October 2008 Ethanol Producer Magazine by BBI International

INSIDE: RAILROADS, ETHANOL PRODUCERS FOCUS ON SAFETY OCTOBER 2008

Beefing Up Barley Research Results Have Prompted Ethanol Producers to Take Another Look at This Crop

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inside

OCTOBER 2008 . VOLUME 14 . ISSUE 10

features 62 EQUIPMENT In Dynamic Pursuit of Efficiency

102 TRANSPORTATION Rail-to-Truck Ethanol Terminals

A U.K.-based company is in the midst of testing the commercial power of its

Shipping vast amounts of ethanol from the Midwest, where much of it is

PDX Ethanol Reactor Tower, which is designed to boost ethanol production

produced, to the East and West coasts, where it’s consumed, requires more

efficiency. By Ron Kotrba

than just adding railcars and tracks. Terminals for transloading are also needed to keep shipping costs down. By Erin Voegele

70 TECHNOLOGY In the Lab PhibroChem recently opened a new laboratory in St. Paul, Minn., to expand its

110 SAFETY Staying on Track

diagnostic, research and product development work. The lab also plans to

More ethanol shipments over the nation’s rail system have led to an increase

explore and anticipate the organisms most likely to contaminate cellulosic

in the number of nonaccidental releases of ethanol. EPM looks at what rail

ethanol plants. By Jessica Ebert

companies and ethanol producers are doing to bring those numbers down. By Ryan C. Christiansen

Page 78

Page 94

Page 126

78 FEEDSTOCK Beefing Up Barley

118 PROFILE A Taste of Victory

Barley’s potential as an ethanol feedstock has taken on new life as

Victory Energy Operations LLC's rapid growth rate hasn’t gone unnoticed. The

researchers develop and test new hulled and hulless varieties.

boiler supply company ranked No. 15 in Entrepreneur Magazine’s 2008 Hot

By Susanne Retka Schill

100, a list of the fastest growing companies in the United States. By Anna Austin

86 CELLULOSE Building Better Energy Crops Ceres Inc. is preparing for the advent of the commercial production of

126 INDUSTRY Making the Most of Every Dollar

cellulosic ethanol by developing high-yielding energy crop seeds. The

Corn prices remain high but not as high as they were earlier in the year. That

company is concentrating its efforts on switchgrass, miscanthus and sorghum.

should give producers a bit of wiggle room when it comes to profit margins.

By Kris Bevill

By Bryan Sims

94 ENZYMES If You Build it … Novozymes and Genencor will soon have a presence in the Corn Belt near their customer bases. Novozymes is building an enzyme production facility, while Genencor’s project involves a training center. By Suzanne H. Schmidt

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

Get more out of your corn - with Spirizyme® Ultra If squeezing the last bit of ethanol from your corn is important to you, your options have now improved. Spirizyme Ultra is a new, premium glucoamylase designed to deliver consistently higher ethanol yields and smoother plant performance. Have you been getting the most from your corn? Contact us today to see what you’ve been missing.

Novozymes is the world leader in bioinnovation. Together with customers across a broad array of industries we create tomorrow’s industrial biosolutions, improving our customers’ business and the use of our planet’s resources. Read more at www.novozymes.com.

Novozymes North America, Inc. 77 Perry Chapel Church Road · Franklinton, NC 27525 Tel. +1 919-494-3000 · Fax +1 919-494-3485 fuel-ethanol@novozymes.com · www.novozymes.com

inside

OCTOBER 2008 . VOLUME 14 . ISSUE 10

departments

contributors

11 Advertiser Index

132 OPTIMIZATION

14 The Way I See It

Technologies and process options abound for ethanol producers looking to enhance productivity. An in-depth review of what’s available provides some optimization goals that can improve yield. By Philip A. Marrone, Kenneth R. Liberty and David J. Turton

By Mike Bryan Hurricane Season Should Spur Ethanol Support

20 Business & People 24 Commodities 26 A View from the Hill By Bob Dinneen Thinking Nationally, Acting Locally

27 RFA Update 30 Industry News & BIObytes

Emerging Process Optimization Opportunities for Ethanol Facilities

136 POLICY

Punitive Measures Ineffective in the Energy Sector In the 1970s, the U.S. government unsuccessfully implemented price controls intended to aid energy consumers. The failure of such measures provides a learning experience and solidifies renewable fuels’ role in the marketplace. By Tim Sklar

140 BYPRODUCT

Carbon Footprint, Trade Evolving with Industry Reduced carbon emissions are becoming a pivotal selling point for growing “green” industries. New greenhouse gas emissions protocols may provide more good news for the ethanol industry. By Sam Rushing

40 Plant Construction List 48 Our Plant By Kris Bevill Big Things Happening in the Bayou

50 In the Field By Susanne Retka Schill GreenSeeker Matches Nitrogen to Crop Needs

52 Up Front

144 FERMENTATION

Yield Remains Key to Determining Profitability When it comes to enhancing the bottom line, throughput isn’t the name of the game. A small percent increase in ethanol yield provides the greatest increase in profits. By Dave Kelsall

148 CORN

Analyzing the Complex 2008 Corn Crop 2008 provided a rollercoaster ride for corn producers and those depending on the crop. How will this year's near-record corn crop impact 2009 plantings and the ethanol industry? By Elaine Kub

By Kris Bevill A Kiwi in Corn Country

54 Business By Bryan Sims Ethanol Sales Improve Quarterly Earnings

56 Finance By Jesse McCurry Overtaxed and Under-Reviewed: A Simple Way to Save Money

58 Legal Perspectives By John Eustermann and Randy Shefman The Implications of Plant Optimization Activities

152 Events Calendar 154 EPM Marketplace Ethanol Producer Magazine: (USPS No. 023-974) October 2008, Vol. 14, Issue 10. Ethanol Producer Magazine is published monthly. Principal Office: 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. Periodicals Postage Paid at Grand Forks, North Dakota and additional mailing offices. POSTMASTER: Send address changes to Ethanol Producer Magazine/Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, North Dakota 58203. BPA Worldwide Membership Applied for October 2006

on the web EthanolProducer.com’s most-read Web exclusive news stories for August 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

EPA denies RFS waiver request Pacific Ethanol closes credit facility ADM reports fourth-quarter losses Global Renewable Energy tests sweet sorghum in Florida SunEthanol receives fourth U.S. DOE grant Experts discuss biomass-based ethanol future Arisdyne Systems to optimize biodiesel, ethanol technology The Andersons posts record second-quarter earnings California plant chooses Fagen as lead contractor Poet to build pilot-scale cellulosic ethanol facility

Corrections from our August 2008 issue:

Corrections from our September 2008 issue:

The author information at the end of the Pumps contribution, titled “Pump Technologies Provide Greater Efficiencies,” on page 255 should have read: Tom Stone is the director of marketing for Grand Rapids, Mich.-based Blackmer. Reach him at stone@blackmer.com or (616) 248-9252.

The Industry News story on page 33, titled “Canadian RFS opens doors for new markets,” incorrectly stated that there are only two provinces in Canada with ethanol mandates. Manitoba joined Ontario and Saskatchewan when its ethanol mandate was enacted Jan. 1, 2008.

The author information at the end of the Policy contribution, titled “The Farm Bill: Planting Seeds of Renewable Energy,” on page 259 should have read: Matthew E. Ross is in the Energy and Project Finance Group at the law firm Ballard Spahr Andrews & Ingersoll LLP. Reach him at rossm@ballardspahr.com or (202) 661-2279.

On page 102 of the Fractionation feature, titled “Food and Fuel Technology Bundle,” it incorrectly stated that ICM Inc. laid off 750 employees. The company laid off 105 employees. On the same page, ICM’s food and fuel technology package was incorrectly identified as PKO. It is called TKO. On page 109 of the Use feature, titled “Rocky Mountain E85,” it incorrectly stated that Colorado Gov. Bill Ritter Jr. established the Governor’s E85 Coalition in 2006. Gov. Bill Owens, who Ritter replaced in 2007, established the coalition.

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

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Ad Index 93 2009 Canadian Renwable Energy Workshop 92 2009 International Fuel Ethanol Workshop & Expo 34 32 4 6 88 77 29 117

76, 84 & 124 98 31 46 68 & 137 100 & 147 108 & 129 53 5 35 120 83 65 106 42 66 55 107 125 60 & 61 51 & 80 23 114 67 37 47 59 & 128 134 85 3 145 57 121 28 16 & 17 112 2 10

ABENCS Agra Industries Corp. American Railcar Industries Inc. Anhydro Inc. Aqua Power Inc. Aquatech International Barr-Rosin Inc. BBI International Community Initiative to Improve Energy Sustainability (CITIES) BBI Project Development Best Energies Inc. BetaTec Hop Products Inc. Biodiesel & Ethanol 101 DVDs Biofuels Canada Biofuels Recruiting Biomass Magazine Buckman Laboratories Inc. Burns & McDonnell Calbrandt Centrisys Corp. Cereal Process Technologies LLC Check-All Valve Mfg. Co. Chemineer Inc. Christianson & Associates PLLP Clifton Gunderson LLP Coverall Building Systems Crown Iron Works Co. dbc SMARTsoftware Inc. Delta-T Corp. Distillers Grains Quarterly DuPont Chemical Solution Enterprise Eco-Tec Inc. Eisenmann Corp. Energy from Biomass to Waste Expo & Conference Engineered Storage Products Co. ethanol-jobs.com ETS Laboratories Faegre & Benson LLP Fagen Inc. FCStone LLC Fermentis Gamajet Cleaning Systems Inc. Genencor International Inc. GreenShift Corp. Gusmer Enterprises Inc. ICM Inc. Indeck Power Equipment Co.

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

69 International Distillers Grains Conference and Trade Show 2008 44 82 33 18 149 36 138 43 116 113 109 73

Interstates Cos. Intersystems Kennedy & Coe LLC Lallemand Ethanol Technology Larox Corp. Mapcon Technologies Inc. Martrex Inc. McC Inc. Nalco Co. Natural Resource Group Inc. National Ethanol Conference Natwick Associates Appraisal Services

75 15 123 141 8 150 139 39 19 164 64 45 99 81 38 122 163 97 96 143 74 135 90 89

Nestec Inc. New York Blower Co. Nexen Marketing USA Inc. North American Safety Valve Novozymes Paul Mueller Co. Peters Machine PhibroChem Pioneer Hi-Bred International Inc. Poet LLC Primafuel Inc. Pro-Enviornmental Inc. R&R Contracting Inc. RailWorks Track Systems Inc. Renewable Fuels Association Resonant BioSciences LLC Robert-James Sales Inc. Roskamp Champion/CPM SafeRack LLC Salco Products Inc. Seneca Waste Solutions Smar International Corp. Spraying Systems Co. Strongform Nationwide Industrial Builders

104 & 105 12 130 142 131 72 101 133 146 115 91 151

Sulzer Chemtech USA Inc. Syngenta TDC Dryers Trico TCWind Inc. Tri-Mer Corp. U.S. Water Services Vaperma Inc. Victory Energy Operations LLC Vogelbusch USA Inc. Volkmann Railroad Builders Inc. Watson-Marlow Bredel Pumps WIKA Instrument Corp. 11

We’re on the right path.

Step ahead with us. We’re hiring. As a world leader in agriculture and plant science, Syngenta is uniquely positioned to help the renewablefuels industry reach its full potential. If you’re interested in joining a team dedicated to shaping the future of our industry, we want to hear from you. Syngenta is now hiring to ﬁll numerous positions in its expanding renewable-fuels program. Visit www.syngentacareers.com for more information and to apply online today.

