2016 November Ethanol Producer Magazine

INSIDE: NEW OWNERS FOR ABENGOA’S FIRST-GEN PLANTS NOVEMBER 2016

FIBER

INNOVATORS D3Max Introduces Wet Cake Conversion Page 40

The Challenge of Handling Fiber Page 34

ALSO

New Pathways for Stover Page 28

Decoupling Pretreatment at Biomass Depots

Page 24

www.ethanolproducer.com

A LEGACY OF PROVEN INNOVATION At Solenis, we are committed to helping you stay ahead of the curve. Whether you need to increase your yields, meet a regulatory requirement or reduce your costs, we’ve got you covered.

2009 Corn oil extraction aids

2011 Knowledge-based control system

2012 Low-corrosion biocide for cooling systems

2014 Blended scale inhibitors for evaporators

Process Aids Water Treatment Chemistries Monitoring and Control Systems

2015 Antibiotic-free fermentation aids

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CONTENTS

NOVEMBER 2016 VOLUME 22

DEPARTMENTS

FEATURES

5

AD INDEX

6

EDITOR'S NOTE

7

EVENTS CALENDAR

8

VIEW FROM THE HILL

Biomass Breakaways

By Tom Bryan

Lies and Big Oil Fiction

By Bob Dinneen

10

DRIVE

12

GRASSROOTS VOICE

14

The Road to 10 Million Miles

By Emily Skor

STOVER

The Odd Decouple

New Pathways for Stover

34

40

Biomass depots are proposed to separate pretreatment process

By Tim Portz

Companies expand stover markets beyond cellulosic ethanol

By Ann Bailey

Coming Together for a Thriving Low-Carbon Economy

By Andrea Kent

18

COMMODITIES

20

DISTILLED

50

FEEDSTOCK

28

GLOBAL SCENE

BUSINESS BRIEFS

49

24

Auto Club Monitoring Proves Ethanol Blending Safe

By Gene Hammond

16

48

ISSUE 11

FIBER

Fiber: Feedstock of the Future

CLEARING THE AIR

Value of E30 Proven in Real Time

By Jim Seurer

Understanding corn kernel fiber and second-gen biomass feedstocks

By Susanne Retka Schill

INNOVATION

Wet Cake MAX-imization

D3Max introduces new back-end fiber conversion technology

By Ann Bailey

BUSINESS MATTERS

OSHA Revises Reporting Requirements

By Gregory N. Dale

BUSINESS

High Plains Transition

MARKETPLACE

Abengoa’s first-generation assets find new owners

By Susanne Retka Schill

ON THE COVER Mark Yancey first began working on wet cake-to-ethanol conversion at NREL two decades ago.

PHOTO: MIKE BATEMEN

4 | Ethanol Producer Magazine | NOVEMBER 2016

44 Ethanol Producer Magazine: (USPS No. 023-974) November 2016, Vol. 22, Issue 11. Ethanol Producer Magazine is published monthly by BBI International. Principal Office: 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. Periodicals Postage Paid at Grand Forks, North Dakota and additional mailing offices. POSTMASTER: Send address changes to Ethanol Producer Magazine/Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, North Dakota 58203.

VOLUME 22 ISSUE 11

EDITORIAL President & Editor in Chief Tom Bryan tbryan@bbiinternational.com Vice President of Content & Executive Editor Tim Portz tportz@bbiinternational.com Managing Editor Susanne Retka Schill sretkaschill@bbiinternational.com Associate Editor Ann Bailey abailey@bbiinternational.com News Editor Erin Voegele evoegele@bbiinternational.com Copy Editor Jan Tellmann jtellmann@bbiinternational.com

ART Art Director Jaci Satterlund jsatterlund@bbiinternational.com Graphic Designer Raquel Boushee rboushee@bbiinternational.com

PUBLISHING Chairman Mike Bryan mbryan@bbiinternational.com CEO Joe Bryan jbryan@bbiinternational.com

ADVERTISER INDEX 2017 International Fuel Ethanol Workshop

13

2017 National Ethanol Conference

51

BetaTec Hop Products

36

Biomass Engineering & Equipment

47

Buckman

31

CPM Roskamp Champion

16

D3MAX LLC

26-27

DuPont Industrial Biosciences

52

Eqeniq, Inc.

38

Fagen Inc.

9

Fluid Quip Process Technologies, LLC Growth Energy

SALES Vice President of Operations Matthew Spoor mspoor@bbiinternational.com Sales & Marketing Director John Nelson jnelson@bbiinternational.com Business Development Director Howard Brockhouse hbrockhouse@bbiinternational.com Senior Account Manager/Bioenergy Team Leader Chip Shereck cshereck@bbiinternational.com Account Manager Jeff Hogan jhogan@bbiinternational.com Circulation Manager Jessica Tiller jtiller@bbiinternational.com Marketing & Advertising Manager Marla DeFoe mdefoe@bbiinternational.com

EDITORIAL BOARD

2

Hydro-Klean LLC ICM, Inc.

37 7

J.C. Ramsdell Enviro Services, Inc.

32

Leaf - Lesaffre Advanced Fermentations

30

Nalco Water

17

POET-DSM Advanced Biofuels

11

R.S. Stover

25

Seneca Companies

42

Solenis LLC

Ringneck Energy Walter Wendland Little Sioux Corn Processors Steve Roe Commonwealth Agri-Energy Mick Henderson Pinal Energy Keith Kor Aemetis Advanced Fuels Eric McAfee Poet Scott Teigen Western Plains Energy Derek Paine

23

3

Southeastern Illinois College

39

Swedish Exergy AB

43

Thermal Refractory

33

Tramco Inc.

22

Trestle Energy

15

VetterTec GmbH Victory Energy Operations, LLC. WINBCO

46 20-21 35

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

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COPYRIGHT Š 2016 by BBI International TM

NOVEMBER 2016 | Ethanol Producer Magazine | 5

EDITOR'S NOTE

Biomass Breakaways Just before press time, the U.S. EPA released a pile of suggestions intended to enhance the renewable fuel standard. Among the voluminous, Tom Bryan

President & Editor in Chief tbryan@bbiinternational.com

375-page offering is a proposed regulatory revision that would allow biofuels producers to process feedstock at one facility and convert the resulting material into fuels at another using existing pathways. That specific proposal lends support to a big idea covered in this month’s lead-off feature, “The Odd Decouple,” on page 24. Authored by Executive Editor Tim Portz, the story shares researcher notions about disconnecting the early steps of biomass processing from subsequent downstream conversions—just like the EPA wants to sanction. The idea is that biofuels and bioenergy plants would benefit from insulating themselves from the difficult, risky job of breaking down the material under the same roof where it’s made into fuel, power or heat. Decentralizing and outsourcing biomass prep work sounds futuristic, but it’s an idea with technical merit and, now, federal endorsement.

Corn stover, maybe the world’s most prominent cellulosic ethanol feedstock, is a great candidate for distributed preprocessing. Yet, today, it’s the sugars derived from stover that are the likely near-term derivatives of process decoupling. In “New Pathways for Stover,” on page 28, Associate Editor Ann Bailey reports on alternative uses for the abundant residues of corn, including one company’s plan to convert stover and wheat straw into salable, high-end sugars.

In “Fiber: Feedstock of the Future,” on page 34, we compare the pursuit of corn-fiber-toethanol conversion with the broader challenge of taming biomass fiber of all manner. Managing Editor Susanne Retka Schill relays the accomplishments of two seasoned front-end separation technology providers, and explains the challenge of making fiber flow through an ethanol plant’s numerous conduits without stoppage.

Our cover story, “Wet Cake Max-imization,” on page 40, acquaints readers with Mark Yancey and D3Max, another company pursuing corn-fiber-to-ethanol, albeit from back-end wet cake that’s already been cooked. As Bailey reports, D3Max is at a pivotal point in its development, with a pilot plant under construction, multiple producers interested in hosting the unit, and commercial design work underway.

In our anchor spot, on page 44, Retka Schill follows up on the sale of five Abengoa Bioenergy first-gen ethanol plants. In all, three buyers paid a collective $357 million for the facilities in September. The sale of Abengoa’s stranded cellulosic ethanol plant in Hugoton, Kansas—never fully operational—is expected to close later this year, basically ending the Spainbased corporation’s respectable, brave tenure in North American ethanol.

FOR INDUSTRY NEWS: WWW.ETHANOLPRODUCER.COM OR FOLLOW US: 6 | Ethanol Producer Magazine | NOVEMBER 2016

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EVENTS CALENDAR

2017 National Ethanol Conference February 20-22, 2017 San Diego, California The 2017 National Ethanol Conference: Building Partnerships, Growing Markets provides attendees with an exclusive opportunity to engage key decision makers and industry executives while networking and learning about the latest technologies and government policies.

202-315-2466 | www.nationalethanolconference.com

2017 International Biomass Conference & Expo April 10-12, 2017 Minneapolis Convention Center Minneapolis, Minnesota Organized by BBI International and produced by Biomass Magazine, this event brings current and future producers of bioenergy and biobased products together with waste generators, energy crop growers, municipal leaders, utility executives, technology providers, equipment manufacturers, project developers, investors and policy makers. It’s a true one-stop shop—the world’s premier educational and networking junction for all biomass industries.

866-746-8385 | www.biomassconference.com

2017 International Fuel Ethanol Workshop & Expo June 19-21, 2017 Minneapolis Convention Center Minneapolis, Minnesota From its inception, the mission of the event has remained constant: The FEW delivers timely presentations with a strong focus on commercial-scale ethanol production— from quality control and yield maximization to regulatory compliance and fiscal management. The FEW is also the ethanol industry’s premier forum for unveiling new technologies and research findings. The program extensively covers cellulosic ethanol while remaining committed to optimizing existing grain ethanol operations.

866-746-8385 | www.fuelethanolworkshop.com

2017 National Advanced Biofuels Conference & Expo June 19-21, 2017 Minneapolis Convention Center Minneapolis, Minnesota With a vertically integrated program and audience, the National Advanced Biofuels Conference & Expo is tailored for industry professionals engaged in producing, developing and deploying advanced biofuels, including cellulosic ethanol, biobased platform chemicals, polymers and other renewable molecules that have the potential to meet or exceed the performance of petroleum-derived products.

866-746-8385 | www.advancedbiofuelsconference.com

icminc.com/epm

VIEW FROM THE HILL

Lies and Big Oil Fiction

By Bob Dinneen

Stop me if you’ve heard this one. Ethanol is singularly responsible for the dead zone in the Gulf or the destruction of bee pollinator habitats or is destroying wetlands across America or is a dirtier fuel than gasoline. Those are just some of the lies making the rounds on Capitol Hill these days. None of them are true, of course, but they are the fodder our critics seize upon to fuel the campaign against us. At one point this year, I actually read that the renewable fuel standard (RFS) and ethanol were harming the food industry by driving down prices. Yes, after years of being blamed for driving up the price of food, we’re now also responsible for their lost profits as food prices fall. Unbelievable.

