INSIDE: SUSTAINABILITY A HOT TOPIC AT WORLD BIOFUELS SYMPOSIUM JANUARY 2009
Water Works Reducing Water Usage in Ethanol Plants Maintaining Water Systems Critical to Profitability Exploring Ethanol’s Impact on Water Use for Irrigation
WWW.ETHANOLPRODUCER.COM
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ETHANOL PRODUCER MAGAZINE JANUARY 2009
ETHANOL PRODUCER MAGAZINE JANUARY 2009
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inside JANUARY 2009 . VOLUME 15 . ISSUE 1
features 50 TECHNOLOGY Making Do With Less H2O
74 EVENT A World of Potential
Ethanol plants have reduced water usage by more than 20 percent, and experts believe further reductions are possible. By Erin Voegele
The 4th World Biofuels Symposium held recently in China revealed a growing global demand for biofuels. Sustainability will play an important role in that development. By Travis Hochard
Page 50
Page 58
Page 92
58 MAINTENANCE Going With the Flow
84 FRACTIONATION A Renewed Future
The steady, unhindered flow of water is critical to an ethanol plant’s efficiency and profitability. By Frank Zaworski
A Wisconsin-based ethanol plant is using fractionation to make the most of every kernel of corn. The process also allows the facility to save energy and market a unique high-protein animal feed. By Anna Austin
66 FEEDSTOCK Irrigation Mitigation
92 FINANCE Surviving the Economic Storm
The amount of water used to grow ethanol feedstocks depends on the crop and where it’s produced. According to an International Water Management Institute report, only 3 percent of all irrigation in the United States is used to grow corn for ethanol. By Ryan C. Christiansen
The aftermath of record-high corn prices and the ensuing economic crisis has generated talk of consolidation in the ethanol industry. EPM talks to industry experts about calculating the value of distressed ethanol plants. By Bryan Sims
ETHANOL PRODUCER MAGAZINE JANUARY 2009
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© Novozymes A /S · Customer Communications · No. 2007-35469-02
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inside JANUARY 2009 . VOLUME 15 . ISSUE 1
contributors 98 BIOREFINING
Danish Company Provides Technology, Innovations for Cellulose Biorefining
departments 8 On the Web
Dong Energy uses its domestic network of power production technologies to help keep Denmark independent of Middle Eastern oil. Now the company’s biotechnology spin-off Inbicon is looking to make its mark on the cellulosic ethanol industry. By Roger Moore
9 Advertiser Index 12 The Way I See It By Mike Bryan Leaving a Rough Road Behind
16 Business & People 20 Commodities 22 View From the Hill 23 RFA Update 24 Industry News & BIObytes 34 Plant Construction List 44 Drive By Toni Nuernberg Breaking Through the Blend Wall
46 Legal Perspectives By James L. Pray Understand Your Carbon Credits Contracts
102 Events Calendar 104 EPM Marketplace
Corrections from our December 2008 issue: The person in the photo on page 88 of the Policy feature, titled “Carbon as a Commodity,” is not Jim Murphy, president of Carbon Green LLC. The correct photo is posted with the story on our Web site. On page 104 of the Vehicles feature, titled “The Road Ahead for FFVs,” it incorrectly stated that miles achieved per gallon for E85 were slightly above vehicles fueled with unleaded gasoline. It should have said miles per gallon were slightly below. Ethanol Producer Magazine: (USPS No. 023-974) January 2009, Vol. 15, Issue 1. Ethanol Producer Magazine is published monthly. Principal Office: 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. Periodicals Postage Paid at Grand Forks, North Dakota and additional mailing offices. POSTMASTER: Send address changes to Ethanol Producer Magazine/Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, North Dakota 58203.
On page 129 of the Finance feature, titled “Bankrolling the Next Generation,” it incorrectly stated that BlueFire Ethanol has broken ground on a 17 MMgy cellulosic ethanol plant near Palm Springs, Calif., and a 3.2 MMgy facility near Lancaster, Calif. Both projects are in development, but haven’t broken ground yet.
BPA Worldwide Membership Applied for October 2006
On page 44 of the Plant Construction List, the photo was mislabeled as Plymouth Energy LLC. The photo was taken at Cardinal Ethanol LLC.
ETHANOL PRODUCER MAGAZINE JANUARY 2009
Correction from our November 2008 issue: 7
ON THE
web BLOG
PODCAST
TAKINGSTALK Start Planning for San Antonio The 14th Annual National Ethanol Conference is on the horizon, and Contributions Editor Dave Nilles discusses the highlights of the event that’s sure to bring together the ethanol industry’s movers and shakers in this pivotal year full of challenges and opportunities.
Making Do With Less
To view this blog and others, visit www.ethanolproducer. com/takingstalk/archive.jsp.
Staff Writer Erin Voegele discusses water usage in her January EPM feature, “Making Do With Less H20.” Ethanol producers have dramatically reduced water consumption through the years, but experts believe further reductions are possible. To listen to this podcast and others, visit www.ethanolproducer.com/podcast. TOP 10 WEB EXCLUSIVES
Acquisitions, Financing and a Presidential Election EthanolProducer.com’s most-read Web exclusive news stories for November
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Industry: Obama, ethanol won the election
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Economist: What if ethanol expansion levels off?
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VeraSun receives interim financing
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Former Shell executive signs on as Range Fuels CEO
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President-elect Barack Obama’s pro-ethanol campaign platform leaves many industry stakeholders hopeful the new administration will continue supporting the renewable fuel.
An Iowa State University biofuels economist forecasts higher ethanol prices and industry consolidation as new production capacity levels off.
Four days after filing for Chapter 11 bankruptcy protection, VeraSun receives commitments for up to $215 million in debtor-inpossession financing.
Former Royal Dutch Shell Executive David Aldous replaces Mitch Mandich as chief executive officer of future cellulosic ethanol producer Range Fuels Inc.
Soil tilth lab studies corn stover harvesting
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VeraSun files for Chapter 11 bankruptcy protection
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Syngenta develops sugarcane farming technology
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Viaspace acquires Inter-Pacific Arts, license to hybrid gases
Researchers at the USDA’s National Soil Tilth Laboratory determine what portions of corn stover are best for cellulosic ethanol production.
One of the nation’s largest ethanol producers, VeraSun Energy Corp., files for Chapter 11 bankruptcy protection, allowing it to enhance liquidity while the company reorganizes.
Syngenta announces plans to develop a new technology to improve the cost efficiency of sugarcane planting for use in ethanol production.
California-based Viaspace Inc.’s acquisition of Inter-Pacific Arts Corp. allows it to gain a license for commercial farming and sale of a fast-growing grass hybrid suitable for ethanol production.
Cardinal Ethanol starts up Indiana plant Indiana, the nation’s fifth-largest ethanol producer, sees its 12th ethanol plant start up—a 100 MMgy facility near Union City.
► For up-to-date Web exclusives, visit www.ethanolproducer.com 8
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Monsanto acquires Brazilian sugarcane companies Monsanto Co. announces the acquisition of two Brazilian sugarcane breeding and technology companies, CanaVialis SA and Alellyx SA. ETHANOL PRODUCER MAGAZINE JANUARY 2009
AdIndex
81 2009 Canadian Renewable Energy Workshop 82 2009 International Biomass Conference 42 2009 International Fuel Ethanol Workshop & Expo 2 2009 National Ethanol Conference
61 Gamajet Cleaning Systems Inc. 47 Genencor International Inc. 56 Growth Energy 14 & 15 Hydro-Klean Inc. 43 Indeck Power Equipment Co.
57 2009 RETECH Conference
71 Intersystems Inc.
62 ADI Systems Inc.
37 Kennedy & Coe LLC
25 Agra Industries Corp.
91 Lallemand Ethanol Technology
27 Barr-Rosin Inc.
70 Maas Cos.
28 BBI Biofuels Recruiting 110 BBI International Community Initiative to Improve Energy Sustainability (CITIES) 64, 72 & 99 BBI International Engineering & Consulting 68 BetaTec Hop Products Inc. 49 & 95 Bioenergy Australasia 94 & 109 Bioenergy Canada 86, 97 & 108 Biomass Magazine 52 Buckman Laboratories Inc. 4 Burns & McDonnell 41 Centrisys Corp.
101 Mapcon Technologies Inc. 30 Martrex Inc. 40 McC Inc. 33 Metso Automation 77 Nalco Co. 99 Nexen Marketing USA Inc. 60 North American Safety Valve 6 Novozymes 83 PhibroChem 45 Pioneer Hi-Bred International Inc. 112 Poet LLC
26 Christianson & Associates PLLP
53 Primafuel
76 Clifton Gunderson LLP
80 R&R Contracting Inc.
65 Crown Iron Works Co.
63 Resonant BioSciences LLC
79 Crown Iron Works/Harburg Freudenberger
111 Robert-James Sales Inc.
73 dbc SMARTsoftware Inc.
36 Salco Products Inc.
10 Delta-T Corp.
31 Sulzer Process Pumps
100 Distillers Grains Quarterly
29 TDC Dryers
69 Eisenmann Corp.
38 Trico TCWind
48 Ethanol and Biodiesel 101 DVDs
54 U.S. Water Services
87 ethanol-jobs.com
90 Vaperma Inc.
88 ETS Labratories
32 Vecoplan
89 Exothermics Inc.
55 Victory Energy Operations LLC
3 Fagen Inc.
39 Vogelbusch USA Inc.
19 FCStone LLC 13 Fermentis
ETHANOL PRODUCER MAGAZINE JANUARY 2009
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ETHANOL PRODUCER MAGAZINE JANUARY 2009
EDITORIAL
ART
PUBLISHING & SALES
Jessica Sobolik Managing Editor jsobolik@bbiinternational.com
Jaci Satterlund Art Director jsatterlund@bbiinternational.com
Mike Bryan Publisher & CEO mbryan@bbiinternational.com
Dave Nilles Contributions Editor dnilles@bbiinternational.com
Sam Melquist Graphic Artist smelquist@bbiinternational.com
Kathy Bryan Publisher & President kbryan@bbiinternational.com
Rona Johnson Features Editor rjohnson@bbiinternational.com
Elizabeth Slavens Graphic Artist bslavens@bbiinternational.com
Joe Bryan Vice President of Media & Events jbryan@bbiinternational.com
Ron Kotrba Senior Staff Writer rkotrba@bbiinternational.com
Jack Sitter Graphic Artist jsitter@bbiinternational.com
Tom Bryan Vice President of Communications tbryan@bbiinternational.com
Jerry W. Kram Staff Writer jkram@bbiinternational.com
Matthew Spoor Sales Director mspoor@bbiinternational.com
Susanne Retka Schill Staff Writer sretkaschill@bbiinternational.com
Howard Brockhouse Sales Manager, Media & Events hbrockhouse@bbiinternational.com
Kris Bevill Staff Writer kbevill@bbiinternational.com
Clay Moore Account Manager cmoore@bbiinternational.com
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Jeremy Hanson Account Manager jhanson@bbiinternational.com
Anna Austin Staff Writer aaustin@bbiinternational.com
Chip Shereck Account Manager cshereck@bbiinternational.com
Ryan C. Christiansen Staff Writer rchristiansen@bbiinternational.com
Tim Charles Account Manager tcharles@bbiinternational.com
Bryan Sims Staff Writer & Plant List Manager bsims@bbiinternational.com
Chad Ekanger Account Manager cekanger@bbiinternational.com
Hope Deutscher Online Editor hdeutscher@bbiinternational.com
Marty Steen Account Manager msteen@bbiinternational.com
Jan Tellmann Copy Editor jtellmann@bbiinternational.com
Marla DeFoe Advertising Coordinator mdefoe@bbiinternational.com
Megan Skauge E-Media Coordinator mskauge@bbiinternational.com
Jessica Beaudry Subscriptions Manager jbeaudry@bbiinternational.com Jason Smith Subscriber Aquisition Manager jsmith@bbiinternational.com Christie Anderson Administrative Assistant, Sales canderson@bbiinternational.com Nicole Zambo Receptionist nzambo@bbiinternational.com
HOW TO REACH US
LETTERS TO THE EDITOR
We welcome letters to the editor. Send your letter to: Ethanol Producer Magazine Letters, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203 or e-mail to jsobolik@bbiinternational.com. Letters should include the writer’s full name, address and telephone number, and may be edited for purposes of clarity and space.
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ETHANOL PRODUCER MAGAZINE JANUARY 2009
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The Way I See It
Leaving a Rough Road Behind
W
hew! 2008 is finally behind us. It was a tough year for the ethanol industry. The squeeze of falling oil and ethanol prices, combined with commodity hedging, spelled trouble for many and disaster for some. There is hardly a segment of the industry that hasn’t been affected. The build-out of corn-to-ethanol plants, high grain prices, project financing virtually impossible to obtain and the collapse of major banks all came together to create what some have described as “the perfect storm.” Looking forward, we can only speculate that intervention by the government to bail out banks and automakers will help strengthen the economy. This, combined with a new administration that seems to have a strong bent toward renewable energy, could help turn the ethanol industry around in 2009. Some of the issues that plagued us during 2008, such as the food-versus-fuel debate and unnaturally high grain prices, may be behind us. This isn’t to say that 2009 will be a cakewalk. In fact, it may take much of the first half of the year just to recover from 2008, but recover we will, and the industry will be stronger as a result. Once again, the partnership with American agriculture has proven its worth during this difficult time. As we have seen in the past, the plants that have a strong connection with farmers seem to be better able to withstand unpredictable market fluctuations. The fact is, agriculture remains the backbone of the ethanol industry. It’s puzzling that many be-
lieve second-generation ethanol will be largely built by big businesses, not farmers. If history is any predictor of the future, not having the direct involvement of agriculture may be a fatally flawed path forward. Farmers need to be involved in building the next generation of ethanol plants. We should still be forming farmerowned cooperatives. Time and time again, we have seen that these boards can provide the kind of intelligent and careful guidance that is needed to make plants successful during a wide variety of market conditions. Somehow, we have gotten the idea that farmers are done building ethanol plants because many of the future plants may not be corn-based. In my opinion, that’s a pretty lame notion. Not only should farmers be involved in next-generation ethanol production, but I believe in order for the industry to really prosper, it’s imperative that they’re involved. This doesn’t mean every cellulosic ethanol plant has to be farmer-owned, but there ought to be a whole lot of them that are. My message to American agriculture is simple: “You built this industry. Don’t stop now. Take it to the next generation.” That’s the way I see it!
Mike Bryan Publisher & CEO mbryan@bbibiofuels.com
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ETHANOL PRODUCER MAGAZINE JANUARY 2009
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BUSINESS&PEOPLE
Business&People Ethanol Industry Briefs
Business Ethanol companies receive DOE funding
Xethanol changes name, energy focus Former cellulosic ethanol company Xethanol Corp. relaunched on the New York Stock Exchange on Oct. 28 as Global Energy Holdings Group Inc., a “diversified energy company” that plans to focus on various waste feedstocks for the production of energy and natural gas. “We’re moving on from ethanol, and the reason is the business model doesn’t work,” Chief Executive Officer David Ames said. “With the price of corn and energy ... we’ve lost a lot of money doing that. We’ve spent a lot of money in cellulosic research, and nothing out there is really fruitful and will make a major economic impact on producing ethanol.” EP
Shell initiates European blending facility contract Royal Dutch Shell PLC has granted a threeyear contract to Jacobs Engineering Group Inc., a consulting, engineering and operations firm based in Pasadena, Calif., to design, engineer, procure, construct and install future Shell ethanol and biodiesel blending facilities in company depots throughout Europe. Jacobs will work out of Ghent, Belgium; provide Shell with conceptual designs and basic engineering packages for the biofuel blending projects; and fully implement most of them. The projects will help Shell to comply with European Union directives and to satisfy customer demands for renewable fuels, according to Robert Matha, vice president of Jacobs. EP 16
Following an award announcement made in February 2007, South Dakotabased ethanol producer Poet LLC received $3.7 million in Phase I funding in October to transform its 50 MMgy corn-based ethanol plant in Emmetsburg, Iowa, into an integrated corn- and cellulose-to-ethanol biorefinery. The DOE also announced that Poet’s Phase II award funding, subject to annual appropriations, may be up to $76.3 million. In the same month, the DOE awarded Danish enzyme producer Novozymes with a $12.3 million, 2.5-year contract to increase the efficiency of enzymes necessary to produce cellulosic ethanol. This was the second DOE contract awarded to Novozymes, which will match the latest DOE funding dollar-for-dollar, bringing the total investment of the research project to $25 million. Around the same time, Poet and Novozymes were named “promising alternative energy companies” in an article by Forbes magazine. Mascoma Corp. also announced in October its receipt of $26 million from the DOE for a proposed 40 MMgy woodchip-to-ethanol plant in Kinross, Mich. It also received $23.5 million from the state of Michigan. EP
Share Your Industry Briefs To be included in Business & People, send information (including photos or illustrations if available) to: Industry Briefs, Ethanol Producer Magazine, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You may also fax information to (701) 746-5367, or e-mail it to jsobolik@ bbiinternational.com. Please include your name and telephone number in all correspondence.
