn’t likely to experience a major increase in popularity. As producers plan their operations and weigh their logistical options in the coming year, Conn says he’s reminding his customers to keep an eye on the economy. “Over the last few years, the ramp up in ethanol has occurred as the economy has been plummeting,” he says. “As the economy
improves, more goods will be shipped via rail and truck, so you could see turn-times increasing, more congestion on the rail and more fuel to haul by truck.” Author: Kris Bevill Associate Editor, Ethanol Producer Magazine (701) 540-6846 kbevill@bbiinternational.com
Tankman™
Sellers 360
Jumbo™
ROTATING WASH HEADS FOR ALL PROCESS VESSELS Efficient, Powerful, Dependable cleaning heads for tanks and fermenters up to 70 feet in diameter.
t Unmatched versatility
t Low-maintenance operation
t Long-term reliability
t Industry specified
Cloud/Sellers, 4120-A Horizon Lane, San Luis Obispo, CA 93401 USA Phone: 805-549-8093 Fax: 805-549-0131 E-mail: mkemp@cloudinc.com Web: www.cloudinc.com december 2011 | Ethanol Producer Magazine | 65
SM
,[OHUVS 9LK\JLK .HZ 7YPJLZ I` WLY NHSSVU PU Ethanol reduced the average American household’s gasoline bill by more than $800. If ethanol disappeared, gas prices could rise by as much as 92%.*
>L JHU»[ HMMVYK [V WH` L]LU TVYL H[ [OL W\TW Over 200 plants nationwide. 13 billion gallons of clean, renewable American energy, a year. Fueling the economy with over 400,000 jobs. Turning everyday abundant, renewable ingredients into clean sustainable energy.
www.EthanolRFA.org *Hayes, Dermot J., Du, Xiaodong (April 2011) The Impact of Ethanol Production on US and Regional Gasoline Markets: An Update to May 2009. Center for Agricultural and Rural Development (CARD).
IF YOU'RE LUCKY, I MAY EVEN DANCE.
CONVENTIONAL GRAIN LOADER Traditional grain loading isn’t very efficient. Grain piles in the middle and top edges remain unfilled.
The Load Toad® uses patented technology to load grain more evenly than is humanly possible. As a result, it loads 5%* more grain into every railcar. This translates into a 5% savings on your grain shipping costs. Meet the Load Toad in person. Call (605) 965-6414 to put the Toad to the test with a custom trial at your plant. Or email info@loadtoad.com.
WITH LOAD TOAD The Load Toad’s patented technology loads grain more evenly, resulting in 5% more grain loaded into every railcar.
*Results may vary.
LoadToad.com
PREPAREDNESS
Bird’s Eye An Illinois state police helicopter provides the bird’s eye view of the wreckage from a massive ethanol tank car fire that kept fire crews on site for more than 48 hours. PHOTO: JOHN PETRAKIS, PRINCETON FIRE DEPARTMENT
68 | Ethanol Producer Magazine | december 2011
PREPAREDNESS
Plan for the
Worst The Tiskilwa ethanol tank car fire demonstrates the need for preparedness and cooperation between local fire crews and ethanol plants By Kris Bevill
In the early hours of Oct. 7, 26 cars on a 131-car train destined for the East Coast derailed in northwest Illinois just outside the tiny village of Tiskilwa, Ill., jolting the townâ&#x20AC;&#x2122;s residents awake as tank cars filled with 30,000 gallons of ethanol exploded into flames. Some said it sounded like bombs going off as the rail cars caught fire. The fire was so bright it looked like the sun was rising from the south, according to one first responder.
december 2011 | Ethanol Producer Magazine | 69
PREPAREDNESS
requested to take a closer look at the fire and then grabbed his camera and headed off for a better view of the situation. “You could hear the containers hissing and the roar of the flames,” he says. “We saw a great big ball of fire coming from where the engine had disconnected. Right off the bat, I think it was safe to say this was way over our heads. There’s not many of us in the area that have a lot of exposure to this.” Because of the ferocity of the fire, crews could only survey the situation from the south side of the railroad tracks and the pitch black of the predawn hours made it difficult to get a visual on the condition of the cars. However, a manifest obtained from the train engineer helped responders estimate that between seven and nine ethanol cars were involved. The remaining derailed cars carried distillers grains which, according to Petrakis, were “completely lost,” their contents having been strewn across the tracks, adding more potential fuel for the fire. “What was going through our minds at that point was: ‘What’s the plan here?’” Petrakis says.
Being Prepared
Ethanol derailments are not common.
Out of more than 300,000 ethanol shipments hauled via rail in 2010, only 50 tank cars were involved in incidents, according to the Federal Railroad Administration and the Association of American Railroads. The number of ethanol shipments has likely increased substantially since then, with more ethanol being produced and greater emphasis being placed on unit trains as the preferred method of transport. “Ethanol is the largest volume hazardous material transported by rail today, with approximately 75 percent of all ethanol produced in the U.S. moving by rail,” the Renewable Fuels Association said in a statement following the Tiskilwa incident. “We encourage all first responders and those in the ethanol and fuel business to take this unfortunate incident as a reminder to ensure they have the proper safety planning, training and materials in place to respond effectively to an ethanolrelated emergency.” It is unclear how many of the more than 50 firefighters who worked the weekend-long Tiskilwa incident had received ethanol safety training prior to the derailment. A number of ethanol-related courses are offered through the Illinois Fire Service Institute’s Hazardous Materials Program, including an online
photo: SCOTT ETHERIDGE, PRINCETON FIRE DEPARTMENT
Needless to say, the initial response to the incident was a bit chaotic. Law enforcement officials were the first to arrive and identified the source of the fire as ethanol after reading placards on the cars from a distance. But, it was difficult to immediately tell how many cars were involved and just exactly how first responders should deal with the situation. Local fire crews responded to the call immediately, but as in many rural areas, fire departments there are small and staffed mostly by volunteers. This would be the largest fire many of them had ever responded to. Supporting units from towns near Tiskilwa got there as fast as they could, but many had 20-minute drive times to get to the scene due not only to the distance between towns but also detours they were forced to take because of the train’s derailment. At 2:21 a.m., Princeton Fire Department, located just about seven miles north of Tiskilwa, received a call for a train derailment and fire near Tiskilwa. By the time the PFD unit arrived, Tiskilwa firefighters were in the process of forming an evacuation plan for some of the town’s 745 residents. Princeton fire chief, John Petrakis, a 15-year firefighting veteran trained in hazmat response,
Fire and Foam Many rural fire departments lack the resources to purchase specialty foam required for ethanol fires. Foam used during the Tiskilwa incident was provided in part by area ethanol plants. 70 | Ethanol Producer Magazine | december 2011
photo: SCOTT ETHERIDGE, PRINCETON FIRE DEPARTMENT
PREPAREDNESS
Night Light A huge fireball rises from the scene of the derailment soon after the incident occurred.
photo: JOHN PETRAKIS, PRINCETON FIRE DEPARTMENT
photo: JOHN PETRAKIS, PRINCETON FIRE DEPARTMENT
Messy Clean-up Crews work to clear tipped rail cars from the derailment site.
