January 2014 Ethanol Producer Magazine

INSIDE: ANALYTICAL ROUND ROBINS AID LAB MANAGERS JANUARY 2014

Keeping Score Data Tracking, Training Yield Performance Boost Page 30

Plus: Six Sigma: Low Variation Brings New Highs Page 36

And:

IRFA's Monte Shaw Speaks for Iowa Biofuels Page 42

www.EthanolProducer.com

BROUGHT TO YOU BY GROWTH ENERGY. From advocating for ethanol on Capitol Hill, to validating higher ethanol blends through NASCAR®, to calling out Big Oil with a national television campaign, Growth Energy is there for the producers and supporters of the ethanol industry.

We know we’re in a battle, but we’re ready for the fight.

Learn more at GrowthEnergy.org

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CONTENTS

JANUARY ISSUE 2014 VOL. 20 ISSUE 1

FEATURES

DEPARTMENTS 6

Editor’s Note

7

Ad Index

10

The Way I See It

RFS Was Never Contingent on Gas Consumption

BY TOM BRYAN

30

11

12

14

TRAINING

A Squad Trained to Score

Glacial Lakes Energy tackles performance metrics and enhanced operator training

BY SUSANNE RETKA SCHILL

36

42

16

18

20

PERFORMANCE

Sky High with Six Sigma Ethanol producers can improve operational performance by eliminating variation

BY CHRIS HANSON

Q&A

Iowa’s Biofuels Voice

Catching up with Monte Shaw, executive director of the Iowa Renewable Fuels Association

BY RON KOTRBA

The Hatfields and McCoys

BY MIKE BRYAN

Events Calendar

Upcoming Conferences & Trade Shows

View From the Hill

Breaking Through the Blend Wall

BY BOB DINNEEN

Drive

New Year, Renewed Challenges

BY TOM BUIS

Grassroots Voice

The Flight Continues

BY BRIAN JENNINGS

Europe Calling

Time for Rebranding: We are Protein Producers!

BY ROBERT VIERHOUT

Business Matters

New Headaches For Distillers Grains Producers LEAH ZIEMBA

22

Business Briefs

24

Commodities Report

26

Distilled

46

Marketplace

CONTRIBUTION 44 TESTING Round Robins Give Lab Managers Feedback on Test Methods

Program helps to check accuracy, compare internal results with other labs.

BY WAYNE MATTSFIELD Ethanol Producer Magazine: (USPS No. 023-974) January 2014, Vol. 20, Issue 1. Ethanol Producer Magazine is published monthly by BBI International.

Principal Office: 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. Periodicals Postage Paid at Grand Forks, North Dakota and additional mailing offices.

POSTMASTER: Send address changes to Ethanol Producer Magazine/Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, North Dakota 58203.

4 | Ethanol Producer Magazine | JANUARY 2014

ON THE COVER

Glacial Lakes Energy Production Manager Tim Crabtree (left), and Brent Fehn, lead operator, discuss operations data displayed on one of the facility's wall-mounted "scorecard" displays.

PHOTO: TROY MCQUILLEN, MCQUILLEN CREATIVE GROUP INC.

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EDITOR’S NOTE

The public comment period on the U.S. EPA’s contentious—and we think misguided—2014 proposed renewable volume obligation (RVO) volumes began one week before this issue of Ethanol Producer Magazine went to print. Keeping up with the industry’s fiery reaction and the ensuing melee

RFS WAS NEVER CONTINGENT ON GAS CONSUMPTION TOM BRYAN, PRESIDENT & EDITOR IN CHIEF TBRYAN@BBIINTERNATIONAL.COM

of newspaper editorials about the proposal has been absorbing for this self-proclaimed, biofuels-advocate journalist, and it was only a matter of days before I jumped into the fray.

Just after Thanksgiving, I posted a 550-word blog that echoed what so many of our readers were already saying about the EPA’s seemingly improper validation of its proposal.

That is, the agency’s inclusion of the E10 blend wall as part of its rationale for suggesting an RVO deceleration. Aside from the fact that the EPA probably lacks the authority to backslide on the RFS on the basis of the oil industry’s blending reluctance, the spirit and intention of the RFS was never to create a national biofuels program that would be unable to grow during periods when gasoline consumption declined. “In 2007, when the current renewable fuels standard became law, policymakers and industry stakeholders knew, as they know now, that our nation’s vision for biofuels wouldn’t happen without a stepwise introduction of higher-level blends of biofuels into the nation’s transportation fuel supply,” I wrote in my blog. “Not at any time did law makers or representatives of any industry believe that 36 billion gallons of biofuels would, by 2022, make up just 10 percent of our nation’s total transportation fuel stream.”

The bottom line, I concluded, is that America’s biofuels plan was never supposed to be contingent on U.S. gasoline consumption rising. From an environmental perspective, it was, and still is, reckless for anyone to hope gasoline use would not decline with our rising fuel economy standards. If anything, I suggest, biofuels play an even more meaningful role when they have an opportunity to make up a relatively larger component of our overall motor fuels portfolio. Flat gasoline consumption is an opportunity, therefore, and the Obama administration should see it as such.

Those are my thoughts. You can offer yours at www.FuelsAmerica.com on the organization’s easy-to-use portal for making comments that will be forwarded to the EPA. As the RVO debate rages, America’s ethanol plants will continue producing, innovating and finding new efficiencies in 2014. Our first issue of the year focuses on Six Sigma, metrics-driven performance, training enhancement and best practices for quality assurance.

Happy New Year.

FOR INDUSTRY NEWS: WWW.ETHANOLPRODUCER.COM OR FOLLOW US:

6 | Ethanol Producer Magazine | JANUARY 2014

TWITTER.COM/ETHANOLMAGAZINE

EDITORIAL

AdIndex

PRESIDENT & EDITOR IN CHIEF Tom Bryan tbryan@bbiinternational.com

VICE PRESIDENT OF CONTENT & EXECUTIVE EDITOR Tim Portz tportz@bbiinternational.com

26 2014 International Biomass Conference & Expo

11 ICM, Inc.

MANAGING EDITOR Holly Jessen hjessen@bbiinternational.com

SENIOR EDITOR Susanne Retka Schill sretkaschill@bbiinternational.com

NEWS EDITOR

48 2014 International Fuel Ethanol Workshop & Expo

8-9 Inbicon

Erin Voegele evoegele@bbiinternational.com

STAFF WRITER Chris Hanson chanson@bbiinternational.com

COPY EDITOR

28 2014 National Advanced Biofuels Conference & Expo

39 INTL FCStone Inc.

13 2014 National Ethanol Conference

23 Lakos Separators and Filtration

21 BetaTec Hop Products

41 Nalco, an Ecolab Company

27 Buckman

47 Philbro

15 DuPont Industrial Biosciences

19 POET-DSM Advanced Biofuels

46 Ecostrat

33 SGS North America, Inc.

Jan Tellmann jtellmann@bbiinternational.com

ART ART DIRECTOR Jaci Satterlund jsatterlund@bbiinternational.com

GRAPHIC DESIGNER Raquel Boushee rboushee@bbiinternational.com

PUBLISHING CHAIRMAN Mike Bryan mbryan@bbiinternational.com

CEO Joe Bryan jbryan@bbiinternational.com

SALES VICE PRESIDENT OF OPERATIONS Matthew Spoor mspoor@bbiinternational.com

BUSINESS DEVELOPMENT DIRECTOR Howard Brockhouse hbrockhouse@bbiinternational.com

SENIOR ACCOUNT MANAGER Chip Shereck cshereck@bbiinternational.com

ACCOUNT MANAGER Kelsi Brorby kbrorby@bbiinternational.com

ACCOUNT MANAGER

3 Fagen Inc.

40 Tower Perfomance, Inc.

Brittany Ruhr bruhr@bbiinternational.com

MARKETING DIRECTOR John Nelson jnelson@bbiinternational.com

CIRCULATION MANAGER Jessica Beaudry jbeaudry@bbiinternational.com

ADVERTISING COORDINATOR Marla DeFoe mdefoe@bbiinternational.com

EDITORIAL BOARD Mike Jerke, Chippewa Valley Ethanol Co. LLLP Jeremy Wilhelm, Cilion Inc. Mick Henderson, Commonwealth Agri-Energy LLC Keith Kor, Pinal Energy LLC Walter Wendland, Golden Grain Energy LLC Neal Jakel Illinois River Energy LLC Eric Mosebey Lincolnland Agri-Energy LLC Steve Roe Little Sioux Corn Processors LP

35 Fluid Quip Process Technologies 2 Growth Energy

29 Hydro-Klean

5 Tramco, Inc.

32 Vogelbusch USA, Inc.

22 Wabash Power Equipment

Customer Service Please call 1-866-746-8385 or email us at service@bbiinternational.com. Subscriptions to Ethanol Producer Magazine are free of charge to everyone with the exception of a shipping and handling charge of $49.95 for any country outside the United States, Canada and Mexico. To subscribe, visit www.EthanolProducer.com or you can send your mailing address and payment (checks made out to BBI International) to: Ethanol Producer Magazine Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You can also fax a subscription form to 701-746-5367. Back Issues, Reprints and Permissions Select back issues are available for $3.95 each, plus shipping. Article reprints are also available for a fee. For more information, contact us at 866-746-8385 or service@bbiinternational.com. Advertising Ethanol Producer Magazine provides a specific topic delivered to a highly targeted audience. We are committed to editorial excellence and high-quality print production. To find out more about Ethanol Producer Magazine advertising opportunities, please contact us at 866-746-8385 or service@bbiinternational.com. Letters to the Editor We welcome letters to the editor. Send to Ethanol Producer Magazine Letters to the Editor, 308 2nd Ave. N., Suite 304, Grand Forks, ND 58203 or email to hjessen@bbiinternational.com. Please include your name, address and phone number. Letters may be edited for clarity and/or space.

Please recycle this magazine and remove inserts or samples before recycling

COPYRIGHT Š 2014 by BBI International TM

JANUARY 2014 | Ethanol Producer Magazine | 7

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Version 2.0 is the ideal Inbicon Biomass Refinery for grain-ethanol producers who want maximum cellulosic ethanol. Source your biomass from the roughly 200,000 acres that grow the corn grain for your 100-110 MMgy plant. The same cropland produces enough corn stalks for 30 MMgy of cellulosic ethanol.

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THE WAY I SEE IT

The Hatfields and McCoys

By Mike Bryan

As the story goes, the Hatfields and McCoys lived on opposite sides of the Tug Fork Valley of the Big Sandy River, the Hatfield family in West Virginia and the McCoys in Kentucky. Trouble began during the Civil War with the Hatfields fighting for the Confederacy and a number of the McCoys fighting for the Union.

While it may be a bit of a stretch for me to compare the oil industry and the ethanol industry to the Hatfields and McCoys, there clearly are some parallels to be drawn. The Hatfields (we’ll call them Big Oil) were quite large in the timber industry and as a result were much more affluent than the McCoys and politically well-connected. The McCoys, on the other hand, (we’ll call them the ethanol industry) were primarily farmers and did not have the financial resources or the connections of the Hatfields.