As we near the close of the 114th Congress, I thought I would share some of the more outrageous fallacies used by ethanol’s critics on Capitol Hill to sow the seeds of doubt and undermine support for the RFS. Falsehood No. 1—Ethanol will ruin boats. Early in this Congress, the American Petroleum Institute launched a campaign to warn consumers about the RFS. One TV ad featured a family of boaters storming into the Capitol, dripping wet from having been stranded by a failed engine in the Potomac River, asking Congress to repeal the RFS because it was damaging their boat’s engine. The oil group also released a series of drawings, ridiculing boaters who filled up using ethanol blends.

API has trotted out this campaign numerous times since then, and each and every time, the Renewable Fuels Association has hit back with facts. An RFA ad campaign notes that for nearly 30 years, 10 percent ethanol has been used in all types of marine engines and the fuel blend is approved for use by all major marine engine manufacturers, including Honda, Mercury Marine, Kawasaki and Johnson Evinrude. As a bonus, ethanol’s higher octane ratings increase engine performance, while being the lowest-cost, cleanest-burning fuel on the planet.

Falsehood No. 2—Ethanol’s carbon footprint is worse than petroleum’s. This falsehood recently picked up steam after the release of a study funded by API and conducted by University of Michigan Energy Institute researchers, including longtime biofuels critic John

8 | Ethanol Producer Magazine | NOVEMBER 2016

DeCicco. The study’s methodology only examined carbon emissions at the tailpipe without accounting for the origins of the carbon embedded in the fuel. Thus, the study showed no CO2 benefit from ethanol.

As RFA explained, here’s the difference: In the case of ethanol, the CO2 released at the tailpipe was recently in the atmosphere and is simply returning to that origin—the use of biomass for energy recycles atmospheric carbon as part of a relatively rapid process. By contrast, the use of fossil fuels adds to atmospheric CO2 by emitting carbon that was previously sequestered deep underground for millions of years. When coal, oil, natural gas or other fossil fuels are burned, new carbon is introduced into the atmosphere. It is this new carbon that is contributing to climate change.

Falsehood No. 3: The blend wall—The U.S. gasoline market cannot absorb more than 9.7 percent ethanol. In May, biofuel critics Rep. Bill Flores, R-Texas, Peter Welch, D-Vt., Bob Goodlatte, R-Va. and Jim Costa, D-Calif., introduced H.R. 5180, which would cap ethanol blends in the U.S. transportation pool to no more than 9.7 percent by volume. It’s a rather odd and precise number without any logic, other than it’s the percentage the oil companies want.

Again, the RFA hit back, noting in ads that ethanol already exceeds 10 percent of the fuel mix in at least 22 states, including California, Minnesota and South Dakota, where consumers have access to higher blends such as E15 and E85. Higher ethanol blends have seen rapid growth in recent years due to steady industry investment in an effort to provide more choice at the pump. By adopting Big Oil’s biofuel limits, the bill would not just halt ethanol’s growth in providing a more affordable, high-octane source of fuel to consumers, it would stem that progress.

Biofuel critics will continue to distort the truth to fit their own narrative, but you can bet the ethanol industry will hit back with the truth each and every time.

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

DRIVE

The Road to 10 Million Miles

By Emily Skor

The nation’s most popular motor sport, NASCAR, adopted Sunoco Green E15 in 2011 as its official race fuel. Every vehicle in the sport has been

running on the fuel ever since, including the Camping World Truck Series, the XFINITY Series and the Sprint Cup Series.

This, month American Ethanol will have powered NASCAR for 10 million miles of competitive racing. It’s obvious that 10 million miles is an enormous distance driven, but what does that number really mean?

Ten million miles means that E15 has withstood the rigors of the most demanding competitive motorsports environment in the world and passed each test with flying colors. NASCAR is above all else, a proving ground. It is a proving ground for drivers, mechanics, pit crews and, of course, fuel. If a driver is off his or her game, or someone in the pit crew makes a mistake, it will be painfully obvious out on the track. Similarly, if a fuel is not doing its job, it has nowhere to hide in NASCAR. The good news is, E15 has nothing to hide. It is a highoctane fuel that also helps cool the engine to help it operate at full throttle without overheating. E15 displaces toxic carcinogens known to cause cancer and smog, and by teaching consumers that it burns cleaner and cooler, so it’s better for their cars’ engines and for our air, they will come to understand why ethanol is so important to Americans. The fact that E15 provides an octane boost with a more environmentally friendly emissions profile, all while saving consumers money at the pump, is truly a win-winwin.

10 | Ethanol Producer Magazine | NOVEMBER 2016

We know that E15 is one of the most tested fuels in history.

The U.S. DOE tested E15 in 86 vehicles for 6 million miles and didn’t find a single issue related to emissions or engine performance. Meanwhile, drivers have traveled over 300 million miles using E15. It’s becoming more widely available, too. In addition to the E15 that is already available in more than half of the United States, through Prime the Pump, we have secured roughly 800 retail sites for E15/E85 with 10 of the largest retail chains in the nation: Sheetz, Thorntons, Kum & Go, RaceTrac, Cenex, Minnoco, Protec, Family Express, MAPCO and Murphy USA. Consumer access and education are absolutely essential to making higher ethanol blends of American ethanol the new normal at the pump. So, what does 10 million miles ultimately mean to the consumer? It means that E15 is a fuel they can trust.

E15 has been put to the test for 10 million miles on the track and 300 million off the track. Those 10 million miles on the track mean that the best drivers, mechanics and pit crews in the world make their living and win championships on American ethanol.

The 10-million-mile mark is an incredible milestone for American Ethanol and our industry, and each day and every individual mile on that journey is another reminder that E15 is the fuel of the present and the future.

Author: Emily Skor CEO, Growth Energy 202-545-4000 eskor@growthenergy.org

IS MADE HERE.

For years, we’ve been told that cellulosic ethanol is a “fantasy fuel.” And it is.

And now it’s going to change the world. For real.

So we’ve spent a decade planning, researching, and working hard to make that fantasy a reality. ®

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Advanced Biofuels

GRASSROOTS VOICE

Auto Club Monitoring Proves Ethanol Blending Safe

By Gene Hammond

I woke up Sat., Dec. 1, 2012, to a front page headline in the Sioux Falls, South Dakota, Argus Leader that made this former South Dakota farm boy mad! The headline read “AAA issues warning on E15.”

I was raised on the farm, and after a short career in teaching, I have been in the motor business for the past 42 years. I founded both the Association for Motor Club Marketing and Travelers Motor Club. Based on my experience, I could not understand what AAA was talking about. I knew off the top of my head that ethanol had reduced road service calls for our corporations because ethanol use had reduced wintertime gas line freeze.

As a principle owner of AMCM and Travelers Motor Club, representing over 19 million members, my next move was to contact our claims departments to see how many road service claims we could attribute to ethanol use. An initial road service analysis of past claims could not attribute one single service call to ethanol use. I immediately ordered the monitoring of all road service claims going forward to determine if AAA knew something about E15 that we didn’t. After two years of monitoring claims, we shared our claim history with the American Coalition for Ethanol and Growth Energy. We reported to both groups that after two years of claims monitoring we could not attribute one claim to ethanol use.

Today we can report that during a four-year period, we still cannot report one claim attributed to ethanol use, E15 or any blend, for that matter.

Since sharing our real-life claim history with ethanol industry leaders, we have made two trips to Washington, D.C., to convey a very simple message to Congress and the U.S. EPA. Our four-year record of monitoring motor service claims indicates ethanol poses no problem, so when AAA spouts oil industry talking points about E15 damage, we demand that AAA provide its real-life road service claim history. We are confident that AAA’s claims mirror ours.

12 | Ethanol Producer Magazine | NOVEMBER 2016

Besides sharing our findings with decision makers in our nation’s capital, we also have lobbied in favor of the renewable fuel standard (RFS) and sent a letter of support to the mayor and city council of Chicago during their E15 debate. I have also had the opportunity to be interviewed a number of times on the radio to tell our claims history. Long story short, we are doing all we can do to tell the truth about ethanol and encourage AAA to tell its story about E15 claims, rather than repeating the petroleum industry’s self-serving talking points.

We did not engage in this fight for E15 and the RFS to sell motor club memberships. We just wanted to set the record straight and to support rural America. We believe the ethanol industry has done a great job of adding to our nation’s security through oil independence and contributing to a cleaner environment. Add that to the economic benefits of ethanol for farmers and small town America, and it makes it easy for us to stand up and set the record straight. With that being said, we do want to thank the many ethanol industry individuals who have purchased motor club memberships and the ethanol plants that have gifted their shareholders and employees with AMCM memberships.

We are going to continue to stand up for ethanol and rural America. We are going to continue to pressure AAA to talk about its claims and not petroleum industry studies. If you or your ethanol plant would like us to address your board of directors meeting, shareholders meeting or a community event to tell our real life motor club claims story, we are available and more than willing to do so.

Author: Gene Hammond CEO, Association Motor Club Marketing 605-261-6083 ghammond@travlersmotorclub.com

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GLOBAL SCENE

Coming Together for a Thriving Low-Carbon Economy

By Andrea Kent

Government commitment to reducing greenhouse gas (GHG) emissions and fighting climate change is at an all-time high.Then why has Canadian biofuel production

been dropping? There is no other way to reach emission targets without taking greenhouse gases out of the transportation sector sooner, rather than later. Biofuels are the best pathway to achieve this, paving the way to a growing array of biobased products.

This is why we at Renewable Industries Canada (RICanada) are hosting the first Renewable Industries Forum. Canada’s premier renewable and bioeconomy event, the forum will bring together government, industry and academic experts, as well as students, to address challenges and opportunities of the renewable and biobased sectors.

The forum’s program builds on our past decade of annual conferences. It is more dynamic, progressive and policy-orientated.

Rather than a conference that mainly delivers information to its audience, the forum is designed to engage participants in critical and lively discussions that will lead to measurable action on transitioning to a thriving low-carbon economy.

The only national voice for Canada’s renewable fuels and biobased products industries, RICanada’s 32-year history has built and maintained relationships with the most passionate, knowledgeable and influential members in the innovative world of renewable fuels, biobased products and clean technology. The Renewable Industries Forum will bring these groups together to discuss growing from biofuels to the bioeconomy and beyond. Students are

14 | Ethanol Producer Magazine | NOVEMBER 2016

also encouraged to participate to ask critical questions and to add refreshing ideas on how we can reduce greenhouse gas emissions and protect the environment while boosting the economy.

Focusing on advanced biofuels and policy programs will support greater research, development and commercialization of renewable and biobased industrial products. We will also discuss marketing the green economy. This is of utmost importance. Our messages won’t be heard if we don’t unite and utilize our collective voice. Misinformation surrounding renewable fuels and biobased products continues to circulate, and we face stiff competition from other sectors as governments look for ways to reduce GHG emissions.

I can’t think of a better time for the Renewable Industries Forum to take place. Canada’s ethanol producers have shown that growing beyond biofuels is not only possible, it’s essential.

By coming together, the renewable fuels and biobased products sectors will take action that will continue to grow the bioeconomy, help governments reduce greenhouse gas emissions, and benefit all Canadians for years to come.

Visit www.ricanada.org for more information and to register for the Renewable Industries Forum.