E D I TO R I A L

A RT

PUBLISHING & SALES

Jessica Sobolik Managing Editor jsobolik@bbiinternational.com

Jaci Satterlund Art Director jsatterlund@bbiinternational.com

Mike Bryan Publisher & CEO mbryan@bbiinternational.com

Dave Nilles Contributions Editor dnilles@bbiinternational.com

Sam Melquist Graphic Artist smelquist@bbiinternational.com

Kathy Bryan Publisher & President kbryan@bbiinternational.com

Rona Johnson Features Editor rjohnson@bbiinternational.com

Elizabeth Slavens Graphic Artist bslavens@bbiinternational.com

Joe Bryan Vice President of Media & Events jbryan@bbiinternational.com

Ron Kotrba Senior Staff Writer rkotrba@bbiinternational.com

Jack Sitter Graphic Artist jsitter@bbiinternational.com

Tom Bryan Vice President of Communications & Marketing tbryan@bbiinternational.com

Jerry W. Kram Staff Writer jkram@bbiinternational.com

Matthew Spoor National Sales Director mspoor@bbiinternational.com

Susanne Retka Schill Staff Writer sretkaschill@bbiinternational.com

Howard Brockhouse Senior Account Manager hbrockhouse@bbiinternational.com

Kris Bevill Staff Writer kbevill@bbiinternational.com

Clay Moore Account Manager cmoore@bbiinternational.com

Erin Voegele Staff Writer evoegele@bbiinternational.com

Jeremy Hanson Account Manager jhanson@bbiinternational.com

Anna Austin Staff Writer aaustin@bbiinternational.com

Chip Shereck Account Manager cshereck@bbiinternational.com

Suzanne H. Schmidt Staff Writer sschmidt@bbiinternational.com

Tim Charles Account Manager tcharles@bbiinternational.com

Ryan C. Christiansen Staff Writer rchristiansen@bbiinternational.com

Chad Ekanger Account Manager cekanger@bbiinternational.com

Bryan Sims Staff Writer & Plant List Manager bsims@bbiinternational.com

Marty Steen Account Manager msteen@bbiinternational.com

Hope Deutscher Online Editor hdeutscher@bbiinternational.com

Marla DeFoe Advertising Coordinator mdefoe@bbiinternational.com

Jan Tellmann Copy Editor jtellmann@bbiinternational.com

Jessica Beaudry Subscriptions Manager jbeaudry@bbiinternational.com

Amber Armstrong E-Media Coordinator aarmstrong@bbiinternational.com

Jason Smith Subscriber Aquisition Manager jsmith@bbiinternational.com Erika Wishart Administrative Assistant ewishart@bbiinternational.com Christie Anderson Administrative Assistant canderson@bbiinternational.com Nicole Zambo Receptionist nzambo@bbiinternational.com

HOW TO REACH US

LETTERS TO THE EDITOR We welcome letters to the editor. Send your letter to: Ethanol Producer Magazine Letters, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203 or e-mail to jsobolik@bbiinternational.com. Letters should include the writerâ&#x20AC;&#x2122;s full name, address and telephone number, and may be edited for purposes of clarity and space.

SUBSCRIPTIONS Ethanol Producer Magazine is now free of charge to everyone with the exception of a shipping and handling charge of $49.95 for any country outside the United States, Canada and Mexico. To subscribe, visit www.EthanolProducer.com or you can send your mailing address and payment (checks made out to BBI International) to: Ethanol Producer Magazine Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You can also fax a subscription form to (701) 746-5367.

CUSTOMER SERVICE AND CHANGE OF ADDRESS For service, please use our Web site at www.EthanolProducer.com. You can also call (866) 746-8385, or write to: Ethanol Producer Magazine, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203.

BACK ISSUES AND REPRINTS Select back issues are available for $3.95 each, plus shipping. To place an order, contact Subscriptions at (701) 746-8385 or subscriptions@ethanolproducer.com. Article reprints are also available for a fee. For more information, contact Christie Anderson at (701) 746-8385 or canderson@bbiinternational.com.

ADVERTISING For advertising rates and our editorial calendar, visit www.EthanolProducer.com or call (866) 746-8385.

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

The Way I See It Hurricane Season Should Spur Ethanol Support

t was interesting to watch the events that occurred before and after the U.S. landfall of Hurricane Gustav and the implications it was feared to have on the supply of oil from the Gulf of Mexico. At the same time, we still see signs at a number of gas stations in Colorado that say “Ethanol-Free Gasoline.” This and other attacks on the ethanol industry seem totally at odds with the stark reality of our energy vulnerability. The fact that a hurricane could disrupt 25 percent of the energy supply of an entire nation is troubling, but the attacks being launched against domestically produced ethanol at the same time are even more troubling. It’s time for Americans to realize that our energy vulnerability reaches far beyond our dependence on foreign oil. Our vulnerability is right here at home in the Gulf of Mexico. With Hurricane Gustav, we may have dodged an energy crisis bullet, but even as a result of a moderate storm, it affected the oil supply from the Gulf for days. If we subscribe to the idea of global warming, then we also have to accept the fact that such storms will be more frequent and possibly more violent. America has a concentrated energy base in the Gulf of Mexico that can be substantially disrupted or even totally shut down in the blink of an eye. Conversely, ethanol is akin to distributed generation in the electrical industry. Everyone endorses the concept of distributed electrical generation as an excellent strategy to ward off potential power disruptions. Isn’t the fact that ethanol production is distributed over the entire Midwest and growing in other parts of the country a similarly sound concept? Distributed power generation from small independent power producers is not the total answer to securing our electrical energy future, nor is distributed fuel production in the form of ethanol. However, it is an important step in the direction of energy security, helping to maintain our crucial energy supply as we encounter an increasing number of weather-related disruptions. Perhaps as a result of global warming, we have entered a new era of potential energy disruptions. Whatever the cause, it makes an even stronger case for distributing our renewable energy supply from coast to coast. That’s the way I see it!

Mike Bryan Publisher & CEO mbryan@bbibiofuels.com

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

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GreenShift is the original inventor and industry pioneer of Corn Oil Extraction technology. With over 40,000 hours of operational run time on our systems and years of know how integrating extraction technology into corn ethanol plants, GreenShift has established its technology leadership and proven its reliability. Participating in GreenShiftâ&#x20AC;&#x2122;s corn oil extraction program is guaranteed to bring you the highest return, on the shortest lead time, at the lowest risk, and for the least amount of capital deployed.

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?^^] rhnk ^maZghe [kZbg [r Zmm^g]bg` Ma^ Hi^kZmhkl School sponsored by Lallemand Ethanol Technology and held in at the National Corn-to-Ethanol Research Center (NCERC). The three-day program is designed as The Practical Workshop for ethanol plant operators. Lectures will cover complete processing areas consisting of raw materials through distillation and co-products. These theories will be applied through

laboratory and functional demonstrations at NCERC. Ma^ Hi^kZmhkl L\ahhe bl Z `k^Zm pZr mh `Zbg practical experience and find ways that plants can make their operations more effective and profitable.

For more information or to enroll, visit www.ethanoltech.com or call Liz at 414-393-0410.

ÂŠ2008 Ethanol Technology Institute, a business unit of Lallemand, Inc. For additional information go to www.ethanoltech.com

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BUSINESS&PEOPLE

Business& People Ethanol Industry Briefs Business FEW named one of ‘Fastest 50’ BBI International Inc. has been named one of Trade Show Week magazine’s Fastest 50 after its International Fuel Ethanol Workshop & Expo posted awardwinning growth for the second year in a row. The criteria for the award include an increase in area used for an event and the number of exhibitors between 2005 and 2007. The show expanded from 226 exhibitors in 2005 to 551 exhibitors in 2007, and 26,400 square feet in 2005 to 76,800 square feet in 2007. The award will be presented to BBI at a banquet in Baltimore in November. The FEW’s 25th annual event will be held at the Denver Convention Center on June 15-18. EP

DuPont Danisco joins Tennessee initiative One month after refuting a report that Mascoma Corp. was dropping out of the University of Tennessee’s Biofuels Initiative, the University of Tennessee announced that the initiative had partnered with DuPont Danisco Cellulosic Ethanol LLC and parted ways with Mascoma. The University of Tennessee Research Foundation, through Genera Energy LLC, made the announcement in July. Site preparations for a 250,000-gallon-per-year cellulosic ethanol facility are to begin this fall in Vonore, Tenn., with production expected to begin in December 2009. The plant design will include the flexibility to take in corn stover, cobs and fiber, in addition to switchgrass. EP

Pacific Ethanol secures $40 million funding

Iowa producer to install corn oil extraction unit Amaizing Energy LLC has agreed to install a corn-oil extraction unit at its 55 MMgy dry-grind, corn-based ethanol plant in Denison, Iowa. The unit will be engineered and constructed by Basehor, Kan.based Primafuel Solutions. Amaizing Energy chose Primafuel’s trademarked SMAART Oil solution because the ethanol plant felt it was the best technology, according to company President and General Manager Alan Jentz. The extraction unit is slated to be operational this winter, at which time Amaizing Energy hopes to begin selling the corn oil to biodiesel producers. EP

Share your Industry Briefs To be included in Business & People, send information (including photos or illustrations if available) to: Industry Briefs, Ethanol Producer Magazine, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You may also fax information to (701) 746-5367, or e-mail it to jsobolik@bbiinternational.com. Please include your name and telephone number in all correspondence.

Through its marketing subsidiary Kinergy Marketing LLC, Pacific Ethanol Inc. closed on a $40 million revolving credit facility with Wachovia Capital Finance Corp. The credit facility, which matures in three years, replaces a $25 million credit facility between Kinergy and Comerica Inc. that started August 2007. According to Pacific Ethanol President and Chief Executive Officer Neil Koehler, the company sought this most recent funding to enhance liquidity and keep pace with its rapid growth, which will provide working capital that was subject to limitations based on qualifying collateral when it was finalized in August 2008. EP

Brazilian ethanol projects receive funding Two companies announced they had secured funding to move forward with Brazilian ethanol projects in July. Dallasbased Southridge Enterprises Inc. formed a partnership with Durmundo Carasca SA to construct and operate an ethanol facility in Brazil. Durmundo Carasca will contribute $5 million and acquire 15 percent ownership in the facility. Southridge Enterprises has an additional joint venture agreement with Briskul Transaccao Ltd. for the project. Likewise, Brazilian biofuel producer Comanche Clean Energy secured $85 million in a private placement round of financing to expand its sugarcane-based ethanol facility in São Paulo, Brazil, to approximately 26 MMgy. EP

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

BUSINESS&PEOPLE

Sponsored by

Business Alliance for Abundant Food & Energy launched The Alliance for Abundant Food & Energy was launched July 24. As a coalition of leaders representing all aspects of the agricultural value chain, the alliance aims to promote the belief that agriculture can sustainably meet both the growing demands for food and renewable energy through innovation. Using credible factand science-based education, information and advocacy, the alliance plans to increase support for today’s agricultural solutions and build an understanding of agriculture’s ability to fulfill the needs of the future. Founding members of the alliance include Archer Daniels Midland Co., DuPont, Deere & Co., Monsanto Co. and the Renewable Fuels Association. EP

Lignol receives British Columbia grant Lignol Innovations Ltd., a subsidiary of Vancouver-based technology developer Lignol Energy Corp., has received nearly $2 million as part of British Columbia’s Innovative Clean Energy Fund. Lignol will use the $1.96 million grant to support the ongoing development and commercialization of its process technology to convert nonfood biomass into ethanol and other biochemical products. Lignol believes commercialization of its technology could help British Columbia reduce greenhouse gas emissions, use local feedstocks and contribute to other local technologies with strong export potential. The Clean Energy Fund is a $25 million fund designed to accelerate the development of clean technologies. EP

Mantra NextGen Power to develop cellulosic ethanol EBS releases plant management software Encore Business Solutions in Winnipeg, Manitoba, has released new business management software. Company Marketing Manager Shauna Allan said the Renewable Energy Agricultural Processing software (REAP 2.5) was specifically designed for the ethanol and biodiesel industry. “Those who would primarily benefit include plants that require a grain accounting software solution that can effectively manage lab information, preventative maintenance, business intelligence and accounting,” she said, adding that ethanol producers such as United Wisconsin Grain Producers are using the software. UWGP has been able to produce 3.01 gallons of ethanol per bushel of corn within a 48-hour fermentation batch. The industry average is typically 2.8 gallons.EP

Agassiz Energy sues Bio-Renewable Group Crookston, Minn.-based Agassiz Energy LLC is suing Bio-Renewable Group—a group of contractors that consists of Fargo, N.D.-based Wanzek Construction, Teton Industrial Group, Utility Engineering Corp. and Vogelbusch USA Inc.—for $829,500, claiming that the group misrepresented itself as a corporation with experience in designing and building ethanol plants. According to Gary Bridgeford, one of Agassiz Energy’s board members, the lawsuit was filed in a federal court in Fargo and was still pending at press time. Agassiz Energy has been proposing to build a 50 MMgy corn-based ethanol plant near Erskine, Minn., since 2004 but suspended development of the project in the fall of 2007 because of “unfavorable market conditions.” EP

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

Vancouver, British Columbia-based Northwind Ethanol Ltd. entered into exclusive negotiations with Mantra Venture Group Ltd. to create a joint venture called Mantra NextGen Power Inc. that will utilize Northwind’s proprietary process technology to produce cellulosic ethanol. Northwind describes its process as a low-temperature acid hydrolysis of starch that can integrate acid hydrolysis of lignocellulose to produce low-cost ethanol. EP

St. Clair Ethanol Plant in Sarnia, Ontario, plans to double capacity to 200 MMly.