Plan of Attack Smoke billows from derailed ethanol tank cars as crews monitor the situation. december 2011 | Ethanol Producer Magazine | 71
PREPAREDNESS
railment brought out a number of responding agencies, from various hazmat units to the state environmental protection agency and Homeland Security officials, to a specialized hazmat unit contracted through the railroad company. “The biggest thing we learned is that as large as these incidents become, more organizations are going to be involved and everyone needs to work together,” Petrakis says. “You don’t get the private and public interaction often and when people come together there’s always a chance for authority issues, but there was none of that.” Crews also lacked one of the key components to fighting ethanol fires, a foam suppressant that many rural fire departments simply do not have the budget to keep on hand. But as luck would have it, some of Tiskilwa’s volunteer fire fighters are also ethanol plant employees, and as soon as they learned of the fire, they contacted officials at the 140 MMgy Marquis Energy LLC plant in Hennepin, located about 14 miles east of Tiskilwa, and the 110 MMgy Patriot Renewable Fuels LLC plant in Annawan, about 25 miles west of Tiskilwa, to request their foam supplies. Both plants readily offered their support and within a few hours fire crews had hundreds of gallons of foam suppressant at their disposal. It would be several more hours before the foam could be used, but as day broke and Petrakis and other fire officials were able to survey the scene from a state police helicopter, it became clear that the mantra of letting
photo: SCOTT ETHERIDGE, PRINCETON FIRE DEPARTMENT
awareness course, a course dedicated to specialized foam applications, and even one designed specifically to train ethanol plant personnel on fire awareness and hazmat rescue. None of the courses, however, are mandatory requirements for fire fighters. The state fire marshal would have to take action to make ethanol awareness courses mandatory and that is not likely to happen, according to Ray Palczynski, director of special operations training programs at the Illinois Fire Service Institute. He says that because so much ethanol moves around the country without incident, it can be difficult to generate interest for ethanol safety training among fire fighters. “This will probably spike [interest] again,” he says. “Just like when somebody falls off a ladder, we get calls for ladder training. If somebody has a line advancement issue, that’s the new big ticket issue. I expect we’ll be getting calls from folks asking for a refresher course after this.” Petrakis and his crew had received ethanol training—it’s a mandatory requirement at his station—so they entered the situation somewhat prepared, but none of them had responded to a real-time ethanol incident until that night. And as important as training is, every incident is unique and brings with it its own set of challenges. In this case, establishing a chain of command was the first struggle. “The fire was far enough away that the likelihood of a container failure was low,” Petrakis says. “Our biggest need was a strategy.” An incident the size of the Tiskilwa de-
Pooling Resources More than 2 million gallons of water were used by a coalition of area fire fighters while battling the train derailment near Tiskilwa, Ill. 72 | Ethanol Producer Magazine | december 2011
the fire burn itself out was not going to be the best course of action and foam would be required to get the situation under control. Firefighters were able to negotiate the removal of most of the cars, but the ethanol tanks were piled on top of one another. The tipped grain cars also presented major hidden fire and heat build-up concerns. That, combined with 30 mile-per-hour wind gusts, prompted the responding units to move into a “defensive cooling operation,” using the suppression foam to cool down the railcars that weren’t yet burning. “We weren’t so worried about the tanks that were on fire,” Petrakis says. “We were more concerned about the rail cars that weren’t on fire.” As hazardous as the situation was, the Tiskilwa incident ends as a success story. No one was injured, and while local fire departments were stretched to their limits—many had members on-site for more than 24 hours—by the following Monday, all of the village’s residents were back in their homes and fire fighters were discharged from the scene. Petrakis says the blaze offered invaluable hands-on training for firefighters who spent their weekend working at the scene. “We see a lot of ethanol travel through here, but we don’t get a lot of ethanol incidents,” he says. “So it was a great learning experience.” He hopes that their experience will inspire other rural fire departments to check their equipment and update their training. “The fire service has become very demanding and training is sometimes unfunded, but be resourceful,” he advises. “I’ve never been turned down when I’ve asked people for help getting training. With ethanol, even though it’s a low frequency incident, it’s high impact.”
