2016 October Ethanol Producer Magazine by BBI International

INSIDE: POLICY CHANGES TO BOOST RUSSIA ETHANOL OCTOBER 2016

CORN MATTERS Fall Storage Challenge Page 34

Mycotoxin Monitoring

Page 28

ALSO

Quality Starts in the Lab

Page 24

Aemetisâ&#x20AC;&#x2122; Multiple Ventures

Page 38

www.ethanolproducer.com

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CONTENTS

OCTOBER 2016 VOLUME 22

DEPARTMENTS 6

EDITOR'S NOTE

AD INDEX

THE WAY I SEE IT Passing the Torch By Mike Bryan

EVENTS CALENDAR

VIEW FROM THE HILL

Export Exchange 2016 Presents Great Opportunity By Bob Dinneen Support Breast Cancer Awareness Through October Retailer ‘Pink Out’ By Emily Skor

GRASSROOTS VOICE

Ace’s New E15, Flex Fuel Retailer Roadmap By Ron Lamberty

GLOBAL SCENE

World Needs Transport Biofuels By Bliss Baker

BUSINESS BRIEFS

COMMODITIES

DISTILLED

CLEARING THE AIR

LAB

QUALITY CONTROL

At the Heart of the Process

Mycotoxin Monitoring in the FSMA Era

Heartland Corn Products lab manager Jennifer Roepke sees the big picture By Ann Bailey

New rule ups the ante on the testing of incoming corn By Susanne Retka Schill

DRIVE

FEATURES

Another Big Harvest, More New Rules By Tom Bryan

ISSUE 10

The Deﬁnition of Insanity Is… By Pam Miller

BUSINESS MATTERS

CORN

Bin-Busting Bushels

2016 corn crop poses storage challenges By Ann Bailey

PROFILE

Aemetis’ Multiple Ventures

McAfee discusses Edeniq acquisition and the LanzaTech project By Susanne Retka Schill

INTERNATIONAL

Russia Ethanol Production Set to Grow

Lifting the tax barrier is expected to fuel expansion By Eugene Gerden

Overtime Rule Change Takes Eﬀect Dec. 1 By Megan Erickson Moritz

CONTRIBUTIONS

MARKETPLACE

Best Practices for Lab Quality Control

46 FRONTLINE

48 INNOVATION

Samples containing active enzymes and yeast require proper handling By Matt Kelker

Process combines carbon dioxide, water and lignin into syngas By Gary C. Young

Turning CO2 Emissions into Fuel

ON THE COVER An abundant corn harvest is expected in southern Minnesota and across the Corn Belt. PHOTO: JOHN BROSE

4 | Ethanol Producer Magazine | OCTOBER 2016

Ethanol Producer Magazine: (USPS No. 023-974) October 2016, Vol. 22, Issue 10. 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.

Ironically, the latest breakthrough in the field of energy, is a field. While most innovation begins with the seed of an idea, the greatest advance in the making of ethanol starts with a seed. The first corn seed technology specifically developed to increase the efficiency of ethanol production, Enogen® corn can reduce costs by up to 10% and helps generate more ethanol per bushel than any corn feedstock ever grown. Recently named AgriMarketing’s Product of the Year, Enogen is definitely making waves in the field of energy.

© 2016 Syngenta. Enogen ®, the Alliance Frame, the Purpose Icon, and the Syngenta logo are trademarks of a Syngenta Group Company. Syngenta Customer Center: 1-866-SYNGENT(A) (796-4368). www.FarmAssist.com MW 1ENG6003_8.5 x 10.875 1/16

EDITOR'S NOTE

Another Big Harvest, More New Rules As the Food Safety Modernization Act takes effect, ethanol producers will be required to ramp up their corn and DDGS testing practices— many already have—and document their actions meticulously. As we Tom Bryan

President & Editor in Chief tbryan@bbiinternational.com

report in our page-30 feature, “Mycotoxin Monitoring in the FSMA Era,” the infrequent but always lingering risk of mycotoxins is experiencing regulatory amplification through FSMA’s new hazard analysis and recordkeeping rules. As a result, the ethanol industry will be subject to more stringent recordkeeping on inbound corn and outbound DDGS, even in low-toxin years. Our story lays out a few practical resources for predicting, detecting and dealing with the various mycotoxins that thrive in different conditions. Weather aside, it’s probable that we will see some mycotoxin events in the U.S. corn supply this fall given the sheer volume of grain that’s going to be harvested. The coming harvest is expected to be the largest on record at an estimated 15.2 billion bushels (see “Bin-Busting Bushels” on page 34). Carryover is also expected to top previous highs, and so there will be a whole lot of grain in storage, of all manner, over the next several months. As a result, there likely will be some grain stored outdoors or in inadequate confines, which might lead to increased occurrences of spoilage. Ethanol plant labs are, of course, our industry’s first line of defense when it comes to monitoring and responding to corn quality issues when they occur. Ethanol production is a biological process, after all—our industry turns plant matter into alcohol using live organisms, water, heat and pressure. That alone explains why ethanol plant managers have to be steeped in the sciences of biology and chemistry. Add to that the responsibilities of inspection, quality control and regulatory compliance and you’ve only begin to describe the role of lab managers like Heartland Corn Products’ Jennifer Roepke, the focus of our page-24 story, “At the Heart of the Process.” On page 38, we catch up with West Coast ethanol producer and next-gen biofuels technology investor Aemetis, which is acquiring a well-known company with a conceivable pathway to cellulosic ethanol. Concurrently, but on a different front, Aemetis is preparing to deploy a waste-tofuels and chemicals gasification technology adjacent to its corn ethanol plant in Keyes, California. Deeper in the magazine, on page 42, you’ll find a story on Russia’s on-again/off-again ambition to increase the share of ethanol in its domestic motor fuel supply to 10 percent, as well as contributions on lab best practices and emissions mitigation.

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

TWITTER.COM/ETHANOLMAGAZINE

VOLUME 22 ISSUE 10

ADVERTISER INDEX 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

2017 Fuel Ethanol Workshop & Expo

2017 International Biomass Conference & Expo

AgCountry Farm Credit Services

AMETEK Brookfield

BetaTec Hop Products

Buckman

D3MAX LLC

Direct Automation

DuPont Industrial Biosciences

EISENMANN Corporation

Fagen Inc.

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

SALES

Fluid Quip Process Technologies, LLC

Foundation Analytical Laboratory

GEA Group

Growth Energy

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

Hydro-Klean LLC

ICM, Inc.

J.C. Ramsdell Enviro Services, Inc.

Mole Master Services Corporation

Nalco Water

Natwick Associates Appraisal Services

Phibro Ethanol Performance Group POET LLC

EDITORIAL BOARD

Renewable Fuels Association

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

R.S. Stover

Southeastern Illinois College

Syngenta: Enogen

Thermal Refractory

Trestle Energy

Victory Energy Operations, LLC.

22-23

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.

Please recycle this magazine and remove inserts or samples before recycling

OCTOBER 2016 | Ethanol Producer Magazine | 7

THE WAY I SEE IT

Passing the Torch By Mike Bryan

I’ll try not to be overly melancholy about this, my final article for Ethanol Producer Magazine.

My two sons, Joe and Tom, who have successfully run BBI International the past seven years, have now taken over full ownership. It’s exciting to see a new generation with new ideas and an unchartered approach take us to the next level. I would be remiss if I did not take this opportunity to compliment the staff of BBI, who continue to amaze me with their dedication, attention to detail and hard work, you are exceptional! Diversification has been one of the mainstays of BBI, from ethanol to biodiesel to biomass power and, more recently, a magazine and conference on unmanned aerial systems. Always looking for the next opportunity, but always keeping our eye on ethanol. I’ve made a lot of friends over the past 31 years in the industry that will last a lifetime. Many of you who read this will not have known my wife Kathy who passed away in 2009. She and I started BBI in 1995, in St Louis, in a spare bedroom of our house. She was a true friend and pioneer in the industry and is remembered fondly by many. I know it would please her greatly to think that the contributions by BBI over the past 20 years have, in some small way, made the industry stronger I often think that I had the fun years, when plants were being built up and down country roads across America. Then, in the global financial crisis, the tap was turned off overnight and companies, including BBI, hovered close to closing down. In times like that, you know who your friends are. But we dare not spend too much time looking back, lest we lose sight of the future, and the future for this industry is

NEXT GEN: Mike Bryan, center, is officially retired, passing ownership of BBI International to his sons, Tom, left, president of the company, and Joe, CEO.

indeed bright. Make no mistake, it faces a whole new set of challenges—many of them different than the ones we faced, but just as daunting—to be taken up by a whole new generation, with new ideas and renewed determination. So, I’ll stop here and express my gratitude to friends and the ethanol industry, in general, for giving me 30 years of fruitful work and the ability to not only look back with pride and satisfaction, but to look forward with renewed optimism for the future, and to say one last time: That’s the way I see it.

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

8 | Ethanol Producer Magazine | OCTOBER 2016

EVENTS CALENDAR 2016 Christianson & Associates' Biofuels Financial Conference October 17-18, 2016 Hyatt Regency Minneapolis Minneapolis, Minnesota Produced by Christianson & Associates and organized by BBI International, this year’s Biofuels Financial Conference is focused on the best ways to explore new options in today’s changing ethanol and biodiesel industries. By understanding risks associated with various technology and marketing initiatives, and by exploring various options for making the best use of capital and resources, we’ll learn how to create a well-managed plan for growth and change—a plan that maximizes profitability while ensuring future stability and meeting the expectations of all stakeholders. 866-746-8385 | www.biofuelsfinancialconference.com

2017 International Biomass Conference & Expo April 10-12, 2017 Minneapolis Convention Center Minneapolis, Minnesota

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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

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VIEW FROM THE HILL

Export Exchange 2016 Presents Great Opportunity By Bob Dinneen

The export market continues to serve as a crucial source of demand for U.S. ethanol, demonstrating that gasoline blenders in foreign markets increasingly are valuing ethanol for its unique octane and oxygenate properties. Meantime, ethanol coproducts, such

as distillers dried grains with solubles (DDGS), help boost industry profitability, providing another opportunity for exports. China has been the largest customer of U.S. DDGS the past few years, though the country has been weighing whether to impose antidumping duties on the coproduct. With that unpredictability, it’s important the U.S. industry identify and develop new markets. That’s why the Export Exchange 2016 is so essential. It brings together international buyers and end users of coarse grains and other products, including DDGS, with U.S. suppliers and agribusiness representatives. The biennial conference, Oct. 24-26 in Detroit, is cosponsored by the Renewable Fuels Association and the U.S. Grains Council. It provides an excellent forum for international buyers and sellers to trade products. The event is expected to attract nearly 500 attendees, including 200 from 30 countries participating as part of USGC trade teams. The previous Export Exchange in 2014 attracted buying teams from 33 countries, including all of the top U.S. international grain markets, and generated more than $1 billion in sales. The U.S. ethanol industry has emerged as a major producer of high-quality animal feeds such as DDGS and corn gluten feed. The Export Exchange provides a venue to connect producers and marketers of those coproducts with customers around the world. The United States is the world’s largest exporter of coarse grains and, with an anticipated record corn harvest expected to reach export channels, the conference provides an opportunity for the world’s top buyers to have access to these products. In addition to networking opportunities, the conference will have general sessions that will address critical issues facing U.S. agricultural exports, offering the customers and sellers in attendance an increased awareness of the benefits of U.S. coarse grains and coproducts. Keynote speaker will be Christopher W. Nolan Sr., managing director and co-head of food, beverage and agribusiness coverage at