Monsanto acquires sugarcane companies Monsanto Co. announced its acquisition of Brazil-based Aly Participacoes Ltd., which operates sugarcane agricultural companies CanaVialis SA and Alellyx SA, for $290 million. CanaVialis is a sugarcane breeding company developing and commercializing a sugarcane germplasm that Monsanto said may result in significantly higher sugarcane yields. CanaVialis has contracts with 46 sugarcane mills, whose production areas cover 2.7 million acres. Alellyx is an applied genomics company focused on developing biotech traits primarily for sugarcane. Monsanto expects to bring the new sugarcane varieties to market by 2016 in order to meet food and biofuel needs. EP
East Coast Ethanol begins equity drive East Coast Ethanol LLC launched its equity drive Oct. 14 at four locations chosen for 110 MMgy corn-based ethanol plants along the Atlantic Coast: Jackson, N.C.; Columbia, S.C.; Jesup, Ga.; and Carollton, Fla. Company Treasurer and Chief Financial Officer John Long said the equity drive is moving forward, although he admitted, “The timing of this probably isn’t the best.” Besides seeking farm and urban investors, the project has retained a London firm to seek Middle Eastern and Asian investors. The four projects are in varying stages of permitting and site acquisitions. Fagen Inc. and ICM Inc. have been named the design/build team. EP
ETHANOL PRODUCER MAGAZINE JANUARY 2009
BUSINESS&PEOPLE
Sponsored by
Business CFTC clears OTC ethanol contracts ICM partners with Gevo In late October, Colorado-based Gevo Inc. announced its partnership with Colwich, Kan.-based ICM Inc. to advance the development of Gevo’s Integrated Fermentation Technology, which enables retrofitted ethanol plants to produce isobutanol and hydrocarbons. Under the terms of the agreement, a demonstration facility will be built at ICM’s biofuels research center in St. Joseph, Mo. ICM would serve as the exclusive engineering, procurement and construction contractor for the retrofit of future ethanol plants utilizing Gevo’s technology. Prior to this announcement, ICM released 73 employees in addition to the 105 it released in April. ICM attributed the staff reduction to the nationwide economic downturn has also affected the ethanol industry. EP
Aventine purchases Nebraska Energy Pekin, Ill.-based Aventine Renewable Energy Holdings Inc. has completed the purchase of Nebraska Energy Co-op’s 21.58 percent interest in Nebraska Energy LLC, a 50 MMgy ethanol plant in Aurora, Neb. The co-op’s interest was purchased for 1 million shares of Aventine’s common stock. The stock was estimated to have a value of $6.6 million, or $6.62 per share, based on the average of Aventine’s closing stock price on the acquisition announcement date July 31, and the four days preceding and the four days following the announcement date. Aventine now owns 100 percent of Nebraska Energy. EP
Algenol opens new US headquarters KL Process Design changes name, goes public South Dakota-based engineering firm KL Process Design Group announced Oct. 8 that it had become a public company through completion of a reverse merger with ethanol marketing company KL Energy LLC. In doing so, it has changed its name to KL Energy Corp. It has operated a 1.5 MMgy wood-waste-to-ethanol plant near Upton, Wyo., since January 2008. This latest move and accompanying funds will allow the company to construct a second facility, which Chief Executive Officer Randy Kramer said will be announced in further detail in the near future. EP
Florida-based Algenol Biofuels Inc. announced the opening of its new U.S. headquarters in Naples, Fla., on Oct. 27. The offices will house the company’s development and executive teams. It also has offices in Baltimore and Palm Beach County, Fla. Algenol has developed an algae-toethanol technology trademarked Direct to Ethanol. During the production process, sugar is produced through photosynthesis and immediately converted into ethanol. Algenol’s first commercial-scale facility will be located in Mexico and is scheduled to break ground in late 2008 or early 2009. It’s expected to produce 1 billion gallons of ethanol annually. EP
ETHANOL PRODUCER MAGAZINE JANUARY 2009
The Commodity Futures Trading Commission issued an order to the Chicago Board of Trade to clear over-thecounter (OTC) ethanol contracts Oct. 9. The order allowed the Chicago Mercantile Exchange and registered futures commission merchants to commingle eligible contract participants’ funds used to margin, secure or guarantee contracts executed in the OTC markets with other funds held in segregated accounts. The order also calls for CME and the futures commission merchants to apply appropriate risk management procedures to these transactions and to provide specified information to the CFTC. EP
Panda Ethanol restructures funding Panda Ethanol Inc. has restructured funding arrangements on its 115 MMgy ethanol plant under construction in Hereford, Texas, in an effort to complete the project by Jan. 30. The restructuring was supported by the project’s senior and subordinated lenders. It included the senior lenders waiving all existing defaults that occurred under the original financing agreements. Now, the project can borrow up to $31.5 million for construction-related needs and has $2.5 million available in new proceeds from the Hereford project’s subordinated lender. Another $2.5 million in new equity investment from Panda Energy International is expected for use as working capital. EP
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BUSINESS&PEOPLE
Business
Lignol, Suncor partner Canada-based Lignol Energy Corp. and Suncor Energy Products Inc. have teamed up to develop a commercial-scale cellulosic ethanol plant in Grand Junction, Colo. Suncor, which currently operates a 105 MMgy corn-based ethanol plant in Sarnia, Ontario, will assist Lignol with preliminary development work. The companies hope to have the agreement finalized before Jan. 15. In January 2008, the U.S. DOE awarded Lignol with $30 million in funding for the commercial-scale cellulosic project, which is expected to be completed between 2010 and 2011. The company also operates a pilot plant in Burnaby, British Columbia. EP
Governors group signals support for all biofuels The Governors’ Ethanol Coalition changed the name of its group to the Governor’s Biofuels Coalition at its annual meeting in Billings, Mont., in late September. Its current membership includes governors from 34 states led by Chairman and Illinois Gov. Rod Blagojevich. The governors chose the new name to reflect the organization’s support of all biofuels, which have become prominent since the coalition was organized in 1991 to promote increased ethanol use and production in its members’ states. EP
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People Duff heads BBI Engineering & Consulting
Oklahoma academy names Scientist of the Year
BBI International Inc. recently promoted Brian Duff to director of its Engineering & Consulting division from his previous position as manager of process development. Before joining the Lakewood, Colo.-based division of BBI, he was senior pilot plant engineer at NREL, where he was responsible for the design, installation and start-up of an integrated two-ton-per-day lignocellulosic process demonstration unit. He has a master’s degree in chemical engineering from Stanford University and a bachelor’s degree from Lehigh University. EP
Richard Dixon, a senior vice president, professor and director of the Plant Biology Division at The Samuel Roberts Noble Foundation Inc. agricultural research cenDixon ter in Ardmore, Okla., has been named Oklahoma Scientist of the Year by the Oklahoma Academy of Science. He developed low-lignin plant varieties for producing cellulosic ethanol. EP
Former USDA secretary joins AE Biofuels board
Verenium appoints research VP
California-based proposed cellulosic ethanol producer AE Biofuels Inc. has appointed former U.S. Secretary of Agriculture John Block to its board of directors. He Block served as agriculture secretary from 1981 to 1986 and has since held various executive positions in the food industry, including positions at Hormel Foods Corp. EP
Gregory Powers has been named executive vice president of Verenium Corp.’s research and development division. He replaces Geoffrey Hazlewood, who resigned Powers for personal reasons earlier this year, but continues to serve as consultant and scientific advisor. Prior to joining Verenium, Powers served as vice president of United Technologies Corp.’s carrier division. EP
Seurer heads Glacial Lakes Energy
Memorials being accepted for Alfa Laval manager
Glacial Lakes Energy LLC has named its Chief Financial Officer Jim Seurer as the company’s interim chief executive officer, following the departure of Tom Branhan. Seurer has worked for Glacial Lakes Energy since early 2007 and was formerly chief financial officer at South Dakota Soybean Processors. He will also take Branhan’s place on the board of directors of the Renewable Fuels Association. EP
Brian Pike, agro market unit manager for Alfa Laval Inc., passed away in October after a brief illness. Well-known in the ethanol community, he was instrumental in introducing Alfa Laval decanter centrifuges to the industry. Memorials donations can be sent to Rush University Medical Center’s Lung Cancer Research at 1725 West Harrison St., Suite 821, Chicago, IL 60612. EP
ETHANOL PRODUCER MAGAZINE JANUARY 2009
BUSINESS&PEOPLE
People Amyris-Crystalsev Biofuels appoints board members Renewable fuel company AmyrisCrystalsev Biofuels has welcomed Roberto Rodriques and Fernando Reinach to its staff. Rodrigues joins the company’s Reinach new strategic advisory board, where he will advise on commercialization ventures of sugarcane-based diesel in Brazil. Reinach was appointed to the Amyris board of directors. Also in October, Amyris announced a strategic equity investment made by Votorantim Novos Negócios, supporting Amyris’ objective of commercializing diesel fuel made from sugarcane by 2010. It brought the total capital raised by Amyris in 2008 to $100 million. EP
DuPont Danisco names management team DuPont Danisco Cellulosic Ethanol LLC added three to its management team in October: Georg Anderl, vice president of engineering; Vonnie Estes, vice president of business development; and Jack Huttner, vice president of commercial and public affairs. Anderl and Huttner moved from similar positions at Genencor, a Danisco division, whereas Estes came from DuPont. In addition, the joint venture announced its headquarters will be located in Itasca, Ill., a suburb of Chicago. Construction of the company’s pilot-scale cellulosic ethanol facility is underway in Vonore, Tenn., in partnership with the Tennessee Bioenergy Initiative. EP
COMMODITIES REPORT Natural Gas Report By Casey Whelan, U.S. Energy Services Inc.
Bearish information continues to roll in Nov. 17—Natural gas market prices have dropped dramatically over the past several months, in large part due to the general decline in commodity prices. Aside from the general weakness in commodity markets, factors unique to the natural gas industry will likely keep prices relatively low as we go through winter. These bearish factors are good for consumers and bad for producers. The following is a brief description of each factor. First, natural gas production has increased approximately 8 percent over the past year. There hasn’t been a year-over-year increase that large over the past 10 years. Increased production is largely due to the extreme success of shale production development over the past few years. Second, liquefied natural gas imports may increase over the next few months since Asian storage levels are relatively high, Asian demand is off and the U.S. market is the last resort. Third, Canadian imports are likely to increase since tar sands production, which consumes a significant amount of natural gas, has been reduced due to low crude oil prices. Fourth, alternative fuel prices (No. 6 fuel oil and fats/grease) have dropped dramatically to the point that some industrial plants are switching from natural gas to alternative fuels. Fifth, anecdotal information indicates that industrial natural gas demand (biofuels production, steel production, etc.) is dropping due
to production cuts. Sixth, natural gas storage inventory levels are at near historically high levels limiting the ability to “hide” gas. Finally, Gulf of Mexico production shut in since Hurricane Gustav is coming back on line. Bottom line: Due to the factors above—strong supply and weak demand—there is limited opportunity for natural gas prices to increase from current levels. The caveat of course is that oil prices remain soft, at or below $75 per barrel. EP Casey Whelan, vice president of strategic initiatives, can be contacted at cwhelan@usenergyservices.com.
Corn Report By Jason Sagebiel, FCStone
Fall corn reports predict near-record harvest Nov. 17—The corn and soybean market observed a rare historical revision from the October USDA supply and demand report. Therefore, the November report did not reveal anything too exciting. The corn portion in the October revision changed only slightly compared to the soybean supply and demand. Corn yield was 154 bushels per acre versus 152.3 in October, and carry-out increased from 1.018 billion bushels to 1.154 billion. Corn demand for ethanol was reduced by 100 million bushels as gasoline consumption is expected to slow. Livestock feed demand increased by 150 million bushels while other industrial use was lowered by 10 million bushels. Feed demand increased due to lower grain prices and the reduced availability of distillers grains. World corn inventories fell 2.18 million metric tons from September to October. One component of that equation was an increase in world corn use for livestock feed demand. From a coarse grain perspective, the world carry-out actually increased by 0.15 million metric tons. The November report reduced yield by 0.1 bushels per acre, which was surprising. In the December EPM, we detailed how, historically, corn yield increases from October to November if it increases from September to October. However, fall 2008 made this untrue partly due to the October USDA revision. Nonetheless, this will be the second-highest yield on record behind 2004, and produc20
tion will be the second largest behind the 2006-’07 crop year. The graph indicates an increase in wheat feeding in 2008 compared to 2007. Total feed demand has been lower due to less livestock feeding and/or more ethanol coproduct feeding. With freight values decreasing due to slowing demand, wheat has actually been rumored to come into portions of the Western Hemisphere. EP ETHANOL PRODUCER MAGAZINE JANUARY 2009
COMMODITIES REPORT DDGS Report By Sean Broderick, CHS Inc.
Markets firm slightly going into winter Nov. 17—As Thanksgiving neared, the DDGS market felt as though it was feeling the effects of the season. After following the Chicago Board of Trade’s downward trend and reacting to a late start to the cooler fall weather, the market appeared to becoming firmer. Generally, plants sell more wet cake to feedlots in the fall and winter, and are looking to buy back previously sold railcars to capture those premiums. The longevity of a major, multi-plant producer is in doubt, and those that were betting on the tonnage from that group of plants are starting to scramble a bit. The barge market, which for a while was at parity to the California market, is now trading at a $20-plus discount, due to a slackening export
demand and a sharp drop in barge freight. Feed wheat is plentiful around the world, and, along with the dollar’s strength, is hampering U.S. grain exports. The Canadian market, a strong demand pull for the past year, has significantly lightened with successful barley and wheat crops. Going forward, as grain producers put the crop away and distillers grains supplies stay in doubt, we are back to who needs to buy first. This generally favors the seller, but with a significant amount of corn yet to be harvested amid reports of sizeable yields, sellers must take care to ensure they do not place themselves completely in the spot market. Whether scaling up or down, selling will be the prudent feature going ahead. EP
Regional Ethanol Prices (Monthly averages in cents per gallon)
REGION
SPOT
BULK TRUCK (rack)
SPLASH/ TOP OFF (rack)
West Coast
184.026
182.04
209.252
Midwest
172.539
173.41
205.744
East Coast
182.75
----
196.275 SOURCE: OPIS
Regional Gasoline Prices (Monthly averages in cents per gallon)
REGION
SPOT
RACK
RETAIL
West Coast
149.698
177.591
282.271
Midwest
151.213
167.234
236.48
East Coast
155.513
168.155
252.417 SOURCE: OPIS
DDGS Prices ($/ton) LOCATION
NOV. 2008
OCT. 2008
NOV. 2008
Minnesota
125
130
130
California*
165
172
185
Chicago
105
125
137
Buffalo, N.Y.
120
150
150
Central Florida
145
150
SOURCE: CHS Inc.
Corn Futures Prices DATE
Ethanol Report By Spencer Kelly, OPIS
170
*Central Valley
(March corn, $/bushel)
HIGH
LOW
Nov. 14, 2008
3.98 1/2
3.88
3.97
Oct. 21, 2008
4.35
4.25
4.27 3/4
Nov. 14, 2007
3.75
3.57
CLOSE
3.71 1/2
Shine comes off blending margins Nov. 14—Concern over possibly slower ethanol demand growth due to slack overall fuel consumption ratcheted higher through November as once stellar blending economics were soured by fast falling gasoline values. Chicago ethanol actually held up rather well over the month compared to losses seen elsewhere. Running a couple of cents on either side of $1.65 per gallon for November spot material at midmonth represented only a nickel or so slippage against near-term deals concluded the previous month. That was little solace to producers still struggling with tender margins tight enough to bring several producers— most prominently the 14-facility operation VeraSun—into bankruptcy. However, the relatively steady nature of ethanol prices versus gasoline also tightened blending economics enough to give some pause, especially
at a time when U.S. motorists were curtailing fuel use. Over the past month, Chicago spot gasoline prices dropped 32 percent. At $1.65 per gallon, for example, Chicago ethanol—with the federal blend credit included—was offering only 6 cents advantage versus spot gasoline at $1.20 per gallon. At summer’s end, ethanol could boast blending advantages of $1 or more. The economic benefits of blending ethanol have already disappeared at some racks. Conventional unleaded selling in Omaha, Neb., at $1.345 per gallon at midmonth was about 4.5 cents cheaper than the $1.90 per gallon rack low posting reported for ethanol, once the federal blend credit was included. EP For more information, contact OPIS Ethanol & Biodiesel Information Service at (888) 301-2645.
ETHANOL PRODUCER MAGAZINE JANUARY 2009
SOURCE: FCStone
Cash Sorghum Prices ($/bushel) NOV. 14, 2008 OCT. 17, 2008 NOV. 16, 2007 Superior, Neb. Beatrice, Neb. Sublette, Kan. Salina, Kan. Triangle, Texas Gulf, Texas
2.95 2.80 2.97 3.10 2.97 3.88
3.08 3.03 3.19 3.23 3.15 4.03
3.69 3.71 3.47 3.80 3.45 4.30 SOURCE: Sorghum Synergies
Natural Gas Prices
($/MMBtu)
NOV. 2008
OCT. 2008
NOV. 2007
NYMEX
6.31
6.93
7.70
N. Ventura
5.90
6.21
6.73
Calif. Border
3.80
4.90
4.93
SOURCE: U.S. Energy Services Inc.
U.S. Ethanol Production Output August 2008
647,000*
July 2008
614,000
August 2007
434,000
*all-time monthly high
(barrels/day)
SOURCE: U.S. Energy Information Administration
21
VIEW
FROM
THE HILL
Out with the Old, In With the New? For many, a new year brings pledges to lose weight, travel more, get that promotion, go back to school, and many other self-improvement efforts. To be sure, the ethanol industry has a number of goals it has resolved to achieve: increased use of higher level blends, accelerated development of next-generation technology, and the protection of the Renewable Fuel Standard from scurrilous attacks, to name a few. While tradition suggests that our resolutions should be the focus on the first column of a new year, we at the Renewable Fuels Association are taking a little different approach. Last month we attempted to wax poetic, relating the Chinese astrological symbols to the challenges facing America’s ethanol producers. This month, we just plain want to have some fun. So, with our tongue firmly in cheek, we say out with the old and in with the new.
RFA’s 2009 Out/In List Out
In
President George W. Bush E10 Red Cavaney Food versus fuel EPIC 9 billion gallon RFS E85 pumps Gov. Sarah Palin Hydrogen vehicles No tanks Iraq Atlanta lawsuit Chairman Dingell Food before fuel Virtual pipeline Duty drawback Sen. Tom Daschle 5 percent denaturant Corporate greening Criteria pollutants Drill baby, drill
President Barack Obama E?? (>10 percent) Jack Gerard Indirect land use changes Growth Energy 11 billion gallon RFS Blender pumps Gov. Tim Pawlenty Flexible-fuel hybrids Pirate protected Tesoro lawsuit Chairman Waxman Food Price Truth.com Midwest ethanol pipeline Ethanol exports Secretary Tom Daschle 2 percent denaturant Green jobs Carbon emissions Grow baby, grow
Dinneen
2008 was a challenging year in many respects. 2009 will be better. We at the RFA are looking forward to working with everyone in the ethanol industry to pave the way for a brighter tomorrow. Happy New Year!
Bob Dinneen President and CEO Renewable Fuels Association 22
ETHANOL PRODUCER MAGAZINE JANUARY 2009
RFA Update
National Ethanol Conference draws near
Report: Industry return on investment nearly 5 to 1 A new report released by LECG LLC Director John Urbanchuk touts the benefits the U.S. ethanol industry has provided for the past three decades. Titled “Economic Contribution of the Partial Exemption for Ethanol from the Federal Excise Tax on Motor Fuel: Increased Revenues and Reduced Dependence on Foreign Oil,” the report details the return on investment the industry provides. The U.S. ethanol industry has generated an estimated $33.4 billion in tax revenue for the federal government and nearly $17 billion of additional tax revenue for state and local governments since 1978, according to the report. The industry has also reduced America’s tab for imported oil by $97.5 billion, helped reduce farm payments by more than $3 billion per year since 2006, and put approximately $66 billion into the pockets of Americans in the form of increased household income. By contrast, the federal government has spend $30.4 billion in the form of the partial exemption for ethanol from the federal excise tax on motor fuel. The report is available at www.ethanolrfa.org.
ETHANOL PRODUCER MAGAZINE JANUARY 2009
w w w. e t h a n o l R FA . o r g
With a new administration and Congress taking office at a critical point in the ethanol industry’s history, anticipation is mounting for the Renewable Fuels Association’s 14th Annual National Ethanol Conference. Registration is open for the event, which will be held Feb. 23-25 at the San Antonio Convention Center in San Antonio. This year’s conference is themed “Growing Innovation: America’s Energy Future Starts at Home.” The event, which drew more than 2,100 to Orlando, Fla., in February 2008, will again feature a general session, breakout sessions and ample networking opportunities. The conference will cover all the major issues impacting the industry, including: Marketing higher level blends—An in-depth discussion of the pathways to the use of ethanol blends above 10 percent in today’s marketplace. The path to cellulosic ethanol commercialization—Companies will provide updates on their cellulosic ethanol projects underway to produce commercial-scale fuel ethanol. Washington insiders’ roundtable—Inside the Beltway analysts will discuss and hypothesize on the agenda and priorities of the new administration and the 111th Congress. The impact of life cycle greenhouse gas emissions on ethanol use—Panelists will discuss current approaches to life cycle greenhouse gas analysis of ethanol, the application of life cycle analysis in new regulations, and the importance of these issues to the future growth of the industry. Downstream retailing: Our customers’ perspective—Ethanol blenders will discuss the factors that lead them to blend ethanol, including its value and the challenges of bringing ethanol to market. More information is available at www.nationalethanolconference.com.
23
INDUSTRYNEWS
BIObytes Ethanol News Briefs
Ethanol terminal opens in Texas The Dallas/Ft. Worth Musket Ethanol Terminal became operational Nov. 1 and immediately began receiving unit trains of ethanol from BNSF Railway Co. Owned by Musket Corp. and built by Strobel Construction, the facility has a storage capacity of 10 million gallons and was designed to unload a 95-car unit train every 24 hours. The terminal will receive shipments exclusively from BNSF Railway’s Ethanol Express, a service created to move ethanol from a single origin to a single destination.
Penford Products rebounds from flood Penford Products Co. in Cedar Rapids, Iowa, resumed production in October at 90 percent of the ethanol plant’s 45 MMgy capacity, pending tank repairs. The plant was off line for more than three months following record flooding in the state in June. The plant had begun production only one month before the flood caused $47 million in damages, not including lost profits.
Clemson receives grant for pilot research plant Clemson University received a $1.2 million grant from the U.S. DOE in late September that will go toward building a pilot-scale ethanol plant at Clemson’s Restoration Institute in North Charleston, S.C. The university, part of the South Carolina Bioenergy Research Collaborative, plans to research switchgrass, sweet sorghum, trees and other ethanol feedstocks there. Other participants include the DOE Savannah River National Laboratory, South Carolina State University, industry incubator SC Bio and other industry partners.