Suncor receives boost from Canadian government The government of Canada has invested $25 million in Calgary, Albertabased Suncor Energy Inc. The funding will help the oil and gas company to double capacity at its 200 MMly (53 MMgy) ethanol production facility in Sarnia, Ontario. The St. Clair Ethanol Plant will be the largest ethanol producer in Canada after the expansion is complete in September 2009. To date, the facility has received $12.5 million in equity investments from farmers. The federal funds will come from the $200 million, four-year ecoAgricultural Biofuels Capital Initiative, which aims to build or expand biofuels production. Farmer investment is one of the conditions for ecoABC funding. EP 21

Business

People

Iogen, Shell expand cellulose partnership Royal Dutch Shell PLC has increased its shareholding percentage in Ottawabased Iogen Corp.’s subsidiary technology development firm from 26.3 percent to 50 percent. The increased ownership is part of an agreement between Iogen and Shell to extend their existing partnership for the purpose of accelerating the development and production of cellulosic ethanol. The companies first partnered in 2002 when Shell purchased an equity stake in Iogen. As part of the extended partnership, Shell will also invest in Iogen and contribute to full-scale cellulosic ethanol production feasibility and design assessment work being conducted by Iogen. EP

OptiSwitch Technology system to boost ethanol yields OptiSwitch Technology Corp., a highperformance semiconductor device, module and system research and development company, has developed a new process that uses an electroporation system to increase corn-based ethanol yields by 5 percent or more. The project, which was performed and evaluated at the National Corn-toEthanol Research Center in Edwardsville, Ill., was funded with $10 million contracted from the U.S. Department of Defense. Ty Navapanich, director of operations at San Diego-based OptiSwitch Technology, said the company is currently looking for ethanol plants to partner with to reach commercialization. EP

Mark Yancey has been named chief executive officer of BBI BioVentures LLC, a wholly owned subsidiary of BBI International Inc. that will develop and Yancey operate multiple cellulosic ethanol plants in the United States. Yancey has been employed by BBI International for more than seven years, formerly serving as the company’s Nieves vice president of project development. In addition, BBI International named Rafael Nieves to the newly created position of director of international business development. Nieves previously served as the company’s manager of international business development and has been with BBI International for three years. EP

PHOTO: ALLTECH

BBI fills two new positions

Pearse Lyons created Lexington, Ky.-based Alltech in 1980.

Lyons wins award According to Irish magazine Business and Finance, Pearse Lyons, founder and president of global animal health and nutrition company Alltech, has been named one of the most influential U.S.-Irish business leaders of 2008. Lyons created Lexington, Ky.-based Alltech in 1980 to supply technology and products to the ethanol industry. Alltech also markets a line of distillers grains additives. EP

Four join PhibroChem’s Ethanol Performance Group DuPont Danisco names president DuPont Danisco Cellulosic Ethanol LLC has named Joseph Skurla as its new president. Skurla will help lead the company in commercializing cellulosic ethanol using nonfood feedstocks. He has 30 years of experience in the oil-refining and chemical sectors, most recently leading the development of DuPont Clean Technologies. DuPont Danisco is a joint business venture between DuPont and Genencor, a Division of Danisco A/S. EP

The Lactrol Ethanol Performance Group, a part of Phibro Animal Health Corp.’s PhibroChem Ltd. division, announced the hiring of four employees since May 1. Neal Flickinger, fermentation engineer, will be based in Kansas, focusing on growth and support of the company Lactrol product in the Midwest. Henry Huertas, another fermentation engineer, will be based in Puerto Rico, focusing on business growth in the Caribbean and Latin America. Stephen O’Shea, technical sales representative, will support Lactrol business on the West Coast. Heidi DoeringResch, nutritional specialist, will be based in South Dakota, working with the company’s field sales organization on issues related to animal safety and nutrition with distillers dried grains usage. EP

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

COMMODITIES REPORT Natural Gas Report

Winter prices return to early ’08 lows Aug. 26—If you missed the January buying opportunity for winter 2008-’09, your patience has paid off. Natural gas prices for the upcoming winter are now back to and below the market lows witnessed in the first quarter. As the chart shows, it has been a wild ride since January. The winter 2008-‘09 strip price on Jan. 2 was $9.02/MMBtu. The market bottomed out at $8.54/MMBtu on

By Casey Whelan, U.S. Energy Services Inc.

Jan. 23 before rallying to $14.29/MMBtu on July 3. The market rocketed up 67 percent from its market low. Since July 3, prices dropped dramatically to $8.76/MMBtu on Aug. 25. Will the market continue to drop or are we approaching a low? While no one can say with certainty where the market will go, it appears that prices in the $8.50 to $9 range for winter have been the recent floor. The four most notable factors that will determine the path of prices as we move into the fall and winter follow in no particular order: 1) storage inventory volumes, 2) oil prices, 3) hurricane activity and 4) winter weather. These are the primary factors we will be following in the coming months to help discern where prices are going. Currently, all four are supportive of low prices. Season-ending storage inventories are expected to approach last year’s historic high, oil prices are weak compared to prices over the past several months, hurricane activity has been weak and there is no sign of winter yet. It is important to note that we are often approaching or at a market low when the market appears to be in great shape. Our recommendation is to seriously consider some coverage for this fall and next winter using options or futures structures. EP Casey Whelan, vice president of strategic initiatives, can be contacted at cwhelan@usenergyservices.com.

Corn Report

Corn on pace for near-record year Aug. 26—The corn market has seen drastic volatility. The day the August USDA supply and demand report was released corn traded at a low near $5.04 per bushel. At press time it was trading at $6. That incremental move comes in less than a week for what used to be a price move in a corn marketing year. There is no doubt that producers and end users are in awe with price moves. The USDA’s August supply and demand estimate yielded a larger carry-out versus the previous estimate. The corn yield was bumped from 148.4 bushels per acre to 155 as crop conditions improved dramatically since June floods. With harvested acres up 400,000 acres and yield at 155 (the second highest yield on record), production was projected at 12.288 billion bushels, which is the second-highest production on record. With carry-in of 1.576 billion bushels, total supply was slated at 13.878 billion bushels, including 15 million bushels of imports. With prices down the USDA expected more demand to prosper. Ethanol and feed demand increased by 150 million and 100 million bushels, respectively. As a result the projected ending stocks value is 1.133 billion bushels, equating to a mere 8.9 percent carry-out-to-use ratio. Internationally, world coarse grain in 2008-‘09 is projected up 20.1 24

By Jason Sagebiel, FCStone

million tons to 1,089.1 million. World corn production is expected to increase to 789.58 million metric tons. Most of this increase is in U.S. corn production. Brazil corn exports were decreased by 2 million metric tons while the EU-27 is expected to import 2.5 million metric tons less corn in 2009. EP ETHANOL PRODUCER MAGAZINE OCTOBER 2008

COMMODITIES REPORT DDGS Report By Sean Broderick, CHS Inc.

Annual price slump returns Aug. 27—As Labor Day approached, the distillers grains market was suffering from slumping prices due to poor late-summer demand and a large influx of production. Five or six plants started up that did not have a significant amount of feed sold, and prices, while trending with the price of corn, tended to emphasize to the downside. With the corn crop on the homestretch and cooler temperatures approaching, buyers and sellers turned their attention to new crop pricing. With values nowhere near a typical percentage of cash corn, plants have been reluctant to lock in what buyers consider to be market prices. So the pattern of unsold feed hitting the spot market will continue. The rising dollar is not helping distillers grains exports, nor are the price

Regional Ethanol Prices (Monthly averages in cents per gallon)

BULK SPLASH/ TRUCK (rack) TOP OFF (rack)

REGION

SPOT

West Coast

242.625

245.6

286.711

Midwest

229.673

238.64

267.914

East Coast

246.058

----

287.97 Source: OPIS

increases that container companies have been taking to move product to the Pacific Rim. Feed wheat is plentiful in most producing regions, which is cutting into distillers grains demand. Barge and shipping rates, while down from their highs earlier in the year, are still on the high end of historical ranges due mainly to the price of crude. Elevations in the Pacific Northwest are tight, leaving the Gulf of Mexico as the most likely bulk shipping origin. With the amount of grain business getting done in the Northwest and the potential availability of doing a hold of distillers grains in conjunction with an overseas shipment, the landlocked Midwestern plants suddenly gain a potential foothold in the Asian market. EP

Regional Gasoline Prices (Monthly averages in cents per gallon)

REGION

SPOT

RACK

RETAIL

West Coast

303.353

326.799

413.382

Midwest

308.428

315.83

381.979

East Coast

293.276

306.781

386.336 Source: OPIS

DDGS Prices ($/ton) AUG. 2008

JULY 2008

AUG. 2007

Minnesota

135

165

100

California*

180

202

145

Chicago, Ill.

135

155

107

Buffalo, N.Y.

150

163

122

Central Florida

180

195

LOCATION

134

*Central Valley

Source: CHS Inc.

Corn Futures Prices (December corn, $/bushel) DATE Aug. 25, 2008

HIGH

LOW

6.28 3/4

5.98 1/4

6 5.96 1/2

July 25, 2008

6.04

5.88

Aug. 27, 2007

3.54 1/4

3.48 1/2

3.53 Source: FCStone

Ethanol Report

Damper remains on August prices Aug. 22—Ethanol spot values closely followed the fortunes of corn markets through most of August even as once solidly bullish petroleum markets showed some severe cracks ahead of Labor Day. Spot Chicago ethanol trading in the low $2.30s per gallon shed some midAugust gains, and that represented a loss of more than a dime in spot values over the last month. At the same time, New York Harbor barge ethanol for late August/early September, which was retreating from the low $2.50s per gallon to the upper $2.40s per gallon, showed spot price losses in the area of 22 cents. Those prices were still well up from recent lows reached in early August, when Chicago spots touched $2.15 per gallon. Petroleum markets sold off sharply since mid-July, but one of the key factors for ethanol appeared to be corn. For

By Spencer Kelly, OPIS

example, one week at mid-month Chicago spot gasoline prices gained 2 percent, while spot ethanol added 6.5 percent. Over the same period, Chicago Board of Trade front-month corn futures traded up more than 7 percent— a correlation between corn and ethanol that some market sources noted through most of the month. At Midwest racks, ethanol prices mostly stepped lower in August, almost ignoring spot market swings. In Iowa, average rack postings at $2.40 per gallon shed more than 24 cents over the month. Those in Illinois, at $2.485 per gallon, dropped more than a dime in August. Minnesota, at less than $2.395 per gallon, gave up 26 cents. EP For more information, contact OPIS Ethanol & Biodiesel Information Service at (888) 301-2645.