Author: Andrea Kent President, Renewable Industries Canada 613-594-5528 a.kent@ricanada.org

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BUSINESS BRIEFS People, Partnerships & Deals

The USDA recently named Cletus P. Kurtzman to the Agricultural Research Service Science Hall of Fame. Kurtzman, a research microbiologist at the ARS Mycotoxin Prevention and Applied Kurtzman Microbiology Research Unit in Peoria, Illinois, helped pioneer molecular techniques to identify yeast microor-

ganisms. These discoveries enable scientists to accurately predict the biological properties of yeasts. This knowledge led to innovations in converting crop biomass into fuel, in producing biodegradable ingredients for detergents and in food safety, crop production and human and animal health advancements.

ethanol plants. Indian Oil is currently expected to develop three such facilities in India. In addition to providing the technology and designs for the projects, Praj is also expected to supply machinery to the projects and assist in operations and maintenance.

Vincent ChorIndian Oil Corp. Ltd. has selected Praj net, CEO of Enerkem Industries Ltd. as its technology partner Inc., has been named in for the development of second-generation the 2017 Clean16 awards

by Delta Management Group and the Clean50 organization.

Canadaâ&#x20AC;&#x2122;s Chornet Clean50 Awards recognize 50 individuals from 16 different categories, including clean tech, who have done the most to advance the cause of sustainability and clean capitalism in Canada over the past two years.

Renmatix recently announced a $14 million investment, led by Bill Gates and joined by Total. The investment in commercializing Renmatixâ&#x20AC;&#x2122;s Plantrose process will help drive toward the first wave of Renmatix licensees building Plantroseenabled biorefineries in diverse global markets like Canada, India, Malaysia, the U.S. and elsewhere. In parallel, that activity will facilitate further market development in downstream bioproduct applications.

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The American Coalition for Ethanol launched a new online tool for gasoline and ethanol retailers in September. The website is an interactive version of ACEâ&#x20AC;&#x2122;s recently released E15 & Flex Fuel Retailer Roadmap and features an interactive calculator that retailers can use to compare current sales and revenue to results achieved by their peers currently offering higher blends of ethanol.

Gevo Inc. has announced it has entered into a heads of agreement with Deutsche Lufthansa to supply Gevoâ&#x20AC;&#x2122;s alcohol-to-jet fuel (ATJ) from its first commercial hydrocarbons facility, intended to be built in Luverne, Minnesota. The terms of the agreement contemplate Lufthansa purchasing up to 8 million gallons per year of ATJ from Gevo, or up to 40 million gallons over the five-year life of the off-take agreement. The

BUSINESS BRIEFS¦

heads of agreement is nonbinding and is ethanol conversion module is expected to be subject to completion of a binding off-take added to the facility in the second half of 2016. agreement and other definitive documentation between Gevo and Lufthansa, expected St1 Nordic Oy’s Norwegian subsidiary, to be completed in the next few months. Smart Fuel AS, has signed a letter of intent with Viken Skog SA and its subsidiary TrekThe Roundtable on Suslyngen Holding AS to construct a Cellutainable Biomaterials has nolix ethanol plant in Norway. St1 aims to announced its re-recognition construct the facility in the industrial area of by the European CommisFollum in Hønefoss, making maximum use sion. The decision was published by the of the existing industrial infrastructure and commission on Aug. 9 in the Official Journal of the European Union and is valid for five years. The EU Commission recognizes the “Roundtable on Sustainable Biomaterials EU RED” for demonstrating compliance with the sustainability criteria under Directives 98/70/EC and 2009/28/EC of the European Parliament and of the council.

Diesel Dogs Fuel Service has become the first fuel distributor in Minnesota to offer pre-blended E15. The St. Paul-based distributor delivered its first gallons of preblended E15 in August to its municipal and corporate fleet customers in the Twin Cities metro area. It will soon offer preblended E15 to retail customers as well.

Propel Fuels has announced the launch of the Propel ProShop, an online store for customers to purchase apparel and accessories. In addition to the ProShop, Propel has launched its Hi-Octane Society (Flex Fuel E85) and Diesel Pro (Renewable Diesel HPR) aficionado clubs, providing unique social forums for customers to share photos, videos and experiences about their use of high-performance, low-carbon fuels.

Enerkem Inc. has obtained certification from the International Sustainability and Carbon Certification system for the biomethanol production of its Enerkem Alberta Biofuels full-scale facility in Edmonton, Canada. This biorefinery becomes the first ISCC certified plant in the world to convert municipal solid waste into biomethanol. A biomethanol-toSHARE YOUR INDUSTRY NEWS: To be included in the 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 email information to evoegele@bbiinternational. com. Please include your name and telephone number.

equipment from the former paper-mill area.

The planned production capacity of the plant is 50 million liters (13.21 million gallons) of advanced cellulosic bioethanol for transportation, using local forest industry residues as feedstock. The project is expected to reach the investment decision stage in 2018, with plant operations beginning in 2021.

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NOVEMBER 2016 | Ethanol Producer Magazine | 17

COMMODITIES

Prices & Market Analyses

Natural Gas Report

Summer heat buoys natural gas prices Sept. 26—Widespread heat lingering into fall shoulder season kept natural gas prices propped up and sent nearby futures to 20-month highs. After not surpassing the psychologically-important $3 level for well over a year, the prompt-month NYMEX breached this benchmark in mid-September on the back of unseasonable cooling load in populous Eastern markets. What had already been a record season for natural gas usage for power extended into fall, with summer-like temperatures forecast.

The supportive weather, along with other bullish elements, has altered views of the coming winter as well. A year ago, production growth was still relatively strong and storage inventories were on track to enter the winter season at record levels. While September inventories remained historically strong, it appeared the end-of-summer storage peak would fall shy of the 2015 record. Meanwhile, exports have grown and domestic production declined since Q1. As a result, average NYMEX pricing for the coming winter in late September sat near $3.30 per MMBtu, compared to well south of $3 a year ago.

Winter forecasts are mixed and too early for firm conclusions about heating load. It is a safe assumption that demand will be higher

by Andy Huenefeld

than the historically-mild 2015-’16 season, contributing to expectations for strong storage withdrawals that could potentially leave inventories near the lower end of the five-year range as the market enters the 2017 injection season.

Corn Report

Corn market focused on big crop

by Jason Sagebiel

Sept. 26—Big USDA yield expectations pressured the market in late September, but are yields really that high? The USDA released a July national yield of 175.1 bushels per acre before easing in August to 174.4, which would still top the record by 3.4 bushels. Examining the overall impact, each bushel deviation potentially impacts carryout by 87 million bushels. At current carryout projections of 2.384 billion bushels and leaving demand unchanged, backing off to the previous 171 record would still net a carryout above 2 billion bushels.

Feed demand is expected to consume 5.65 billion bushels, an increase of 450 million. This old-crop figure was revised in the Sept.

30 Quarterly Stocks Report. Many analysts believed the feed number was lofty given grain consuming animal units have grown by 1.3 percent (much less than the 8.7 percent increase in feed demand) and greater wheat feeding is likely, given massive stocks and low prices. Corn for export was expected to be 2.175 billion bushels, an increase of 260 million and the largest since 2007. Exports will depend on South American production this winter and the U.S. dollar. Given Brazil’s current corn shortage, export demand should remain strong. Finally, corn demand Analyst bias leans toward a slow decline in corn yields, while soyfor ethanol is expected to consume 5.275 billion bushels, up from 5.200 bean yields slowly grow. In past years, soybean demand has consistently billion bushels in 2015-’16. One thing to note: Projected ethanol ex- grown over the course of the marketing year and has the potential to ports are the equivalent of 320 million bushels of corn. support corn values in the spring acreage battle.

Comments in this column are market commentary and are not to be construed as market advice.

18 | Ethanol Producer Magazine | NOVEMBER 2016

Regional Ethanol Prices ($/gallon) Front Month Futures (AC) $1.544

DDGS Report

Chinese antidumping tariff grabs DDGS headlines Sept. 26—With harvest around the corner, the focus in late September was on the big corn and soybean crops, but China came out with its preliminary antidumping tariff of 33.8 percent on DDGS and stole the headlines. An additional countervailing duty also was expected to be announced shortly after. This is sure to affect Chinese imports in the future, possibly dropping them as the leading importer of DDGS, which we have not seen since November 2014 when China banned MIR 162. Since then, the demand base for DDGS worldwide has been expanding, which helps to partially alleviate dramatic price swings when a major player changes import policies.

Region

Spot

Rack

West Coast

1.700

1.700

Midwest

1.593

1.671

East Coast

1.610

1.695 SOURCE: DTN

by Sean Broderick

Domestically, DDGS was trading at about parity to corn in September, so most feeders have it fully implemented into their rations. Hog and cattle forward margins are only mildly profitable, at best. DDGS inclusion generally will decrease the cost of feeding, so the trade is seeing good demand from them as well. Dairies in California were buying October-March strips as they saw positive milk margins.

Ethanol plants have positive margin for Q4, so there is sure to be a good supply for the winter. The market was watching to see what China announced for the countervailing duty, and how that affects demand.

That was expected to be a big story, as was harvest progress and the size of the crop.

Regional Gasoline Prices ($/gallon)

Front Month Futures Price (RBOB) $1.404 Region

Spot

Rack

West Coast

1.509

1.782

Midwest

1.693

1.433

East Coast

1.428

1.490 SOURCE: DTN

DDGS Prices ($/ton) LOCATION

Nov. 2016

Oct. 2016

Nov. 2015

Minnesota

110

115

155

Chicago

135

142

135

Buffalo, N.Y.

140

132

128

Central Calif.

175

178

178

Central Fla.

151

155

158 SOURCE: CHS INC.

Corn Futures Prices (Dec Futures) Date

close, bu.

close, ton

Sept. 26, 2016

3.290

117.500

Aug. 26, 2016

3.250

116.071

Sept. 25, 2015

3.890

138.929 SOURCE: FCSTONE

Cash Sorghum ($/bushel)

Ethanol Report

by Rick Kment

Ethanol prices gain on counter-seasonal supply shift Sept. 26—Ethanol futures gained renewed buyer support through the last week of September with traders focusing on higher corn prices and tighter ethanol supplies. While RBOB gasoline futures have turned seasonally lower, ethanol futures have moved above summer highs, reaching $1.54 per gallon.

Ethanol supplies continued to erode, moving to a nine-month low in the latest Energy Information Agency weekly report. This, combined with firming corn prices, pointed to additional support through October. Although blending ac-

tivity will slow seasonally in the fall, the demand for ethanol may remain strong through the end of the year, keeping prices strong.

RBOB gasoline prices fell nearly 20 cents per gallon between late August and late September, with additional pressure expected in October based on likely increases in inventory levels in coming weeks. But demand for gasoline may moderate through the rest of the year, limiting price losses depending on the region of the country.

Location

Sept. 26, 2016

Aug. 26, 2016

Sept. 24, 2015

Superior, Neb.

2.39

2.26

3.41

Beatrice, Neb.

2.44

2.41

3.29

Sublette, Kan.

2.38

2.29

3.43

Salina, Kan.

2.49

2.43

3.44

Triangle, Texas

2.66

2.51

3.37

Gulf, Texas

3.61

3.80

4.44

SOURCE: SORGHUM SYNERGIES

Natural Gas Prices ($/MMBtu) LOCATION

Sept. 21, 2016

Aug. 24, 2016

Sept. 22, 2015

NYMEX

3.057

2.749

2.577

NNG Ventura

3.015

2.560

2.615

Calif. Citygate

3.090

2.765

2.885

SOURCE: U.S. ENERGY SERVICES INC.