E85 infrastructure increases To help further E85 sales in the United States, the National Governors Asso-
Ethanol plants look to get back on track An economic downturn in the Watertown, S.D., in October because United States has resonated in virtua late corn harvest forced them to ally every market, including the ethaobtain corn from further away and nol industry, where some existing pay more for transportation. Interim ethanol producers recently filed for Chief Executive Officer Jim Seurer bankruptcy protection, while others stressed the decision was only temare making moves to avoid such a porary until this year’s corn crop fate. came in. In the meantime, parent Taylor Greater Ohio Ethanol LLC company Glacial Lakes Corn Profiled for Chapter 11 bankruptcy protection cessors asked its 4,200 shareholders for funds in Ohio Northern Bankruptcy Court in early to sustain operations. Its investors approved October. The company halted production at the request, providing interim funds worth $1 its 54 MMgy corn-based ethanol facility in million. Lima, Ohio, and accepted bids from potential MGP Ingredients Inc. announced it was buyers. In the same month, Gateway Ethanol taking new business initiatives to correct a net LLC filed for Chapter 11 bankruptcy protec- loss of $9.9 million in its fourth quarter of tion, citing a lack of funds to operate its 55 fiscal year 2008. The ingredient and distillery MMgy corn-based ethanol plant in Pratt, Kan. products company operates a 78 MMgy ethaDougherty Funding LLC, which financed the nol plant in Pekin, Ill., and a 4 MMgy ethanol construction of the plant with a $54.3 million facility in Atchison, Kan. It was MGP Ingrediloan, foreclosed on the facility. ents’ first net loss in more than 10 years. “The Filing for Chapter 11 bankruptcy protec- main culprit was continuing high prices for our tion allows a company to reorganize its busi- principal raw materials, wheat and corn,” said ness affairs and assets, and ultimately resume President and Chief Executive Officer Tim operations if it fulfills its obligations under its Newkirk. “However, a closer review of our reorganization plan, according to Todd Tay- results shows that we achieved significant sales lor, an officer with Minnesota-based law firm growth in food-grade alcohol products, as Fredrickson & Byron. “Going into bankruptcy well as in some key categories in specialty inwith a plan ahead of time is better versus a gredients. To realize our true long-term profit panic without knowing how to make next potential, we continue to take additional steps month’s bank payment,” he said. to strengthen the organization. The latest of One reorganization option involves re- these includes lowering our operating costs examining feedstock contracts. Renegotiating through the restructuring of our business with feedstock costs with farmers may be viable. greater focus on those areas that can generate “That’s what a lot of plants are going to have the highest returns while also further reducing to look at doing at some point if corn [prices risk across the enterprise.” are] the driver taking them down,” Taylor said. A lack of financing has affected proposed “If you filed for bankruptcy protection, your ethanol plants, as well. Alternative Energy duty is to maximize the protection of your as- Sources Inc., a publicly owned ethanol compasets, preserve whatever capital is left and come ny based in Kansas City, canceled plans to purup with a plan to come out of it to hopefully sue ethanol projects in Kankakee and Greenresume operations.” ville, Ill., and Ogden, Iowa. Denver-based Corn prices fluctuated greatly this sum- LiquidMaize LLC delayed development of a mer, but corn supply has also been an issue. proposed 11 MMgy ethanol plant in Lamar, Glacial Lakes Energy LLC halted production Colo., due to unfavorable market conditions. at its 100 MMgy facility in Mina, S.D., and re—Bryan Sims duced production at its 100 MMgy plant in
continued on page 26
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ETHANOL PRODUCER MAGAZINE JANUARY 2009
INDUSTRYNEWS
2008 U.S. Presidential Election Results =Republican
=Democratic
Obama to bring energy policy to White House On Jan. 20, President-elect Barack Obama will be officially sworn in as the leader of the United States. His win over Republican candidate Sen. John McCain on Nov. 4 concluded a longer-than-usual campaign that featured several highlights for the ethanol industry. Once Obama takes office, however, many in the ethanol industry may be wondering: How soon will we see the results of his new energy policy? Obama and Vice President-elect Joe Biden’s campaign platform included aggressive measures to increase energy independence and security for the United States. Obama said he would like to see imports of oil from the Middle East and Venezuela eliminated in 10 years, and the implementation of a low-carbon fuels standard that would reduce carbon in U.S. transportation fuels by 10 percent by 2020. He also intends to increase the 36 billion gallons of renewable fuels required to be consumed in the United States by 2020 to 60 billion gallons by 2030. By 2050, he aims to reduce greenhouse gases by 80 percent. This would be done in part by implementing an economy-wide cap-andtrade program. It would require all pollution credits to be auctioned, with proceeds going to investments in a clean energy future, habitat protections and rebates. The presidentelect also plans to create 5 million new jobs by investing $150 billion over the next 10
years—$15 billion per year—to catalyze private efforts to build a clean energy future. During the campaign, the country’s energy future was a hot-button issue, and both candidates’ actions and words indicated the direction the country may take. McCain expressed his disdain for ethanol subsidies and said he would repeal them. Meanwhile, members of Obama’s campaign party expressed support for renewable fuels by touring Range Fuels Inc., a cellulosic ethanol pilot plant in Denver that uses wood waste as a feedstock. The company is also building a demo-scale facility in Soperton, Ga. Obama began assembling his cabinet shortly after he was elected. At press time, former Sen. Tom Daschle, an ethanol supporter, had accepted the lead position of the Department of Health & Human Service. He named Rep. Henry Waxman, D-Calif., as chairman of the House Energy and Commerce Committee, replacing Rep. John Dingell, D-Mich. On Obama’s win, the Renewable Fuels Association stated, “On behalf of America’s grain and cellulosic ethanol producers, we congratulate President-elect Obama, Vice President-elect Biden and all those elected to Congress.”
ETHANOL PRODUCER MAGAZINE JANUARY 2009
—Ron Kotrba
25 25
INDUSTRYNEWS
BIObytes Ethanol News Briefs ciation announced Oct. 15 that General Motors Corp. is partnering with 10 states—Alabama, Florida, Idaho, Kansas, Michigan, Missouri, Nebraska, Ohio, Tennessee and Wisconsin. GM will provide technical assistance, optimize E85 supply from ethanol producers, and use its network of dealers, plants and offices to promote E85 usage. In mid-October, the National Ethanol Vehicle Coalition announced that more than 1,800 U.S. retail fuel stations now sell E85. In particular, during the first three quarters of 2008, 20 fuel retail stations began offering the blend in Iowa. More E85 was sold in the state during the first half of 2008 than was sold in all of 2007. The state’s 100th E85 station opened in late November.
Grassley asks GMA to lower food prices Sen. Chuck Grassley, R-Iowa, has written a letter to the Grocery Manufacturers Association, asking the group to urge its members to lower food prices in light of falling commodity prices. The GMA caused controversy in the spring of 2008 by starting a public relations campaign blaming ethanol for rising food prices. continued on page 28
26
EthosGen develops ethanol feedstock greenhouse for military EthosGen LLC, a business venture incubated by King’s College in Wilkes-Barre, Pa., has secured a $1.2 million U.S. Department of Defense contract to study the feasibility of using greenhouses at or near an ethanol plant to grow a sorghum-family hybrid crop for the production of ethanol. According to Greg Emery, a King’s College faculty member and an EthosGen business partner, the goal of the project is to find a way to reduce the cost of procuring, transporting and protecting military fuel supply chains. “One of the important aspects of using a greenhouse means that you can put it just about anyplace in the world (including nonarable land),” he said. “The majority of the transportation costs that are involved with growing a crop and taking it to a centralized ethanol plant, producing it, and then shipping it out hundreds or thousands of miles in different directions can largely be overcome if you’re able to grow the crop right at the source where you’re going to blend it into gasoline.” Emery said EthosGen has been working with Cornell University in Ithaca, N.Y., to develop a sorghum-family hybrid that maximizes the amount of fermentable juice that can be extracted from the plant when it’s crushed. The company currently has two seven-acre greenhouses growing the potential ethanol feed-
PHOTO: ETHOSGEN LLC
continued from page 24
EthosGen LLC’s sorghum-family hybrid feedstock is grown at Van Hoekelen Greenhouses Inc. in McAdoo, Pa.
stock at Van Hoekelen Greenhouses Inc. in McAdoo, Pa. He said the company is working with greenhouse manufacturer U.S. Global Resources and Merle Jensen, a plant sciences researcher at the University of Arizona who has devoted his career to controlled environment agriculture, to design a greenhouse that will be tailored specifically for EthosGen. The company plans to build two greenhouses, one in a cool climate and one in a warm climate in locations yet to be determined, according to Emery. He added that EthosGen is seeking financial support from the state of Pennsylvania. —Ryan C. Christiansen
ETHANOL PRODUCER MAGAZINE JANUARY 2009
INDUSTRYNEWS
Indirect land use policy debate heats up As part of the U.S. EPA’s implementation of the renewable fuels standard as mandated by the Energy Independence & Security Act of 2007, the possibility of indirect land use change measurement could become reality, and numerous groups aren’t hesitating to make their opinions on the matter known. An example of indirect land use change would be the destruction of rainforests in order to clear more land for crop production to meet greater demand, in this instance a crop used in biofuels production. Opponents of such a policy argue that there are no agreedupon methods to compute land changes as an indirect result of biofuels production and that premature inclusion of such changes in a federal policy will stunt the growth of a young industry. Proponents say that proper calculations of indirect land use changes will result in the use of only the best and most sustainable types of feedstocks. On Oct. 23, Jim Greenwood, president and chief executive officer of the Biotechnology Industry Organization, submitted a letter to the EPA stating that the organi-
zation’s 1,200 members support the measurement of direct emissions, but that indirect measurements would be premature. “If the proposed rule contains numerical results from flawed models published prior to the maturing of modeling tools, it could have a range of perverse effects, including discouraging and chilling investment and curbing U.S. production and use of all biofuels,” Greenwood wrote. Several scientists and biotechnology companies, including Ceres Inc. and Mendel Biotechnology Inc., also wrote to the EPA and said that the requirement to measure indirect land use changes is “currently impossible.” In contrast, a letter submitted by a coalition of environmental groups and scientists stated that indirect land use change is the “ripple effect” resulting from converting land from food production to fuel production. The group, consisting of the Environmental Defense Fund, the National Wildlife Federation, the Natural Resources Defense Council and others, added that the inclusion of indirect changes would help determine
the least environmentally detrimental feedstocks, thus strengthening the industry overall. “Properly done, accounting for indirect land use will improve the ability of investors and developers to distinguish promising approaches from dead ends,” the letter stated. The EPA testified before a senate subcommittee in early 2008 that it would need to push back the date for its final renewable fuels standard ruling from January 2009 until later in the year due to the complex issues being covered in the policy. At press time, no time line had been set. The California Air Resources Board is also considering indirect land use change measurements as part of its Low Carbon Fuel Standard. Bruce Dale, a chemical engineering professor and associate director of the Office of Biobased Technologies at Michigan State University, spoke out against the CARB policy. “It makes American fuel producers responsible not only for their own actions … but for the actions of people literally on the other side of the world,” he said, adding that a policy of that magnitude has never been imposed on any industry. —Kris Bevill
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BIObytes
INDUSTRYNEWS
Ethanol News Briefs continued from page 26
Corn and other commodity prices have fallen by 50 percent June, according to the letter, while food prices have continued to rise.
Tesoro files suit against CARB Tesoro Refining & Marketing Co., an operating subsidiary of San Antonio-based Tesoro Corp., filed a lawsuit against the California Air Resources Board to prevent the implementation of a new regulation that would require refiners such as Tesoro to blend more ethanol into gasoline. CARB ruled in August that California refiners increase the amount of crop-based ethanol in gasoline from the current level of 5.7 percent to as much as 10 percent by December 2009.
EPIC, Poet give FFV, E85 to Minnesota family The Ethanol Promotion and Information Council, along with ethanol producer Poet LLC, teamed up with the popular ABC television show “Extreme Makeover: Home Edition” to award the Dirk Devries family of Albert Lea, Minn., with a flexible-fuel 2009 Ford F-150 crew cab
Studies remeasure corn-based ethanol’s impact, potential Corn-based ethanol production has often been and will likely continue to be scrutinized. Recently, two studies commissioned by the Illinois Corn Marketing Board updated corn-based ethanol’s energy balance and evaluated global corn supply, while another study examined what would happen if corn-based ethanol plant construction levels off. To determine ethanol’s energy balance, Steffan Mueller, principal research economist of the Energy Resources Center at the University of Illinois at Chicago, conducted a life cycle analysis of Illinois River Energy LLC, a 50 MMgy ethanol plant near Rochelle, Ill. Using surveys of local corn growers and USDA data, he concluded the facility had 21 percent less of a global warming impact (GWI) than the standard value for existing ethanol plants, and 40 percent less GWI than gasoline from petroleum. “We wanted to dig deeper and actually survey the corn producers who are providing corn to the plant, which led us to get involved in the land-use issue,” said Rodney Weinzierl, the board’s executive director. “We think that as you get outside the corn industry, a lot of people may not realize we are continuing to increase yields and use fewer inputs to do it.” Ross Korves, economic policy analyst at ProExporter Network, examined the ability of
U.S. corn growers to supply adequate grain supplies to the feed and fuel industries from 2016 to 2030. Corn yields steadily increased over the past 60 years as fertilizers, pest control chemicals and genetically modified corn varieties were adopted by corn growers. By tracking average yield growth since 1990, Korves concluded that by 2030, corn farmers could support the production of 36 billion gallons of ethanol per year on the same number of acres, plus meet increased demand for feed, food and industrial products. Robert Wisner, a biofuels economist for the Agricultural Marketing Resource Center at Iowa State University, also explored future corn supply, except he used the assumption that corn-based ethanol production would plateau in the next few years. He found that a leveling off of ethanol production plus increased corn yields could ease corn supply tightness by the 2011-2012 marketing year. Since ethanol demand is expected to increase due to the federal renewable fuels standard. He concluded that production capacity, including plants currently under construction, will fall 15 percent short of the target for corn-based ethanol in 2015. This could raise ethanol prices and lead to an increased use of corn for ethanol. —Jerry W. Kram
continued on page 30
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ETHANOL PRODUCER MAGAZINE JANUARY 2009
INDUSTRYNEWS
Using municipal solid waste (MSW) as a feedstock for ethanol production continues to be a viable option, particularly for two recent projects—one domestic and the other international. St. Louis-based CleanTech Biofuels Inc. announced the successful testing of process technology developed at the University of California, Berkeley that will use nitric acid, rather than sulfuric or hydrochloric acid, to hydrolyze cellulosic material for the production of ethanol and other fuels from biomass filtered from MSW. It was the first milestone in CleanTech’s mission to validate and commercialize the waste-to-ethanol technology that it purchased from the university under an exclusive worldwide sublicense agreement. Under the agreement, CleanTech is required to make payments to HFTA Inc., a company formed by the developers of the technology, when certain development milestones regarding validation and commercialization are met. “The core of this technology is that we take garbage from the curbside and separate it into component parts to develop a homogenous, cellulosic feedstock that looks much like a mulch. We already know this can be mixed with coal and burned at a power plant.” Kime said now that the first round of testing is complete, the technology will be demonstrated at a pilot plant, likely in rural Illi-
PHOTO: CLEANTECH BIOFUELS INC.
Trash-to-ethanol projects progress
CleanTech’s MSW-to-ethanol technology produces ethanol and other fuels from biomass in municipal solid waste.
nois. “There is already a built-in infrastructure for delivering and collecting garbage, and we are expanding the size and scope of the demonstration plant that we had initially conceived,” he told EPM. The facility is expected to process approximately 40 to 50 tons of local MSW, wood and agricultural waste per day. According to Kime, CleanTech is hoping to partner on this project with the University of Illinois, which is developing experimental crops such as miscanthus, and the USDA. “We think one of the principle problems with the development of the cellulosic ethanol industry is the lack of an infrastructure to collect and hold the biomass,” Kime said. “We believe our technology for processing MSW can provide a backbone for this. We are proving that biomass can be profitably turned
ETHANOL PRODUCER MAGAZINE JANUARY 2009
with our technologies—or others that present themselves—into cellulosic ethanol or biofuels.” He added that CleanTech hopes to complete the pilot plant by the end of 2009. The company also recently completed a merger with Biomass North America Licensing Inc., now its wholly owned subsidiary, to obtain the exclusive rights to use a proprietary technology that produces a solid-fuel cellulosic biomass filtered from municipal solid waste. CleanTech is currently implementing the technology at a commercial waste transfer station in Chicago and plans to market the solid-fuel biomass to companies for multiple purposes, including electricity production in existing coal-fired power plants. In a similar project across the Atlantic Ocean, Westerman, England-based Reclaim Resources Ltd. secured a $21 million contract with Philippine province Zambales to supply and install its MSW-to-ethanol technology and system north of Manila. The facility is expected to process approximately 150,000 metric tons of MSW into 8 MMgy of ethanol, and possibly be expanded to 300,000 metric tons and 16 MMgy. Construction of the facility is slated to begin in 2009, followed by start-up by the end of the year. —Anna Austin
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BIObytes
INDUSTRYNEWS
Ethanol News Briefs
pickup and a year’s supply of E85, valued at $6,000. The family will be able to use its E85 fuel card at the local Freeborn County Co-op Oil Co. At press time, the episode was slated to air Dec. 7.
Agassiz Energy lawsuit dismissed A lawsuit filed in federal court by Agassiz Energy LLC against Wanzek Construction and its partners was dismissed Nov. 5. Defendant Teton Industrial Group motioned to dismiss for lacking diversity jurisdiction, and Agassiz Energy conceded, asking the court to dismiss. “Diversity jurisdiction” covers multiple parties from different states. Agassiz filed the lawsuit because it claimed the defendants, under the name Bio-Renewable Group, misrepresented their ethanol industry experience. EP
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Novel lignocellulosic ethanol process operates in India
Perth, Australia-based Mission NewEnergy Ltd. has joined the list of cellulosic ethanol developers. The company announced in November that its pilot facility, built through a joint venture with a scientific team in India, has successfully produced cellulosic ethanol from agricultural wastes using a novel conversion process. Located in northern India, the pilot plant has a batch process capacity of 10,000 gallons per year. Mission NewEnergy is focusing on lignocellulosic agricultural waste containing complex C5 and C6 sugars, lignin, and high levels of silica. The company’s technology uses a unique sequence of certain conventional and patentpending chemical and mechanical processes, said James Garton, head of corporate finance, mergers and acquisitions at Mission NewEnergy. The company said it achieves 100 percent separation of both cellulose and hemicellulose from lignin, which permits easier and complete hydrolysis of cellulose and hemicellulose into C5 and C6 sugars. The process achieves the separation at low heat and low pressure without enzymes or high-concentration acids, he explained. In addition, the chemicals used in the process can be recovered to remove any hazardous material from waste material, and the extraction of silica from the lignin improves the efficiency of lignin for use as a feedstock in energy production.
PHOTO: MISSION NEWENERGY LTD.
continued from page 28
This pilot plant in northern India has demonstrated a new low-heat, low-pressure cellulosic ethanol process developed by Mission NewEnergy and a team of Indian scientists.
“While other technologies have been able to produce bio-ethanol from biomass, they have suffered from a low conversion rate of raw material to bio-ethanol or a high conversion cost,” said Mission NewEnergy Managing Director Nathan Mahalingam. “These high production costs make other projects not commercially viable. None of these challenges exist within Mission’s technology, and we believe this positions Mission to become one of the few successful next-generation ethanol producers.” —Susanne Retka Schill
ETHANOL PRODUCER MAGAZINE JANUARY 2009
INDUSTRYNEWS
Kinder Morgan offers ethanol pipeline; others may follow
Kinder Morgan Energy Partners LP began offering commercial ethanol service along the company’s 16-inch pipeline running between Tampa and Orlando, Fla., in November. The transportation policy for ethanol in the Central Florida Pipeline became effective Nov. 17, with the first commercial batch of ethanol flowing within seven days. Ethanol shipments will continue once per week on a regular schedule. Jim Lelio, Kinder Morgan’s director of business development and manager of national renewable fuels, said the company will keep resources focused on the Central Florida Pipeline for now. “We continue to monitor and improve the process for moving ethanol on this pipeline system,” he said. According to Lelio, Kinder Morgan’s first step in expanding ethanol shipments into other geographic areas will be compiling a prioritized list that matches the company’s existing assets with commercial demand. “Right now, we are very encouraged with central Florida,” he said. While Lelio said he was unsure when Kinder Morgan’s next ethanol pipeline proj-
ect would be developed, he said the Central Florida Pipeline will serve as a model as the company undertakes those projects. “Each pipeline system has its own challenges,” he noted. “We hope we will have success in other places, too.” The Central Florida Pipeline ethanol project took approximately 18 to 24 months to develop. Other companies are moving forward with plans for ethanol pipelines, as well. Georgia-based Colonial Pipeline Co. is studying the feasibility of introducing ethanol into pipeline shipments using geographic information system technology software. The software, provided by Environmental Systems Research Institute Inc., provides a framework for understanding different elements of the study based on geographic location and relationship. Colonial Pipeline is using the software to find the best opportunities for connecting producers to pipelines, terminals and retail gas stations. In addition, All Fuels & Energy Co. announced it has entered into agreements with two privately held infrastructure technology firms with the purpose of constructing multi-
ETHANOL PRODUCER MAGAZINE JANUARY 2009
purpose pipelines capable of transporting all alternative fuels. Recent legislation has improved the feasibility of transporting ethanol by pipeline, making it likely that additional biofuel pipeline projects will be developed. Language included in the Emergency Economic Stabilization Act of 2008 revamps a provision in the tax code that had previously blocked publicly traded partnerships (PTP) from being able to claim income generated from biofuels as qualifying income. Under the old tax code, PTPs such as Kinder Morgan had to earn 90 percent of their income from the exploration, transportation, storage or marketing of depletable natural resources, including oil, gas and coal. If this condition was not met, the PTP would be treated as a corporation for tax purposes. The change to the tax code now allows PTPs to earn qualified income from the transport, storage or marketing of any renewable liquid fuel approved by the U.S. EPA. —Erin Voegele
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ETHANOL PRODUCER MAGAZINE JANUARY 2009
Small valves can save you a small fortune. Whether you are outfitting an existing or new ethanol plant, Metso Automation’s NELES R-Series control valves provide up to three and a half times the flow capacity of an eccentric plug valve, so smaller valves can be specified.And small is good when it leads to huge cost savings. Up to a $25K savings in control valves for a typical 115 million gallon ethanol plant. JAMESBURY® high-performance
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ETHANOL PRODUCER MAGAZINE JANUARY 2009
JmbyRenewableFuels.com
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Representing 2.65 Billion Gallons Annually
Ethanol Plant Construction New Project
Project Complete
Project Expansion
Expansion Complete
Plants Come On Line During Challenging Economic Times espite challenging economic times affecting both operating and proposed plants, five were recently able to complete their respective projects on schedule. Cardinal Ethanol LLC officially started production at its 100 MMgy corn-based ethanol plant in Union City, Ind., in early November. Built and designed by Fagen Inc. and ICM Inc., the $150 million facility will take in approximately 36 million bushels of local corn annually. The facility is Indiana’s 12th ethanol plant to come on line. The state is the fifth-largest ethanol producer with a total annual capacity of approximately 1.1 billion gallons. Ethanol Grain Processors LLC, owned by Green Plains Renewable Energy Inc., officially started up its 110 MMgy plant in Obion, Tenn., in late November. The facility is projected to produce approximately 350,000 tons of distillers dried grains per year. Green Plains Renewable Energy acquired the plant in August via a merger agreement secured with VBV LLC, giving it a combined production capacity of 330 MMgy. Cilion Inc. completed construction of its 55 MMgy corn-based ethanol plant in Keyes, Calif., in November, as well. Hawkeye Renewables started up its two 110 MMgy ethanol plants in Shell Rock and Menlo, Iowa, in late October, increasing the company’s combined production capacity—all in Iowa—to 435 MMgy.