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

Cash Sorghum Prices ($/bushel) Superior, Neb. Beatrice, Neb. Sublette, Kan. Salina, Kan. Triangle, Texas Gulf, Texas

AUG. 2008

JULY 2008

SEPT. 2007

4.77 4.82 4.97 5.25 5.21 5.98

5.07 5.12 5.27 5.12 5.39 5.16

3.36 3.21 3.12 3.46 3.19 4.01 Source: Sorghum Synergies

Natural Gas Prices ($/MMBtu) AUG. 25, 2008

JULY 18, 2008

AUG. 24, 2007

NYMEX

7.82

10.66

5.62

N. Ventura

6.99

10.12

5.40

Calif. Border

7.24

10.42

5.37 Source: U.S. Energy Services Inc.

U.S. Ethanol Production Output (barrels/day) May 2008

598,000*

April 2008

562,000

May 2007

406,000

*all-time monthly high

Source: U.S. Energy Information Administration

VIEW FROM

THE HILL

Thinking Nationally, Acting Locally As the two major political parties celebrate their conventions and nominees, they also craft platforms on which candidates across the nation will run. While individual candidates often adopt their own agenda separate from the party, the platform developed at each convention makes clear the issues of importance to the party as a whole. A draft plank in this year’s Republican Party platform calls for an end to the federal policies that have helped reduce America’s dependence on foreign oil by increasing our use of renewable fuels such as ethanol. As I write this column the draft reads, “The U.S. government should end mandates for ethanol and let the free market work.” As those familiar with the Renewable Fuels Association well know, the RFA is agnostic when it comes to politics. We do not endorse candidates, keep voting scorecards or even have a political action committee. We endeavor to work with all lawmakers, regardless of political affiliation. So in pointing out this plank, we are not criticizing the party. Rather, the purpose is to feverishly underscore the importance of becoming involved in the political process at every level of government. We know that support for biofuels is bipartisan. But we also know that opposition to the growth of the ethanol industry can be found in both parties. As members of this industry who have fought hard to make renewable fuels a competitive alternative, we must maintain constant vigilance. This means supporting policies which provide positive outcomes for biofuels while criticizing those that undermine our future. On this page I recently extolled the importance of paying attention to what candidates say. Listen carefully, understand their positions and ask the tough questions that need to be asked. Above all else, vote. I have no doubt that those involved in America’s ethanol industry will be there early on Nov. 4. What I want to encourage is the yearlong involvement necessary to ensure that near-sighted, petroleum-blinded candidates

do not end up in places of power that will allow them to decimate the one industry having any success reducing America’s reliance on foreign oil. Whether the antiethanol plank survived at the convention wasn’t known at press time. We will all know by the time you read this column. But what I can say with Dinneen absolute certainty is that this idea was not nirvana visited upon those developing the platform. Rather, it originated back in a county, in a precinct somewhere in America many weeks ago. The fact that such a draft would even be included stresses the critical necessity of political engagement at every level of government. Our industry has enjoyed success at the federal level because we have effectively taken our message of energy security, environmental stewardship and rural economic renaissance to Capitol Hill. That success has drawn increasingly ruthless smear campaigns that threaten to obscure the truth just enough to cause doubt in the minds of lawmakers about their commitment to a new generation of biofuel technologies. The fact a draft platform of one of the two major political parties includes an anti-ethanol plank is evidence of this effort. When the dust clears and the makeup of the next administration and Congress comes into view, it simply will not be enough to say we have done our job and wait two more years for the next election cycle. We must take this opportunity to educate new leaders and reeducate those reelected about the vitality of an American biofuels industry led by America’s ethanol producers.

Bob Dinneen President and CEO Renewable Fuels Association 26

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

RFA UPDATE

EPA makes right decision, denies RFS waiver In August the U.S. EPA denied Texas Gov. Rick Perry’s renewable fuels standard (RFS) waiver request, which would have reduced the 2008 RFS by 50 percent to 4.5 billion gallons. Perry submitted the request in April. More than 15,000 comments were submitted to the EPA during the 30day public comment period. In denying the request, EPA Administrator Stephen Johnson said “The renewable fuels standard is not causing severe economic harm.” The required total volume of renewable fuels to be blended into the nation’s fuel supply will remain at 9 billion gallons for 2008 and 11.1 billion gallons in 2009. “At the end of the day, the EPA rejected the waiver request for failing to present sufficient evidence showing that the RFA was causing severe harm to the U.S. or even to the Texas economy,” RFA President Bob Dinneen said. “Rightly, the EPA took notice of studies by Texas A&M University, Purdue University and others which clearly state that skyrocketing oil prices are the main driver behind higher corn prices. These studies also lay bare the fact that reducing the RFS would have minimal impact on the prices of corn.”

Harvard University’s Kennedy School of Research released a report, “Biofuels and Sustainable Development,” that concludes the development of sustainable biofuels requires a firm commitment to the renewable fuels standard as well as other biofuels incentives. The report is based on a discussion on the impact of biofuels on the global environment and economy among 25 of the world’s top experts on biofuels, economic development and ecology. “Despite pressure from biofuel critics, governments should avoid simplistic and precipitous changes in course such as rollback or moratoria on existing biofuels mandates or incentives,” the report said. The report urges governments to “initiate an orderly, innovation-enhancing transition toward incentives targeted on multi-dimensional goals for biofuels development. These goals should include poverty alleviation, reducing new greenhouse gas emissions, increasing use of non-food feedstocks, attaining sustainable biofuel production targets and conserving biodiversity.” Removing current mandates would have a “chilling effect on the nascent biofuel industry,” the report said.

Corn crop on near-record pace Despite devastating and widespread June floods, U.S. corn farmers in mid-August were on pace to produce the second-largest corn crop in the country’s history. The USDA’s mid-August World Agriculture Supply and Demand Estimates said U.S. corn farmers were also poised to produce the second-highest average yield. Average yield was estimated at 155 bushels per acre, up from July’s estimate of 148.4. Production was estimated at 12.288 billion bushels. “America’s farmers have once again responded to adversity, poised to produce the second-largest corn crop in American history,” Dinneen said. “Their historic response should go a long way in silencing those Chicken Littles who sought to capitalize on the devastation of this summer’s flooding to undermine and abandon America’s movement toward cutting our dependence on foreign oil.”

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

www.ethanolRFA.org

Harvard report cites biofuels importance

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BIObytes

INDUSTRYNEWS

Ethanol News Briefs Airgas to collocate carbon dioxide plant Airgas Inc., the largest distributor of industrial, medical and specialty gases in the United States, has agreed to build a 450-ton-per-day liquid carbon dioxide plant at First United Ethanol LLC, a 100 MMgy ethanol plant in Camilla, Ga. The carbon dioxide facility will refine the ethanol coproduct for use in the food, commercial and beverage industries. Airgas expects the refinery to be operational by late 2009. The ethanol plant is scheduled to begin operating in October.

Aventine applies for expansion project Aventine Renewable Energy Inc. applied to the Illinois Environmental Protection Agency for a revised construction permit that would allow for expansion of its 56.5 MMgy ethanol plant in Pekin, Ill. Aventine’s proposal, which was pending final approval by the IEPA at press time, would expand the company’s current capacity to 63.5 MMgy. The agency has determined that overall emissions from the facility wouldn’t increase beyond what is already permitted, according to IEPA spokeswoman Jill Watson.

Milwaukee council rejects resolution to oppose RFS At a July hearing of the Milwaukee Common Council’s Judiciary and Legislation Committee, the Wisconsin Bio Industry Alliance led an effort to educate committee members on the benefits of biofuels. The hearing was called to consider passing a resolution that would allow the committee to oppose the federal renewable fuels standard. After ethanol supporters presented testimony on the benefits of biofuels, committee members elected to take no action on the resolution.

U.S. ethanol production to meet 2008 RFS targets The ethanol industry is on track to meet the 9 billion-gallon renewable fuels standard (RFS) in 2008, despite the threat of a waiver request submitted in April. In August, the U.S. EPA denied the request from Texas Gov. Rick Perry to reduce the RFS requirement set forth in the Energy Independence & Security Act of 2007 by 50 percent. Currently, 175 ethanol plants in the United States have a Note: measured in billion gallons total production capacity of SOURCE: RENEWABLE FUELS ASSOCIATION 10.57 billion gallons. In late August, the U.S. Energy Information and milo for feedstocks may qualify, but the Administration released its oxygenate report, proportion of milo used isn’t clearly known. Whether the ethanol produced by those which stated that ethanol facilities produced 17,544 barrels of ethanol in June, bringing the plants will qualify as advanced biofuels by year’s production total to 4.25 billion gallons meeting the 50 percent GHG reduction target so far. However, the RFS isn’t a production will depend on the methodology chosen by mandate but rather a consumption mandate the EPA to calculate GHG emissions. “The that applies to refiners, blenders and EPA is still working on its GHG criteria,” said Matt Hartwig of the Renewable Fuels importers of fuels. For 2009, the RFS calls for 10.5 billion Association. “The ethanol industry remains gallons of conventional biofuel and 600 mil- intimately involved. This is important work as lion gallons of advanced biofuel, which it will likely inform debate about future lowincludes 500 million gallons of biomass-based carbon legislation.” Questions still remain as to whether the diesel and 100 million gallons of undifferentiated advanced biofuel. The industry should cellulosic ethanol projects currently under have no problem meeting the increased con- development will be on line and producing ventional biofuel standard, especially with enough ethanol to meet the 2010 RFS, which another 3 billion gallons of capacity under calls for 100 million gallons of cellulosic bioconstruction. However, the advanced biofuel fuel to achieve 60 percent GHG reductions. category presents a new issue for the industry. The EISA legislation gives the EPA the Advanced biofuels in the legislation are authority to lower the RFS targets and adjust defined as anything other than corn-starch- the GHG reduction targets if the requirebased ethanol that achieves a 50 percent ments can’t be met. For example, cellulosic greenhouse gas (GHG) emission reduction biofuels that don’t meet the 60 percent GHG when compared with fossil fuels. Thus, there reduction target can be counted as advanced is the potential for existing ethanol plants biofuels if they meet the 50 percent target. using feedstocks other than corn to have their —Susanne Retka Schill production qualify for the advanced biofuels category. Ethanol plants that use both corn

continued on page 32 30

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

INDUSTRYNEWS

EPA to revise RFS in 2009 The U.S. EPA won’t be releasing regulations to implement the second stage of the renewable fuel standard (RFS), enacted in the Energy Independence & Security Act of 2007, until mid-2009. Robert Meyers, principal deputy assistant administrator in the EPA’s Office of Air and Radiation, told the U.S. Senate Committee on Environment and Public Works in July that the “RFS2” includes new elements that add complexity to the program. The EPA’s final ruling was previously to be issued by Jan. 1. The RFS was first enacted in the Energy Policy Act of 2005 and called for 7.5 billion gallons of renewable fuels consumption by 2012. RFS2 increases the total mandated renewable fuel volumes to 36 billion gallons per year by 2022. Several other changes were made, as well. For example, the original RFS established two categories of renewable fuels: conventional biofuel and cellulosic ethanol. RFS2 increases the number of renewable fuels categories to four: conventional biofuel, advanced biofuels, biomass-based diesel and cellulosic biofuels. Part of the delay in RFS2 regulation will stem from the need to establish systems to track the production of these fuels and demonstrate compliance with four separate standards, Meyers said. RFS2 will also include offroad gasoline and diesel fuel for the first time. Cellulosic biofuels will make up most of the new requirement under the RFS2. EISA increased the cellulosic biofuel mandate from 250 million gallons to 1 billion gallons by 2013, with additional annual increases to 16 billion gallons in 2022. In order to achieve this level of production, the EPA will have to make many critical determinations. For example, according to

Meyers, EISA authorizes the EPA in certain circumstances to adjust the cellulosic biofuel standard to a level lower than what was specified in the law. However, it also requires that if the EPA adjusts the standard, it must also make credits available for compliance purposes and provide instructions on how to establish a specific price for these credits. EISA also requires the EPA to apply life cycle greenhouse gas (GHG) standards to each category of renewable fuel. Meyers said the EPA has done a substantial amount of work on life cycle analysis over the past year, and has made significant advances in its methodology, data inputs and assessment of land use changes. However, he anticipates extensive comments from all stakeholders on both life cycle analysis inputs and methodology before these rules are put into place. RFS2 also changed the definition of renewable fuel feedstocks in a fundamental manner. The new law limits the crops and crop residues used to produce renewable fuel to those grown on land cleared or cultivated, either actively managed or fallow, and non-forested before the enactment of EISA. Meyers said the EPA will have to have extensive contact with the USDA, the U.S. Trade Representative, and farmers and lands to create appropriate and enforceable regulations on this. The EPA has started these discussions, Meyers said, and plans to continue this dialogue throughout the regulatory process. EISA also requires that forest-related slash and tree thinnings used for renewable fuel production not come from federal forestlands.