U.S. Ethanol Production (1,000 barrels) Per Day

Month

End Stocks

Jul 2016

1,008

31,251

21,167

Jun 2016

1,009

30,258

21,199

976

30,249

19,701

Jul 2015

SOURCE: U.S. ENERGY INFORMATION ADMINISTRATION

NOVEMBER 2016 | Ethanol Producer Magazine | 19

DISTILLED Ethanol News & Trends

California extends GHG reduction targets

Brazilian fuel ethanol data (in million liters) 2015

2016

2017

27,522

28,022

27,778

Imports

500

530

530

Exports

1,184

750

750

Production

On Sept. 8, California Gov. Edmund G. Brown Jr. signed legislation to extend the state’s greenhouse gas (GHG) reduction targets through 2030. The bill, SB 32, sets a target to reduce GHG emissions to 40 percent below 1990 levels by 2030.

The Low Carbon Fuel Standard and cap-and-trade program are among the climate programs that have been extended.

Responding to the news, fuel retailer Propel Fuels said California currently leads the nation in low carbon fuel retail volumes, with more than 14 million gallons of E85 sold last year.

According to Propel, a gallon of its California-produced ethanol has 60 percent less GHG emissions than a gallon of California-produced gasoline. In addition, Propel noted that low-carbon liquid biofuels are responsible for 85 percent of the GHG reductions achieved by the LCFS during its first five years.

SOURCE: USDA FAS GAIN

Brazilian ethanol production forecast to be down slightly in 2017 Brazil has filed its annual biofuels report with the USDA Foreign Agriculture Service’s Global Agricultural Information Network, noting the country is expected to produce 30.372 billion liters (8.02 billion gallons) of ethanol this year.

Of the 30.372 billion liters of ethanol expected to be produced this year, approximately 28.022 billion liters will be fuel ethanol, including 6 million liters of cellulosic ethanol. Moving into 2017, total ethanol production is forecast at 30.148 billion li-

ters, with 27.778 billion liters of fuel ethanol, including 8 million liters of cellulosic ethanol.

According to the report, Brazil currently has 383 first-generation ethanol plants with combined nameplate capacity of 39.65 billion liters. Capacity is expected to be maintained through 2017. Brazil also currently has three cellulosic ethanol plants, with a combined capacity of 127 million liters

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DISTILLED

Wayne American fuel dispensers to be E25 compatible In August, Wayne Fueling Systems announced that all Wayne North American retail fuel dispensers will be supplied as compatible and UL-Listed to E25 as a standard feature.

The shift from the standard Underwriters Laboratory listing of E10 to E25 was effective immediately for Wayne Ovation fuel dispensers, and by year-end for the Wayne Helix family of dispensers. According to Wayne, 90 percent of dispensers currently in the industry are only certified to dispense E10 fuel. â&#x20AC;&#x153;We are pleased to be the first manufacturer to offer E25-Listed dispensers as standard to our North American dispenser product offering, reflecting the growing interest from our customers to prepare for any and all necessary changes to the fueling infrastructure in the future,â&#x20AC;? said Tom Cerovski, vice president of products and services at Wayne.

New York fueling station data New York Motor gasoline

Share of U.S.

Period

4,678 stations

4.2%

2014

82 stations

2.6%

2016

Ethanol SOURCE: U.S. ENERGY INFORMATION ADMINISTRATION

New York proposes to update fuel regulations to allow E15 On Aug. 24, the New York Department of Agriculture and Markets published a proposed rule in the New York State Register proposing to update the stateâ&#x20AC;&#x2122;s fuel regulations to allow for the sale of E15 in model year 2001 and newer vehicles. A public comment period on the proposed rule was to be open for 45 days.

Growth Energy has spoken out in support of New Yorkâ&#x20AC;&#x2122;s proposed move to E15, noting the state consumes more than 5.5 billion gallons of gasoline each year, making it the fourth largest gasoline market in the U.S.

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Growth Energy also said it has worked extensively with Poet over the past two years to update the regulation. â&#x20AC;&#x153;This proposal marks a major victory for consumers, who would gain access to cleaner, more affordable choices at the pump,â&#x20AC;? said Emily Skor, CEO of Growth Energy. â&#x20AC;&#x153;We appreciate the departmentâ&#x20AC;&#x2122;s work on this regulation to reflect federal approval of E15 and we look forward to working with retailers across the Empire State to quickly get E15 into the market,â&#x20AC;? she continued.

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DISTILLED Advanced ethanol plant proposed in North Dakota

Canadian fuel ethanol statistics (in million liters)

Red River BioRefinery LLC, a biorefinery proposed to be built near Grand Forks, North Dakota, aims to transform low-value agricultural byproducts, including sugar beet tailings, wheat straw and potato waste, into biofuel. The North Dakota Ag Products Utilization Commission recently awarded the project $84,000 for engineering.

Keshav Rajpal is listed as chief operating officer on the APUC application and Jacek Chmielewski is named principal. In April 2015, Chmielewski wrote a letter to the North Dakota Industrial Commission that said his company, BioMass Solution LLC, was reapplying formally for the North Dakota Industrial Commission Renewable Energy Grant program.

That project was to produce 8 million gallons of fuel ethanol.

According to Rajpal, the Red River BioRefinery project is similar to the BioMass Solution LLC project, but there are some differences in plant capacity and other production details. Rajpal declined to give specifics on the Red River BioRefinery project, citing proprietary concerns.

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2016

2017

Production

1,725

1,750

1,750

Imports

1,094

1,000

1,000

Exports

0

0

0

2,819

2,750

2,750

Consumption SOURCE: USDA FAS GAIN

Canadian ethanol plants operating at capacity Canada recently filed annual biofuels report with the USDA Foreign Agricultural Service’s Global Agricultural Information Network, reporting the nation’s ethanol industry has consolidated and plants are running at capacity.

The report indicates that Canada’s ethanol plants have generally operated at maximum capacity since 2009, as demand for fuel ethanol has often exceeded domestic supply. Federal and provincial support programs are cited as allowing Canadian

plants to operate positive cash flows despite feedstock price spikes and competition from U.S. imports.

Canada currently has 14 ethanol refineries. Production is expected to reach approximately 1.75 billion liters (462.3 million gallons) this year, 1.4 percent higher than 2015 production levels. Next year, production is expected to be maintained at the 2016 levels. Capacity is also expected to remain at the current level of 1.775 billion liters in 2017.

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DISTILLED Mexico allows for 5.8 percent ethanol in most markets The Energy Regulatory Commission of Mexico has announced it will allow for the blending and sale of up to 5.8 percent ethanol in the nationâ&#x20AC;&#x2122;s fuel supply, with the exception of the three major metropolitan areas of Mexico City, Guadalajara and Monterrey. The regulation marks the first time in history Mexico has established a policy on ethanol. â&#x20AC;&#x153;We are pleased to see Mexico begin to embrace the inclusion of fuel ethanol in their gasoline. The U.S. Grains Council has worked in Mexico for many years and has seen enormous growth in that marketâ&#x20AC;&#x2122;s demand for U.S. products of all types in the past two decades. We welcome this positive development related to ethanol use and what it could mean for furthering of the U.S.-Mexican trade partnership,â&#x20AC;? said Tom Sleight, president and CEO of the U.S. Grains Council.

Australian fuel ethanol statistics (in million liters) 2014

2105

2016

260

250

250

Imports

6

6

5

Exports

5

22

20

261

234

235

1.3%

1.3%

1.3%

Production

Consumption Blend rate SOURCE: USDA FAS GAIN

Report: Australian plants operating below capacity Australia will produce 265 million liters (70 million gallons) of ethanol this year, a report by the USDA Foreign Agricultural Serviceâ&#x20AC;&#x2122;s Global Agricultural Information Network estimates.

The 265 million liters represents about 60 percent of the continentâ&#x20AC;&#x2122;s annual ethanol production capacity of 440 MMly. There were three ethanol manufacturing plants in Australia in 2014, each distilling different feedstocks.

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The largest producer is located in New South Wales and has the capacity to produce 300 MMly of ethanol from wheat starch. Two smaller producers are located in Queensland. One has the capacity to produce 80 MMly of ethanol from red sorghum, while the second has the capacity to produce 60 MMly of ethanol from molasses and sugar.

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BEYOND KINETICS: Researchers at Idaho National Laboratory are working to better understand pretreatment processes that will add value to biomass streams by upgrading them in a manner that makes their later conversion more efficient.

The Odd

Decouple

In Iowa, corn stover bales sit unprotected in vast piles, exposed to sun and rain, until they are picked off the pile and carried by a forklift to a bale receiving machine. They are then shredded, milled, and passed immediately into pretreatment for conversion into cellulosic ethanol. In Minnesota, urban wood waste is shredded, stored in piles in a woodyard, loaded onto trucks and delivered to a downtown heat-and-power facility for feeding into a boiler.

These approaches, characterized by few, if any, additional efforts to better prepare the feedstock for conversion, are common 24 | Ethanol Producer Magazine | NOVEMBER 2016

National laboratories argue for a paradigm shift in the industry’s approach to biomass handling and preparation.

By Tim Portz

throughout the biomass-to-energy industry.

According to researchers at the nation’s national laboratories, this low-tech approach must evolve if the biomass-to-energy industry is going to significantly increase its contributions to the nation’s power, heat and fuel portfolios.

This approach, where biomass handling, sizing and drying all occur at the conversion facility, is referred to as a direct couple, and researchers at Idaho National Laboratory, among others, are urging the industry to move away from a practice they say carries too much operational risk. “A conventional system that you see the guys building today are mostly passive systems, with very little active control in them

at all, including active moisture management,” says Richard Hess, director of the Idaho National Laboratory Energy Efficiency and Renewable Energy Program. “The grinder is directly coupled to the pretreater. If the grinder plugs and shuts down, it shuts the whole plant down.”

In other industries that handle vast quantities of solid materials, Hess notes, it is rare that preprocessing and conversion are coupled to the degree that they currently are at many biomass-to-energy facilities. “If you look at the Budweiser plant out here, its receiving station is five miles away, and all their malt formulations are done there,” Hess says. “Once that is done,

FEEDSTOCK a train car rolls out and drops it all in the malt plant. It’s completely decoupled.”

Hess recognizes that biorefineries, heat plants and biomass power plants are all capable of particle-size reduction, but he and others are calling for more measures, preferably happening at some distance from the conversion facility. “Taking a corn stover bale, grinding it up and changing it from an 8-pound-per-cubicfoot rat’s nest to a 2-pound-per-cubic foot rat’s nest that still won’t flow is not an acceptable level of decoupling,” says Hess. “This material still won’t work in the next process.”

Commercial Relevance

Hess’s assertions are an extension of an approach that the U.S. DOE has been championing for years. Most recently, the concept received more attention and articulation in the 2016 Billion-Ton Report released by the DOE in July. In chapter 6 of the report, “To the Biorefinery: Delivered Forestland and Agricultural Resources,” the authors call for increased innovation along the biomass feedstock supply chain, noting that current feedstock systems have “few to no active control strategies.” The report calls for feedstock streams that transform “raw feedstocks that are aerobically unstable and highly variable into a high-density, flowable format that can be traded as a commodity.”

