INSIDE: COUNTING CARBON IN CALIFORNIA march 2011
DDGS EXPORTS
Boom China Dominates, Mexico, Canada Still Strong Page 42
plus
Iowa Funds Advanced Biofuel Projects Page 54
KL Gears Up for Bagasse Page 48
www.ethanolproducer.com
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contents
features 42
march issue 2011 VOL. 17 ISSUE 3
48
DEPARTMENTS 6
Editor’s Note
Cellulosic Ethanol News Ebbs and Flows By Susanne Retka Schill
10 The Way I See It DISTILLERS GRAINS
Hot Destinations for DDGS Exports: China, Mexico, Canada 2010 was a great year for DDGS exports, but 2011 prospects are in question.
Big Contributions,
TECHNOLOGY
Gearing up for Bagasse
Big Subsidies By Mike Bryan
KL Energy partners with Petrobras to refine its process for sugarcane biomass.
11 Events Calendar
By Kris Bevill
Upcoming Conferences & Trade Shows
By Holly Jessen
54
60
12 View From the Hill Today and Tomorrow By bob dinneen
14 Drive
Waving the Green Flag
for E15—and American Ethanol By tom buis
16 Europe Calling
The Blenders Credit and
STATE PROGRAMS
REGULATION
The top corn state, Iowa also supports cellulosic ethanol projects through its Power Fund.
California’s Low Carbon Fuel Standard has raised many questions.
By Kris Bevill
By Kris Bevill
18 Taking Stalk
Carbon Counters
The Core of Advancement
China Trade Requires
Contributions 74
70
66
Trade: A Good Match? By Rob Vierhout
Long-term Vision By Tom Dorr
20 Business Matters A New Year Requires
New Look at Tax Rules By Donna Funk
22 Business Briefs 26 Commodities Report 30 Distilled SAFETY
Creating a Culture of Safety at an Ethanol Plant
Analyzing direct and indirect costs highlights importance of safety planning.
ENERGY
Utility Management Provides Savings
Tracking utilities identifies inefficiencies and opportunities. By Jaron Vande Hoef
By Nathan Vander Griend
INSTRUMENTATION
In-line Analytical Measurements Provide Intelligent pH Management
79 Marketplace 82 Ad Index INSIDE: COUNTING CARBON IN CALIFORNIA march 2011
Probes designed for harsh conditions improve fermentation controls.
DDGS EXpORTS
BOOm China Dominates, Mexico, Canada Still Strong Page 42
By Stefan Bardek pluS
Ethanol Producer Magazine: (USPS No. 023-974) March 2011, Vol. 17, Issue 3. Ethanol Producer Magazine is published monthly. Principal Office: 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. Periodicals Postage Paid at Grand Forks, North Dakota and additional mailing offices. POSTMASTER: Send address changes to Ethanol Producer Magazine/Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, North Dakota 58203.
4 | Ethanol Producer Magazine | march 2011
Iowa Funds Advanced Biofuel Projects Page 54
KL Gears Up for Bagasse Page 48
www.ethanolproducer.com
On The Cover The U.S. Grains Council sponsors educational sessions, such as this tour of an Alberta feedlot storing DDGS in a bunker. PHOTO: U.S. Grains Council
editor’s note
This issue of Ethanol Producer delivers another month of solid reporting from our team. Associate Editor
Cellulosic Ethanol News Ebbs and Flows Susanne Retka Schill, Editor sretkaschill@bbiinternational.com
Holly Jessen takes a look at the U.S.’ 2010 DDGS exports and reports that—no surprise here—China blasted past Mexico and Canada to become the No. 1 DDGS customer. She also reports on USDA’s long-term projections for DDGS that suggest the growth in the ethanol coproduct supply will probably not exceed its export and domestic use potential. Associate Editor Kris Bevill takes us around the country in her feature stories this month, discussing issues arising around California’s low carbon fuel goals and Iowa’s use of its Power Fund to attract advanced biofuel projects to the Hawkeye state. She also fills us in about the boost given to the cellulosic ethanol process development by South Dakota’s KL Energy in its partnership with Petrobras. The Distilled news section reports the good news for three other cellulosic ethanol developers who landed USDA loan guarantees: Coskata, IneosBio and Enerkem, and unfortunately, a brief update on Range Fuel’s struggles. I’ve been wondering if working out the kinks of a larger-scale process is at the core of Range Fuels’ seemingly slow progress after being quick out of the starting blocks. Iogen Corp.’s leadership made a strong point that they believe running their demonstration plant continuously for several months to work out issues will be key to their success. I’ve also wondered what the story is behind Verenium’s sale of its cellulosic interests to its backer, BP. That business development may have less to do with the challenges of process fine tuning, and more to do with the ability to stay in the game if BP were ready to invest more. Shortly after my visit to Ottawa last summer, Iogen announced the retainer of financial advisors to plan how to maintain a 50 percent stake in its joint venture with Shell. We often suspect that the multiplicity of company news releases on incremental steps by start-up companies is mostly intended to keep investors interested. More than once when a company has landed a big investment, the news releases dry up. Quite often, we run into companies that deliberately stay under the radar, not wanting to announce their existence until they’ve perfected their process.. That certainly saves on the embarrassment of not meeting projected milestones. This may be the situation regarding news about cellulosic ethanol developments; many firms going after grants and loan guarantees had to go public when they would have preferred not to.
FOR THE LATEST ETHANOL INDUSTRY NEWS VISIT www.ethanolproducer.com
contributors donna funk is a member of Kennedy and Coe, LLC, a CPA and manager of the firm’s biofuels group. She is a regular contributor to the Business Matters column, which rotates among legal and accounting firms working with ethanol producers. 6 | Ethanol Producer Magazine | march 2011
thomas dorr, president and CEO of the U.S. Grains Council, leads the council’s worldwide staff and overseas market development activities in more than 50 countries. Prior to joining USGC, Dorr served as USDA undersecretary for rural development.
EDITORIAL EDITOR Susanne Retka Schill sretkaschill@bbiinternational.com ASSOCIATE EDITORS Holly Jessen hjessen@bbiinternational.com Kris Bevill kbevill@bbiinternational.com COPY EDITOR Jan Tellmann jtellmann@bbiinternational.com
ART ART DIRECTOR Jaci Satterlund jsatterlund@bbiinternational.com GRAPHIC DESIGNER Erica Marquis emarquis@bbiinternational.com
PUBLISHING CHAIRMAN Mike Bryan mbryan@bbiinternational.com CEO Joe Bryan jbryan@bbiinternational.com VICE PRESIDENT Tom Bryan tbryan@bbiinternational.com
SALES VICE PRESIDENT, SALES & MARKETING Matthew Spoor mspoor@bbiinternational.com EXECUTIVE ACCOUNT MANAGER Howard Brockhouse hbrockhouse@bbiinternational.com SENIOR ACCOUNT MANAGER Jeremy Hanson jhanson@bbiinternational.com ACCOUNT MANAGERS Chip Shereck cshereck@bbiinternational.com Marty Steen msteen@bbiinternational.com Bob Brown bbrown@bbiinternational.com Andrea Anderson aanderson@bbiinternational.com Dave Austin daustin@bbiinternational.com CIRCULATION MANAGER Jessica Beaudry jbeaudry@bbiinternational.com SUBSCRIBER ACQUISITION MANAGER Jason Smith jsmith@bbiinternational.com ADVERTISING COORDINATOR Marla DeFoe mdefoe@bbiinternational.com Senior Marketing Manager John Nelson jnelson@bbiinternational.com
EDITORIAL BOARD Mike Jerke Jeremy Wilhelm Commonwealth Agri-Energy LLC Mick Henderson Corn Plus LLLP Keith Kor Golden Grain Energy LLC Walter Wendland Chippewa Valley Ethanol Co. LLLP Cilion Inc.
Neal Jakel Illinois River Energy LLC Bert Farrish Lifeline Foods LLC Eric Mosebey Lincolnland Agri-Energy LLC Steve Roe Little Sioux Corn Processors LP Bernie Punt Siouxland Energy & Livestock Co-op
Customer Service Please call 1-866-746-8385 or email us at service@bbiinternational.com. Subscriptions to Ethanol Producer Magazine are free of charge to everyone with the exception of a shipping and handling charge of $49.95 for any country outside the United States, Canada and Mexico. To subscribe, visit www.EthanolProducer.com or you can send your mailing address and payment (checks made out to BBI International) to: Ethanol Producer Magazine Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You can also fax a subscription form to (701) 746-5367. Back Issues, Reprints and Permissions Select back issues are available for $3.95 each, plus shipping. Article reprints are also available for a fee. For more information, contact us at (701) 746-8385 or service@bbiinternational.com. Advertising Ethanol Producer Magazine provides a specific topic delivered to a highly targeted audience. We are committed to editorial excellence and high-quality print production. To find out more about Ethanol Producer Magazine advertising opportunities, please contact us at (701) 746-8385 or service@bbiinternational.com. Letters to the Editor We welcome letters to the editor. Send to Ethanol Producer Magazine Letters to the Editor, 308 2nd Ave. N., Suite 304, Grand Forks, ND 58203 or e-mail to sretkashill@bbiinternational.com. Please include your name, address and phone number. Letters may be edited for clarity and/or space.
Please recycle this magazine and remove inserts or samples before recycling COPYRIGHT Š 2011 by BBI International
march 2011 | Ethanol Producer Magazine | 7
Power your old ethanol plant with New Ethanol production.
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the way i see it
Big Contributions, Big Subsidies By Mike Bryan
Could it really happen? Could the oil industry really get its subsidies cut? While I applaud President Obama’s initiative, it is almost beyond comprehension that Congress would ever pass such a bill. The pressure of the oil lobby and the tentacles from the oil industry that spread into a host of other powerful lobbying groups may likely prove to be more pressure than Congress can endure. Big oil generates billions of dollars in profits, while being subsidized by the federal government, and all the while creates diversionary rhetoric about the absurdity of a miniscule, by comparison, ethanol tax incentive. It is nearly an impossible task to calculate the amount of tax breaks, subsidies, incentives, low-interest loans and oil depletion allowances that we provide the oil industry each year. Estimates are between $15 billion and $35 billion annually. The reason for the wide range is that it is hard to quantify given the numbers of various programs that can be broadly characterized as subsidies. Suffice to say, in addition to reaping some of the largest profits on the planet, when federal subsidies are added in, the oil industry is doing pretty well. The oil lobby is all-powerful. Franklin Delano Roosevelt said, “The trouble with this country is you can’t win an election without the support of the oil bloc and you can’t govern with it.” Total contributions from the oil and gas industries to political candidates during the 2009-’10 election cycle exceeded $23 million. That’s a whole lot of influence when it comes to Congress reducing the oil industry subsidies.
10 | Ethanol Producer Magazine | march 2011
Critics’ rail against big oil when there is a spill and they gasp with disbelief when Exxon announces the largest profits of any company in the history of the world, yet they continually turn their spiteful criticism to an industry that supports American agriculture, produces a domestic renewable fuel and creates millions of domestic jobs. As a nation, we should support the development of domestic energy, including natural gas, domestic oil, and a range of emerging and existing forms of renewable energy. We complain about oil imports and rattle a sabre now and then when gasoline prices spike, but the fact is, as a nation, we really don’t care where our energy comes from or what the ultimate price really is, as long as the price at the pump is within our budget. When it comes to the real price of oil we still ascribe to a now outdated policy of “Don’t ask don’t tell.” So while the critics of ethanol subsidies continue to rant, the oil industry is reaping billions in profits while feeding like pigs at the government trough. Ships full of foreign oil continue to quietly slip into our ports, we unload the oil and fill them with billions of American dollars and send them on their way, all the while complaining about the injustices of the domestic ethanol industry. That’s the way I see it.
Author: Mike Bryan Chairman, BBI International mbryan@bbiinternational.com
events calendar
International Biomass Conference & Expo May 2-5, 2011 America’s Center | St. Louis, Missouri The largest, fastest growing biomass event was attended in 2010 by 1,700 industry professionals from 49 states and 25 nations representing nearly every geographical region and sector of the world’s biomass utilization industries—power, thermal energy, fuels and chemicals. Plan to join more than 2,500 attendees, 120 speakers and 400-plus exhibitors for the premier international biomass event of the year. Register by the early bird deadline, March 21, and save $200. (701) 746-8385 | www.biomassconference.com
FEW Seeks Producers, Industry Professionals to Present Their Stories
06/27
The International Fuel Ethanol Workshop & Expo is looking for producer stories. “FEW is and always has been a conference principally designed for producers—the men and women engaged in the production of ethanol globally,” says Tim Portz, program director for BBI International. “We are seeking—and giving strong preference to—presentation ideas from ethanol plant personnel and corporate management.” The FEW will be convening for its 27th year June 27 to 30 at the Indiana Convention Center in Indianapolis. The FEW organizers also welcome abstracts from a wide range of ethanol industry participants under four broad categories: production, management, coproducts and cellulosic ethanol. To a great extent, the program featuring four tracks, 30 panels and 130-plus speakers is built from the generous number of submitted abstracts. Track 1 focuses on production efficiency, plant optimization, process control, advanced maintenance, compliance, quality control, safety and other important areas of facility operations. This track will particularly appeal to ethanol plant managers, operations managers, process engineers, maintenance managers, lab managers and commodities managers. Track 2 is customized for ethanol industry executives, board members, directors and top-tier facility managers who have financial and/or managerial oversight of ethanol plants. Track 3 covers ethanol plant coproducts production, marketing and use. From production technology to domestic and international marketing and transport, this track will include a broad cross section of issues central to commodities managers, risk managers, distillers grains merchandisers, lab managers, researchers, animal nutritionists, and equipment, technology and service providers. Track 4 covers cellulosic ethanol—research, development and demonstration, feedstock technology and logistics, policy, projects and commercialization updates. This track will benefit ethanol plant personnel, researchers, engineers, growers, waste generators and aggregators, process technology providers and other industry service providers contributing to the development of crucial pathways to commercializing industrial-scale cellulosic ethanol production. Short summaries (abstracts) of proposed presentations can be submitted via the conference website at www.fuelethanolworkshop.com. The deadline for notifying acceptances is March 25, one month after the deadline for submissions.
International Fuel Ethanol Workshop & Expo June 27-30, 2011 Indiana Convention Center | Indianapolis, Indiana The FEW is the largest, longest-running ethanol conference in the world. Focused on production of grain and cellulosic ethanol, operational efficiencies, plant management, energy use and near-term research and development, the FEW will attract 2,500 attendees. (701) 746-8385 | www.fuelethanolworkshop.com
International Biorefining Conference & Trade Show September 14-16, 2011 Hilton Americas – Houston | Houston, Texas The International Biorefining Conference & Trade Show brings together agricultural, forestry, waste, and petrochemical professionals to explore the value-added opportunities awaiting them and their organizations within the quickly maturing biorefining industry. Speaker abstracts are now being accepted online. (701)746-8385 | www.biorefiningconference.com
Northeast Biomass Conference & Trade Show October 11-13, 2011 Westin Place Hotel | Pittsburgh, Pennsylvania With an exclusive focus on biomass utilization in the Northeast – from Maryland to Maine – the Northeast Biomass Conference & Trade Show will connect current and future producers of biomassderived electricity, industrial heat and power, and advanced biofuels, with waste generators, aggregators, growers, municipal leaders, utilities, technology providers, equipment manufacturers, investors and policymakers. (701)746-8385 www.biomassconference.com/northeast march 2011 | Ethanol Producer Magazine | 11
view from the hill
Today and Tomorrow By Bob Dinneen
The future of ethanol production in America cannot only be about starch-based ethanol. Today’s industry continues to make great advancements in efficiency, constantly implementing new technologies that allow for the production of more ethanol using fewer inputs. The ability of current ethanol producers to provide nearly 10 percent of the nation’s gasoline demand is opening new markets and paving the way for more renewable fuel use into the future. Simply put, we would not even be on the road to greater energy diversity and choice in America were it not for the contributions of today’s American ethanol production. But we have only begun to scratch the surface. Cutting edge technologies are nearing commercialization that will greatly expand the feedstocks from which ethanol is made as well as increase this industry’s capacity to provide a biodegradable, renewable alternative to imported petroleum. These technologies will turn what many consider to be waste materials— corns stalks, wood chips, grasses and even garbage—into economic opportunities and jobs creating a high octane, domestic renewable fuel. Despite the promise of these technologies, real world challenges stand in the way of full commercialization. Frigid capital markets, ineffectual loan guarantee programs and a constricted marketplace for ethanol are all contributing to the slower-than-necessary pace with which these technologies are developing. Recognizing the need for immediate action, leading companies in this sector of the ethanol industry have joined together with the Renewable Fuels Association to form a council with the singular purpose of accelerating
12 | Ethanol Producer Magazine | march 2011
commercialization of these promising technologies. This council of advanced and cellulosic ethanol leaders will advocate for visionary policies that ease capital market constraints and allow plans for commercial scale biorefineries to be built. It will aggressively promote efforts to expand the market for ethanol, creating room for the production capabilities of these advanced and cellulosic technologies. As CEO of the RFA, I am proud to be joining with these companies to advocate for sensible, yet ambitious, policies that move America’s ethanol industry forward. If the goals of the renewable fuels standard (RFS) are to be met, we must expand ethanol production beyond grain starch as the feedstock. If the RFS is to be a success, we must open up the gasoline market to true competition and provide choice for consumers. Ethanol policy debates will be fierce in this Congress. We are already seeing challenges to the entire industry percolate through members of Congress with constituents desperate to maintain the status quo. With pioneers in advanced and cellulosic ethanol production joining with the board members of the RFA, the industry can effectively say with one voice: “We must address the concerns of today while planning for the needs of tomorrow.” Author: Bob Dinneen President and CEO of the Renewable Fuels Association (202) 289-3835
Put BetaTecŽ natural hop extracts to work in your fermentation process to replace antibiotics and enhance yeast propagation. IsoStabŽ is the natural way to effectively control gram-positive bacteria while eliminating antibiotics and harsh chemicals. Plus, antibiotic-free DDGS adds value to your co-products. VitaHopŽ Silver yeast nutrient enhances yeast performance and vitality, inducing faster fermentations and larger yields. Combined with BetaTecŽ fermentation expertise and training, these technologies will significantly increase your plant’s efficiency. BetaTecŽ‌the natural hop to higher profits. For more information specific to fuel ethanol producers, visit www.bthp.info. 4HJ(Y[O\Y )S]K :\P[L >HZOPUN[VU +* ;! -! www.betatechopproducts.com
DRIVE
Waving the Green Flag for E15—and American Ethanol By Tom Buis
We are in the midst of a truly exciting time for the nation’s ethanol business. First, we have the approval of the Growth Energy Green Jobs Waiver, our petition to increase the blend of ethanol allowed in fuel from 10 percent to 15 percent. On the heels of that easing of regulatory barriers to our market, the 2011 NASCAR racing season launched with American Ethanol as a new marketing partner—and E15 as the official fuel of all NASCAR racing vehicles. It is absolutely good news to see a mountain of testing data compiled by the scientists at the U.S. DOE and the U.S. EPA all point toward E15 as a good fuel for today’s cars. Having NASCAR’s racing champions validate E15 is an incredibly effective way to market E15 to everyday Americans. In the case of both the E15 waiver and the American Ethanol agreement with NASCAR, the seeds of success were planted years before by the foresight, ingenuity, and hard work of Growth Energy’s members. Ethanol is a truly American industry—a business built by entrepreneurs in pursuit of opportunity. And in each of these
14 | Ethanol Producer Magazine | march 2011
significant moves, the opportunity lies in growing a marketplace through choice and competitiveness. Growth Energy’s filing of the Green Jobs Waiver in March 2009 was a major step forward for our industry. And it was a landmark decision when EPA delivered its final decision in January to approve E15 for all automobiles and light trucks made in the past decade. This signifies a huge increase in the market for American ethanol. But we still have people to win over. I truly believe that the NASCAR deal will push American Ethanol into the stratosphere. NASCAR has more fans—and more loyal fans—than any other racing series. First, Sunoco Green E15 will be pumped into the fuel tanks of each division of what is America’s leading racing series. Anyone who has any question of how E15 will perform in their street vehicle shouldn’t have to go any further than turning on the television on Sunday race days to see for themselves. Second, with the American Ethanolbranded green flag waving over the track on every lap, the American Ethanolbranded fuel port on every NASCAR racing vehicle, and the American Ethanol TV ads on media outlets covering NASCAR, this deal means tens of millions of Americans will begin to see our positive ethanol message—many for the first time.