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

—Jerry W. Kram

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INDUSTRYNEWS

Ethanol News Briefs

Mid-Missouri Energy inks landfill gas deal

continued from page 30

Louisiana to pursue hydrous ethanol, blender pumps The Louisiana Department of Agriculture and Forestry’s Division of Weights and Measures will monitor the performance of blender pumps and hydrous ethanol blends in separate four-year pilot programs established in the state’s new advanced biofuels initiative. The initiative calls for a decentralized network of small advanced biofuel plants and offers income tax credits on the first 10 MMgy of production through 2012. The legislation targets state-grown crops other than corn that require less water and nitrogen than corn while being tolerant to extremes in moisture, high temperatures and marginal soils.

USDA: No penalty-free release for CRP Citing the summer drop in commodity prices and the built-in reduction in Conservation Reserve Program acres in the next few years, Secretary of Agriculture Ed Schafer said the USDA won’t allow land to be released penalty-free from the CRP. Schafer pointed out that the 2008 farm bill lowered the cap on the total number of continued on page 34

Minneapolis, Minn.-based U.S. Energy Services Inc. and Chicago-based Integrys Energy Group Inc. have entered into an agreement with Johnson County Landfill in Shawnee, Kan., that will supply renewable landfill gas to farmer-owned cooperative Mid-Missouri Energy Inc.’s 40 MMgy ethanol plant in Malta Bend, Mo. U.S. Energy Services estimates that the deal, which was announced in late July, will displace more than 90 percent, or approximately 3,300 million British thermal units of the natural gas used at the plant each day. U.S. Energy Services will provide MidMissouri Energy with biogas management services, including economic use impact analysis, thermal value management services and offtake agreement negotiation. U.S. Energy Services works with energy providers to manage natural gas, electricity and alternative fuel needs. Integrys Energy Services is a nonregulated energy supply and services company that serves residential, commercial, industrial and wholesale customers in developed competitive markets in the United States and Canada. Mid-Missouri Energy General Manager Greg Bower said the organizations were able to negotiate a price that allows the co-op to offset part of its gas costs by using the renewable fuel to power the plant.

PHOTO: MID-MISSOURI ENERGY INC.

BIObytes

Mid-Missouri Energy Inc.'s ethanol plant is located in Malta Bend, Mo.

The operation will move the pipeline-quality gas approximately 150 miles along Panhandle Eastern Pipeline’s interstate pipeline from the 800acre Johnson County Landfill, which is owned and operated by Deffenbaugh Industries Inc., to the ethanol plant. First opened in 1995, the Johnson County Landfill is scheduled to close in 2027 due to exhausted capacity. Although many ethanol plants are displacing part of their thermal requirements, no other plants displace as high a percentage of its fossil fuels with a waste-derived fuel, according to U.S. Energy Services. —Anna Austin

INDUSTRYNEWS

Automakers work to expand ethanol use

PHOTO: JOHN F. MARTIN, GENERAL MOTORS CORP.

involves a gradual progression in fuel General Motors Corp., the usage from petroleum to biofuels, largest automaker in the world, electricity and ultimately hydrogen. posted a $15.5 billion loss for the The company’s current view is that second quarter of 2008, the thirdbiofuels—specifically ethanol— worst quarterly performance in the remain the best near-term energy company’s history. Despite the lossalternative to oil. es, Candace Wheeler, a technical felGM plans to increase the numlow at GM who has focused on susber of flexible-fuel vehicle (FFV) tainable transportation for the past models it produces to 18 in 2009 and 12 years, said the company is comsaid that half of its total production mitted to its “advanced technology will be FFVs by 2012, provided that strategy,” which includes flexiblethe infrastructure is in place to supfuel vehicle manufacturing and the port it. promotion of alternative fuels such Ford Motor Co. has also worked as E85. General Motors says half of its total vehicle production will be FFVs to expand E85 infrastructure in In July, the company formed by 2012. recent years. The company has a an alliance with the National for E85 pumps. The company has expertise long-standing relationship with VeraSun Governors Association to expand E85 infrastructure and availability throughout eight in expanding E85 availability. According to Energy Corp., one of the largest ethanol prounspecified states within the next year. “The GM, the company has helped to bring 300 ducers in the world. In 2006, Ford and infrastructure development for E85 needs to E85 pumps on line over the past three years. VeraSun partnered to open the Midwest E85 GM also recently hosted a one-day “bio- Corridor, allowing travelers to drive between expand now if the nation is to be ready for the significant growth in ethanol coming fuels backgrounder” for media representa- Kansas City, Mo., and Chicago along from new sources,” said Beth Lowry, GM tives to promote biomass-based biofuels, Interstate 55 and Interstate 70, fueling excluvice president of environment, energy and which the company sees as one step in the sively with E85. Ford currently offers seven safety policy. GM will contribute to the ladder to reaching energy independence. The FFV models and plans to add more in 2009. expansion project by connecting fuel retailers biofuels session included presentations from with available grants for infrastructure instal- plant genomics firm Ceres Inc., Mascoma —Kris Bevill Corp. and BlueFire Ethanol, as well as GM. lations and conversions, as well as offer its assistance in determining the best location Wheeler told attendees that GM’s strategy

SOMETIMES, CHOOSING THE WRONG PATH CAN COST A LOT MORE THAN YOU THINK.

In the biofuels industry, you make decisions every day that can help — or hinder — your future success. At Kennedy and Coe, we can help ensure that you capitalize on every opportunity. Our knowledge and experience in the industry can help you identify opportunities that can signiﬁcantly impact your cash ﬂow each year. So you can be sure that the path you choose is the right one. Call Jesse McCurry at 800-303-3241 or visit us at www.kcoe.com.

Not your average accountants.SM The “e” mark and the “stylized e” are registered service marks of the Ethanol Promotion and Information Council. Used with permission.

ETHANOL PRODUCER MAGAZINE OCTOBER 2008 KAC.10442_EPM_Dir_7.5x3.375_4C 1

33 7/24/08 11:08:47 AM

BIObytes

INDUSTRYNEWS

Ethanol News Briefs

acres allowed in the CRP program from 39.2 million to 32 million acres. With 34.7 million acres now enrolled, contracts on 1.1 million acres were set to expire Sept. 30. In a year, another 3.8 million acres in contracts will expire, followed by 4.4 million acres in 2010.

MSW-to-ethanol projects announced Fulcrum Bioenergy Inc. plans to build a $120 million, 10 MMgy waste-to-energy plant called Sierra BioFuels in Storey County, Nev. Construction will begin later this year with operation slated for 2010. The plant will convert 90,000 tons of municipal solid waste (MSW) into synthesis gas annually. The gas will be then be converted into ethanol. Similarly, British chemical company INEOS announced plans to begin producing commercial quantities of ethanol from MSW within two years.

Report: Miscanthus requires less acreage for ethanol University of Illinois researchers reported in the journal Global Change Biology that continued on page 36

Cellulosic pilot plant starts operation in Montana AE Biofuels Inc. brought its pilot-scale ethanol plant in Butte, Mont., on line in August and since then has begun work to prove out its two individual cold-cook enzyme platforms. “We’re trying to differentiate ourselves from our competitors, so by having two enzymes—one for starch and one for cellulose—we can run an integrated facility where you use both feedstocks,” said Todd Casper, vice president of the company’s project development division. Clifford Bradley, coinventor of the AE Biofuels pilot process, said the company’s first task is to perfect the simultaneous integration of starch and cellulose hydrolysis. “We’re talking corn and corn stover,” he told EPM. “We designed the cellulose pretreatment system to use a conventional jet cooker to keep capital costs down. We can do an alkaline pretreatment or an acid, but we like alkaline. It’s milder and less messy.” He said the company’s technology can obtain cellulases capable of hydrolyzing both cellulose and hemicellulose from a single culture. For corn stover, the gallons-per-ton conversion ratio is still unknown, but it will be the subject of ongoing work in the Butte plant. Bradley said the company achieved 84 gallons of ethanol per ton of wheat straw, which included 62 gallons from the cellulose fraction and up to 22 gallons from the pentose sugars. The plant is scaled to produce up to 150,000 gallons of ethanol per year.

PHOTO: AE BIOFUELS INC.

continued from page 32

AE Biofuels’ new 150,000-gallon-per-year pilot plant will be used by the company to optimize two cold-cook enzyme platforms, one for corn and the other for biomass hydrolysis.

Later this year, the company will test sugarcane bagasse. “Our idea is that by using both enzyme systems and converting a plant to no-cook, we can integrate corn- and cellulose-derived ethanol and actually put them in the same fermentor,” Bradley said. Work to optimize pentose fermentation is also moving forward. Still, AE Biofuels isn’t excluding conventional ethanol plants. Andy Foster, president of AE Biofuels subsidiary American Ethanol, said the company’s technology can most immediately be optimized in existing facilities. “Ethanol producers are a captive audience, and they’re constantly looking for ways to reduce operating expenses,” he said. —Ron Kotrba

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

INDUSTRYNEWS

DOE backs cellulosic ethanol, energy policies The U.S. DOE recently doled out a variety of funds to accelerate the development of cellulosic ethanol production. The recipients, which included academia, businesses and an association, are exploring many feedstock options and process technologies to help our country reduce its dependence on foreign oil. On July 31, the DOE awarded grants totaling $10 million to 10 universities and research institutes under a joint DOE-USDA program that began in 2006 to advance fundamental research in biomass genomics, and further the use of cellulosic plant material for bioenergy and biofuels production. Colorado State University was awarded $1.5 million, the highest amount, to explore rice plants, according to Jan Leach, a professor in the department of bioagricultural sciences and pest management at CSU, and lead researcher on the project. For a complete list of award winners, read the August EPM Web exclusive at www .ethanolproducer.com. Amherst, Mass.-based SunEthanol Inc. was awarded a $750,000 contract from the DOE in August, the company’s fourth from the DOE this year. The award, a follow-up to the successful completion of a one-year Phase I grant, will help advance the development and commercialization of the company’s patented Complete Cellulosic Conversion process that uses its QMicrobe technology, which SunEthanol claims can convert a wide range of plant and organic materials directly into ethanol. “The projects are underway in stages,” said Jef Sharp, SunEthanol’s executive vice president. “Things are moving very quickly.”

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

BlueFire Ethanol Fuels Inc. recently received its first installment of a DOE grant initially awarded in March 2007 for the development of BlueFire Mecca LLC, a 17 MMgy cellulosic ethanol plant near Palm Springs, Calif. The facility will use wood wastes and other refuse-derived biomass as feedstocks. According to BlueFire President, Chairman and Chief Executive Officer Arnold Klann, the company intends to break ground on the plant next year. Start-up is expected before 2010. To help with this endeavor, BlueFire announced Aug. 1 that it had signed an agreement with Amalgamated Research Inc. for the exclusive rights to its Simulated Moving Bed Chromatographic Separation Technology. The technology will specifically aid BlueFire’s acid hydrolysis process, which converts cellulose to ethanol, by recovering 99 percent of the entrained sugars in the acid/sugar stream. “This is history-making, and we’re excited because we believe we’re going to be building many more of these facilities in the future,” Klann said. In an effort to support energy policies at the state level, the DOE awarded $850,000 to the National Governors Association, which is seeking to develop and deploy cleaner sources of energy to power vehicles, homes and workplaces more efficiently. This goal is part of a clean energy initiative set forth by Minnesota Gov. Tim Pawlenty, whose NGA chairmanship ended July 14. The DOE funding will support one year of the five-year plan, and more funding will be issued in the future, according to Christopher Cashman, spokesman for the NGA. —Bryan Sims

INDUSTRYNEWS

BIObytes Ethanol News Briefs continued from page 34

Congressmen show pipeline support

using miscanthus to produce ethanol requires less than half the acreage of corn or switchgrass. To offset 20 percent of the nation’s consumption of gasoline, only 9.3 percent of current agricultural acreage would be required to grow miscanthus versus 25 percent for corn or switchgrass, the report said. Researchers found that miscanthus yields more biomass than corn, produces green leaves earlier and stays green longer.