10 | Ethanol Producer Magazine | OCTOBER 2016

PricewaterhouseCoopers Corporate Finance LLC. His experience in providing advisory services to the world’s leading ag commodities trading companies gives him a unique outlook on the international grains market, which he will discuss during his presentation, entitled “Global Megatrends Affecting Agribusiness.” Other speakers include Geoff Cooper, RFA senior vice president; me; Nancy DeVore, president of DHF Team, who will speak on the global grains outlook; Dr. Jerry Shurson, professor of swine nutrition at the University of Minnesota, who will speak on DDGS nutrition; Kyle Tapley, senior agricultural meteorologist at Minnesota Department of Agriculture’s Information Systems, who will discuss weather trends and the global grain market; and Paul Hishmeh, director of data and technology at Field to Market, who will present on big data and sustainability. Meantime, among the numerous groups attending will be those from the Middle East and North Africa—two regions with rapidly expanding markets and interests in corn and DDGS. Countries with representation at Export Exchange 2016 will include Saudi Arabia, Egypt, Tunisia, Jordan, the United Arab Emirates, Lebanon, Morocco and Turkey. Registration is available online at www.exportexchange.org. USGC and RFA members will be eligible for discounted pricing. Members of the media covering the grain trade and ethanol industries can request comped registration for the conference via the registration process. RFA will continue to be involved in efforts to help boost U.S. ethanol and coproduct exports through the U.S. Department of Commerce’s International Buyer Program, which recruits prescreened foreign buyer delegations and brings them to selected trade shows and conferences in the United States, connecting U.S. companies with international buyers. As the lowest-cost producer of ethanol, the U.S. has emerged as the world's most reliable and cost-effective source of the fuel and RFA will continue to be active in all trade-related activities. Author: Bob Dinneen President and CEO, Renewable Fuels Association 202-289-3835

DRIVE

Support Breast Cancer Awareness Through October Retailer ‘Pink Out’ By Emily Skor

You might notice something a little different this October at your local gas station, thanks to an exciting partnership between Growth Energy, Prime the Pump and a great team of local retailers. In a regional “Pink Out,” retailers across six states will be turning some pumps pink in support of Breast Cancer Awareness Month, with a portion of the proceeds from every fill-up going to fund the hard work of charitable organizations. The pink pumps will be those offering E15, a gasoline blend containing 15 percent ethanol, which helps boost the octane in your tank without the typical toxic additives associated with cancer, asthma and smog. Ethanol blends are appealing because they offer better engine performance at a lower cost to drivers, but Breast Cancer Awareness Month is a unique opportunity to reconsider what we’re putting in our vehicles and the air we breathe. Many consumers don’t even realize that toxic chemicals such as benzene, toluene and xylene regularly are mixed into our gasoline, let alone that ethanol represents a cleaner, greener alternative. It reduces greenhouse gas (GHG) emissions by 34 percent or more— GHG emissions that contribute to global warming—and it slashes emissions of dangerous particles associated with conditions such as asthma. Ethanol also is reducing our reliance on dirty fossil fuels imported from hostile nations in the Middle East. And, the higher the blend, the greater the benefits. At Growth Energy, we’re focused on sharing this message with moms, millennials and consumers across the country—people who might not otherwise take the time to consider their fueling options. As a mother of two young children, I understand the daily stress of being a parent and the concerns we all share about the health

12 | Ethanol Producer Magazine | OCTOBER 2016

and safety of our kids. That’s how I know other moms are ready to listen when we present the facts about biofuels and explain how E15 helps keep our air clean for our children and our environment. This initiative is just one of Growth Energy’s ongoing efforts to put ethanol at the heart of our conversations about how to build a cleaner, healthier future for America. Through outreach and education, we are providing the information consumers need to recognize that E15 is not only good for our environment, but it’s good for our engines. By burning cleaner and cooler than oil, while also increasing octane, ethanol has put an end to the days when fossil fuels were the only option for high-performance fuel. E15 is a great example. It works well in all 21st century vehicles, and the U.S. EPA has approved the blend for all car models 2001 and newer. It benefits our environment, our wallets, our engines and, yes, even our national security. And each and every day, it’s moving America forward. These are the messages Growth Energy is working to share, and we hope you will join us by looking for a pink pump this October and telling your friends, neighbors and colleagues why. It’s time for consumers to feel good about their decisions at the pump. Let’s turn a simple transaction into a public statement and be proud of the efforts we are making to improve our world each and every day. Stand with ethanol, fuel up with higher blends, and help make Breast Cancer Awareness Month a success.

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

SEE THE WORLD

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ACE’s New E15, Flex Fuel Retailer Roadmap By Ron Lamberty

With high-profile convenience store chains announcing the addition of E15 and flex fuels to their traditional fuel slates, other chains and individual station owners increasingly are looking for information to explain why the big guys are making the move. Until now, the answer they’ve been given usually has

been a description of a program that helps pay for new fuel dispensing equipment. Meanwhile, ethanol supporters have asked (usually in frustration) why any petroleum marketer would pass up new, state-of-the-art dispensers for 25 cents on the dollar. Well, they take a pass because “new pumps” isn’t the business they’re in. They sell fuel and other stuff people buy when they’re getting fuel. Think about it. Whatever business you’re in, if someone offered to provide you with nearly free new equipment to grow, build or sell a product you’ve never grown, built or sold before, don’t you suppose you’d hesitate, and ask a few questions? Wouldn’t your “sounds too good to be true” alarm be going off? Ultimately, the question is, “How would this help me make more money?” That’s the question most petroleum marketers eventually ask about E15 and flex fuels. They have many other questions about equipment, permission, customers and demand. But the bottom line is, always, the bottom line. The American Coalition for Ethanol’s “E15 and Flex Fuel Retailer Roadmap” was created to address those marketer questions. It’s called a roadmap because, unlike a GPS with turn-by-turn instructions, this guide is similar to the maps service stations used to provide for customers. Those roadmaps showed main highways and county roads in each state, with more detailed inset maps of larger cities. After choosing a destination, people would explore different routes to get there. Every retail station owner’s journey is different, and the roadmap is a reference to help identify routes they can take to E15 and flex fuels, if they decide to go there.

14 | Ethanol Producer Magazine | OCTOBER 2016

The first section addresses the why and why not of new ethanol blends. It compares the E15 and flex-fuel marketplace to common options such as diesel and premium. (Hint: Those options aren’t as common as folks think.) It also provides vehicle warranty info and dispels myths about equipment requirements and liability risks. It also goes through important components of the math of E15 and flex fuels, such as blending economics, octane, increased customer counts and inside sales, and renewable identification number (RIN) credit values. The back section of the roadmap covers the how-to of adding E15 and flex fuels. Again, not in step-by-step fashion—it’s a general look at E15 and flex-fuel requirements, with instructions on where to find more detailed information. We show how blender dispensers work, cover U.S. EPA and Federal Trade Commission rules on E15 and flexfuel equipment compatibility, pump labeling, and what it takes to sell legal E15. Because the single most important factor in successful E15 and flex-fuel retailing is the ability to obtain E85 or E98 at prices that reflect RIN values, the roadmap includes a list of ethanol producers, highlighting those selling E85 or E98, with or without RINs, directly to marketers and retailers. Finally, the meat of the roadmap is the middle section, with stateby-state vehicle and driver statistics, rules and regulations, financial incentives for retailers and a statistical profile of E15 and flex-fuel availability and opportunity in each state. Those stats are combined to create an informal back-of-the-napkin pro forma for a fictional station in that state that adds E15 and flex fuels and performs as well as average existing E15 and flex-fuel retailers, or up to the level of the highest performing flex-fuel retailers currently in the market. Ultimately, that’s what retailers really want to know before making any switch.

Author: Ron Lamberty Senior Vice President American Coalition for Ethanol 605-334-3381 rlamberty@ethanol.org

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GLOBAL SCENE

World Needs Transport Biofuels By Bliss Baker

The summer of 2016 marked an ominous record for global temperature readings.

July was the hottest month in 136 years of record keeping. It was the 15th straight month of record-breaking temperatures according to National Oceanic and Atmospheric Administration figures. NOAA also noted that it was the 379th consecutive month with temperatures at least nominally above the 20th century average. The hottest temperature ever recorded in the Eastern Hemisphere (54 degrees Celsius, or 129 degrees Fahrenheit) also was in July, scorching Mitribah, Kuwait. I could go on. These temperature readings are particularly troublesome because carbon dioxide concentrations in the atmosphere so far this year have passed the symbolic 400 parts per million threshold and are trending upward. Observing these trends, scientists note that going forward, each new month and year has the potential to be the hottest on record. The data so far in 2016 strongly suggests that it will pass 2015 and 2014 as the hottest year yet. Fifteen of the 16 warmest years have occurred in the 21st century and it’s only 2016. The ink is barely dry on the celebrated Paris agreement reached at COP21, which pledged global action to keep global temperature increases to less than 2 C above preindustrial levels and to pursue efforts to limit it to 1.5 C. This latest temperature data, however, already has shaken the foundations on which the deal was reached. According to NASA, the average temperature in the first six months of 2016 was 1.3 C warmer than the preindustrial era in the late 19th century. Despite the encouraging and historic Paris agreement, it is clear that changes to the climate are outpacing predictions, putting efforts to reduce emissions to help manage climate change significantly behind schedule. The targets set in the COP21 agreement were used to inform government planning for emissions reductions on a time frame looking toward 2050. As David Carlson, the director of the World Meteorological Organization put it, “We don’t have as much time as we thought.” The transport sector is one of the largest contributors of greenhouse gases (GHGs), estimated to be approximately 25 to 30

percent of global emissions, but has the lowest renewable energy share of any sector. In spite of this (S&T)2 Consultants Inc., the energy and environmental consulting firm, found that in 2014 alone, ethanol use in the transport sector accounted for global GHG emission savings of 168.9 million metric tons. Despite the fact that biofuel technologies are demonstrated to be effective at reducing GHGs and are affordable and immediately available, their adoption remains far below current potential. According to the International Energy Agency, sustainable biofuels, such as ethanol, could provide 27 percent of the world’s total transport fuel by 2050 and avoid about 2.1 gigatonnes of CO2 emissions per year, with biofuels eventually providing 20 percent of total emission savings in the transport sector. When you consider that cars typically have a 20-year life span, and that plug-in cars make up just one-tenth of 1 percent of the global car market today, it is clear that the transition to a low-carbon global transport sector will need to rely on biofuels in the short- and mediumterm to maximize emission reductions. In a recent working paper, the International Renewable Energy Agency outlined recommendations to sharply increase the share of biofuels in the transport sector. Its recommendations would see total biofuel demand rise to 500 billion liters (132 billion gallons) within the next 15 years, representing a quadrupling of current annual liquid biofuel demand. The biofuels industry is not static. Government policies that increase the demand for, and investment in, biofuels will continue to drive research into new technologies and best practices. This, in turn, will promote next-generation biofuels and their associated advantages such as the use of agriculture waste products and increased emission offsets. With an accelerated time frame for global action on climate change, the challenge for national governments has changed from identifying what actions need to be taken, to finding the best policy direction to achieve them. Whatever form those policies take, biofuels will have to have a significant and continuing role to play in global efforts to fight climate change. Author: Bliss Baker President, Global Renewable Fuels Alliance 647-309-0058 info@globalrfa.org