PHOTO: CARDINAL ETHANOL LLC
D
Cardinal Ethanol LLC
Two plants were added to this month’s list. Abengoa Bioenergy Corp. began preliminary construction of two 88 MMgy plants in Posey County, Ind., and Madison, Ill. The company confirmed that both projects are fully permitted and funded. General contractors were expected to arrive on-site in late November. —Bryan Sims
Abengoa Bioenergy of Indiana
Abengoa Bioenergy of Illinois
Location General contractor Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date
Location General contractor Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date
Posey County, Ind. Abener Energía SA Vogelbusch USA Inc. 88 MMgy corn Abengoa Bioenergy Trading Abengoa Bioenergy Trading undeclared March 2008 fourth quarter 2009
Synopsis of progress This project is fully permitted and funded. The site was ready for the general contractor to arrive on-site in late November.
Madison, Ill. Abener Energía SA Vogelbusch USA Inc. 88 MMgy corn Abengoa Bioenergy Trading Abengoa Bioenergy Trading undeclared March 2008 fourth quarter 2009
Synopsis of progress This project is fully permitted and funded. The site was ready for the general contractor to arrive on-site in late November.
To provide updates to this list, contact Bryan Sims at (701) 738-4950 or bsims@bbiinternational.com.
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ETHANOL PRODUCER MAGAZINE JANUARY 2009
Appomattox Bio Energy Location General contractor Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date
Aventine Renewable Energy-Aurora West LLC Hopewell, Va. Agra Industries Inc. Katzen International Inc. 65 MMgy barley Osage Inc. N/A N/A October 2008 second quarter 2010
Location General contractor Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date
Aurora, Neb. Kiewit Energy Co. Delta-T Corp. 113 MMgy corn Aventine Renewable Energy Inc. Aventine Renewable Energy Inc. undeclared September 2007 June 2009
Synopsis of progress Construction continues. No further information was available at press time.
Synopsis of progress Aventine announced a six-month suspension of this plant’s construction in November.
Archer Daniels Midland Co.
Aventine Renewable Energy-Mt. Vernon LLC
Location General contractor Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date
Cedar Rapids, Iowa undeclared undeclared 275 MMgy corn Archer Daniels Midland Co. undeclared undeclared June 2007 first quarter 2010
Synopsis of progress N/A
Mt. Vernon, Ind. Kiewit Energy Co. Delta-T Corp. 113 MMgy corn Aventine Renewable Energy Inc. Aventine/Consolidated Grain and Barge
undeclared September 2007 fourth quarter 2009
Synopsis of progress Construction continues. Target start-up date was pushed back from the first quarter of 2009. No further information was available at press time.
Archer Daniels Midland Co. Location General contractor Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date
Location General contractor Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date
Bionol Clearfield LLC Columbus, Neb. undeclared undeclared 275 MMgy corn Archer Daniels Midland Co. undeclared undeclared July 2007 third quarter 2009
Synopsis of progress N/A
ETHANOL PRODUCER MAGAZINE JANUARY 2009
Location Design/builder Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date
Clearfield, Pa. Fagen Inc. ICM Inc. 110 MMgy corn Bionol Clearfield LLC Land O’Lakes N/A February 2008 January 2010
Synopsis of progress N/A
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Cardinal Ethanol LLC Location Design/builder Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Start-up date
Project Complete Union City, Ind. Fagen Inc. ICM Inc. 100 MMgy corn Murex CHS Inc. N/A February 2007 November 2008
Clean Burn Fuels LLC Location General contractor Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date
Raeford, N.C. Biofuels Design/Clean Burn Fuels LLC
Katzen International Inc. 60 MMgy corn undeclared Harris Crane Inc. Airgas Inc. May 2008 July 2009
Synopsis of progress This plant officially began production Nov. 3. Congratulations Cardinal Ethanol LLC!
Synopsis of progress Construction continues. No further information was available at press time.
Cilion Inc.
E Caruso LLC
Location General contractor Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Start-up date
Project Complete Keyes, Calif. Harris Construction Praj Industries Ltd. 55 MMgy corn Eco-Energy Inc. Western Milling N/A July 2006 November 2008
Synopsis of progress This plant began grinding corn in mid-November. Congratulations Cilion Inc.!
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Location General contractor Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date
Goodland, Kan. JMC Engineering LLC/Agri-Systems JMC Engineering LLC/Agri-Systems
20 MMgy corn undeclared undeclared N/A June 2006 first quarter 2009
Synopsis of progress N/A
ETHANOL PRODUCER MAGAZINE JANUARY 2009
Ethanol Grain Processors LLC
Project Complete
Obion, Tenn. Fagen Inc. ICM Inc. 100 MMgy corn Aventine Renewable Energy Inc. undeclared N/A December 2006 November 2008
PHOTO: ETHANOL GRAIN PROCESSOR LLC
Location Design/builder Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Start-up date
Synopsis of progress This plant began grinding corn Nov. 12. Congratulations Ethanol Grain Processors LLC! Ethanol Grain Processors LLC
GreenField Ethanol Location General contractor Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date
Hawkeye Renewables Johnstown, Ontario SNC-Lavalin Group ICM Inc. 200 MMly (53 MMgy) corn GreenField Ethanol Commercial Alcohols undeclared October 2006 December 2008
Synopsis of progress Construction is approximately 97 percent complete. The first shipment of corn has arrived on-site. Workers were fine-tuning mechanical systems at press time.
SOMETIMES, CHOOSING THE WRONG PATH CAN COST A LOT MORE THAN YOU THINK.
Location Design/builder Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Start-up date
Project Complete Menlo, Iowa Fagen Inc. ICM Inc. 110 MMgy corn Hawkeye Gold LLC undeclared N/A July 2007 October 2008
Synopsis of progress The company announced that this plant is officially on line. Congratulations Hawkeye Renewables!
In the biofuels industry, you make decisions every day that can help — or hinder — your future success. At Kennedy and Coe, we can help ensure that you capitalize on every opportunity. Our knowledge and experience in the industry can help you identify opportunities that can significantly impact your cash flow each year. So you can be sure that the path you choose is the right one. Call Jesse McCurry at 800-303-3241 or visit us at www.kcoe.com.
Not your average accountants.SM The “e” mark and the “stylized e” are registered service marks of the Ethanol Promotion and Information Council. Used with permission.
ETHANOL PRODUCER MAGAZINE JANUARY 2009 KAC.10442_EPM_Dir_7.5x3.375_4C 1
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Hawkeye Renewables Location Design/builder Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Start-up date
Project Complete Shell Rock, Iowa Fagen Inc. ICM Inc. 110 MMgy corn Hawkeye Gold LLC undeclared N/A July 2007 October 2008
Homeland Energy Solutions LLC Location Design/builder Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date
Lawler, Iowa Fagen Inc. ICM Inc. 100 MMgy corn Green Plains Renewable Energy Inc.
CHS Inc. N/A May 2007 March 2009
Synopsis of progress The company announced that this plant has come on line ahead of schedule. Congratulations Hawkeye Renewables!
Synopsis of progress Bins are complete, and rail is approximately 75 percent complete. Work on water treatment plant is ongoing. Administration building exterior is complete, and interior work is underway. All distillation columns are erected.
Highwater Ethanol LLC
Kawartha Ethanol Inc.
Location Design/builder Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date
Lamberton, Minn. Fagen Inc. ICM Inc. 55 MMgy corn Renewable Products Marketing Group
CHS Inc. N/A November 2007 May 2009
Synopsis of progress Concrete grain silos, tank farm and cooling tower are complete. All process tanks are placed. Construction of water treatment building is ongoing. Rail construction is approximately 98 percent complete. Electrical substation is ready to be fired up, and natural gas lines are being placed.
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Location General contractor Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date
Havelock, Ontario Profab International Ltd. Delta-T Corp. 80 MMly (21 MMgy) corn undeclared Thompson’s Ltd. undeclared October 2007 February 2009
Synopsis of progress All buildings are erected. No further information was available at press time.
ETHANOL PRODUCER MAGAZINE JANUARY 2009
Louisiana Green Fuels LLC Location General contractor Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date
Northwest Renewable LLC Lacassine, La. Praj Industries Ltd. Louisiana Green Fuels LLC 25 MMgy sugarcane/sweet sorghum undeclared N/A undeclared April 2008 mid-2009
Location General contractor Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date
Longview, Wash. Makad Construction Corp. Lurgi Inc. 55 MMgy corn U.S. Ethanol LLC Lansing Trade Group undeclared November 2006 second quarter 2009
Synopsis of progress Components for the plant’s distillation process are on-site. The collocated syrup mill is operating; it’s expected to supply extracted sugar from sugarcane as a feedstock once the ethanol plant is operational.
Synopsis of progress Construction continues. No further information was available at press time.
NEDAK Ethanol LLC
One Earth Energy LLC
Location General contractor Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date
Atkinson, Neb. Delta-T Corp. Delta-T Corp. 44 MMgy corn Eco-Energy Inc. Frahm and Deitloff N/A June 2006 December 2008
Synopsis of progress Welding and fortification of various tanks were in progress at press time. No further information was available.
ETHANOL PRODUCER MAGAZINE JANUARY 2009
Location Design/builder Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date
Gibson City, Ill. Fagen Inc. ICM Inc. 100 MMgy corn Eco-Energy Inc. Ag Motion Inc. N/A October 2007 March 2009
Synopsis of progress N/A
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Panda Hereford Ethanol LP Location General contractor Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date
Range Fuels Inc. Hereford, Texas Panda Ethanol Inc. Thermo-Kinetics/Lurgi Inc. 105 MMgy corn Aventine Renewable Energy Inc. Panda Ethanol Inc. undeclared September 2006 first quarter 2009
Synopsis of progress Status of project is being evaluated after general contractors were switched. Construction is approximately 98 percent complete. No further information was available at press time.
Location General contractor Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date
Soperton, Ga. undeclared undeclared 10 MMgy woody biomass undeclared N/A N/A November 2006 first quarter 2010
Synopsis of progress Excavation work continues. No further information was available at press time.
Plymouth Energy LLC Merill, Iowa Delta-T Corp. Delta-T Corp. 50 MMgy corn C&N Cos. Plymouth Energy LLC undeclared May 2007 November 2008
PHOTO: PLYMOUTH ENERGY LLC
Location General contractor Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date
Synopsis of progress Construction continues. No further information was available at press time.
Plymouth Energy LLC
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ETHANOL PRODUCER MAGAZINE JANUARY 2009
Route 66 Ethanol LLC Location General contractor Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date
Tharaldson Ethanol LLC Tucumcari, N.M. APS/United Stainless Process Technology United Stainless Process Technology
10 MMgy corn/milo undeclared undeclared N/A October 2007 early 2009
Location General contractor Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date
Casselton, N.D. Wanzek Construction Inc./Valley Engineering
Vogelbusch USA Inc. 120 MMgy corn Green Plains Renewable Energy Inc.
Verde Bioproducts Inc. N/A May 2007 December 2008
Synopsis of progress Construction continues. No further information was available at press time.
Synopsis of progress Corn has arrived on-site. Equipment, tanks, valves, and automated computer systems are being calibrated and commissioned. This plant will operate at approximately 70 percent capacity once operational.
Southwest Iowa Renewable Energy LLC
VeraSun Janesville LLC
Location Design/builder Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date
Location Design/builder Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date
Council Bluffs, Iowa ICM Inc. ICM Inc. 110 MMgy corn Lansing Ethanol Group Bunge N/A November 2006 December 2008
Synopsis of progress Distillers dried grains area is complete. At press time, the final stages of electrical work in the energy center were being completed. Work on steam line was ongoing. Finishing touches on rail loop were in progress.
ETHANOL PRODUCER MAGAZINE JANUARY 2009
Janesville, Minn. Fagen Inc. ICM Inc. 110 MMgy corn VeraSun Energy Corp. VeraSun Energy Corp. undeclared January 2007 fourth quarter 2008
Synopsis of progress VeraSun announced that it has indefinitely delayed the start-up of this plant due to its Chapter 11 bankruptcy filed in October. No further details were available at press time.
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June 15 – 18, 2009 Denver Convention Center D e n v e r , C o l o r a d o, USA
w w w. f u e l e t h a n o l wo r k s h o p. c o m 42
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:DRIVE
Breaking Through the Blend Wall
he path to energy independence is not for the faint of heart. In the words of President Woodrow Wilson, “If you want to make enemies, try to change something.” The ethanol industry knows this lesson all too well after a tumultuous 2008. Our foes spent tremendous sums of money attempting to discredit us. But we never let a lie go unchallenged, and as we begin the New Year our critics realize that we are a force to be reckoned with. However, challenges remain, and we must confront them head on. Our industry has faced a triple economic threat posed by fluctuating ethanol prices, a credit crunch and volatile commodity prices. While there is uncertainty, there is also reason for optimism. Corn prices have retreated, and in survey after survey a large majority of Americans continue to support cleaner sources of energy. With production outpacing demand, it will be crucial for the blend wall to be increased. The current regulatory cap is 14 billion gallons per year. If E10 was blended into all U.S. gasoline it would require something closer to 12 billion gallons per year. The blend wall creates two problems. First, it makes it difficult to reach the goal of 36 billion gallons of renewable fuels use that was set in the 2007 energy bill. Second, by holding down prices, it stymies growth—not just for cornbased ethanol, but also cellulosic ethanol.
T
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By Toni Nuernberg
The Renewable Fuel Standard (RFS) program not only provides a foundation for the industry but the promise of long-term stability. However, the 10 percent regulatory cap on the amount of ethanol that can be blended into gasoline places the RFS at risk. The industry is seeking approval for mid-level blends to increase the regulatory cap. Preliminary studies on increased blends have proved promising. Test results on vehicles have revealed that tailpipe emissions were similar to E10 blends, and informal observations proved that drivability was unchanged. While E85 infrastructure has yet to meet the demand of flexible-fuel vehicle (FFV) owners, the Ethanol Promotion and Information Council has helped lay the groundwork for increasing the regulatory cap on the amount of ethanol blended into ordinary pumps. New blender pumps that offer drivers varying levels of ethanol are becoming common at fuel retailers in the Midwest. The ability of consumers to choose higher blends of ethanol hinges on the availability of blender pumps, particularly as the number of FFVs continues to increase. The ethanol industry’s blender pump program supports the installation of fuel dispensers that offer a combination of at least two mid-range blends such as E20, E30 or E40, in addition to E85. The program got its start in South Dakota with help from the South Dakota Corn Utilization Council. The state now has 45 blender pumps. Active blender pump programs are also underway in Kansas, Missouri, Iowa and Minnesota.
Our robust grainbased ethanol industry is setting the stage for the coming generation of advanced Nuernberg biofuels. The industry is fueling research into technologies that will improve the production of cellulosic ethanol from feedstocks such as switchgrass, crop waste and other renewable biomass. However, the incentive to push for these new technologies may be at risk if we cannot push for higher blends at the pump. In support of these goals, EPIC plans to join the recently announced Growth Energy, a nonprofit organization comprised of ethanol producers and industry partners. The public policy organization aims to influence elite opinion makers inside the Beltway and increase consumer awareness nationally with public relations and marketing initiatives. Now is a critical time to push the cause of alternative fuels. Toni Nuernberg is the executive director of the Ethanol Promotion and Information Council. Reach her at tnuernberg@epicinfo.org or (402) 932-0567.
ETHANOL PRODUCER MAGAZINE JANUARY 2009
Today Pioneer is driving new opportunities to help industry become
Delivering high-output products is only one piece of the
more profitable by delivering high-quality grain, proven expertise
equation. Pioneer also is developing new ways to profit from
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livestock and food production industries.
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Several key Pioneer® brand hybrids have been developed for
suited for their business, and Pioneer QualiTrakSM system
end-use markets: High Total Fermentable (HTF) hybrids provide more
assists processors and growers in evaluating and understanding
ethanol per bushel. High Available Energy (HAE) hybrids contain
quality variations of incoming grain.
more digestible energy for pork and poultry producers. Food-grade corn hybrids offer food processors higher milling quality corn.
®, TM, SM
Trademarks and service marks of Pioneer Hi-Bred. All purchases are subject to the terms of labeling and purchase documents. © 2008 PHI INDSL010514P238AVC
To learn more about these products and services and our commitment to American agriculture, visit www.pioneer.com/enduse
:LEGAL PERSPECTIVES 46
Understand Your Carbon Credits Contracts By James L. Pray he recent election may clear the way for new greenhouse gas emissions legislation. This legislation may also embolden efforts already underway to convince ethanol producers to sign complex long-term contracts to trade their carbon credits. Ethanol producers should consider several important attributes of carbon credit contracts before signing. This article discusses these issues. Brokerage or sale? Carbon trading contracts offered to ethanol producers take very different approaches. Some of the contracts are modeled after conventional brokerage service agreements. After the credit is issued, the ethanol and trading companies split the net revenues according to the agreed formula and depending on the type of credit sold. Other contracts take the “property” approach. Once the credit is converted into a tradable security it is owned by the carbon trading company. The producer is paid a portion of the proceeds when the security is sold. In the end, either approach can accomplish the same thing. However, if a party to the carbon trade fails, a producer may be in a better legal position as an owner of the credit if it is trying to get its credit back. Contract length: Some carbon credit brokerage contracts have 10year terms. Given the uncertainty surrounding the coming legislative de-
T
bate over how carbon emissions will be regulated, most ethanol producers should avoid a decade-long contract. Commissions: The commissions in the contracts are much higher than what are usually encountered in a commodity business, sometimes as high as 50 percent. Because this is a fairly new and evolving market, it is important for companies to carefully review these rates, especially if the contract is long term. Be sure to shop around. Ownership of carbon offsets: Marketers of carbon credits from the ethanol industry argue that ethanol is “carbon negative” as the ethanol replaces fossil fuels that would otherwise enter the atmosphere. Until legislation or the free market adds some clarity, some carbon traders suggest that they are unlikely to buy or sell this kind of carbon credit from an ethanol producer. They argue that it is not the producer that generates the credit but the consumer or distributor who makes the decision to buy or sell the product. It is possible that future legislation may clear up this uncertainty. Until then, producers may want to anticipate future regulatory changes in the contract. Carbon reduction technology: The sulfur dioxide and nitrogen oxides emissions trading market is a model for how ethanol producers may generate credits with emission reduction technology. All ethanol producers already have emission reduction technology in place. Some of this technology may also reduce carbon dioxide or other greenhouse gases. Note that
carbon trading contracts can capture any credits generated by an ethanol producer from the use of this equipment. The availability Pray of this credit is independent of the status of ethanol as a carbon negative or positive product. Thus, the high commission may be unwarranted. Also, some contracts may inadvertently give the carbon credit trader an interest in certain pollution reduction equipment or give the trader the right to modify equipment. Avoid this language. Most manufacturers will not warrant the performance of equipment that is modified by third parties. Carbon credit trading is an evolving market segment. Ethanol producers should investigate the opportunity but be aware of the unknowns. James L. Pray chairs the environmental practice group at BrownWinick, a Des Moines, Iowa-based law firm serving the renewable fuels industry. Reach him at pray@brownwinick.com or (515) 242-2404.
ETHANOL PRODUCER MAGAZINE JANUARY 2009
Together we can build a low-carbon economy where business and future generations thrive.
Genencor® and you— a partnership of possibilities At Genencor®, we help our customers explore the limitless potential of industrial biotechnology. We apply our expertise in enzyme technology and systems biology to the challenges of the diverse industries we serve. Our ability to deliver innovative and sustainable customer solutions creates value while minimizing environmental impact. Join us in building a better future. www.genencor.com ETHANOL MAGAZINE JANUARY 2009 © 2008 DaniscoPRODUCER US Inc. Genencor® is a registered trademark of Danisco US Inc. or its affiliates in the United States and/or other countries.