The battle between the two families began small but over the years continued to escalate. A shooting here, a stolen pig there, one thing leading to another until there was virtually no stopping the feud. Both sides accused the other of a variety of devious acts, from stealing to murder and both

10 | Ethanol Producer Magazine | JANUARY 2014

sides were convinced that they were in the right.

The Hatfields, while guilty of untold acts of aggression used their money and political influence to deflect the charges laid against them. On the other hand, the McCoys dug in their heels with a vengeance and were determined not to give an inch.

When one reads a story of two families, fighting each other for nearly 30 years, you can’t help but wonder if at some point the oil industry and the ethanol industry will come together in an official truce as did the Hatfields and McCoys on June 14, 2003.

Today, for the decedents of the two families, it’s just a page out of their history book, a reason for a good laugh and perhaps an opportunity to swap a few stories.

I believe we will reach that point. I believe that there will come a time when our two industries come together and realize that the feud that has now gone on for nearly 30 years must come to an end. It’s pointless and has accomplished little for either industry, while costing hundreds of millions of dollars and countless casualties along the way. But until that time, the fight goes on. Sometimes I wonder if we even know what we

are fighting about anymore. We just get up each day and start all over again.

There’s an old cartoon about Sam and Ralph, the sheepdog and the coyote. They came to work each day greeted one another, punched in at the time clock and began fighting. They would stop and have lunch together and then start all over again promptly at one o'clock.

At five they punched out, said goodnight and went home for the day.

The final truce of the Hatfields and McCoys proclaimed, “We ask by God’s grace and love that we be forever remembered as those that bound together the hearts of two families to form a family of freedom in America.” Maybe someday!

That’s the way I see it.

Author: Mike Bryan Chairman, BBI International mbryan@bbiinternational.com

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International Biomass Conference & Expo March 24-26, 2014 Orange County Convention Center Orlando, Florida

Organized by BBI International and produced

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International Fuel Ethanol Workshop & Expo June 9 -12, 2014 Indiana Convention Center Indianapolis, Indiana

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VIEW FROM THE HILL

Breaking Through the Blend Wall

By Bob Dinneen

2013 could be described as the Year of the Blend Wall. For the first time, refiners were required to use more ethanol than could be sold as 10 percent blends, renewable identification number (RIN) prices rose, and the American Petroleum Institute’s PR machine tried to recreate the narrative around the renewable fuels standard (RFS) to suggest growing the market for renewable fuels beyond 10 percent was never envisioned nor practical. That’s not true, of course, as the whole intent of the RFS was, and remains, to drive innovation in both the production and marketing of renewable fuels.

Such divergent views of our energy future made for good media and political fodder throughout the year. Still, with characteristic fortitude, the ethanol industry carried on, doing its part to provide costeffective oil alternatives to consumers, lowering motor fuel costs, reducing imports of oil and breaking down the blend wall one E85 or E15 pump at a time!

The effort to eviscerate the blend wall will continue in 2014 for sure, but that effort will be aided by the largest corn crop in history, more and more auto companies providing warranty coverage for E15, and favorable economics driving E85 into the market. So as we look to 2014 with optimism and resolve, I present my annual "In/Out" list for both catharsis and levity.

OUT

IN

50-Year Drought

Bin-Busting Corn Crop

Idled Ethanol Plants

Full-Capacity Production

Biodiesel RIN Fraud

EPA Quality Assurance Program

Midgrade

E15/E85

AAA Anti-Ethanol Campaign

Better World Auto Club

Big Oil Whining About RIN Prices

Oil Company RIN Profits

Ethanol Imports

Ethanol Exports

Sugar Surpluses

USDA’s Feedstock Flexibility Program

Jeff Dunham and Achmed

Mr. Slick and Dummy

Rep. Sensenbrenner’s E15 Histrionics

E15 2014 MY Warranty Coverage

87 Octane

84 Suboctane

Motorcyclists Rally Against RFS

Iowans Rally for RFS

Deepwater Horizon Spill

Lac-Mégantic Train Derailment

Blend Wall

RFA’s Infrastructure Program

China DDG Antidumping Case

Record DDG Exports to China

Cellulose Five Years Away

Ineos, Abengoa, DuPont and Poet

CRC E15 Polemic

DOE E15 Technical Review

Lisa Jackson

Gina McCarthy

Big Oil’s Smear Campaign

Fuels America RFS Ads

AP Reputation for Fairness

RFA AP Fact Check

E15 Scaremongering

Bobby Likis Car Clinic

RFS Legislative Attacks

RVO Administrative Attack Author: Bob Dinneen President and CEO, Renewable Fuels Association 202-289-3835

12 | Ethanol Producer Magazine | JANUARY 2014

DRIVE

New Year, Renewed Challenges

By Tom Buis

As we begin the new year, we have much to be thankful for and to reflect upon. There is no doubt that 2013 was a challenging year. There was discussion of congressional action on the renewable fuel standard (RFS) and our industry came under heavy attack from a number of special interest groups such as Big Oil and Big Food.

But through your efforts, we succeeded in stopping any congressional action.

Throughout the summer and fall, many of you stepped up to the plate and contacted your members of Congress and made it clear that legislative changes to the RFS would not be tolerated and would have severe ramifications for our industry and rural America.

So, while we have been successful in some endeavors, now is the time to stay resilient and continue to fight for our industry and for the future of renewable fuels.

We must move forward, not backward when it comes to developing alternatives to fossil fuels and foreign oil. We all know that the RFS and biofuels have created jobs that cannot be outsourced, which have helped ensure a robust rural America. Additionally, renewable fuels are better for the air we breathe and for our environment, and they are making a difference by decreasing our dangerous dependence on foreign oil. Biofuels are better for our national security, energy security and they benefit the consumer by providing them a choice and savings at the pump. It is because of

14 | Ethanol Producer Magazine | JANUARY 2014

these critical reasons we must continue to advocate for our industry and its sustained growth.

As you know, on Nov.15 the U.S. EPA released the proposed renewable volume obligations (RVOs) under the RFS for 2014.

These volumes represent the amount of renewable fuel that must be blended into the nation’s transportation fuel supply.

The agency has proposed to significantly reduce the volumes Congress set by statute. EPA proposes to reduce the total renewable fuel volume from 18.15 billion gallons to 15.21 billion gallons. Within the total 15.21 billion gallons of renewable fuel, EPA has proposed to reduce the volume of advanced biofuels from 3.75 billion gallons to 2.2 billion. Within the advanced pool, EPA has proposed 17 million gallons of cellulosic ethanol and 1.28 billion gallons of biobased diesel.

The bottom line is that this rule cannot stand. It is important to remember that this is a proposed rule and there is still time to weigh in and let the EPA know that this is unacceptable. That is why I am calling on every stakeholder in the biofuels industry to submit comments to the EPA and make their voices heard.

Together, these proposals have the effect of reducing the total amount of grainbased ethanol that can be used to meet the standards from 14.4 billion gallons to 13.01 billion gallons. This is also a reduction from last year’s total of 13.8 billion gallons for grain-based ethanol.

A drastic cut such as the initial EPA proposal will have a devastating impact on agriculture and our rural economies, as

well as jobs at ethanol plants around the country. By taking a step backward, the EPA is sending a signal that the government no longer supports the production of biofuels.

This uncertainty, coupled with a dramatic cut in production, puts not only jobs at risk, but also the security of our nation and the future of the biofuels industry.

Furthermore, if the EPA turns its back on the production of conventional biofuel, it will have a devastating effect on the development and commercialization of nextgeneration biofuels, like cellulosic biofuels from feedstocks such as agricultural waste.

When the RFS was established, it always envisioned ethanol blends above 10 percent—even with decreasing gasoline consumption. But oil companies are doing everything they can to maintain their stranglehold on our nation’s fuel supply.

This proposal, as it stands, would have a devastating ripple effect on ethanol plants, their production and the jobs they support, as well as the surrounding communities.

That is why in the new year, we must remain resilient and continue to battle for our industry. We must submit comments to the EPA and do everything in our power to help shape a better rule that reflects the original vision of the RFS and keeps our industry moving forward, not backward.

Author: Tom Buis CEO, Growth Energy 202-545-4000 tbuis@growthenergy.org

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GRASSROOTS VOICE

The Fight Continues

By Brian Jennings

Thanks to the grassroots advocacy and leadership of American Coalition for Ethanol members, we successfully countered efforts by Big Oil and others in Congress this year to repeal or reduce the renewable fuel standard (RFS).

But as we set our sights on 2014, we know the fight to increase the use of E15 and E85 and keep the RFS continues.

A recent "news" article published by the Associated Press and a proposal by EPA to reduce ethanol use under the RFS next year serve as two examples.

The AP story flies in the face of its own standards against bias and distortions, and shows an incredibly reckless disregard for the truth about ethanol. AP bragged about the number of journalists involved and its connections in all 50 states, and yet that army of reporters missed or ignored a number of errors that could have been easily checked and avoided. From small errors, such as (in early versions of the story) identifying Tom Daschle as a former senator from Iowa rather than South Dakota; to big errors like indicating corn is being grown on “virgin lands” for ethanol production—something that is specifically prohibited by the RFS—or reporting that corn prices were about $7 per bushel all year, the article was clearly less concerned with accuracy than it was maligning ethanol.

It is our job to help the media and policymakers understand that ethanol isn’t some public figure or government program that can be maligned without

16 | Ethanol Producer Magazine | JANUARY 2014

consequence. Ethanol is a real product, made by real businesses, and those businesses provide thousands of good jobs and billions of gallons of clean, affordable, domestic renewable fuel to real people. When you take the time to show and tell your story about why ethanol is important, you help the entire industry proactively promote a positive image of ethanol.

One of the best ways we can show the RFS is successful is to help ensure more E15 and E85 is sold this year.

That’s especially important in light of EPA’s absurd proposal to unnecessarily restrict sales of ethanol-blended fuel in 2014 below 10 percent of gasoline demand. ACE is deeply disappointed in EPA and will try to help the agency come to its senses before the final rule is published. This proposal likely violates the law, would shut down biofuel facilities, put Americans out of work, would crater demand and prices for corn and chase investment in advanced biofuel overseas to our competitors.

A reduction in ethanol use this year would increase pump prices, drain between seven and 12 billion dollars from consumer pocketbooks and transfer billions more to oil company profit statements. What’s more, EPA’s proposal fundamentally betrays the Obama administration’s commitment to clean renewable fuels and caves to Big Oil demands to put a ceiling on ethanol use.

During the comment period, we will need to remind EPA the oil lobby fought to prevent ethanol from comprising even 10 percent of the market when the original RFS was passed by Congress in 2005, and they have rebelled against blending ethanol since the law was expanded in 2007. Their state of denial

about higher blends was the reason that the waiver language was one of the final outstanding provisions that oil companies tried to weaken as finishing touches were put on the RFS by Congress.