Pipeline Act, which would amend the Several congressmen from the Energy Policy Act of 2005 to provide Midwest are pushing for legislation loan guarantees for projects to construct that could improve the feasibility of renewable fuel pipelines. It would also ethanol pipelines. In particular, two increase the loan guarantee rate to 90 pieces of legislation were introduced percent. The act was referred to various on both sides of Congress in July and House committees, including the have been referred to the applicable Committee on Energy and Commerce, committees. Harkin and the Committee on Transportation U.S. Sens. Tom Harkin, D-Iowa, and Infrastructure. On Aug. 20, Boswell and Richard Lugar, R-Ind., introduced held a press conference in Iowa to highthe Biofuels Pipeline Act of 2008, light the need to improve the infrastrucwhich would give pipeline owners that ture for transporting ethanol from the move ethanol the same tax benefits Midwest to the rest of the country. they receive for moving petroleum Representatives from Magellan Pipeline products. Currently, a provision in the Co., the Iowa Corn Growers tax code prevents publicly traded partLugar Association and the Iowa Renewable nerships (PTPs), which build and operate most liquid pipelines, from moving forward Fuels Association also participated. Also in July, South Dakota Gov. Mike Rounds with biofuels projects. Under current laws, PTPs must earn 90 percent of their income from explo- appointed seven people to the South Dakota ration, transportation, storage or marketing of Underground Pipeline Task Force, which was credepletable natural resources, including oil, gas and ated to review the status of existing and proposed coal. Renewable fuels aren’t currently included in water, natural gas, ethanol and refined petroleum the law. The act would change the tax code, allow- pipelines in South Dakota. It will also assess the ing PTPs to earn qualified income from transport- adequacy of state laws and regulations regarding ing, storing or marketing any renewable liquid fuel those pipelines. The task force held its first meetapproved by the U.S. EPA. The measure was ing Aug. 14. It must present findings to Rounds by Dec. 1. referred to the Senate Finance Committee. U.S. Reps. Leonard Boswell, D-Iowa, and Lee —Erin Voegele Terry, R-Neb., introduced the Renewable Fuel

Idaho Ethanol Processing to undergo improvements Idaho Ethanol Processing Inc., a 5 MMgy ethanol plant in Caldwell, Idaho, that closed in 2004 will undergo changes after ED&F Man Group reopened the facility in 2007. Improvements will cost $3 million to $5 million, and are expected to boost production 30 percent by targeting pinch points in the old plant and focusing on improved energy efficiency. The facility, being leased from J.R. Simplot, uses potato, beverage and sugar industry waste as feedstocks. EP

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ETHANOL PRODUCER MAGAZINE OCTOBER 2008

INDUSTRYNEWS

Wood-to-ethanol demo plant comes on line

PHOTO: GULF COAST ENERGY INC.

necessary funding for the Gulf Coast Energy Inc. endeavor. began operating its demonstraHazen said the company’s tion-scale wood gasification plant process can produce 215 gallons in Livingston, Ala., in August. The of ethanol per dry ton of wood synthesis gas that it produces from waste. Petelos said Hoover has the wood will be converted into enough wood waste to produce ethanol, according to Scott Hazen, 350,000 to 400,000 gallons of executive vice president for the ethanol per year. company. Initially, the company will The demonstration plant’s process only wood, but it could main feedstock source will be use other feedstocks, such as wood waste from the city of switchgrass, Hazen said. Hoover, Ala., a suburb of However, converting wood to Birmingham located 100 miles ethanol is a natural choice in northeast of Livingston. EightyAlabama, he added. “With the five percent of Hoover’s city fleet cost of corn and the cost of runs on renewable fuels, including 180 vehicles that use ethanol, Gulf Coast Energy Inc., a demonstration-scale wood gasification plant in processing ethanol with tradiLivingston, Ala., began operation in August. tional technologies, plus the according to Tony Petelos, mayor of Hoover, and Gulf Coast Energy will be sell- It would be at least enough to satisfy Hoover's yields that we get with our process being signifing the ethanol that it produces back to Hoover. needs, plus any additional needs that we have.” icantly higher than any we found out there, it Hoover recently delivered eight tons of wood Hazen added that the venture is “not complete- was just a lot of due diligence that pointed us in ly a commercial enterprise, but we actually will this direction,” he said. “Being in Alabama, the waste to the Livingston facility. wood industry is very established. All of the harHazen said ethanol production at the plant be selling product out from there.” The Gulf Coast Energy project has been vesting and transportation issues have been will be intermittent. “We have a commitment with Hoover to process what we get from them in the works for two-and-a-half years, Hazen worked out. It was an easy choice for us.” through our demonstration plant, and so we'll said. The company was formed in April 2007. —Ryan C. Christiansen run it at least enough to do that,” he said. “Plus, While the demonstration plant is operational, for any [research and development] that we the company will begin designing a commercialneed to do, we will have some other feedstock. scale facility and will work to obtain all of the

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NEW PROJECT

PROJECT COMPLETE

PLANT EXPANSION

EXPANSION COMPLETE

INDUSTRY

Ethanol Plant Construction Several Facilities Near Completion

espite the financing challenges that proposed ethanol plants are facing today, the facilities that secured funding and began construction have been moving forward and meeting time lines—a positive sign among negative press

coverage in the mass media these days. In this month’s list, for example, five facilities have started production, and 13 plan to do so by the end of October. PHOTO: NORTHEAST BIOFUELS LLC

Northeast Biofuels LLC started production at its 100 MMgy cornbased ethanol plant in Volney, N.Y., in early August. The facility is the easternmost ethanol plant in the United States and should help to increase availability in the Northeast. Also in August, VeraSun Hartley LLC, a 110 MMgy corn-based ethanol plant in Hartley, Iowa, announced start-up. Construction of this facility was completed in June, but the company announced it would Northeast Biofuels LLC

delay production until market conditions improved. It did the same with its ethanol plants in Hankinson, N.D., which started up a month later, and Welcome, Minn. In the company’s second-quarter earnings report

United Ethanol LLC in Camilla, Ga.; and Poet Biorefining-Marion in

released Aug. 11, it said the Welcome facility is aiming for a September

Marion, Ohio, plan to start production in October. Cardinal Ethanol LLC

start-up, along with its facility in Dyersville, Iowa. VeraSun’s only other

in Union City, Ind., said it plans to start construction this fall. Together,

ethanol plant currently under construction in Janesville, Minn., is slat-

these 13 facilities total approximately 1.07 billion gallons of ethanol.

ed for completion by the end of the year.

After these plants have started production, only 22 plants will remain

Patriot Renewable Fuels LLC, a 100 MMgy facility in Annawan,

under construction.

Ill., started grinding corn in the last week of August. White Energy

One unique facility currently on the list is Louisiana Green Fuels

Plainview LLC was confirmed at press time to have been operational

LLC in Lacassine, La. According to press contact Randal Johnson, the

since May.

company will be using sugarcane as a feedstock in the same manner

Poet Biorefining-North Manchester hosted its grand opening Sept.

as the South American ethanol industry. The feedstock will be supplied

11, celebrating the start-up of its 68 MMgy corn-based facility in North

by an adjacent facility and various state sugar mills. The ethanol facil-

Manchester, Ind.

itiy will also process sweet sorghum, which has been planted and will

If all 13 plants scheduled to start production by the end of October

be harvested twice a year for sugar extraction. The sugarcane bagasse

reach their goals, then this plant construction list will look drastically dif-

and other solids left over from processing will be burned in a boiler to

ferent in the coming months. IGPC Ethanol Inc. in Aylmer, Ontario;

generate steam power for the ethanol plant and adjacent sugar plant.

Indiana Bio-Energy LLC in Bluffton, Ind.; Pacific Ethanol Stockton LLC

The company will also be able to sell power back to the local grid and

in Stockton, Calif.; Platinum Ethanol LLC in Aurthur, Iowa; Poet

produce biofertilizers with the remaining waste. This is the first of four

Biorefining-Fostoria in Fostoria, Ohio; Route 66 Ethanol LLC in

facilities that the company plans to build in the state. After the other

Tucumcari, N.M.; and the two VeraSun facilities in Dyersville and

facilities are built, the facility in Lacassine will be expanded from 25

Welcome planned to start production by the end of September.

MMgy to 100 MMgy. The goal is to meet this final goal by 2012.

Bridgeport Ethanol LLC in Bridgeport, Neb.; Cilion Ethanol LLC in Keyes, Calif.; Ethanol Grain Processors LLC in Obion, Tenn.; First

—Jessica Sobolik

To provide updates to this list, contact Bryan Sims at (701) 738-4950 or bsims@bbiinternational.com.

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

Construction Represents 3.6 Billion Gallons Annually

Archer Daniels Midland Co. Location General contractor Process technology Capacity Feedstock

Cedar Rapids, Iowa undeclared

undeclared 275 MMgy corn

Bridgeport Ethanol LLC Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Archer Daniels Midland

undeclared undeclared June 2007 first quarter 2010

Synopsis of progress N/A

Location Design/builder Process technology Capacity Feedstock

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Poet Ethanol Products Colorado Agri Products

undeclared September 2007 October 2008

Synopsis of progress Piping and electrical work is nearly complete. Start-up is slated for Oct. 16.

Archer Daniels Midland Co. Location General contractor Process technology Capacity Feedstock

Bridgeport, Nebraska ICM Inc. ICM Inc. 50 MMgy corn

Columbus, Nebraska undeclared

undeclared 275 MMgy corn

Cardinal Ethanol LLC Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Archer Daniels Midland

undeclared undeclared July 2007 third quarter 2009

Synopsis of progress N/A

Location Design/builder Process technology Capacity Feedstock

Union City, Indiana Fagen Inc. ICM Inc. 100 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Murex CHS Inc. N/A February 2007 fall 2008

Synopsis of progress Work on rail loop was slated for completion by the end of August. Gas lines are complete. Distillers grains load-out swing arms have been placed in grain-receiving area. Overhead doors are being constructed, and all conveying equipment has been placed on silos for distillers grains and grain-drying area. Piping is being installed throughout tank farm. The stack is erected, and most ductwork and piping are underway.

Aventine Renewable Energy-Aurora West LLC Location General contractor Process technology Capacity Feedstock

Aurora, Nebraska Kiewit Energy Co. Delta-T Corp. 113 MMgy corn

Ethanol marketer Aventine Renewable Energy Distillers grains marketer Aventine Renewable Energy Carbon dioxide marketer undeclared Broke ground September 2007 Target start-up date first quarter 2009

PHOTO: CARDINAL ETHANOL LLC

Synopsis of progress Construction was on schedule, but no further information was available at press time.

Aventine Renewable Energy-Mt. Vernon LLC Location General contractor Process technology Capacity Feedstock

Mt. Vernon, Indiana Kiewit Energy Co. Delta-T Corp. 113 MMgy corn

Ethanol marketer Aventine Renewable Energy Distillers grains marketer Aventine/Consolidated Grain and Barge Carbon dioxide marketer undeclared Broke ground September 2007 Target start-up date first quarter 2009

Cardinal Ethanol LLC

Synopsis of progress Construction was on schedule, but no further information was available at press time.

Bionol Clearfield LLC Location Design/builder Process technology Capacity Feedstock

Clearfield, Pennsylvania Fagen Inc. ICM Inc. 110 MMgy corn

Cilion Inc. Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Bionol Clearfield Land Oâ&#x20AC;&#x2122;Lakes N/A February 2008 December 2009

Synopsis of progress Foundations are being poured.

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

Location General contractor Process technology Capacity Feedstock

Keyes, California Harris Construction Praj Industries Ltd. 55 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Eco-Energy Western Milling N/A July 2006 October 2008

Synopsis of progress Piping and electrical work continues. Staff hiring is complete.

Clean Burn Fuels LLC Location General contractor Process technology Capacity Feedstock

Raeford, North Carolina Biofuels Design/Clean Burn Fuels Katzen International 60 MMgy corn

GreenField Ethanol Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

undeclared undeclared undeclared January 2008 September 2009

Synopsis of progress Distillers grains building is erected. Equipment is on-site, along with more than 100 contract workers. Grain silos are being built.