Besides drawing one of the largest and most loyal fan followings of TVcovered sports, NASCAR penetrates parts of the country where we face our toughest challenges to change minds, including the Southeast and California. American Ethanol continues to grow. We recently signed the National Corn Growers Association to become a major partner in the American Ethanol coalition—and we are looking for more partners who see the value in reaching out to the many, many Americans who follow NASCAR. Thanks to Growth Energy’s Green Jobs Waiver, we now have the endorsement of the federal government that E15 is both a safe and effective fuel for today’s vehicles. Thanks to Growth Energy’s American Ethanol deal with NASCAR, ethanol will win over new believers who will watch as their champions reach the checkered flag racing on E15. Author: Tom Buis CEO, Growth Energy (202)545-4000 tbuis@growthenergy.org
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Europe Calling
The Blenders Credit and Trade: A Good Match? By Robert Vierhout
For several months now, the European ethanol-producing community has experienced a growing concern about ethanol imports. The estimated volume of ethanol/gasoline blends entering the EU last year reached 400,000 cubic meters (106 million gallons) or close to 10 percent of the EU fuel ethanol market. Most of this product, about 75 percent, comes from the U.S.A.; the rest from Brazil. This increased flux of ethanol to the EU occurred for a number of reasons. A very important one is certainly the blendwall that slows down U.S. domestic demand and forces producers to find other markets. Also helpful is the U.S. dollarto-Euro exchange rate that works to the advantage of American product. But there are two other factors at play that are very beneficial in making this trade possible. The first is very much a European issue, the second is American. Even though the EU is a customs union with one instead of 27 borders, free trade within its borders does not necessarily mean that all EU member states apply the EU custom rules in the same way. And to make it even more complicated, the technical requirements for the use of ethanol as a fuel can be different as well. Most EU countries allow only non-denatured ethanol for fuel. But
16 | Ethanol Producer Magazine | march 2011
some, such as the UK, Netherlands, Denmark and Finland, allow denatured ethanol such as blends of ethanol with gasoline. In the UK and Netherlands the custom’s point of view is that 10 percent of gasoline in ethanol is no longer a denatured ethanol, but a chemical. The result is that the import duty compared to the duty on denatured ethanol is reduced by about 50 percent. A clever trader or blender can even go a step further using the U.S. Volumetric Ethanol Excise Tax Credit to increase the margins on the trade. It doesn’t require rocket science to understand that such an operation—low import duty plus the blenders credit—creates a nice return. Thus, it isn’t surprising that a U.S. blender has rented storage capacity in Rotterdam this year for more than 66 million gallons of E90. It isn’t surprising either that there are now U.S. ethanol producers who have certified their product in line with German sustainability requirements. European ethanol producers do not like the way ethanol/gasoline blends are classified and taxed in certain countries. By applying the chemical classification code, only the trader is benefiting. The European Union is losing income, and the driver at the pump is most likely not paying less for fuel. The classification needs to be resolved, and it will. Like in the U.S., E90 blends with 10 percent gasoline should be classified as a denatured ethanol and not as a chemical. It is a problem we need to sort out at this side of the pond.
The VEETC, however, is a problem of a different order. The credit is intended to boost domestic ethanol consumption of U.S.-produced ethanol. So far, so good. I think it would be difficult to argue against such a support measure, provided it is really used to promote the homegrown for the homeland. Using the blenders credit for improving competitiveness outside the U.S. is, in my opinion, not in the spirit of the law and questionable under EU trade law. American taxpayers’ money should not be abused for the benefit of some traders and blenders who see a golden opportunity to increase their profit margin. If EU producers see their market and prices undermined because of a subsidy, and on top of that on a fuel blend that is not commonly consumed in the U.S. (E90), then there is not much room for maneuvering. Legal action seems the only way out. Unless, of course, the U.S. Congress would decide to include a provision in the law that excludes the use of the VEETC for fuel blends that are not consumed on U.S. soil. This would be a reasonable way forward, and we would certainly prefer this over any legal action. Subsidies and trade do not make a good match. They tend to end up in long legal battles. That is good for lawyers but not for the ethanol industry. Author: Robert Vierhout Secretary-general, ePURE Vierhout@epure.org
World-Class Marketing and Distribution Services for World-Class Biofuel Producers, Refiners, Blenders and Retailers. www.eco-ener gyinc . c o m
6 1 5 . 7 7 8 . 2 8 9 8
taking stalk
China Trade Requires Long-term Vision By Tom Dorr
One of the notable developments in the U.S. ethanol economy has been the sustained growth in exports of distillers dried grains with solubles (DDGS). By the end of last year, U.S. DDGS exports totaled more than 8 million metric tons with a value that topped $700 million. In Africa, the Americas and Asia, foreign livestock producers have discovered how valuable DDGS can be as a key component of livestock feed and how adopting DDGS can help them become more efficient producers of meat, milk and poultry products for their consumers. Nowhere has the adoption of DDGS been more dramatic than in China, where it rocketed from less than 2,000 metric tons of DDGS imports in 2007 to more than 2.3 million in 2010. Clearly, DDGS delivers great benefits to China’s livestock industries at the same time growing Chinese demand benefits the expanding U.S. ethanol sector. The steady growth of DDGS trade with China in response to growing demand makes the Chinese government’s decision to file anti-dumping charges against imports of U.S. DDGS not only surprising, but mutually disruptive to trade. It puts at risk mutually beneficial trade flows that, unless resolved amicably, will have implications for both countries. Even if the case is dismissed or mitigated during the injury investigation, the anti-dumping charges will likely have a negative effect on the United States’ 18 | Ethanol Producer Magazine | march 2011
ethanol industry. The charges mean additional costs in time and attention throughout the U.S. ethanol industry as it responds to the case, and increased uncertainty for ethanol producers and the corn growers who supply them. In a commodities market where a negative weather forecast can drop the price of corn in minutes, it’s not hard to see that uncertainty in the DDGS market can be bad news, not only for farmers who supply grain to the ethanol plants, but for every U.S. farmer who sells corn into commercial channels. There is also the very direct effect the charges will have on the ethanol industry itself. At 2010 levels, Chinese purchases of DDGS represent about 7.5 percent of total DDGS sales. For an industry where coproduct sales can represent as much as 30 percent of a facility’s revenue stream, China has become a critical export market. So what can ethanol producers expect as this case progresses? The first, critical step was completed in January, when almost 70 U.S. companies registered with the Chinese government as “interested parties” in the case—a process that was coordinated by the U.S. Grains Council. While it sounds like a formality, this registration is a very important means for signaling that the U.S. ethanol industry takes China’s concerns and actions seriously and respects the need to work with each other to resolve trade problems. It also has important implications because registered parties can qualify for lower, negotiated tariffs if, in the end, the case results in tariffs being assessed. The case is now in the fact-finding stage, during which Chinese investigators
will research DDGS sales, pricing and specific company practices for evidence of injury and dumping. To reach a final ruling against the U.S. trade, China must show evidence that DDGS has been dumped in the Chinese market at prices below those being paid by other buyers in other markets and that this practice has caused economic harm to the domestic industry. Provisional tariffs could be assessed as early as June, even before a final decision is reached. Under the current timetable, China is expected to make a decision on its findings by Dec. 28, although that deadline can be extended if necessary. China’s economic growth over the past two years has meant new trade patterns for a number of agricultural products including U.S. DDGS, and it’s not unusual to expect that both countries will go through a bit of a transition and adjustment in response to this new supply/ demand paradigm. At the council, we remain hopeful for a positive resolution to the case as U.S. DDGS offers such significant advantages to both parties—for the U.S. ethanol industry, a vibrant, growing market, and for the Chinese livestock industry, a valuable tool to feed a growing, economically more powerful nation. In the big picture, our goal is to encourage a resolution that focuses on the long-term U.S.-China trade relationship and the market potential not only for DDGS but for trade in a full array of U.S. and Chinese agricultural products. Author: Tom Dorr President and CEO, U.S. Grains Council (202) 789-0789 grains@grains.org
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business matters
A New Year Requires New Look at Tax Rules By Donna Funk
In 2011, business owners and managers should be aware of new 1099 reporting requirements, health care reform and accounting pronouncements. Here are a few items to note as you work with your tax consultant in the coming months. Businesses, including ethanol plants, have a new disclosure requirement in 2011 on their financial statements. The pronouncement changes will affect the level of detail provided to investors, lenders and others throughout financial statements and are a way to provide extra detail behind these transactions. Fair value measurements include hedging of commodity contracts, typically classified as a Level 1 transaction on financial statements. This year, a reporting entity should separately disclose the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe reasons for the transfers. Another pronouncement that could affect ethanol plants includes disclosing subsequent events for entities after June 15, 2010, that are registered with the Securities Exchange Commission (SEC). An entity that is either an SEC filer or holds conduit debt securities that are traded in a public market is now required to evaluate subsequent events through
20 | Ethanol Producer Magazine | march 2011
the date that financial statements are issued. Some good news for ethanol plants comes with the introduction of incentives for businesses to invest in machinery and equipment including a 100 percent bonus depreciation deduction for property purchased and placed into service after Sept. 9, 2010, and before Dec. 31, 2011. In addition, there are numerous credits available depending on plant size, fuel produced and feedstock used. The 2010 Tax Relief Act extends the reduced alcohol fuels credit for ethanol blenders for one year and retroactively extends the allowance of the alcohol fuels credit and the excise tax refund for alcohol fuel mixtures. Ethanol tariffs have been extended through 2011 as well as a 30 percent investment tax credit for alternative vehicle refueling property. The news media and business publications have discussed big-time changes due to health care reform legislation, but there’s another layer of this reform. For example, beginning in 2011 a provision in the Patient Protection & Affordable Care Act requires any business to report all payments in excess of $600 for services or merchandise to a third party when the cumulative amount paid during the year exceeds $600. The provision’s aim is to reduce the gap between income that individuals and businesses make and the federal taxes they pay. Prior to 2011, payments made to a corporation or to any type of business for merchandise were not required to be
reported on Form 1099. Under the new law, businesses will be required to submit a 1099 for all purchases, including those from corporations. The exact parameters of this requirement are still being researched but it is possible such things as employee reimbursements for meals and hotels claimed as business expenses will need to be attributed to the specific vendors and 1099s filed as needed. The business could have to send the form to that restaurant or hotel, which can potentially add to the burden of expense reporting. In the past year, our firm has been a part of numerous presentations on general education of health care reform and how to minimize the tax impact of the new law. Keep in mind, a business with fewer than 25 employees may qualify for a tax credit to offset some health insurance costs. Other key points for ethanol plant managers this year include a delay of the increase in personal income tax rates until 2013. At that same time, the 3.8 percent tax on unearned income and the 0.9 percent tax increase on Medicare will both take effect. As the tax changes this year are numerous, it is imperative to consult your tax adviser for solutions to this year’s set of rules. Author: Donna Funk Biofuels Group Manager, Kennedy and Coe LLC (800) 303-3241 funk@kcoe.com
Toulouse Mercure Toulouse Atria
April 11–15, 2011 A Tradition of Industry Education For 30 years, The Alcohol School has been educating fuel ethanol and distilled beverage producers in the science of alcohol production. The weeklong programme in Toulouse, France, is designed for lab, plant, and management personnel and is organized around a series of lectures and laboratory demonstrations presented by a faculty of academic, industry and Ethanol Technology Institute experts. The programme will cover the process of ethanol and beverage alcohol production from milling and mash preparation through fermentation and distillation. Enzyme usage, yeast biology, bacterial contamination and control will also be discussed along with other issues currently affecting both industries.
For More Information Registration is limited, with preference given to fuel ethanol and distilled beverage producers. Additional information is available online at www.ethanoltech.com. 6120 West Douglas Avenue Milwaukee, WI 53218 USA +1 414 393-0410 Fax +1 414 358-8012
business briefs People, Partnerships & Deals
Robert Streblow has joined The Merrick Consultancy, where he will work on the consulting team focusing on renewable energy projects for clients located throughEnergy Consultant out the Americas. Robert Streblow will His work will include work with Merrick on projects throughout the consulting services in Americas. program and project development, construction management, equipment and operations trouble shooting, energy audits and problem solving, and contract management. Streblow’s 37-year career has focused on the energy industry, including work with Horizon Wind Energy, The Industrial Company, MechTech Consultants, Stone & Webster Engineering, and the James River Corp.. Roger D. Stark has joined Ballard Spahr as a partner. He will handle energyrelated project development and financing transactions, mergers and acquisitions, public-private partnerships, and infrastructure development matters. He has advised numerous investors and sponsors in the renewable energy industry, including acting as program counsel to the U.S. DOE Loan Guarantee Program. He also advises on cross-border matters, particularly in Latin America, and has energy regulatory and litigation experience, including representing clients before the Federal Energy Regulatory Commission and state utility commissions. Carl Miller has joined the business and scientific advisory board at iDiverse Inc. With more than 40 years in the industry, Miller has held positions at Novozymes, Gist-brocades (now DSM), Diversa (now Verenium), Innovase and Syngenta, and is currently the president of Enventek, a biotechnology consulting company. His work has ranged from the development of cost-ef22 | Ethanol Producer Magazine | march 2011
fective biofuel production process designs to the commercialization of novel industrial enzymes. “The iDiverse technologies represent breakthroughs in the conventional paradigm of biofuel production from any feedstock but its greatest impact will be realized in the biomass-to-biofuels sector,” Miller said. John Atanasio was named president and CEO of Alfa Laval Inc. in January, charged with leveraging the company’s key technologies of heat transfer, separation Driving Growth and fluid handling Alfa Laval’s new CEO, John Atanasio has to drive profitable nearly 30 years with growth in its markets the company. in the U.S. Joining the company in 1983, he began in the food and dairy group and joined Alfa Laval Separation in 1990, where he held several positions. In 2001, Atanasio was named president of Alfa Laval USA’s parts and service division, and in 2004, became president of the equipment division. Most recently, he served as president of the hygienic and marine group of Alfa Laval Inc. Paul Kamp has joined the Inbicon A/S North American team as its business development representative. Based in Chicago, he works with grain-ethanol First to Second producers adding Paul Kamp, now with Inbicon, is working commercial celluwith first-generation losic production to ethanol plants to plan for second-generation their operations and upgrades. is responsible for accelerating the licensing of Inbicon Biomass Refinery technology in the U.S. and Canada. Kamp was previously an independent consultant under contract with Accenture as well
as leading chemical and biofuels companies. At Delta-T Corp., he held key roles in firstgeneration ethanol projects totaling over $1 billion and is currently working with many of those same producers to increase overall efficiencies and profitability and expand into the next generation. He has an extensive background in energy, chemicals, biofuels, renewable resources, legislative affairs, and technology commercialization. Wayne Mitchell has joined Merrill, Wis.-based Agra Industries Inc., in a business development role. He will be responsible for developing a long-term strategy for Agra to maximize opportunities within the renewable energy sector, indentifying and analyzing key market trends and establishing strategic goals and business development opportunities for Agra. Qteros Inc. appointed Christopher Dale to the newly created position of vice president, research and development. A bacterial microbiologist, he brings close Leading R&D to three decades of Christopher Dale commercially oriented takes a leadership role at Qteros as vice research and developpresident, research and ment experience for development. novel, industrial-scale biological applications to the development of the Qteros consolidated bioprocessing platform. Most recently, he served as head of microbial technology for Switzerlandbased Lonza where he led U.S. R&D efforts with a focus on bioprocess design, scale-up and technology transfer. He has also held senior positions at Cambrex Biopharma, Covance Biotechnology Services, SmithKline Beecham Biologicals and the Centre for Biochemical Engineering at the University of Birmingham.
Sponsored by
Scott Switzer has been named industrial sales manager for CPM Roskamp Champion. He has more than 20 years of experience in the process equipment and Size Reduction size reduction indusSpecialist Scott tries. CPM Roskamp Switzer will apply his 20 years of experience Champion is a manuas industrial sales facturer and designer manager at CPM Roskamp. of pelleting and particle-size-reduction equipment and automation systems for the animal feed milling and oilseed processing industries. Eric Marcotte has been appointed the southern U.S. regional sales manager for Stedman and Innovative Processing Solutions. Marcotte’s responsibilities will inNew in Regional clude selling crushing Sales With three equipment and sysyears of experience, Eric Marcotte is putting tems to Stedman cushis degree in mining tomers. The Aurora, engineering from the University of Kentucky Ind.-based company to use at Stedmans. offers various size reduction equipment including cage mills, size reduction hammer mills, pulverizer machines and rock crushers, as well as customed designed solutions. Willem P.C. Stemmer and Frances Arnold are corecipients of the Charles Stark Draper prize, one of the engineering profession’s highest honors given by the National Academy of Engineering. They were recognized for contributions to “directed evolution,” the process of engineering novel enzymes and biocatalytic processes for creating new drugs and chemical products. At the heart of Stemmer’s contribution is a process called DNA shuffling, which became the
core technology platform at Silicon Valleybased clean technology company Codexis Inc. Founded in 2002, Codexis has built a nearly $100 million company over nine years of commercializing this technology, including its use in the advanced biofuel development supported by Royal Dutch Shell plc. Ceres Inc. appointed William Burnquist general manager of its operations in Brazil. With 33 years in Brazil’s sugarcane and ethanol sector, Burnquist will administer the day-to-day activities of the company's subsidiary, Ceres Sementes do Brasil Ltda., including local seed production and sweet sorghum trials. Ceres traits such as drought and aluminum tolerance are being planned for sweet sorghum. Burnquist joins the company as the first large-scale trials are getting underway with ethanol mills, and as Ceres is gearing up for commercial-scale activities in Brazil. Michael Hancock has assumed the position of training manager for U.S. Water Services, developing training programs and materials both internally and for customers. Previously a member of the sales force, he has more than 33 years of water treatment experience in several industries. “I am excited to begin this new role for the company,” Hancock said. “This type of position will enable me to take the experience I’ve acquired through my years of service and use it to train the next generation of water treatment representatives.”