They wanted the opportunity for their cuff-linked attorneys to wordsmith and dodge their way out of compliance when the RFS became a real threat to their continued monopoly on consumer pocketbooks.

To waive the RFS based on the blend wall rewards oil companies for doing nothing to comply with the inevitability of higher ethanol blends and would take the teeth out of the most consequential policy Congress has enacted to improve the way we produce and use transportation fuel.

ACE will be working to arm you with data and background with which to make comments, but as importantly, we’re working with other constituencies to ensure we’re getting the attention of EPA and the White House. For example, we’re working with retailers who are selling E15 and E85 and can comment to the administration that they need and want the RFS to work as intended.

ACE will also continue to take steps to develop the E15 and E85 markets, by promoting the price advantages to retailers and consumers, working with you to direct market these blends from your plants and trying to erase liability concerns about E15.

Author: Brian Jennings Executive Vice President American Coalition for Ethanol 605-334-3381 bjennings@ethanol.org

Place Your Name on the Wall!

The map is distributed to the following: All Ethanol Producer Magazine subscribers All ethanol production facilities Distributed to attendees of the National Ethanol Conference

Reach ethanol industry professionals

Increase Sales & Stay Top of Mind in 2014 Limited Space Available!

Spring 2014

Ethanol Producer Magazine’s Fuel Ethanol Plant Map identifies conventional and cellulosic ethanol plants in the U.S. and Canada. Color coded for quick reference, the map indicates both conventional sugar/ starch facilities and cellulosic ethanol facilities, showing installed capacity, plants under construction, as well as proposed plants. The minimum size to be included on the list is 1 MMgy. Listings include name of facility, city, state, feedstock and capacity.

Contact us at 866-746-8385 or service@bbiinternational.com

EUROPE CALLING

Time for Rebranding: We are Protein Producers!

By Rob Vierhout

At the yearly F.O.Licht's World Ethanol Conference, I had the pleasure of sharing a session on "Ethanol, the Coproduct."

There were two very interesting speakers who did not speak about ethanol as product but on ethanol coproducts, suggesting that eventually ethanol could become the coproduct. For me, it is clear that some important changes are taking place in our industry that may, or maybe should, have implications beyond mere processing technology. They spoke about front-end separation of high-value protein from the corn, or recovering the yeast to produce a protein concentrate that is a great animal feed for fish or chicks.

It is not just yeast that can be separated but, of course, also oil and fiber. Recently, I attended a presentation by Jerry Shurson, a professor, nutritionist and specialist on animal feed, speaking about corn oil extraction.

I never before paid much attention to these relatively new coproducts, but the more I look into them, the more I am convinced that this is going to be a gold mine, not just for ethanol producers, but also for people like me who are defending the interests of the sector.

Corn oil is fascinating because it is an excellent raw material for all sorts of industrial uses and the production of

18 | Ethanol Producer Magazine | JANUARY 2014

biodiesel. Importantly, extracting oil from the corn does not diminish the nutritional value of the distillers grains. On top of that, it creates highly needed new sources of revenue. According to Shurson's research, the investment cost for the oil extraction equipment can be earned back in less than three months. Extracting yeast and fiber will create other valuable new products and welcome new revenues for the ethanol producer, particularly when ethanol margins are low.

I see another use for these new coproducts in a totally different market segment: the political or regulatory market.

For over a year, we have had a fierce lobby in the EU on the unintended effects caused by biofuel policy in indirect land use change (ILUC). The debate is conducted in a onesided way by putting much emphasis on the food/feed crop needed to produce the ethanol or biodiesel mandated by policy.

We try as much as possible to explain that the ILUC effect is quite different, very likely nonexistent or even positive, if the coproducts are accounted for in the proper way.

It seems that something that is so obvious does not resonate well with nongovernmental organizations (NGOs), media and many regulators. Why is that?

I think the main reason is that we keep stressing first and foremost that we are ethanol (biofuel) producers and this makes us

extremely vulnerable because it is the biofuel policy that is under attack. The main problem lies in the way we have been branding ourselves. What for many producers is (now) the main source of income when producing ethanol should maybe become the way to defend our industry. Rather than repeating that we are ethanol producers, we should brand ourselves as protein producers. It is not different from the soy business: the main product is soymeal, the oil is just a byproduct.

In Europe, we need to import 70 percent of our protein needs. Positioning ourselves as protein producers should resonate well even with NGOs. The European ethanol sector has a great story to tell: we use (feed) grains, enrich the proteins in those grains so that we can reduce the protein shortage in Europe. Oh yes, we also do produce ethanol from the sugars (not very healthy for the animals) that we can use in the sectors of drinks, industry, chemicals and energy.

From now on, we should call ourselves protein producers that operate a biorefinery with a coproduct called ethanol. It is a residue and should maybe count double when one uses it as a fuel.

It is time we start seriously thinking about rebranding the ethanol industry.

Author: Robert Vierhout Secretary-general, ePURE Vierhout@epure.org

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BUSINESS MATTERS

New Headaches For Distillers Grains Producers

By Leah Ziemba

Manufacturers of distillers grains are already regulated by an alphabet soup of statutes, implementing agencies and industry certifications, including the U.S. EPA, U.S. Food and Drug Administration (FDA), Toxic Substances Control Act, Generally Recognized as Safe and the Association of American Feed Control Officials, to name just a few. Now, add the Food Safety Modernization Act (FSMA) to the list. On Oct. 25, the FDA released its proposed rule on current good manufacturing practice (cGMP) and hazard analysis and risk-based preventative controls for animal feed. This proposed rule is one of the last rules to be released implementing FSMA, signed into law in January 2011.

This proposed rule would apply to animal facilities required to register under the Federal Food, Drug and Cosmetic Act (FFDCA) that manufacture, process, pack or hold ingredients and finished products that are intended to be fed to animals, including livestock, pets and other animals. The FDA has previously required all facilities that produce animal feed, including ethanol facilities that produce distillers grains, to register under the FFDCA. Further, the FDA has specifically stated that the proposed rule applies to “biofuel manufacturers that supply distillers grains for animal food.”

The proposed rule would establish regulations regarding the manufacturing, processing, packing or holding of food for animals by creating new cGMP regulations that specifically address those areas. This proposed rule marks the first time cGMPs will be required for animal food. The proposed cGMPs would establish procedures in areas such as buildings and facilities, design and layout, cleaning

20 | Ethanol Producer Magazine | JANUARY 2014

and maintenance, pest control, and personnel hygiene.

It would establish new preventive control provisions that would include requirements to maintain a food safety plan, perform a hazard analysis and implement preventive controls to minimize or prevent those hazards.

Facilities would have to monitor their controls, verify effectiveness, take any appropriate corrective actions and maintain records that document these actions. Although similar to the Hazard Analysis and Critical Control Points systems currently used by some in the food industry, the FSMA rule may require preventative controls at points other than critical control points, and critical limits may not be required for all preventative controls.

A written food safety plan would be required to detail the facility’s hazard analysis and risk-based preventative controls, as well as the facility’s monitoring, corrective actions, verification activities, and recordkeeping requirements.

The FDA has proposed that the rule become effective 60 days after the final rule is published, and has suggested a sliding scale of compliance dates. Very small businesses would have three years to comply. The agency is soliciting comments on whether very small businesses should mean businesses with less than $500,000, $1 million or $2.5 million in total annual sales of animal food. Small businesses would have two years to comply. The FDA has proposed that a small business employs fewer than 500 employees. Other businesses, which don’t fit into the definition of very small, small or qualify for other exeptions, would have one year to comply.

As of now, the comment period

is set to close Feb. 26, although the animal feed industry will likely ask the FDA to allow additional time to provide comments. We cannot emphasize enough that manufacturers of distillers grains should review the proposed rule, consider how it would impact their operations, and then provide substantive comments to FDA. The agency has increased inspection and enforcement authority, so now is the time to understand how to comply with FSMA’s mandate. Facility operators should consider meeting with legal counsel to ensure readiness to comply with FSMA and properly manage FDA inspections.

Besides the most recent FSMA rule, FDA continues to be active on ethanol industry issues. In March, a citizen petition was filed with the FDA seeking to ban the use of antibiotics in ethanol production, so that distillers grains with solubles fed to livestock will not contribute to the levels of antibiotics found in the U.S. meat products. If FDA does not ban the use of antibiotics entirely, the petition requests that FDA develop regulations that require antibiotics sold to ethanol producers be registered as a new animal drug under the FFDCA. Although this issue has been simmering for years, do not expect it to go away anytime soon.

We are likely only at the cusp of FDA’s oversight of feed coproducts from the ethanol industry.

Authors: Leah H. Ziemba Attorney, Michael Best & Friedrich LLP 608-283-4420 lhziemba@michaelbest.com Contributor: Seth A. Mailhot Attorney, Michael Best & Friedrich LLP

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BUSINESS BRIEFS

• • • • • • SELL • RENT• LEASE • • • • • • • • • • • • • • • • • • • AssetPoint, a provider of comput• • • erized maintenance management software • • (CMMS) and enterprise asset management • • (EAM) solutions, announced NuGen Ener• • gy LLC has implemented TabWare CMMS/ • • EAM software solution for maintenance • management and successfully integrated it • • with its Microsoft Dynamics GP system.

• • NuGen Energy operates a 110 MMgy etha10HP TO 250,000#/hr • • nol plant in Marion, S.D. The company was 250,000#/hr Nebraska 750 psig 750OTTF • • formerly known as U.S. Bio Marion LLC, and 150,000#/hr Nebraska 1025 psig 900OTTF •• currently operates as a subsidiary of REX 150,000#/hr Nebraska 750 psig 750OTTF •• American Resources Corp.

• 150,000#/hr Nebraska 350 psig • • California Etha• 115,000#/hr Nebraska 350 psig • nol & Power LLC • 80,000#/hr Nebraska 750 psig • has promoted David O • 80,000#/hr Erie City 2000 psig 800 TTF • Rubenstein from the • 75,000#/hr Nebraska 350 psig • position of chief op• 70,000#/hr Nebraska 750 psig 750OTTF • erating officer to presi• • dent and CEO. Jeffrey 60,000#/hr Nebraska 350 psig • Lee, who previously • 40,000#/hr Nebraska 350 psig • served as president, is • 20,000#/hr Erie City 200 psig • assuming the role of • Rubenstein 10-1000HP Firetube 15-600 psig • manager of project de• • velopment and general ALL PRESSURE AND TEMPERATURE • • counsel. Prior to joining COMBINATIONS SUPERHEATED • • AND SATURATED CE&P, Rubenstein was • • the president and ma• • RENTAL FLEET OF MOBILE jority owner of Pacific • • TRAILER-MOUNTED BOILERS Diazo Products Inc., • which produced and • 75,000#/hr.

Nebraska 350 psig • distributed industrial • 75,000#/hr.

Optimus 750 psig 750°TTF • Lee chemicals. Lee previ• 60,000#/hr.

Nebraska 350 psig • ously served as senior development manager • • with Bechtel Enterprises Inc. and lead coun50,000#/hr.