For Hess and his colleagues at the DOE, the solution is to create a series of regional biomass depots where raw biomass streams of many kinds can be received, sized and upgraded for downstream conversion. The resulting material, often referred to as an intermediate, will be a conversion-ready material that can flow seamlessly through the material handling equipment at biorefineries, biomass power facilities or district heating installations. “The biomass depot is really a business model to implement a concept, but the fundamental concept is we’re moving from a passive feedstock supply system to an active one,” Hess explains. “What is active in that feedstock supply system is very feedstock- and regionally specific. We can list many things from moisture, all the way down to quality control, blending or leaching.”

Hess says that the processes the depots would be capable of performing would vary by region, owing to the varied biomass streams available throughout the country. The active controls required to prepare corn stover for conversion into cellulosic ethanol will likely vary greatly from the steps necessary to make forest residues ready for a power plant cofiring biomass. “The point is, the materials leaving

a biomass depot will be conversion-ready,” he stresses.

Value-Added Upgrading

For Hess, the vision of a biomass depot goes beyond merely getting biomass streams into a conversion-ready product that will flow easily into and around conversion facilities. The promise of a biomass depot, Hess notes, is really beginning to drive some increased value into biomass by increasing the ease of its later conversion. “We need to get beyond beating on things with hammers and start looking at different types of preprocessing treatments,” he says.

“Kinetic energy is really the lowest, poorest way to tear stuff apart. If you start coming in and putting a little heat here and a little bit of pressure there, your finesse and ability to take things apart into a better and more uniform product is much improved.”

Hess says that value-added upgrading, like the biomass depot concept, will vary based on the feedstock and the ultimate downstream uses of the material. “Mild torrefaction approaches that don’t go all the way to torrefaction, but

more closely resemble coffee roasting, can do significant things to reduce the grinding energy, for instance,” he says. “If you can start to apply those processes on a fractional basis, then you can apply those treatments to the different issues and you can get a much better product.”

The continued evolution of the biomass industry hinges on the evolution of our ability to better preprocess the feedstock streams it intends to convert. “Right now, we’re just using a hammer to take apart a complex composite,” Hess adds. “When you do that, your quality control over the deconstruction of that product, and the particle-size distribution, is just very broad and very random. That creates a lot of challenges when you start talking about heat transfer and the processes that the biomass will undergo in the various conversion reactors these streams will end up in.”

Author: Tim Portz Executive Editor, Ethanol Producer Magazine tportz@bbiinternational.com 701-738-4969

Editor's Note: This story first appeared in the September issue of our sister publication, Biomass Magazine.

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NEW PATHWAYS for Stover Innovation in stover utilization targets feed, sugars and coproduct credits.

By Ann Bailey

28 | Ethanol Producer Magazine | NOVEMBER 2016

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NOVEMBER 2016 | Ethanol Producer Magazine | 29

Building a robust biomass supply chain for the future will require multiple end users. Innovative companies

PIVOT TO FEED: Cellulose Sciences International founder Rajai Atalla gained traction for his biomass pretreatment process when nutritionists found remarkable improvement in feed digestibility.

PHOTO: ROLF HAGBERG

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reliability

are utilizing stover with new projects in the Midwest and Canada that have the potential to tap into new markets for livestock feed, power and renewable biochemicals.

London, Ontario-based Comet Biorefining Inc. plans to build a commercial-scale cellulosic sugar plant in TransAlta’s Bluewater Energy Park in Sarnia, Ontario. It will use its patented process to convert corn stover and wheat straw into highpurity dextrose sugars that can be used by biofuel and bioproducts manufacturers for value-added end products. Besides building, owning and operating its own plants, Comet Biorefining plans to strategically license its technology to select partners worldwide to meet the growing demands for biobased products, the company says.

The 60 million pounds-per-year (27,000 tons) dextrose plant is expected to be operational in 2018, says Andrew Richard, founder.

The company will buy the corn stover and wheat straw from area producers. “In general, this is

performance

yield

STOVER an excellent region where the plant will be located. There is plentiful feedstock within close distance to the plant. There’s a tremendous amount of infrastructure, not just on the TransAlta site, but in Sarnia, in general,” Richard says. Construction of the first-of-its-kind plant represents a key step toward large-scale commercialization of its cellulosic sugar business, Richard says. “It highlights the important role our technology plays in the value chain, helping to drive the bioeconomy and reduce greenhouse gas emissions.”

“This facility for us is our first commercial facility and it is an essential step in our development, in our commercialization path to show significant amounts of dextrose being utilized by our customers,” Richard says. “We have a very strong relationship with our feedstock partners, local cooperatives that have been formed to supply the plant and so we’re pleased with our region and we’re pleased with our partners.”

Earlier this year, Comet announced an offtake agreement with BioAmber to supply dextrose for bio-succinic acid production, giv-

ing BioAmber certain exclusive rights in the fields of succinic acid, BDO (1,4-butanediol) and THF (tetrahydrofuran).

Enhancing Stover

Several hundred miles south, Ag Ventures Alliance in Mason City, Iowa, and Cellulose Sciences International in Madison, Wisconsin, formed Stover Ventures to commercialize its process to turn corn stover into nutritious, palatable dairy and beef cattle feed.

Rajai Atalla, a chemist and cellulose researcher who founded Cellulose Sciences International, initially developed a process to pretreat corn stover for ethanol production.

Though, he believed—and still believes—in the effectiveness of the pretreatment for cellulosic ethanol, he was unable to convince established ethanol companies to adopt the technology. After attending a workshop on start-up companies in which the speaker advised pivoting, if marketing to the original target industry was unsuccessful, Atalla refocused his efforts on using his pretreatment process to convert corn stover into cattle feed.

Some chemical companies focus on this

“We treated some corn stover and sent it off to one of the animal nutrition laboratories and they were amazed at the dramatically increased digestibility,” Atalla says. Cellulose Sciences’ patented process occurs at room temperature and ambient pressure. “We treat it with sodium hydroxide dissolved in a cosolvent of ethanol and water. If you have the right proportions, you are able to open up the structure of the cellulose so it is much more accessible to the enzymes and, at the same time, you’re able to extract the inhibitors,” Atalla says. “If you remove the inhibitors, it is much easier for the cellulases and xylanases to convert the polysaccharides to glucose and xylose,” Atalla says, and at an increased rate.

In the process, corn stover is shredded to an average size of about one-half inch.

The pretreatment process is unique because it avoids thermal degradation of the cellulose, and the conversion to glucose and xylose requires far less time than the four or five days needed for high-temperature, pretreated corn stover. “If we’re dealing with pure cellulose, the pretreatment is complete in 10 to 15 min-

or that

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NOVEMBER 2016 | Ethanol Producer Magazine | 31

FIBER PLUS: Cellulose Sciences International's process improves the digestibility of corn stover, shown above untreated on the left and treated.

PHOTO: ROLF HAGBERG

utes. If we’re dealing with biomass, depending on the biomass, anywhere between 30 and 60 minutes is all it takes. And when we apply the enzymes, we get complete conversion to glucose and xylose, in about 30 to 40 hours.

“Raj has developed a pretty innovative way to treat forage fiber,” says David Combs, dairy scientist in the University of Wisconsin

32 | Ethanol Producer Magazine | NOVEMBER 2016

Department of Dairy Science in Madison.

The additional step of extracting compounds solubilized by sodium hydroxide to remove them greatly enhances the digestibility of the forage, once it has dried, says Combs, whose work specializes in ruminant nutrition. “You take a product that had digestibility of around 40 percent—60 percent of the fiber that a

cows eats, she can’t do anything with it and 40 percent she can. With this process you can increase that digestibility to 75 to 80 percent.”

The increase in the corn stover’s digestibility puts the feed on par with another fiber supplement, Combs says. “Raj’s treatment process on paper looks to be as digestible as soy hulls and it actually can be produced at a lower cost than what soy hulls cost producers.” Combs completed several feeding studies in December 2015, generating a lot of interest from other dairy scientists and farmers, he says. Further studies may be done with beef cattle. Substituting pretreated corn stover for corn in a majority of beef cattle’s ration could substantially reduce the cost of feeding and also reduce the amount of stover on cropland, Combs says.

Cellulose Sciences International is partnering with Ag Venture Alliance to build a demonstration plant that will allow expanded feeding studies. The alliance, a Mason City, Iowa-based cooperative supporting valueadded agriculture, has contributed $500,000 to the Cellulose Sciences project. Most of the alliance’s 635 farmer members live in corn areas of southern Minnesota and northern Iowa where studies have shown removing some of the stover can increase yields. “Farmers, especially ones growing continuous corn, have too much stover left on the fields,” says Jude Conway, Ag Ventures executive director.

STOVER Minnesota’s Agricultural Utilization and Research Institute also provided some financial support to Cellulose Sciences’ project. The project fits perfectly with one of AURI’s goals, which is adding value to Minnesota’s agricultural commodities, says Al Doering, AURI senior scientist and a farmer. “What excited AURI is Cellulose Sciences offered a new technology. It didn’t require high pressure to process the stover and the results they saw in the increase in energy value after the treatment, especially when used as a feedstock for ruminants, were incredible,” Doering says. “It’s a pretty amazing technology. Feeding corn stover or corn stalks to livestock is nothing new, what’s so incredible is the increase in energy availability out of those corn stalks. That’s really where the value comes.”

Ag Ventures Alliance plans to hold informational meetings and raise money this winter and break ground on a demonstration plant next spring. The cooperative has selected a site for the plant and is working with an engineering firm, Conway says.

Low-Carbon Fuel

A third effort to utilize corn stover is targeting the carbon reduction benefits from using the stover as a biomass fuel source for power plants. Last winter, California-based Trestle Energy LLC received a favorable carbon intensity (CI) rating from the Califor-

nia Air Resources Board for its pathway that would shave 18 points off an ethanol plant’s CI rating, according to the CARB staff summary. The company has received favorable CI ratings under the British Columbia Low Carbon Fuel Standard and has a pathway pending with the U.S. EPA. James Rhodes, co-founder and president of Trestle Energy says the approach creates a new coproduct credit from using corn stover for electric generation, either at an ethanol plant with biomass boilers, or at a partnering utility cofiring biomass with coal. The process allows both sides of the supply chain to reap emissions reduction benefits, Rhodes says. “By making pellets a coproduct of ethanol, the financial benefits of low-carbon fuels can make biomass power a cost-effective option for coal plants to use in meeting their own compliance requirements.”

Data for the life-cycle analysis of the pathway was collected in a demonstration project conducted in 2012 and 2013 with Iowa-based Golden Grain Energy and Cedar Falls Utilities, with the help of Larksen LLC, which works with utilities for biomass supplies. The utility, Rhodes explained, has been evaluating the possible use of biomass in one of its coal-fired boilers for several years. The life-cycle analysis used for the CARB CI score took into consideration the additional use of farm equipment for stover removal, additional

inputs to offset nutrients removed and feedstock transportation, among other factors. The biggest CI reduction was the result of avoided emissions from using the crop residues.