Lallemand Ethanol Technology appointed Graeme Walker scientific director
of the Ethanol Technology Institute, replacing the retiring Mike Ingledew. Walker is currently a professor of zymology and director of the Abertay Yeast Research Group in Dundee, Scotland, and will continue in those positions. In making the announcement, Lallemand General Manager Bill Nankervis described Graeme as one able to bridge the gap between academia and practical application of the theory in industrial situations. The Ethanol Technology Institute is the educational arm of Lallemand Ethanol Technology and is responsible for the production of both the Alcohol School held in Montreal and Toulouse, France, and the Operator’s School held in Omaha, Neb., as well as the publication, “The Alcohol Textbook.” Lallemand Inc. is a privately held Canadian company specializing in the research, development, production, marketing and distribution of yeast and bacteria. Gamajet Cleaning Systems appointed Tadd Wolff vice president of distributor relations, responsible for growing its U.S. and international distribution network and working with existing distributors to streamline and further develop their sales and service efforts. In his previous position as sanitary division manager, Wolff was responsible for the significant growth within the pharmaceutical and personal care industries. Enerkem appointed Philippe Burton vice president, human resources. CEO Vincent Chornet said Burton will play a prominent role in building the company’s management team and guiding talent development as it deploys its growth strategy. Burton has more than 16 years of experience, most recently as managing director, human resources at AVEOS Fleet Performance, and General Electric, Energy group, in Montreal prior to that.. Poet LLC CEO Jeff Broin received the 2010 Paul Dana Excellence in Bioenergy march 2011 | Ethanol Producer Magazine | 23
Leadership award during the Greater Indiana Clean Cities awards ceremony in Indianapolis. The award honors the memory of Indy Racing League driver Paul Dana, a strong supporter of Indiana’s growing biofuels industry who was killed in a racing accident in 2006. In January 2005, Indiana had only one ethanol plant, even though it was the fifth largest corn-producing state. Indiana currently has 11 ethanol plants and two more under construction. The combined production of the plants in production and under construction will exceed 1.1 billion gallons of ethanol annually and will use approximately 423 million bushels of corn. Protec Fuel announced Mr. Pete's in Brunswick, Ga., is the first station to have Protec Fuel's new E85 dispenser imaging, and the first offering E85 in the area south of Savannah, Ga. Three new stations were also added in the Atlanta area, installed by Protec for Indore Oil Co. Indore was the first to offer E85 to the public in the Atlanta area and now has 15 outlets operating. The newest are located at the Chevron stations in Sandy Springs, Lithia Springs and Newnan, Ga. DN Tanks Inc. is the new company formed after the merger of Natgun Corp., Wakefield, MA, and DYK Inc., El Cajon, Calif. The merger of the two companies, with more than 130 years of combined experience, creates the largest producer of wire and strand-wound prestressed concrete tanks in the world. Initially, Natgun and DYK will operate under their existing names, as divisions of DN Tanks. As the integration process takes place, they will evolve into a single operating company. Rockwell Automation has reconfigured TechConnect, streamlining its remote 24 | Ethanol Producer Magazine | march 2011
support offerings and adding several new capabilities. Subscribers can choose one of four levels of service: Self-Assist Support, Product Support, System Support and Application Support. Users also can customize a support package by adding a la carte options to a standard support level. Subscribers can receive support via email, online chat and interactive user forums, plus a smartphone solution will soon be deployed, allowing access to support offerings and chat via the mobile Web. Weaver, the largest regional independent certified public accounting firm in the Southwest, announces an expansion of the services offered to the petroleum and renewable fuels industries through a merger with L.T. Hawthorne & Associates Inc. “With the growing regulatory burden facing the petroleum and renewable fuels industries, the addition of Hawthorne staff gives us the much-needed ability to expand the scope of our consulting services,” said Wade Watson, leader of the renewable and energy compliance practice at Weaver. Last year’s ethanol advertising splash took honors from the National AgriMarketing Association. Poet LLC’s national television advertising campaign won first place honors for Television Ad Series and Best in Show. The campaign ran on Fox News, MSNBC, CNBC, NBC, CNN and HLN. The series of three ads featured a farmer, a scientist and a plant manager reciting free-verse poetry explaining their role in helping solve the nation’s fuel crisis. Growth Energy’s $3 million national advertising campaign, dubbed “Facts,” began last April and ran through the fall, incorporating national TV, online, print and outdoor ads. It won a first place for Outdoor Creative from the NAMA judges for the displays at the closest subway stop to the U.S. Capitol. The campaign also won a Merit award in the multi-media category, for how the campaign was used on national TV, on-line, and in traditional print and broadcast, as well as outdoors. Both ad series were developed by 3 Advertising, Albuquerque, N.M.
Tapco Inc. added IFI Grade 5 No. 1 Norway flat countersunk head elevator bolts to its existing product line. The Grade 5 bolts have greater proof load and minimum yield and tensile strength than Grades 1 or 2, allowing them to better withstand the additional forces exerted on belt lap splices. Tapco also supplies Grade 2 bolts in six styles. Tapco is a major importer and distributor of elevator bolts and manufacturer of a full line of elevator buckets.
Anhydro Inc. is once again Dedert Corp. Over the past several years, the company has built a successful dryer division in its Chicago office. Dedert built the world’s largest DDGS ring dryer, and supplied a number of closed circuit rotary dryers (technology license from Swiss Combi), and ring and flash dryers for various industries. Dedert also specializes in evaporator technology. The company is preparing to develop and market its dryer and evaporator technology worldwide. New Orleans-based Tulane University is targeting the energy industry with a new degree program at its A.B. Freeman School of Business. The master of management in energy program begins in July and will include customized courses on energy fundamentals, finance, modeling, data analysis, economics, trading, accounting, risk management, strategy and portfolio management. The curriculum also prepares students to take the Energy Risk Professional examination and other industry certification exams.
Share your industry briefs To be included in Business Briefs, send information (including photos and logos if available) to: Business Briefs, Ethanol Producer Magazine, 308 Second Ave. N., Suite 304, Grand Forks ND 58203. You may also fax information to (701) 7468385, or e-mail it to sretkaschill@bbiinternational.com. Please include your name and telephone number in all correspondence.
commodities Natural Gas Report
Will the U.S. become a natural gas exporter? Jan. 31—A dramatic increase in the development and production of natural gas and oil from shale formations is a game changer. Five years ago, the conventional wisdom was that the U.S. would have to import liquefied natural gas (LNG) from overseas to meet increasing domestic natural gas demand. In fact, several hundred million dollars were spent over that time to develop new and expanded LNG vaporization facilities along our coastline. Today, these investments look like white elephants since their utilization rates are very low. Ironically, the most significant LNG activity today is related to converting LNG vaporization facilities to LNG liquefaction facilities. For example, Cheniere Energy Partners announced in January its intention to develop 1-2 billion cubic feet per day of
liquefaction capacity at Sabine Pass, Texas. Their partner in the project is Sumitomo Corp., which will load and sell the LNG in the world market. Traditionally, Sabine Pass has been an LNG import facility. The U.S. is fast moving toward becoming a natural gas exporter for two interrelated reasons. First, natural gas in North America sells at a significant discount to the natural gas elsewhere in the world. For example, the current price of gas at Henry Hub, La., is significantly under $5 per million Btu. The current price of natural gas in Europe is roughly double that level. Moreover, the spread between North American and European natural gas prices actually widens somewhat through 2016. Clearly, there is a compelling economic reason why marketers and traders would
By Casey Whelan
like to move North American molecules to Europe. The second reason, which essentially is driving the first, is the continued exuberance regarding the scope, scale and economics of shale gas in North America. The resource is immense and spread literally across much of the country between the Rockies and the Appalachians. Further, the economics of shale development appear somewhat attractive at today’s prices and extremely profitable at European price levels. We expect projects will continue to be developed that will increasingly move the U.S. toward becoming an exporter of natural gas to buyers around the world. That is good for the trade deficit but not likely good for natural gas consumers who may experience higher prices.
Corn Report
Volatile markets ahead as planting approaches Feb. 2—Corn has seen choppy trading while trending higher. Market concerns include lower Argentine corn and soybean projections, a weaker U.S. dollar, Australia weather, and perceived short supplies of domestic and global grain. New investment monies
26 | Ethanol Producer Magazine | march 2011
flowing into all commodities at year end, and not just ag, pushed commodities higher. USDA’s January report lowered final corn yield to 152.8 bushels per acre. Harvested acres, however, were up 100,000 from the previous estimate, putting production at 12.447 billion bushels. Total demand of 13.43 billion bushels included feed demand reduced to 5.20 billion bushels, ethanol demand increased by 100 million bushels to 4.90 billion bushels, and other industrial use at 1.380 billion bushels. Export demand remained unchanged at 1.95 billion bushels. Overall carry-
BY JASON SAGEBIEL
out was reduced to 745 million bushels, a 5.5 percent carryout-to-use ratio, the lowest since 1995 when China demand entered. Globally, corn carryout was reduced by 3.0 mmt to 127 mmt, which is 10 mmt less than a year ago and the prior year. Looking towards planting intentions, the trade expect corn acres will top 90 million. The market will be poised to test 2008 highs on any planting delays or production issues. This volatility will spill over to the ethanol complex. The accompanying chart shows the carryout-to-use ratio for all U.S. feed grains is the lowest since 1995, keeping all grains and oilseeds volatile. A ratio closer to 15 percent would be more comfortable. The U.S. cannot afford any production declines in wheat, corn or other small grains—today prices are already in ration mode.
report
Regional Ethanol Prices
($/gallon on Jan. 31) Front Month Futures (AC) $2.304 REGION
SPOT
RACK
West Coast
$2.395
$2.525
Midwest
$2.290
$2.450
East Coast
$2.395
$2.610 SOURCE: DTN
DDGS Report
Regional Gasoline Prices
China case, shipping trends impact DDGS BY SEAN BRODERICK Feb. 1—Last month we said the Chinese dumping case should not affect business in the interim—and that should still hold true. But the amount of required paperwork and “discovery” is taking a lot of time at a lot of different plants. Chinese business is being done, mostly via containers, but traders are cautious. After comprising nearly 9 percent of total U.S. exports in 2009, China jumped to about 28 percent from January to November in 2010. Corn rallied about 40 cents per bushel in January, and DDGS rallied $15 to $20 with DDGS prices gaining relative to corn—a typical occurrence this time of year due to cold weather feed demand. Improving forward milk prices
are generating additional dairy DDGS purchases across the country, with a shift from maintenance to production. Prices delivered to the various container yards are still at a premium, pulling in product from plants that would not normally move in that direction. Rail cars are still being kept close to home as plants avoid placing themselves in a “have to sell to the local truck market” situation. Generally speaking, the best netbacks are coming to those that are able to do a blend of truck and rail. Barge freight is expensive, but ocean freight is cheap, thus bulk exports should pick up. DDGS is 85 percent the value of corn in the Gulf—the lower end of that spectrum.
($/gallon on Jan. 31) Front Month Futures (RBOB) $2.4568 REGION
SPOT
RACK
West Coast
$2.476
$2.594
Midwest
$2.433
$2.459
East Coast
$2.466
$2.519 SOURCE: DTN
DDGS Prices ($/ton) mar 2011
feb 2011
Minnesota
location
185
165
mar 2010 95
Chicago
195
175
105
Buffalo, N.Y.
205
175
120
Central Calif.
237
222
161
Central Fla.
214
199
146 SOURCE: CHS Inc.
Corn Futures Prices Date
(March corn, $/bushel)
High
Low
Close
February 2, 2011
6.34
6.20
6.20 1/2
January 3, 2011
5.74
5.55 1/2
5.73 1/2
February 12, 2010
3.86
3.76
3.76 SOURCE: FCStone
Cash Sorghum Prices ($/bushel)
Ethanol Report
LOCATION
Dec 27, 2011
dec 29, 2010
jan 15, 2010
Ethanol prices move early in year
Superior, Neb.
5.76
5.79
3.17
BY RICK KMENT
Beatrice, Neb.
5.83
5.56
3.09
Sublette, Kan.
5.71
5.43
2.84
Salina, Kan.
5.83
5.78
3.21
Triangle, Texas
6.03
5.75
3.12
Gulf, Texas
6.38
6.12
3.96
Jan. 31—Despite the fact that corn futures prices posted a sharp rally in January, ethanol and gasoline prices have seen little change when looking at price shifts on a monthly level. The daily moves in the market the first several weeks of the year, however, have been a volatile tale of market unknowns and commercial and noncommercial (speculator) interest quickly stepping in and out of the market. Shrinking corn supplies and strong spring demand concerns are keeping traders actively focused on the corn market. With prices quickly moving through both the $6 and $6.50 per bushel level in January, many buyers are only guessing at what the top limit may be, especially since potential weather or
planting delays could draw more buying support into the market. Ethanol prices continue to fluctuate with the movement in corn. The inability of energy markets to hold early gains seems to be pressuring the relationship between the corn and energy markets. RBOB gasoline markets have been contained to a 15-cent range through the early part of the year, and although short term gains seen through the middle of January seem to be containing the market for now, the concern around Middle East political and domestic unrest is likely going to be a main focus of most, if not all, markets during the next several weeks.
SOURCE: Sorghum Synergies
Natural Gas Prices
($/MMBtu)
feb 1, 2011
jan 1, 2010
feb 1, 2010
NYMEX
4.34
4.11
5.81
NNG Ventura
4.43
4.12
6.08
PGE Citygate
4.31
4.00
6.34
LOCATION
SOURCE: U.S. Energy Services Inc.
U.S. Ethanol Production
(1,000 barrels)
Per day
Month
End stocks
Nov. 2010
925
27,745
18,705
Oct. 2010
884
27,410
17,945
Nov. 2009
804
24,122
16,109
SOURCE: U.S. Energy Information Administration
march 2011 | Ethanol Producer Magazine | 27
distilled
Ethanol News & Trends
Unleashing the USDA
Vilsack leads the administration in supporting the biofuels industry.