16 | Ethanol Producer Magazine | OCTOBER 2016

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BUSINESS BRIEFS People, Partnerships & Deals

Valero Energy Corp. has added H. Paulett Eberhart and Kimberly S. Greene to its board of directors. Eberhart is chair and CEO of HMS Ventures, a privately held business involved with technology services and the acquisition and management of real estate. Greene is executive vice president and chief operating officer of Southern Co., which DuPont and The Dow Chemical Co. serves 9 million electric and gas utility cusannounced that, at their respective special tomers in nine states through its subsidiaries. meetings of stockholders held in July, stockholders of both companies voted to approve American Science and Technology all stockholder proposals necessary to com- has been awarded a patent for a system and plete the merger of equals transactionâ&#x20AC;&#x201D;a key method for the extraction of chemicals from milestone in the process to merge the two lignocellulosic biomass, which reduces the companies and subsequently pursue the in- cost of Organosolv processing and increases tended spin-offs of three highly focused, in- the incentives to use renewable resources dependent companies. The companies expect for chemical production. ASTâ&#x20AC;&#x2122;s Organosolv the merger transaction to close in the second process fractionates lignocellulosic biomass half of 2016, subject to customary closing to produce pure lignin, biochemicals, and conditions, including receipt of regulatory high-quality pulp. The patented process approvals. delignifies the lignocellulosic biomass by

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18 | Ethanol Producer Magazine | OCTOBER 2016

dissolving lignin into organic solvent, converting most of the hemicellulose to biochemicals (such as furfural, butyl acetate, etc.), and producing high-quality pulp. The U.S. Grains Council elected Chip Councell as chairman. Councell is a 10th generation farmer from Talbot County, Maryland. Through work with the Councell USGC and the Maryland Grain Producers Utilization Board, he has become a leading farm educator and conservationist. Prior to being elected chairman, Councell served two years as an officer with the USGC. He has also served in community and farm organization leadership positions both locally and nationally. After his election, Councell told delegates the USGC will continue to focus on its core market development mission for feed grains while building export markets for U.S. ethanol and communicating to customers about the work the U.S. grains industry does to produce reliable, high-quality crops.

McCord Pankonen has joined Valicor as sales manager and will help the company further develop its portfolio of North American ethanol producer accounts. Pankonen has spent the past nine years developing business in various biorefining roles. He also previously held management roles with Dakota Ethanol and U.S. BioEnergy. Pankonen was instrumental in developing and introducing distillers corn oil additives to the industry, for which he is assigned as an inventor. He joined Valicor after its recent unveiling of five new corn oil extraction solutions. A group of 21 land-grant institutions and partner organizations are collaborating to provide extension professionals, regulators, feed industries and producers with upto-date, research-based information on the nutrient needs of agricultural animals. Since forming in 2010, the National Animal Nu-

BUSINESS BRIEFS¦

trition Program has created a database of animal feed ingredients. The database is a vital tool to inform cost-effective production decisions, animal welfare policies and procedures, and to guarantee the safety and nutritional value of consumers’ food. So far, the program has collected and sorted 1.5 million feed ingredient records to create a reliable database that is used by organizations in over 30 countries, including the United Nations Food and Agriculture Organization.

California Ethanol & Power LLC has been awarded a $2.5 million grant from the Imperial Irrigation District, a public agency that provides water and energy service to the communities it serves. The IID board of directors unanimously approved the competitive grant at its meeting on July 19 with a 4-0 vote. The grant will allow CE&P to further develop its low-carbon renewable energy company with intentions of becoming the first sugarcane-to-ethanol facility in the United States.

The American Coalition for Ethanol has re-elected four board members and elected three new representatives to its board of directors. Current board members re-elected to serve three-year terms are Owen Jones of Full Circle Ag Cooperative, Duane Kristensen of Chief Ethanol Fuels, Dave Sovereign of Golden Grain Energy and Dale Tolifson of the Minnesota Corn Growers Association. The three new directors elected to serve three-year terms are Scott McPheeters of KAAPA Ethanol LLC, Rick Schwarck of Absolute Energy and Chris Studer of East River Electric Cooperative.

The Renewable Fuels Association has announced that HWRT Oil Co. will become the first company in the United States to offer pre-blended E15 at the terminal level. The development is a game changer that can rapidly open the market for E15 in the

Red Trail Energy LLC and the Energy & Environmental Research Center have been awarded $490,000 by the North Dakota Industrial Commission’s Renewable Energy Program in support of a study examining the integration of carbon capture and storage (CCS) at a North Dakota ethanol facility to reduce the carbon footprint associated with ethanol production. The study will determine the technical and economic parameters of installing and operating a commercial CCS system at RTE’s ethanol manufacturing facility near Richardton, North Dakota. The facility produces approximately 63 MMgy of ethanol The Broom Creek Formation, located approximately 6,400 feet below the RTE facility, will be considered the main target injection point for potential geologic storage of the CO2. According to previous studies conducted by the EERC, this formation is expected to be an ideal storage target. SHARE 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.

Access Premium Markets

Midwest. Beginning Sept. 16, HWRT included E15 in its slate of product offerings at terminals in Hartford, Illinois; North Little Rock, Arkansas; Norris City, Illinois; and Seymour, Indiana. RFA has been working with HWRT on a number of issues related to offering E15 at the terminal, including regulatory compliance, participation in the EPA’s required fuel survey, and adoption of RFA’s Misfueling Mitigation Plan. Sappi has entered an agreement with Valmet for the construction of a secondgeneration sugar extraction demonstration plant. The facility, to be located at Sappi’s Ngodwana Mill in South Africa, will extract hemicellulose sugars and lignin from the company’s existing dissolving pulp line. Startup of the facility is scheduled for early next year.

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COMMODITIES

Prices & Market Analyses

Natural Gas Report

Natural gas inventories grow at snail’s pace Aug. 26—The story of current natural gas storage in the U.S. is a two-sided tale. On one hand, inventories sat at unprecedented high levels throughout the season. On the other, the pace of injection since April, especially during the heart of the summer, was extremely slow. At the current pace, inventories have the chance to establish a seasonal peak that falls shy of the 4-Tcf record set in 2015. This prospect seemed very remote just a few months ago. On April 1, the market was staring at a year-over-year storage surplus of more than 1,000 Bcf. Since then, that surplus has declined dramatically, falling to 275 Bcf as of Aug. 19. Injections over that 20-week period netted 870 Bcf compared to 1,603 Bcf added a year ago. This data implies that about 4.8 Bcf per day of natural gas that was available to be placed into storage in 2015 is no longer on the table. For just the third summer week in history, and the first since 2006, the market saw a net weekly withdrawal in July, as demand outweighed supply for the week.

by Andy Huenefeld

The factors driving the year-over-year shift in market fundamentals occur on both sides. Declines in domestic production were offset by an uptick in imports from Canada, but overall supply held lower than last summer. Shifts on the demand side of the ledger have been more robust, as power generators have consumed more natural gas than ever and exports from Texas to Mexico and out of the Sabine Pass LNG export terminal have ramped up. In late August, the market was not overly concerned about the storage situation, with nearby NYMEX gas holding below $3 per MMBtu. After all, inventories remained on pace to enter the coming heating season at healthy, if not record, levels. The factors tightening the market aren’t going anywhere anytime soon and, barring an unlikely repeat of last year’s historically mild winter, inventories will be drawn down quickly this winter. This could increase volatility throughout the winter and leave storage levels near the bottom of the five-year range ahead of next summer.

Corn Report

Corn market digesting big crop

by Jason Sagebiel

Aug. 26—Crop conditions that remained positive all summer long gave the USDA ammo to increase yield potential to a record 175.1 bushels per acre. If realized, this would be the largest yield, besting the previous record of 171 bushels per acre set in the 2014-’15 marketing year. Ultimately, this would lead to a production level of 15.15 billion bushels. The USDA generously has increased the demand scenario for new-crop corn in the way of feed demand and exports. Corn for feed demand jumped to 5.675 billion bushels and exports to 2.175 billion bushels. If realized, the current feed and export projection would be the highest figure since 5.858 for feed and 2.437 billion bushels for exports used in 2007-’08. In its August report, the USDA increased new-crop feed demand for next year while it decreased Grain Animal Consuming Units days later, leading traders to believe the feed demand figure may be a little generous. Overall carryout for new crop was increased to 2.409 billion bushels or a 16.6 percent carryout-to-use ratio. This would be the largest carryout-to-use ratio since 2006-’07. These type of figures will keep upside resistance on corn and the overall coarse grains complex. Exports will be susceptible to how the U.S. dollar trades well into the The chart above illustrates the GCAUs and corn feed demand as grain marketing year and to South American weather after a very disappointing safrinha crop in Brazil. World corn carryout increased for next projected by the USDA. Something to consider when comparing recent year but the carryout-to-use ratio has remained at a steady three-year years to past years is the introduction of the renewable fuels standard and the impact it has had on the supply of coproducts into feed sectors. pace, indicating an increase in global demand next year. Comments in this column are market commentary and are not to be construed as market advice.

20 | Ethanol Producer Magazine | OCTOBER 2016

Regional Ethanol Prices ($/gallon) Front Month Futures (AC) $1.442

DDGS Report

Market evaluates logistics of moving big corn crop Aug. 26—As harvest nears, and with traders expecting a big crop, the focus moves from, “how to grow it” to “how to move it.” Logistics are going to play an important part on delivered prices this season both in the U.S. and abroad, and in late August the market already had started to see an uptick in prices not only on grain shuttles and barge rates, but also in container freight and elevation. Domestically, DDGS was well-priced at about 105 percent of the value of corn, and was at a discount on a per-unit of protein basis versus soymeal. Feeding margins for livestock producers were extremely poor, especially in the dairy sector. Milk prices were low enough that

Region

Spot

Rack

West Coast

1.580

1.650

Midwest

1.455

1.631

East Coast

1.510

1.580 SOURCE: DTN

by Sean Broderick

feeding for performance was taking a backseat to only feeding for maintenance. Demand was not robust, due more to the feeder profitability than to the value of DDGS. Overseas, buyers still were waiting to hear whether any tariffs are instituted in China. Most of the buying has been in the nearby time slots, hoping to beat any antidumping tariff announcements, which have been rumored for several months. There was talk in late August that it may happen closer to the Mid-Autumn Festival holiday, Sept 16, which, with its proximity to the U.S. harvest, may create even more exciting price swings.

Regional Gasoline Prices ($/gallon)

Front Month Futures Price (RBOB) $1.506 Region

Spot

Rack

West Coast

1.558

1.922

Midwest

1.693

1.624

East Coast

1.470

1.522 SOURCE: DTN

DDGS Prices ($/ton) Oct 2016

Sep 2016

Oct 2015

Minnesota

115

120

125

Chicago

142

155

Buffalo, N.Y.

132

145

158

Central Calif.

178

180

185

Central Fla.