Nebraska 500 psig • • sel for a Bechtel Corp. operating division. The 40,000#/hr.

Nebraska 350 psig • • company also recently announced it has re30,000#/hr.

Nebraska 350 psig • • ceived its Authority to Construct permit from 75-300HP Firetube 15-600 psig • • California’s Imperial County Air Pollution • ALL BOILERS ARE COMBINATION GAS/OIL • District. The permit is the final piece of the • • necessary entitlements for the project. Once ENGINEERING • START-UP • • complete, the plant will have the capacity to FULL LINE OF BOILER AUXILIARY • • produce 66 million gallons of ethanol, 49.9 SUPPORT EQUIPMENT. • megawatts of electricity and 940 million cubic Electric Generators:• 50KW-30,000KW • • feet of biogas annually.

• • • WEB SITE: www.wabashpower.com • The South Dakota Safety Council 847-541-5600 • FAX: 847-541-1279 •• has awarded a Governor’s Safety Award E-mail: info@wabashpower.com • • to Poet Biorefining–Hudson for excel• • lence in workplace safety and health. Awards POWER • EQUIPMENT CO. • were presented by South Dakota Lt. Gov. • 444 Carpenter Avenue, Wheeling, IL 60090 • Matt Michels in October. Poet Biorefining – •

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People, Partnerships & Deals

Hudson was one of 40 employers recognized at the awards ceremony and one of 25 to win the Meritorious Achievement, which honors companies that have a better-than-average performance in incident rates for their industry. The 56 MMgy plant has been operational since 2004.

Algenol Biofuels has joined the Advanced Ethanol Council. The company is focused on commercializing its patented algae technology platform for the production of ethanol and other biofuels. Algenol’s Direct to Ethanol technology uses sunlight, algae, non-arable land and carbon dioxide to produce ethanol and waste biomass that can be converted into gasoline, diesel and jet fuel.

Greenbelt Resources Corp. and its wholly owned subsidiary Diversified Ethanol Corp. have announced the selection of Hitachi Zosen Corp. as a collaborator on its proprietary dehydration module. Greenbelt has successfully integrated the high-performance zeolite ceramic membrane innovation from Hitachi Zosen to achieve a higher purity ethanol through efficient extraction of residual moisture. Hitachi Zosen has operated a similar zeolite membrane in continuous commercial service since March 2009. In addition to technical support, the company has conducted hands-on training for membrane installations and participated with Greenbelt in system stress and performance testing.

Carbo Analytics has appointed Amit Kumar to its board of advisors. He has been an investor, founder, director and CEO of several technology enterprises.

As CEO of CombiMatrix Corp., he took the Kumar company public and ran it for a decade. He has also worked in venture capital with OAK Investment Partners and has been an advisor to investment funds,

BUSINESS BRIEFS Sponsored by

venture capital firms and Fortune 500 companies. Kumar served on the board of directors for Acacia Research Corp. from 2002 through 2008 and is currently CEO of Geo Fossil Fuels.

Mascoma Corp. has appointed Steve Percy and Dan Nelson to its board of directors. Percy is the former chairman and CEO of BP America Inc. Since retiring from BP, he has served as the head of Phillips Petroleum’s refining, marketing and transportation company, and served as a visiting professor of corporate strategy and international business at the University of Michigan’s Ross School of Business. He previously served as a member of President Clinton’s Council on Sustainable Development and as co-chair of its Climate Change Task Force. Nelson is the former vice president of ExxonMobil. He spent 25 years with the company, most recently as vice president of government relations. He previously held a variety of senior positions with the corporation, both in the U.S. and internationally.

After one year on the market, Novozymes Avantec is now used to produce more than 20 percent of total corn ethanol volumes in the U.S., while Novozymes Spirizyme Achieve is used to produce more than 10 percent of U.S. corn ethanol after only four months on the market. On average, Avantec increases ethanol yield by 2.5 percent while reducing energy use by 2 percent. Spirizyme Achieve increases yield by 1.5 percent while reducing energy use by 3 percent.

Coshocton, Ohio-based Three Rivers Energy LLC has signed a commercial agreement to use Syngenta’s Enogen corn. The 50 MMgy facility, which began operations in October after sitting idle for several years, is operated by Lakeview Energy LLC. A sister

SHARE YOUR INDUSTRY BRIEFS To be included in Business Briefs, send information (including photos and logos if available) to: Business Briefs, Ethanol Producer Magazine, 308 Second Ave. N., Suite 304, Grand Forks ND 58203. You may also fax information to 701-746-8385, or email it to evoegele@ bbiinternational.com. Please include your name and telephone number in all correspondence.

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facility also owned by Lakeview Energy, the 50 MMgy Plymouth Energy LLC plant in Merrill, Iowa, signed an agreement with Syngenta for the use of Enogen corn last year.

That facility recently received its first shipment of Enogen corn.

Cargill recently announced it has begun operations at its 115 MMgy corn wet mill ethanol plant in Fort Dodge, Iowa. Cargill purchased the previously idle facility from Tate & Lyle in 2011. At full production, the plant will consume 150,000 bushels of corn per day and produce a variety of products, including ethanol, dextrose and SweetBran feed for cattle.

Green Plains Renewable Energy Inc. has acquired two 110 MMgy ethanol plants previously owned by BioFuel Energy Corp. from an entity composed of its lender group. The two facilities included in the transaction are the Pioneer Trail Energy plant in Wood River, Neb., and the Buffalo Lake Energy facility in Fairmont, Minn.

The Renewable Fuels Association, Biotechnology Industry Organization and Growth Energy filed a motion in the U.S. Court of Appeals for the District of Columbus Circuit in early November to intervene in support of the U.S. EPA’s renewable fuel standard (RFS) 2013 final rule, which is currently being challenged by Monroe Energy, the American Petroleum Institute and American Fuel and Petrochemical Manufacturers.

Ceres Inc. and Syngenta AG have extended their joint marketing development agreement in Brazil, where Ceres has been introducing its sweet sorghum and high-biomass sorghum varieties at Brazilian ethanol mills. The two companies will continue to collaborate on field evaluations with the mills. Syngenta will evaluate its portfolio of crop protection products alongside Ceres hybrids, while Ceres will provide seed and research support.

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COMMODITIES Natural Gas Report

Drilling down into the details of natural gas supply, price Nov. 22—Over the past five years, the United States has experienced rapid growth in oil and natural gas production. The driving force behind this supply renaissance is the improvement of well development processes in the form of directional drilling and hydraulic fracturing of shale deposits. For many in the industry, the large narrative is well known and understood. The ability to access energy from shale will drive down the cost of production for energy intensive industries and reduce domestic reliance on foreign oil. In the case of natural gas, however, despite rapid growth in production over the past five years, the story is a little more complicated below the surface.

Almost all shale wells produce some level of natural gas and oil, but the balance of production—more oil and less gas or vice versa— varies across the different shale plays. If a shale tends to favor natural gas production rather than oil, it is typically referred to as a dry play, where locations that tend to produce a higher proportion of heavier hydrocarbons like propane, butane, natural gasoline or crude oil are typically referred to as wet. The old saying in commodities is that “low prices are the cure for low prices.” In 2012, when the average price of

BY BEN STRAUS

natural gas was below $3 per MMBtu, many shale plays that had been driving production growth were suddenly no longer economic. Even at current price levels, many of the dry shale plays remain uneconomic and the rate of drilling and production has slowed.

Corn Report

Corn market lackluster in November, but cash market strong Nov. 22—The month of November exhibited a lackluster market with a highly anticipated report due to the missed October USDA report. It offered a slightly bullish tone because some data reported was friendly relative to what the trade was expecting.

This year’s corn production was projected at 13.989 billion bushels, up from 10.780 billion bushels last year. Larger supplies have made this market feel much more comfortable as the carryout rests just under 1.90 billion bushels or a 14.6 percent carryout-to-use ratio, not seen since 2005. This has been the contributing factor for a lower corn market since mid-August. With lower prices forecast, the reason for increased demand has been assumed. Ethanol demand is expected to be at 4.90 billion bushels, up from 4.648 billion bushels last year but below 5.0 billion bushels in 2011-’12.

World corn ending stocks increased from 151.42 million metric tons (mmt) to 164.33 mmt as increased U.S. production boosted previous estimates. With projected world carryout at the highest level since 2000 (see chart), world corn values should remain under pressure. The market will still have South America's weather to worry about because Argentina and Brazil are forecast to produce 26 and 70 mmt, respectively. The positive takeaway for the corn market in November was the 24 | Ethanol Producer Magazine | JANUARY 2014

BY JASON SAGEBIEL

strong cash market. Slow producer movement attributed to lower futures prices was the cause for the cash market to be so strong. Corn prices should stay sideways into the new year but lack of corn movement will keep basis firm.

REPORT

Regional Ethanol Prices Front Month Futures (AC) $2.035

($/gallon)

REGION

SPOT

RACK

West Coast

2.820

2.850

Midwest

2.970

2.800

East Coast

3.075

2.624 SOURCE: DTN

Regional Gasoline Prices

DDGS Report

DDGS prices under high export demand, price appreciation BY SEAN BRODERICK Nov. 22—In late November, distillers grains prices had shaken off whatever corn harvest pressure buyers expected and steadied, if not gotten stronger. The domestic market, in particular, has borne the brunt of this lack of price movement, as the majority had been waiting for falling prices as a percentage of corn. Now domestic feeders are paying up to keep DDGS in their rations but mainly for the protein aspect of it. Protein meals worldwide are expensive, and both domestic and export markets are buying more DDGS for that aspect.

Export markets remain brisk, with much of the feature being the logistics piece of getting containers loaded and shipped. Containers are occasionally in short supply, trucks have been difficult to

get since the middle of summer and the harvest did not make them any more available. We have seen additional container transloading capacity being utilized outside of Chicago in places like Kansas City, southeastern ports and even Omaha.

Politically, the renewable fuel standard discussion is sure to impact DDGS supply for 2014, especially since a pretty decent amount of Chinese business has already been booked through the summer. And in China, there are regulations that affect DDGS registration with the Ministry of Agriculture, and talk of new regulations from AQSIQ (the General Administration of Quality Supervision, Inspection and Quarantine) that have the potential to affect demand over there.

($/gallon) Front Month Futures Price (RBOB) $2.7261

REGION

SPOT

RACK

West Coast

2.659

2.769

Midwest

2.436

2.853

East Coast

2.730

2.837 SOURCE: DTN

DDGS Prices ($/ton) LOCATION

JAN 2014

DEC 2013

Minnesota

210

210

JAN 2013 240

Chicago

245

236

236

Buffalo, N.Y.

220

208

250

Central Calif.

288

273

312

Central Fla.