PHOTO: USDA
It would appear as though the biothan corn kernel starch. Several corn fuels industry has no greater supporter ethanol producers made the list of recipients, but were paid only for the fuel than Secretary of Agriculture Tom Vilthey produced from something other sack. And, at least for now, the Obama than corn, according to the USDA, such administration is allowing the USDA to as milo-based ethanol. The agency said do everything it can to advance and nurthe one-time payments are meant to ture the industry as it struggles to keep up provide a financial incentive to biorewith the technological advances required fineries, which will play a necessary step by the renewable fuel standard. Under towards meeting future renewable fuel his direction, the USDA approved three standard targets. Future installments of massive loan guarantees for cellulosic the program will depend on changes to ethanol projects in January—a feat the the 2008 Farm Bill as well as the 2012 U.S. DOE has yet to accomplish. The Staunch Supporter Agriculture Secretary Vilsack makes no Farm Bill, an agency spokesman said. secret of his support for the ethanol industry. agency is also reportedly working on a Ethanol producers that received payrewrite to its loan guarantee requirements included: early February. The facility is expected to be ments, which will eliminate outdated language and make it a little easier for cellu- complete and operational next year. • Pinal Energy LLC, Ariz. $943,335.07 Coskata Inc. received the largest of the losic projects to be financed. Additionally, the • Western Plains Energy $598,783.49 agency recently made good on its late-2010 USDA’s three initial loan guarantees, garnerLLC, Kan. declaration to make payments to producers ing a letter of intent for $250 million. The • Prairie Horizon Agri$581, 640.12 of advanced biofuels under Section 9005 of company is planning a 55 MMgy woody Energy LLC, Kan. the 2008 Farm Bill and to provide funding biomass-to-ethanol plant in west-central Ala• Kansas Ethanol LLC, $486,701.08 for feasibility studies for biofuels production bama’s Green County. The company said the Kan. USDA loan guarantee will enable it to focus in all areas of the country. • Arkalon Ethanol LLC, $467,792.37 “We believe it’s critical and crucial to de- on the completion of financing for the plant. Kan. velop renewable energy from feedstocks in “This, along with the other announced loan • Bonanza Bioenergy LLC, $187,789.02 rural America,” Vilsack said shortly before guarantees, is a clear demonstration of the Kan. announcing the approved loan guarantees. administration’s long-term commitment to • Reeve Agri Energy Inc., $106,073.10 “We have this vision for a strong economic advanced biofuels,” Wes Bolsen, Coskata’s Kan. future that relies on homegrown energy and chief marketing officer and vice president of • Nesika Energy LLC, Kan. $73,422.90 we look forward to these projects and many government affairs, says. • East Kansas Agri-Energy $24,332.67 Quebec-based Enerkem Inc. received more as time goes on.” LLC, Kan. The USDA loan guarantees have had an the third loan guarantee for its subsidiary’s 10 immediate impact on at least one of the proj- MMgy municipal solid waste-to-ethanol proj• Corn Plus LP, Minn. $128,658.66 ect in Pontotoc, Miss. The $80 million USDA ects that received approval. Ineos Bio’s joint • Chippewa Valley Ethanol $6,037.27 venture, Ineos Bio New Planet Energy, re- commitment will be added to the $50 million Cooperative LLP, Minn. ceived a $75 million conditional commitment DOE grant the project received previously • Abengoa Bioenergy Corp., $213,891.03 from the USDA for its 8 MMgy waste-to-eth- and should help the company meet its goal Mo. anol project near Vero Beach, Fla. The plant of breaking ground later this year. • Chief Ethanol Fuels Inc., $949,018.35 As part of the Farm Bill’s Bioenergy will also produce 6 megawatts of electricity Neb. when operating at full capacity. Total project Program for Advanced Biofuels, the USDA • White Energy Inc., Texas $1,022,026.02 costs are expected to be $150 million. The distributed more than $15 million to biofu• Levelland/Hockley $304,897.19 project previously received a $50 million U.S. els producers in January. The financial boost County Ethanol LLC, DOE grant and so, with the backing of the was divvied up among producers based on Texas USDA, the company was able to complete the amount of advanced biofuels produced financing and break ground on its project in from basically any biomass feedstock other —Kris Bevill 30 | Ethanol Producer Magazine | march 2011
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One Foot in Front of the Other
E15 waiver approved, more work to do before fuel widely available. With part two of the U.S. EPA’s twostep approval process completed on Jan. 21, the E15 waiver now covers vehicles starting with model year 2001 through the current year. The industry reacted to the news with enthusiasm tempered by the need to keep moving forward. The National Corn Growers joined others such as the Renewable Fuels Association and Growth Energy in spreading that message. “While there is still plenty of work to be done, NCGA is pleased the EPA has taken this important step forward,” said NCGA Chairman Darrin Ihnen, a South Dakota corn grower. “NCGA and its ethanol industry allies will continue our work to educate the public on the use of higher blends of ethanol in vehicles.” The E15 waiver does not make the fuel
legal for sale and use immediately. Until a number of federal, state and industry-required steps are completed, E15 is only legal for use in flex-fuel vehicles. One of those steps is for fuel manufacturers to register E15 with EPA, which is also finalizing work on an E15 label. With the E15 waiver approved, many looked ahead to the need to build out ethanol infrastructure. “We commend the EPA’s decision to raise the amount of ethanol that can be blended into our fuel from E10 to E15,” said Glenn Nedwin, executive vice president of Genencor, a Division of Danisco. “It was the right action to take and an essential one. The EPA action expands the market opportunity for ethanol producers and will accelerate the deployment and availability of biofuels to more consumer markets
across the country. Building the ethanol fueling infrastructure is important to achieving greater economic, environmental and energy security benefits.” Others pointed to the need to approve E15 for 2000 and older vehicles, which were not tested by the U.S. DOE as newer model years were. In addition, the EPA said it would not be granting a waiver this year for E15 in any motorcycles, heavy-duty vehicles or nonroad engines. “This is definitely a step in the right direction, but North Dakota’s ethanol industry encourages EPA approval of E15 for all vehicles, thus providing a more streamlined process and less confusion for retail marketers and consumers,” said Jeff Zueger, chairman of the North Dakota Ethanol Council. —Holly Jessen
Missed Messages
Critics incorrectly blame ethanol industry. Sometimes the comments section for U.S. EPA rulings makes for entertaining reading. In its comments to the EPA about the proposed E15 label, the National Marine Manufacturers Association made quite a claim. NMMA accused Growth Energy of misleading boaters at its website, DrivingEthanol.org. Now, although the website in question specifically speaks about E10 and not E15, NMMA claimed that Growth Energy was suggesting compatibility of E15 in marine equipment by including a photo of a boat. Growth Energy, in its comments called the claim inaccurate and said the website in question makes “no reference to use of E15 and expressly instructs the public to check manufacturer’s specifications regarding use of E10 in marine applications.” In addition, NMMA argues that an E15 pump label is not enough to safeguard against misfueling. One extremely restrictive option it suggested was requiring a cashier lockout for mid-level blends, requiring ca-
shiers to only unlock an E15 pump for consumers with approved equipment. Other options NMMA suggested included radio frequency identification technology on vehicles and fuel pumps, electronic key pad confirmation or segregated pumps—none of which were instituted when the U.S. went from leaded to unleaded Not Intending to Mislead Does a photo a recommendation make? fuel. NMMA claimed Growth Energy was suggesting that E15 is compatible NMMA isn’t the only with boats by using a photo of a boat. group singing a negative song. All the buzz about misfueling is “manufac- and other industry groups aren’t suggesting tured hysteria,” says Matt Hartwig, commu- E15 be used anywhere but in the vehicles nications director for the Renewable Fuels approved by EPA. It clearly applies to cars, Association. Brazil starts with a minimum of pickups and SUVs only for model year 2001 25 percent of ethanol in each gallon of gas and newer. “Remember, this isn’t a manand the fuel is regularly used to fuel engines date,” Hartwig adds. “It simply allows ethain boats, lawnmowers and weed whackers. nol blends up to E15 to be sold with proper “This isn’t a huge technological leap.” labeling to the approved consumer groups.” Regardless, the RFA, Growth Energy —Holly Jessen march 2011 | Ethanol Producer Magazine | 31
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Good Bet on Ethanol Three plants located about an hour’s drive from each other made an announcement that gave their investors something to celebrate just before Christmas. Homeland Energy Solutions LLC, Golden Grain Energy LLC and Absolute Energy LLC, all majority owned by local investors, will have completed paying out a combined $20 million in cash distributions by early March. As Rick Schwarck, chairman, president and CEO of Absolute Energy, says, the companies are putting the product back into U.S. gross domestic product. Absolute Energy, 115 MMgy, is located just north of the Iowa border in Lyle, Minn. Distributions from each plant ranged from $6 million to $7 million. Investors received from 6 to 25 percent of the original value of their shares. The money will shore up the local economy, turning over several times
in the community, as members spend their dividends. “In times of pretty tough economics, this is exactly what Iowa needs to keep the economy growing,” says Walter Wendland, who serves as president and CEO of Golden Grain and Homeland, both 100 MMgy plants located near the Iowa towns of Mason City and Lawler, respectively. Besides the cash distribution, the local communities Profiting Locally Ethanol producer Homeland Energy Solutions and its benefit from a market for corn neighbors, Golden Grain Energy and Absolute Energy, paid out nearly million in cash distributions, benefiting their northern Iowa and and jobs. Collectively the three $20 southern Minnesota communities. plants process about 120 million bushels of corn from local corn producers, stable or growing employment numbers. In which is turned into more than 350 MMgy addition, the plants produce distillers grains of ethanol. Currently there are a total of 140 for area livestock producers. —Holly Jessen people employed at the plants, which enjoy
Stalking Horse
GPRE bids to purchase Otter Tail Ag Enterprises. Green Plains Renewable Energy Inc., already the fourth largest U.S. ethanol producer, is looking to add another 55 MMgy to its production levels. The company bid $55 million—$1 million for each million gallons—for Otter Tail Ag Enterprises LLC, a still-operating bankrupt plant in Fergus Falls, Minn. GPRE was approved by the bankruptcy court as the stalking horse bidder. A stalking horse agreement is an attempt by a debtor to test the market before an auction. The auction was set for Feb. 16 with the sale approval hearing set for Feb. 17, says Jim Stark, vice president of investor and media relations for GPRE. Although others may bid against GPRE in the auction, as the stalking horse bidder, the company has some additional options. “If we are not the prevailing bid, we have the option to respond, if we choose to,” Stark tells EPM. The company plans to finance the 32 | Ethanol Producer Magazine | march 2011
transaction with a mix of cash on hand and debt financing. Coming online in March 2008, Otter Tail Ag filed for Chapter 11 bankruptcy protection in U.S. Federal Court Oct. 30, 2009, and has been operating as a debtor in possession. It is limited from doing anything out of the ordinary course of business without approval from the court. As part of its reorganization plan, the company attempted to raise $12 million through investors last summer. It was unable to do so by the deadline, however, even after a series of extensions. The money that was raised was returned and the courts gave Otter Tail Ag another extension. In October, the courts approved employment of Carl Marks Advisory Group LLC as financial advisor to seek additional investors, amend the plant’s proposed reorganization or locate a buyer for the plant. If GPRE acquires the plant, it will in-
crease its capacity by about 8 percent, from 657 MMgy to 712 MMgy. The company currently operates eight plants in Indiana, Iowa, Michigan, Nebraska and Tennessee. "We remain focused on our growth strategy of acquiring operating assets that expand our ethanol platform and contribute immediately to our financial results," said President and CEO Todd Becker. "If we are successful in the auction process, we believe our proven management capabilities will add value for all stakeholders." GPRE also operates other complimentary businesses. It markets and distributes ethanol for four third-party ethanol producers with total capacities of 360 MMgy. It owns 51 percent of Blendstar LLC, which operates nine biofuels blending or terminal facilities in seven states. Finally, it operates grain storage, agronomy and petroleum businesses in Iowa, southern Minnesota and western Tennessee. —Holly Jessen
PHOTO: MATTHEW PUTNEY
Three plants pay $20 million to local investors.
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Up and Running Again
photo: POET
Abengoa says VEETC, E15 factors in restarting New Mexico plant.
Filling Up With cellulosic ethanol a scarce commodity, EcoTrek's pickup box is lined with drums carrying fuel for the trip.
Cellulosic Pitstop
First refueling at Poet research center after 3,000 miles The EcoTrek Foundation is showcasing E85 in a cross country road trip with a Ford F-250 fueled with cellulosic ethanol produced at Poet LLC’s research center in Scotland, S.D. Starting at the Santa Monica pier in California on Jan. 11, driver and EcoTrek founder Tom Holm refilled the barrels lining the pickup truck’s box for the first time at a stop in Scotland Feb. 1. Holm had already scored interviews with Forbes Magazine in San Francisco and television stations in Arizona. Further stops were planned for Chicago, New York, Washington D.C., Atlanta and Dallas before returning to California. “We’re taking a regular American-made pickup truck, outfitting it with American-made accessories and powering it with American-made biofuels in order to emphasize our ability to be gentler to the environment, while bolstering American’s economy, national security and independence from foreign oil,” Holm says. “Of course, we’re also doing this to highlight the magnificence of America’s natural and cultural beauty. These are things our forefathers fought and died for, and our servicemen continue on the web to make the ultimate sacrifice to protect. My hope is that Follow Tom Holm’s blog at www.ecotrek.com/blog the use of clean biofuels made here at home will begin to minimize our sacrifices and lead to a more prosperous America admired for the innovations for which Americans are noted.” —Susanne Retka Schill
Abengoa Bioenergy Corp. credited improved market conditions and recent policy developments, such as extending the Volumetric Ethanol Excise Tax Credit and the approval of E15, for its decision to restart its 30 MMgy plant in Portales, N.M. The plant sat idle for nearly two years before restarting Jan. 12. “We are proud to have our operations up and running again in Portales,” says Javier Salgado, president and CEO of Abengoa Bioenergy. “Due to its energy efficient production setup and the unique sorghum feedstock, which is typically grown without irrigation in Roosevelt County and the surrounding region, Abengoa’s Portales plant is a model for sustainable American fuel production that can help our rural farmers maintain their way of life while also preserving our precious water resources.” New Mexico’s one and only ethanol plant is located in Portales’ industrial park, only 20 miles from the main Burlington Northern Santa Fe Railway, making Texas and California, primary markets for the plant, easily reached via rail. The wet distillers grains has a good market in the area, which houses more than 40 large dairies as well as America’s largest cheese factory. —Holly Jessen
Jumping In
Another oil refiner takes its position among the top 5 producers of ethanol. In January, Flint Hills Resources Renewables LLC announced plans to acquire two former Hawkeye Renewables LLC facilities in Iowa, with the sale expected to close by the end of February. The company will pay an undisclosed cash sum for the 100 MMgy Iowa Falls plant and the 115 MMgy Fairbank plant, both of which will continue to operate as ownership and management operations are transferred to Flint Hills. The addition of the Iowa Falls and Fairbank facilities increases Flint Hills’ ethanol production capacity to 445 MMgy, making it the fifth largest ethanol producer in the U.S., according to EPM plant map data. The company also owns and operates 115 MMgy plants in Menlo and Shell Rock, Iowa, which it purchased from Hawkeye for an undisclosed cash sum on Sept. 8. Flint Hills is a refiner and marketer of petroleum and its related coproducts. Based in Wichita, Kan., it operates refineries in North Pole, Alaska; Rosemount, Minn., and Corpus Christi, Texas, and markets petroleum-based fuels and products throughout North America. The company is a wholly owned subsidiary of Koch Industries Inc., one of the largest private companies in the world. Founded in 1940, Koch Industries and its affiliates operate more than 80 refineries and own or operate about 4,000 miles of petroleum pipelines. As the largest purchaser of ethanol in Minnesota, Flint Hills is expected to utilize at least some of its newly acquired ethanol capacity to supply its own blending operations. A spokesman for the company said it became an ethanol producer “to enhance its renewables business” and to advance its position as a leader of transportation fuels production. The company will continue to explore opportunities for additional ethanol acquisitions, he says. —Kris Bevill march 2011 | Ethanol Producer Magazine | 33
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Moving to the Big Time Valero Energy Corp., North America’s largest independent oil refiner and marketer and the third largest ethanol producer in the U.S., made steps recently to further diversify its transportation fuel portfolio. The company has signed a nonbinding letter of intent to invest up to $50 million of the equity required to finance Mascoma Corp.’s joint venture project to construct a 40 MMgy hardwood pulpwood-to-ethanol plant near Kinross in Michigan’s Upper Peninsula. The $350 million Frontier Kinross LLC project will utilize consolidated bioprocessing technology developed by Mascoma at its Rome, N.Y. demonstration facility. The technology has been developed over the past five years and consists of a hydrolysis and fermentation process that utilizes genetically modified microorganisms to convert cellulosic fibers to sugar and produce alcohol in one step, without the addition of enzymes. Last September, the company purchased Canada’s SunOpta BioProcess Inc. in order to utilize its first-step pretreatment process for biomass, such as woody biomass. “Valero’s proposed investment in our first commercial-scale production facility proves the economic practicality of Mascoma’s technology for the conversion of woody biomass into ethanol,” Mascoma CEO Bill Brady said following the investment announcement in January. “We are also thrilled to have Valero as a shareholder in Mascoma Corp. as there are many synergies even beyond the Kinross facility, where the technologies we have developed could be helpful to Valero’s business.” In addition to equity, Mascoma’s agreement with Valero includes a coveted offtake agreement for fuel produced at the Kinross plant. Valero will also provide project development and construction oversight service for the project. A groundbreaking is planned for this spring. Production is expected to commence in 2013. Valero media relations director Bill Day says Valero has been making selective investments in emerging technologies and biofuels projects for the past few years, beginning with 34 | Ethanol Producer Magazine | march 2011
PHOTO: MASCOMA CORP.
Mascoma lands Valero agreement, prepares to break ground.
Humble Home Mascoma Corp. has been developing its consolidated bioprocessing technology at a 200,000 gallon per year demonstration facility in Rome, N.Y., for the past five years.
its acquisition of corn ethanol plants and expanding to include ventures in algae-to-biofuels, renewable diesel from animal fats and cellulosic ethanol. “We’re interested in knowing what the next renewable energy technology is going to be,” he says. “So we’re making investments in various companies that are working on those, and cellulosic ethanol is one of the most promising.” Valero’s investment in Mascoma is dependent upon the approval of both companies’ boards of directors and the validation of Mascoma’s technology. Day says there are “several steps” that Frontier must accomplish before the nonbinding letter becomes a solid commitment, but that is to be expected at a first-of-its-kind facility. Mascoma declined to provide further explanation of the agreement due to confidentiality restrictions. The Frontier project has already received a fair amount of criticism, most notably from environmental activists concerned with the use of woody biomass as a feedstock. Mascoma’s partner in the project is forestry company J.M. Longyear LLC, which plans to provide feedstock that is “selectively harvested, naturally regenerated, and is an underutilized, abundant resource in the area surrounding the Kinross biorefinery,” according to Mascoma. The Michigan chapter of the Sierra Club filed a suit against the state’s department of natural resources in December over the department’s approval of an air permit for the facility. The group dropped its lawsuit shortly after filing,
but continues to claim the facility is a poor use of Michigan resources and state funding. The project has received $23.5 million in funding from the Michigan Economic Development Corp. and is awaiting U.S. DOE approval for a $200 million loan guarantee. Day says Valero is always concerned about the environmental impacts of its projects. “But we wouldn’t be moving forward with this project if we were not comfortable with the technology,” he says. Steve Hicks, CEO of Frontier and J.M. Longyear says an extensive 14-month review, which included a public comment period, was conducted by the department of natural resources before it approved the facility’s air permit application. With Valero’s offtake agreement, Mascoma says it now has the entire process of commercializing cellulosic ethanol covered, from raw materials supply, to preprocessing, through production and distribution. It plans to become a top provider of process technology in the industry. Valero’s future will likely include more investments like the Mascoma agreement, with Valero providing the funding to commercialize previously developed technology. “We don’t have the research and development arms that a lot of the bigger oil majors have,” Day says. “So we choose to invest in companies that are doing that, or in some cases we just buy the whole company.” —Kris Bevill
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What Happened to Range Fuels?
Plans to create a RIN-generating pathway for the company’s methanol are still under way. With the fate of the Range Fuels Inc. cellulosic biofuels production facility in question, the potential for cellulosic methanol to generate RINs (renewable identification numbers) could also hang in the balance. In November, the U.S. EPA included Range Fuels as one of a handful of cellulosic biofuel producers that it expected to actually produce measurable amounts of fuel this year. When it finalized the 2011 renewable fuel standard (RFS) volumes on Nov. 29, the EPA said it expected Range Fuels to produce 2.3 million ethanol equivalent gallons of fuel this year—100,000 gallons of cellulosic ethanol and 2.9 million gallons of cellulosic methanol. But in early January, Range Fuels unexpectedly announced it had laid off “a handful” of workers at its headquarters in Broomfield, Colo., and at the production facility in Soperton, Ga. On Jan. 11, a company spokesman said the Soperton plant was producing methanol and was expecting to produce cellulosic ethanol by Jan. 14. But in the following days, CEO David Aldous was quoted by local media as saying that the plant would be temporarily closed while the company worked to raise more financing and correct technological difficulties. It is unclear if or when operations will begin again. EPM was unable to reach a spokesman for the company for a comment. The EPA says Range Fuels has provided information that demonstrates the company’s intent to produce methanol in 2011. In the meantime, the EPA will continue to monitor the industry’s overall progress toward meeting this year’s cellulosic biofuels goal of 6 million ethanol-equivalent gallons. An agency spokeswoman says the EPA is also still working to develop a RIN-generating pathway for cellulosic methanol, with input from Range Fuels. On Jan. 27, an agency spokeswoman said the EPA is continuing to investigate how best to analyze a situation in which renewable methanol made by one party is used by another party in the production of biodiesel. “Range Fuels is currently assembling their formal petition, but in our discussions with them we have already discussed much of what the petition will cover, allowing us to begin the analytical work,” she says. The EPA says it believes biodiesel producers would utilize a RIN-generating cellulosic methanol pathway, but it is unaware of any company other than Range Fuels pursuing the production of cellulosic methanol. Quebec-based Enerkem has said it will produce methanol and ethanol at its municipal solid waste-toethanol facilities using a thermochemical approach, the method employed by Range Fuels, but it does not plan to contribute to the 2011 RFS. —Kris Bevill march 2011 | Ethanol Producer Magazine | 35
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E10 German Style Some stations in Germany are now selling E10, an increase from E5 which has been available in Germany since 2007. The roll out of E10 started slowly Jan. 1. “It’s coming in, but it was never foreseen that it would be everywhere at the first of January,” says Dietrich Klein, secretary general of the German Bioethanol industry association. Dieter Bockey, a spokesperson for the UFOP, the union of German oilseed producers, is concerned that education efforts need to be beefed up. He believes the current strategy is insufficient for the introduction of E10 in every member state of the EU. “E10 seems to be becoming more and more a problem in the German market,” he explains. “The consumers are very unsure concerning the use of E10 in their cars.” Drivers won’t be able to find E10 at all gas stations until each has added the proper labeling and solved certain technical issues. Klein estimates that E10 will be available throughout Germany by early March. The process must be completed by then, he adds, in order to meet the quota of a minimum energy content of 6.25 percent biofuels in diesel and gasoline. Although biodiesel will be used to help fulfill that quota, ethanol is crucial to meeting the quota because
biodiesel’s portion is limited to 7 percent of total biofuels volume, Klein says. E5 will continue to be available at least until 2013 for those cars unable to use E10. The German environment ministry says about 90 percent of vehicles are compatible with E10. That number may actually be even higher, says Rob Vierhout, secretary general of ePURE, the Producers Union of Renewable Ethanol. The introduction of E10 is part of Germany’s bio-ordinance, which followed an EU directive requiring 10 percent use of renewable energy in road transport by 2020. By 2015 Germany will transition from the current general mandate to one that requires decreasing greenhouse gas emissions from transport fuels via the use of biofuels, Klein says. The goal is to lower carbon dioxide in exhaust gases as well as to conserve “increasingly scarce” crude oil, according to a press release from the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety. While the country imports most of its crude oil, the feedstocks for biofuels grow in Germany or Europe. "We expect the introduction of E10 to be structured in a consumer-friendly way,” said Federal Environment Minister Norbert
PHOTO: NORBERT BREUER
EU quota sets 6.5 percent biofuel content.