155

160

LOCATION

178 SOURCE: CHS INC.

Corn Futures Prices (Dec Futures) Date

close, bu.

close, ton

Aug 29, 2016

3.208

114.554

July 29, 2016

3.428

122.411

Aug 28, 2015

3.750

133.929 SOURCE: FCSTONE

Cash Sorghum ($/bushel)

Ethanol Report

by Rick Kment

Ethanol prices stabilize as corn markets tumble Aug. 26—Ethanol prices have remained relatively stable in August. Frontmonth futures have fallen just 3 cents per gallon despite strong demand for blending through the end of August. The shift in the ethanol market has been dynamic, moving away from continued support in RBOB gasoline and toward recent losses in the corn market. Corn futures have moved to new contract lows; September was trading at $3.16 per bushel when this was written. The focus of the corn market has turned to expectations for record production, which will increase overall sup-

plies without a significant shift in demand. These lower corn prices mean lower production costs for ethanol, potentially improving plant margins. But on the energy side, recent stability and slight drawdowns in supplies through late summer are expected to keep buyers active. Long-term pressure is likely to be seen, eventually, due to significant production increases. RBOB gasoline markets continue to hold a strong premium to the ethanol market, which will limit additional ethanol losses over the near future.

Location

Aug 26, 2016

July 22, 2016

Aug 20, 2015

Superior, Neb.

2.26

2.45

3.13

Beatrice, Neb.

2.41

2.60

3.40

Sublette, Kan.

2.29

2.48

3.58

Salina, Kan.

2.43

2.61

3.55

Triangle, Texas

2.51

2.60

3.66

Gulf, Texas

3.80

3.77

4.42

SOURCE: SORGHUM SYNERGIES

Natural Gas Prices ($/MMBtu) LOCATION

NYMEX

Aug. 24, 2016

July 25, 2016

Aug. 25, 2015

2.749

2.747

2.685

NNG Ventura

2.560

2.705

2.610

Calif. Citygate

2.765

3.620

2.935

SOURCE: U.S. ENERGY SERVICES INC.

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

Month

End Stocks

Jun 2016

1,009

30,258

21,199

May 2016

975

30,228

20,792

989

29,684

20,029

Jun 2015

SOURCE: U.S. ENERGY INFORMATION ADMINISTRATION

OCTOBER 2016 | Ethanol Producer Magazine | 21

DISTILLED Ethanol News & Trends

AFPM asks EPA to change point of obligation under RFS On Aug. 4, the American Fuel & Petrochemical Manufacturers filed a petition for rulemaking with the U.S. EPA, asking the agency to move the point of obligation under the renewable fuel standard (RFS) to the owner of hydrocarbons at the rack. Refiners and importers are currently considered obligated parties under the RFS. Valero Energy Corp. has also petitioned the EPA to redefine obligated party. The National Association of Truck Stop Operators is among the groups advocating against the change. David Fialkov, vice president of government affairs at NATSO, said current policy creates a strong incentive for fuel marketers to blend renewable fuels into the fuel supply while lowering the price at the pump. “Changing the point of obligation would have the opposite effect of discouraging fuel marketers from integrating renewable fuels into the fuel supply while simultaneously raising prices at the pump,” he said.

EIA: Ethanol capacity up The U.S. Energy Information Administration has reported U.S. ethanol production has increased for the third year in a row, reaching nearly 15 billion gallons per year at the beginning of 2016, up 500 million gallons when compared to January 2015. This equates to approximately 973,000 barrels per day of capacity. The EIA tracks nameplate production capacity, defined as the plant manufacturer’s stated design capacity to produce denatured fuel ethanol during a 12-month period. Nameplate capacity, however, is not a physical production limit for many ethanol plants, as many ethanol plants are capable of being operated at levels that exceed nameplate capacity, if market conditions provide an incentive to do so.

U.S. fuel ethanol plant nameplate capacity (MMgy) 2015

2016

PADD 1

423

442

PADD 2

13,029

13,537

PADD 3

442

439

PADD 4

190

200

PADD 5

285

14,369

14,903

U.S. total

SOURCE: U.S. ENERGY INFORMATION ADMINISTRATION

While U.S. nameplate capacity is currently estimated to be 973,000 barrels per day, producers have been manufacturing ethanol at levels well-above that threshold. The week ending July 15, the U.S. ethanol industry set a new weekly production record with production reaching an average of 1.029 barrels per day.

DISTILLED

7 plants achieve efficient producer status The U.S. EPA recently approved efficient producer pathway petitions for six ethanol plants owned by Poet LLC and one owned by Green Plains Inc. Plants that have approved efficient producer pathways are able to generate renewable identification numbers (RINs) for production volumes above those grandfathered under current renewable fuel standard (RFS) regulations. To qualify for compliance with the RFS program, any new production above the grandfathered gallons must meet a 20 percent greenhouse gas (GHG) reduction threshold when compared to the program’s gasoline baseline. Alexandria, Indiana-based Poet Biorefining – Alexandria, achieved a 20.4 percent carbon reduction; Fostoria, Ohiobased Poet Biorefining – Fostoria, achieved a 20.1 percent carbon reduction; Leipsic, Ohio-based Poet Biorefining – Leipsic achieved a 20.4 percent carbon reduction; Marion, Ohio-based Poet Biorefining – Marion achieved a 20.1 percent reduction; North Manchester, Indiana-based Poet Biorefining – North Manchester achieved a 20.4 percent carbon reduction; Portland, Indiana-based Poet Biorefining – Portland achieved a 20.4 percent carbon reduction; and Rives, Tennessee-based Green Plains Obion LLC achieved a 22.2 percent carbon reduction.

Net RIN data, January-June 2016 (in millions) D3 cellulosic biofuel D4 biomass-based

76.97 1,632.47

D5 advanced biofuel D6 renewable fuel

32.9 7,453.47

D7 cellulosic diesel

0.11

SOURCE: U.S. EPA

RIN generation reaches 9.21 billion during first half of 2016 The U.S. EPA has released renewable identification number (RIN) generation data for June, reporting that nearly 9.21 billion RINs were generated during the first half of the year. Approximately 76.97 million D3 cellulosic biofuel RINs were generated during the first six months of 2016, with 2.02 million generated for ethanol, 44.03 million generated for renewable

compressed natural gas and 32.76 million generated for renewable liquefied natural gas. In addition, 114,835 D7 cellulosic RINs were generated during the first half of the year, along with more than 32.9 million D5 advanced biofuel RINs, 7.45 billion D6 renewable fuel RINs and 1.63 billion D4 biomass-based diesel RINs.

24 | Ethanol Producer Magazine | OCTOBER 2016

LAB

At the Heart of the

Process This long-time ethanol lab manager wears many hats while striving for overall plant success. By Ann Bailey

Jennifer Roepke recognizes her work is just part of the process. The lab manager at Heartland Corn Products in Winthrop,

Minnesota, takes great pride in doing her job in a way that will benefit not only her laboratory, but the company as a whole. “A lab manager in ethanol needs to understand the process—from the grinding of the corn to the shipping of the ethanol,” Roepke says. Heartland Corn Products Vice President Tim Miller appreciates Roepke’s attitude. “She’s our Rock of Gibraltar,” Miller says. Roepke was the first person he hired when the plant started up in 1995, he notes. With her background in science, she seemed like she would be a good fit for the position at the new ethanol plant, he says. Roepke, who earned a degree in biomedical science from St. Cloud State University in 1990, worked in the genetics laboratory at Mayo Clinic in Roches-

IMMERSION: Two decades ago, Jennifer Roepke began applying her medical science experience to managing the lab at the newly commissioned Heartland Corn Products ethanol plant. PHOTO: JOHN BROSE

OCTOBER 2016 | Ethanol Producer Magazine | 25

LAB

PHOTO: JOHN BROSE

ter, Minnesota, for four years before moving to the Winthrop area in 1994 with her husband, Scott, who works as a biologist at the Minnesota Department of Natural Resources. â&#x20AC;&#x153;I thought: â&#x20AC;&#x2DC;What am I going to

do there?â&#x20AC;&#x2122;â&#x20AC;&#x2122;â&#x20AC;&#x2122; Roepke recalls. When Heartland Corn Products brought the ethanol plant on line in 1995, Roepke decided to apply for the job, even though she knew what she would be doing in the lab there would be

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very different from what she had done at Mayo Clinic. â&#x20AC;&#x153;There arenâ&#x20AC;&#x2122;t a lot of genetics labs out in small towns,â&#x20AC;? Roepke says. â&#x20AC;&#x153;If I was going to take a job close to where my husband was going to work, I was going to have move out of that type of medical field.â&#x20AC;? While there was a learning curve involved in working in an entirely different type of laboratory, a bigger challenge was moving from a large company to a small one, Roepke says. â&#x20AC;&#x153;You have to wear a lot more hats in a small company. You have to learn how to cross-train and a do lot of different tasks, whereas at Mayo Clinic, you kind of learn one thing and become very, very efficient at it.â&#x20AC;? She immersed herself in learning about ethanol in her first few weeks on the job, traveling to an ethanol plant in South Dakota to be mentored by a lab manager. When she finished that, she went to a yeast school

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in Kentucky. â&#x20AC;&#x153;I had a lot to learnâ&#x20AC;&#x201D;still do,â&#x20AC;? Roepke says. She continues her education on the ethanol industry and innovations in lab techniques and technology by attending workshops and using the resources available through the Renewable Fuels Association, she says. â&#x20AC;&#x153;They give us a lot of guidance.â&#x20AC;?

Two Decades of Change

During the past couple of decades, technology has significantly changed the way work is done in the laboratory at Heartland Corn Products. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s a lot different than it used to be,â&#x20AC;? Roepke says. â&#x20AC;&#x153;The specification list on ethanol has been added to through the years and each time they make an addition, itâ&#x20AC;&#x2122;s an additional test. Thatâ&#x20AC;&#x2122;s constantly changing, and I am sure there will be more testing in years to come. Weâ&#x20AC;&#x2122;ve added a lot of equipment for different things. Weâ&#x20AC;&#x2122;ve added density meters, a

PHOTO: JOHN BROSE

Karl Fischer titrator, ion chromatography. Another big one is gas chromatography.â&#x20AC;? The additional tests are required because they help ensure the product quality

is more consistent, Roepke says. Besides all of the tests that her lab conducts, she and the lab technician also issue fill certificates when unit trains arrive to pick up ethanol

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OCTOBER 2016 | Ethanol Producer Magazine | 27

LAB

Corn Oil Recovery Yields Profits for Producers Adding a GEA RSE 220 separator to your plant can provide a new revenue stream by recovering valuable corn oil. Eﬃcient and economical, the separator pays for itself within a year of installation. Besides the income generated by the corn oil, the process reducess energy consumption during drying for further savings. VOC emissions aree also decreased. • Easy retrofit at the back-end of the plant • Fast ROI • Energy savings • Reduced VOC emissions for plant safety. To learn how you can use the most sought after ter corn oil separator to increase profitability and improve plant eﬃciency, email sales.unitedstates@gea.com, call

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800-722-6622, or visit us online.