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TECHNOLOGY
Making Do With Less
Some of ethanol’s most vocal critics decry the industry because of the amount of water it uses. Research has shown, however, that ethanol plants on average have reduced their water needs by more than 20 percent in recent years, and industry experts expect that trend to continue. By Erin Voegele
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TECHNOLOGY
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n 2007, the Renewable Fuels Association conducted a survey of U.S. ethanol plants. The survey collected a variety of information, including data on water usage. Twenty-two ethanol plants representing more than 1.8 billion gallons of ethanol production responded to the survey. These plants accounted for 37 percent of total U.S. ethanol production in 2006. The Argonne National Laboratory analyzed the RFA’s data and compared it with a 2003 USDA survey of ethanol plants, and according to the report released in March “Analysis of the Efficiency of the U.S. Ethanol Industry 2007,” water consumption at dry-grind ethanol plants decreased 26.6 percent. The report says dry-grind ethanol plants currently use an average of 3.45 gallons of fresh water per gallon of ethanol produced, while wet-mill ethanol plants use an average of 3.92 gallons of water per gallon of ethanol. According to USDA’s 2003 study, ethanol plants used an average of 4.7 gallons of water to make 1 gallon of ethanol. The study didn’t separate wet- and dry-grind plants.
‘Anything you can do to make your plant more energy efficient is going to help your water usage as well.’ The ANL analysis also found there are significant variations in water use among individual plants. Dry-grind ethanol plants reported water usage statistics ranging from 2.65 gallons of water per gallon of ethanol to 4.9 gallons per gallon of ethanol. Wet-mill plants reported water use varied from a minimum of 1.2 gallons of water per gallon of ethanol to a maximum of 6.1 gallons per gallon of ethanol.
Current State of Water Use Large variations in water usage can be explained by a variety of factors. According to the ANL report, newly constructed plants tend to require less water, primarily due to improved designs. According to
Greg Hausmann, ICM Inc.’s vice president of engineering, the quality of incoming water, process considerations, utility system configuration and equipment selection considerations also affect a plant’s water needs. “We believe that the industry is doing very well, and making a big effort to reduce water use, either through recycling or process change,” says May Wu, an ANL environmental scientist who authored the March report. “There are a lot of things ongoing, and newly built plants are definitely much more water efWu ficient.” According to Andy Aden, a National Renewable Energy Laboratory senior research engineer, energy and water demands at ethanol plants are closely integrated. “Anything you can do to make your plant more energy efficient is going to help your water usage as well,” he says. Aden wrote a journal article in 2007
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TECHNOLOGY
titled “Water Usage for Current and Future Ethanol Production” about water use in ethanol plants. “The real take-home message of the paper was that the process Aden water—meaning the water that is in fermentation that goes through the normal part of the process— is really not the issue,” he says. “The demand … is in the utilities side. It is water lost to evaporation from the cooling tower. It is water lost to blowdown in the boiler system. It is all these extraneous water uses that have to be made up, and that’s where the improvements lie.” Carolyn Kotsol, director of process technology for Delta-T Corp., says the first step in reducing water usage is to identify the plant’s largest water consumers. “First and foremost, I think most technology providers have really refined the amount of indirect heat that the plant uses,” she says. “Increasing the amount of indirect
‘We’re really re-evaluating all the water streams in a plant and looking for areas to recycle or reduce the water streams to be more efficient in our water usage.’
heat that you use in the design decreases the amount of fresh water you need for your boiler. That helps significantly.” Another primary place where water is lost is through dryer exhaust, Kotsol says. If you can capture that exhaust, you are harnessing heat. You can take the vapor, condense it into a liquid stream and then reuse it in the plant to offset some of the biggest water consumers. “The largest user of fresh water in the plant is the cooling tower,” Kotsol says. One option to reduce that water use is to offset the fresh water used in the cooling tower with another stream, such as dryer
exhaust. “Then you could greatly reduce the amount of fresh water that you are bringing into the plant,” she says. “That technology is out there, and it has been applied in a few plants.” Kotsol This technology can offset total water usage at the plant by approximately 1 gallon of water per gallon of ethanol. Kotsol says as the industry recovers from the high corn prices of 2008, many water-saving technologies are being imple-
TECHNOLOGY
‘I think it’s safe to say that nobody doing a cellulosic system investigation effort, or development effort, is doing it without consideration of water consumption.’
mented at existing facilities rather than through new construction. Optimization is often a great option for existing plants, she says. “They may have already done some troubleshooting and some de-bottlenecking, so this is the time to go out there and optimize the plant from a water usage standpoint as well,” Kotsol says. According to Erin Heupel, Poet LLC’s design and construction lead environmental engineer, her company is trying to incorporate water savings technologies into all future plant designs, and retrofitting existing plants. “We’re really re-evaluating all the water streams in a plant and looking for areas to recycle or reduce to be more efficient in our water usage,” she says. Heupel recently studied Poet’s plants and found that on average they are using less than 3 gallons of water to produce a gallon of ethanol. “Depending on the source water quality, you’ll see variability,” she says. The average was calculated by comparing Poet’s total ethanol production against the total volume of water used at the plants. In five years, she hopes the facilities will be closer to using 2 gallons of water per gallon of ethanol. “This is dependent on the initial water quality,” Heupel says. “I think the trend we hope to see in our plants is that we can eventually take them to zero-liquid.”
TECHNOLOGY
ICM has also been working on technologies to minimize water usage in its plant designs. “[ICM] has designed a couple of zero-discharge facilities that are in various stages of construction,” Hausmann says. However, the technologies that reduce water usage often carry high capital costs. “When we bring [capital cost] considerations into play, then our technology options start getting limited,” Hausmann says. Keith Scarberry, ICM’s water systems engineering manager, and Hausmann agree that one key element to reducing water usage is water quality. “The better the water quality is, the less water will be consumed by the factory,” Hausmann says.
Water Use in the Future Interest in reducing water use at ethanol plants is expected to continue. “During the time I’ve been with ICM [water quality and usage] has gone from almost an afterthought by the owners and project developers to a consideration most of them are taking with their site selections,” Scarberry says. Wu says that through her attendance at numerous ethanol conferences, she has seen that many existing plants are working to further minimize water usage. “I have heard more and more talk about water recycling,” she says. “The key limitation, perhaps, is the cost.” Many technologies, however, are getting more affordable. “I am pretty confident zero-water discharge can be realized,” Wu says. Plant designers and technology providers have developed several methods to reduce water usage, including the replacement of evaporative cooling towers with air exchangers or other cooling media. “The technology folks have taken some pretty significant steps in the right direction to reduce the amount of water consumption in our plants,” Kotsol says. Those new technologies won’t necessarily eliminate the use of cooling towers, but they would certainly reduce the size of the cooling tower need, which would reduce the amount of fresh water required by the plant. “It’s certainly a
known technology used in other industries,” she says. While most involved with the industry agree water use at traditional cornbased ethanol plants will continue to decline, it is not clear how much water cellulosic technologies will require. “In our studies we have seen numbers as low as 1 gallon of water per gallon of ethanol, and up to 9 to 10 gallons per gallon,” Wu says. “That’s a wide range. It depends on the process you select.” Although no commercial-scale cellulosic ethanol plants currently exist, NREL research suggests the range of water use by cellulosic facilities will be similar to what is seen with corn ethanol. “The cellulosic numbers are based on our very best detailed modeling efforts,” Aden says. According to Aden, a 2002 NREL report came up with a figure of 6 gallons of water per gallon of ethanol at a cellulosic plant. However, a model optimized for water efficiency yielded as little as 1.9 gallons of water per gallon of ethanol in 2007. Kotsol says that analyzing the amount of water coming into a cellulosic ethanol plant will be a primary consideration during the design process. “It will constantly be a part of our technology challenge,” she says. Unlike the early days of the cornbased ethanol plant development, water usage will be a chief concern when developing cellulosic ethanol plants. “There are still a lot of unknowns with [cellulosic ethanol],” Hausmann says, which makes it hard to predict how water will be utilized. “I think it’s safe to say that nobody doing a cellulosic system investigation effort, or development effort, is doing it without consideration of water consumption.” EP Erin Voegele is an Ethanol Producer Magazine staff writer. Reach her at evoegele@bbiinternational.com or (701) 373-8040.
ETHANOL PRODUCER MAGAZINE JANUARY 2009
WE ARE GROWTH ENERGY. YOU ARE, TOO. WE’RE A GROUP OF LEADING ETHANOL COMPANIES DEDICATED TO FUELING AND FEEDING THE WORLD THROUGH ETHANOL AND AGRICULTURE.
Growth Energy means business. We’ve taken a forceful stand on the food industry’s “food vs. fuel” smear campaign. Now we’ve set our sights on a bigger goal: raising the regulatory cap on ethanol. This work won’t be easy. But together, we can grow our industry to where it needs to be, helping our nation become energy independent while creating jobs at home and a cleaner environment for future generations. Ethanol is clean, green, high-tech and homegrown. Help spread this word to opinion leaders, policy makers and Americans from coast to coast. Go to GrowthEnergy.org today and see how you can get involved. Together, we can keep ethanol growing.
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GOING
Flow
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Like a fluid line of credit at the bank, a steady and unhindered flow of water is critical for the efficient operation of an ethanol plant of any size. And just as interest on that credit varies depending on the unique circumstances of the individual plant, water, depending on its source, contains its own unique set of properties. By Frank Zaworski
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N
o two ethanol plants in the world, whether a mile or a continent apart, have exactly the same water with exactly the same characteristics. This uniqueness of a plant’s industrial water creates challenges for plant operation and opportunities for those with technological solutions. “In terms of water quality, the most demanding water user in an ethanol plant is the energy center,” says Mike Mowbray, marketing manager for U.S. Water Services in Plymouth, Minn. (www.uswaterservices.com). “In terms of quantity, the biggest user is usually the cooling system. Both systems require sophisticated control in order to maintain the efficiencies needed to make a modern ethanol plant profitable.” U.S. Water Systems has helped design and start water treatment systems in about 80 dry-grind ethanol plants in the United States. The company provides water management solutions from sophisticated pre-treatment for groundwater or grey water to zero-liquid discharge systems. Mowbray says U.S. Water Services is familiar with the site-specific water challenges all ethanol plants face, and the company is continuously creating and refining technologies and services to meet any plant’s needs.
Texas-Sized Problem “When an ethanol plant in Texas (name withheld), serviced by U.S. Water Services, started experiencing problems with its reverse osmosis (RO) system, conventional, on-site methods of cleaning membranes failed, and the reason soon became clear,” Mowbray says. When the city changed the flow of the water to accommodate the ethanol plant, it stirred up red clay that had settled in the distribution piping. The fine clay silt, so fine it could pass through a 1 micron filter, found its way to the ethanol plant’s RO system and fouled the membranes. Mowbray says attempts were made to clean out the red clay using the same methods as those used to remove organic compounds, but only limited success was achieved. With conventional methods failing at every turn, unconventional methods had to be considered, Mowbray says. Replacing the 180 membranes would be too expensive, especially if the situation persisted.
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The Texas plant turned to U.S. Water Services’ RO cleaning station in Cambridge, Minn. This RO station is unique in the water services industry, Mowbray says, utilizing a variable frequency drive, along with complex valve and control schemes, allowing water to flow through the membrane in either direction, adjusting the pressure over a wide range in order to achieve the best results. “Membranes, by design, allow water to flow in a single direction,” Mowbray says. “Reversing the water flow can provide enough force to kick a majority of the debris free from the membrane, something that is impossible to do on-site, and is rarely seen in other off-line cleaning systems.” Finally, U.S. Water Services’ membrane cleaning station has the ability to test the performance of each cleaned membrane at actual operational flux rates to ensure that the membrane meets industry specifications before being sent back to the customer. On its first test run, the RO cleaning station proved successful, Mowbray says. The red clay silt was removed from a substantial number of the membranes. The performance was verified, and the membranes were sent back to the customer, ready to reinstall. “The U.S. Water Services membrane cleaning station is the newest and most sophisticated system in the industry,” Mowbray says. “It was designed and built by our engineering group using knowledge gained from extensive experience with our customers’ reverse osmosis applications. Not every plant will need to clean membranes off-site. However, considering the critical nature of a properly functioning water treatment plant, and the cost of replacing membranes, it is good to have the option of enhanced cleaning when needed.”
More Solutions Boiler water treatment: The heat recovery steam generators (HRSG) built into most new ethanol plants are designed to convert the waste heat coming out of the thermal oxidizers (TO) into steam instead of burning oil or gas in a fire box. In order for the HRSG to be effective, according to U.S. Water Services engineers, it must be built to maximize the capture of heat energy from the waste gas stream. This leads to designs with small diameter steam tubes that are packed very tightly in the steam generating section. Some of the tubes have fins on the fire side in order to increase heat transfer as much as possible. The modern HRSG is like a sports car, Mowbray says. “It packs a lot of performance in a small package, but it demands respect and attention to get the most out of it.” From a water treatment point of view, Mowbray says, the steam generator is prone to scale and deposits. As a result, it is critical that the highest quality water is used for make-up to these systems. This requires either a good demineralizer system or a RO unit followed by polishing softeners.
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PHOTO: U.S. WATER SERVICES
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Engineers at U.S. Water Services in Cambridge, Minn., examine a portion of the RO cleaning station used to remove stubborn debris from membranes.
RO or softened water alone typically does not provide the level of water quality needed in the HRSG, Mowbray says. Once water of the proper quality is available, it is equally important to treat the water with corrosion inhibitors and a dispersant polymer program. “The use of older style precipitating chemistries will not provide the level of boiler tube cleanliness needed in a HRSG,” he says. “Lastly, this high-tech chemistry should be controlled with automated chemical and blowdown controllers.”
Since the steam generating tubes are narrow, and the heat flux is high, scale forming in the hot section of the system can quickly plug and blow tubes, Mowbray says. This will lead to the shutting down or de-rating of a plant to repair the problem. The design of many HRSG systems makes repair a difficult undertaking. Plugging or replacing individual tubes is virtually impossible. The only recourse is to replace the entire generating bank. Another reason to pay such close attention
to boiler water treatment is simple economics, Mowbray says. Waterside tube scale is an insulator that blocks the efficient transfer of heat from the thermal oxidizer waste gas to the boiler water. As little as a sixty-fourth of an inch (thinner than an eggshell) of calcium carbonate or iron oxide scale will reduce heat transfer efficiency by as much as 15 percent. Scaling in HRSG tubes can result in increased energy costs that directly affect plant profitability. Good water treatment is cheap insurance, he says. Unfortunately, make-up water is not the only water source that can cause problems in your ethanol plant boiler. As with any production facility, contaminants can, and usually do, come back into the steam generator through the return condensate. In an ethanol plant, the contaminant is typically mash. When mash is in the boiler water, conductivity goes up, the water turns black, and the boiler foams and causes the drum level to bounce. The boiler water will also carry over into the steam due to the foaming. This has been known to plug steam control valves, eventually shutting down the plant. Cooling water treatment: The cooling water system requires the largest amount of water in
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an ethanol plant’s subsystems. A typical 40 MMgy to 50 MMgy ethanol plant has to remove 100 million to 120 million British thermal units per hour, according to U.S. Water Services. Just as in the steam generating system, a small amount of scale on heat exchanger surfaces will significantly reduce heat transfer efficiency, possibly resulting in having to run chillers more often. If serious enough, it can affect a plant’s ability to produce the maximum amount of ethanol. The quality of incoming water will be the major factor in cooling tower management. A cooling tower releases heat to the atmosphere by evaporating water. The dissolved solids from the well water are left behind in the cooling water. As more well water is added, and more cooling water is evaporated, the dissolved solids become more concentrated. The various constituents in the well water each have their own limits of solubility. Eventually, the cooling water will cycle up to a point where some of the dissolved solids will precipitate. Typically, they will do this first at the point of highest temperature in the cooling system, the heat transfer surface of the hottest heat exchanger. There are various methods used to increase
the cycles of concentration in a cooling system. The first, as with the boilers, is to take the dissolved solids out of the cooling tower make-up water before adding it to the system. According to Mowbray, many plants use extra RO treated water to supplement well water to the tower. “This is not a free fix, however, as the RO also has to be treated to prevent it from scaling, and there are significant operating costs,” he says. “However, depending on the initial plant water quality, this may be the best option.” The other method is to treat the cooling water with chemicals that will prevent scale from forming at higher concentrations of dissolved solids than would normally be possible. Cooling systems are also treated to prevent corrosion and bacteria growth. Serious corrosion can cause equipment failure. Even minor corrosion can cause problems, since the rust will move with the water flow until it comes to an area of slower flow. Then the rust particles can settle out and cause plugging. Bacteria can cause corrosion and system plugging as well, Mowbray says. But the biggest concern with bacteria is health related. Legionnaire’s disease still pops up occasionally in industrial
facilities, and cooling towers need to be treated to prevent them from becoming a breeding ground for this dangerous bacterium, he says. A variety of biocides are available to the industry. The choice of which to use depends on the system being treated, and on local discharge restrictions. The Occupational Safety and Health Administration and the Cooling Tower Institute recommend a combination of continuously fed oxidizing biocide (usually chlorine gas or sodium hypochlorite bleach, fed with sodium bromide) and a nonoxidizing biocide slug fed on a weekly basis. “Water quality and water treatment can have a huge impact on the profitability of a plant,” Mowbray says. “It is important to get a competent water treatment professional involved with your plant early in the design process. Waiting until a couple of weeks before start-up to choose a water treatment chemical supplier is a recipe for trouble.” EP Frank Zaworski is an Ethanol Producer Magazine freelance writer. Reach him at fzaworski@gmail.com.
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Irrigation Mitigation The amount of irrigation needed to grow feedstock for ethanol depends on what is being grownâ&#x20AC;&#x201D;and where. By Ryan C. Christiansen
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uring the past year, both international and domestic organizations have raised concerns about whether the irrigation of crops for energy production will lead to water shortages. In some countries, these concerns are driving policies for certifying that ethanol and other biofuels are produced without impacting water supplies. During the Washington International Renewable Energy Conference held in March in Washington, D.C., U.S. Department of the Interior Secretary Dirk Kempthorne said that crops used for ethanol take an enormous amount of water. “To reach our ethanol production target of 7.5 billion gallons per year by 2012 will require 30 billion gallons of water a year to process,” he said, “or the amount of the annual water needs of Minneapolis, Minn. And if just 25 percent of the new corn crop requires irrigation, ethanol will demand more water than the combined annual usage of all cities in Arizona, Colorado, Idaho and Nevada. As we increase ethanol production, we must have a holistic approach that takes into account its impact on water supply.” During World Water Week, an international meeting held in Stockholm, Sweden, in August, the Stockholm International Water Institute concluded that bioenergy demands are diverting water from food production and that by 2050, the amount of water used to grow and process feedstocks for energy in the world will equal the amount of water used to grow crops to feed the world. Also in August, the Roundtable on Sustainable Biofuels, a Switzerland-based think tank that is helping the European Commission to define sustainability criteria for biofuels in the European Union, released the first version of its criteria. The group said that water used for irrigation must not be withdrawn beyond the replenishment capacity of the water table and that water-intensive energy crops must not be established in water-stressed areas. Crops that fit local conditions must be used for the most efficient use of water, the criteria said. In September, with support and advice from the World Wildlife Fund and Natural Resources Defense Council, members of the international airline industry—including Air France, Air New Zealand, All Nippon Airways, Cargolux, Gulf Air, Japan Airlines, KLM, SAS
and Virgin Atlantic Airways—formed the Sustainable Aviation Fuel Users Group, demanding that the cultivation of jet fuel plant sources should not jeopardize drinking water supplies. While ethanol is not a source of jet fuel, it is clear that both government and industry around the world are concerned that the irrigation of crops for energy production might lead to water shortages.