European Styling A fuel pump for E5, E10 and E85 is shown at a tradefair held in Berlin.
Rottgen. “It must therefore be open and transparent, must not be used for a general increase in petrol prices or have detrimental effects for drivers dependent on existing fuel types." —Holly Jessen
If You Don’t Like It, Sue Lawsuit against RFS2 thrown out. Efforts to thwart the renewable fuel standard (RFS2) failed in late December when a panel of three judges denied a petition for review. "This is an important legal development that upholds a critical pillar of a national energy policy that is intended to wean the United States off foreign sources of fossil fuels," said Growth Energy CEO Tom Buis. Growth Energy joined the National Biodiesel Board as an intervener in the case. In a 40-page ruling, the U.S. Court of 36 | Ethanol Producer Magazine | march 2011
Appeals for the District of Columbia ruled that the U.S. EPA correctly carried out its duties required by the Energy Independence and Security Act of 2007. The National Petrochemical and Refiners Association and the American Petroleum Institute had filed the lawsuit in March and argued the issue on Sept. 17. The groups claimed RFS2 was impermissibly retroactive and violated statutory lead time and compliance provisions. In addition, the groups said it violated statutory require-
ments, setting separate biomass-based diesel volume requirements for 2009 and 2010. Not surprisingly, API expressed disappointment. "EPA failed to meet its statutory deadlines, and in March of 2010, finalized a rule that regulated refiners and importers for the previous year," said Patrick Kelly, senior policy advisor. "This is a disappointing decision. Setting requirements to blend certain biofuels for the previous year is a legally questionable retroactive action." —Holly Jessen
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Fueling Freedom, One State at a Time SD wants to implement a state version of Growth Energy’s Fueling Freedom Plan.
In response to urging from the state’s ethanol producers, S.D. Gov. Dennis Daugaard introduced a plan during his Jan. 11 State of the State address to redirect a portion of the industry’s production incentives toward the installation of blender pumps within the state. The state currently spends $7 million annually on production incentives for State Support S.D. Gov. Dennis ethanol producers. Subsidies are capped at Daugaard proposes $1 million per facility and are distributed redirecting ethanol production incentives based on production volume. The reformed to infrastructure program would cut producer incentives by support. $2 million annually for the next five years and instead use that money to finance the build-out of blender pump infrastructure and provide funding for the state’s Revolving Economic Development Initiative. Daugaard says this revamp will free up $3.5 million for blender pump installations and $10 million for the REDI fund over the course of five years. “This approach is a ‘win-win-win’,” he said during his address. “First, our economic development efforts will have more money to invest in South Dakota business. Second, our ethanol industry will get an investment in blender pumps—the infrastructure needed to expand ethanol markets. And third, we will do this at no additional cost to our budget.” Although the plan will reduce the amount of money ethanol producers receive, it was actually initiated by the state’s producers. “The governor has called on all of us to assist in South Dakota’s economic recovery,” says Rob Skonsberg, senior vice president of public policy and corporate affairs for South Dakota-based Poet LLC and member of the state’s ethanol producers association. “This plan is one of those solutions. We can tighten our belt, assist in South Dakota’s recovery effort and invest in our future by simply restructuring an existing program.” South Dakota’s plan is admittedly based on Growth Energy’s Fueling Freedom Plan, which calls for federal ethanol incentives to be redirected toward the build out of ethanol infrastructure. “South Dakota is really excited to be a poster child to show how this can work, how you can work with an industry to evolve subsidies from just cash down the barrelhead to ethanol producers to something that’s going to be able to help build infrastructure,” Dustin Johnson, the governor’s chief of staff, says. —Kris Bevill march 2011 | Ethanol Producer Magazine | 37
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BP Goes Public
Report predicts oil growth in transportation to slow dramatically due to biofuels. BP released its 80-page Energy Outlook 2030 in January, containing its projections of long-term energy trends, including biofuels’ increasing share in the energy mix. By 2030, the company’s base case shows biofuels, mostly ethanol, will exceed 6.5 million barrels a day (Mb/d), an increase from 1.8 Mb/d produced in 2010. The company calculates that biofuels will contribute 30 percent of global supply within the next two decades. Specifically, the company projects that growth of oil use in transportation will slow dramatically and will probably plateau in the mid 2020s, largely due to increased biofuels use. “In transport, we are starting to see diversification, driven by policy and enabled by technology, with biofuels accounting for nearly a third of energy demand growth,” the source: bp report says. Other factors include highIn contrast, the company projects that er oil prices, improving fuel economy, vehicle saturation in mature economies and expected oil will be the slowest-growing fuel in the increases in taxation and subsidy reduction in next 20 years. Still, global liquid fuel demand will rise by 16.5 Mb/d and exceed 102 Mb/d developing countries. All this comes from an annual report by 2030. Most of the growth will come from that until this year was only used internally, countries with emerging economies such as according to Bob Dudley, group chief execu- China, Russia and Brazil. OPEC’s share of oil tive. “However, we feel it is part of our re- production is projected to increase to 46 persponsibility as a company to make important cent, levels that haven’t been seen since 1977. information and analysis available for public However, the U.S. dependence on imports of debate—all the more so if the issue at hand oil and gas is likely to fall to levels seen in the is as vital to all of us as is energy, its relation 1990s, thanks to improved fuel efficiency and to economic development on one side, and to increased biofuels use. Overall, biofuels, wind, solar and other climate change on the other.” The company expects the U.S. and Brazil renewables will continue strong growth, into continue to lead in biofuels production, ac- creasing their share in primary energy to more counting for 68 percent of total production in than 6 percent by 2030, up from 2 percent in 2030, a decrease from the combined 76 per- 2010. Biofuels alone will take up 9 percent of cent share in 2010. First-generation biofuels transport fuels. Fossil fuels contributed more will likely make up most of the increase, the than 80 percent of growth in energy from report says. About 40 percent of global liquid 1990 to 2010, however, they are expected to fuel demand growth will be met by biofuels contribute only 64 percent of growth in the after 2020 and 60 percent by 2030, compared next 20 years. Renewables, excluding hydro power but including biofuels, will account for to 13 percent in 2010. 38 | Ethanol Producer Magazine | march 2011
18 percent of growth in energy to 2030. “The global fuel mix continues to diversify, but for the first time, nonfossil fuels will be major sources of supply growth,” says Christof Rühl, BP's chief economist. The world’s population has more than quadrupled since 1990. In that same period, real income as measured by gross domestic product (GDP) has increased by a factor of 25 and primary energy consumption by a factor of 23. “The modern energy economy has been shaped by the trends of industrialization, urbanization, motorization and rising income levels,” Rühl says. In addition, energy per unit of income, also measured by GDP, continues to fall faster and faster. “This is true in our outlook to 2030, not only for the global average but for almost all of the key countries and regions,” he says. “The combination of energy efficiency gains and a long-term structural shift towards less energy-intensive activities as economies develop underpins this trend.” —Holly Jessen
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Miscanthus Boom Ahead
Repreve commits to planting 10,000 acres. With recent investments bringing its capitalization up to $10 million, Soperton, Ga.-based Repreve Renewables LLC has committed to getting 10,000 acres of miscanthus planted this year. The company held a field day in January to show off its test plots and equipment to potential growers, but even if not enough farmers commit, says manager of commercial operations, Craig Patterson, “we’ll plant it ourselves. There will be 10,000 acres in 2011.” That will be a huge leap in acres devoted to the high-yielding biomass crop. Repreve currently has 500 acres planted in five locations in the Southeast, which is equal to the total of all other miscanthus plots being grown now in the U.S. and Canada, Patterson says. The push to commercialize miscanthus got a boost in 2010 when Phillip Jennings, turf grass grower and founder of Sunbelt Biofuels, attracted new investors and folded his company into Repreve Renewables. The word "repreve" is a service mark of Unifi Inc. being used under license. Unifi is a Greensboro, N.C.-based global textile company, which entered the joint venture with Sunbelt Biofuels in mid-2010. A third, unidentified investor, brought the capitalization up to $10 million. Repreve is licensing Freedom miscanthus from Mississippi State University, which developed the variety and continues to work on crop development. Patterson says one-year-old stands in the Southeast are expected to yield between 4 and 6 tons per acre, two-year-old stands about 10 and after four years, 25 tons per acre. Patterson believes Freedom miscanthus will be a good fit in the Southeast, where growing conditions and underutilized farm land will favor the long-lived perennial biomass crop. "All those that grew tobacco need something else," he points out. The high-yielding miscanthus will compete well with subpar corn and subpar soybeans, provide a crop for land that has become overgrown, and even yield as well or better than timber. Planting equipment used for tobacco has been modified for planting miscanthus rhizomes, although Patterson adds the new investments will allow for the engineering of larger, more Big Biomass Producer Miscanthus should efficient equipment. be a good fit in the Southeast, yielding around 20 dry tons per acre on mature stands. —Susanne Retka Schill march 2011 | Ethanol Producer Magazine | 39
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distillers grains
China Reload A small barge is loaded with U.S. DDGS at China’s Shenzhen Chiwan Port. The product was delivered to feed mills up the Pearl River. photo: USGC
42 | Ethanol Producer Magazine | march 2011
distillers grains
Hot
Destinations for
DDGS
exports: China, Mexico, Canada The landscape of U.S. distillers grains exports changed dramatically in 2010 and—depending on the outcome of the Chinese dumping accusation—could change radically in 2011, as well. By Holly Jessen
In 2010, China sped past Turkey, Canada and Mexico, becoming the No. 1 destination for exported U.S. distillers grains, gobbling up 28 percent of the total DDGS exported worldwide. The odds that the upward trend would continue in 2011 came to a screeching halt in early January, however, with the announcement of China’s anti-dumping investigation. In just four years, China’s importing of DDGS went from zero to millions of metric tons in 2010, according to information from the USDA Foreign Agricultural Service. It started out modestly with 1,150 million metric tons (mmt) in 2007 and grew to more than 542,000 mmt in 2009. But that’s nothing compared to what happened in 2010. “They just skyrocketed,” says Mike Callahan, director of international operations for the U.S. Grains Council. “There are lots of numbers running around out there but I think the final tally, once it’s all in, China will have imported close to 3 million tons during 2010.” Others have estimated it could reach as high as 5 mmt. The official number for January to November 2010 is 2.3 mmt, a huge increase from the 445,058 mmt exported to China during the same time period in 2009. “Certainly China is an example of extraordinary takeoff in demand,”
march 2011 | Ethanol Producer Magazine | 43
distillers grains
<285 &/($5 62/87,21
DDGS Exports (Values in thousands of dollars)
Mexico Canada China All other Grand Total
Value
253,497 142,566 1,992 980,637 1,378,692
1,188,766 793,947 8,505 4,532,352 6,523,570
252,545 123,347 100,849 966,276 1,443,017
SOURcE: USDA Foreign Agriculture Service, data from Department of Commerce, U.S. Census Bureau, Foreign Trade Statistics
,7Âś6 $0$=,1*
:+$7 <28 &$1 *(7 '21( 81'(5
Value
2008 mmt
35(6685(
:KHQ \RX QHHG LW GRQH QRZ FRXQW RQ RXU SURIHVVLRQDO FUHZ WR FOHDQ DOPRVW DQ\WKLQJ EHWWHU WKDQ DQ\RQH
72// )5(( ZZZ DTXDSRZHU XV LQIR#DTXDSRZHU XV +\GUR EODVWLQJ DQG YDFXXP VHUYLFHV VLQFH 44 | Ethanol Producer Magazine | march 2011
Callahan says. â&#x20AC;&#x153;DDG has been a widely, easily accepted feed ingredient in most of our other Asian markets, but certainly not to the extent that China has embraced the product.â&#x20AC;? Lest China get all the attention, itâ&#x20AC;&#x2122;s important to note that the No. 2 and No. 3 export markets, Mexico and Canada, have been steady growth markets since 2003. For example, through November, Mexico imported 1.5 mmt of U.S. DDGS and Canada imported 933,346. That might be a fraction of the product sent to China in the past year, but thereâ&#x20AC;&#x2122;s no doubt that Mexico and Canada have had a bigger overall impact on the industry during the past decade. Mexico crossed the one million mark in 2008, importing nearly 1.2 mmt of DDGS. Economic conditions in 2009 and early 2010 slowed, but did not stop, the growth as livestock producers cut back on their animal numbers. â&#x20AC;&#x153;Livestock sectors are not back in the levels they were in 2008â&#x20AC;&#x201D;they are working toward that,â&#x20AC;? says Hernandez. â&#x20AC;&#x153;My impression is that they will be full speed ahead by the end of next year.â&#x20AC;? In Canada, the biggest increase in imports from the U.S. was from 318,864 mmt in 2007 to 793,947 mmt in 2008. In 2009 Canada brought in 819,743 mmt, somewhat less than was expected, but an increase nonetheless. In 2010, January through November, 933,346 mmt were brought into Canada, a 27 percent increase from the same time period in 2009.
Chinaâ&#x20AC;&#x2122;s Appetite for DDGS
Overall, the price of imported DDGS compared to Chinese corn or imported corn prices appears to be the primary driver
of DDGS imports to China, according to â&#x20AC;&#x153;Market Issues and Prospects for U.S. Distillers Grains Supply, Use, and Price Relationships,â&#x20AC;? a USDA report released in December. Another thing that has helped facilitate that increase is the availability of shipping containers and the growth of larger bulk shipments in ocean vessels. The USGC considers it a natural growth in trade for a country experiencing increasing urbanization. As more people migrate from rural to urban areas the demand for animal products, meat, milk and eggs, is growing. â&#x20AC;&#x153;DDGS is just another product [Chinese livestock producers] have realized there is value in that they need to capture,â&#x20AC;? Callahan tells EPM. China simply doesnâ&#x20AC;&#x2122;t have enough domestic feed ingredients to fulfill demand, nor does it have sufficient ethanol capacity to supply its own DDGS to the feed industry. There is a small ethanol industry in China, most of which use corn as the primary feedstock. The Chinese government, however, has put the brakes on expansion in the corn-to-ethanol industry, Callahan says. In addition, U.S. DDGS typically has better nutritional quality than the product made at Chinese ethanol plants. Another factor is that it has proven easier for U.S. exporters to send DDGS to China than corn. For example, imported corn is assessed a 13 percent tax and a 1 percent import duty while DDGS is only assessed a 5 percent import duty. Assuming the anti-dumping case is resolved favorably, Callahan says thereâ&#x20AC;&#x2122;s definitely room for growth in the Chinese market for U.S. DDGS. He was in China just before the announcement and it looked like 2011
distillers grains
2009 mmt 1,458,435 819,743 542,424 5,650,694 8,471,296.0
Jan - Nov 2009 Value mmt 226,979 111,262 80,739 871,146 1,290,126
1,310,296 733,496 445,058 5,108,004 7,596,854
255,293 133,928 463,209 1,473,119 2,325,549
1,515,082 933,346 2,346,025 8,284,446 13,078,899
The decision is expected by the end of 2011, with the possibility of a six-month extension.
Good Neighbors
Mexico and Canada are good markets for U.S. DDGS for the same reason— proximity. Sharing borders with the U.S. makes it easier to transport product whether by truck, rail or barge. Another big factor in both markets is the attractive price. And, both countries have room to grow in terms of accepting increasing amounts of DDGS. In Mexico, DDGS is still considered a new product, says Julio Hernandez, country director in Mexico for the USGC. As a result, the organization has been working to educate livestock producers on its use. That includes working with new users, helping current users learn
photo: USGC
was on track for even more growth. “The people there were saying, ‘Gee whiz, we’ll at least take 4 million in 2011, or maybe even more than that—we want as much of it as we can get,’” he says. As it is, however, the anti-dumping case is likely to disrupt trade in 2011. How much is going to depend on whether China decides to impose heavy duties, which could begin as early as June 2011. Will it be 10 to 25 percent, possibly low enough for trade to continue? Or, will the duties reach 100 percent? “Right now the buyers are sitting on the sidelines to see what is going to happen,” he says. To rule against the U.S., China must show evidence that DDGS have been dumped on the Chinese market at prices lower than what other buyers pay, injuring Chinese interests, according to the USGC.
Jan - Nov 2010 Value mmt
Feed Class USGC holds DDGS seminars for livestock feeders at Mexico farms to explain feed characteristics in cattle rations. march 2011 | Ethanol Producer Magazine | 45
the benefits of increasing inclusion levels and educating animal nutritionists. “We have a very ambitious and aggressive program,” Hernandez says. In contrast, in Canada DDGS is a wellknown and increasingly trusted product that’s already used by many livestock producers. The country will remain a large importer but will eventually reach a saturation point, says Neil Campbell, a consultant for USGC in Canada. The country’s entire feed market is about 19 mmt yearly, a much smaller feed market than China or Mexico. In addition, Canada is a major grain exporting nation that also produces a significant amount of DDGS at its own ethanol plants. “I would expect us to probably maintain our position as No. 3,” he tells EPM. The key to growing the market in Canada has been feeding trials to demonstrate higher inclusion rates. In the past three to four years the main priority was swine, the largest market segment for potential DDGS demand in Canada, Campbell says. With demand now
46 | Ethanol Producer Magazine | march 2011
photo: USGC
distillers grains
Mixer Ready A group checks out a feedlot silage bunk for DDGS at a feedlot in southern Alberta.
solid in the swine market, a cattle feeding trial of 20, 30 and 40 percent inclusion rates was recently completed, with the final report
available in late March. “If that trial works out the way that we think it should, that should provide a demand boost of probably
distillers grains
200,000 to 300,000 tons of distillers grains a year,” he said. The two countries also share the same barrier to increasing imports of the product. There’s a need for infrastructure to receive, store and distribute it. In Mexico the businesses are often simply too small or poor to make the needed upgrades, Hernandez tells EPM. Canada, on the other hand, has historically focused more on exporting product than importing and doesn’t have the necessary receiving and storage facilities, particularly in Western Canada. “It’s something that up until this distillers grains boom, nobody would have even thought,” Campbell says. “Why would we import any feed ingredient to any large extent, outside of maybe soybean meal from the United States? One of our long-term competitive advantages in terms of meat exports has been our ability to have low-cost feed produced in our own country.”