28 | Ethanol Producer Magazine | OCTOBER 2016

at Heartland Grain Products. “We take a sample, run all of the tests on it to be sure that the numbers meet specifications and then we issue a certificate of analysis to our customers for those trainloads of ethanol,” Roepke says. She enjoys the challenge of keeping on top of the changes in the ethanol industry. “I like there’s always something new to be learning. A lot of the learning comes from the changes in the enzymes and the yeasts and how we’re trying to optimize fermentation,” she says. Just as Roepke’s knowledge about ethanol industry laboratory testing and procedures has grown during the past 21 years, so has the capacity of Heartland Corn Products. “It used to be a tiny 10 million gallons a year (MMgy) plant,” Roepke says. “Now the plant is 100 MMgy, 10 times what it originally started at.” Roepke takes pride in doing her work in a way that has a ripple effect down the line. She strives to catch details in lab results that help Heartland save water and be more energy efficient. “You look at a sample that’s coming out of a certain step in the process and ask questions, if you see changes have occurred along the way, and try to figure out what is causing lab numbers to drift away from the baseline,” Roepke says. “It’s establishing normal so when things do change, you know they’re changing.” Finding ways to improve efficiency is what Heartland Corn Products strives to instill in all of its employees, Miller says. “That’s always been the goal for all of us. We’ve all worked together on that,” he says. It’s evident Roepke has a broad knowledge of Heartland Corn Products and understands the importance of seeing the big picture. During a plant tour, she shares information with visitors about plant equipment—both inside and outside. She talks about the new buildings and tanks that have been constructed over the years, and why they were added to the ethanol plant.

MINNESOTA GROWN: The 100 MMgy Heartland Corn Products plant in southern Minnesota has grown significantly from the 10 MMgy capacity it started out with in 1996. PHOTO: JOHN BROSE

“She’s got a wealth of knowledge about how everything works both in the lab and in the plant,” Miller says. “She’s our go-to person. She’s our E.F. Hutton. When she talks, we all listen. She knows the process from the bottom up and she has been a great employee for us, a wonderful resource.” Roepke not only has a lot of knowledge about how the ethanol process works, she’s willing to share it with other Heartland employees, he says. “She works with the operators and with the supervisors and explains to them how the process is working both biologically and physically. (She) teaches.” “When we have new operators. I spend quite a bit of time with them, trying to get them to understand what every step in the process is for and why it’s important for them to watch their parameters,” Roepke says. Miller appreciates the pride that Roepke takes, not only in her work in the Heartland Corn Products laboratory, but in the company as a whole. “She acts like she owns the place, which is good.” Author: Ann Bailey Associate Editor, Ethanol Producer Magazine abailey@bbiinternational.com 701-738-4976

OCTOBER 2016 | Ethanol Producer Magazine | 29

PHOTO: JOHN BROSE

30 | Ethanol Producer Magazine | OCTOBER 2016

QUALITY CONTROL

Mycotoxin Monitoring

in the FSMA Era Plants gear up systems to document compliance. By Susanne Retka Schill

Ethanol producers have long known that in certain years, mycotoxins will be an issue because any that come in with the whole grain get tripled in the outgoing distillers grains. This year, there is an added dimension as plants figure out how to adapt

the systems they’ve used for years to satisfy the hazard analysis and record keeping requirements of the Food Safety Modernization Act. Charles Hurburgh, head of the Iowa Grain Quality Initiative, participated in the first training seminars on FSMA compliance for ethanol producers. There is a range of preparedness in the industry as FSMA kicks in, he says. “Most understand that it’s more a matter of documentation and making the procedure consistent. Plants that have solid records of inbound corn and outbound DDGS testing may well be able to avoid having formal preventive controls. But, they have to keep the program going, even in low-toxin years, even if at a lower sampling frequency.” A good mycotoxin program starts before the new crop starts coming, says Erin Bowers, postdoctoral associate working with Hurburgh, with monitoring crop development and any emerging quality concerns. “You don’t need to test for every mycotoxin every year,” she says. “The fungi that produce these mycotoxins like different weather.” Aflatoxin is seen most often in hot, dry conditions, frequently in the South. DON (deoxynivalenol or vomitoxin) is found when growing seasons are cool and wet. Three other mycotoxins of concern are fumonisin, zearalenone and ochratoxin. There are other molds in growing or stored grain that can cause quality problems for ethanol production, but these five are of concern for the DDGS because they can cause negative health impacts in animals. Each mycotoxin has its own limits that vary by the species being fed and the age of the animal. When the new crop starts coming in, test more frequently, she suggests, and keep a control chart—a running average of test results to establish what the normal level for the season will be. If the control chart shows stable, very OCTOBER 2016 | Ethanol Producer Magazine | 31

QUALITY CONTROL low or undetectable levels, the level of monitoring could be reduced. “If they do have a mycotoxin issue that year, they’re going to have to implement some safety plan,” she says. “If some truckloads are coming in at 12 parts per billion aflatoxin, and it’s being seen more often, there needs to be a plan.” That could include tighter acceptance criteria or more intense testing protocols. “FSMA does not prescribe how to evaluate grain lots for mycotoxins,” she says. “In the preamble to the animal food law,

32 | Ethanol Producer Magazine | OCTOBER 2016

it even says you don’t have to test every load of grain. The requirement is that it does need to be evaluated for hazards, so every facility is going to have some sort of evaluation method that they can justify and use to protect their purchasers.”

Sample Strategy

Getting the right sampling procedure is important. One study found the level of aflatoxin can be so high in a single kernel that eight

of those kernels in a bushel of corn would put the whole lot over the 20 parts per billion limit. “That is very extreme,” Bower says, and would be uncommon, “but that shows you how small of a level of contamination can cause a problem. Doing a high level of representative sampling is a pain, but sometimes it is necessary.” Research-based best practices for getting good representative samples are found in the Federal Grain Inspection Service’s mycotoxin sampling handbook. Another resource is available on the website of the United Nations Food and Agriculture Organization, Bower says. Using the FAO mycotoxin tool, one can enter the grain, the type of mycotoxin and characteristics of sampling plans to see how they will impact detection. The FGIS procedure describes how to properly collect multiple probes from a truck or rail car. The probe samples are combined, mixed and divided and at least 10 pounds are ground, from which a subsample is taken for the mycotoxin test. In the past decade, several manufacturers have developed rapid test kits that use a solvent to extract the mycotoxins from the representative ground sample and a test strip to detect the presence and level of the targeted mycotoxin. While the manufacturers of mycotoxin testing kits have cut the time needed for the actual test, Bower points out, “it doesn’t cut back on all the sample preparation time.” For a commercial facility handling 100 or more trucks per day, collecting a 10-pound sample from every truckload for testing is not practical, Bower adds. In addition to the volume and time, there’s the cost. It can range from $3,000 to $7,000 to get set up for rapid testing on site, plus the consumable test strips cost around $18 to $25 each. “You want to have a plan, because it gets expensive to shoot from the hip,” Bower says. “If all you’re going to do is scoop some grain off the top of a truck and grind it, you might as well not test. It’s not worth your $20. Proper sampling is important to get reliable results.” Rather than testing individual trucks, most facilities use composite samples. Hurburgh explains that normally the probe sample for a truck is divided with one portion going to the moisture meter. The remainder is combined in a 5-gallon pail. At the typical sample sizes used for grading, about 15 loads will provide a 10-pound sample to be ground for mycotoxin testing. He suggests getting more use from the

QUALITY CONTROL composite samples by tracking other quality factors using NIR technology, or sending it to a federal or commercial lab to compare with in-house results. Another check on the effectiveness of the program to monitor incoming grain is accomplished by monitoring outgoing DDGS. It can be a good check, as the incoming corn has been thoroughly mixed through the process, making the DDGS a far more homogenous product. In many cases, the rapid tests used for corn can be used for mycotoxin testing of DDGS, with some modifications. In years of low mycotoxin risk, the intensity of sampling and testing can be reduced. “Every facility is different,” Bowers says. “It depends on your market. For instance, if your DDGS go to cattle, they are a lot more tolerant to mycotoxins than pigs are.” Documenting the program is important. “That control chart, testing and documentation is proof that you’re monitoring and evaluating the grain. You keep that and you can show how you justified your decision: We were testing this many times a day, here is what we were seeing. We tested our outbound product and here’s what we were seeing. It showed us we had set limits at the beginning of the process for receiving grain that were protective enough that our DDGS fell below any of these questionable or potentially hazardous levels.” FSMA’s provision for a recall plan, should a hazardous situation occur, has led to a new recommendation for ethanol plants. “Make sure that at some point to go bin empty to create a cutoff point,” Bower suggests. “The whole point is that, if there is a food safety outbreak and it’s traced back to your facility, you’re going to have a recall. Are you going to have account for the sale of 100,000 tons or 10,000 tons?” Traceability is a live topic in the industry, Hurburgh says. “A lot of thought is going in that direction because there are commercial benefits as well as supporting recall potential.” Most bulk handling systems, however, are not designed for traceability. “There are things you can do, especially if you aren’t trying to track something that is very small or has low margin for error,” he says. “For example, if you are tracing mycotoxins to some level of tolerance, the errors introduced by simply leaving the cone of dry corn in the bottom of a bin as opposed to going to completely empty might not

be a problem. These will all be documentation issues from the FSMA perspective.” Hurburgh and Bowers were part of the industry committee that developed a training curriculum for those responsible for FSMA compliance at ethanol plants. The first of the training sessions were held this summer, and Hurburgh has been an instructor. “I have come to see that the biggest FSMA related challenge for ethanol plants will be supply chain requirements placed on them by buy-

ers,” he says, “not compliance activities and supply chain management inside the plant.” The industry is stepping up to the challenge. “I see commitment among the plant people to make the ethanol industry the best in agriculture at meeting FSMA and product safety standards,” Hurburgh says. Author: Susanne Retka Schill Managing Editor, Ethanol Producer Magazine sretkaschill@bbiinternational.com 701-738-4922

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Bin-Busting

BUSHELS A huge U.S. corn crop is expected to strain storage and pressure prices. By Ann Bailey

PHOTO: JOHN BROSE

U.S. farmers will harvest a mammoth corn crop this fall.

USDA estimates the 2016 harvest will total 15.2 billion bushels—the largest on record. As of late summer, USDA estimated that yields would average 175.1 bushels per acre, 6.7 bushels per acre more than last year and 4.1 bushels per acre higher than the previous record yield set in 2014, according to the agency’s Aug. 12 crop production report. Not only is this year’s U.S. corn crop a binbuster, but there still are a lot of bushels on hand from previous crops in the United States and across the globe. U.S. corn supplies for the 2016-’17 marketing year, which runs from Sept. 1 to Aug. 31, are projected at a record 16.9 bil34 | Ethanol Producer Magazine | OCTOBER 2016

lion bushels, 1.5 billion bushels more than the previous marketing year, the USDA World Agriculture Supply and Demand Estimate said. Large planted acreage and good growing conditions combined to produce the bumper corn crop. Unlike last year, when corn growing conditions in the eastern Corn Belt were poor, this year, pretty much the entire U.S. had favorable weather for corn production. Corn growing conditions in other parts of the world also generally were good this year and USDA raised foreign production by 2.1 million metric tons in the August WASDE report, noting that the ample corn crops in Argentina, India and Mexico offset smaller crops in Canada, Spain and France.