Plant Outreach
An ethanol plant can be a valuable partner in helping train the local fire department by inviting the fire fighters to the facility and encouraging an open dialogue with the fire chief. Often it is the case, as it was in Tiskilwa, that because of the ethanol plant’s rural location, some of the volunteer fire fighters are also ethanol plant employees. Matthew Hagrelius, general counsel and head of safety and environmental matters at Marquis En-
PREPAREDNESS
ergy, says a strong working relationship between the ethanol plant and the local fire department is why firefighters knew they could count on Marquisâ&#x20AC;&#x2122; help during the Oct. 7 firefight. â&#x20AC;&#x153;We have them out here on a pretty regular basis just to familiarize them with the facility,â&#x20AC;? he says. â&#x20AC;&#x153;They noticed our stores of foam and had asked if we would have some available if something arose out on the highways or anything. Of course we said â&#x20AC;&#x2DC;yes.â&#x20AC;&#x2122;â&#x20AC;? Palczynski says heâ&#x20AC;&#x2122;s found that most often the relationships between local fire departments and ethanol plants are good ones. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s either great or itâ&#x20AC;&#x2122;s nonexistent,â&#x20AC;? he says. â&#x20AC;&#x153;It depends who youâ&#x20AC;&#x2122;re dealing with. Having a relationship with an ethanol plant in your neighborhood seems to be an automatic, but that doesnâ&#x20AC;&#x2122;t always happen.â&#x20AC;? For ethanol plants, developing a relationship with the local fire department can make the difference between your assistance being welcomed or shunned in the case of a nearby incident, he says. In the case of Tiskilwa, because the local fire chiefs knew the ethanol plant operators, it wasnâ&#x20AC;&#x2122;t a stranger offering help, it was someone they knew and so they willingly received their assistance, he says. While this incident involved a rail car fire, the chance always exists that the next incident will be at an ethanol facility. All the more reason to open the lines of communication, Pal-
czynski says. He offers as an example a recent case of a small town fire department that requested ethanol training. In order for the class to be offered at no cost, the local fire chief needed to sign up at least 15 people from two or more departments to attend. Despite the fact that the fire department is within eyesight of an operating ethanol plant, the fire chief was unable to get any fire fighters from the nearby towns to attend the training. â&#x20AC;&#x153;I just gave it to the handful from that little depart-
Taking Initiative
It was ironic that Aventine Renewable Energy Inc. hosted an ethanol and anhydrous ammonia safety training event at its Pekin, Ill., plant just weeks after the Tiskilwa train derailment. Brad Cantrell, safety/loss control manager at Aventine, says the derailment spurred additional interest in Aventineâ&#x20AC;&#x2122;s training seminars and provided a regional example of the types of incidents first responders need to be prepared for. About 100 people attended the daylong seminars, held Oct. 21 and 22, including representatives from local volunteer fire departments, chemical companies, power plants, fertilizer production facilities, insurance companies, area health departments and the U.S. Department of Transportation. TransCAER and the Ethanol Emergency Response Coali-
ment,â&#x20AC;? Palczynski says. â&#x20AC;&#x153;The fact that theyâ&#x20AC;&#x2122;re smarter for having been there is great. But the fire chief was very disappointed that no one else came. I told him itâ&#x20AC;&#x2122;s going to take a problem before they realize they should have been here. And thatâ&#x20AC;&#x2122;s how it goes.â&#x20AC;? Author: Kris Bevill Associate Editor, Ethanol Producer Magazine (701) 540-6846 kbevill@bbiinternational.com
tion assisted in planning the event and provided financial assistance to cover the cost of hosting the seminars. Aventine makes a point of maintaining a strong relationship with its local fire department. Cantrell recommends other ethanol plants do the same and also consider taking the initiative to host similar ethanol safety seminars. â&#x20AC;&#x153;There are resources available; you just have to reach out,â&#x20AC;? he says. He commends the ready assistance and guidance offered through TransCAER and the EERC and says Aventine is also willing to provide resources gathered for its event to interested parties. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;d be more than happy to share that with anybody, whether itâ&#x20AC;&#x2122;s an ethanol plant or an emergency response group or whatever,â&#x20AC;? he says.
,1129$7,9( 7$1. '(6,*1 $*5$ ,QGXVWULHVÂś LQQRYDWLYH WDQN
GHVLJQ FDQ W\SLFDOO\ EH HUHFWHG DW \RXU ORFDWLRQ LQ D VLQJOH GD\ GUDPDWLFDOO\ UHGXFLQJ FRQVWUXFWLRQ FRVWV E\ FXWWLQJ RQVLWH DVVHPEO\ WLPH E\ XS WR
::: $*5$,1' &20
2XU WDQNV DUH DOO IDEULFDWHG LQ ZDOO VHJPHQWV FRQVWUXFWHG RI GXUDEOH FDUERQ RU VWDLQOHVV VWHHO LQ D FRQWUROOHG LQGRRU IDFLOLW\ 7KH VHJPHQWV DUH WKHQ GHOLYHUHG WR \RXU VLWH DQG DVVHPEOHG E\ RXU H[SHULHQFHG FRQVWUXFWLRQ GLYLVLRQ
$*5$
Ä&#x161;ĆľĆ&#x152;Ä&#x201A;Ä?Ĺ?ĹŻĹ?Ć&#x161;Ç&#x2021; Ä?Ç&#x2021; Ä&#x161;Ä&#x17E;Ć?Ĺ?Ĺ?ĹśÍ&#x2DC;ÎĄ
$*5$ LV \RXU WXUQNH\ VRXUFH IRU GHVLJQ IDEULFDWLRQ HUHFWLRQ DQG JHQHUDO FRQWUDFWLQJ IRU D ZLGH YDULHW\ RI HWKDQRO DQG DJULFXOWXUDO DSSOLFDWLRQV :KHWKHU \RX DUH EXLOGLQJ DQ HQWLUHO\ QHZ IDFLOLW\ RU DGGLQJ RQ RXU VHUYLFHV DUH SURYLGHG WR \RX IURP WKH JURXQG XS december 2011 | Ethanol Producer Magazine | 73
April 16-19, 2012
Colorado Convention Center Denver, Colorado
The Largest Biomass Industry Networking Event in the World! Sponsorships and Exhibit Space
Now Available
The International Biomass Conference & Expo is anticipated be even larger than last yearâ&#x20AC;&#x2122;s successful event. With an anticipated 1,500 attendees, 230 exhibitors, 120 speakers and 60 sponsors, youâ&#x20AC;&#x2122;ll experience firsthand why the majority of our past exhibitors and sponsors have walked away with valuable contacts and sales leads. Register Today and Grow Your Future. CONTACT US: 866-746-8385 service@bbiinternational.com Follow Us: twitter.com/biomassmagazine
A New Era in Energy: The Future is Growing Sponsors as of October 11, 2011
RISK MANAGEMENT
CONTRIBUTION
Mitigating Ethanol Market Risk by Monitoring Opportunities Brokers play an important role in effectively using swaps, other risk management tools By John Harangody
Whether itâ&#x20AC;&#x2122;s incessant growing demand for commodities from Brazil, Russia, India and China or Middle East turmoil, changes in U.S. federal energy policy or a drought in the plains, all these events have one unique thing in common: a significant impact on the price of ethanol.