Long-term Supplies As ethanol production increases, so does the supply of DDGS which is expected to reach 33.3 million metric tons for the 2009-’10 marketing year, more than four times greater than in 2003-’04 and more than double since 2006-’07, according the USDA report on DDGS. The rapid growth has prompted fears that DDGS will someday exceed feed-use potential. However, Linwood Hoffman and Allen Baker, authors of the USDA report, say that’s not likely. The potential for domestic and export use of U.S. DDGS currently exceeds production and will probably continue to do so in the future. For one thing, the use of corn for ethanol production is expected to continue to grow, but at a much slower rate. The USDA projects that 4.5 billion bushels of corn will be used for ethanol production in 2009-’10. By 2019-’20 the projection climbs only slightly, to 5 billion bushels. As a result,
the supply of DDGS is expected to increase from about 33.3 mmt in 2009-’10 to about 38.6 mmt in 2019-’20. Higher export numbers also have an impact on the amount of DDGS available in the domestic feed market. The U.S. only imports a very small amount of DDGS, with 1 percent or less brought in during the past seven years. The export numbers have increased or held steady since 2002-’03 when 0.8 mmt, or 14 percent, of U.S. DDGS were exported. For 2009-’10 it’s estimated that 8.3 mmt, or 25 percent, of DDGS will be exported. Depending on who is asked, the potential for DDGS exports ranges from 20 mmt to 52 mmt. The study concluded, Hoffman tells EPM, that there’s enough use potential in the U.S. and export feed markets to consume the U.S. DDGS supply as long as prices remain favorable. Author: Holly Jessen Associate Editor, Ethanol Producer Magazine (701) 738-4946 hjessen@bbiinternational.com
march 2011 | Ethanol Producer Magazine | 47
technology
48 | Ethanol Producer Magazine | march 2011
technology
Gearing up for
Bagasse KL Energy Corp. is preparing to validate its modified process technology to turn sugarcane bagasse into ethanol. By Kris Bevill
As the bitter winter turns to spring in the tiny town of Upton, Wyo., located on the northern edge of the Thunder Basin National Grassland in the northeast section of the state, workers at KL Energy Corp. will bring in a dose of the tropics. For the past year, KL Energy has been overhauling its 1.4 MMgy demonstration facility in preparation to produce ethanol from sugarcane bagasse and this month marks the first trial runs of the companyâ&#x20AC;&#x2122;s new cellulosic process technology. Itâ&#x20AC;&#x2122;s an expensive project, particularly when considering itâ&#x20AC;&#x2122;s likely to need further modifications, but the company has a backer with deep pockets.
Tall Order After making $11 million in modifications to its Upton, Wyo., demonstration-scale facility, KL Energy Corp., in partnership with Petrobras, is ready to validate its sugarcane bagasse-to-ethanol technology. PHOTO: KL ENERGY CORP.
march 2011 | Ethanol Producer Magazine | 49
technology
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Last August, Brazil-based integrated energy firm Petrobras, Latin America’s largest company, agreed to invest $11 million in KL Energy as part of a cooperative agreement to develop and commercialize sugarcane bagasse-to-ethanol technology. The deal was nothing if not the opportunity of a lifetime for KL Energy, a company of about 30 people that has been working since 2007 to commercialize cellulosic ethanol production technology using woody biomass, specifically ponderosa pine, as a feedstock. Leading the collaborative efforts was Peter Gross, a Brazilian who was introduced to KL Energy and its technological potential about two and a half years ago. “I liked KL’s technology, so we agreed that in Brazil we would develop market opportunities for KL,” he says. “I focused on Petrobras from the very beginning, being Brazil’s biggest and most important company. We started with the Petrobras R&D department because they were also developing their own technology in the area of second-generation ethanol. Basically, I called up the researchers and told them a bit about what KL was doing, our ideas and the technology and the possibilities of cooperation.” Petrobras quickly realized the potential of KL’s technology and agreed to col-
laborate, Gross says, but it took two years before a contract was finalized, due mostly to the fact that Petrobras is an enormous international corporation and therefore has a slower decision-making process than smaller companies. In the meantime, Gross took on the role of KL Energy’s CEO and established an office in Brazil. Once an agreement had been reached, the companies established shared offices in Brazil, and a steady stream of Petrobras researchers began traveling to KL Energy’s demo plant in Wyoming and lab in nearby Rapid City, S.D., to assist in modifications to KL Energy’s process technology. Changes have been major, including the addition of a pre-pretreatment process called the bagasse conditioning step, which Gross says was learned from the pulp and paper industry. Modifications have been made to allow for the physical and chemical differences between bagasse and woody biomass and, most importantly, a new fermentation process has been designed. Gross says the process will utilize a yeast that allows them to process the C5 and C6 sugars. Ultimately, the plant will switch to a clear mash fermentation process that is used in Brazilian sugarcane mills. Gross says KL Energy’s process technology has come a long way since the plant was first commissioned in 2008. “We have a much better process,” he says. “There are a lot of changes in the process to reflect the learning over the past three years, which affects the entire process. What we’re doing now is injecting our process technology in Upton from what we’ve learned in the past 12 months in our bench-scale lab experiments. Of course there’s also some input from the Petrobras engineering team.”
Sweet Process
Approximately 1,000 dry tons of sugarcane bagasse will be trucked from Louisiana for the 10-week industrial validation program at Upton. Gross realizes the feedstock situation is not ideal but “there are not too many options in the U.S.,” he
technology
says. “It will be the most expensive bagasse ever processed, but that’s OK.” As part of the collaborative agreement, data produced during the validation process will be shared with Petrobras and used for the engineering of its first commercial-scale bagasseto-ethanol plant, which will be integrated at one of Petrobras’ Brazilian sugarcane mills. The early stages of engineering have already begun for that facility, which will have the potential to process 100,000 dry tons of bagasse annually and produce about 10 MMgy of ethanol. Production is slated to begin in 2013 and the goal is to immediately be able to produce at capacity at a cost which is competitive with Brazilian sugarcane ethanol. This lofty goal will be helped greatly by the process validation beginning this month at the Upton plant. The demonstration-scale is a vital step in the commercialization process, as producers well know, and was a significant factor in Petrobras’ decision to invest in KL Energy in the first place, according to Gross. The Upton facility has the ability to process 1 to 2 dry tons of biomass per hour. “That’s something very few companies have,” he says. “Petrobras does not have that in Brazil. They don’t have any demonstration facility. So rather than spend two or three years engineering and constructing their own demonstration facility in Brazil, as a shortcut we just upgraded our facility and prove the validation runs in the U.S.” The clock is ticking on the collaboration agreement, however. The mutual exclusivity rights to technology developed between the pair expire at the end of this year. Petrobras has the option to license the technology from KL Energy and Gross says having that option written into the agreement has benefited the partnership. “There’s absolutely no reason not to be 100 percent transparent with Petrobras and vice versa,” he says. “There’s no need to hide anything.” In the future, KL Energy’s business plan includes being owner/operator of a cel-
lulosic ethanol plant as well as providing technology for other producers. “Customers like Petrobras and others won’t be interested in having us as a producer when they have their own business concept on how they want to do it,” he says. “We’re fine with that. That’s also our preferred approach for the next year, which will allow us to grow our business without requiring huge investments. At this stage, that’s why it was so im-
portant for us to team up with Petrobras. I think we need these big partners that are willing and capable of taking on certain initial perceived risk and build that first commercial plant, which will be the reference plant for our technology.”
International Partnerships
International partnerships have benefits and disadvantages, as do domestic col-
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laborations, but Gross says working with Petrobras has been a very positive experience for the KL Energy team. “Petrobras is not a shareholder in the company, so we can maintain full flexibility and speed because KL is a small company,” he says. “I think we’re trying to take the best of both worlds. On the one side is Petrobras with all the assets, large R&D teams and financial resources. [On the other side] our small size
FRACTIONATION
•
EXTRACTION
[allows the] capability of developing our technology past taking some risk and also changing course when required. We would like to keep it this way.” While KL Energy is so far Petrobras’ only U.S. collaborator for cellulosic ethanol technology, several U.S. companies have entered into the Brazilian market through other avenues with the goal of advancing biofuel production technology. Bioenergy
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crop developer Ceres Inc. has established a subsidiary to focus on expanding sweet sorghum as a regional crop, providing Brazilian growers with an alternative to the ever-popular sugarcane. Ceres is collaborating with California-based Amyris Biotechnologies Inc. to commercialize renewable diesel from sweet sorghum. Amyris also established a Brazilian subsidiary and recently announced a joint venture with Brazilian sugar- producing giant Cosan S.A. to commercialize renewable base oils, which would serve as a renewable alternative for petroleum base oils to produce such products as engine oils, gear oils and hydraulic oils. In January, Amyris added the former North American chief representative of the Brazilian Sugarcane Industry Association (UNICA), Joel Velasco, as its senior vice president of external relations. Last August, Cosan also signed a $12 billion joint venture with Shell International Petroleum Co. Ltd. to produce and distribute sugarcane-based ethanol and other fuels throughout Brazil. According to Cosan, the joint venture has a production capacity of about 528 million gallons. Shell contributed its 50 percent interest in Ottawa-based Iogen Energy Corp. and its 15 percent interest in California-based biotechnology developer Codexis Inc. to the deal, which it said will enable the joint venture to commercialize second-generation ethanol in the near future. Gross says the opportunity to develop second-generation biofuels in Brazil is unique when compared to the U.S. because Brazil offers virtually no subsidies or federal incentives of any kind. But what the country lacks in financial benefits, it more than makes up for with feedstock availability and market demand. “We don’t have any prospect of any grant money or other support becoming available,” Gross says. “On the other hand, we will enter the market with by far the best potential because of available biomass and a developed market. Ethanol
in Brazil is already bigger than gasoline, so there’s a huge domestic market. All cars are using at least 25 percent ethanol, most much more. And there’s a welldeveloped industry—there are about 400 sugarcane mills and most of them offer an opportunity to integrate ethanol. We also have a huge, fast-growing pulp and paper industry.” Gross believes that having a large partner such as Petrobras helps to validate his company’s technology, partly because the company conducted rigorous due diligence before agreeing to collaborate with KL Energy. “I think that is a very positive statement,” he says. There are many second-generation technologies on their way to commercialization and Gross says he’s convinced that second-gen fuels and biochemicals will be a reality in a few short years. While ethanol is a popular starting point, Gross emphasizes that the ability to produce sugar is the most important aspect of all of the emerging technologies. Once that is accomplished, the possibilities for endproduct applications are wide-reaching. “As these new technologies kick in, and you start producing biodiesel from sugars or butanol and chemicals, there will be a tremendous increase in the demand for sugars,” he says. “With the limitations in expanding land for crops, naturally the market will turn to sugars from biomass like bagasse and others. That’s where we’re going to be. Maybe we’re not going to use all the sugars to produce ethanol. Maybe it’s going to be something else, but it almost does not matter.”
PHOTO: KL ENERGY CORP.
technology
Starting Small Research at KL Energy Corp.’s lab in Rapid City, S.D., is focused on perfecting the company’s sugarbased process technology.
Author: Kris Bevill Associate Editor, Ethanol Producer Magazine (701) 540-6846 kbevill@bbiinternational.com
march 2011 | Ethanol Producer Magazine | 53
state programs
54 | Ethanol Producer Magazine | march 2011
state programs
The
CORE of
Advancement Iowa is on a mission to cement its status as the breeding ground for new biofuels technology and production. By Kris Bevill
There’s a perfectly good reason why Iowa should be the center of cellulosic ethanol development in the United States, according to project stakeholders and state officials. Well, several good reasons, actually, starting with feedstock. Corn is king in Iowa, where millions of acres of corn are harvested annually, more than any other state. That’s great for ethanol producers, who have a stronghold within the state and take advantage of the abundant corn stocks to produce more gallons of ethanol than any other state. In fact, in 2009 the 38 Iowa ethanol production facilities consumed 1 billion bushels of corn, about 46 percent of the state’s crop, and produced 30 percent of the U.S.’ ethanol, according to the Iowa Office of Energy Independence. The high concentration of feedstocks, which includes more crop residues than any other state, and ethanol production matters greatly to cellulosic biofuels developers who plan to piggyback their technology with corn ethanol’s infrastructure. A robust research environment, a biofuels-savvy workforce and widespread public support round out the short list of benefits Iowa offers to budding cellulosic and advanced biofuels projects. “When you have a unique value proposition to an industry and the industry understands that right away, it’s great to have that opportunity to engage with so many companies that are just as excited as you are about the opportunity,” says Martin Mitchell, international project manager, bioscience industry investment, for the Iowa Department of Economic Development. “We have a significant skilled workforce in the area of industrial biotechnology. We have that infrastructure in the ground [and] in the past 48 months, we’ve seen over $3.5 billion in capital investment projects in the industrial biotechnology/renewable space.” Drill, Baby, Drill A researcher drills a core sample from a bale of corn cobs and stover for testing at the Poet LLC plant in Emmetsburg, Iowa, shown in the background. PHOTO: DON TORMEY, IOWA OFICE OF ENERGY INDEPENDENCE
march 2011 | Ethanol Producer Magazine | 55
state programs
spent on research and development, early stage commercialization, and technology developments that would ultimately lessen Iowa’s dependence on fossil fuels. Budget cuts and redirected funding to flood recovery efforts, educational programs and community grants ate up just over a quarter of the program’s funding, whittling the program’s available funds down to around $75 million. In the first three years of the four-year program, the Power Fund board received at least 335 applications, requesting a total of $699.2 million, clearly demonstrating the desire for state support of cutting-edge renewable techPowerful Funding In an effort to turn Culver’s vision into nology projects. As of last December, the fund had ina reality, the state established the Iowa Power Fund in 2007. Iowa legislators approved a vested about $51.6 million in 39 projects—13 $100 million budget for the program, to be of them focused on biofuels. Project participants are required to commit matching funds to Power Fund grants and have contributed more than $300 million to their respective projects. Culver says he “couldn’t be more excited” about the program’s performance. “Our state has become a laboratory for the research and development related to second- and third-generation Piling Up A combine passes a giant pile of corn cobs harvested for storage and testing at Poet LLC’s Project Liberty, co-located with the renewable technologies,” he company’s corn ethanol plant in Emmetsburg, Iowa. says. “We’re attracting innovaPHOTO: DON TORMEY, IOWA OFICE OF ENERGY INDEPENDENCE There’s another reason cellulosic developers are flocking to the Hawkeye state—money. For Iowa, recruiting cellulosic and other renewable energy projects is not just an economic development talking point. The state is putting its money where its proverbial mouth is, and has spent the past few years carefully selecting innovative projects to invest in and nurture to commercialization. The hope is that all of this effort will result in what former Gov. Chet Culver refers to as the “silicon prairie of the Midwest.”
56 | Ethanol Producer Magazine | march 2011
tors and entrepreneurs to places like Shenandoah and Emmetsburg and, most importantly, because of this investment and this approach, we’re going to help solve the energy challenges across the Midwest, and around the world potentially, with some of these breakthrough technologies.” Companies participating in Power Fund projects include some of the biggest names in the ethanol industry. Poet LLC is the program’s poster child, receiving more than $14 million for its Project Liberty—bolton cellulosic ethanol technology used to convert corn stover to cellulosic ethanol. The company will install the technology at its 55 MMgy corn ethanol plant in Emmetsburg and plans to produce 25 million gallons of cellulosic ethanol beginning in 2012. Kerri Johannsen, executive officer of the Power Fund, says Project Liberty was one of the first projects selected for funding, in part because of its potential to accelerate cellulosic ethanol technology. “Iowa has the resources and infrastructure, including existing ethanol production, that make us an ideal location for next-generation ethanol production, but there are still many logistical hurdles to overcome to get there,” she says. “The Power Fund’s investment in Project Liberty demonstrated our belief in the technical expertise and determination on the part of Poet to get this
done and the great potential for Iowa that would be attached to this project’s success.” Johannsen says the board’s approval for the project was also influenced by the leveraged funding that Poet would bring to the state. The company has committed more than $230 million of its own money to the project, more than half of the total committed funds from all of the program’s participants. Jim Sturdevant, director of Project Liberty, says the decision to locate the project in Iowa was an easy one. The abundance of available feedstock, namely corn, as well as the large concentration of traditional ethanol plants in the state were the company’s main motivators, although community and farmer support also played a role in convincing Poet that Iowa was the right place to commercialize cellulosic technology. “Our Phase 1 approach is to co-locate cellulosic plants with our corn-based plants,” he says. “There are many advantages to following that business model. The fact that Iowa is a strong supporter of corn-based ethanol, it’s just common sense that it would be a strong supporter for cellulosic ethanol, too.” Poet operates seven corn ethanol plants in Iowa and has received strong political support as well as financial support in exchange for it doing business there. “We’ve felt all along that Iowa was a leader in our nation’s renewable energy campaign and they’ve come through,” Sturdevant says. “Their actions support our perception.”
Becker, there was never a question as to where the company would locate its algae project, regardless of state funding. “We probably could have located it at any one of the states that we have an ethanol plant in, but it’s really a partnership that started a long time ago between Explaining Liberty Poet’s Project Liberty Director Jim Sturdevant explains to members of the Iowa Power Fund Board and the Iowa Office of Energy Independence the layout of our company and the cellulosic ethanol plant’s biomass storage site, which is currently under construction. the state of Iowa and we’re appreciative of that partnership,” we build these [reactors] out at scale. There’s he says. “We were willing to invest, with or a chance to have algae reactors at every ethawithout them, but we thought with them was nol plant in Iowa. That’ll provide a lot of jobs a great idea because it’ll create jobs in Iowa if and downstream opportunities as well.”