Storage Outlook

During the past 50-plus years, corn storage in the United States has increased, says Darrel Good, extension agricultural economist at the University of Illinois in Champaign-Urbana. “It clearly has grown over time as production has grown, both commercially and on-farm,” he says. Moderate harvest corn bids and some positive carry in the corn market made it more attractive as of late August to store the 2016 corn crop than soybeans, Good noted in an Aug. 22 weekly outlook in FarmDoc Daily. If the average basis in south-central Illinois strengthened to about 10 cents by spring 2017, as it has during the past two years, the market was offering

CORN

OCTOBER 2016 | Ethanol Producer Magazine | 35

farmers about 40 cents per bushel to store corn between harvest and late spring, he says. Sukup Manufacturing Co., whose products include grain storage facilities, has increased its sales of commercial storage bins over the years, says CEO Steve Sukup. Located in Sheffield, Iowa, and founded in 1963, the company supplies grain bins, dryers and handling equipment. “Our commercial market bins are approaching 50 percent of our sales market,” says Sukup, “It’s been very strong. It matches up to our bucket elevators and conveyor units that we have for our commercials.” The bulk of both Sukup’s commercial and on-farm bin sales are in Iowa, Minnesota, North Dakota, South Dakota, Nebraska, Illinois, Indiana and Ohio. In early August, sales of on-farm storage bins continued strong and farmers were assessing whether they needed to add more storage to accommodate the 2016 crop, Sukup says. “I think they’re taking a good look at it. We’ve had good activity,” he says. The capacity of the steel bins the company manufactures for farmers range from 5,000 bushels to 1.5 million bushels, Sukup says. Ken Hellevang, an extension engineer in the North Dakota State University Agriculture and Biosystems department says it appeared in August that there still was a fair amount of corn in storage on farms in the Corn Belt. A Wisconsin farmer told him in August that he was moving last year’s corn into various facilities in preparation for this year’s corn harvest, Hellevang says. Meanwhile, Hellevang heard reports of “wheat being piled in the street,” he says. “That indicates there’s a lot of grain, in general, that is going into storage.”

Short-term Issues

Hellevang advises farmers who are considering alternative forms of storage for their grain to, first, look at trying to provide a storage environment that would be similar to that of a grain bin with the ability to move air through the grain, control the temperature and work with the moisture content of the grain. Doing so will help prevent spoilage issues that will damage the grain, if it’s not stored properly. One of the popular locations farmers choose to store grain is in a building such as a pole shed, he says. If they are considering that, they need to be aware that grain will put pressure on the walls and determine whether they can withstand that. Meanwhile, the pole shed probably is not set up for the grain to air dry, so farm-

36 | Ethanol Producer Magazine | OCTOBER 2016

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ers will need to make sure they store only dry grain in the building, Hellevang says. Another alternative storage option for farmers is grain bags, Hellevang says. However, the bags require special equipment to fill and, like pole sheds, don’t permit storage of high-moisture corn. The bags also are vulnerable to insect infestations. “Even grain bags need to be considered as short-term storage,” Hellevang says. Hellevang strongly discourages farmers from storing corn outside in piles on the ground. Besides the potential for spoilage and insect damage, corn stored outside can get debris and rocks mixed it with when the grain is being picked up. Even if farmers put down plastic on the ground before they pile the grain, that’s not necessarily a solution because the plastic can rip, Hellevang says. Another potential problem that can arise from outdoor storage on the ground is damage from precipitation, he says. One inch of rain on the top foot of a corn pile raises the corn’s moisture by 9 percent, he says. That means that even if the corn was piled with a moisture content of 15 percent, the moisture content would increase to 24 percent at the top. With that high of moisture content, the top 2 feet of corn piles would spoil over time, resulting in a huge economic loss to a farmer, Hellevang says. “Any time that we’re dealing with alternative storage, that increases the potential for

problems,” Hellevang says. Those problems, of course, can eventually be passed on to the livestock or ethanol industry corn buyers, he notes.

Price Outlook

With the huge U.S. corn crop and large amount in storage, USDA lowered its estimated national average farm-gate prices in the August WASDE report. The agency reduced the season-average price farmers received to $2.85 to $3.45 per bushel. That range of prices represents a reduction of 25 cents on both ends and a 45-cent reduction at the midpoint from the $3.55 to 3.65 per bushel that is expected for the 2015-’16 marketing year, the WASDE report said. In late August, depending on where farmers were located, corn prices already were moving to $3 per bushel or lower for harvest bids, Good says. That means ethanol producers may have an opportunity to purchase corn at a moderate price. “If the corn crop is confirmed as big as expected and we get some price movement around the basis, then corn will be attractively priced at harvest time,” he says. Author: Ann Bailey Associate Editor, Ethanol Producer Magazine abailey@biinternational.com 701-738-4976

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38 | Ethanol Producer Magazine | OCTOBER 2016

PROFILE

AEMETIS’

MULTIPLE VENTURES California-based company moves Edeniq and LanzaTech developments to the forefront. By Susanne Retka Schill

Launching new technology ventures is nothing new at Aemetis Inc.—several are in various stages of development. CEO and

Chairman Eric McAfee is most enthusiastic about the two projects announced this summer—the acquisition of Edeniq Inc., expected to close soon, and the licensing of LanzaTech technology to build a gasifier alongside its Keyes, California, corn ethanol plant. In McAfee’s view, Edeniq’s technology is a low-capital, low-risk, fast way to get into cellulosic production. “Edeniq is a pretreatment device and enhancement of fermentation so your existing corn ethanol yields go up, extracting more starch. Your corn oil revenues go up, extracting more corn oil, and for the first time, you are extracting your C5 and more C6 sugars through cellulases, and you are producing cellulosic ethanol.” Adding Edeniq’s Cellunators, a proprietary grind technology, takes about six months from signing the contract, he says, and requires minimal changes to a plant. “We are using standard yeast. We’re not going in and changing the fermentation process, we’re just putting a cellulase enzyme in front of it.” Pacific Ethanol-Stockton (California) was the first to run Edeniq’s Pathway Technology at commercial scale, announcing the successful trial completion last December. In January, the company applied with the U.S. EPA to register for D3 renewable identification number (RIN) generation, but the registration process that takes a matter of weeks for a first-generation process, was still pending in early September, much to McAfee’s frustration. An EPA spokesman said the review of Pacific Ethanol’s registration has been lengthy for a variety of reasons, the biggest being that it involves

a new technology and testing method. “EPA has been working closely with both Pacific Ethanol and Edeniq on these issues, and we expect to resolve them in the very near future. We understand that this technology and testing method could be adopted by many corn ethanol facilities making this initial review at Pacific Ethanol especially important for potential future registrations.” The challenge is that most cellulosic processes use separate reactors that facilitate measurement. Edeniq’s process comingles firstand second-generation ethanol. McAfee says Edeniq has focused on having robust laboratory tests that reliably document cellulosic gallons produced. Several are waiting for the critical step of getting the first D3 RIN registration. A modular design, sized at one per 20 MMgy capacity, 29 of Edeniq’s Cellunators are already installed at six ethanol plants. Earlier this year, Edeniq announced four companies had licensed its Pathway technology for cellulosic production: Aemetis, Pacific Ethanol-Stockton, Siouxland Energy Cooperative and Flint Hills Resources. Flint Hills, an Edeniq investor, has installed cellunators at three of its seven plants. In addition, Mid American Agri Products-Wheatland and E Energy Adams have installed cellunators.

Ongoing Projects

The Edeniq acquisition is just one of multiple ventures for Aemetis. Launched in 2006 as AE Biofuels, the company built an integrated cellulose and starch ethanol demonstration facility in 2008 in Butte, Montana, to optimize its ambient temperature starch and cellulose hydrolysis process. Three years later, the company acquired Zymetis Inc., de-

velopers of the Z-microbe. Now on the back burner, the technology has been refined at the company’s research facility in Maryland. “The plan there is chemical,” McAfee says. “We have been producing isoprene, which is a valuable $8-per-gallon chemical, produced from corn starch and cellulose.” The technology is ready to go, he adds, once a market opens up for the renewable chemical. In 2010, the company leased the idled 60 MMgy corn ethanol plant in Keyes, California, originally started up in 2008 by Cilion. Aemetis purchased the plant in 2012 after completing multiple upgrades. Having a commercial corn ethanol plant is a key advantage for a technology developer, McAfee says. “When you don’t own the plant, you have to wait until somebody else adopts the innovation, and that puts you in a huge bind.” That’s been a limiting factor for Edeniq, he adds. Other ongoing projects include building and operating a liquid carbon dioxide plant at the Keyes facility. The company also is working with alternative feedstocks, receiving a state grant to help with a grain sorghum development program a couple of years ago and, more recently, working with biomass sorghum development. Aemetis also has a subsidiary on the east coast of India that runs a 50 MMgy biodiesel plant and glycerin refinery. Aemetis has its eye on getting into the renewable diesel/jet fuel market as well, signing a global technology license with ChevronLummus/ARA for the production of 100 percent drop-in renewable jet fuel and diesel.

LanzaTech Project

The project McAfee is most interested in right now is with LanzaTech. The plans anOCTOBER 2016 | Ethanol Producer Magazine | 39

PROFILE nounced this summer are to build an 8 MMgy ethanol production facility using LanzaTech’s gasification technology and its proprietary microbe that converts carbon monoxide McAfee into ethanol or other chemicals. The project is in the engineering and permitting phase with construction expected to begin in the first quarter of next year, McAfee says. Completion is expected within 10 months. The LanzaTech project at Aemetis sidesteps a major hurdle faced by most advanced biofuels projects. “We designed the business model to address the core problem,” McAfee says. “Can you finance the construction?” Often, the focus is on the cool feedstock or excit-

ing technology, but the best way to get project financing is to contract an attractive deal for inputs, with a solid market for the output. Approximately a quarter of the feedstock for the LanzaTech gasifier will be hazardous waste under a long-term contract with a fixed volume and price—in this case, a tipping fee that will be paid to Aemetis. With a shrinking number of landfills able to take hazardous waste, McAfee explains some companies are paying a tipping fee of $600 per ton to get rid of things like oil rags and other materials with oil or trace chemicals. “A key technology player in the deal was actually hauling hazardous waste from central California, 50 miles from our plant, all the way to Texas to get rid of it,” he says. He adds that the volume of the feedstock is not massive and any ethanol produced from the hazardous waste would not be considered cellulosic. The bulk of the feedstock will be lowcost biomass and, in some cases, agricultural waste that Aemetis will be paid to take. One abundant feedstock will come from almond growers in California’s Central Valley who must dispose of almond wood from about

Some chemical companies focus on this

50,000 acres every year, McAfee explains. For years, biomass power plants have used that feedstock, but many now are shutting down due to a combination of factors, including 15year air permits not being renewed and tough competition from wind and solar generation in California’s low-carbon market. The LanzaTech unit will be a separate facility built alongside the corn ethanol plant, with only the final distillation of the ethanol produced being done at the existing plant. In the project’s next phase, the hydrogen coproduct will be used to make renewable jet fuel. On the other side of the equation, McAfee points out the value of cellulosic ethanol in California is $4.50 per gallon, including the base value of the fuel plus RINs, state and federal credits. Edeniq, Lanzatech, renewable diesel, isoprene, liquid carbon dioxide make for a lot of moving parts in Aemetis’ short- and long-term plans. “We’re a public company and investors hate uncertainty,” McAfee admits. “In general, investors will read your article and say, ‘There’s so much risk here, there’s all sorts of stuff going on.’ We think about that a lot. How do we

or that

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40 | Ethanol Producer Magazine | OCTOBER 2016

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reduce complexity for those who don’t know what we’re doing?” The Edeniq move is the company’s answer. “All we’re doing is taking a corn ethanol plant, and adopting a fully commercial, zero-risk technology,” he says. “There’s zero commercial risk in the Cellunator devise and no commercial risk in the cellulase—it’s fully developed, fully deployed, fully tested. Zero risk.” Figuring a 2.5 percent cellulosic yield at the 60 MMgy plant, it is expected to result in $10 million increased revenue annually. Alluding to the hundreds of millions of dollars invested in cellulosic ethanol development that has been slow to produce a return, McAfee is enthusiastic about Aemetis’ new venture, calling it, “the upgrade where we can actually get something done in our lifetime.” Author: Susanne Retka Schill Managing Editor, Ethanol Producer Magazine sretkaschill@bbiinternational.com 701-738-4922