Coproduct credits are common in life-cycle analyses, Rhodes says. A common coproduct credit in biodiesel CI pathways, for example, comes from the feed produced at the soybean mill. Another example would be California crude oil that is produced with enhanced oil recovery using steam. The production of that steam includes an electricity coproduct that is credited to the fuel. Rhodes pointed out applying the coproduct credit would make Midwestern corn ethanol competitive with Brazilian sugarcane ethanol, where the coproduct credit for generating electricity from bagasse is a big part of the fuel’s low carbon intensity score.

Rhodes is optimistic about the next step.

“We have a whole series of test burning opportunities that could launch for 2017 harvest,” he says. “Since we received the approval, we’ve been speaking with utilities, mainly in the western half of the Midwest, looking at opportunities to commercialize.”

Author: Ann Bailey Associate Editor, Ethanol Producer Magazine abailey@biinternational.com 701-738-4976

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NOVEMBER 2016 | Ethanol Producer Magazine | 33

Pericarp fiber.

PHOTO: FLUID QUIP

34 | Ethanol Producer Magazine | NOVEMBER 2016

FIBER

FIBER:

Feedstock of the Future

Realizing its full potential requires a better understanding of fiber’s fickle characteristics.

By Susanne Retka Schill

In years to come, ethanol producers will be learning a lot about fiber, as many plants diversify from the starch-only, first-generation production process into the next generation of biorefining technology. The first step for many will be doing more with the corn kernel already being processed. Realizing the full potential of cellulosic ethanol, though, requires taking the next step into better understanding the fickle characteristics of the wide range of biomass fiber.

Converting corn kernel fiber is seen as the low-hanging fruit by many. Up to now,

ethanol dry mills have focused on optimizing the grinding of whole corn in the process. Wet millers and a handful of dry millers, though, have long separated kernel components. Neal Jakel got his start in the wet mill industry before working in fuel ethanol production and now in strategy and technology at Fluid Quip Process Technologies. “One of my first projects out of college 25 years ago was trying to convert corn fiber from a wet mill to ethanol. It’s not a new concept, it’s been around for a long time,” Jakel says. “[Fiber] is very difficult to separate out into individual C6 or C5 molecules because of the way they’re bound together. It’s very chemically and energy intensive to make a clean separation, which

is the complete opposite of how starch is set up. When you think about it, that fiber is meant to protect the seed, that kernel, so that it’s not easily broken down by mold or anything, whereas the starch is readily available to be broken down for energy to feed that new seed when it’s planted to grow.

That’s why the starch is much easier to convert to sugars, but the fiber is not.”

Kernel Fiber

Tapping the potential of corn kernel fiber requires understanding the kernel. The outer hull, the pericarp, is the most predominant source of kernel fiber and the easiest to separate and remove due to its large particle size. The pericarp protects the starch

NOVEMBER 2016 | Ethanol Producer Magazine | 35

FIBER

and the germ that contains most of the protein and oil. The big dry millers separate the fiber and bran, Jakel explains, which typically retains a fair amount of starch, producing food items like corn flakes and brewers grits.

Wet mills use a different process to maximize the separation of kernel componentsâ&#x20AC;&#x201D;the fiber, protein, starch and oil. â&#x20AC;&#x153;Wet mills are intensely focused on getting those four components in as pure form as possible,â&#x20AC;? Jakel says. The kernel is soaked in water and sulfur dioxide or a similar chemical, which softens the outer hull and disrupts the protein matrix surrounding the starch granules. The process allows the whole germ to break free and the protein to be washed from the starch granules. The protein, now called corn gluten meal, is 60 percent protein or better and used in poultry, pet and acquaculture feeds. The oil is separated, refined and goes into the vegetable oil market. The remaining corn gluten feed is 60 percent or more fiber, typically

dried and pelletized to increase bulk density to be shipped overseas. The starch is further processed into paper coatings or for hairspray, converted to high-fructose corn sugar or low-cal sweeteners or fermented into ethanol or other products such as dextrin or citric acid. FQPT is adapting the wet mill approach for the fuel ethanol industry, Jakel says, developing bolt-on versions of the proven technologies. Three fiber bypass systems have been installed at plants so far. â&#x20AC;&#x153;We see a huge opportunity, the fiber stream being just one of the many streams that we can separate and do more with in an ethanol plant.â&#x20AC;?

While fiber separation has long been done, using it in other processes and not just drying it for feed is relatively new. â&#x20AC;&#x153;When processing a pure fiber stream, it has to be very dilute in order to pump it,â&#x20AC;? Jakel says.

A 50 to 70 percent fiber stream needs to be around 10 percent solids or less in order to move through a pipe. â&#x20AC;&#x153;Thereâ&#x20AC;&#x2122;s no doubt fiber has a great ability to bind with water and

to structures. Itâ&#x20AC;&#x2122;s a great mechanism to plug up heat exchangers, valves and nozzles, just because of the 3D structure of the fiberâ&#x20AC;&#x201D; itâ&#x20AC;&#x2122;s got a lot of edges and points to grab in the process.â&#x20AC;?

Handling Issues

Overcoming the challenge of handling fiber has been a big part of ICMâ&#x20AC;&#x2122;s research.

Like FQPT, ICM is working with front-end separation technologies, but with a different focus, integrating its select milling and fiber separation technologies into traditional dry mill ethanol plants with an eye on the transition to cellulosic ethanol production in what it calls its Gen 1.5 process, converting corn kernel fiber into cellulosic ethanol.

The lessons learned in handling kernel fiber are being applied to developing a Gen 2 process for converting feedstocks such as stover, biomass sorghum and switchgrass.

One of those lessons is the optimal solids loading. â&#x20AC;&#x153;Normal Gen 1 corn mashes are going to run in a 32 to 35 percent solids

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36 | Ethanol Producer Magazine | NOVEMBER 2016

FIBER HANDLING: Processing fiber presents multiple challenges ICM has successfully worked to overcome, from wet energy sorghum's tendency to pile up on process conveyors, left, to corn fiber fouling due to protein content in pretreatment, right.

PHOTO: ICM

range. Thatâ&#x20AC;&#x2122;s still quite a liquid,â&#x20AC;? says Jeremy Javers, director of technology development at ICMâ&#x20AC;&#x2122;s St. Joseph, Missouri, demonstration plant. â&#x20AC;&#x153;If you jumped into a tank of corn mash, youâ&#x20AC;&#x2122;d sink. If you jumped into a tank of 35 percent corn fiber solids, youâ&#x20AC;&#x2122;d probably get the middle of your calves wet and your knees would still be dry.â&#x20AC;?

Thereâ&#x20AC;&#x2122;s a big difference between the feedstocks under consideration for cellu-

losic ethanol processes. â&#x20AC;&#x153;By far, corn fiber is the easiest. Itâ&#x20AC;&#x2122;s the one we can push the solids higher, and it still acts like a liquid,â&#x20AC;?

Javer says. Thereâ&#x20AC;&#x2122;s another advantage in the handling and cleaning of corn kernels. â&#x20AC;&#x153;We have well-established systems like scalpers and sieves and air classification systems that can help take things like rocks and chains, bolts and hitch pins out of the corn that gets brought in. Weâ&#x20AC;&#x2122;re very good at getting

that cleaned up. Occasionally, something gets through and busts a hole in a slurry screen.â&#x20AC;?

The systems for cleaning second-generation feedstocks arenâ&#x20AC;&#x2122;t fully developed yet. â&#x20AC;&#x153;When you bring in a bale of corn stover, you get the rocks, the bolts, the twine, the dead animals coming in. And when youâ&#x20AC;&#x2122;re processing 1,000 tons a day, 2,000 bales material a day, it becomes an issue,â&#x20AC;?

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FIBER

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PHOTO: ICM

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he says. “You’ve got to figure out a way to get the stuff out. If you don’t, it’s not busting a hole in a slurry screen, it’s starting a fire or breaking a piece of equipment or causing serious damage to the equipment inside the process—wearing out bearings, plugging things, breaking things, and on a high-pressure system.”

Once ground, getting the fiber to flow through the process was the primary challenge to overcome, Javers acknowledges.

“We spent millions of dollars trying to get that material from the first tank through the first 25 feet of pipe. That’s where we spend the majority of development dollars.” In the early years of research, the team experimented with multiple iterations of process conditions and equipment configurations.

At one point, he says with a laugh, the key performance indicator was not how long the system would run, but how quickly they could take it apart and unplug it for the next iteration. “You’d spend all day getting ready to start it up, then you’d run for an hour and everything would plug up,”

he says. The system would be dismantled, unplugged, power washed and sometimes even needed chiseling to get the material out. Javers commends the ICM team and the equipment providers who hung in there through multiple modifications in the process. Today, the system starts up smoothly within a couple of hours and runs continuously, he says.

Getting the fiber to flow was the biggest challenge, but not the only one. The work with switchgrass illustrates another dimension of fiber conversion, Javers says.

“The switchgrass fields were no more than 15 miles apart but the levels of water soluble materials were variable. That variation in just water soluble ash and other components could have a serious impact on conversion efficiencies.” The researchers focused on ways to equalize the incoming feedstock. “One way we did that was through applying washing technology,” he says. “Getting certain components out of the process did a few things. Some of them act like bases in the pretreatment system,

FIBER

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and we run a dilute acid pretreatment, so the more equalized the feedstock, the more efficient our acid doses were and the more consistent conversion we got field to field.

So itâ&#x20AC;&#x2122;s not just about milling and mixing and pumping, itâ&#x20AC;&#x2122;s also about preparation of the feedstock and presenting it to the system and pre-wetting the feedstock.â&#x20AC;? Even the pre-wetting step presents a challenge, he explains, as the lignin content in some feedstocks means the chopped material does not absorb water easily, instead floating on the top of the tank.

Javers says ICM now has five fiber separation systems (FST) operating, with a sixth starting up soon. Initially, the fiber is being removed, increasing throughput in the starch process, and then reintroduced at the backend. Discussions are under way to determine which will be the first to add the Gen 1.5 system to convert the fiber into ethanol. The process also will modify and diversify coproducts with high-protein distillers, modified syrup and a potential new fiber stream.

â&#x20AC;&#x153;Every one of these startups of FST have had their unique challenges and opportunities,â&#x20AC;? Javers says. â&#x20AC;&#x153;Iâ&#x20AC;&#x2122;m really proud of the customer, the team and the company for being able to respond to every one of those challenges and find solutions and have successful startups.â&#x20AC;?

ICM and FQPT are just two of many companies, each with its own approach to tapping into the potential of fiber biorefining. Javers echoes a comment heard from many of them. â&#x20AC;&#x153;We want to see others succeed. At the end of the day, the vision of success is so great that we canâ&#x20AC;&#x2122;t afford to fail. The value this industry, the bioprocessing industry is going to bring to agriculture is going to be great.â&#x20AC;?

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

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NOVEMBER 2016 | Ethanol Producer Magazine | 39

Mark Yancey PHOTO: MIKE BATEMAN PHOTOGRAPHY

INNOVATION

W E T C A KE Max-imization New technology poised to improve ethanol plant’s bottom line.