Algae, MSW Projects
Green Plains Renewable Energy Inc. has received approximately $4 million from the Power Fund for its BioProcess Algae LLC project to cultivate algae from CO2 and waste water produced at GPRE’s 65 MMgy corn ethanol plant in Shenandoah. The twophase project was awarded about $2 million in Power Fund grants for each phase and is the only project to receive second-round funding from the Power Fund, according to GPRE. The total budget for the project is nearly $11.5 million. The project just recently entered the second phase, which includes operating at-scale bioreactors to grow and harvest the algae at commercialsize volumes. According to GPRE CEO Todd march 2011 | Ethanol Producer Magazine | 57
PHOTO: POET LLC
state programs
state programs
Other Notable Projects
The Iowa Power Fund has invested in projects that span the entire renewable energy spectrum, including biofuels, wind, solar, energy efficiency, biomass and transportation. The following is a short list of several notable projects. Tri-Phase Drying Technologies Inc.— Based in Norwalk, Iowa, this company is currently installing its first commercial-scale Tri-Phase II Dryer at American Natural Soy in Cherokee, Iowa. The dryer uses electricity
Just under $3 million of Power Fund money has been doled out to Fiberight LLC for its municipal solid waste (MSW)to-ethanol project at Blairstown. The $7 million project is expected to be among the first to actually produce cellulosic ethanol at commercial volumes in 2011 and will commence operations soon at its retrofitted corn ethanol plant. The availability of cornbased feedstocks doesn’t benefit Fiberight’s operations and CEO Craig Stuart-Paul says
58 | Ethanol Producer Magazine | march 2011
instead of natural gas or liquefied petroleum gas and is expected to reduce energy needs by 75 percent compared to traditional dryers. The Power Fund provided a $300,000 grant for the project. The total project budget is approximately $630,000. Cellencor Inc.—In association with the Iowa Corn Growers Association, the company is developing process technology that can be used to replace natural gas- or coal-fired dryers of distillers grains with microwave drying sys-
the company didn’t initially plan on locating its first commercial project in Iowa. “Our original thought when we bought the plant was to strip it down and move it, but the more we looked at the situation in Iowa … a lot of the things that we needed were already there,” he says. “So we thought we’d just stay put. That, so far, has turned into a good decision.” Fiberight’s feedstock of choice, MSW, turns out to also be plentiful in Iowa. The state has a 50 percent waste
tems. The process is expected to reduce water consumption, energy use and greenhouse gas emissions and will also produce higher value animal feeds. The Power Fund has committed $1.5 million to the $2 million project. Iowa State University Animal Science— Researchers are conducting experiments aimed at increasing the use of distillers grains in swine, poultry and cattle diets. The Power Fund has approved a $172,994 grant for the $415,328 project.
diversion goal, a paper mill with available waste located near Fiberight’s facility and many small landfills that could also service the plant. In addition, infrastructure and what Stuart-Paul describes as “welcome” were two very important components to Fiberight’s decision to remain in Iowa. “There’s a fairly hefty permitting requirement and also a very extensive financing requirement for secondgeneration biofuels,” he says. “While a lot of states pay lip service to it, when you actually
state programs
the program’s initial run and it entered the year already short on funds. In late December, the Power Fund board was negotiating contracts for about $35 million in funds, well over the program’s actual remaining budget of about $22 million. There’s also some question as to whether the new governor and legislature will renew the four-year program before the end of this year. In December, a press officer for incoming Gov. Terry Branstad said the governor will be reviewing all of the state’s programs, including the Power Fund, to determine whether they should receive renewals. Ultimately, the decision of whether to continue the program will be based on its cost/benefit analysis, he said. Culver and others believe the choice to continue the program should be obvious. Shaky Future According to an economic impact study But for all the development the Power recently conducted by the Office of Energy Fund has fostered over the past few years, Independence, the Power Fund’s investments there’s a very real chance the money will dry through September equaled only about 10 up before any of the projects reach their percent of the actual project costs. Between conclusion. This is the last approved year for 2007 and 2014, annual economic activity LWC628-RJS-0446 Biorefining Ad #2 1/8/11 10:52 PM Page 1 get into the process of getting permits and financing done, things grind to a halt. What we’ve found in Iowa was not only did we get rapid access to the Iowa Power Fund, we also got rapid access and willing support from all of the relevant agencies to make sure that this project got going.” Fiberight applied for a Power Fund grant in February and was awarded the money on Aug. 29, a timeline that would make any company seeking federal funding jealous. “A lot of work was done during that period of time, but they have a fast-track process and they make things happen,” Stuart-Paul says. “If you have a driving force saying ‘we want these projects to happen,’ people will make things happen. That willingness to help is a big difference.”
associated with Power Fund projects averages out to more than $100 million, including construction activities and ongoing project operations. State tax revenues from the projects are expected to exceed $2 million this year. Culver says he hopes the new state leaders will agree that the Power Fund is worth investing taxpayers’ dollars in. “I respect the fact that they’ve had very fair questions and that’s the case with every appropriation,” he says. “At the end of the day, I think the facts are going to be overwhelming in terms of continuing to support these renewable energy research investments. These are cuttingedge research projects that have tremendous potential. Obviously not every one of them is going to be the solution tomorrow, but I think it’s fair to say that any number of these projects will make it to commercialization and beyond. That’s what I’m focusing on.” Author: Kris Bevill Associate Editor, Ethanol Producer Magazine (701) 540-6846 kbevill@bbiinternational.com
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march 2011 | Ethanol Producer Magazine | 59
regulations
Carbon Intensity Lookup Table
Carbon Intensity Values in gCO2e/MJ
SOURCE: CALIFORNIA AIR RESOURCES BOARD
60 | Ethanol Producer Magazine | march 2011
regulations
Carbon Counters
California’s Air Resources Board defends and reconsiders its Low Carbon Fuel Standard. By Kris Bevill
January marked the start of California’s controversial Low Carbon Fuel Standard program, a regulatory measure designed to reduce greenhouse gas (GHG) emissions from the state’s transportation sector by 16 million metric tons in 2020. The specifics of the program are far from finalized, however. California’s Air Resources Board is currently defending its policy in lawsuits filed in both federal and civil courts while simultaneously convening its regular Expert Working Group hearings to attempt to settle contentious issues related to the policy. Most notable for ethanol producers is the issue of CARB’s calculation for indirect land use changes (ILUC) related to the production of their fuel, which initially resulted in a carbon intensity rating for ethanol that was higher than gasoline. As of late January, early effects of this highly unrealistic rating on the ethanol market in California were difficult to discern, but ethanol producers and lobby groups alike are certain that if the rating is left unchanged it could spell disaster for the industry.
march 2011 | Ethanol Producer Magazine | 61
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How Many Methods?
Perhaps the largest problem with attempting to determine indirect land use change (ILUC) related to biofuels production is the sheer number of models used to attempt to calculate changes. As shown in the graph, different models result in vastly different ILUC determinations. There remains no widely agreed-upon method to determine ILUC, but as models are updated with more recent data and refined to better reflect actual land changes, total ILUC associated with biofuels continues to decline.
Source: Renewable Fuels Association
Measuring Carbon
In order to calculate the total amount of emissions associated with each specific fuel, CARB devised various fuel pathways to determine the carbon intensity of each fuel. This measurement is expressed in grams of CO2 equivalent per megajoule (g CO2e/MJ) of fuel energy and is comprised of the full life-cycle measure of GHG emissions associated with the production, transport, storage and use of the fuel. Carbon intensity values are listed in a lookup table, which is then meant to be used by fuel providers to determine their compliance with carbon intensity reduction regulations. Separate pathways were created by CARB to differentiate among the various fuel types used to power facilities producing fuel as well as differences in the carbon intensity of the types of products created. Wet distillers grains, for example, has a lower carbon intensity than dried distillers grains. The regulation allows for new pathways to be added to the lookup table as approved by CARB’s executive officer. There are two avenues available through which new pathways can be added to the table: fuel providers can file an application for a new/modified pathway or CARB staff may develop new pathways internally. While in theory this open-ended method for determining emissions levels for fuels 62 | Ethanol Producer Magazine | march 2011
is workable, there is one major flaw with CARB’s calculations. Five fuels are included in CARB’s lookup table—gasoline, natural gas, hydrogen, electricity and ethanol—but only ethanol was subjected to carbon values for land use change. A value of 30 g CO2e/ MJ for land use change was tacked onto every pathway for domestically produced ethanol, resulting in an overall higher carbon intensity value for many of ethanol’s pathways than for gasoline.
Contentious ILUC
This contentious decision was immediately challenged by the ethanol industry and continues to be debated. Industry members are at odds with the agency over the notion of including ILUC at all, but they also believe that if ILUC considerations are required for ethanol, they should be required for all other fuels as well. Additionally, CARB’s method for calculating ILUC values is believed to be outdated and results in inflated values. To that effect, CARB’s own Expert Working Group recommended in November that the agency update its land use change and indirect effects values as soon as possible. The group recommended that CARB employ a model developed by scientists at Purdue University that uses updated information through 2006 related
to economic data, cropland pasture data, valuation of distillers dried grains and crop yields. However, the EWG warned CARB of the uncertainty related to any LUC model in its final report to the agency. “The assessment of life-cycle GHG emissions of transportation fuels is relatively new and is in a period of rapid development,” the report says. “No one model or set of models can be expected to do the ‘best job’ in performing a life-cycle assessment. This is particularly true in the case of indirect impacts of biofuels whose life-cycle GHG assessment are greatly influenced by data and assumptions regarding agricultural system response to greater biofuel demand, especially land use changes which result in changes in carbon stocks.” The EWG also noted that CARB uses the GTAP model to estimate ILUC, which poses some limitations. The group said that while that particular model may be the correct model to score fuel over arbitrary changes in quantity, it is not as accurate as other models in analyzing the overall fuel score in response to larger market changes. In comparison, the models selected by the U.S. EPA—FAPRI and FASOM—can be used to estimate the effects and value of carbon sequestration and related policies on land use and estimate the effects biofuel markets have on agricultural trade. The group’s overall
regulations
message to CARB was that using multiple models, or changing models, will undermine the stability of the regulation. Therefore, the group recommended that existing models are adapted to incorporate new information and researchers are encouraged to use the CARB’s framework of models to refine the ILUC models. CARB accepted the EWG’s recommendations and vowed to reach a conclusion regarding ILUC this spring. In the meantime, however, ethanol producers are hampered by the inclusion of ILUC values for their fuel.
Take it to Court
It’s not often that ethanol producers and oil refiners find themselves on the same side, but CARB has managed to find a way to bring the two groups together. Growth Energy, the Renewable Fuels Association and the National Petrochemical & Refiners Association are among a list of organizations that have filed legal challenges against the LCFS. Led by Growth Energy and the RFA, the basis of these challenges is that the LCFS violates the Commerce Clause of the U.S. Constitution because it regulates interstate commerce and imposes substantial burdens on producers not located in California. According to documents filed in 2009 by Growth Energy, the RFA and other plaintiffs with the County of Fresno division of California’s Superior Court, CARB made certain assumptions when forming its lookup table that negatively impact Midwest ethanol. Four of the corn ethanol fuel pathways in the lookup table assign higher carbon intensity values to Midwestern ethanol than to identical ethanol produced in California. Growth Energy, the RFA and others argue that the reasoning behind these higher values are based on factors that are entirely out of any single producer’s control. For example, Midwest corn ethanol producers are held responsible for emissions produced during the transport of their product from the plant to the enduser in California. The plaintiffs assert that this valuation unfairly favors ethanol
produced in California and that CARB recognizes its actions will result in decreased demand for Midwest ethanol. “California is the largest single state market for corn ethanol in the United States,” the ethanol groups stated in a court document. “Because it will be economically impracticable for companies subject to the LCFS to continue to rely on ethanol produced from corn starch, the market for corn growers nationwide will be
substantially reduced and will be subject to increased volatility.” The NPRA, as well as the ethanol plaintiffs, point out that while the LCFS will negatively impact their industries, it will at the same time do very little to reduce emissions. “The fuel prohibited from use in California will simply be used elsewhere, which will result in increasing overall GHG emissions as a result of less stringent environmental
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march 2011 | Ethanol Producer $0 Magazine | 63
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standards in places those fuels would ultimately be consumed and of increased GHG emissions from increased transportation distances,â&#x20AC;? NPRA President Charles Drevna said, following the groupâ&#x20AC;&#x2122;s lawsuit filing in a California court.
Slow Progress
It will likely be some time before the legal battle over the LCFS reaches a con-
clusion. A motion filed in November by Growth Energy and the RFA to halt CARBâ&#x20AC;&#x2122;s implementation of the regulations was scheduled to be heard by the court on Feb. 23. In late January, sources familiar with the lawsuit expressed cautious optimism that the industry would be at least partially successful in its challenge, but declined to predict a timeline for a conclusion. In the meantime, ethanol producers have been
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filing amendments with CARB to register new and modified pathways for their fuel. Poet LLC, Archer Daniels Midland Co. and Green Plains Renewable Energy Inc. were among the first producers to file amendments. All of their proposed pathways were approved by CARB staff and were expected to receive final approval from the executive director in February. These amendments will reduce ethanolâ&#x20AC;&#x2122;s carbon intensity values for certain new pathways to below the carbon intensity value for gasoline, but until CARB fully recants its initial ILUC valuation, the default rating for ethanol remains higher than gasolineâ&#x20AC;&#x2122;s. CARB says the number of pathway amendment applications it has already received is proof that the LCFS is working. The program is incentivizing producers to produce fuels with lower GHG emissions, CARB says. The agency also says that 55 percent of U.S. ethanol production capacityâ&#x20AC;&#x201D;7.9 billion gallonsâ&#x20AC;&#x201D; is LCFS approved. Given that California consumed about 1.5 billion gallons of ethanol in 2010, CARB says there is more than enough LCFS-approved supply to meet the stateâ&#x20AC;&#x2122;s demands this year and in the future. But the implications of Californiaâ&#x20AC;&#x2122;s program are more far reaching than the agency lets on. Other states look to California to set policy standards and several East Coast states have already expressed interest in forming similar LCFS policies. A state policy that differentiates from federal policy also creates confusion in the marketplace and, as one source says, â&#x20AC;&#x153;throws a cloud of uncertainty over the whole biofuels area.â&#x20AC;? In agreeing to re-evaluate its ILUC model, CARB has made a step in the right direction. Itâ&#x20AC;&#x2122;s now up to producers and industry representatives to ensure that the policy continues in a fair, science-based direction. Author: Kris Bevill Associate Editor, Ethanol Producer Magazine (701) 540-6846 kbevill@bbiinternational.com
regulations
A Growing List
The California Air Resources Board initially included 16 specific pathways for ethanol (13 for corn ethanol, three for sugarcane ethanol) in its Low Carbon Fuel Standard Lookup Table. As of late January, more than 50 additional ethanol pathways had already been proposed, all in an effort to reduce ethanol’s total carbon intensity value to a level below that of gasoline. ADM created a new pathway that utilizes a combination of coal and cogeneration as a fuel source for the facility. The company’s proposed pathway includes co-firing up to 15 percent biomass at its coal powered facilities in Columbus, Neb., and Cedar Rapids, Iowa, reducing the carbon intensity of ethanol produced at those plants to approximately 10 points less than the carbon intensity for gasoline. Poet proposed 11 modified pathways for its no-cook, raw starch, hydrolysis
production method, some of which also utilize alternative energy sources including landfill gas, combined heat and power using waste heat from electricity generation, and biogas fuel. The company’s most aggressive proposal uses an 80/20 combination of natural gas and biomass to produce ethanol and wet distillers grains at a Midwest dry mill, resulting in a total carbon intensity rating of 86.8 g CO2e/MJ, compared to gasoline’s rating of 95.85 g CO2e/MJ. GPRE’s modification applications are based on operations at its Lakota and Central City, Iowa, plants. The Lakota application includes updated corn yield data which shows the average corn yield for 2009 was 26 percent more than CARB’s initial pathway average, which means fewer acres were required to supply feedstock to the facility. Additionally, GPRE said it uses less natural gas and electricity at both plants than
CARB’s average ethanol pathway, therefore ethanol produced at those facilities should have a reduced carbon intensity rating. CARB says the number of applications it has received for new or modified pathways indicates the LCFS is facilitating the production of lower carbon fuels, but Bruce Dale, a chemical engineering professor at Michigan State University, does not agree. “CARB’s approach has been to set the number as high as possible, using not very defensible methods, and then require industry to come back and beat them down,” he says. “I think that’s less scientific than trying to your best job up front.” CARB is “hyper cautious” when it comes to regulations and relies upon affected industries to petition the regulations down to realistic levels, he says, adding that some emerging fuel industries simply don’t have the resources to fight back.
march 2011 | Ethanol Producer Magazine | 65
safety
CONTRIBUTION
Creating a Culture of Safety at an Ethanol Plant
A combined 250 years of experience helps fit the pieces together to formulate effective, targeted safety programs. By Nathan Vander Griend
To have a truly effective safety program it takes all of pieces of the puzzle positioned correctly. One missing piece may be the difference between an effective or ineffective overall safety program.
Senior management has two critical roles. First, the managers can make safety a key business goal by providing support and the necessary resources to be successful. Secondly, they can show leadership. Employees throughout the organization will take their cue from the top.
Where does senior management, the people responsible for keeping employees safe, start? Promoting safety, walking the walk, being responsive to safety concerns and sharing clear goals and expectations for safety performance is paramount. Safety before production must be a mindset in ethanol operations. Empowering employees to slow down and do a job safely is far more important than getting the plant back online one hour sooner. In fact, statistics to date show that the average workers compensation claim in an
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). 66 | Ethanol Producer Magazine | march 2011
ethanol plant is approximately $7,150. This represents the insurable cost or direct cost of injury. The uninsured costs or indirect costs associated with workers compensation claims are often overlooked. According to the National Safety Council, indirect costs average four times that of direct cost. Indirect costs include items such as administrative time dealing with the injury, the replacement of hours lost by the injured employee with overtime or by hiring a new employee, the loss of reputation and employee confidence, an increased insurance rate, legal costs, unwanted media attention, and more. Based on the average claim, the indirect cost of an injury would
safety
be $28,600. An ethanol plant that has a net profit margin of six cents per gallon will need to make 476,666 gallons to offset the cost. A 100 MMgy plant will need to run for almost 42 hours and a 50 MMgy plant almost 84 hours to offset the indirect cost associated with one average workers compensation claim in the ethanol industry.