In fact, there is no market existing today that may be more acutely affected by such a broad array of factors. At first glance, the ethanol business appears elementary. One acquires corn, ferments it, and co-produces alcohol and distillers grain. The industry refers to this as the â&#x20AC;&#x153;corn crush.â&#x20AC;? If the acquisition cost of corn and the cost of production are less than the
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). 76 | Ethanol Producer Magazine | december 2011
market value of ethanol and distillers grain, the business is profitable. If only it were that simple. The ethanol market has many diverse participants that view price from different perspectives, including relationships to corn, basis locations, reformulated gasoline blendstock for oxygenate (RBOB) blending, renewable identification numbers (RINs), sugar, crude oil, the U.S. dollar and even equity markets. To complicate matters more, while most of the relevant forward commodity price curves are in contango (that is, futures prices are above the expected
RISK MANAGEMENT
spot prices and the two converge), some are backwardated (futures are generally below the expected spot price, desirable for net long positions), and some have elements of both imbedded in their structure. This translates into price alignments that are extremely dynamic, requiring constant monitoring for opportunities to lock in profitable margins.
What It Takes
Ethanol risk management is not for the faint of heart. It requires a strong intellect, nimbleness, decisiveness and the ability to respond quickly to changing conditions. Possession of all these talents and skills is not sufficient for success, however. To be effective, one needs well-designed financial products and physical markets to manage price risk. In addition, the market needs to be structured in a manner that pools liquidity and facilitates rapid dissemination of price information. Fortunately, notwithstanding the fact that the ethanol markets are still in their nascent stage of development, many financial risk products have been developed to accommodate the most demanding of managers.
The list of exchange-cleared risk products that can be employed is impressive. CME Group’s product suite includes Chicago Board of Trade ethanol swaps, options on CBOT ethanol swaps, Chicago Platts swaps, NY Harbor Platts swaps, RBOB calendar swaps and corn calendar swaps. CBOT ethanol futures, ethanol block futures as well as corn futures are also available. About 80 percent of all exchange-cleared ethanol contracts are over-the-counter (OTC) swaps. In addition, RINs and distillers dried grains with soluble (DDGS) are traded as physical products. By nature OTC swap markets do not have strong institutional structure. Consequently, a final ingredient necessary for the markets to function effectively are good brokers who constantly monitor changes in conditions, quickly communicate that information and assist their clients in understanding the impact on price.
Advantages of a Broker
In the physical and financial ethanol markets, a broker is a neutral intermediary that matches buyers and sellers at the best
price in the market. A good broker will keep company names anonymous until an actual transaction that meets the client’s requirements is executed. Because a pure broker does not leverage a balance sheet or take actual ownership of the underlying asset, transacting parties are assured of getting the best price without risk of bias. Some ethanol brokers utilize a refined hybrid approach that melds voice brokering with electronic trade to produce the deepest, most efficient OTC ethanol swap markets. Mike Bridges, founding member of Atlas Commodity Markets LLC states, “We have found benefits to both forms of execution. Our selection is predicated by customer preference and our internal assessment of which venue will produce the best results for our customers. While a majority of today’s OTC ethanol swap trades are transacted via voice and instant message, there is a growing contingent of market participants that want to execute on our electronic trading platform.” A proposed Commodity Futures Trading Commission rule governing swap transactions would require commodity swaps
december 2011 | Ethanol Producer Magazine | 77
RISK MANAGEMENT
that are mandated to be exchange cleared to be executed on a designated contract market or a swap execution facility (SEF). Swaps that are not mandated to be exchange cleared may be executed bilaterally. This requirement may result in the migration of many swap contract transactions to SEFs. It remains to be determined which, if any, ethanol swap contracts will be mandated for clearing. Some may ask why a broker is even necessary given the bilateral nature of OTC swap transactions and the ability for parties to trade directly. There are several ways that a broker can enhance a trader’s performance. The first is efficient utilization of time. A full service broker employs the optimum number of knowledgeable professionals to provide complete coverage to each counterpart in the marketplace. Within seconds, a well functioning desk can respond to a request for a quote with confidence that every relevant market participant has been queried regarding price and volume. This insures maximum liquidity and best price. A skilled broker also provides market intelligence and completely understands where price values are in each geographic location across the time curve. This insight frequent-
ly results in the ability to combine disparate markets where interest is expressed, to create liquidity in a different market. The best brokers are market neutral and have exceptional market insight. This enables traders to always transact at the most competitive terms and frees their time to focus on ways to create additional value for their business. Chris Yarrow, the anchor on Atlas Commodity Markets’ financial products desk, says “a broker should serve as your eyes and ears for the market, helping to determine value by monitoring inter-market and intramarket spreads and to alert you to market opportunities.” An intermarket spread is a price differential between two distinct markets such as RBOB and ethanol, whereas an intramarket spread is a time spread such as first-quarter versus second-quarter ethanol. The execution of the “corn crush” is an excellent example of a broker adding value to the trade process. An experienced broker can source the relevant markets, calculate the crush, communicate the bid and offer in cents per gallon of ethanol produced, and execute the trade in a matter of seconds. DDGS traders face a unique set of challenges. For one, no liquid DDGS financial risk products are available for hedging pur-
poses. In addition, the growth in the number of ethanol plants has not only increased DDGS production, but has created a wider variance in product from a nutritional perspective. Specific nutritional knowledge relative to different quality grades of DDGS needs to be disseminated. As nutritionists become more comfortable utilizing DDGS in feed rations, corn and other feed ingredients will experience some displacement in the formula. The increased number of ethanol plants provides merchandisers arbitrage opportunities that previously didn’t exist. Bart Vance, Atlas’ physical grains desk, says “a knowledgeable physical broker is an asset to both transactional parties. Whether as an extension of a company’s sales force or as a part of a procurement team, both get the benefit of another employee without the direct overhead. Brokers that have trading experience understand the challenges that confront today’s market participants. Their tacit knowledge is invaluable to solving problems that may arise. For example, this year in drought stricken Texas, local buyers desperately needed alternative feeds. We were able to quickly locate DDGS supply from nontraditional regions throughout the U.S. while also creating new distribution points for processors.” In summary, a reasonable person might think that corn, ethanol and DDGS comprise three distinct, somewhat untethered markets, each with a different array of risk products, liquidity, execution venues and methods of communication. Some may find it a clumsy arrangement that impedes efficient trade. These markets should represent great opportunity. The key is to invest the time to research and understand each market’s nuances, and risk products. If one then identifies and employs the most experienced brokers with the broadest market reach, the structure will be in place to simultaneously monitor all three and capture pricing opportunities as they occur. Author: John Harangody Chief Operating Officer, Atlas Commodity Markets (312) 854-0400 john.harangody@atlasmarkets.com
78 | Ethanol Producer Magazine | december 2011
Increase Productivity Managing your inbound grain and trading has never been easier, more convenient or more profitable! Introducing DPP grain desk â&#x20AC;&#x201C; a customized electronic grain marketing and trading tool that creates new financial opportunities by SM
connecting ethanol producers directly to top-performing farmers. To learn how DPP grain desk can help increase your plant productivity, go to www.dppgraindesk.com or call 888-393-6471 today.