Ethanol and Water Use Using corn ethanol to power a vehicle consumes more water than using petroleum gasoline. In a report titled “Water Intensity of Transportation” published in the November 2008 edition of the journal Environmental Science & Technology, researchers in the Bureau of Economic Geology and also the Center for International Energy and Environmental Policy in the Jackson School of Geosciences at the University of Texas in Austin, Texas, report that driving a petroleum gasoline-fueled light-duty vehicle—which includes cars, trucks and sport utility vehicles—typically consumes between 9 and 18 ounces of water per mile. However, driving an E85 ethanol-fueled light-duty vehicle can consume between 1 and 62 gallons of water (28 gallons of water on average) per mile—up to 882 times as much as petroleum gasoline— if the ethanol in the E85 blend is processed from corn grain that is harvested from irrigated fields, depending on where the corn is grown. In fact, the amount of water used to irrigate the corn crop has the greatest impact on how much water is used per mile. Approximately 50 million acres of land worldwide is used for the production of biofuels and about 11.6 trillion gallons of water is used throughout the world annually to irrigate energy crops, according to a report entitled “Biofuels and Implications for Agricultural Water Use: Blue Impacts of Green Energy” published by the International Water Management Institute. However, the global impact of irrigating crops for biofuel production is minor, the IWMI said, and the amount of water that is needed to irrigate energy crops varies widely, depending on which crops are being grown and where. Individual countries and regions need to assess the local impact of energy crop irrigation, the IWMI said. For example, both China and India might not have enough water resources
ETHANOL PRODUCER MAGAZINE JANUARY 2009
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to grow energy crops for ethanol if they use traditional crops such as corn or sugarcane. China withdraws approximately 2,400 gallons of water for irrigation to grow enough corn to produce 1 gallon of ethanol. India withdraws approximately 3,500 gallons of water for irrigation to grow enough sugarcane to produce 1 gallon of ethanol. Meanwhile, very little irrigation is used in Brazil to grow sugarcane. According to an IWMI report entitled “Water Use and Impacts Due to Ethanol Production in Brazil,” the total rainfall in the savannahs of Brazil is enough to grow crops there without irrigation. Meanwhile in the United States, only 3 percent of all irrigation is used to grow corn for ethanol, the report said. Overall in the United States, approximately 17 percent of U.S. corn for grain or seed is irrigated, based on the latest available USDA data from 2002, according to Carey King, co-author of the UT study and a research associate at the school. The IWMI said if all national targets for biofuels production are to be met worldwide, an additional 74 million acres of land and 47.5 trillion gallons of water for irrigation will be needed. Meanwhile, water constraints will limit the potential for growth in the production of energy crops in some parts of the world. According to a report entitled “The State of Food and Agriculture 2008-Biofuels: Prospects, Risks, and Opportunities” published by the Food and Agriculture Organization of the United Nations, the most potential for expansion is in Latin America and sub-Saharan Africa.
U.S. Energy Crop Irrigation When ethanol is processed from corn grown in nonirrigated fields, driving an E85 ethanol-fueled light-duty vehicle consumes only between 19 and 45 ounces of water per mile—or eight times as much as petroleum gasoline—compared with an average of 28 gallons of water per mile for irrigated corn, the UT study said. According to the USDA’s Natural Resources Conservation Service Resource Economics and Social Sciences Division, the majority of producing ethanol plants in the United States—and those that are planned or in construction—are located in the heart of the Corn Belt where little irrigation is needed to grow corn. For example in 2002, between 500
and 1,000 gallons of water was used on average to grow one bushel of irrigated corn in Iowa (when the corn was irrigated at all). Between 1,000 and 2,000 gallons of water per bushel were used in Minnesota, South Dakota, Wisconsin and Illinois. However, as you move to the outer edges and away from the center of the Corn Belt, the irrigation requirement for corn starts to increase. For example, in Nebraska and Kansas, the average irrigation needed per bushel of corn is between 2,000 and 3,000 gallons of water. The National Research Council cited the Ogallala aquifer, which runs through Kansas and Nebraska, as a resource under stress. According to Daniel O’Brien, an extension agricultural economist at Kansas State University, Ogallala aquifer groundwater supplies have been declining since irrigation began in the 1960s. He said increased demand for corn for ethanol might result in more corn acreage and more intensive irrigation, which might accelerate the decline of the aquifer. Kansas farmers planted 4.1 million acres of corn in 2008, a 5 percent increase over 2007 and the largest planting in the state since 1936, according to the Kansas Corn Growers Association. Nebraska farmers planted 9 million acres of corn in 2008, a 4 percent decrease from the highest-ever planting of 9.4 million acres in 2007, according to the Nebraska Corn Board. The University of Nebraska-Lincoln Extension Institute of Agriculture and Natural Resources reports the consumption of water by irrigated crops is the biggest user of water in Nebraska. Nebraska has 22 ethanol plants in production and four under construction; Kansas has 13 plants in production and one under construction, according to BBI International’s U.S. & Canada Fuel Ethanol Plant Map. According to King, only Kansas and Nebraska are above average in the 10 Corn Belt states in terms of the amount of water that is used to irrigate corn. “The average for the 10 corn states is similar to the average for the entire U.S.,” King said, “but heavily weighted by Kansas and Nebraska, which have over half of the total irrigation for corn in gallons of water. They dominate the irrigation.” The 2002 USDA irrigation census data indicates that the 10 major corn states used 3,812 billion gallons of water for the irrigation of corn for grain or seed, with Nebraska using 1,800 bil-
ETHANOL PRODUCER MAGAZINE JANUARY 2009
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Percentage of U.S. Irrigation for Corn—Nebraska and Kansas Total gallons of water used for irrigating corn for grain or seed = (1.2 acre-feet/ year/acre)(9,749,748 acres)(325851.4 gallons/acre-feet) = 3,812 billion gallons Total irrigation used in Kansas and Nebraska for corn for grain or seed = Nebraska + Kansas = [(1.2 acre-feet/year/ acre)(4,605,499 acres) + (1.4 acre-feet/year/ acre)(1,231,918 acres)](325851.4 gallon/acre-feet) = 1,800 + 562 = 2,362 billion gallons Thus, Nebraska and Kansas account for 62 percent of the total U.S. irrigation for corn for grain or seed. SOURCE: CAREY KING, UNIVERSITY OF TEXAS AND USDA NATIONAL AGRICULTURAL STATISTICS SERVICE “FARM AND RANCH IRRIGATION SURVEY (2003)” (Vol. 3, Pt. 1, Table 28, p. 90).
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lion gallons and Kansas 560 billion gallons. King said a light-duty vehicle powered by E85 ethanol from irrigated Kansas corn consumes 52 gallons of water per mile; the same vehicle powered by E85 ethanol from irrigated Nebraska corn consumes 43 gallons per mile. King’s calculations are based on 2002 USDA census data, he said, and would not reflect the impact that the 2005 renewable fuels standard might have had on the amount of water used to irrigate corn in those states. The USDA 2007 census data is scheduled to be released in February. The push to grow corn outside of the Corn Belt is a cause for concern, according to a report by the NRC entitled “Water Implications of Biofuels Production in the United States.” The NRC found that shifting agricultural land from other crops to grow corn or expanding corn production into regions with little agriculture, especially dry areas, might greatly increase pressure on water resources in those regions. The amount of water that goes through the corn plant and into the atmosphere as transpiration is directly related to corn grain yields, according to the Nebraska extension service.
ETHANOL PRODUCER MAGAZINE JANUARY 2009
FEEDSTOCK
Because irrigation is such a large factor in the amount of water used to produce ethanol, there is a “tremendous amount of need” for proper water resource planning, said the UT researchers. Historically, using petroleum-based fuels has had a small overall impact on U.S. water resources, they said, and the United States must consider the supply of water needed for irrigating existing and future energy crops. They said comparing the amount of water supplied by rainfall to the amount supplied by irrigation provides a measure for sustainability.
soils and water quality researcher at the University of Arkansas. “Immediately, it wouldn’t have a major impact,” Sharpley says. “But long-term, over several years, you would be removing a lot of organic matter from that soil that would [normally] get recycled back in. If you’re harvesting it continuously and removing it, then the organic matter in the soil tends to slowly decline. One of the major benefits of organic matter is that it increases the waterholding capacity and potential of soils.”
Policies to promote the production of cellulosic ethanol using nonfood crops, such as switchgrass and native grasses, should be expanded, the NRC said, because the largescale production of those feedstocks could be irrigated with wastewater that otherwise would be unsuitable for irrigating food crops. EP Ryan C. Christiansen is an Ethanol Producer Magazine staff writer. Reach him at rchristiansen@bbiinternational.com or (701) 373-8042.
Future Ethanol and Water Use If corn continues to expand to the edges and outside of the Corn Belt, water conservation, erosion prevention, and the efficient use of fertilizer can help to mitigate the impact of water use for growing energy crops, the NRC said. No-till planting practices, where crops are planted into the previous year’s crop residues, might be employed. The corn stover from these areas is less likely to be available for the production of cellulosic ethanol in the future, the NRC said. The UT study also looked at the impact on water usage if cellulosic ethanol made from corn stover is used in a light-duty vehicle. If the ethanol is processed from corn stover from irrigated fields, driving an ethanol-fueled light-duty vehicle consumes between 3 and 46 gallons (an average of 19 gallons) of water per mile, depending on where the corn is grown, which is generally less than ethanol processed from corn grain-only that is harvested from irrigated fields. Meanwhile, driving a vehicle using ethanol processed from corn stover from non-irrigated fields consumes about 32 ounces of water per mile. If the entire corn plant is used to make ethanol, the UT report said, a light-duty vehicle will consume between 2 and 38 gallons of water per mile for irrigated corn and between 28 and 49 ounces of water per mile for nonirrigated corn, depending on where the corn is grown. However, because crop residues on the soil surface absorb water from rainfall and snow and also reduce the evaporation of water from the underlying soil, using corn stover for the production of cellulosic ethanol might also have an impact on the amount of irrigation needed to grow corn, according to Andrew Sharpley, a ETHANOL PRODUCER MAGAZINE JANUARY 2009
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ETHANOL PRODUCER MAGAZINE JANUARY 2009
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a world of potential
Experts at the 4th World Biofuels Symposium offered their impressions of the global potential for ethanol, biodiesel and beyond. By Travis Hochard
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ore than 200 people attended the 4th World Biofuels Symposium held Oct. 19-21 in Beijing. The symposium, which was organized by BBI International and Tsinghua University, featured 48 speakers from biofuel associations, technology companies and research institutions from countries around the world including Brazil, China, Scotland, Thailand, Italy, Republic of Ghana, Sweden, United Kingdom and the United States. The common thread throughout the conference was that sustainability must be a top priority in the expansion of biofuels worldwide. While many speakers found this path in secondgeneration ethanol and other advanced biofuels, Marcos Jank, president and chief executive officer of the Brazilian Sugarcane Industry Association (UNICA) said that he considered Brazilian ethanol from sugarcane to be a sustainable biofuel based on the greenhouse gas emissions reductions achieved and low percentage of arable land used. Jank said in Brazil, the equivalent of 25.8 million tons of carbon dioxide was avoided in 2007, thanks to the use of ethanol. He also said that food versus fuel is not an issue for the country. “Sugarcane for ethanol accounts for only 1 percent of the arable land in Brazil, reducing our gasoline consumption by 50 percent,” Jank said. “This is in a country where gasoline is considered the alternative fuel.” Brazil produced 23 billion liters (6.08 billion gallons) of ethanol in 2007, and the domestic sales of E100 were 1 billion liters (264 million gallons), according to Jank. “This demand is driven by consumer choice—90 percent of new cars sold in Brazil are flex fuel—representing more than 25 percent of the fleet,” Jank said, adding that another driver of Brazil’s success is the mandatory blending of 20 percent to 25 percent of ethanol into gasoline. Projections for Brazilian ethanol from sugarcane show tremendous potential with 47 billion liters (12.42 billion gallons) by 2016 and 65 billion liters (17.17 billion gallons) by 2021. Most of this expanded production would be exported—an unpredictable market for Brazil. This is why Jank is in favor of making ethanol a globally traded energy commodity by lifting all tariff and nontariff barriers. “Sugarcane is the most competitive raw material for the production of ethanol—competitive with any gasoline obtained from a U.S. $70 barrel of crude—and has very positive energy and environmental balances,” Jank said, adding that Brazil does not intend to supply ethanol for the rest of the world. “We are part of the solution, not the solution,” he said. While Brazil is a net exporter of ethanol, China will have to look to next-generation technologies for ethanol and other biofuels to become a significant part of its fuel supply, according to information provided by Xiaohui Wang, director and senior analyst of the Market Monitoring Division of the China Grains and Oils Information Center, a government think tank researching grain and oilseed supply and demand. Wang’s analysis of Chinese agriculture and food supply revealed the country’s limitations for grain-based ethanol expansion. “Chinese agricultural products will continue to increase yields and efficiency, but the lack of wa-
ETHANOL PRODUCER MAGAZINE JANUARY 2009
PHOTO: BBI INTERNATIONAL
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A lack of water and arable land limits China’s ability to use food crops to produce ethanol, so the country is focusing its efforts on nonfood crops such as this cassava root.
ter and arable land will limit China’s future in grain output,” Wang said. “With a rising population and increased standard of living we must ask who will feed Chinese people in the future.” Wang explained that to expand agricultural production the Chinese government has implemented policies that will improve crop yields, increase storage and restrict uses for arable land, but he stressed that food will remain the priority for Chinese agriculture. It is for this reason that China’s largest food manufacturer and ethanol producer is focusing its research and development efforts on cellulosic ethanol. The China National Cereals, Oils, & Foodstuffs Corp. (COFCO) produces 820,000 tons (275 million gallons) of ethanol in China annually, which is half the country’s total capacity. “Our demand for cellulose is more than in the United States,” Guojun Yue, assistant president of COFCO told the audience during the general session. “With the development of biomass technologies we have a goal to produce 2 million tons (670 million gallons) of biomass ethanol by 2010 and 10 million tons (3.3 billion gallons) by 2020.” However, Yue did not dismiss the production of grain-based ethanol altogether. He explained that corn and wheat are laying down the foundation for nongrain ethanol in China, and the second stage will include sweet potato and
sweet sorghum—which is still considered a grain. “This will provide a transition period, but the future of ethanol in China lies in cellulose.” A U.S. company that is trying to find a way to supply the Chinese biofuels market is Coskata Inc., a cutting-edge technology firm that is commercializing a proprietary process for the production of fuel-grade ethanol. Wes Bolsen, chief marketing officer and vice president of business development for Coskata, discussed China’s rising potential for second-generation biofuels and outlined his company’s solution to its food-versus-fuel dilemma. Bolsen’s figures showed that Chinese grain-based ethanol production has grown from 100 million gallons in 2004 to about 500 million in 2008. He attributed this increase to E10 mandates in several Chinese provinces and cities, but cautioned that “high food demand limits the further growth of first-generation ethanol in China.” He added that corn ethanol is not economical without subsidies in China, and said that cellulosic ethanol from the Coskata process costs less than half the current cost of producing grain-based ethanol. Bolsen told participants that cellulosic ethanol can tap into a wealth of nonfood resources and help make China energy self-sufficient. He said that China’s current annual biomass resources can displace the equivalent of 1.2 billion barrels of im-
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PHOTO: BBI INTERNATIONAL
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Participants of the World Biofuels Symposium toured Guangxi COFCO Bio-energy Co. Ltd., a cassava ethanol plant in Beihai, China, the first fuelethanol plant based on a nongrain feedstock in China.
ported oil, and that additional potential exists from dedicated energy crops, garbage, steel off-gasses and fossil sources. “Using Coskata’s hybrid gasification plus fermentation technology combines the best
of both routes and allows the use of a wide variety of feedstocks,” Bolsen said. “This could provide important economic development in China—not only in rural areas—but outside major cities using things like tires, municipal solid waste and plastic bottles.” General Motors Corp., a premier sponsor of the symposium, supports Coskata’s process and the second-generation ethanol movement. The automaker has announced alliances with Coskata and Boston-based Mascoma Corp., another cellulosic ethanol start-up based in the United States. “GM is committed to the rapid commercialization of the next generation of ethanol,” said Andreas Lippert, director for Global Energy Systems in General Motor’s Research and Development and Strategic Planning Department. “This is why we started a strategic alliance with the two leading cellulosic ethanol companies that together cover the biothermal and biochemical spectrum in advanced biofuel technology.” The United States is also looking at cellulosic ethanol and other advanced biofuels to meet its goals for alternative transportation fuels, according to Dale Gardner, associate director for Renewable Fuels Science and Technology at the National Renewable Energy Laboratory in Golden, Colo. Gardner presented an overview of the biofuels industry in the United States and pointed out the limitations of grain feedstocks. The United States has 162 commercial ethanol plants with a total capacity of 9.4 billion gallons per year and another 4.2 billion gallons per year planned, Gardner explained. There are an additional 13 cellulosic ethanol demonstration plants funded by the U.S. DOE
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PHOTO: BBI INTERNATIONAL
‘Regardless of what path we take we cannot assume that land use, water, soil and other environmental factors are not part of the equation. We must put together a comprehensive sustainability analysis that considers environmental, social and economic impacts.’
Symposium participants toured the National Stadium (bird’s nest) and the National Aquatics Center (water cube), which are attractions from the 2008 Beijing Olympics and draw people from all over the world. The tour was sponsored by the Minnesota Department of Agriculture.
with a projected capacity of 250 million gallons per year for 2008. Gardner listed three government programs designed to increase the capacity of alternative transportation fuels in the United States
including President George W. Bush’s 20-in-’10 target of 35 billion gallons of alternative transportation fuels by 2017, the renewable fuels standard legislation that requires the use of 36 billion gallons of renewable fuels by 2022, and the DOE’s 30x’30 goal of 60 billion gallons of ethanol (30 percent of today’s gasoline consumption of 140 billion gallons per year) by 2030. “A major goal of the DOE is to reduce the cost of cellulosic ethanol,” Gardner said. “We are currently funding projects using various technologies including biochemical, thermochemical and integrated processes.” In addition to technical barriers for commercially viable production, Gardner explained that another challenge is collecting the feedstock. “We have done extensive resource assessments so we know where it is … the challenge is how to get it.”
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The U.S. biodiesel industry will also require technological breakthroughs to meet these goals. Gardner said that while the production capacity for the 171 biodiesel plants in the United States is currently 2.2 billion gallons per year—only 450 million gallons were produced in 2007. “Lack of feedstock is a factor for our biodiesel industry,” Gardner said, adding that its future will rely on what he called third-generation technologies, which includes the use of microalgae. “We see algae as a promising new feedstock with potential to produce 10 to 50 times more lipids per
acre than other terrestrial plants,” Gardner said. “Other benefits of algae cultivation are that it can utilize marginal, nonarable land, saline or brackish water, and can provide large waste carbon dioxide vent resources such as absorbing flue gases from coal plants.” According to Gardner, the DOE also has plans to start an advanced biofuels program. “What we mean by this is beyond ethanol and biodiesel,” Gardner explained, using the term fourth-generation technologies— converting higher energy density molecules directly from organisms into gasoline, diesel
and jet fuel. “Regardless of what path we take, we cannot assume that land use, water, soil and other environmental factors are not part of the equation,” Gardner said. “We must put together a comprehensive sustainability analysis that considers environmental, social and economic impacts.” Most experts agree that a comprehensive life-cycle assessment of future biofuels is needed, and to understand that not all biofuels are created equal. Ausilio Bauen, director of E4tech, a European sustainable energy consultancy, gave an overview of international developments in carbon and sustainability policy for biofuels. He said that the recent rapid growth of biofuels led by strong policy support in the United States, European Union and Brazil has led to carbon and sustainability concerns. “Life-cycle greenhouse gas savings vary depending on the biofuel type and how it is produced,” Bauen said. “Direct change of land use to grow biofuels increases these emissions significantly—in some cases negating the benefits of using biofuels.” This has led to a variety of policy responses worldwide such as in Germany where biofuels laws require a minimum greenhouse gas savings of 30 percent, rising to 40 percent in 2011. In addition there are mandatory requirements on agriculture and habitats. The EU, United Kingdom and the Netherlands have similar laws in place. They all use a life-cycle approach to assess biofuel’s carbon intensity. “It is essential to consider all of the policy goals when designing low-carbon fuels policy,” Bauen explained, adding that greenhouse gas emissions savings may be the key driver, but other goals must also be considered and prioritized including energy security, macroeconomic impact, rural development, social responsibility and the potential for innovation. “Regardless of the model, policy must be made in an international context and it must be flexible and adaptable to new technologies.” EP Travis Hochard attended the World Biofuels Symposium held in October in Beijing.
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ETHANOL PRODUCER MAGAZINE JANUARY 2009
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FRACTIONATION
A Renewed Future As ethanol producers search for ways to ease the pain of economic asperity, fractionation could be the answer. Renew Energy LLC implemented Cereal Process Technologies LLC’s dry-fractionation system at its 130 MMgy ethanol plant in Jefferson, Wis., now the world’s largest corn dry-milling operation. EPM investigates the benefits of installing this system. By Anna Austin
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J
im Giguere’s work on corn fractionation technology didn’t stop when his process was first being used in the 1980s, or when he secured the final patents in 1994. The chemical engineer continued to refine the process and make it more efficient long after he retired. Today his endeavors are being employed by Cereal Process Technologies LLC, who introduced it to the ethanol industry. Its first commercial application in the world of ethanol came in January 2008, when Renew Energy LLC commenced operations at its 130 MMgy ethanol plant in Jefferson, Wis. Renew’s ethanol plant was built on the site of what was once the largest malting plant in the world, which the company purchased from Cargill Inc. in 2006. Using the existing resources such as the storage units and water and electric utilities, its metamorphosis from malting plant to ethanol facility was smooth, despite the fact that the developers were attempting to build more than a typical ethanol plant. “We were looking for a way to build a facility that would have added value and not be the traditional commodity-based ethanol plant,” says Scott Busch, Renew Energy product merchandising and marketing manager. “We wanted to differentiate ourselves by having different feed products.” After researching different fractionation options, Renew decided that the CPT system was its best choice. “First, because dry fractionation is more economical than wet,” he says. “And the horsepower required for this system—the cost of running it and overall capital costs—was less than other systems.” Today the facility can process 50 million bushels of corn annually, which is about one-third of the corn dry-milled in the United States. The technology has also provided Renew with a value-added feed product, allowing the company to serve additional markets.