Make Information King
It is extremely difficult, and perhaps impossible, for a plant to operate without information. Whether it is information pertaining to production efficiencies, or industry safety and claim data, personnel need information to learn and improve. Very few ethanol producers designed and engineered their own ethanol plant. Most started with a base model and tweaked it, making additions or tailoring it in some way. If that had not been the case, there likely would have been much more trial and error. Whether it is building a new plant or creating a safe workplace, it is much more efficient to learn from others than to learn by trial and error on your own. Over the past seven years ERI Solutions Inc. has been working with ethanol producers on safety and loss control. To date, more than 70 ethanol production facilities participate in the ERI Safety Group which accounts for over 250 years of combined plant operating experience. The lessons learned have proven invaluable in preventing accidents and injuries. The safety group has helped ethanol producers learn about ethanol safety and loss control through shared industry experience, and not through their own incidents. ERI has performed more than 700 on-site comprehensive plant safety audits at ethanol facilities over the past seven years. Approximately 30 percent of the audit process is focused on property loss control and approximately 70 percent on employee safety and health. These visits
resulted in more than 17,000 total findings and recommendations, of which 1,000 were considered major recommendations on situations potentially posing imminent danger to life and health. As part of managing an effective safety program, ethanol producers must be aware what the historical data says. Taking data from four readily available sources—plant audits, near miss/incident reports, Occupational Safety and Health Administration statistics and workers compensation claims—we are able to analyze and report to the industry common hazards and how to best address them. To be successful in mitigating claims and staying safe, it’s vitally important to identify the high risk areas in ethanol operations. The incident reports from FIGURE 1 - Incident Reports Near misses and accident by area of occurrence 164 Grains/DDGS building 130 Ethanol rail load-out 102 Centrifuge area 81 Sulfuric acid area 75 Cook area 74 Wet cake pad 73 Shop / maintenance area 56 Pump alley 48 Process building 46 Yeast propagation tank 42 Fermentation area 38 Driveway/parking lot 38 Distillation/evaporation 28 Switchgear 26 Ethanol truck load-out 22 Beer mash exchanger 18 Water treatment area 14 Tank farm 6 Scale 5 Administration building 3 Ammonia tank
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march 2011 | Ethanol Producer Magazine | 67
safety
more than 1,100 near misses or claims experienced by the ERI Safety Group over seven years have been analyzed in Figure 1. In addition to identifying where employees are getting hurt, it is also important to note what job function was being performed and the physical cause of injury. The historical data shows that grain handling activity and maintenance activity combined make up more than 70 percent of the claims cost incurred. The data also shows that the two most frequent physical causes of injury were slips and falls and manual materials handling. Materials handling alone makes up almost 30 percent of claim costs at a staggering $20,833 average insurable cost per claim. Once supported and armed with information it is time to target preventative measures. Give first priority to those measures addressing hazards occurring with high frequency or severity before
moving on to those presenting high cost with low frequency occurrences. Low cost and low frequency incidents can be given a lower priority, although they should not be neglected. There are various methodologies for success and, in most cases, no one silver bullet solution to solving safety issues. The first step is to start. Proven prevention and risk reduction strategies can be implemented by plants to help avoid the headaches and indirect costs associated with workplace incidents and workers compensation claims. With maintenance activity and grain handling activity making up more than 70 percent of our historical claims, steps toward injury prevention would include developing job hazard analyses for routine jobs performed in those roles. Have employees performing those job functions review the hazard analysis on a regular basis. It is also wise to institute a formal observation program where supervisors and manage-
Setting Priorities Categorizing safety risks by their frequency and potential cost helps in deciding which areas need attention first. 68 | Ethanol Producer Magazine | march 2011
safety
ment take the time to watch a specific job from beginning to end, noting any safety concerns they see. Steps to improving workplace safety or maintaining a good Empowering Workers track record are Safety must become the mindset to avoid easily identifiable substantial costs, says with the right data. consultant Nathan Vander Griend. That information needs to be fully integrated and supported, however, to produce measurable improvement and sustainability.
for ethanol plant managers? Understand your safety risks, develop a plan, have fanatical management support, implement, adapt and involve all employees to promote accountability. The hierarchy of a successful culture of safety is based on a management philosophy that makes safety a priority. If you are successful you will reap the benefits
of working with employees who believe that their safety and self-interest is their responsibility. Author: Nathan Vander Griend Risk Consultant, ERI Solutions (316) 927-4294 nathan.vandergriend@erisolutions.com
Create a Culture of Safety
Creating a culture of safety requires a shift in thinking. No plant has moved from concept through development stage to full operation without reaching milestones along the way. Everything from securing funding to dirt work to first grind were big accomplishments used to judge progress. Those industry veterans who have worked in ethanol operations for more than a decade will tell you once the plant was operational, they found the need to refocus attention as things got out of line or as new industry challenges arose. An ethanol producer may need to hone in and focus on a certain aspect of operations while others take a back seat. Plant managers need to build in periodic attention to safety awareness before a tragedy occurs. If nothing else, to avoid the negative press of an accident while protecting the plantâ&#x20AC;&#x2122;s most valuable assets, its employees. Think back to March 2005 with the explosion killing 15 in Texas City, Texas, or even the more recent oil spill and the negative publicity and impact those incidents had for BP. Our industry is in fragile standing in the media as antiethanol supporters look for reasons to take jabs. A serious accident could put the entire industry in a bad light. So what is the take-home message march 2011 | Ethanol Producer Magazine | 69
energy
CONTRIBUTION
Utility Management Provides Savings Tracking utility data isolates inefficiencies, changes in energy consumption and uncovers hidden trends. By Jaron Vande Hoef
Since you cannot effectively manage what you do not measure, the most logical place to begin managing energy use is to implement a utility metering and monitoring system. The U.S. DOEâ&#x20AC;&#x2122;s Industrial Technologies Program has recorded many cases of 20 percent energy savings in facilities in the food processing, cement manufacturing, brewery and corn processing industries. Achieving 20 percent energy
savings may seem daunting, but like any other overwhelming project, it helps to have a solid reference point to begin. Utility management tools enable intelligent analysis of energy data and often provide a dashboard-type view of a facilityâ&#x20AC;&#x2122;s entire electrical system and piped utility system. One can track and allocate energy usage, which in turn helps reduce utility bills by avoiding peaks in energy usage. It also provides early detection of power qual-
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). 70 | Ethanol Producer Magazine | march 2011
ity problems and enables capacity planning and maintenance. Finally, the data provides important information on trends used to troubleshoot potential issues. The greatest benefit of utility metering and monitoring equipment is that it puts users in a proactive position. Today's meters and power monitors capture events, provide historical trending data, and can even provide control functions to alarm the system operator or possibly trigger automated responses to certain energy data points. Longterm metering provides facility owners with a map of load changes, allowing them to track daily, weekly and seasonal variations,
energy
as well as discern long-term trends. In addition, owner metering provides a comparison base to validate utility billing, and for identifying money-saving opportunities on electric bills. Utility costs are a major business expense and while management systems also require expenditures, a study by the Energy Cost Savings Council revealed meters and monitors have an average payback period of less than six months and an average return on investment of 200 percent when appropriate action is taken to manage the energy costs that are being measured once the meters and monitors are installed. An iceberg analogy illustrates utility cost savings. When people view an iceberg, all they see are huge peaks rising above the water. In reality, most of an iceberg is under the water. Utility cost savings can be viewed the same way. Think of a utility bill as the peak that is easy to see each month. With a utility management system, you could realize a 2 to 4 percent savings in utility billsâ&#x20AC;&#x201D;the tip of the iceberg in terms of potential savings. The majority of savings is derived by looking beyond a utility bill, or below the surface. An additional 2 to 5 percent can be saved through
better equipment utilization and avoiding unnecessary capital purchases. Another 10 percent can be realized by improving power system reliability.
Identify Root Causes, Opportunities
Utility data can help isolate inefficiencies or changes in energy consumption and relate them to everyday business processes. From a higher level, one can drill down to deeper levels of detail to understand what is driving the performance. For example, one facility discovered an unexpected $20,000 increase in its utility bill. Fortunately, utility metering was in place that revealed the source of the excessive usageâ&#x20AC;&#x201D;a chiller was running at full load all day. With no automatic setbacks in the chiller controls, operators neglected to make adjustments. To prevent this from recurring, the facility added an automation program to control the chiller to optimize energy performance. Access to data allows managers to view energy use and costs by organizing and aggregating consumption data by time of use, production volume or other drivers. Aggregating energy consumption by
march 2011 | Ethanol Producer Magazine | 71
energy
shifts may uncover differences in efficiency from one shift to the next. Detecting and analyzing sudden spikes in energy could indicate pending equipment failure, or identify sustained changes that may be the result of equipment replacement. An ethanol plant depends on continuity of power, affecting everything from computers to controls and motors. The aggregate cost of power quality events for continuous-process manufacturers is estimated at $300 million each year. Monitor elements such as run-time, voltage, frequency, fuel levels, pressures and temperatures to determine stresses on generators, transformers and other components throughout the facility infrastructure. Utility management system capabilities range from operational-level software to enterprise solutions that can consolidate and analyze all consumed energy types across all geographical locations through a single,
72 | Ethanol Producer Magazine | march 2011
unified interface. To allow for accurate comparisons, the system would automatically convert measurements for each utility type to common units such as Btu. For example, a producer could integrate metering of electricity, water, air, gas and steam and then correlate the electrical and piped utility data. This information can be combined with temperature and humidity readings to calculate and optimize system efficiency.
System Components
Data provided by a utility management system is the result of multiple components working together. Physical components, data acquisition hardware and software work together to provide functional data. Physical components include items such as power meters, water meters (incoming and outgoing), gas meters, and compressed air header-pressure transmitters. These meters use a variety of output signals
including analog (4-20mA), pulse, Ethernet and Modbus to communicate information or data. For physical components to be effective, hardware connects the components and acquires the information being collected at each of the physical locations. Typical hardware would include an Ethernet switch and discrete or analog I/O taking the signals to the plant automation system. To convert collected data into something useful, it must be logged, organized and converted into functional information using a management software package. Examples of utility management software include Rockwellâ&#x20AC;&#x2122;s RS software, Siemensâ&#x20AC;&#x2122; Access product line and Square Dâ&#x20AC;&#x2122;s Powerlogic equipment.
Implementation Steps
A facility manager can break down implementation of a utility management sys-
energy
tem into a three-step process. First, perform a site assessment to identify what metering capabilities currently exist and determine the comDrilling Deep plexity of the power Big savings come from distribution system. analyzing utility trends says Jaron Vande The site assessment Hoef, senior project should reveal what engineer at Interstates Engineering. communication interfaces already exist and measure the physical distances for interconnection of equipment. Next, work with the site assessment team to establish guidelines for use in any other facilities beyond the one where the initial assessment was completed. Through this process, document standards for the other facilities to follow, based on what was learned through the first site assessment, to provide consistency across the organization. The guidelines should include applicable automation vendors and products as well as metering or monitoring system vendors and products. Also include communication protocol for interconnecting the meters and devices within each facility, as well as any network infrastructure required to interconnect multiple facilities. Finally, carefully review the report provided by consultants assisting with the assessment. A complete report should include both a summary of the site assessment findings and a recommendation for a utility management system based on the results, as well as the guidelines established in the process. In addition, the consultant should provide a budget estimate and implementation plan for installing a management system in the facility that was used for the initial assessment, along with guidelines and criteria for how the organization will leverage this plan across all facilities. One 130 MMgy ethanol plant con-
structed in 2008, for example, applied a power monitoring system to separately meter electrical usage for plant process areas such as grain handling, mash, cook and prep, distillation, drying and water treatment. To accomplish this, motor control centers (MCC) were separated by process and named accordingly. The switchgears feeding the MCCs were designed with electronic trip units in the circuit breakers that also meter power usage in each MCC. Each switchgear has an overall circuit monitor to collect data from each circuit breaker trip unit, sending it via Ethernet to the plant automation system to be logged and eventually tracked and trended using energy management software. The automation system also collects inputs from other utilities such
as water and natural gas for data analysis. With this configuration, the plant is able to track and monitor each area of the facility to optimize efficiency and assign accountability for energy costs to each area manager within the facility. Given todayâ&#x20AC;&#x2122;s market pressures, processing facilities must find every way to control input costs to protect profit margins. A utility management system provides the measurements needed to make sound management decisions. Author: Jaron Vande Hoef Senior Project Engineer, Interstates Engineering (712) 722-1662 jaron.vandehoef@interstates.com
march 2011 | Ethanol Producer Magazine | 73
instrumentation
CONTRIBUTION
In-line Analytical Measurements Provide Intelligent pH Management Real-time measurements aid quality assurance and batch traceability. By Stefan Bardeck
photo: METTLER TOLEDO
In bioethanol production, more and more parameters are being measured directly in the process. Advantages of these real-time measurements include better plant control and the fact that in-line measurement data facilitates quality assurance and batch traceability. A new, intelligent concept for predictive maintenance increases system availability
and considerably simplifies operation of measurement equipment. The adjustment of pH value plays an important role in process steps involved in bioethanol production. If enzymatical processes are involved in converting starch from different feedstock crops into sugars, for example liquefaction and saccharification, tight control of the pH value results in higher yields. The same is true
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). 74 | Ethanol Producer Magazine | march 2011
for yeast fermentation processes in which sugar is converted to alcohol as well as for other alcohol-producing fermentations. In yeast recovery processes, pH is lowered to a defined level keeping the recovered yeast in a healthy condition by killing unwanted bacteria. Requirements for an in-line measurement device can be divided into two categories; those for measurement performance, and those for usability and maintenance. For in-line pH measurement, the first category includes accuracy, repeatability and integrity of the measurement value, electrode
instrumentation
lifetime and the least possible variation in these quantities when the electrode is subjected to cleaning and sterilizationin-place cycles. The second category includes simple installation and commissioning, and ease and safety of calibration and maintenance. With modern technology, this category can also include device diagnostic functions which provide information on the current operational status, and can be used to predict the remaining electrode lifetime based on the electrode load history. These functions enable operators to plan and carry out need-based maintenance, which also leads to lower maintenance costs and a reduced risk of plant downtime due to a failed measurement device.
Designs for Harsh Conditions
Intelligent sensor management (ISM) combined with an electrode designed for the demanding applications in the bioethanol industry provide functionality while meeting the extremes in pH, pressure and temperature. Desirable design elements include high-alkali-resistant membrane glass to safeguard precise measurement regardless of the pH level and pre-pressurized liquid electrolyte to minimize the effects of diaphragm clogging and ensure long service life. ISM is a new platform based on sensors with embedded digital technology that set a new standard in pH management. The key to ISM is a microprocessor integrated within the sensor head, which is powered by and read through the con-
nected transmitter Critical electrode information such as sensor identity, calibration data, time in operation and process environment exposure are all recorded by the microprocessor. The data is utilized to continuously monitor the condition of the sensor and recommend appropriate actions based on actual sensor exposure to process conditions. The adaptive diagnostic information directs maintenance, thereby reducing downtime and plant operating costs. Further, the output signal of the electrode is digital, which secures integrity of the measurement value, even under the toughest conditions.
Plug and Measure
Installation of a new pH electrode typically requires calibration as the first step which may involve bringing pH buffer solutions out to the field and performing a two-point calibration. In addition to it being time consuming, this critical step may need to be conducted outdoors under adverse weather conditions, or when exposed to an uncomfortable or hazardous process environment. One particularly useful ISM function is that electrodes can be calibrated offline using iSense Asset Suite software via a simple USB connection to a laptop or desktop computer This means electrodes can be precalibrated in the laboratory, and stored until they are required. Such functionality eliminates the need to carry cleaning agents and buffer solutions through the plant to do tedious on-site calibrations. Precalibrated sensors carry all configuration data on
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photo: METTLER TOLEDO
march 2011 | Ethanol Producer Magazine | 75
instrumentation
the integrated microprocessor and share it with the transmitter immediately upon connection. This avoids configuration errors and ensures the electrodes are immediately ready for measuring.
Enhanced Diagnostics
Tracking Lifespan The display for the Dynamic Lifetime Indicator for pH electrodes can be transmitted to track remaining life in the probe.
Auto Defouling Mettler Toledo has designed an automated cleaning and calibration system for in-line pH measurements, the EasyClean 400.
photo: METTLER TOLEDO
photo: METTLER TOLEDO
Advanced diagnostics provide a continuous flow of status and maintenance information to the transmitter. Along with monitoring glass and reference impedance, ISM bases its diagnostics on actual process exposure history. By constantly keeping track of process pH value, temperature and operating hours, ISM calculates when sensor calibration, cleaning or replacement will be needed. Any maintenance requirement is therefore recognized at an early stage. All data is easily accessible through the transmitterâ&#x20AC;&#x2122;s user interface. The same data is also available via
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76 | Ethanol Producer Magazine | march 2011
Engineering, Architecture, Construction, Environmental and Consulting Solutions
instrumentation
HART protocol on Foundation fieldbus or Profibus networks. Exposure to the aggressive process conditions found in bioethanol production directly impacts Analytic Solutions the lifetime of pH Based in Switzerland, electrodes. Since all Stefan Bardeck is responsible for ISM sensors contain international marketing of in-line measurement a temperature sensor solutions for Mettler for pH compensation Toledo. purposes, historical temperature exposure, pH values and other process conditions can be used to forecast remaining useful life. Mettler Toledoâ&#x20AC;&#x2122;s Dynamic Lifetime Indicator uses a proprietary algorithm to do just this, and is displayed on ISM-compatible transmitters. The ability to accurately forecast a
sensorâ&#x20AC;&#x2122;s remaining lifetime, decreases maintenance costs associated with unnecessary sensor replacement and minimizes unexpected process shutdown due to sensor failure. By continuously monitoring reference impedance, pH glass impedance and temperature exposure, the adaptive calibration timer displayed on the transmitter, predicts when calibration is next required in order to maintain measurement reliability.
Automated Maintenance
Another desireable feature is an automatic cleaning and calibration system, particularly in cases of extreme electrode fouling. Using it in combination with a retractable housing, a well-designed system automatically extracts the pH probe without interrupting the process and without the need for a slipstream. Inside the housing, the probe is automatically cleaned and subsequently
calibrated, after which it is re-inserted into the process. Thanks to advanced electrode diagnostics and plug and measure capability, intelligent pH measuring systems facilitate maintenance and calibration procedures when compared with conventional pH system. At the same time, the reliability of the measuring instrument is increased as well. These features lead to substantial benefits when pH in-line control is implemented for optimizing processes in bioethanol production. In addition to the pH measuring systems described here, the Intelligent Sensor Management concept has already been expanded to other parameters including dissolved oxygen, conductivity and turbidity. Author: Stefan Bardeck Market specialist, Mettler Toledo Process Analytics, Switzerland +41 44 7296 211
march 2011 | Ethanol Producer Magazine | 77
78 | Ethanol Producer Magazine | march 2011
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march 2011 | Ethanol Producer Magazine | 79
EPM MARKETPLACE Mechanical L&M Ethanol Maintenance Contracting, Inc. 515-955-2010 www.lmethanol.com
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80 | Ethanol Producer Magazine | march 2011
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1/31/2011 11:45:54 AM
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march 2011 | Ethanol Producer Magazine | 81
AdIndex 83
2011 Fuel Ethanol Industry Directory
29
2011 International Biomass Conference & Expo
78
2011 International Biorefining Conference & Trade Show
35, 37 & 39 41
2011 Spring Fuel Ethanol Plant Map
28
2012 National Ethanol Conference
68
Agra Industries
44
Aqua Power
13
BetaTec Hop Products
64
Brock Grain Systems
47
BrownWinick Law Firm
76
Burns & McDonnell
51
Cloud/Sellers Cleaning Systems
50
CPM Roskamp Champion
52
Crown Iron Works Company
45
Davenport Dryer, LLC
17
Eco-Energy Inc.
53
Encore Business Solutions
77
Fagen Inc.
15
Fermentis - Division of S.I. Lesaffre
72
Flottweg Separation Technology
46
Foundation Analytical Laboratory
73
Freez-it-Cleen
25 & 84 19 2 5 & 71 8&9
GENENCOR速 - A Danisco Division Grace Davison Renewable Technologies Growth Energy ICM, Inc. Inbicon
65
Indeck Power Equipment Co.
58
Intersystems
21
Lallemand Ethanol Technology
57
Merrick & Company
63
Mole Master Services Corporation
75
Natwick Associates Appraisal Services
3
82 | Ethanol Producer Magazine | march 2011
2011 International Fuel Ethanol Workshop & Expo
Novozymes
40
Pioneer Hi-Bred International, Inc.
59
Robert-James Sales, Inc.
69
Vicam
56
Vogelbusch USA, Inc.
67
Wabash Power Equipment Co.