SM Service mark of Farms Technology Š2011 DPPGD021796P238AVA
OUTREACH
CONTRIBUTION
Educating Drivers about FFVs and Renewable Fuels Can your motor vehicle administration break the blend wall and help meet the RFS? By Burl Haigwood
Photo: National FlexFuel Vehicle Awareness Campaign
In order to earn the privilege to drive, potential drivers must not only learn the rules of the road, but also show an understanding of safety issues. It is time that the privi-
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). 80 | Ethanol Producer Magazine | december 2011
lege includes the responsibility to understand how their gasoline addiction has a direct impact on safety as it relates to their economic/ environmental/energy/national security—and personal health. A national public education strategy worked for littering, recycling, smoking, seat belts and child safety seats. It’s time we give our national energy crisis and the national renewable fuel standard (RFS) the same reverence we give auto safety and trash—and with the same order of magnitude. The National FlexFuel Vehicle Awareness Campaign initiated such a project by working with the American Association of Motor Vehicle Administrators. The AAMVA recently reached out to all of their state motor vehicle administrators (MVAs) and informed them about our new FlexFuel Vehicle Awareness/Motor Vehicle Administration Driver Education Project. The FFV/MVA project creates the opportunity to collaborate on driv-
OUTREACH
er education projects in six states with high concentrations of flex-fuel vehicles (FFVs) and/or flex-fuel pumps. Why? In some areas it is estimated that 90 percent of FFV owners don’t know they are driving this special vehicle. Therefore, it would be safe to guess that an equally high number don’t know where to find nearest flex-fuel pump. How to reach those drivers—the motor vehicle administration. The first question to be asked—“Are you driving an FFV?” The initial response to the FFV/MVA project has been favorable because it also supports the goals of the RFS which are synergistic with state goals to create jobs, protect the environment and public health of citizens and improve energy diversity. Two components of this project point to its potential effectiveness. First, states think this project is timely because they believe chronic high gasoline prices and supply shortages will continue and become status quo. Second, FFV owners and flex-fuel pumps could be an important part of the state’s energy emergency preparedness plan, in the event of a price spike or shortage caused by a natural or diplomatic disaster. The FFV awareness campaign will work to combine its education tools with the MVAs’ ability to communicate with all drivers, and specifically FFV owners. First, we will encourage states to develop their FFV owner/vehicle registration database, similar to projects piloted by the American Lung Association and other stakeholders in Ohio, Nebraska, Minnesota and Wisconsin. Each state is unique, so we have found different procedures need to be followed. To further the FFV/MVA project, we will also help MVAs explore, and include in the daily work routine, other no- to low-cost activities that could make energy and FFV awareness part of driver education culture. Activities include posting website information, reaching out to FFV dealers, incorporating FFV information in driver preparation and testing, including information in vehicle registration and license renewal mailings, safety inspection and emissions notices, and providing information at point-of-service locations. Our preliminary research shows MVA participation does not need outside agency approval
for most activities and actual internal costs are zero to minimal. Our research discovered that significant education projects that are aimed at the driver and focused on Reaching Consumers energy awareness, and Burl Haigwood, especially the RFS or program director of the Clean Fuels FFV owners simply do Foundation, asks not exist outside a few stakeholders to help enlist the aid of motor Midwestern states. Our vehicle administrators efforts will begin to fill in educating drivers that void by creating about FFVs and flexfuel use. demonstration programs and encouraging other states to do the same. For example, the North Dakota state government recently partnered in a program that will invest nearly $500,000 to start reaching FFV owners in their state. USDA, the U.S. EPA, and the Governors Biofuels Coalition have added their support to the FFV Awareness Campaign. Our goal now is to appeal to more stakeholders to join in.
Supporting the RFS
The project addresses many of the challenges that face stakeholders trying to support the RFS. It will: 1. Help sustain existing E85 infrastructure to support the rollouts of midlevel blends and transition to flex-fuel pumps. 2. Complement industry/government refueling infrastructure investments—by educating customers and helping them locate flex-fuel pumps. 3. Generate energy awareness while creating positive information about the RFS, ethanol and alternative fuel vehicles.
Photo: Photo: National FlexFuel Vehicle Awareness Campaign
4. Leverage the support of EPA, USDA, the Governors Biofuels Coalition, several Clean Cities Coalitions, and over 30 other energy/environment/national security organizations for the campaign. 5. Educate consumers that they can move from the existing involuntary purchase of ethanol to one of choice. The RFS is not a consumer requirement. 6. Help break the E10 blend wall by reaching demand levels that will justify investment in cellulose and advanced ethanol/ biofuels. We hope stakeholders don’t see this as “instead of ” project that would deter from other market development and refueling infrastructure investment efforts. It’s part of a portfolio approach. We trust most RFS advocates will also see this effort is not just about FFVs or specifically E85. It is a tremendous opportunity at hand. The project is first about the RFS, and then how the states and the public can achieve those benefits with the use of higher blends of ethanol—safe and valuable common ground for many diverse groups to rally around. Considering the end game in this adult education process, it is likely that more consumers will be willing to try and sustain the purchase of higher blends of ethanol if they were truly enlightened. More FFV owners would look for a flex-fuel pump, if they knew it was for their flex-fuel car. We hope industry and government stakeholders share our vision. There are multilevel values of the FFV campaign as both a near and long term strategy—and it needs to be supported now. Regardless of the eventual price point for higher ethanol blends, education will play an important role in consumers valuing fuel choice. After all, hybrids, Volts, and electric vehicles do not have an economic advantage today—but they are all sold on the same FFV value proposition of energy and environmental security. This project will generate as much goodwill about the RFS and ethanol as simply encouraging ethanol use. Regardless of the burden of proof, consumers will continue to be exposed to fear and doubt generated in the media and they will need counterbalancing information.