By Ann Bailey

D3Max, a company cofounded by BBI International, has developed a corn fiber-toethanol technology with the potential to increase the output of ethanol plants by 10 percent

The technology is groundbreaking due to its potential increase in profitability for ethanol plants, according to Mark Yancy, chief technology officer for D3Max. Twenty years in the making, the process is now poised to become a reality, Yancey says. Unique among the emerging cellulosic technologies, he says, it uses wet cake that has gone through the ethanol plant and has been cooked. “This allows us to run our pretreatment at much lower temperatures and avoid the plugging problems seen with some technologies.”

Corn fiber contains only a small amount of lignin, so it is much easier to convert to fermentable sugars than cellulosic feed stocks such as corn stover, switchgrass and wood, he adds. Another advantage of the D3Max technology is that wet cake is available at ethanol plants and doesn't have to be grown, harvested, stored and

transported the way other cellulosic feedstocks do.

Yancey believes the D3Max technology has great potential to be successful and make a huge impact on the ethanol industry. “If you look at the ethanol industry as a whole, all the corn fiber from dry mills would convert to 1.5 billion gallons of cellulosic ethanol—that’s the potential for this technology, just within the U.S.,” he says. “I think what is groundbreaking is the potential increase in the profitability of the ethanol plant. It’s much more significant than modifications to dry mills that are happening today. Producers do everything they can to maximize profitability, which is important, but there is no technology that will increase their bottom line as much as D3Max.”

2 Decades in the Making

D3Max’ corn-fiber-to-ethanol technology has its roots in research Yancey was involved in 1996 when he was a project manager at the National Renewable Energy Laboratory in Golden, Colorado.

When making ethanol out of spent brewers grain, Yancey and the other researchers discovered that it was much easier to convert the distillers grain to fermentable sug-

ars than to convert the other feedstocks being worked with. “In fact, NREL senior scientist Jim McMillan stated that spent brewers grain was the best feedstock that NREL had ever tested. That project was a success, but the market for converting spent brewers grain to ethanol is only about 70 million gallons a year, so the Department of Energy did not fund any further work, and that was kind of the end of that,” Yancey says.

Yancey revisited research into converting spent brewers grain into ethanol a decade later, in 2006, when Joe Coors Jr. asked him if he wanted to renew the 1996 project. By that time, Yancey had left NREL and was leading the project development team at BBI International. BBI gave the green light to the project and the BBI team designed a plant to convert the spent brewers grain at Coors brewery in Golden to ethanol. In 2008, when project developers were poised to begin raising money to build the plant, the bottom dropped out of the economy and the project was put on hold, Yancey says. He began working on the project again in 2010 and during the next several years obtained a patent for conversion of fermentation residual products to ethanol and NOVEMBER 2016 | Ethanol Producer Magazine | 41

INNOVATION

REACTOR: The D3Max skid-mounted pilot will employ a pretreatment reactor similar to the AdvanceBio Systems' reactor pictured here at a national laboratory installation.

PHOTO: ADVANCEBIO

made strides toward commercializing the technology. Last year, BBI formed D3Max LLC to commercialize the technology. Today D3Max is owned by Yancey, BBI and several private investors.

“For the past nine months, we’ve been raising money to finish the commercialization effort and we’re now designing a pilot plant to generate the data we need to design the commercial plant,” Yancey says.

The D3Max technology targets the corn fiber, composed of cellulose and

hemicellulose, present in wet cake, using a three-step process. In the first pretreatment step, the wet cake is heated. “We add acid to reduce the pH and we hold it at that temperature and pH for five to 10 minutes. The result of that is some of the carbohydrates are broken down into fermentable sugars,” Yancey says. Specifically, the carbohydrates xylan and arabinan are converted to xylose and arabinose sugars, which can be fermented to ethanol. The pretreated wet cake slurry then goes through enzymatic

hydrolysis in a large tank for 24 to 30 hours.

“A mixture of enzymes is added that break down the cellulose to sugars, and then that material goes to fermentation where we add a genetically modified yeast to ferment all of the sugars to ethanol,” Yancey says.

“The rest of the process is essentially the same as a dry mill. We go through a beer well, distillation column and then further purification of the ethanol to produce fuel ethanol.”

D3Max’s goal is to license its technology to at least 50 of the 200 dry mill ethanol plants in the United States and the dozen or so in Canada, Yancey says. All dry mill ethanol plants produce wet cake—wet distillers grains—that is typically dried and sold as animal feed. Converting the fiber and residual starch in wet cake would result in a 20 percent decrease in DDGS volume with a concentrated protein content of about 40 percent. Besides the 10 percent increase in ethanol production, the bolt-on technology brings a 0.5 pound-per-bushel increase in corn oil recovery.

The additional ethanol production would qualify as cellulosic, generating D3 renewable identification numbers—RINs that are used by obligated parties to demonstrate compliance with the renewable fuels standard. In early September, D3 RINs were trading at about $1.80 per gallon and corn ethanol was selling about $1.50 per

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INNOVATION gallon, so the potential revenue for cellulosic ethanol would be about $3.30 per gallon, Yancey says. “An advantage of D3Max is that RINs are directly measured from the ethanol produced, and not calculated as they are with some other technologies.”

Furthermore, there are additional carbon credits available for fuel shipped to California under the state’s Low Carbon Fuel Standard.

Pilot Ahead

“We’re seeing huge demand for this product,” Yancey says. Three ethanol plants have expressed interest in hosting the pilot testing, with the final decision to be made yet this fall. Others have indicated they want to be the site of the first commercial plant, he says.

Design of the skid-mounted pilot is underway by Ohio-based AdvanceBio Systems LLC and construction will be finished by the end of the year, Yancey says. “The first of next year we will commission the pilot and begin testing. Data will be used to narrow the pretreatment time, temperature and pH,” Yancey says. Once the initial data is collected for the commercial-scale design, the pilot system can be trucked from plant to plant to demonstrate the D3Max technology.

AdvanceBio Systems modified its standard pretreatment reactor, which is made for high-solids biomass such as corn stover, for the D3Max pilot, which is a lower-solids feedstock, says Dale Monceaux, AdvanceBio Systems co-founder. The readily available wet cake definitely is an advantage for ethanol plants who will use D3Max technology, he says. “You’ve got stuff that is in a pile already. You don’t have to pay shipping costs. You don’t have to pay collection costs. It’s just the value of that material, as is, and it’s already been mechanically pretreated and it’s already been milled in the ethanol process, so there are a lot of benefits that allow for better economics.”

“If all goes as planned, the first D3Max plant will be under construction this time next year,” Yancey says.

SOURCE: D3MAX

Author: Ann Bailey Associate Editor, Ethanol Producer Magazine abailey@biinternational.com 701-738-4976 NOVEMBER 2016 | Ethanol Producer Magazine | 43

BUSINESS

COLWICH REUNION: ICM, headquarters shown in the foreground in the top photo, got its start in 1995 with the purchase of the engineering division of High Plains Corp. Abengoa purchased the High Plains ethanol plant, pictured in back, in 2002.

PHOTO: ICM

High Plains

TRANSITION

The financial difficulties of Abengoa Bioenergyâ&#x20AC;&#x2122;s parent company in Spain trigger the sale of its production facilities in the U.S.

By Susanne Retka Schill

44 | Ethanol Producer Magazine | NOVEMBER 2016

RAVENNA IN 2007: Abengoa started up its Ravenna, Nebraska, plant in 2007, shown here in photos from that year. The first of three Vogelbusch-design plants, the Illinois and Indiana facilities came online in 2010.

PHOTO: BBI FILES

With the closings at September’s end, five Abengoa first-generation ethanol plants turned the page to a new chapter. Green Plains

Inc. acquired three of the plants sold in bankruptcy proceedings, ICM Inc. bought the plant next to its headquarters and KAAPA Ethanol bought the plant 40 miles up the road. Abengoa Bioenergy Biomass LLC, the cellulosic ethanol plant in Hugoton, Kansas, is being sold in a separate process handled by Ocean Park Advisers and expected to close later this year.

Carl Marks Advisors handled the auction process for the first-gen plants that took place

Aug. 22. Chris Wu, partner, was pleased with the process that brought in $357 million. “We contacted well over 250 buyers and we had well-over 80 people participating in the process. There was significant strategic interest in all the assets,” Wu says. “We had a wholesome stalking horse process, which means effectively we’re running an auction for the right to be the stalking horse bidder.”

Green Plains placed successful stalking horse bids on the Madison, Illinois, and Mount Vernon, Indiana, plants of $100 million each; KE Holdings LLC, a subsidiary of KAAPA Ethanol, bid $115 million on the Ravenna, Nebraska, plant. A third, $35 million stalking horse bid by BioUrja Trading LLC on the

York, Nebraska, facility was outbid at the auction by Green Plains at $37.375 million. ICM successfully outbid two other parties on the older, idled Colwich, Kansas, plant for $3.15 million. The three 90 MMgy, Vogelbusch-design plants in Ravenna, Madison and Mount Vernon sold for an average price of $1.17 per gallon.

The strategic bidders represented a variety of companies interested in the industry, Wu says, as evidenced by the stalking horse bid offered by BioUrja, a midstream ethanol distributor, seeing an opportunity to integrate into the production side. “BioUrja wasn’t the only one interested,” he adds. The successful sale confirms the viability of the corn ethanol

BUSINESS industry in the U.S., he says, showing both the confidence from strategic investors and lenders willing to extend credit. “It’s an important watershed.”

Green Plains

Consolidation is a big part of the Green Plains platform. The Abengoa acquisitions bring the company’s ethanol footprint to 17 dry mill plants with a combined capacity of 1.5 billion gallons per year. “We continue to focus on making strategic investments

in high quality assets as we expand our production footprint,” says Todd Becker, Green Plains president and CEO. “The Madison and Mount Vernon plants will give us access to the Mississippi River, supporting our new export terminal planned in Beaumont, Texas. In addition, we will broaden our product offering globally with industrial alcohol production at the York plant.”

Diversification is emerging as a new theme for Green Plains. While the York plant is an older plant, the acquisition will mark Green

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Plains entry into the industrial alcohol market.

Two years ago, it acquired a 70,000-head feedlot in southwest Kansas and in October, it announced the acquisition of Fleischmann’s Vinegar Co. In addition to supplying all-natural food and beverage ingredients, Fleischmann’s portfolio extends into antimicrobials, animal feeds, herbicides and disinfectants. “The Fleischmann’s Vinegar acquisition will lead to further supply chain opportunities within Green Plains, as its largest production cost is foodgrade ethanol,” Becker says. The acquisition will expand the company’s opportunities into consumer and industrial-based ethanol products.

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Logistics are a big part KAAPA Ethanol’s interest in the Ravenna facility. A locally owned LLC with just under 500 stockholders in central Nebraska, the acquisition will more than double its ethanol footprint, from 60 MMgy at its home base in Minden to a combined 150 MMgy, giving it access to unit train shipping.

KAAPA created KE Holdings LLC to make the acquisition, with the plant becoming KAPPA Ethanol Ravenna LLC, a wholly owned subsidiary.

For Ravenna, the acquisition brings a new business model, says KAAPA CEO Chuck Woodside, particularly for grain origination.