274

267

280 SOURCE: CHS Inc.

Corn Futures Prices DATE

(March Futures, $/bushel)

HIGH

LOW

CLOSE

NOV 22, 2013

4.32 1/4

4.27

4.29 1/4

OCT 22, 2013

4.57

4.50 1/4

4.51

NOV 12, 2012

7.53

7.47 1/2

7.49 3/4 SOURCE: FCStone

Cash Sorghum Prices ($/bushel) LOCATION

Ethanol Report

Consumer demand holding strong

BY RICK KMENT

Nov. 22—Front-month ethanol futures rallied nearly 45 cents per gallon since the market low was set Nov. 6. The previous pressure in most commodity markets, based on lackluster commercial and investment buying interest, has given way to an active rally in both ethanol and energy futures markets. Traders are now focusing on the unusual sustainability in gasoline and ethanol demand through the fall months. This could lead to overall demand growth over the holidays and break the traditional seasonal demand patterns which seem to govern the markets. At a time when stock markets are moving to levels not seen before and traders are looking for fresh and opportunistic avenues, energy markets are ripe for the picking just before the holidays. It is uncertain if ethanol futures will be able to

hold the strong front month premium, as traders in the market scramble to secure short-term supplies. But the aggressive nature in reformulated blendstock for oxygenate blending (RBOB) gasoline markets has given traders a great deal of confidence going into the holiday season.

December RBOB gasoline futures rallied over 20 cents since five-month lows were set in early November. This re-established longer-term support levels at $2.55 per gallon and quickly encouraged additional buyer interest from both investment and commercial buyers. Demand for gasoline will likely remain firm through the holidays, as traders appear to be now eyeing potential moves through the upcoming year.

NOV 25, 2013

OCT 25, 2013

NOV 21, 2012

Superior, Neb.

4.20

4.30

7.14

Beatrice, Neb.

4.00

4.00

7.04

Sublette, Kan.

4.19

4.20

7.22

Salina, Kan.

4.35

4.40

7.21

Triangle, Texas

4.22

4.23

7.48

Gulf, Texas

5.30

5.38

7.36

SOURCE: Sorghum Synergies

Natural Gas Prices LOCATION

($/MMBtu)

SEP 30, 2013

NOV 22, 2013

NOV 22, 2012

NYMEX

3.56

3.77

3.90

NNG Ventura

3.43

3.72

3.64

CA Citygate

3.62

3.93

3.69

SOURCE: U.S. Energy Services Inc.

U.S. Ethanol Production

(1,000 barrels)

PER DAY

MONTH

END STOCKS

SEP 2013

852

25,564

16,040

AUG 2013

849

26,320

16,971

SEP 2012

813

24,375

19,921

SOURCE: U.S. Energy Information Administration

JANUARY 2014 | Ethanol Producer Magazine | 25

DISTILLED

Ethanol News & Trends

Ethanol, bioglycol plant EPA proposes lower 2014 RFS RVO The U.S. EPA released its proposed The American Coalition planned in China

M&G Chemicals plans to construct a secondgeneration biorefinery in China to convert 1 million metric tons of biomass into ethanol and bioglycols.

The project is a joint venture with Chinese company Guozhen Group Co., which will supply wheat straw and corn stover to the project. The company will also utilize the lignin coproduct produced at the plant to feed a 45 megawatt cogeneration plant that will be co-located with the biorefinery.

The proposed plant will employ Prosea technology licensed from Beta Renewables, a joint venture of Biochemtex of the Mossi Ghisolfi Group, U.S. private equity fund TPG, and Danish enzyme producer Novozymes. Once complete, the plant will handle approximately four times the volume of biomass processed at Beta Renewables’ first commercial facility in Crescentino, Italy, which was commissioned in October.

In addition to ethanol, the plant will produce mono-ethylene glycol (MEG), which is used in the production of synthetic polyester fibers and polyethylenbe terephthalate (PET). Novozymes has announced it will provide $35 million to the project, and will supply enzyme technology to the plant on an exclusive basis for 15 years.

rule for the 2014 renewable fuels standard (RFS) renewable volume obligation (RVO) on Nov. 15. If enacted as proposed, the rulemaking would reduce the 2014 RVO significantly, to levels below both statutory requirements and the RVO finalized for 2013. Industry trade groups and ethanol producers have expressed disappointment in the proposal.

for Ethanol called the EPA proposal for the 2014 volumes a betrayal of the agency’s commitment to renewable fuels, in that the proposed RVOs, if finalized, would cut ethanol use below levels called for in the law. “There is nothing positive that can be said about EPA’s proposal to unnecessarily restrict sales of ethanol-blended fuel in 2014,” said Brian Jennings, ACE executive vice president.

RFS volume comparison (in billion gallons)

Cellulosic biofuel* Biomass-based diesel Advanced biofuel* Renewable fuel*

Statutory 2013 RVO

Final 2013 Statutory RVO 2014 RVO

1 No less than 1.0 2.75 16.55

0.006 1.28 2.75 16.55

1.75 No less than 1.0 3.75 18.15

Proposed 2014 RVO 0.017 (range of 2-2.51) 1.28 2.2 (range of 2-2.51) 15.21 (range of 15-15.52)

* Ethanol equivalent gallons SOURCE: U.S. EPA

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Sweetwater, Naturally Scientific to convert CO2 to sugar Sweetwater Energy Inc. and Naturally Scientific Technologies Ltd. are expanding their relationship through a joint venture to produce sugar from waste carbon dioxide. The joint venture will use technology developed by Naturally Scientific that can convert carbon dioxide emissions from facilities such as ethanol plants and power plants into simple sugars.

The joint venture will add flexibility and synergies to Sweetwater’s business model targeting the ethanol industry. The company’s process produces C5 and C6 sugars from cellulosic biomass. The sugars are then sold to ethanol producers as a supplemental feedstock. The new concept could allow Sweetwater to capture carbon dioxide from those ethanol plants and use Naturally Scientific’s Stage 1 process to convert the carbon dioxide to C3 glyceraldehydes. It would also be possible to use the Stage 2 process to further process those sugars into vegetable oil.

EPA releases GHG emissions data

The U.S. EPA has released its third year of greenhouse gas (GHG) emissions data.

The data set includes information gathered from several thousand of the largest industrial operations in the U.S., and can be broken down by industrial sector, GHG type, geographic region and individual facility. Overall, approximately 8,000 facilities are represented.

For ethanol producers, the 2012 data set tracks 166 reporting facilities that together emit 17.4 million metric tons of carbon dioxide equivalent. Emissions from the sector

dropped from the previous year’s level of 18.1 million metric tons of carbon dioxide equivalent. “EPA is supporting President Obama’s Climate Action Plan by providing the highquality data necessary to help guide commonsense solutions to address climate change,� said EPA Administrator Gina McCarthy. “Putting this data in the hands of the public increases transparency, supports accountability, and unlocks innovation.�

GHG emissions

(in million metric tons of CO 2 e) 2010 Ethanol industry (166 plants)

17.7

Peltroleum and natural gas systems (2,058 facilities) Power plants (1,611 facilities)

2,330.80

2011

2012

18.1

17.4

209.8

217.1

2,221.90

2,090

SOURCE: U.S. EPA

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Commitment makes the best chemistry.

DISTILLED

New ethanol plant begins REAP funds corn oil biodiesel plant operations in Ontario colocation, 6 flex fuel pumps Brantford, Ontario-based Energentium Inc. is starting up its new 15 MMly (4 MMgy) ethanol plant. The facility recycles waste beer and soft drinks into ethanol. In addition to taking in waste beverages as feedstock, the system can also be adapted to use other food wastes, such as fruit and vegetables, jams, syrups, sugars and candies.

The plant is distinctive in several ways beyond its feedsock. For example, it incorporates reverse osmosis in a unique manner, which Phil Artman, the company’s general manger, describes as very energy efficient. “It actually produces energy in the ethanol distillation process,” he said.

“Many companies are paying growing penalties to the government for the waste-material dumping and even bigger penalties in public relations in the public eye,” Artman said, noting the plant uses “technology that will not only make ethanol from waste materials in an efficient way, but create additional byproducts such as electricity, animal feed, omega-3 oils and CO2, to name just a few.”

Funding awarded through the USDA’s Rural Energy for America Program is supporting several ethanol-related projects.

In November, Agricultural Secretary Tom Vilsack announced more than $14 million in funding for a total of 424 projects in 22 states, including six grant awards to support the installation of flexible fuel pumps.

Also included in the round of awards were five biomass projects, including one that will support the construction of a co-

located biodiesel facility at an Illinois ethanol plant. Lena, Ill-based Adkins Energy LLC was awarded $500,000 through REAP for the construction of a 2 MMgy biodiesel plant that will take in corn oil produced at its 48 MMgy ethanol plant as feedstock. The $4.5 million project is expected to begin production in the spring. The biodiesel plant will feature technology developed by WB Services LLC.

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28 | Ethanol Producer Magazine | JANUARY 2014

DISTILLED

Webinar examines benefits of corn oil extraction

High-yield, cellulosic butanol process introduced, company seeks partners

A webinar hosted by Ethanol Producer Magazine in mid-November addressed corn oil extraction from the viewpoint of animal nutrition, corn oil markets, its financial impact on ethanol plants, and taking the technology to the next level to achieve greater coproduct diversification.

During the event, Warren Barnes, co-owner of Cereal Process Technologies LLC, said that a plant that adds dry fractionation can produce multiple coproduct streams, including a higher-quality starch stream, corn oil, fiber for cellulosic ethanol and higher-quality feed.

He said CPT has been analyzing a double biofuel model of production, which the company believes is the best path forward for the ethanol industry. Via fractionation, an ethanol plant can produce the same volume of ethanol from degermed, debranned, corn, plus high-protein distillers grains that can be sold at a premium price. The corn oil can be used as feedstock to produce biodiesel at a co-located plant.

Biodiesel sells today for approximately $4 per gallon, he said, nearly twice the price that ethanol plants can produce crude corn oil.

Additional webinar spearkers included Harold Tilstra, manager, technical support, DDGS Marketing, Purina Animal Nutrition LLC; Joseph Riley, general manager, FEC Solutions; and Paula Emberland, benchmarking business analyst, Christianson and Associates PLLP.

Taiwan’s Industrial Technology Research Institute has announced its trademarked ButyFix process, a biobutanol production technology that can convert 94 percent of the available carbon in biomass, including carbon dioxide. The process is expected to achieve greenhouse gas reductions of more than 100 percent at a cost of less than $2 per gallon.

The three-step ButyFix process starts with low-acid hydrolysis at 100 degrees Celsius and atmospheric pressure. The fermentation step utilizes naturally occurring

anaerobic bacteria to convert the resulting sugars to butyrate. A liquid-to-liquid separation technique then removes the butyrate for conversion into butanol via esterification and hydrogenation.

To date, the process has been proven at a bench scale. Chiang-Hsiung Tong, vice president and general director of ITRI’s Green Energy and Environment Laboratories, said his group is looking for partners for pilot-scale and demonstration-scale production.

Carbon Capture The microbes used in the ButyFix process that convert cellulosic sugars into butyrate also utilize carbon dioxide produced in the fermenter.