december 2011 | Ethanol Producer Magazine | 81
OUTREACH
Collaborating with Automakers
There also are many value propositions and justification for automakers to support this FFV/MVA project and therefore support the RFS and the use of higher blends of ethanol in their vehicles. First, education aimed at all drivers will reach millions of consumers. This will engage drivers in the first step of educated deci-
sionsâ&#x20AC;&#x201D;to determine if their vehicles can use a higher blend of ethanol. This will reduce automaker concerns about proper refueling, and in the end, create a satisfied consumer for all stakeholders. When specifically aimed at FFV owners, the project is aligned with the proper refueling goals of all automakers and the need to increase the utilization of alternative fuel in
(QYLURQPHQWDO 6XVWDLQDELOLW\ 3URFHVV (IĂ&#x20AC; FLHQF\ â&#x20AC;˘ ' 75$6$5Â&#x160; WHFKQRORJ\ Âą 'HWHFW FRQGLWLRQV 'HWHUPLQH DFWLRQ
'HOLYHU UHVXOWVÂŤDXWRPDWLFDOO\ Â&#x2021; &RROLQJ ZDWHU Â&#x2021; %RLOHU ZDWHU Â&#x2021; 1DOFR <HDVW $FWLYLW\ 0RQLWRU Â&#x2021; (WKDQRO &RUURVLRQ ,QKLELWRUV â&#x20AC;˘ &RUQ 2LO UHFRYHU\ DGGLWLYHV
â&#x20AC;˘ 7KLQ 6WLOODJH &ODULÂż FDWLRQ â&#x20AC;˘ (YDSRUDWRU 'HSRVLW &RQWURO 3URJUDP â&#x20AC;˘ 7RZHU 6FDQV
<RX NQRZ (WKDQRO :H NQRZ :DWHU
H PDLO IRRGDQGEHYHUDJH#QDOFR FRP ZZZ QDOFR FRP HWKDQRO Essential Expertise for Water, Energy and Air
SM
Â&#x2039; 1DOFR &RPSDQ\ 1DOFR WKH ORJR DQG WKH WDJOLQH DQG ' 75$6$5 DUH WUDGHPDUNV RI 1DOFR &RPSDQ\
FFVs to meet corporate average fuel economy standard (CAFE) credit usage verification requirements. In addition, the project addresses the long-term complaints from the environmental community regarding minimal flex-fuel use in FFVs. Success in educating consumers will enhance the value of the FFV credit/technology option to reduce greenhouse gas emissions, and could serve as a safety net should consumers not fully embrace the introduction of electric vehicles, which is needed to meet new CAFE regulations. Furthermore, energy awareness will accelerate the desire of the public to buy more new fuel-efficient, clean-burning alternative fuel vehicles as they come to market. This would help move energy usage responsibility from being solely the burden of the automaker to one of a shared responsibility with the vehicle owner and the fuel provider. While many state governments are interested in the economic, environmental and energy security benefits of the RFS, we have found very few focus on how to reach that endgame. The clean fuels and clean cars stakeholder coalition created during the Clean Air Act Amendments of 1990 led to a historic change in fuel quality, emissions reductions and, as an added bonus, crude oil reduction. The next round of CAFE requirements, and possible changes to fuel, represent the next historic opportunity. The FFV/MVA project is a win for states interested in developing biofuels, a win for FFV makers and dealers, a win for gasoline retailers, a win for agriculture, a win for the biofuels industry looking to hurdle the E10 blend wall, and a win for the public. This project is truly in the national interest and supports the goals of the general public. Author: Burl Haigwood Director, Program Development, Clean Fuels Foundation (301) 718-0077 Burl.Haigwood@cleanfuelsdc.org
ď&#x20AC;¸ on the web Support the FFV Awareness Campaign, get more information about the FFV/MVA project: www.FFVAwareness.gov
82 | Ethanol Producer Magazine | december 2011
Put BetaTecÂŽ natural hop extracts to work in your fermentation process to replace antibiotics and enhance yeast propagation. IsoStabÂŽ is the natural way to effectively control gram-positive bacteria while eliminating antibiotics and harsh chemicals. Plus, antibiotic-free DDGS adds value to your co-products. VitaHopÂŽ Silver yeast nutrient enhances yeast performance and vitality, inducing faster fermentations and larger yields. Combined with BetaTecÂŽ fermentation expertise and training, these technologies will significantly increase your plantâ&#x20AC;&#x2122;s efficiency. BetaTecÂŽâ&#x20AC;Śthe natural hop to higher profits. For more information specific to fuel ethanol producers, visit www.bthp.info. 4HJ(Y[O\Y )S]K :\P[L >HZOPUN[VU +* ;! -! www.betatechopproducts.com
EPM MARKETPLACE
Associations/Organizations
Water Treatment
Growth Energy 202-545-4000
U.S. Water Services 763-553-0379 www.uswaterservices.com
www.growthenergy.org
Heat Exchanger
Yeast
Clean Cities Red River Valley Clean Cities 651-227-8014 www.CleanAirChoice.org Twin Cities Clean Cities Coalition 651-223-9568 www.CleanAirChoice.org
Ferm Solutions 859-402-8707
www.ferm-solutions.com
Fermentis-Division of SI Lesaffre 800-558-7279 www.fermentis.com Xylogenics, Inc. 317-697-7514
Chemicals Anti-Microbial Ferm Solutions 859-402-8707
Cleaning www.ferm-solutions.com
Dryer Systems HTH Companies 636-584-4586
Denaturant Methanol of Orlando 407-234-1788
www.xylogenics.com
jmm@arllc.org
dgreer@hthcompanies.com
Hydro-Klean, Inc. 515-283-0500
www.hydro-klean.com Heat Exchanger Services 303-947-7864 www.hexservices.com
Desiccant Interra Global 847-292-8600
Seneca Companies 800-369-5500
www.interraglobal.com
Enzymes CTE Global, Inc. 847-564-5770
www.senecaco.com
Hydro-Blasting Hydro-Klean, Inc. 515-283-0500
www.cte-global.com
EPM MARKETPLACE With all contact information placed in one convenient location, Ethanol Producer Magazine not only contains top editorial content but also a useful directory in each publication. Whether a first-time advertiser wanting to raise awareness of your business or a frequent display advertiser looking for added exposure, EPM Marketplace is the perfect solution.