GOLDEN STATE PRODUCER: Headquarterd in Silicon Valley's Cupertino, Aemetis' 60 MMgy plant is located 60 miles west in Keyes, California. PHOTO: VERSCHELDEN PHOTOGRAPHY

OCTOBER 2016 | Ethanol Producer Magazine | 41

INTERNATIONAL

Russia Ethanol Production

Set to Grow Impending tax abolishment to provide the impetus for the development of Russian ethanol industry. By Eugene Gerden

Plans to lift a hefty excise tax on fuel ethanol by the Russian government are being called revolutionary. Recent statements from the

office of Alexander Tkachev, Russia Minister of Agriculture, indicate the government plans to lift the excise tax on domestic ethanol by the end of the year with the goal of stimulating production. It will help implement one of the more ambitious state goals to increase the share of ethanol in the domestic motor fuel up to 10 percent by 2020. The existing tax has been one of the major obstacles for the development of the ethanol industry in Russia, as it made local ethanol production unprofitable and resulted in low investment attractiveness for fuel ethanol, mainly due to the positioning of ethanol as a potable alcohol-containing product subject to excise duties by the Russian government. The rate of the tax is 102 rubles ($1.62) per liter, roughly 90 percent of the final cost of production. Until 2016, the Russian government has not been ready to lift taxes on ethanol sales and production within the country, fearing production of vodka under the guise of bio-

ethanol. Excessive consumption of vodka and spirits is a big problem for Russia, which has one of the world’s highest consumption levels. The decline in global oil prices also likely played a role in the state’s change of attitude toward the development of an ethanol industry in Russia, along with the plan approved in 2012 outlining a complex program of development of biotechnology in the country. Alexei Ablaev, president of the Russian Biofuels Association, says lifting the excise tax is good news for the industry. Russia has huge potential for the development of the ethanol industry, he says, and may become one of the world’s leaders in production, alongside the U.S. and Brazil. Eugene Pantskhava, a senior expert at the All-Russian Committee of Renewables, one of Russia’s leading analyst agencies in the field of ethanol and biofuels, says rapid development of the ethanol industry in Russia historically has been prevented by the strong lobby from the leading domestic oil and gas producers. That situation may be changing already, indicated by the government’s increased attention to the development of a national renewables industry and, in particular, ethanol.

SWEET PRODUCTION: Russia’s largest ethanol producer, Miranda, uses primarily sugar beets as feedstock, shipping the bulk of its production out of the country.

42 | Ethanol Producer Magazine | OCTOBER 2016

OCTOBER 2016 | Ethanol Producer Magazine | 43

INTERNATIONAL

RESEARCH LEAD: A new R&D center for ethanol production will be established at the Kurchatov Institute, pictured above, Russia's leading research and development institution in the field of nuclear energy.

Specific government plans include introducing amendments to Chapter 22 of the national tax code for the lifting of the excise duty on the sales of ethanol in the domestic market. The Russian government also is introducing a bio-ethanol definition, qualifying the product as denatured ethyl alcohol, containing not more than 1 percent water. The government also has announced tax benefits for a period up to five years for newly established facilities for the production of ethanol.

The Russian government believes that the production of ethanol in the country can be profitable even amid the current low global oil prices, while the level of profitability will be increased significantly after the expected recovery of prices during the next several years. State plans project the lifting of taxes will increase the domestic ethanol production up to 670 million gallons per year during the next several years. In the past five years, work has begun on reconstructing existing ethanol

plants and construction and planning for up to 19 new facilities, supported by the government and private investors. Particular attention will be paid to the building of plants with the capacity of 150 million liters (40 million gallons) per year. Plants with the production capacity of less than 70 million liters per year are considered economically inadvisable. The payback period is expected to be in the range of four and a half to seven years, depending on the capacity of the plant. Investments in plant sizes between 250 to 1,000 metric tons (84,000 to 335,00 gallons) in daily capacity are expected to range from $113 million to $150 million, and take between one and a half to two years to build.

Current Production

At present, the annual production of ethanol in Russia is estimated at 5.6 billion liters, mostly for the production of vodka. There are nearly 140 plants in the country with a total capacity of 9.5 billion liters. Modern production technologies, however, are used only at 10 to 12 industrial sites. Russia still lacks specialized plants for the production of fuel ethanol. Most of the exist-

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ing distilleries, due to their small size, low level of automation and high energy consumption are unable to produce ethanol at an acceptable cost. Analysts from the Russian Ministry of Agriculture believe that lifting of duties will result in the influx of investments in the industry, which should help to create conditions for the building of modern ethanol plants. According to state plans, a cluster for the production of ethanol in Russia will be established in Russiaâ&#x20AC;&#x2122;s North Ossetia region, the region in southern Russia on the northern slope of the Caucasus Mountains, which is the current center of Russian ethanol production. The Russian Ministry of Agriculture predicts that the annual volume of ethanol production in the region will reach 300,000 metric tons (100 million gallons) in 2017 and will increase more with the lifting of the excise duty. Miranda LLC, Vladikavkaz, North Ossetia, is Russiaâ&#x20AC;&#x2122;s largest ethanol producer. The plant has a design capacity of 200 metric tons a day (67,000 gallons), and current production of about 100 metric tons per day, according to the company website. Its main raw material comes from regional sugar producers, although the plant also processes a smaller

BIOFUEL SUPPORT: Alexander Tkachev, Russia Minister of Agriculture, is one of the main initiators for the development of Russian ethanol industry.

amount of wheat, selling wheat gluten, bran and high-protein distillers grains, along with wheat starch. According to Kazbek Lyanov, technical director of Miranda, the majority of the plantâ&#x20AC;&#x2122;s production to date has been shipped abroad, although the situation may change next year, with the lifting of excise tax on the sales of ethanol within the country. Along with the policy changes designed to increase the nationâ&#x20AC;&#x2122;s ethanol production, the

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Russian government also has announced its plans to accelerate research and development activities in the field of ethanol. The research will be conducted by the new bioenergy laboratory located at the Kurchatov Institute, Russia's leading research and development institution in the field of nuclear energy. Author: Eugene Gerden Freelance Writer Gerden.eug@googlemail.com

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for Lab Quality Control

By Matt Kelker

During a recent relocation of fragility—had not crept into our Xylogenic’s laboratories, coupled analyses. An old school alchemist would with an interest in adding several have referred to these demons as Death, Famine, War and Conquest. The greatest new assays to our repertoire, we of these is irreproducibility, which must be re-evaluated our procedures to managed by proper sample handling and rigverify that the banes of labora- orous adherence to clear, unambiguous and robust protocols. tory quality control—irreproIn our industry, analyses of the fermenducibility, sample instability, tation process require constant monitoring, protocol irregularity and assay from analyzing corn grind and corn moisture

prior to fermentation, to analyzing changes in sugar and carbohydrate levels and composition during fermentation and, finally, to determining sugar and ethanol levels at the end of fermentation. In many cases, the samples to be analyzed contain active yeast, active enzymes or both. Thus, proper handling of these samples is crucial if one is to avoid spurious results due to the unwanted actions of yeast or enzymes prior to analysis—not to mention potential activities due to contaminating microbes.

CONTRIBUTION: The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Ethanol Producer Magazine or its advertisers. All questions pertaining to this article should be directed to the author(s).

46 | Ethanol Producer Magazine | OCTOBER 2016

FRONTLINE Typically, sample handling errors can be avoided by conducting the needed assays immediately after sample collection. Unfortunately, delays sometimes cannot be avoided—an equipment malfunction occurs, an unexpected emergency takes precedence, or you spend more time than anticipated impressing the office staff with your athletic prowess. If a second sample cannot be collected as a reasonable replacement for a sample left sitting, it should be noted clearly that the sample was handled differently than standard protocols, and data derived from this sample should be taken with a grain a salt.

Sample Integrity

If a delay between sample collection and analysis cannot be avoided, steps should be taken to ensure sample integrity. For our own analyses, we typically bring samples back to our laboratory in Indianapolis. With our transportation mode, samples can reliably be in transit for at least 24 hours without alterations to the samples. This can be accomplished by freezing a sample in a frostfree freezer. However, if the volume of a sample is large enough, simply placing a sample in the freezer may not allow the sample to freeze quickly enough to provide accurate measurements later on. To reliably bring any biological or enzymatic activity of a sample to a rapid halt requires rapid freezing of a sample no larger than necessary. A robust method to flash freeze samples is to place

it in a dry-ice ethanol bath for several minutes and subsequently store the samples in a frost-free freezer. During one quality control meeting, we had a brief, but interesting discussion as to where we might find a source of ethanol for that dry-ice bath. Once samples have been collected, they may be subjected to a variety of analyses. Each protocol will have its own requirements for sample preparation and sample abundance. In each case, the proper reagents must be prepared. Whenever possible, reagents should be prepared ahead of time and stored properly as specified, which may be frozen or at room temperature, concentrated or undiluted. Each reagent should be labeled with the precise chemical composition (or as accurately as possible), date of preparation, name of preparer and any storage requirements. Avoid abbreviations, unless following proper scientific or industrial shorthand. Protocols should be written clearly and in detail to avoid any possibility of interpretation. (Hmmm, it doesn’t say I can’t leave it on the bench at this point until Monday morning?) Whenever possible, our protocols are written in “bite size pieces.” If possible, a set of steps is kept on a single page, ending at a point at which the sample can be safely stored or frozen and the protocol completed later. Each protocol must not only be clear, but also clearly doable. For example, the required sample number should be limited

to one that can be reasonably carried out— don’t set up 20 samples knowing that each sample will have to be subjected to a 10-minute analysis and you will only have an hour before the samples are ruined. Make sure before you start that the necessary laboratory equipment is available and properly set up for use. Preparation will prevent mistakes down the road from having to hurry. Scientifically, it is okay to go as fast as you can; however, hurrying is going faster than you can, and should always be avoided. Finally, whenever possible build the time constraints and expertise of your staff into each protocol. If everyone who may have to perform a protocol is comfortable knowing they possess the necessary skills and time to carry out an assay, the likelihood of errors can be minimized. The goal of laboratory management and quality control is to ensure that every test that needs to be performed can be done in a rigorous manner by multiple staff members. By adhering to proper sample handling, developing clear and simple protocols and proper planning before every assay, this goal can be achieved. Author: Matt Kelker Chief Scientific Officer, Xylogenics Inc. mkelker@xylogenics.com 317-694-0143

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TURNING CO2

Emissions into Fuel

Process combines carbon dioxide, water and lignin into syngas. By Gary C. Young

A new process for the economical conversion of carbon dioxide into fuels such as ethanol has been developed. The proprietary noncatalytic

process combines CO2 with a carbonaceous feedstock and water in the form of steam at temperatures between 1,600 to 3,000 degrees Fahrenheit and low pressure, near atmospheric, in a gasifier to produce a syngas comprised mostly of carbon monoxide and hydrogen. The syngas can be converted to a fuel such as ethanol via a commercially available biochemical process. The over-all process using Bio-ThermalEnergy Inc.â&#x20AC;&#x2122;s technology for the conversion of CO2 emissions from a cellulosic ethanol plant to more ethanol is a process in which lignin is the carbonaceous material. Both carbon dioxide and lignin are byproducts produced from the corn stover-to-ethanol plant. A cellulosic ethanol plant with a capacity of 25 million gallons per year of ethanol produces enough CO2 emissions for another 21.3 million gallons of ethanol annually using the technology, with the combined plants profitable. B-T-Eâ&#x20AC;&#x2122;s proprietary process has six U.S. patents, one Japanese patent and other patents pending. The technology was proven experimentally at Westinghouse Plasma Corporationâ&#x20AC;&#x2122;s 12.5 ton-per-day pilot plant in Pennsylvania. Syngas was produced in the pilot plant using a feed comprised of CO2, steam and a carbonaceous material. As a noncatalytic process, the carbonaceous material fed to the high-temperature gasifier can use flexible feeds such as gases, liquids, solids or a mixture. Furthermore, a wide variety of carbonaceous feedstocks can be used including corn stover, wood, switchgrass, lignin, municipal solid waste, methane, coke, carbon black, coal, charcoal or tires. The CO2 feed from a corn stover-to-ethanol plant does not require any purification and crude lignin from the plant can be fed to the CO2-to-ethanol plant, without costly drying or pelletizing operations.