PHOTO: ITRI

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JANUARY 2014 | Ethanol Producer Magazine | 29

TRAINING

Grains Training Paul Calkins, project manager, lays out the general program for employees to get certified in the grains department at the Glacial Lakes Energy facility in Mina, S.D. PHOTO: TROY MCQUILLEN, MCQUILLEN CREATIVE GROUP INC.

30 | Ethanol Producer Magazine | JANUARY 2014

TRAINING

A Squad Trained to

Score

Applying a metrics-driven performance system and some coaching from Novozymes, Glacial Lakes Energy improves its numbers.

BY SUSANNE RETKA SCHILL

Every morning the numbers are posted to the scorecard—green squares for the goals that were met the day before and red for those that weren’t. If the scorecard is all green, says Frank Moore, director of operations, the standards are set too low at Glacial Lakes Energy LLC. When a plant is already a top producer, taking it to the next level isn’t necessarily easy. “Glacial Lakes was performing well,” says Moore, a 30-year veteran in the ethanol industry. “Operators and managers were doing an excellent job, yet in any process, there continues to be upside potential. But the higher the level of performance, the more difficult it is to improve that.”

The Glacial Lakes staff began using its scorecard early in 2012 to track performance at the company’s two plants in Watertown

JANUARY 2014 | Ethanol Producer Magazine | 31

TRAINING and Mina, S.D. As the program took off, the management team rolled out a certified operator training regimen last year to boost its scores, or metrics, in all key areas of operations. With about 80 percent of the process operators now certified at a core level, the company has begun a training and certification program for staff in the grains departments, who handle incoming and outgoing shipments at the two plants, and the maintenance department.

A greater emphasis on personnel training began about three years ago at Glacial

Lakes when an in-house evaluation turned up a number of challenges to overcome in the quest to boost performance, including such things as limited individual empowerment and accountability, weak procedures and inadequate training. “Training is the biggest weakness across the industry,” Moore says. “We tend to be an inbred industry; we need outside ideas.”

Specifically, standardization was one of the plant’s core problems. “Each shift had its own procedure and none were following the SOP (standard operating procedure),”

Producers' Podium Glacial Lake's Frank Moore speaks to an audience of ethanol plant personnel assembled at Novozymes’ Franklinton, N.C., facility in November.

PHOTO: SUSANNE RETKA SCHILL, BBI INTERNATIONAL

Moore says. “One of the challenges is standardizing the process and treating the process as a science and not an art.”

Also on that list of challenges was limited human resources—the in-house time and expertise to build a solid training program. As the management team at Glacial Lakes began planning, Gary Johnson, a Novozymes account manager, stopped for a visit. As they talked about the plant’s needs, Moore asked whether Novozymes would share its expertise in training plant operators. That quickly evolved into a partnership that helped fill the gap for Glacial Lakes. A team of eight from Glacial Lakes spent a day and a half brainstorming with the Novozymes training team, followed by a visit from several Novozymes trainers and multiple conference calls.

Recognizing a need in the industry and seeing the results at Glacial Lakes, Novozymes invited other producers to its facility in Franklinton, N.C., in early November to learn about the program, which it hopes to duplicate. About 20 ethanol producers, mostly plant and operations managers from 10 companies, attended the training workshop. Together, in North Carolina, the producers were told about the lessons learned by the enzyme company in implementing its own operator training program, as well as what the Glacial Lakes team learned during its adoption of the system.

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32 | Ethanol Producer Magazine | JANUARY 2014

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TRAINING Some of the attendees said there is a clear need for better training industrywide. Midwest Renewable Energy LLC in Sutherland, Neb., for example, started up last April after a 14-month shutdown. Only one person out of a dozen came back to the operations crew when the facility came back on line. Others at the seminar reported experiencing higher-than-normal turnover as even longtime employees were spooked by the number of shutdowns in the industry and sought alternative employment. Everyone at the seminar was looking to enhance their existing training program.

Scorecard Challenge Moore explains that the first step taken at Glacial Lakes was adopting the scorecard approach to management, a process that was led by senior and midlevel managers but included significant input from shift leads and everyone throughout the system.

“We knew what was important to the business, but it’s different when you put it down in writing and try to measure it each day,” he says. Key metrics were identified, including such things as moisture levels in the ethanol and distillers grains, ethanol yield, the percentage of ethanol in the stripper and unscheduled downtime, among others. The bigger challenge was agreeing on daily performance numbers.

Managing by Score Every morning, the previous day’s numbers are posted on the scoreboard and displayed in each department. Here, Tim Crabtree, production manager, and Brent Fehn, lead operator, discuss what needs to be changed to bring more of the red squares into the gold or green zones.

PHOTO: TROY MCQUILLEN, MCQUILLEN CREATIVE GROUP INC.

The scorecard has become part of the discussion at every shift change and regular department meetings, and a friendly competition between the company’s two plants has evolved. It also illustrates a shift in management focus. “Scorecards tend to take the personality out,” Moore says. Rather than reacting to an event, the scorecards facilitate discussions about how to improve performance.

“It’s allowed us to have conversations on things like how DDGS moisture ties into tons of shipments,” explains Mina

Plant Manager Joe Gillespie. “It allows us all to see how things interact.”

The daily scores also help in identifying problems quickly. “When both plants are struggling, it gives us a tool to brainstorm solutions,” Gillespie says, giving as an example the dip in corn oil yields that occurred at both plants when the new crop came in. And, the scorecard becomes a tool for continuous improvement. “It is a vital first step, taking a look at the data and starting a detailed analysis.”

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JANUARY 2014 | Ethanol Producer Magazine | 33

TRAINING

Measurable Difference The benefits from the new training program far outweigh the time invested and were seen immediately and tangibly in the bottom line, says Gillespie, Mina plant manager.

PHOTO: SUSANNE RETKA SCHILL, BBI INTERNATIONAL

Training Upgrade In addition to using a scorecard to measure performance, Glacial Lakes has put a heavier emphasis on providing personnel with certification-driven training. Adapting the operator certification system employed at Novozymes, Glacial Lakes now asks all of its operators to be certified. Experienced operators were asked to complete the certification in a few months, while new hires

will be asked to become certified within two years. The training is broken into areas such as propagation, cook, fermentation, distillation and drying. “We want certified operators to be able to display skills to operate the entire facility and not just one specific area,” Moore says. “With only four people per shift running a 120 MMgy plant, it behooves us to have everyone able to work in any area.”

On-the-Job Training Glacial Lakes Energy Watertown Plant Manager Dan Schoenfelder explains to Robin Jung, production operator, the principles of corn oil separation.

PHOTO: TROY MCQUILLEN, MCQUILLEN CREATIVE GROUP INC.

34 | Ethanol Producer Magazine | JANUARY 2014

Spelling out what needs to be known in each area in detail is no small task, Moore says, but developing the program requires managers to define their expectations for employees. Each area’s training module is approached from three angles, knowing, understanding and demonstrating. The specific points of knowledge needed to properly operate in each area are listed, the underlying theory and concepts required to understand the process are outlined, and, the specific skills to be demonstrated are detailed.

Safety training is integrated throughout.

The training manual will become a living document, Moore adds. Any time a process is changed or new equipment is added, the training materials will be updated.

While some of the training is done in small groups, materials are also available online and linked to the relevant standard operating procedure (SOP) for individual study. On-the-job training is done with shift leads, the plant engineer, midlevel and plant managers all participating as needed.

When ready, the employee takes written and oral tests on the information learned and demonstrates the specified skills. There are about 20 tests in the production department at Glacial Lakes and, given that shutting down and starting up each part of the plant is on the list of competencies to be demonstrated, the process takes at least a year. When all steps are accomplished, the employee receives a signed certificate in a small ceremony where Glacial Lakes managers recognize the achievement.

There was little pushback from employees when the program was rolled out, Moore reports. It opened dialogue among experienced operators about the things they found easy or hard, and it improved morale.

“There’s been a totally different attitude from hourly employees as we laid this out,” he says, adding that one goal of the training and certification process is to provide a clear path for employees. “We want to put control of their destiny into their hands.”

Achieving certification as an operator is tied to a pay raise, and everybody who wants can continue training for the next certification step. To become senior op-

TRAINING erators, they need a deeper understanding of the process and critical control points, along with demonstrated troubleshooting skills. The final level of certification, which is still being developed at Glacial Lakes, will be for supervisors, and will include another level of training in people skills, coaching and other management skills.

People Benefits After the first year, about 80 percent of the operations crew has become certified at Glacial Lakes. The training program provided new insight on experienced employees.

“You’d be surprised at the number of holes you’ve got out there,” Moore says. “You’ll find managers that are not fully trained themselves. We’re in a rapidly growing industry, and people were promoted without having every needed skill.” And, sometimes the perception of who was the best operator may be wrong, Gillespie points out, recalling one quiet operator who was exceedingly knowledgeable.

The training has had immediate benefits. “Some parts of the plants had bottlenecks because they weren’t understood,” Gillespie says. The training process helped in finding and solving some of those, improving throughput. Admitting that developing the program felt like climbing Mt. Everest at times, he adds, “the benefits far outweigh the effort. The investment in time will give rewards to the bottom line. We’ve absolutely seen that.”

In presenting their program at the Novozymes workshop, Gillespie and Moore fielded questions and shared stories with the other managers, describing in greater detail how the program was developed, explaining why they adapted certain parts of the Novozymes system to meet their needs, and showing examples of their training checklists and SOPs. Similarly, Novozymes’ training staff described how their program was developed and what their approach to dividing the training into manageable steps looks like. A similar workshop is likely to be held again and plans are in place to host a leadership training workshop for frontline employees this winter. Novozymes

also expects to repeat the “Golden Batch” workshop for lab managers that outlines a system similar to Glacial Lake’s scorecard.

After the Novozymes workshop, Moore says he got a few calls asking if he would share the Glacial Lakes materials, which he says he isn’t going to do. “This cannot be a canned process,” he says. “It needs to be developed internally.” The training checklists, SOPs and supporting documents are, admittedly, an enormous task to develop, he says, although most plants will have some in place. “This has been a tremendous individual development tool,”

Moore adds, “even just in putting this program together.” Not to mention that Glacial Lakes is seeing a linear improvement in all those metrics tracked on the scorecard. “In 2013, every production record improved,” he says quietly.

Author: Susanne Retka Schill Senior Editor, Ethanol Producer Magazine 701-738-4922 sretkaschill@bbiinternational.com

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JANUARY 2014 | Ethanol Producer Magazine | 35

PERFORMANCE

An Eye On Everything Adopting Six Sigma allowed Pinal Energy LLC to boost its performance in several areas of plant operations.

36 | Ethanol Producer Magazine | JANUARY 2014

PERFORMANCE

Sky High with SIX SIGMA

The iconic variability-reduction system developed by Motorola in the 1980s is helping a growing number of U.S. ethanol plants improve their bottom line.