Premium Plant Services, Inc. 888-549-1869 www.premiumplantservices.com Seneca Companies 800-369-5500
MPS Group 515-953-5656
www.hydro-klean.com
www.mpsgrp.com
www.senecaco.com
Emergency Spill Response Hydro-Klean, Inc. 515-283-0500 Seneca Companies 800-369-5500
www.hydro-klean.com www.senecaco.com
Evaporators Hydro-Klean, Inc. 515-283-0500
www.hydro-klean.com
Premium Plant Services, Inc. 888-549-1869 www.premiumplantservices.com
Fans Premium Plant Services, Inc. 888-549-1869 www.premiumplantservices.com
86 | Ethanol Producer Magazine | december 2011
Reach your customers Your Solution. Advertise Today.
EPM MARKETPLACE
EPM MARKETPLACE
Tank Cleaning Systems Spraying Systems Co. 800-95-SPRAY
Tanks www.tankjet.com
Algae Biomass Summit 763-458-0068 www.algaebiomasssummit.org Algal Biomass Organization 763-458-0068 www.algalbiomass.org
Concrete Silos www.hoffmanninc.com
Agra Industries, Inc. 715-536-9584
Grain Storage www.hoffmanninc.com
Mechanical
Hydro-Klean, Inc. 515-283-0500
L&M Ethanol Maintenance Contracting, Inc. 515-955-2010 www.lmethanol.com
Tank Cleaning Equipment
Plant Construction
Cloud/Sellers Cleaning Systems 800-234-5650 www.sellersclean.com
Agra Industries, Inc. 715-536-9584
Gamajet Cleaning Systems Inc 877-GAMAJET www.gamajet.com
Roeslein & Associates, Inc. 314-729-0056 www.roeslein.com
Scanjet, Inc. 281-480-4041
Stack
www.tankjet.com
Hoffmann, Inc. 563-263-4733
www.hydro-klean.com
Seneca Companies 800-369-5500
www.senecaco.com
Harris Group Inc. 206-494-9422
www.harrisgroup.com
Plant Optimization
www.icminc.com
Safety Rail Safe Training, Inc. 712-212-4145 www.railsafetraining.com
Education
www.agraind.com
Employment Recruiting SearchPath of Chicago 815-261-4403, x100 www.searchpathofchicago.com
www.hoffmanninc.com
EPM MARKETPLACE
Strategic Resources 425-688-1151 www.strategicresources.com
Engineering Design/Build
Premium Plant Services, Inc. 888-549-1869 www.premiumplantservices.com
Agra Industries, Inc. 715-536-9584
Seneca Companies 800-369-5500
Burns & McDonnell 816-333-9400
www.senecaco.com
www.icminc.com
Bismarck State College 701-224-5735 www.BismarckState.edu/energy
Tank Cleaning Services Hydro-Klean, Inc. 515-283-0500
ICM, Inc. 877-456-8588
Railcar Spill Response
Spraying Systems Co. 800-95-SPRAY
Cantley Inc. 865-360-4080
Feasibility Studies www.agraind.com
Andy J.Egan Company 616-791-9952 www.andyegan.com
www.scanjetinc.com
Environmental
RTP Environmental Associates 516-333-4526 www.rtpenv.com
Fabrication
www.hydro-klean.com
Consulting
ICM, Inc. 877-456-8588
Construction
Hoffmann, Inc. 563-263-4733
www.agraind.com
J.C. Ramsdell Enviro Services, Inc. 877-658-5571 www.jcramsdell.com
Conferences/Trade Shows & Meetings
Hoffmann, Inc. 563-263-4733
Agra Industries, Inc. 715-536-9584
www.agraind.com www.burnsmcd.com
december 2011 | Ethanol Producer Magazine | 87
EPM MARKETPLACE
Wolf Material Handling Systems 763-576-9040 www.wolfmhs.com
Process Design ADF Engineering Inc. 937-847-2700 www.adfengineering.com ICM, Inc. 877-456-8588
PreProcess, Inc. 949-201-6041
www.preprocessinc.com
Equipment & Services Air Pollution/Odor Control Anguil Environmental Systems, Inc. 414-365-6400 www.anguil.com
Biogas Scrubbers
www.eco-tec.com
Blowers & Fans FlaktWoods 716-845-0900
Dryers-Rotary Drum
Wolf Material Handling Systems 763-576-9040 www.wolfmhs.com
ICM, Inc. 877-456-8588
Conveyors–Mechanical
Dryers-Rotary Steam Tube
Wolf Material Handling Systems 763-576-9040 www.wolfmhs.com
ICM, Inc. 877-456-8588
Conveyors–Screw
Elevator Buckets
Wolf Material Handling Systems 763-576-9040 www.wolfmhs.com
Wolf Material Handling Systems 763-576-9040 www.wolfmhs.com
Cooling Towers
Emissions Testing & Reduction
Delta Cooling Towers, Inc. 800-BUY-DELTA www.deltacooling.com
ARI Environmental, Inc. 847-487-1580
Corn Oil Recovery
Fermentation Monitoring
www.flaktwoods.com
Catwalks
ICM, Inc. 877-456-8588
www.icminc.com
Total-Yield Diesel from Distillers 402-640-8925 www.total-yield.com
www.icminc.com
Buhler Aeroglide 919-851-2000
www.aeroglide.com
EPM MARKETPLACE
Aaron Equipment 630-350-2200 www.aaronequipment.com
Control Systems www.icminc.com
Kahler Automation Corp. 507-235-6648 www.kahlerautomation.com
Conveyors-Belt Wolf Material Handling Systems 763-576-9040 www.wolfmhs.com
Conveyors–Drag Wolf Material Handling Systems 763-576-9040 www.wolfmhs.com
88 | Ethanol Producer Magazine | december 2011
ETS Laboratories 707-963-4806
www.arienv.com
www.etslabs.com
Bioengineering, Inc. 781-672-2620 www.bioengineering-inc.com
Fractionation-Corn
Dryers-Fluid Bed
Centrifuges
www.icminc.com
Fermentors
DDGS Diesel
L&M Ethanol Maintenance Contracting, Inc. 515-955-2010 www.lmethanol.com
ICM, Inc. 877-456-8588
www.icminc.com
Vogelbusch USA, Inc. 713-461-7374 www.vogelbusch.com
Eco-Tec, Inc. 905-427-0077
Conveyors–Enclosed
With all contact information placed in one convenient location, Ethanol Producer Magazine not only contains top editorial content but also a useful directory in each publication. Whether a first-time advertiser wanting to raise awareness of your business or a frequent display advertiser looking for added exposure, EPM Marketplace is the perfect solution.