Dissecting the Process The CPT corn dry fractionation process differs from the typical ethanol plant corn processing method, says Reg Ankrom, director of market development for CPT. “Conventional ethanol plants, which hammer mill whole corn, don’t separate nonfermentable germ and bran from the starch component,” he says. “That means lower efficiency and higher-cost ethanol production, and the loss of valuable coproducts.” The CPT process separates the corn kernel’s endosperm, or starch, from the germ and bran, which are not used to make ethanol. “A few ethanol plants use a wet-milling process, which requires steeping the corn in a heated solution to achieve separation of the corn’s constituents,” Ankrom says. In the CPT process, once the corn is cleaned of stones, dust and other foreign matter, it is tempered as necessary, and held for 24 hours in tanks to attain proper moisture content to prepare for fractionation. The corn is then passed through a degerminator, a patented process that separates the corn germ, Ankrom says. The resulting corn pieces are passed through two roller mills and then sifted. The larger pieces are returned to the roller mill to be further reduced. ETHANOL PRODUCER MAGAZINE JANUARY 2009
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PHOTO: SCOTT BUSCH, RENEW ENERGY
FRACTIONATION
In an initial step, destoners like these at Renew Energy in Jefferson, Wis., clean rocks and other extraneous materials from the corn.
Aspirators separate the lighter bran from the germ and endosperm streams and a bran finisher is used to remove about 1 percent more of the endosperm from the bran. “The resulting high-purity DDC (de-
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germed, debranned corn) stream can then be conveyed directly to the ethanol plant or to temporary storage,” Ankrom says. “CPT fractionation is built in modules, which more closely relates capital cost to plant size.
Modular systems permit maintenance without shutting down the entire fractionation or ethanol plant, Ankrom says. A single module can be shut down and repaired separately. If necessary, the entire system can be slowed down to process only 5 bushels an hour. Each module typically processes about 650 bushels of corn per hour, and is capable of processing up to 750 to 800, if an operator needs to catch up after a dry spell. “The sweet spot is about 650 though,” he says.
CPT’s Fractionation Advantages The benefits of installing CPT’s fractionation system go beyond what typically come to mind when considering fractionation, Ankrom says. Of the DDC stream, no less than 80 percent by mass of the incoming whole corn will be contained in the collected stream, and a minimum of 91 percent of the starch in the incoming whole corn will be contained in the DDC stream to the ethanol plant. “When compared with available starch in the whole kernel—not chemically bound in the corn germ or bran,
ETHANOL PRODUCER MAGAZINE JANUARY 2009
and therefore, not separable—the DDC fractionation captured by CPT’s technology amounts to approximately 95 percent of starch available for separation,” Ankrom says. A minimum of 65 percent of the crude fat, or oil, from the incoming whole corn will be contained in the collected corn germ stream. Of the oil available for separation, not bound in the bran or endosperm, CPT’s process typically yields 86 percent of the oil available in the germ portion, he says. Ankrom tells EPM that the CPT fractionation system reduces about 17 percent of the corn’s nonfermentable materials, in turn leading to a reduction in energy proportional to the level of the inert materials. A 35 percent reduction in the drying requirement can also be achieved. “This is a result of the removal of the nonfermentable solids, and is a significant portion of the total plant energy savings,” Ankrom says, adding that the CPT system can drive down the cost of ethanol production to about 22,000 British thermal units per gallon. Other energy savings include the elimination of approximately 1.2 megawatts in
PHOTO: SCOTT BUSCH, RENEW ENERGY
FRACTIONATION
With corn germ separated, the corn kernel’s fractions flow through roller mills like these in CPT’s patented process to perfect separation without damaging the corn-oil-rich germ.
the hammer mill load typically required for a 100 MMgy ethanol plant, and only two megawatts of totally connected load for the fractionation plant, Ankrom says. “This is considerably less connected energy than
ETHANOL PRODUCER MAGAZINE JANUARY 2009
most dry-fractionation systems,” he says. The CPT system at Renew uses 2,700 connected horsepower. “We understand that is about half the horsepower required at a typical corn-milling operation,” Ankrom says.
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FRACTIONATION
ETS
In addition, Renew’s water requirement has been reduced to about 2.7 gallons per gallon of ethanol, a 33 percent savings. “At Renew, wastewater has been reduced by 50 percent,” Ankrom says. “They’ve done a great job doing this by recapturing and reusing.”
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Ethanol and Then Some The fractionation process separates the corn germ, which is the living part of the seed that contains growth elements and oil, and the bran, the tough, fibrous outer layer. The oil in the corn germ can be extracted and refined in a separate process for use in food-grade products. The deoiled corn germ resulting from the fractionation can be used for feed, or mixed with the bran and the syrup from ethanol production to create a form of corn gluten feed. “The bran can be used as a feed source,” Ankrom says. “Including provid-
ing a medium for carrying the syrup, and, at more than 8,100 Btus per pound, it also can be used as a fuel source.” The low oil and bran content of the DDC stream results in a high-protein meal, he adds. Renew’s feed product contains crude protein of about 40 percent, which reduces the need for supplemental protein sources when used in animal feed. Renew’s patented, high-protein Renew Meal, which is produced using Cargill Animal Nutrition’s Reveal technology, can be used as a substitute for soybean meal. CPT’s equipment is unique because the operator can change the makeup and tailor the feed to the client’s needs. “The operator can vary the streams,” Ankrom says. “For example, normally the highprotein meal comes out the back end and has a lot less oil. If a client asks for slightly more oil for energy for swine, the process
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Renew Energy LLC utilizes Cargill Animal Nutrition’s Reveal system to identify and manage the nutrient profile of its animal feed products. In 2007, Cargill released the system, which uses near-infrared reflectance spectrometer (NIRS). Larry Holy, Cargill biotechnology and renewable energy consultant, says NIRS is an infrared light that reflects off of the bonds of the material being scanned. The light measurement is transformed into a method of statistical analysis to interpret what it sees, such as carbon bonds, oxygen or hydrogen. “It develops a pattern, or fingerprint, and it matches those that correlate to soybean meal or DDG (distillers dried grains),” he says. “You can use it to measure many different things. It’s used in other applications, such as chemical and food analyses, but animal feed is our specialty.” The Reveal system allows the user to evaluate a product’s nutrients and ingredients. “It delivers the correct amount of nutrition to the animal, without over-feeding it and wasting money,” Holy says. “It ensures that you are de-
livering the correct nutritional load to the animal. By capturing the value differences, due to the variation of ingredients, it allows a company to put more money toward its bottom line.” The system provides the producer and the customer with a certificate of analysis and a quantification of ingredients. “The concept of this, in a nutshell, is real-time nutrient analysis,” Holy says. “After the analysis is run, and the scan is made through the NIRS system, it generates a paper document, which can also be electronic. In DDG it evaluates protein, fat, ADF (acid detergent fiber), NDF (neutral detergent fiber), ash, moisture and sulfur.” The Reveal system is used by clients worldwide, but Renew is the first ethanol plant to utilize the system, and is currently the only ethanol plant using it, Holy says. “No one else is producing the unique products that Renew is,” he says. Although economic constraints have slowed interest in the United States, Cargill expects a renewed interest in the future when conditions improve, he says.
ETHANOL PRODUCER MAGAZINE JANUARY 2009
PHOTO: SCOTT BUSCH, RENEW ENERGY
FRACTIONATION
Since endosperm, germ and bran have different densities, CPT can use low-cost, efficient aspirators to separate them by weight and convey them on cushions of dry, clean air.
can easily be varied to do this.” Renew also sells liquid carbon dioxide, a byproduct of ethanol production. After it’s collected and cleaned of impurities, the company sells it to the food industry as a refrigerant, carbonator for soft drinks or dry ice.
“We’re in a paradigm shift,” Ankrom says. “Ethanol is not as glamorous as it was just a few years ago, but it’s still important to the nation today as a path to a cleaner environment and reduced dependency on foreign oil. Farmers are enjoying higher corn prices—a good thing—but ethanol values have not matched the increase in oil prices. The result is squeezed ethanol margins. The challenge for producers is to keep ethanol healthy in a more challenging market.” By taking advantage of the value in the corn feedstock, which in most cases is al-
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ready paid for, ethanol producers who make fractionation part of their business model can produce their primary product more economically and add new revenue streams from the higher-value coproducts. “Fractionation adds up to higher profitability and sustainability,” Ankrom says. EP Anna Austin is an Ethanol Producer Magazine staff writer. Reach her at aaustin @bbiinternational.com or (701) 738-4968.
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Cost and Payback As with any project, different variables can affect the cost and how long it will take to pay for the technology. “Site condition and requirements, such as the fractionation plant’s proximity to the ethanol plant, conveyance and incoming and outgoing loading facilities, among others, impact cost,” Ankrom says. Ankrom estimates that it costs $30 million for a nine-module system, such as the one serving Renew. “Payback is subject to many variables, including corn costs, ethanol values, coproduct values, transportation costs and so on,” he says. “Given these considerations, our calculations show a payback within two years.” CPT’s technology can add more than 20 cents per gallon to the producer’s net income when built in or added to an ethanol plant, Ankrom says
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FINANCE
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FINANCE
Surviving the Economic Storm The ethanol industry isnâ&#x20AC;&#x2122;t immune to the economic downturn and some wonder if consolidation is imminent. But, how would financially distressed plants be valued? By Bryan Sims
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eclining ethanol and oil prices, a tightening credit market and volatile corn prices have thrown some ethanol companies for a loop. “These issues that ethanol plants have been facing started happening well before the credit crunch, and the tight credit market has just added more fuel to the fire,” says Michael Masterovsky, director and renewable energy team leader for SJH & Co., a Boston-based firm that provides independent, third-party consulting services to project developers and financial institutions operating in the ethanol, biodiesel and biomass sectors. Corn and natural gas prices have fluctuated wildly the past year along with prices for ethanol and distillers dried grains. Analysts and financiers agree that all commodity price fluctuations within the industry are interrelated and that some are more sensitive than others, according to Cory Garcia, senior alternative energy research analyst for Raymond James & Associates. “It’s still going to be a bumpy ride for the next two to three years,” he says. “The margins right now are still very, very thin. What you’re probably going to see are a
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couple smaller companies that just won’t have enough access to capital to continue. There will be more bankruptcies, but it will depend on how long this downturn in ethanol lasts.” Not even VeraSun Energy Corp., one of the largest publicly traded ethanol producers in the country, was able to fend off instability in the marketplace. Its inability to obtain capital coupled with unprecedented moves in the corn market forced the Brookings, S.D.-based company to file for Chapter 11 bankruptcy protection in late October 2008. The seven-year-old company said it locked in hedging agreements to buy corn when prices were high. In the six months ending June 30, corn costs represented 67.3 percent of VeraSun’s total costs of goods sold. In July, VeraSun decided to exit some of its short positions and lock in the current cost of corn. As corn prices sank to $4 per bushel in the fall, VeraSun said it faced a loss of millions of dollars. The company ran headlong into the credit crunch, just as it needed cash to sustain operations. As a result, VeraSun was temporarily removed from trading on the New York
Stock Exchange. It later reappeared on the NYSE after receiving interim debtor-in-possession funds (DIP). At press time, the U.S. Bankruptcy Court of Delaware gave VeraSun approximately $215 million in DIP financing to pay its bills, $40 million of which was interim financing, and grants access to cash collateral for immediate use. In the company’s Chapter 11 filing, VeraSun officials confirmed it would continue producing ethanol at its 16 plants in eight states while the company attempts to reorganize. “Most plants were trying to secure the cheapest corn they could and the market was moving higher so they were trying to get as much coverage as they could in a reasonable manner,” says Tom Wapp, commodity price risk manager for United Bio Energy, which provides consulting and market advisory services for ethanol producers. “Now, what you see is less of trying to take a position on any one particular commodity and more of just trying to manage both commodities to lock in some sort of margin when they have that opportunity.”
ETHANOL PRODUCER MAGAZINE JANUARY 2009
FINANCE
Wapp’s Tips for Weathering the Storm Two words: capital preservation. As the saying goes, the best offense is a good defense. Protect yourself with safe investments to help stay afloat in tough times. Target acceptable margin levels that the plant wants to achieve and be prepared to act to lock those margins in when available. Be realistic as the current environment will not allow much in the way of a margin. Wapp
Understand that just because you might be able to lock in a mar-
gin on paper doesn’t mean you are guaranteed that margin at the end of the month. Locking in the board price for corn and/or ethanol doesn’t lock in the basis that the plant will pay or receive for the cash commodity. Do not underestimate the market’s ability to surprise even the smartest trader. No one can outguess the markets so don’t try. Instead, find a way to hedge against negative circumstances you can’t control—weather, policy and subsidy changes, factors that affect demand for inputs and so on. Be prepared to react to a surprise that changes the market’s dynamics. Quickly acknowledge and analyze changing circumstances to judge whether they require a change in your hedging plan.
As the industry struggles to find financial equilibrium amid difficult economic times, it’s likely only a matter of time until consolidations start to occur. If that happens, what would these financially distressed ethanol plants or assets be worth to a potential buyer?
Assessing Value Despite its financial position, VeraSun would be an attractive purchase because it still has efficient operating assets with the ability to produce about 1.64 billion gallons of ethanol, which accounts for about 15 percent of the domestic supply, says Kyle Althoff, project analyst for BBI International’s engineering and consulting division. Whether a buyer would be willing to acquire VeraSun in pieces or in aggregate, they would have to evaluate if the operating assets could provide solid returns. In addition, a potential buyer would have to consider the risk of inheriting the company’s debt, which is more than $1.5 billion; much of which it obtained after acquiring ethanol plants from rival US BioEnergy Corp. in March 2008 and ASAlliances Biofuels LLC in 2007. “If you look at VeraSun, and its debt
FINANCE
Ethanol Stock Prices $30.00 PEIX AVR VSE BIOF GPRE
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commitments totaling 96 cents per gallon, it has one of the lower debt per gallon ratios of publicly traded ethanol companies Althoff says. “From a debt versus total production capacity standpoint, VeraSun looks attractive.” One method used to determine the value of an ethanol company is to calculate the enterprise value. The formula for figuring out the enterprise value is adding a company’s total debt level and market capitalization then dividing that by the total production capacity held by that company, which provides a value per gallon of ethanol produced. According to Althoff, VeraSun’s enterprise value was calculated at about $1 per gallon before its suspension on the New York Stock Exchange at the end of October. Just prior to delisting, the company was trading at about 28 cents per share and had 157 million shares; multiplying the two equals out to a market capitalization—or value—of $44 million. The value of VeraSun’s stock fell sharply as its financial problems mounted. Over the past year, its stock price—which had traded as high as $18 per share in January 2008 with a market value of $2.8 billion—had fallen 98 percent before trading was suspended due to its bankruptcy. “VeraSun’s core assets can still make ethanol and they’re some of the most efficient assets in the industry, so you just need someone to come in with the right amount of capital to make sure those assets can maintain operations over the next two to three years,” Althoff says. “A large potential buyer could probably acquire those assets with only a moderate capital infusion given the current credit cycle in the United States.” VeraSun isn’t the only publicly traded ethanol company that’s seen its stock price plummet. Others such as Pacific Ethanol Inc. and Aventine Renewable Energy Inc. have faced marginal to negative net profits. According to Althoff, the average publicly traded Midwest ethanol company was trading in mid-November at a total enterprise valuation of under $1.15 per gallon, much less than it took to build the original facilities over the past two years. “Enterprise valuations are composed of the debt and equity portions of the calculation─the drop in ethanol stock prices over the past few years has significantly reduced the valuation for these companies,” Althoff says. “The valuation is correlated with the expected earnings that each company is expected to produce on each gallon of ethanol─as the industry gross margin has declined, the valuation of the stocks has followed suit. These stocks are an attractive buy in today’s market if the gross margins improve.” If consolidation is in the ethanol industry’s future, it’s not certain yet who would be willing and able to acquire financially distressed ethanol plants, and at what cost pursuant to the valuation. Likely candidates could be agri-business giants such as Archer Daniels Midland Co. and Cargill Inc. Both companies would also be better positioned to mitigate the price risk in commodities as they manage much of the grain supply chain in the United States for other food-based products. “Asset values across the board—public or private—are very cheap right now,” Garcia says. “It’s hard to take any valuation stance on a company, and you might not see that until merger and acquisition activity starts to pick up.” EP
Nov
Bryan Sims is the Ethanol Producer Magazine staff writer and plant list manager. Reach him at bsims@bbiinternational.com or (701) 738-4950.
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BIOREFINING
Danish Company Provides Technology, Innovations for Cellulose Biorefining By Roger Moore
I
n the Brothers Grimm fairy tale, Rumpelstiltskin spins straw into gold to save the miller’s daughter. In energy-thrifty and eco-sensitive Denmark, biomass conversion company Inbicon has been spinning straw into ethanol since 2003, using a patented process company officials say could help save the United States $700 billion per year spent on foreign oil. Inbicon, along with its parent company Dong Energy, has been at the leading edge of energy innovation in Denmark. The country is a net energy exporter, and now the biorefinery concept could further enhance that status. Niels Henriksen, Inbicon’s president and chief executive officer, outlines the thrust of his company’s global marketing strategy for Ethanol Producer Magazine. “Our first step is to enable owners of grain-fed plants in the United States and Canada to add biomass-to-ethanol production to their existing operations,” Henriksen says. While other perhaps more well-
known companies such as Poet LLC and DuPont Danisco Cellulosic Ethanol LLC are developing biomass-to-ethanol processes, Inbicon hopes to make its mark soon. The company says it has taken a unique approach to developing a biomass refinery. “We’ve taken a road less traveled with our process technology,” Henriksen says. “Instead of focusing on making ethanol, we’ve concentrated on adding value to biomass by converting it into other forms of energy and products. Because we don’t insist that all the sugar in the biomass ends up as ethanol, we keep production costs low.” Inbicon’s process produces four high-value end products: ethanol, a powdered biomass-based fuel that can be burned to generate additional process energy, a bacteria inhibitor that can be substituted for antibiotics or hops in fermentation processes, and molasses syrup used as livestock feed. “By integrating the powered biofuel into a co-gen conversion, you reduce the plant’s use of fossil fuels to zero,” says Tom Corle, the long-time
ethanol marketing executive and G-Team founder that Henriksen has enlisted to rollout the technology. The company’s patented innovations came from focusing on the front end of the second-generation biorefinery process, breaking down wheat and barley straw, corn stover, or other agricultural residues into liquefied sugars ready for fermentation into ethanol. “Handling Morgen millions of tons of straw is tricky, but Dong Energy has more than a decade of practical experience working out the logistics of the infrastructure, and coordinating all the transportation, storage and handling of huge volumes of biomass,” Corle says. “This expertise in developing the workable infrastructure has put Inbicon several years ahead in its ability to do commercial-scale straw conversion.” Synergies with electric power genera-
The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Ethanol Producer Magazine or its advertisers. All questions pertaining to this article should be directed to the author(s).