48 | Ethanol Producer Magazine | OCTOBER 2016

INNOVATION

Economic Analysis

The economics for the conversion of CO2-to-ethanol was established for a system in which the CO2 and lignin were byproducts from a 25 MMgy corn stover-toethanol plant, and therefore considered as waste byproduct with no cost. The typical economic case for a CO2-ethanol plant indicates a production cost of 98 cents per gallon for the ethanol with an estimated production of 21.3 MMgy. Natural gas cost was figured at $2.80 per MMBtu and electrical cost of 5.5 cents per kWh. Total capital expense projections include ISBL (inside battery limits) and OSBL (outside battery limits) with OSBL at 50 percent of ISBL, which is typical of a greenfield plant. Using an ethanol selling price of $1.458 per gallon (Chicago Board of Trade, July, 2016), net annual revenue is $10.18 million. (21.3 MMgy x $1.458 per gallon minus 21.3 MMgy x 98 cents per gallon equals $10.18 million per year). Total CAPEX is $176 million, or $8.26 per gallon of ethanol. The payout is 17.3 years with no subsidies. A similar case was considered but with OSBL at 25 percent of ISBL, which would be typical for a CO2-to-ethanol plant integrating operations with the corn stover-to-ethanol plant. Total CAPEX becomes $146 million, or $6.85 per gallon and the production cost is estimated at 86 cents per gallon, for a net annual revenue of $12.74 million and an 11.5-year payout. In the economic analysis, operations are considered at 8,760 hours per year, total CAPEX includes ISBL and OSBL, capital at 6 percent and 20 years, OPEX-operation expense includes labor and maintenance, CO2 conversion rates to syngas of 65 to 70 percent based upon experimental data, and no subsidies. If renewable identification number (RIN) credits are included the economic analysis improves substantially. Late July D6 2016 corn etha-

nol RINS were valued at 96.5 cents per gallon and 2016 year D5 RINs (for other advanced biofuels) were $1.015 per gallon. B-T-E has spent about 10 years in the development of the patented CO2 conversion technology to syngas (CO & H2) and potential commercial applications. Originally, thermodynamic computations by Dr. Gary Young of Bio-Thermal-Energy Inc. determined that CO2 could be converted into syngas with a carbonaceous material and steam at proper process conditions using gasification. B-T-E has continued development of this novel proprietary technology which has shown to be a game changer for the ethanol industry. B-T-Eâ&#x20AC;&#x2122;s current business plan is to have a technical and economic feasibility study done at a cooperating cellulosic-toethanol plant using B-T-Eâ&#x20AC;&#x2122;s CO2 technology to convert the byproducts CO2 and crude lignin into ethanol. Of particular interest would be to select a plant site that is representative of the cellulosic ethanol industry and is suitable for a feasibility study to determine overall CO2 reduction from cellulosic-to-ethanol plant stack gas to final tail gas in the CO2-to-ethanol plant, and determine economics. If the feasibility study demonstrates profitability and promise, the next step will be a pilot project. Such an approach would benefit both the cellulosic ethanol industry and U.S. environmental regulatory agencies. It is a win-win proposition created by novel technology for all to benefit through jobs creation, more profitable cellulosic ethanol plants, positive environmental impacts and by promoting U.S. energy independence. Author: Gary C. Young President, Bio-Thermal Energy Inc. 319-373-5191 gycoinc@aol.com

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OCTOBER 2016 | Ethanol Producer Magazine | 49

CLEARING THE AIR

The Definition of Insanity Is... By Pam Miller

I think most of us are familiar with the saying that the definition of insanity is doing the same thing over and over and expecting a different outcome.

Well, sometimes I think that's just what we are doing when we see study after study from reputable universities or medical institutions that conclude vehicle exhaust is killing us. What did they expect? We keep using petroleum-based fuels and we keep getting reports that people are dying from a range of ailments that clearly are linked to those fuels. We read the reports, shake our head, and go back to putting that same gasoline in our cars. And, we are not talking about itchy eyes or a runny nose from this pollution, but actual mortality—premature deaths. The most recent validation of what we know to be true is a study released this summer in Los Angeles. This study, conducted by researchers from New York University and the American Thoracic Society, was peer reviewed and supported by the society's membership of 15,000 health care professionals. Their conclusions should be startling: More than 2,000 deaths in the L.A. metro area and nearby Riverside can directly be attributed to poor air quality, and, specifically, fine particles—harmful soot and chemical-laden specks of pollution that can lodge deep in the lungs. In addition to avoidable deaths, the report concludes that thousands of heart attacks, emergency room visits and other serious health issues, including a loss of work and productivity, could be avoided. It may be tempting to dismiss this as a California problem and blame it on the well-chronicled traffic and population issues the state faces. But just a few months earlier, a nearly identical study about Boston traffic by Tufts University School of Medicine and Boston University School of Public Health came to a nearly identical conclusion. The linkage to vehicle exhaust and the fuels creating that exhaust expose residents to microscopic chemicals that include known and suspected carcinogens. The ill effect of auto exhaust knows no boundaries and this is a health crisis that affects all. It particularly is a debilitating issue for the young and the elderly.

50 | Ethanol Producer Magazine | OCTOBER 2016

However, the good news is that we finally are getting the medical community to clearly make the connection between fuels and health. A leading researcher on children’s health, Dr. Federica Perera, the director of the Columbia Center for Children’s Environmental Health, has publicly stated fossil fuel combustion and associated air pollution and CO2 emissions are the root cause of much of the ill health of children today. She went on to say that “the single most important action we can take for our children is to cure our addiction to fossil fuel.” I could go on, citing study after study but the results would be the same and that would be ... insane. We in the ethanol industry need to remember our greatest strength, among many, is that we offer a clean, low-carbon source of octane. Ethanol can replace the toxic compounds used to increase octane in gasoline, which are directly related to the harmful emissions identified in these studies. Working with the Urban Air Initiative in recent years, I have come to understand the true dangers of the fuel we are exposed to every day. The dreaded BTX compounds (benzene, toluene and xylene) are classified as toxic aromatics and they are as scary as they sound. Their primary role is to provide octane but, as we are seeing, it comes with a price. Ethanol, however, is a superior octane enhancer and is a healthier alternative to current practices. As with so many issues we face, the U.S. EPA will have a final say on the subject. It is charged with regulating fuel and has the ability to limit aromatics. It is up to us to create a sense of urgency for the EPA to do what needs to be done. These studies should be an ongoing wake-up call for the EPA to open the market for cleaner fuels such as higher ethanol blends. Author: Pam Miller Board Chair and Director of Industry and Investor Relations Siouxland Ethanol pam.miller@siouxlandethanol.com

BUSINESS MATTERS

Overtime Rule Change Takes Effect Dec. 1 By Megan Erickson Moritz

Recently, the Department of Labor adopted its long-awaited final rule regarding who is exempt from overtime pay under the executive, administrative and professional exemptions—i.e., the so-called “white collar” or “EAP” exemptions. This new rule takes effect Dec. 1 and could impact exemption classifications and overtime pay obligations at your plant. In July 2015, the Department of Labor issued its notice of proposed rulemaking (NPRM), which outlined its original proposal for the changes to these regulations. The agency then accepted public comment on its proposal through Sept. 4, 2015. The Department of Labor received nearly 300,000 public comments. Despite expressed opposition from many, the Department of Labor went forward with much of its original proposal in the final rule. Here is a summary of some of the basic terms of the revised regulations: Salary Level: Current regulations set the salary level at $455 a week ($26,600 per year), which was established to exclude the lowest 20th percentile of the country’s lowest-wage region and lowest-wage industry. The NPRM proposed raising the threshold to $970 a week ($50,440 per year), which was the 40th percentile of full-time nonhourly workers on a national basis, without regard to regional differences. The final rule keeps the 40th percentile measure proposed in the NPRM, but looks to the 40th percentile of full-time salaried workers in the lowestwage census region (currently, the South), which results in a salary level of $913 a week ($47,476 per year). Highly Compensated Employees: Current regulations establish a salary level for the HCE exemption at $100,000 annually. The NPRM proposed a new level of $122,148, based on the 90th percentile of full-time nonhourly workers nationally. The final rule uses the same 90th percentile of full-time nonhourly workers on a national basis as was proposed in the NPRM, which since has gone up to $134,404 annually. Automatic Adjustments: Current regulations do not require periodic or automatic adjustments to the salary level. The NPRM proposed incorporating a mechanism to recalculate a new salary level annually, based either on a fixed percentile of Bureau of Labor Statistics earnings data or using the Consumer Price Index. The final rule does require regular, periodic updates to maintain the salary level at the 40th percentile of full-time salaried workers in the lowest-wage census region

52 | Ethanol Producer Magazine | OCTOBER 2016

(and HCE comp at the 90th percentile nationally), but calls for updates every three years, rather than annually. Bonuses: Current regulations do not allow any portion of nondiscretionary bonuses or commissions to count toward the salary level requirement. The NPRM indicated it would consider whether it might allow some portion of bonuses to count toward the requirement, but did not give specific proposed language. The final rule allows up to 10 percent of certain nondiscretionary bonuses, incentive payments and commissions (as long as they are paid at least quarterly) to count toward the required salary level. Duties Tests: Current regulations impose a duties test in addition to the salary level and salary basis requirements for each exemption. The NPRM suggested the agency was considering significant changes to the duties tests, but the Department of Labor proposed no specific regulatory language and offered few details regarding the changes being contemplated. The Final Rule makes no changes to the standard duties tests. After the rule goes into effect Dec.1, the automatic updates to the salary thresholds will occur every three years, beginning Jan. 1, 2020. Because reclassification can take months to properly complete, employers should be working with legal counsel to review exemption classifications and consider whether reclassifications or other internal changes are necessary for compliance. In addition to the updated white collar exemptions likely to affect many employers, the U.S. Department of Labor has been cracking down on other overtime pay violations, including failure to pay additional overtime due on performance- and production-based bonus awards and other incentive payments made to nonexempt employees. The agency also has been ramping up enforcement efforts regarding misclassification of employees as independent contractors. The additional oversight from the Department of Labor requires companies to be vigilant about their wage and hour administration.

Author: Megan Erickson Moritz Attorney, BrownWinick Law Firm 515-242-2455 moritz@brownwinick.com

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