Buhler Inc. 763-847-9900
www.buhlergroup.com/us
Cereal Process Technologies 217-779-2595 www.cerealprocess.com Crown Iron Works Company 651-639-8900 www.crowniron.com ICM, Inc. 877-456-8588
www.icminc.com
Grain Handling & Storage Agra Industries, Inc. 715-536-9584 Hoffmann, Inc. 563-263-4733
www.agraind.com www.hoffmanninc.com
Sukup Manufacturing Co. 641-892-4222
www.sukup.com
Heat Exchangers Pick Heaters, Inc. 800-233-9030
www.pickheater.com
Hoppers Airoflex Equipment 563-264-8066 www.airoflexequipment.com
EPM MARKETPLACE
Wolf Material Handling Systems 763-576-9040 www.wolfmhs.com
Laboratory-Testing Services Foundation Analytical Laboratory 712-225-6989 www.foundationanalytical.com
Loading Equipment Bear Boring LLC 309-695-5150
www.bearboring.com
Loading Equipment-Liquid Determan Fluid Solutions 763-571-8110 www.determan.com PFT-Alexander, Inc. 1-800-696-1331
www.pft-alexander.com
Determan Fluid Solutions 763-571-8110 www.determan.com L&M Ethanol Maintenance Contracting, Inc. 515-955-2010 www.lmethanol.com www.pft-alexander.com
Maintenance Software ICM, Inc. 877-456-8588
www.icminc.com
Meters PFT-Alexander, Inc. 1-800-696-1331
www.pft-alexander.com
Millwright Agra Industries, Inc. 715-536-9584
ICM, Inc. 877-456-8588
Tanks
www.icminc.com
Agra Industries, Inc. 715-536-9584
www.agraind.com
Parts & Services Determan Fluid Solutions 763-571-8110 www.determan.com ICM, Inc. 877-456-8588
www.icminc.com
Pipe L&M Ethanol Maintenance Contracting, Inc. 515-955-2010 www.lmethanol.com Robert-James Sales, Inc. 800-666-0088
www.rjsales.com
Thermal Oxidizers
Pipe-Fittings
Maintenance Services
PFT-Alexander, Inc. 1-800-696-1331
Molecular Sieves
www.agraind.com
Reach your customers Your Solution. Advertise Today.
EPM MARKETPLACE
Hammertek Corp. 717-898-7665
www.hammertek.com
Robert-James Sales, Inc. 800-666-0088
www.rjsales.com
Pipe-Flanges Robert-James Sales, Inc. 800-666-0088
www.rjsales.com
• 60 Years of Experience • 500+ RTO Installed Base
Productivity Enhancements
• 100% Uptime Guarantee
ICM, Inc. 877-456-8588
• 24/7/365 Emergency Response Service Guarantee
www.icminc.com
Pumps PeopleFlo Manufacturing 847-929-4774 www.peopleflo.com
Seals Aesseal, Inc. 865-531-0192
www.aesseal.com
www.eisenmann.us.com Email: es.info@eisenmann.com
Storage-DDGS Hoffmann, Inc. 563-263-4733
Clean Air & Energy Technology
www.hoffmanninc.com
Structural Fabrication Agra Industries, Inc. 715-536-9584
Truck Receiving/Dumpers
Marketplace_EthanolProducer.indd 1
www.agraind.com
L&M Ethanol Maintenance Contracting, Inc. 515-955-2010 www.lmethanol.com
5/18/2011 3:34:27 PM
Airoflex Equipment 563-264-8066 www.airoflexequipment.com
Used Equipment UPM Machine 713-440-8200
www.upmmachine.com
december 2011 | Ethanol Producer Magazine | 89
EPM MARKETPLACE
Valves Cashco, Inc. 785-472-4461
www.cashco.com
Wastewater Treatment Services ICM, Inc. 877-456-8588
www.icminc.com
Water Treatment H2O INNOVATION 763-566-8961 www.H2OINNOVATION.com
Yield Enhancement EdeniQ, Inc. 559-302-1780
www.edeniq.com
Finance
Miscellaneous
Insurance
Maas Companies 507-424-2640 www.maascompanies.com
ERI Solutions, Inc. 316-927-4294
erisolutions.com
Research & Development
Mergers & Acquisitions
Engine Testing
Moglia Advisors 847-884-8282
Roush Industries 734-779-7736
www.mogliaadvisors.com
Marketing
Transportation
Fuel Ethanol
Railcar Gate Openers
CHS Renewable Fuels 651-355-6271
www.chsinc.com
www.roush.com
The Arnold Company 800-245-7505 www.arnoldcompany.com
AdIndex 75
2012 International Biomass Conference & Expo
51
Freez-it-Cleen
84
2012 International Fuel Ethanol Workshop & Expo
36
Gamajet Cleaning Systems, Inc.
83
2012 Pacific West Biomass Conference & Trade Show
26
2012 National Ethanol Conference
2
74
ACE American Coalition for Ethanol
27
53
ADI Systems Inc.
73
Agra Industries
13
Ashland Hercules Water Technologies
40
Indeck Power Equipment Co.
85
BetaTec Hop Products
43
Johnson System, Inc.
64
Brock Grain Systems
31
Life Technologies
39
BrownWinick Law Firm
67
Load Toad
59
Buckman
41
Louis Dreyfus
38
Burns & McDonnell
82
Nalco Company
45
CHS Renewable Fuels Marketing
62
Natwick Associates Appraisal Services
65
Cloud/Sellers Cleaning Systems
91
North American Bioproducts Corp.
37
CPM Roskamp Champion
52
Crown Iron Works Company
17
Pioneer Hi-Bred International, Inc.
44
Distillers Grains Production & Markets
66
Renewable Fuels Association
79
Dynamic Pricing Platform
58
Robert-James Sales, Inc.
49
EISENMANN Corporation
15
Syngenta Seeds, Inc.
30
Fagen Inc.
42
Vogelbusch USA, Inc.
55
FCStone, LLC
63
Wabash Power Equip. Co.
19
Fermentis - Division of S.I. Lesaffre
90 | Ethanol Producer Magazine | december 2011
21 & 92
5 8&9
3
GENENCOR速 - A Danisco Division Growth Energy Highmark Renewable Inc. ICM, Inc. Inbicon
Novozymes