“We typically buy direct from the farmer for our corn. That’s a philosophy we’ve had since the beginning.” And, where Abengoa handled marketing through the central office in St. Louis, KAAPA’s acquisition will bring scale to its business partners. “RPMG is going be marketing all the ethanol and distillers corn oil, like they do for Minden,” Woodside says. “And they’ll be marketing dried distillers, which we don’t make in Minden.” Besides benefits from increased scale, Woodside expects that WDGS customers will be pleased to have a backup source when Minden shuts down for maintenance.

Woodside expects other synergies as employees at the two facilities begin working together. For one, the ICM-design at Minden has some significant differences from the Vogelbusch-design at Ravenna. “Clearly they’re continuous fermentation at Ravenna and we are batch. They’re pressure distillation and we’re vacuum in Minden. There’s probably pluses and minuses to both sides.” He anticipates

BUSINESS making improvements at Ravenna that will be focused on production efficiencies and lowering its carbon intensity. With none of Mindenâ&#x20AC;&#x2122;s distillers grains being dried, almost all of its ethanol product goes to California.

ICM

ICMâ&#x20AC;&#x2122;s acquisition of the Colwich plant is also based on adjacency, in this case, the sharing of a property line on the north end of the small town not far from Wichita, Kansas. â&#x20AC;&#x153;The proximity of the location to our headquarters in Colwich was obviously an appeal to us, getting control of that property and the assets there,â&#x20AC;? says Chris Mitchell, ICM president. â&#x20AC;&#x153;As we continue to explore different technology options in the renewable fuel space, there are a number of opportunities that we see that could be viable at that location.â&#x20AC;? Built in the mid-1980s, the 25 MMgy plant at Colwich has not run consistently for the past several years.

Abengoa owned a sixth first-generation plant in Portales, New Mexico. The Portales plant was not part of final bankruptcy auction, due to a separate lender arrangement with GATX Corp. and the resolution for that asset is still pending.

History

Abengoaâ&#x20AC;&#x2122;s three older plants at Portales, Colwich and York were the core assets when the Seville, Spain-headquartered company entered the U.S. ethanol industry in 2002. A 2004 article in Ethanol Producer Magazine, â&#x20AC;&#x153;Abengoa Bioenergyâ&#x20AC;&#x2122;s â&#x20AC;&#x2DC;High Plainsâ&#x20AC;&#x2122; Success,â&#x20AC;? chronicled the companyâ&#x20AC;&#x2122;s purchase of three High Plains Corp. facilities. Abengoaâ&#x20AC;&#x2122;s chief operating officer at the time, Tim Newkirk, was quoted as saying the three plants were performing well in a period of tight margins. â&#x20AC;&#x153;Our plants are high-efficiency, low-cost, highyield producers of ethanol.â&#x20AC;?

Coming online between 1982 and 1994, the story said York was the newest of the three, starting at 25 MMgy and expanded to 55 Mggy. The Colwich plant was expanded from its initial 8 MMgy to 25 MMgy and Portales from 10 MMgy to 24 MMgy. In 2003, High Plains officially changed its name to Abengoa Bioenergy Corp. and the U.S headquarters were established in the St. Louis, Missouri, suburb of Chesterfield, with Chris Standlee in the lead as executive vice president.

When it entered the U.S. ethanol market, Abengoa was already a major corporation with more than 200 companies in 40 countries. The first fuel ethanol producer in Europe, Abengoaâ&#x20AC;&#x2122;s third plant was due online in 2005, bringing the combined capacity to 140 MMgy. The EU had just passed a biofuels directive calling for 5.75 percent biofuel content by 2010. Abengoaâ&#x20AC;&#x2122;s U.S. research arm at the York facility was completing a residual starch conversion pilot plant that was to be utilized by its team researching the conversion of bio-

mass to bioethanol via enzymatic hydrolysis.

Interest is high in who will pick up the torch to carry Abengoa's first commercialscale cellulosic ethanol plant at Hugoton, Kansas, to fruition.

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

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CLEARING THE AIR

Value of E30 Proven in Real Time

By Jim Seurer

Our good friend and colleague Dave VanderGriend wrote in this column in April that a little place called Watertown, South Dakota, could be the beginning of a revolution in how we think about ethanol blends. The E30 Challenge initiated by Glacial Lakes

Energy tests the boundaries of conventional thinking—not to mention EPA restrictions—to encourage the voluntary use of premium gasoline made with 30 percent ethanol blends. With the support of ICM and others, we set out to dispel the myth that 2001 and newer nonflex autos can only operate, at most, on E15. Ultimately, the main purpose of this campaign is to drive change and help consumers recognize the value that higher blends of ethanol offer.

We are well-past the beginning, since our launch in the summer of 2015, and a lot has happened to validate our thinking. Automaker BMW announced it was recommending premium for its popular Mini Cooper and its warranties were good for 25 percent ethanol. During that same time, the U.S. DOE continued to quite publicly tout its work that identified high-octane fuels, including ethanol blends in the 25 to 40 percent volume range, as an optimum fuel for meeting future efficiency and greenhouse gas standards. Just last month, Nissan announced the introduction of a variable compression engine that could be a game changer for ethanol as it would adjust to various blends and negate any potential mileage loss. A new High Octane Low Carbon Alliance has been established, led by former Sen. Tom Daschle, a great friend to ethanol and father of the renewable fuel standard. And a former General Motors engineer recently wrote an article in a Washington newspaper stating ethanol is by far the fuel of choice from an engineer's perspective. Momentum is on our side as the value of ethanol for premium fuels is becoming widely recognized.

What have we learned from our demonstration in Watertown of an E30 premium fuel in conventional vehicles? For starters, the oil company-led charge that ethanol damages engines is unfounded. After a year of monitoring our Premium E30 use, we have not had a single

48 | Ethanol Producer Magazine | NOVEMBER 2016

engine-related issue or complaint. To obtain real-time information, we connected performance data logging devices to about 50 test autos to compare engine performance with E10 and E30. While we are still in the process of collecting and analyzing this data, early indications bode well for Premium E30. We’ve learned there is no significant change in miles per gallon and we have documented proof that engines have more torque and more horsepower using Premium E30 fuel. Because ethanol is a cleaner burning fuel, we already knew that it’s much better for our environment.

So, is E30 the right number? What about the E25-plus blends the Brazilians use, or some other volume? As noted, E25 is the volume specified by Mini Cooper, likely related to the fact that new hoses and pumps are certified up to 25 percent volume. However, current testing protocols used by ethanol supporters in cooperation with pump manufacturers test to the point of failure. We are absolutely convinced a hose or pump that can handle 25 percent can handle 30 percent or more. And while we are delighted to see this move toward a 25 percent volume, going to 30 percent offers significant benefits.

The auto industry has repeatedly stated it would be able to achieve significant efficiency and emission gains with a 100 RON octane, which translates to a 93 to 94 AKI at the pump. Using today's ethanol blendstock, 25 percent ethanol falls just short. But adding 20 percent to E10 would reach the 100 RON number and do so without any difficulty, since we would be splash blending.

Sure, 25 percent volume is a great step forward and we'll gladly take it. But I encourage us all to not be boxed in by a random UL25 number that was created absent of any science or real world experience. E30 is proven to have the biggest bang for the buck in modern engines and provides the octane autos are asking for.

Author: Jim Seurer CEO, Glacial Lakes Energy jseurer@glaciallakesenergy.com

BUSINESS MATTERS

OSHA Revises Reporting Requirements

By Gregory N. Dale

The Occupational Safety and Health Administration published its final rule in May on electronic submission of occupational injury and illness data. While it does not change employers’ existing obligations

to collect, maintain and certify injury and illness records, it does require electronic submission of certain records by some employers.

Under the new rule, establishments with 250 or more employees subject to OSHA’s recordkeeping regulation must electronically submit certain information from the Log of Work-Related Injuries and Illnesses (Form 300); the Summary of Work-Related Injuries and Illnesses (Form 300A); and the Injury and Illness Incident Report (Form 301). In 2017, the deadline for submitting only form 300A is July 1 and in 2018, the deadline for all three forms is July 1. Starting in 2019, the electronic submission deadline is March 2.

Smaller establishments with 20 to 249 employees in certain high-risk industries must electronically submit Form 300A. High-risk industries generally include construction, manufacturing, a wide variety of trucking and transportation industries, warehousing and storage.

The list of regulated industries is available on the OSHA website at “Recordkeeping: NAICS Codes for Electronic Submission.” The submission deadline for form 300A for this category is July 1 in 2017 and 2018 and March 2, beginning in 2019.

Establishments with fewer than 20 employees at all times during the year do not have to routinely submit information electronically to OSHA, unless otherwise advised. OSHA requires employers to count full-time, part-time, seasonal and temporary workers for purposes of the new regulation.

The electronic reporting process is expected to improve OSHA’s ability to analyze workplace injury and illness trends, respond to statistically significant indicators, and engage its compliance and enforcement activities more efficiently.

Significantly, OSHA also has indicated its intent to disclose on its website some of the data collected as a means of encouraging employers to improve the level of occupational safety and health in their worksites. OSHA comments it has effective safeguards in place to prevent disclosure of personally identifiable information.

The new rule also requires that employers “establish a reasonable procedure for employees to report work-related injuries and illnesses promptly and accurately.” Procedures cannot deter or discourage reporting and the rule prohibits employers from discharging or discriminating against any employee for reporting a work-related injury

or illness. The deadline to inform employees of the new rules is Nov. 1.

Employers should confirm they are using the current OSHA-approved posting which can be found at www.osha.gov/Publications/poster. html.

Under the new retaliation-free environment rules, employers will want to evaluate several common workplace programs. OSHA believes underreporting is a potential result of programs such as safety incentive awards (monetary or prizes) based upon low incidents of workplace injuries or lost workdays. A recent OSHA pilot program, W-SVEP, covering the states of Missouri, Kansas, Nebraska and companies under federal enforcement in Iowa extends the OSHA’s Severe Violator Enforcement Program to alleged retaliation complaints found to have merit, including “where a company has a rate-based incentive program for work-related injuries.”

OSHA also views certain rigid reporting requirements as having a chilling effect. OSHA notes “Many employers have policies that require the immediate reporting of a work-related injury by the worker and, for some employers, failure to follow this requirement will result in discipline, regardless of the circumstances. In some cases, workers may be unaware that they have suffered an injury, since the pain or symptoms do not manifest until later . . . This is particularly true for musculoskeletal injuries.” OSHA recognizes “employers have a legitimate interest in maintaining accurate records and ensuring that employees are reporting genuine work-related injuries and illnesses in a reasonably prompt manner. These interests, however, must be balanced with fairness to employees who cannot reasonably discover their injuries or illnesses within a rigid reporting period.”

Also, policies on drug testing should be reviewed. OSHA states blanket post-injury drug testing can be a violation. The new rule does not prohibit employers from drug testing employees; however, the drug testing should be limited to situations where employee drug use is likely to have contributed to the incident and for which the drug test can accurately identify impairment caused by drug use.

In July, a lawsuit was filed challenging aspects of the new rule.

Nonetheless, at present, there is no question that OSHA’s new rule presents several compliance issues as employers consider the new reporting obligations and employee policy impacts.

Author: Gregory N. Dale Partner, Faegre Baker Daniels gregory.dale@FaegreBD.com 317-237-1330 NOVEMBER 2016 | Ethanol Producer Magazine | 49

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