BY CHRIS HANSON

In the mid-1980s, as the semiconductor industry soared and American business executives wielded Motorola’s giant mobile phones, an unsung engineer named Bill Smith developed a standard that allowed the iconic telecommunications company to measure the number of production defects that it suffered for every 1 million opportunities, or chances, for nonconformance. Six Sigma, as the methodology was named, aimed for high efficiency and low variability. It created what would become a global standard in manufacturing and business operations worldwide—a goal of 3.4 errors or less per million chances for one to occur. The results were extraordinary. By the late ’90s two-thirds of all Fortune 500 companies had adopted the program and Motorola alone is

JANUARY 2014 | Ethanol Producer Magazine | 37

PERFORMANCE

Histogram of YieldCalc Normal After Six Sigma

Before Six Sigma

12

SixSigma

10

After Before

8

Mean:

6

2.865 2.692

4

StDev:

0.03497 0.07455

2 0

2.550

2.625

2.700

2.775

2.850

2.925

YieldCalc A Big Bump Six Sigma allowed an unidentified U.S. ethanol plant to achieve significantly higher ethanol yield using existing equipment.

SOURCE: FRUGE CONSULTING

said to have saved an estimated $17 billion over 27 years as a result of its use.

Today, the Six Sigma philosophy has been applied to all manner of companies ranging from beverage producers, food processors and pharmaceutical makers to electronics manufacturers, auto makers and financial institutions. Not surprisingly, ethanol plants, too, are putting Six Sigma in play. Most ethanol producers are adopting the practices to more efficiently operate their plants, says James Fruge, consultant and Six Sigma master black belt. Six Sigma allows the producers to increase ethanol yields with existing equipment and maintain a quality product that meets customer needs, he explains.

Among the barriers facing Six Sigma implementation in the ethanol industry are the system’s somewhat involved training requirements and its relative novelty to the sector. “Well, it does take some training,” explains Fruge, adding that what usually works best is for companies to bring consultants in to train personnel at the plant.

Fruge recently conducted Six Sigma training at Pinal Energy LLC, a 50 MMgy ethanol plant in south-central Arizona. There,

he trained Pinal’s lab manger, Johannes Kor, and two of the facility’s operations managers. Fruge also provided entry-level Six Sigma training to additional members of the plant’s crew—operators, lab technicians and maintenance personnel.

There are various ways to learn Six Sigma and, in fact, it is taught by thousands of master practitioners. It is also typically included in MBA curriculum and its core principles are taught in undergraduate business schools at universities and colleges globally. In-the-field training of plant personnel by consultants and other accredited professionals, however, is still the best, some say the only, way to master it.

Inspired by the color-coded belts of karate, Six Sigma practitioners are granted symbolic status belts—yellow, green and then black—for advancing through the various tiers of program training. Classroomstyle seminars are typically two weeks long, but most people separate the two weeks by a month or more to minimize disruption to their work schedules, Fruge says.

In-the-classroom training has its advantages, but returning to a facility and applying the concepts of Six Sigma on the job

38 | Ethanol Producer Magazine | JANUARY 2014

site can be challenging. So Fruge and other Six Sigma gurus encourage onsite training whenever possible. When plant personnel learn Six Sigma on the job, they’re more likely to understand how to integrate it into their facility’s processes and use it to optimize production and performance.

The first level of Six Sigma training is yellow belt, which teaches the basic understandings of Six Sigma and its available tools. Next, green belt training encompasses more in-depth training on starting and running a project, operating statistical programs and monitoring processes. The black belt level requires roughly four weeks of training and encompasses a deeper understanding of statistical tests and procedures.

The highest level of training is “master black belt,” a status that indicates that a practitioner has mastered the system to a degree that qualifies them to teach it to others. Unlike some professional accreditations, once Six Sigma training is complete, recertification is not required.

Certain elements of Six Sigma are no doubt challenging, particularly those related to applied statistics. However, Fruge says, if the most difficult cogs of the system are taught in practical, easy-to-understand terms, they should be within reach for most

‘Once you get to that point using the Six Sigma methodology, usually the solutions are obvious.’

—Eric Sumner, global market development manager for DuPont Industrial Biosciences

Six Sigma pupils. “It’s a lot different than when you take a stat course, and their goal is to teach the technique,” Fruge says. “We really simplify it and make it easy for anyone to understand what the test means, [and] how and when you use the test.” Fruge says he encourages students of Six Sigma to think of applied statistics as part of the system’s tool set and not “something to be dreaded.”

PERFORMANCE Top-Down Support In addition to promoting quality and efficiency, Six Sigma has been making an impact in product creation and ethanol production. DuPont began implementing the system's continuous improvement methodology in 1999 and uses it as its primary business improvement process.

The company decided to implement the methodology primarily to improve its business performance, which led to a better economic return to stakeholders, explains Eric Sumner, global market development manager for DuPont Industrial Biosciencesâ&#x20AC;&#x2122; FermaSure business and certified Six Sigma black belt. â&#x20AC;&#x153;We use Six Sigma to develop new products through market-driven innovation,â&#x20AC;? Sumner says. â&#x20AC;&#x153;We assess customer input on what their needs are. Then we can bring solutions to the market through innovation, science and technology in order to deliver high value to our products.â&#x20AC;?

DuPont implemented Six Sigma through a companywide rollout that lasted roughly a year. Consultants were brought in to train multiple levels of management and personnel. By the end of 2001, the second full year of implementation, DuPont saw its Six Sigma expansion encompass more than 6,000 trained green belts, 1,300 black belts and more than 5,000 active projects. By the sixth full year, DuPont reported that black belt leaders were leading projects in every business region and function.

Support from senior company leadership is critical to Six Sigma implementation. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s very important that itâ&#x20AC;&#x2122;s implemented as a top-down program, meaning it has managementâ&#x20AC;&#x2122;s support from the top-down, because itâ&#x20AC;&#x2122;s implemented from the ground up,â&#x20AC;? Sumner says. â&#x20AC;&#x153;Management has to support it and what the ground floor employees bring as a result. If they do, theyâ&#x20AC;&#x2122;ll see the benefits.â&#x20AC;? For instance, Six Sigma improves decision making by removing ambiguity and subjective thinking through its data-driven decision making, he explains. â&#x20AC;&#x153;The decision really comes down to an objective measure of performance and looking at data thatâ&#x20AC;&#x2122;s around the decision, and once you get to that point using the Six

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Values of Low Variability DuPontâ&#x20AC;&#x2122;s FermaSure product line was conceived using Six Sigmaâ&#x20AC;&#x2122;s famed DMAIC principles.

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PERFORMANCE

‘If you get total involvement, there is a total culture change in your plant in how you look at your data and what your goals are for that facility.’

—Matt Rynearson, Pinal Energy

Sigma methodology, usually the solutions are obvious,” he says.

Sumner says DuPont’s FermaSure product line was conceived using Six Sigma’s famed DMAIC principles—define, measure, analyze, improve and control.

In collaboration with Wisconsin’s Badger State Ethanol, DuPont created the antibiotic alternative in 2006.

“There’s a lot of opportunity out there to implement a program such as Six Sigma in the ethanol industry,” Sumner says, “particularly because we have such a strong data-driven background in the industry.”

Bottom-Line Results Plant consistency was one of the biggest motivations for Winnebago, Minn.based Corn Plus to implement Six Sigma.

“I feel strongly that without Six Sigma in place, it can be extremely challenging to determine if the plant is in a consistent state of running,” says Courtney Ireland, lab manager at Corn Plus.

Unlike DuPont, Ireland received her Six Sigma green belt during an accelerated course at South Central College in Mankato, Minn., over a two-week period.

The course was followed by a four-month project specific to the Corn Plus facility— a program that not only provided plant personnel with a deeper understanding of Six Sigma skills and methodologies but also yielded significant process improvements at the plant. “Since completing my Six Sigma green belt, it has helped me get a much better handle on our data,” Ireland says. “I have been able to signifi-

cantly reduce our process variance and increase our overall ethanol yield. I have also been able to implement Six Sigma in other areas such as tracking the quality of our coproducts. This helps our marketer more easily advertise the quality of our product.”

Importantly, Ireland says, Six Sigma made an impact on the plant’s bottom line. Decreasing operational variability not only produced greater efficiencies but also increased profitability and plant optimization. For example, implementing Six Sigma methodologies at Corn Plus helped the staff decrease the frequency of poor performing fermenters, Ireland says. “In Six Sigma, you learn extensively to make changes slowly in order to better track the control of your processes. I have been pretty strict about this since my training, knowing that it is not always possible to make changes one at a time but making sure that we move slowly when it is possible.”

Six Sense After employing Six Sigma, Pinal Energy was able to intimately understand how the plant was operating, says Rynearson.

Predictive, Actionable Data During the first quarter of 2011, Pinal Energy implemented Six Sigma after one of its former general managers observed the system’s success in the chemical industry. The plant hired Fruge to implement the program and train Pinal’s staff.

During the first few months of application, the trainees at Pinal worked nearly full time on Six Sigma enactment. That intense focus paid off, according to Pinal Energy Plant Manager Matt Rynearson, who says the benefits of the program were manifest during and after its roll-out.

Rynearson’s team enjoyed early success in focusing Six Sigma methodolo-

PERFORMANCE

Complex Understanding Six Sigma can transform ethanol plant operational cultures and change the way facility personnel utilize data to solve and avoid problems.

gies to yield improvement. Making more ethanol with the same amount of corn was a huge benefit to the plant as corn prices at the time were roughly 80 percent of its bottom-dollar cost, Rynearson says.

In addition to greater ethanol yields, the new processes led to lower natural gas usage and provided the facility’s management team with a more intimate understanding of operations. “Not that we were always mistaken, but [Six Sigma] helped us organize the data to the point where we truly understand what’s going on with this facility,” Rynearson says.

In one instance, the principles helped identify a cracked heat exchanger that was negatively affecting a fermenter at Pinal, Fruge says. After data pointed out issues with the unit, the plant ran a series of tests that initially read as inconclusive. However, once the plant inspected the heat exchanger, two fractures were discovered in the unit.

“They would have never seen the falloff of performance of that fermenter if they hadn’t set up their Six Sigma and hadn’t known how to analyze their data,” Fruge says.

Echoing Sumner’s call for management support of Six Sigma implementation, Rynearson feels that fully committing to the change will greatly benefit plant production. “What you’ll see is, if you get total involvement, there is a total culture change in your plant in how you look at your data and what your goals are for that facility,” he says.

Author: Chris Hanson Staff Writer, Ethanol Producer Magazine 701-738-4970 chanson@bbiinternational.com

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JANUARY 2014 | Ethanol Producer Magazine | 41

Q&A

Iowa’s Biofuels Voice Monte Shaw, executive director of the Iowa Renewable Fuels Association, has seen the U.S. ethanol industry grow from less than 2 billion gallons in 2000 to well over 13 billion gallons today.

From the Beltway to the Corn Belt, Shaw’s advocacy for biofuels has been constant and effective.

INTERVIEW BY RON KOTRBA

After serving as communications director for the Renewable Fuels Association in Washington, D.C., Monte Shaw and his wife returned to the Midwest in 2005 to start a family.