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BIOREFINING be converted to higher-value products if we could discover a way to separate the cellulose so it could be converted to sugars. But it had to be a simple, efficient and inexpensive way.” By 2003, Inbicon had designed and built a pilot plant that continues to convert biomass to ethanol, according to Henriksen. Now the company looks to prove its process with a larger facility. “In September [2008], we celebrated the groundbreaking for our new larger-scale biomass refinery at the Kalundborg port in Denmark,” Henriksen says. The Kalundborg facility is slated to produce 1.4 MMgy of ethanol by December 2009, which will coincide with the United Nations Climate Change Conference to be held in Copenhagen. Inbicon’s biomass refinery technology is a patent-protected sequence combining mechanical preparation, hydrothermal treatment and enzymatic hydrolysis. Developing it “wasn’t rocket science,” Morgen says. The straw is cooked with steam under high pressure with little water. In the cooker, the heat and pressure break down the straw fiber, exposing the cellulose molecules. “By using
Kalundborg. “Waste heat from the power plant next door will help process the straw, and the powdered biofuel byproduct from ethanol production will replace some of the coal burned by the power plant,” Henriksen says.
tion are another key the company plans to demonstrate at its demonstration project located at Denmark’s port city of
An Innovation in Technology Inbicon, a biotechnology spin-off of Dong Energy A/S, has its roots in its parent company’s quest for alternative uses of biomass. Dong Energy’s predecessor companies played an important role in shifting Denmark’s near total dependence on Middle Eastern oil in 1973 to today’s energy independence (see sidebar on page 100). The company began developing its biomass expertise in the mid-1990s. Denmark’s farmers raise a considerable amount of wheat, and the disposal of wheat straw provides an energy opportunity. Dong Energy initially burned straw with coal in its power plants, but Inbicon officials considered other uses for it. “We’re engineers,” explains Christian Morgen, Inbicon engineer and marketing director. “We like practical solutions. We reasoned that the straw could
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BIOREFINING
Dong Energy’s Impact on Denmark When the Arab oil embargo struck in 1973, it hobbled the economies of the United States, Japan and most of Europe. Denmark, a small and vulnerable nation dependent on foreign oil for nearly all of its energy, was hit particularly hard. However, unlike most countries, Denmark didn’t suffer from embargo amnesia once the crisis passed. As Thomas Friedman wrote in a New York Times column titled “Flush With Energy,” Denmark “responded … in such a sustained, focused and systematic way that today it is energy independent.” Denmark’s economic, social and political miracle is that it’s become a net energy exporter over the past 25 years. It imported no Middle East oil in 2008. The transformation required far-sighted government policies and strong public support. It also took power industry cooperation and innovation. The six energy companies that united to form Dong Energy in 2006 have been instrumental in the process. Today, the company earns nearly $9 billion in annual
less water, the savings ripple throughout the plant,” Morgen says. “You can use smaller equipment, smaller diameter piping [and] smaller valves. [The plant will] use less energy for heating water because there’s less water to heat, and reduce or eliminate wastewater and its handling systems and treatment.”
revenue and employs approximately 5,100 people. Dong Energy generates and distributes electricity to 1 million Danish customers. It explores for and produces oil and natural gas from North Sea wells, and operates oil and gas pipelines and distribution systems. Denmark’s electricity was generated from oil-fired plants until the oil embargo, after which the country switched to coal and supplemented it with biomass such as wheat straw. The future belongs to continued innovations in renewable energy, and that technology is one of the country’s fastest-growing exports. Denmark generates 20 percent of its power from wind turbines. Dong Energy has built six of the 10 largest offshore wind farms in the world, according to the company. In the past decade, Dong Energy’s explorations into renewable fuels have led it into biomass conversion and the recent formation of Inbicon, which specializes in converting cellulose such as wheat straw into ethanol.
After the cook step, the treated fiber is tumbled for several hours with a minimal amount of enzymes in a liquefaction stage. During this step, the enzymes convert the cellulose into a sugar slurry. “Our hydrothermal treatment allows us to avoid lots of expensive, exotic enzymes in the hydrolysis stage,” Morgen
says. “[It’s] a big savings. Our special mixing equipment is designed to accelerate the conversion to sugar, requiring fewer enzymes for a shorter period, so we save not only enzyme expenses but energy costs. Both Genencor and Novoyzmes are pre-qualified to supply the enzymes to our process.”
For more information contact: Advertising: advertising@distillersgrainsquarterly.com (701) 738-4999 Editorial: dnilles@bbiinternational.com (701) 373-0636
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The liquefied fiber that is turned into sugar is then fermented with yeast and distilled into ethanol. The powdered biofuel and livestock feed are captured along the way. “By not separating the lignin (until) after the distillation we avoid losses of sugar or ethanol,” Morgen says. Inbicon’s pretreatment yields a higher concentration of sugar in the liquid going to fermentation, resulting in beer, or alcohol concentration, at least double the normal percentage in cellulosic ethanol processing, according to the company. Partnering for Progress Inbicon is making use of several ethanol industry partnerships to further its process. Vienna, Austria-based technology provider Vogelbusch is slated to provide the Kalundborg plant’s ethanol plant technology, starting after Inbicon’s pretreatment and continuing through dehydration. Corle says the Kalundborg facility is expected to showcase the energy integration capabilities possible by using the excess energy provided by Inbicon’s process as a green energy source for power manufacturing. The Inbicon process provides biomass to replace a portion of a power plant’s coal. It will also produce a liquid fraction containing high levels of C5 sugars, salts and inhibitors. Inbicon’s first demonstration plant will use the
fraction as a molasses feed for domestic animals. By feeding the molasses to livestock, nutrients are returned to the soil through the animal’s manure. “Again, it’s all part of nature’s recycling plan,” Morgen says. The company has lofty goals, planning to use its technology to reach 10 billion gallons per year of biomass-based ethanol production capacity. Additional companies, including Siemens, Alfa Laval and Atlas-Stord, are helping the company in pursuit of its goal. Atlas-Stord is a Denmark-based company providing thermal drying, evaporation and mechanical dewatering equipment. Henriksen also touts the synergies between his company’s conversion technology and the starch-based ethanol plants that comprise the current industry. “We’d welcome talks with most any agribusiness using soft lignocellulosic material that’s both plentiful and inexpensive,” he says. With the current energy and economic issues surrounding the globe, its likely opportunities will sprout. Governments worldwide seek energy independence without sacrificing clean air and lower greenhouse gas emissions. The implications are huge. “Given the economic woes cascading around the world, independence from foreign oil becomes more critical every day,” Corle says. “In-
SOURCE: INBICON
BIOREFINING
Niels Henriksen, left, with Denmark Minister of Climate and Energy Connie Hedegaard at the Kalundborg groundbreaking ceremony.
bicon can play a role in helping the United States and Canada shift to lower-cost, cleaner renewable fuels such as ethanol— especially ethanol made from agricultural leftovers such as wheat straw and corn stover. EP Roger Moore is freelance writer located in Lancaster, Pa. Reach him at (717) 653-5700 or moorecreative@comcast .net.
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Carbon Markets North America Jan. 15-16, 2009 Miami Carbon emission regulations will be part of the renewable fuels standard that will regulate future advanced biofuel use in the United States. Therefore, a leading panel of carbon market experts will inform attendees how to prepare for a carbon-constrained economy at this second event. Agenda topics will detail how current emissions trading systems are creating business opportunities, fostering innovation and influencing global finance. + 44 20 7251 9151 www.environmental-finance.com/ conferences/2009/Miami09/intro.htm
EVENTS
National Ethanol Conference Feb. 23-25, 2009 San Antonio Convention Center San Antonio In addition to Renewable Fuels Association President Bob Dinneenâ&#x20AC;&#x2122;s State of the Industry Address, panel discussions at this 14th annual event will focus on midlevel ethanol blends and cellulosic ethanol commercialization, and include the annual Washington Insidersâ&#x20AC;&#x2122; Roundtable. Other topics will include life cycle greenhouse gas emissions, infrastructure, retailing and an international outlook, among many others. (202) 289-3835 www.ethanolrfa.org
Las Vegas Convention Center Las Vegas This event will include a business conference, trade show and several side events. The business conference will address the status and outlook of renewable energy. One breakout session in particular will focus on biomass and biofuels. Other sessions will address sustainability, feedstocks, financing, ethanol production technology, a global market outlook, engines and fueling stations, and next-generation facilities. (805) 290-1338 www.retech2009.com
CALENDAR
The Future of Biofuels April 4-8, 2009 Snowbird Resort Snowbird, Utah The goal of this meeting will be to share a broad perspective defining the critical needs for biofuels, and to highlight cutting-edge research and development efforts that are defining the next generation of biofuel product and process advances. The event will bring together a broad spectrum of core experts to help better enable and advance biofuel research efforts globally. (800) 253-0685 www.keystonesymposia.org
Alternative Fuels & Vehicles National Conference + Expo April 19-22, 2009
Advanced Biofuels Development Summit April 20-21, 2009
Walt Disney World Swan and Dolphin Resort Orlando, Fla.
Marriott at Metro Center Washington, D.C.
This 14th annual event will represent all fuels, vehicles and technologies that provide an alternative to petroleum, including ethanol. Information will be disseminated via preconference sessions, a general session and concurrent breakout sessions. There will also be a ride-and-drive event, industry tours and niche market workshops. A more detailed agenda will be available as the event approaches.
This event will bring together leaders of scientific innovations in advanced biofuels development from feedstock alternatives to processing technologies and methods. Topics will include advanced biofuels feedstocks, including energy crops and waste residues; advanced fuel processing methodologies and refining technologies; market dynamics; collaborations; financing; and public policy. More information will be available as the event approaches.
(702) 254-4180 www.afv2009.com
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Renewable Energy Technology Conference & Exhibition Feb. 25-27, 2009
(781) 972-1346 www.biofuels-summit.com
ETHANOL PRODUCER MAGAZINE JANUARY 2009
Canadian Renewable Energy Workshop March 10-12, 2009
World Biofuels Markets March 16-18, 2009
African Biofuels March 30-April 2, 2009
Brussels Expo Centre Brussels, Belgium
Vodaworld Event Center Johannesburg, South Africa
This is one of the largest biofuels events in Europe and a key meeting place for industry experts looking to share best practices and attract new clients. Agenda topics will include conventional and cellulosic ethanol; international ethanol markets such as Asia, Brazil and Africa; infrastructure; and use.
This fourth annual conference will focus on various biofuels, including ethanol, and the technology and movement toward second-generation biofuels. The event will showcase more than 40 speakers, panel and open floor discussions, mini workshops, and 16 case studies. A more detailed agenda will be available as the event approaches.
Regina Inn Hotel and Conference Center Regina, Saskatchewan This second conference facilitates the continued development of Canada’s renewable energy industry. More information will be available as the event approaches. (888) 501-0224 www.crew2009.com
+44 20 7099 0600 www.worldbiofuelsmarkets.com
(011) 771-7000 www.africanbiofuels.co.za
International Biomass Conference & Trade Show April 28-30, 2009
International Fuel Ethanol Workshop & Expo June 15-18, 2009
Ethanol Conference & Trade Show Aug. 11-13, 2009
Oregon Convention Center Portland, Ore.
Denver Convention Center Denver
Milwaukee
This event, sponsored by BBI International Inc., will address the latest technologies and business considerations for bioenergy projects, including biofuels. Breakout session topics will include cellulosic ethanol; feedstocks such as ag residues, wood waste and municipal solid waste; project finance; and permitting and project implementation. Attendees will also be able to tour the Cornelius Summit Foods ethanol plant.
This will mark the 25th anniversary of the world’s largest ethanol conference, which was recently recognized by Trade Show Week magazine as one of the fastest-growing events in the United States for the second consecutive year. Abstract presentations will be accepted until Jan. 9. The event will address conventional ethanol, nextgeneration ethanol and biomass. More information will be available as the event approaches.
(701) 746-8385 www.biomassconference.com
(701) 746-8385 www.2009few.com
ETHANOL PRODUCER MAGAZINE JANUARY 2009
The American Coalition for Ethanol’s 22nd annual conference will highlight public policy, technology and education in regard to the ethanol industry, among many other topics. More information will be available as the event approaches. (605) 334-3381 www.ethanol.org
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:fekXZk A?B <G: :XgXY`c`k`\j =lcc$J\im`Z\ @e[ljki`Xc >\e\iXc :fekiXZkfi J\c]$G\i]fid :`m`c :feZi\k\# D`ccni`^_k`e^# GifZ\jj G`g`e^ =XYi`ZXk`fe Xe[ @ejkXccXk`fe# KXeb <i\Zk`fe# Jk\\c <i\Zk`fe I`^^`e^
Railworks 913-888-4091
Plant Construction
Consulting
EPM MARKETPLACE With all contact information placed in
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Rentech Boiler Systems, Inc. 325-794-5701 www.rentechboilers.com
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Environmental Air Resource Specialists,Inc. 970-484-7941 www.air-resource.com Inland Waters 313-841-5800
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Granatus Consulting, Inc. 218-773-0005 www.granatusinc.com
rectory in each publication. Whether
Education
a first-time advertiser wanting to raise
Iowa BioDevelopment 641-969-4167 www.iabiodevelopment.com
added exposure, EPM Marketplace is
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ducer Magazine not only contains top
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Analytical Instruments
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R & R Contracting, Inc. 800-872-5975
www.cycconstruction.com
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Control System Integrators, Inc. 319-377-6538 x19 www.csystemi.com
Mid-States Mechanical Services, Inc. 800-950-0279 www.mid-statesmechanical.com
CYC Construction 402-333-1652
804-285-2071
Control Systems
Railroad Tracks
JIC
The Richmond Group USA - BioEnergy Search Division
Engineering
OVER 40 YEARS OF PROVIDING QUALITY COST EFFECTIVE SOLUTIONS TO THE INDUSTRIAL INDUSTRY. We provide: • Experienced Supervision • Multi-craft Staff • Logistical Support For: • Plant Outages • Plant Construction and Expansion • Relocations • Capital Projects • On and off site pipe Fabrication To: • Ethanol and Alternative Fuel Plants • Pharmaceutical Manufacturers • Food Plants • Building Material Facilities
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Iowa Biofuels Training International 641-969-4167 www.biofuelstraining.org Iowa Lakes Community College 800-242-5108 www.iowalakes.edu
the perfect solution. ETHANOL PRODUCER MAGAZINE JANUARY 2009
Centrifuges Cooper Equipment 281-494-7400
www.coopequip.com
105
EPM MARKETPLACE Combustion Equipment Eclipse.Inc. 815-637-7213
Laboratory─Equipment
www.eclipsenet.com
Compressors FlaktWoods 716-845-0900
www.flaktwoods.com
Computer Software dbc SMARTsoftware, Inc. 770-427-7633 www.dbcsmartsoftware.com
Control Systems
Continuous Emissions Monitoring Systems Easiest installation, operation and maintenance Meet or exceeds EPA requirements NOx, O2, CO, SO2 and others Turnkey systems for under $100,000.00 P.O. Box 9271, Columbus, Oh 43209 866-682-6771 sales@monitortechcorp.us
www.feedforward.com
SoftPLC Corporation 512-264-8390
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www.etslabs.com
www.fluideng.com
Control Systems-Distributed
Fractionation─Corn
Control System Integrators, Inc. 319-377-6538 x19 www.csystemi.com
Buhler Inc. 763-847-9900
SGS North America Inc. 281-479-7170 www.sgs.com/alternativefuels
Laboratory─Supplies
Laboratory─Testing Services
Romer Labs, Inc. 636-583-8600
www.romerlabs.com
SGS North America, Inc. 281-478-8234 www.sgs.com/alternativefuels
www.buhlergroup.com/us
Trilogy Analytical Laboratory 636-239-1521 www.trilogylab.com
Cereal Process Technologies 217-779-2595 www.cerealprocess.com
Loading Equipment
FWS Technologies 204-487-2500
Hemco Industries, Inc. 877-347-7106
Sturtevant Inc. 781-829-6501
www.midlandsci.com
Midwest Laboratories, Inc. 402-829-9877 www.midwestlabs.com
Filtration Equipment Fluid Engineering 814-453-5014
www.perten.com
Laboratory─Outsourcing
Midland Scientific, Inc. 800-642-5263
Fermentation Monitoring ETS Laboratories 707-963-4806
FeedForward, Inc. 770-426-4422
Perten Instruments, Inc. 801-936-8165
www.fwsgroup.com www.sturtevantinc.com
www.hemcocpm.com
SafeRack 866-761-7225
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Heat Exchangers
Maintenance Services
Cooling Towers
Custom Metalcraft Inc. 417-862-0707 www.custom-metalcraft.com
Joule’ Industrial Contractors bbosher@jouleinc.com www.jouleinc.com
Delta Cooling Towers, Inc. 800-BUY-DELTA www.deltacooling.com
Munters - Des Champs Products 540-291-1111 www.deschamps.com
Maintenance Software
Dryers─Fluid Bed
Instrumentation
Littleford Day, Inc. 859-525-7600
www.littleford.com
Barr-Rosin,Inc 630-659-3980
www.barr-rosin.com
Dryers─Rotary Drum www.barr-rosin.com
www.wika.com
Industrial Construction & Engineering 636-970-1650 www.ic-e.cc
Jet Cookers
Emission Monitoring Systems
ProSonix Corporation 800-849-1130, x. 801
106
www.perten.com
Insulator
Ronning Engineering Company, Inc. 913-239-8118 www.ronningengineering.com
www.mapcon.com
Mills─Hammer CPM/Roskamp Champion 800-366-2563 www.cpmroskamp.com
Mixers
Perten Instruments, Inc. 801-936-8165 WIKA Instrument Corporation 888-945-2872, x5127
Ronning Engineering Company, Inc. 913-239-8118 www.ronningengineering.com
MonitorTech Corp. 866-682-6771
www.us.endress.com
Process Sensors Corp. 508-473-9901 www.processsensors.com
Dryers─Ring
Barr-Rosin,Inc. 630-659-3980
Endress+Hauser 317-535-2174
Mapcon Technologies, Inc. 800-922-4336
www.pro-sonix.com
KINEMATICA, INC. 631-750-6653
www.kinematica-inc.com
Moisture Analyzers CEM Corporation 704-821-7015 Perten Instruments, Inc. 801-936-8165
www.cem.com www.perten.com
Sartorius Mechatronies-Omnimark 800-835-3211 www.sartorius-omnimark.com
www.monitortechgrp.com ETHANOL PRODUCER MAGAZINE JANUARY 2009
EPM MARKETPLACE Molecular Sieves Vaperma, Inc. 418-839-6989
www.vaperma.com
Zeochem, LLC 502-634-7600
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Structural Fabrication
Water Treatment
Cherokee Steel Fabricators, Inc. 903-759-3844 www.cherokeesteelfabricators.com
Aquatech International Corporation 724-746-5300 www.aquatech.com
Tanks
Fluid Engineering 814-453-5014
Paint & Protective Coatings
CMC Letco Industries 417-831-1528
Mongan / Bockman 260-748-7655 www.monganbockman.com
Federal Equipment Company 800-652-2466 www.fedequip.com
Pipe
Paragon Trailer Sales 800-471-8769
Robert-James Sales, Inc. 800-666-0088
www.rjsales.com
Pipe─Fittings Robert-James Sales, Inc. 800-666-0088
www.rjsales.com
www.cmc-letco.com
www.paragontrailer.com
American Waste Removal 505-417-9933 www.americanwasteremoval.com
Finance
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Accounting
Thermal Oxidizers
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Equity Procurement
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Jordan, Knauff & Company 312-254-5900 www.jordanknauff.com
WIKA Instrument Corporation 888-945-2872, x5127
PROVEN RELIABILITY
www.wika.com
for VOC, CO & PM ABATEMENT
Pumps ITT Industries Goulds Pumps 315-568-2811 www.gouldspumps.com
EISENMANN Corporation Crystal Lake, Illinois
Watson-Marlow Bredel Pumps 800-282-8823 www.watson-marlow.com
QA Test Products
815.455.4100 es.info@eisenmann.com www.perten.com
Insurance ERI Solutions, Inc. 316-927-4294
www.eco-tec.com
erisolutions.com
Mergers & Acquisitions Kent Group, Inc. 715-358-7528
www.kentgroupinc.com
Risk Management First Capitol Risk Management 800-884-8290 www.firstcapitolrm.com R.J. O’Brien 800-621-0757
Resource Recovery
www.rjobrien.com
Reach your customers
Seals
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Aesseal Inc. 865-531-0192
www.aesseal.com
Utex Industries, Inc. 432-333-4151/800-873-0946
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Separation Equipment
EPM MARKETPLACE Valves North American Safety Valve 800-800-8882
www.fluideng.com
Storage─DDGS Laidig Systems, Inc. 574-256-0204
Louis Dreyfus Commodities 402-844-2680 LDCommodities.com POET LLC 605-965-2200
Pressure & Temperature
Fluid Engineering 814-453-5014
Existing Producers
Kennedy and Coe, LLC 800-303-3241
Robert-James Sales, Inc. 800-666-0088
Eco-Tec, Inc. 905-427-0077
Ethanol Production
Thermal Energy
Pipe-Flanges
Perten Instruments, Inc. 801-936-8165
www.fluideng.com
Wastewater Treatment Services Biothane Corporation 856-541-3500x501
www.laidig.com
www.nasvi.com
Hydro-Klean, Inc. 515-283-0500
ETHANOL PRODUCER MAGAZINE JANUARY 2009
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EPM MARKETPLACE Government
Utilities
State
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Reach your customers Biomass Magazine is a trade journal serving companies that use and/or produce power, fuels and chemical feedstocks derived from biomass. Collectively, these biomass utilization industries are positioned to replace nearly every product made from fossil fuels with those derived from plant or waste material. The publication covers a wide array of issues on the leading edge of biomass utilization technologies, from biorefining, dedicated energy crops and cellulosic ethanol to decentralized power, anaerobic digestion and gasification. Itâ&#x20AC;&#x2122;s all here.
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Legal Services
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a useful directory in each publication. Whether a first-time adver-
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For additional information please contact us at (701) 746-8385 or at advertising@biomassmagazine.com.
Railcar Moving Shuttlewagon, Inc. 816-767-0300 108
www.shuttlewagon.com ETHANOL PRODUCER MAGAZINE JANUARY 2009
Robert-James Sales is your #1 source
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