Location General contractor Process technology Capacity Feedstock

Johnstown, Ontario SNC-Lavalin Group ICM Inc. 200 MMly (53 MMgy) corn

Goodland, Kansas JMC Engineering/Agri-Systems JMC Engineering/Agri-Systems

20 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

undeclared undeclared N/A June 2006 first quarter 2009

Location Designer/builder Process technology Capacity Feedstock

Ethanol marketer Aventine Renewable Energy Distillers grains marketer undeclared Carbon dioxide marketer N/A Broke ground December 2006 Target start-up date October 2008

Location Designer/builder Process technology Capacity Feedstock

Eco-Energy undeclared N/A July 2007 fourth quarter 2008

Shell Rock, Iowa Fagen Inc. ICM Inc. 110 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Eco-Energy undeclared N/A July 2007 first quarter 2009

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

RPMG CHS Inc. N/A November 2007 May 2009

Highwater Ethanol LLC Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Eco-Energy Palmetto Grain Brokerage

Airgas Inc. January 2007 October 2008

Synopsis of progress Construction is approximately 95 percent complete in the process area. Construction of the energy center is approximately 90 percent complete. Construction of the water treatment building is approximately 95 percent complete. Construction of the grains-handling area is approximately 85 percent complete.

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Synopsis of progress N/A

First United Ethanol LLC Camilla, Georgia Fagen Inc. ICM Inc. 100 MMgy corn

Menlo, Iowa Fagen Inc. ICM Inc. 110 MMgy corn

Hawkeye Renewables

Synopsis of progress Electrical and piping work is nearly complete. Various loose ends are being tied up.

Location Design/builder LLCProcess technology Capacity Feedstock

undeclared October 2006 December 2008

Synopsis of progress N/A

Ethanol Grain Processors LLC Obion, Tennessee Fagen Inc. ICM Inc. 100 MMgy corn

Commercial Alcohols

Hawkeye Renewables

Synopsis of progress Process building is erected, and nearly all equipment is installed there. Piping is nearly complete, and electrical work is underway. Work continues on connecting the grain-handing area to the process building. Construction of the water treatment and water cooling systems, and the distillers grains area, is also underway.

Location Design/builder Process technology Capacity Feedstock

Commercial Alcohols

Synopsis of progress Construction of corn silo is complete. Work continues on the distillers grains and water buildings.

E Caruso LLC Location General Contractor Process technology Capacity Feedstock

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Location Design/builder Process technology Capacity Feedstock

Lamberton, Minnesota Fagen Inc. ICM Inc. 55 MMgy corn

Synopsis of progress Phase II site preparation, including underground piping, is approximately 80 percent complete. Most foundation work is complete. Process building is approximately 40 percent complete. Off-site water mains are installed. Water treatment and fire protection systems are scheduled to be finished by the end of October. Rail siding and spur are being installed.

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

Holt County Ethanol LLC Location General contractor Process technology Capacity Feedstock

O'Neill, Nebraska Adams Construction Vogelbusch 100 MMgy corn

Kawartha Ethanol Inc. Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target completion date

undeclared undeclared N/A July 2007 late 2008

Synopsis of progress N/A

Location General contractor Process technology Capacity Feedstock

Havelock, Ontario Profab International Delta-T Corp. 80 MMly (21 MMgy) corn

Lawler, Iowa ICM Inc. ICM Inc. 100 MMgy corn

Louisiana Green Fuels LLC

Ethanol marketer Green Plains Renewable Energy Distillers grains marketer CHS Inc. Carbon dioxide marketer N/A Broke ground May 2007 Target start-up date March 2009

Synopsis of progress Foundation work is underway. Silos are erected, and buildings are being erected.

Location General contractor Process technology Capacity Feedstock

Lacassine, Louisiana Praj Industries Ltd. Louisiana Green Fuels 25 MMgy sugarcane/sweet sorghum

Location Aylmer, Ontario General contractor North America Construction Ltd. Process technology ICM Inc. Capacity 150 MMly (40 MMgy) Feedstock corn

undeclared N/A undeclared April 2008 mid-2009

NEDAK Ethanol LLC Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target completion date

Eco-Energy Furst-McNess undeclared August 2007 September 2008

Synopsis of progress All major construction is complete, and some minor wiring is being finished. Corn is arriving on-site.

Location General contractor Process technology Capacity Feedstock

Ethanol marketer Aventine Renewable Energy Distillers grains marketer Indiana Bio-Energy Carbon dioxide marketer N/A Broke ground November 2006 Target start-up date September 2008

Synopsis of progress At press time, corn grinding was slated to start Sept. 10. Leading up to that, piping was complete, and electrical work continued. Scale house and roads were nearly complete. Water, equipment and instrumentation testing was underway.

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

Atkinson, Nebraska Delta-T Corp. Delta-T Corp. 44 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Eco-Energy Frahm and Deitloff N/A June 2006 third quarter 2008

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Noble Americas Corp. Perdue Farms BOC Gases July 2006 August 2008

Synopsis of progress N/A

Project Complete

Indiana Bio-Energy LLC Bluffton, Indiana Fagen Inc. ICM Inc. 101 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Synopsis of progress Dirt work continues, and foundations for buildings are being poured. One of three equipment shipments is onsite.

IGPC Ethanol Inc.

Location Design/builder Process technology Capacity Feedstock

undeclared Thompson's Ltd. undeclared October 2007 February 2009

Synopsis of progress Process building and fermentation tanks are being erected. Distillers grains area is complete.

Homeland Energy Solutions LLC Location Design/builder Process technology Capacity Feedstock

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Location General contractor Process technology Capacity Feedstock

Northeast Biofuels LLC Volney, New York Lurgi Inc. Lurgi Inc. 100 MMgy corn

Synopsis of progress Production began in early August. Congratulations Northeast Biofuels LLC!

Northwest Renewable LLC Location General contractor Process technology Capacity Feedstock

Longview, Washington Makad Construction Corp. Lurgi Inc. 55 MMgy corn

Platinum Ethanol LLC Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

U.S. Ethanol LLC Lansing Trade Group undeclared November 2006 second quarter 2009

Synopsis of progress Preliminary foundation work is complete. Additional construction will continue once a redesign of the facility is complete.

Location Design/builder Process technology Capacity Feedstock

Gibson City, Illinois Fagen Inc. ICM Inc. 100 MMgy corn

Eco-Energy Ag Motion Inc. N/A October 2007 March 2009

Location Design/builder Process technology Capacity Feedstock

Kinergy Marketing Pacific Ag Products LLC

undeclared April 2007 third quarter 2008

Location Design/builder Process technology Capacity Feedstock

Poet Ethanol Products Poet Nutrition N/A August 2007 September 2008

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Murex CHS Inc. N/A February 2007 August 2008

Synopsis of progress Corn grinding began in the last week of August. Congratulations Patriot Renewable Fuels LLC!

Marion, Ohio Poet Design & Construction Poet Design & Construction 68 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Poet Ethanol Products Poet Nutrition N/A May 2007 October 2008

Synopsis of progress No further information was available at press time.

Project Complete

Patriot Renewable Fuels LLC Annawan, Illinois Fagen Inc. ICM Inc. 100 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Poet Biorefining-Marion Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Synopsis of progress According to the company’s second-quarter earnings statement released Aug. 11, construction of this plant is on-schedule and “nearing completion.” No other information was available at press time.

Project Complete

Fostoria, Ohio Poet Design & Construction Poet Design & Construction 68 MMgy corn

Synopsis of progress No further information was available at press time.

Pacific Ethanol Stockton LLC Stockton, California W.M. Lyles Co. Delta-T Corp. 50 MMgy corn

Hawkeye Gold LLC Hawkeye Gold LLC N/A November 2006 September 2008

Poet Biorefining-Fostoria Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Synopsis of progress “Fantastic” weather is allowing more than 200 workers on-site to quickly move ahead with construction. Grainreceiving building is erected. Rail and water pipelines are being installed. Work on distillers grains wet pad is underway. Cooling tower foundations are being poured.

Location General contractor Process technology Capacity Feedstock

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Synopsis of progress At press time, this project was still on track for a Sept. 18 start-up. The finishing touches were being applied in mid-August, including employee hiring and training, piping and electrical work, road paving, and building insulation.

One Earth Energy LLC Location Design/builder Process technology Capacity Feedstock

Arthur, Iowa Fagen Inc. ICM Inc. 110 MMgy corn

Location Design/builder Process technology Capacity Feedstock

Poet Biorefining-North Manchester North Manchester, Indiana Poet Design & Construction Poet Design & Construction 68 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Poet Ethanol Products Poet Nutrition N/A third quarter 2007 September 2008

Synopsis of progress At press time, a grand opening ceremony was scheduled for Sept. 11. Congratulations Poet Biorefining-North Manchester!

1-800-827-1662 • www.interstates.com

ELECTRICAL CONSTRUCTION • ELECTRICAL ENGINEERING • AUTOMATION • INSTRUMENTATION 44

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

Project Complete

Route 66 Ethanol LLC Location Tucumcari, New Mexico General contractor APS/United Stainless Process Technology Process technology United Stainless Process Technology Capacity 10 MMgy Feedstock corn/milo

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

undeclared undeclared N/A October 2007 September 2008

Synopsis of progress Finishing touches, including piping and electrical work, are being applied.

Location Design/builder Process technology Capacity Feedstock

Council Bluffs, Iowa ICM Inc. ICM Inc. 110 MMgy corn

Lansing Ethanol Group

Bunge N/A November 2006 December 2008

Location Design/builder Process technology Capacity Feedstock

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Provista VeraSun Energy undeclared January 2007 fourth quarter 2008

Location Design/builder Process technology Capacity Feedstock

Project Complete

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Welcome, Minnesota Fagen Inc. ICM Inc. 110 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

VeraSun Energy VeraSun Energy N/A November 2006 September 2008

Synopsis of progress Construction is complete, but start-up has been delayed until market conditions improve. In its second-quarter earnings report released Aug. 12, the company said it’s aiming for a third-quarter start-up.

VeraSun Dyersville LLC Dyersville, Iowa Fagen Inc. ICM Inc. 110 MMgy corn

Janesville, Iowa Fagen Inc. ICM Inc. 110 MMgy corn

VeraSun Welcome LLC Ethanol marketer Green Plains Renewable Energy Distillers grains marketer Verde Bioproducts Inc. Carbon dioxide marketer N/A Broke ground June 2007 Target start-up date December 2008

Synopsis of progress Progress is being made, but no further information was available at press time.

Location Design/builder Process technology Capacity Feedstock

VeraSun Energy VeraSun Energy N/A November 2006 August 2008

Synopsis of progress Construction continues, but no further information was available at press time.

Tharaldson Ethanol LLC Casselton, North Dakota Wanzek/Valley Engineering Vogelbusch 120 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

VeraSun Janesville LLC

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Synopsis of progress Road and rail work continues. Electrical work in grain-receiving area is underway. Administration building was slated to be occupied in early September.

Location Design/builder Process technology Capacity Feedstock

Hartley, Iowa Fagen Inc. ICM Inc. 110 MMgy corn

Synopsis of progress Construction was completed in June, but start-up was delayed until market conditions improved. Congratulations VeraSun Hartley LLC!

Southwest Iowa Renewable Energy LLC Location Design/builder Process technology Capacity Feedstock

VeraSun Hartley LLC

Provista VeraSun Energy undeclared November 2006 September 2008

Synopsis of progress Construction continues, but no further information was available at press time.

White Energy Plainview LLC

Location Design/builder Process technology Capacity Feedstock

Plainview, Texas Fagen Inc. ICM Inc. 100 MMgy corn/milo

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Murex The Scoular Co. N/A October 2006 May 2008

Synopsis of progress This facility started production in May. Congratulations White Energy Plainview LLC!