Fortunately, the Iowa Renewable Fuels Association (IRFA) was searching for an executive director at the time. Shaw was a perfect fit for the job and the state organization has flourished under his leadership.

Since joining the IRFA, what changes have you helped facilitate in the organization itself and in the state renewable fuels legislative complex?

When I joined IRFA in 2005, the organization was transitioning from a period when Iowa Corn handled the association's day-to-day operations to where IRFA had dedicated staff. In 2005, it was me and Lucy Norton, who had worked for the Iowa Corn Growers for some time and helped form the the association. One of the first changes was to begin recruiting biodiesel members. There was some initial skepticism, but the IRFA board made it clear that both fuels would get fair treatment, and that’s been the case.

In 2007, Lucy and I decided a summit would be a good way to get our message out.

It had no budget and was set up like someone’s summer vacation slideshow presentation. But 400 people showed up. Now, we’re holding the eighth annual Iowa Renewable Fuels Summit.

As for renewable fuels policy, the IRFA board felt that Iowa was behind other states like Minnesota. It was a clear priority to turn that around. In the eight years that I’ve

lobbied, Iowa has passed four major pieces of biofuels policy. Now with the dramatic shift in federal policy, I think state programs will be more important than ever. So we’ll be busy at the statehouse in 2014.

How has Iowa been so successful without a state renewable fuels mandate?

Twice, there was a strong effort to pass an ethanol mandate (and once for biodiesel).

Ultimately, even many of the rural legislators in Iowa didn’t want to go that route. It was a painful process. But I don’t think the effort was for naught because, to stop the mandate efforts, legislators looked to some aggressive incentives for retailers to install biodiesel and higher-blend ethanol infrastructure. Those programs have helped. Iowa has no plans to revisit fuel requirements. Our goal is to give consumers fuel choices. If someone wants to pay more for E0, so be it. But they should also have the option of paying less for E15 or E30 or E85. That's what Big Oil wants to prevent.

What advice would you give other state organizations to help them achieve success?

Every state needs to tailor its priorities and activities based on its resources. Another key aspect is unity. We’re most effective when all or nearly all of our members are pulling in the same direction. IRFA members know their state legislators. They have them tour the plants and meet the employees. They attend the legislators’ town hall meetings.

42 | Ethanol Producer Magazine | JANUARY 2014

They know their cell phone numbers. Iowa legislators know that when I talk to them at the Capitol, I’m really talking for the 10,000 Iowa households invested directly in ethanol or biodiesel plants and I’m talking for the thousands of employees at those plants.

What are the greatest changes to the ethanol and biodiesel industries you have witnessed in your tenure with both the RFA and IRFA? When I went to work for RFA in 2000, the entire ethanol industry was producing about 1.6 billion gallons. In 2013, Iowa alone produced over 3.7 billion gallons. In 2000, there were a handful of plants operated by large agribusinesses and a handful of plants operated by farmers. There are more of both now but also several plants owned by folks in the petroleum industry. Nine large, stateof-the-art ethanol plants in Iowa are owned by refiners. I’d like to think that our shared interests in state regulatory issues and other things could help us work together. But for now, we’re on opposite sides of the federal RFS and there’s not much they think we can do for them. It’s also been exciting to watch the biodiesel industry grow in Iowa. There’s been change and growth and some consolidation, but the heart and soul of Iowa’s ethanol and biodiesel industry is still local, agricultural and optimistic.

Q&A

How would you characterize Big Oil’s tactics to discredit the RFS and ethanol as a fuel?

In the early days, a major driver in developing ethanol was creating a value-added product from surplus U.S. corn supplies to raise the price and boost farmers’ incomes. But when this happened years later, many took notice and complained that ethanol was responsible for world hunger. What are your thoughts on this?

How important are state renewable fuel policies and efforts under the scenario of a robust federal RFS? And how does the role of states change if federal policies change?

PHOTO: ERIKA FONTANA CPP

This is one of the most frustrating issues that Big Oil fabricated and “encouraged” others to promote. Mostly, this argument is carried on by people not interested in the truth but with other agendas. My favorite example of this was a New York Times article claiming that both cheap corn in the 1980s starved the Guatemalans, while now the “expensive” corn in 2012 was starving the Guatemalans.

How could both be true? Only 11.6 cents of each dollar spent on food today goes to a farmer. And less than 3 cents of that goes to a corn farmer. What might seem like a big shift in corn prices just doesn’t translate into the price people pay for food. Energy, specifically oil, plays a much bigger role. 2013 will not just be the largest corn harvest in U.S. history, but also the largest corn harvest in world history.

In 2012, Ethiopia—the poster child of world starvation—actually produced enough grain to establish a formalized grain trade. The facts are clear. Biofuels do not hurt the world’s poor and, in fact, may be one of the best tools for creating a better future for the world’s poor and hungry.

Shameless, predictable and occasionally effective. The 2014 RFS proposal by EPA shows that the Obama administration bought the Big Oil bluff that there really was a blend wall. Big Oil is the most profitable and powerful industry in the history of the world. It is not easy to try to level the playing field against them. I’m frustrated right now because Big Oil’s success on the RFS means consumers pay more for gas, rural America could teeter on the brink of another farm crisis, and our young men and women will still have to put themselves in harm’s way to defend oil shipments.

State policies are important either way.

Even with a robust RFS, we need state laws and rules to allow, even encourage, E15, E85 and biodiesel. We have to have leaders to show that when offered these fuels, consumers will respond positively. That’s a big goal of Iowa’s state policies. It’s starting, but we need more.

And if the RFS is ultimately gutted through the proposed rules, then state-level policies become even more important.

JANUARY 2014 | Ethanol Producer Magazine | 43

TESTING

CONTRIBUTION

Benchtop Workhorse Most ethanol plant labs analyze sugars, acids, glycerol, and ethanol components using HPLC (high performance liquid chromatography).

The HPLC instrument separates, identifies, and quantifies the components of interest.

PHOTO: SUSANNE RETKA SCHILL, BBI INTERNATIONAL

Round Robins Give Lab Managers Feedback on Test Methods Program helps to check accuracy, compare internal results with other labs.

BY WAYNE MATTSFIELD

Quality assurance (QA) programs in the internal, onsite laboratories at fuel ethanol plants are the primary and most immediate feedback for monitoring plant efficiencies and internal QA practices. In the course of working with clients, questions have been posed regarding the accuracy and precision of the procedures and results generated by the laboratories. Not only do individual plants want to ensure their own results are accurate, but there is also interest in being able to benchmark lab results against those from other laboratories. With this in mind, Phibro Ethanol Performance Group offers a round robin program for interested customers to allow them to anonymously monitor the quality of their own results while benchmarking those results against others.

In the laboratory round robin program, a pretested control sample of known composition is prepared and sent to a group of participating laboratories to use in conducting their standard series of analytical tests. Client laboratories are sent a sample containing the typical sugars, acids, glycerol and ethanol components routinely analyzed by HPLC (high performance liquid chromatography). The HPLC instrument separates, identifies and quantifies the components of interest from a sample in most fuel ethanol plant laboratories.

In the first two round robins organized by Phibro EPG, the participating laboratories were given a time frame to analyze the control samples and send in the results. Phibro tabulated the participantâ&#x20AC;&#x2122;s results, and compared those to the numbers for the control sample.

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).

44 | Ethanol Producer Magazine | JANUARY 2014

TESTING

Author: Wayne Mattsfield Manager, Analytical and Microbiological Services Phibro Ethanol Performance Group 651-641-2821 Wayne.Mattsfield@phibrochem.com

DP4+ = Short Column

= Long Column

202 203 205 206 207 208 209 211 213 215 216 220 221 222 226 233 235 240 246 247 248 249 251 252 256 263 265 266 270 274 281 284 288 290 294 295 297 299

7.5 7 6.5 6 5.5 5 4.5

DP4+ Long and Short The green line in the chart above is the value of the control sample.

The chart shows DP4+ (Dextrin) results in wt % by column length. The broken red line is the mean of all results, and the broken blue lines are the upper and lower control limits (2-sigma from the mean). When the DP4+ was in pure water, the four participants utilizing short columns all had results within the upper and lower control limits.

Lactic Acid

= Daily

= Every 2 days

= Weekly

= Each Use

= Biweekly

= As Needed

= Unspecified

202 203 205 206 207 208 209 211 213 215 216 220 221 222 226 233 235 240 246 247 248 249 251 252 256 263 265 266 270 274 281 284 288 290 294 295 297 299

0.40 0.39 0.37 0.35 0.33 0.31 0.29 0.27 0.25

Lactic Acid These two charts show lactic acid results in wt%, the one above by frequency of instrument calibration, shows increased calibration frequency did not improve the quality of the results. The chart below compares the same results by the manufacturer of the calibration standard (indicated by letter rather than name) or when using a standard prepared in-house.

The four preparing their own had results approaching or outside the upper control limit.

Lactic Acid

0.40 0.39 0.37 0.35 0.33 0.31 0.29 0.27 0.25

=A

= In House

=B

=C

=D

= Unspecified

202 203 205 206 207 208 209 211 213 215 216 220 221 222 226 233 235 240 246 247 248 249 251 252 256 263 265 266 270 274 281 284 288 290 294 295 297 299

The report included the concentration of each constituent analyzed by all participants and a summary of statistics from the data. Charts were produced for the mean, the upper and lower control limits (2-sigma from the mean) and the prepared (or true) values of each component. Results were reported anonymously, identified by a number known only by the participant rather than by name.

Participation in round robins provides laboratories with an opportunity to address several questions they may have about their analyses, including: 1. How accurate are my results versus the other participants and the actual control result?

2. Does my method, including such things as calibration practices or type of instrument, introduce a bias from the known value or does it provide results in a range similar to the other participants?

3. Do I misidentify or fail to detect constituents in the sample when compared to the other participants?

The Phibro team went beyond a simple representation of the tabulated results to compare other factors that may impact results, using a color-coded key to reflect the types of equipment and calibration practices in use at participating laboratories. The factors compared for the HPLC round robin included: • The instrument manufacturer.

• The column manufacturer.

• The length of column, whether long or short.

• The frequency of calibration.

• The source of the HPLC calibration standard, whether purchased from a commercial source or prepared in the lab.

The accompanying charts answer common questions about how some of those factors impact results. The top chart, for instance, compares the results to see whether a short or long column provides a better determination of the glucose polymers (dextrin or DP4+, maltotrios and maltose). The middle chart begins to answer the question of whether the frequency of equipment calibration affects the accuracy of lab results.

Based on feedback from the first two rounds, Phibro EPG plans to expand the scope of the round robin studies to include additional microbiological and chemical analyses conducted at fuel ethanol plants. This program is a key initiative as part of Phibro’s ongoing customer support program to assist in optimizing customers' plant operations. It is the goal of Phibro EPG that future round robins will continue to provide clients with a resource to supplement internal laboratory testing and become an integral part of their own quality assurance programs.

JANUARY 2014 | Ethanol Producer Magazine | 45

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