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:OU R P L A N T 48

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

hen Verenium Corp. officially opened its $60 million demonstration-scale cellulosic ethanol production facility just outside of Jennings, La., in May, it was a great day for the company and the community. Nearly 100 people attended the event, but as soon as it ended, it was back to business as usual on the property that houses both the 1.4 MMgy demo plant and Verenium’s pilot-scale facility. Before summarizing the plant's purpose in his remarks at the grand opening ceremony, Verenium President and Chief Executive Officer Carlos Riva said he looks forward to making cellulosic ethanol production a reality. The plant was built to validate Verenium’s processes and economic criteria, as well as to provide a basis for engineering design that the company can use for its future commercial-scale facilities. One of Verenium’s strengths has been its specialty enzymes division, headquartered in San Diego. However, the entire third floor of the demo plant in Jennings is devoted to enzyme production and development, as well. Researchers in Jennings have the ability to work with real-world applications and share that information with the lab in San Diego. “While current enzyme performance is satisfactory in providing an economic design basis for the commercialization of Verenium's ethanol process, work to increase enzyme performance and yield, and lower cost, will be an ongoing process,” says Kelly Lindenboom, Verenium’s vice president of corporate communications.

VERENIUM CORP. LOCATION GENERAL CONTRACTOR PROCESS TECHNOLOGY CAPACITY FEEDSTOCK ETHANOL MARKETER DISTILLERS GRAINS MARKETER CARBON DIOXIDE MARKETER BROKE GROUND START-UP DATE

Jennings, La. Verenium Corp. Verenium Corp. 1.4 MMgy sugarcane bagasse, energy cane, Sundan grass Verenium Corp. N/A N/A February 2007 May 2008

The facility began start-up in May and expects to reach the optimization phase by the end of the year. So far, the plant has been using sugarcane bagasse and energy cane as feedstocks. A steady supply of both is being delivered to the plant by Cajun Sugar Co-op, which is comprised of approximately 70 sugarcane growers within 90 miles of the plant. Co-op member and lifetime farmer Joe Judice works 2,100 acres of farmland around the area bayous and is happy to contribute feedstock to Verenium. He has been on the short end of falling sugar prices in recent years and says energy crops will become a viable alternative for farmers who are struggling to make ends meet. He was one of a handful of farmers who agreed to grow energy cane on an experimental basis for Verenium, and he says he has been extremely pleased with the results. He says energy cane has been easier to grow than sugarcane and that it’s a good option for him to plant on some of his marginal land. However, he plans to continue growing sugarcane, as well, while working to find the right balance of energy crop and food crop. “If we lose the ability to feed ourselves, we’re in big trou-

ble,” he says. The co-op is extremely supportive of Verenium, and members believe that having a cellulosic ethanol plant in their community will present new and exciting possibilities for area residents. In early August, approximately three months after start-up, Verenium and oil titan BP Corp. announced an 18-month collaboration to advance commercial-scale cellulosic ethanol. As part of the agreement, BP is giving Verenium $90 million in exchange for rights to current and future technology held within the partnership, production facilities, and agronomics expertise. The Jennings facility played a significant role in attracting BP to Verenium. Sue Ellerbusch, president of BP Biofuels North America, says Verenium’s proven technology and scientific expertise, along with its commitment to use nonfood feedstocks, made it the ideal partner for BP’s advanced biofuels itinerary. Research conducted as part of the BP-Verenium partnership will be carried out at the Jennings facility. Verenium was also one of two companies selected in July to receive $40 million from the U.S. DOE to make cellulosic ethanol cost-competitive by 2012. Verenium will use the funding to continue its activities in Jennings. The process technology being used there has also been marketed in Asia and served as the example for Tokyo-based Marubeni Corp.’s pilot cellulosic ethanol facility in Sarubeni, Thailand, which officially opened in late July. —Kris Bevill

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

:OU R P L A N T

Big Things Happening in the Bayou

:INTHEFIELD

GreenSeeker Matches Nitrogen to Crop Needs

emote sensing technology initially developed for satellite imagery is being applied on the ground to fine-tune fertilizer applications. GreenSeeker sensors developed by NTech Industries Inc. in Ukiah, Calif., in cooperation with Oklahoma State University, use optical sensors that emit and capture red and near-infrared light to sense crop vigor. The GreenSeeker sensors are mounted on a fertilizer applicator and coupled to the equipment’s variable rate applicators. NTech Chief Operating Officer Ted Mayfield explains that in corn, the amount of nitrogen available from natural sources such as mineralization or rainfall can vary widely from year to year. Looking at university nitrogen response trials, there are growing seasons when crop yields on plots with no applied nitrogen equal plots with high levels of nitrogen. GreenSeeker aims to capitalize on that phenomena. “Getting the rate right for this year is a huge component that GreenSeeker is trying to accomplish,” Mayfield says. In addition, the sensors identify crop variability. “This part of the field isn’t doing very well,” he says as an example. “Let’s not waste nitrogen on it. This part of the field looks pretty darn good, but not as good as the reference strip. That’s where we’re going to get a good economic return on added nitrogen.” When planting a field, a farmer applies a high rate of nitrogen on a calibration strip that is generally the width of the applicator to be used for topdressing. The rest of the field gets enough nitrogen to get the crop off to a good start, but well below the optimal level. “Say the farmer generally puts on 150 pounds of nitrogen per acre,” Mayfield says. “He will apply 75 to 80 pounds on the whole field, and on a reference strip, he puts down

180 pounds.” When the corn crop is between the eight- and 12-leaf stage, the farmer goes out with the GreenSeeker sensors mounted on his applicator and calibrates the equipment against the strip that received the high nitrogen rate. Then, the rig is run over the entire field, applying a variable rate of nitrogen based on the sensors’ readings. “We’re going to pick up areas of the field where there are less healthy plants or thin stands, and less nitrogen will be applied in those areas,” he says. An example would be areas with stunted plants that flooded during the season. Mayfield says with high fertilizer prices, interest in the technology is increasing from the handful of producers who tried it when GreenSeeker was introduced four years ago. “Nitrogen is 25 (percent) to 35 percent of the cost of production in raising corn,” he says. Costing approximately $22,000, the system has given a payback in the first year in some cases, he adds, and it’s expected to return the investment in two years in fertilizer cost-savings.

The GreenSeeker sensors can be added to a variety of equipment. Some producers mount the sensors on the toolbars of nitrogen sidedressers. Others mount the sensors on high-clearance spray rigs that have been fitted with drop nozzles to dribble the additional nitrogen between the rows. GreenSeeker can be used with liquid, dry or anhydrous formulations, and is compatible with existing rate controllers. “It’s all about trying to make the grower more efficient,” Mayfield says. “We’re trying to maximize the return they get on the money invested in nitrogen. The great thing is that it’s good for the environment, too, because if you only put on the nitrogen that the plant is going to uptake, then it’s not going to get out into the environment.” —Susanne

Retka Schill

PHOTO: NTECH INDUSTRIES INC.

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

:UP FRONT

A Kiwi in Corn Country

t press time, VeraSun Energy Corp.’s 110 MMgy ethanol plant in Dyersville, Iowa, was scheduled to begin production by the end of September. EPM spoke with Plant Manager Pat Hogan, who brings a unique international perspective to the heart of the U.S. ethanol community. Q: Tell us about your background and how you came to work for VeraSun. A: I was born in Canada, where I attended my first year of school before my parents moved the family to New Zealand. There, I completed my

Name Pat Hogan Title Plant Manager Plant VeraSun Dyersville LLC Company VeraSun Energy Corp. Career VeraSun Energy Corp./ U.S. BioEnergy Corp. Plant Manager April 2007-Present Parallel Products/U.S. Liquids Louisville, Ky. Plant Manager February 2001-January 2003 API Grain Processors Red Deer, Alberta Operations Manager June 2000-February 2001 Anchor Ethanol New Zealand Distillery/Operations Manager September 1987-May 2000

schooling and began my professional career. Having lived there for 28 years, I consider myself a Kiwi. My career began in the dairy industry, making cheese. I moved into biofuels when I began work at Anchor Ethanol, where I was a fermentation operator. Eventually, I was promoted to operations manager and was responsible for three distilleries. In 1995, I attended the Alcohol School in Lexington, Ky., and instantly fell in love with the United States— subsequently making the decision that I needed to move there somehow. I tried unsuccessfully for five years to obtain a U.S. work visa before being advised to return to Canada first and refocus my efforts toward the United States at a later date. In 2000, I began working as operations manager for API Grain Processors in Red Deer, Alberta. Within a year, my wishes to live in the United States were granted, and I accepted a position in Louisville as plant manager for Parallel Products, producing fuel-grade ethanol from beverage waste. Due to restructuring and a plant closure, I was laid off in 2003 and didn’t reenter the ethanol industry until 2007 when I became a plant manager for U.S. BioEnergy Corp. (now VeraSun Energy Corp.). I was plant manager for the U.S. Bio facility in Ord, Neb., and trained staff at U.S. Bio facilities in Marion, S.D., and Hankinson, N.D., before finally landing the plant manager role in Dyersville, where I reside with my wife Janie. Q: How does the renewable fuels industry differ between the United States, Canada and New Zealand? A: While I was working in New Zealand, the renewable fuels industry was nonexistent, but it has recently gained momentum with a focus toward non-grain-based ethanol, such as cellulosic and other alternatives. The ethanol produced at the three plants I managed was used for industrial, potable and pharmaceutical applications with the remainder being exported primarily to Asia.

The Canadian biofuels industry is in its infancy, much like the U.S. industry was 20 years ago. The Canadian government is providing research and start-up grants to kickstart the industry. Q: How did you become interested in the ethanol industry? A: Totally by accident! I began my career out of high school in New Zealand, working for the New Zealand Dairy Research Institute, making cheese. While there, I attended Massey University and earned my diploma in dairy technology. I had the opportunity to meet people from the mainstream dairy industry, including one classmate who worked at an ethanol plant. The ethanol facility was part of a dairy plant, as are all three ethanol distilleries in New Zealand. Soon, I was in the ethanol business and haven’t looked back since. Q: What is the status of the Dyersville plant and how have you been involved in the project? A: The Dyersville plant is currently under construction. We are in the process of hiring and training staff, and general preparations in anticipation of start-up. We are all excited and looking forward to the plant start-up. Q: Was your plant affected by the spring flooding that mainly affected Cedar Rapids (70 miles southwest of Dyersville)? A: VeraSun Dyersville has very good drainage, and there was no flooding on the construction site. A few staff members had problems getting home on a few occasions due to flooding and road closures. Q: What are your management strategies? A: Empowering staff to make decisions and manage their daily tasks, allowing them to take responsibility and accountability for their work. I try to take a consultative and collaborative approach to decision-making and management of the plant to ensure I get buy-in from staff and am fully apprised of all the facts. My best strategy though is to remove the clutter so you can see the trees through the forest. —Kris Bevill

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

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:BUSINESS 54

Ethanol Sales Improve Quarterly Earnings

ccording to a report released by the U.S. Energy Information Administration in late August, U.S. ethanol production fell slightly in June to 17.5 million barrels, compared with 18.5 million barrels produced in May. May’s figures were the highest so far this year, and with the number of ethanol plants coming on line continuing to grow, ethanol blending and spot sales are also on the rise. Some major ethanol producers have been profiting from increased ethanol sales, which were reflected in their quarterly earnings statements. Pacific Ethanol Inc. posted net sales of $198 million in its second-quarter earnings statement, a 74 percent increase compared with $113.8 million during the same period last year. The company said the increase was primarily due to substantial growth in sales volume, coupled with higher average sales prices. Pacific Ethanol’s sales volume rose to 66.8 million gallons compared with 43.9 million gallons during the same quarter a year ago. Brookings, S.D.-based VeraSun Energy Corp. posted record revenues of more than $1.01 billion in its second quarter, compared with $170 million during the same period last year. Total revenues included sales of ethanol, distillers grains, the company’s branded VE85 and corn.

The Andersons Inc. reported a record net income of $45.6 million on revenues of $1.1 billion in its second quarter compared with a net income of $25.5 million during the same quarter last year. The company’s Grain & Ethanol Group achieved a record operating income of $20 million, a significant increase from the same quarter last year when it posted $12 million. “Income from the company’s ethanol joint ventures also rose during the quarter,” the financial statement said, although the company wouldn't give a specifc amount. Houston-based Marathon Oil Corp. took a hit, reporting a net income of $774 million in the second quarter, compared with $1.5 billion during the same quarter last year. However, the company's ethanol blending in gasoline rose approximately 38 percent from 40,000 barrels per day last year to 55,000 barrels per day this year. Aventine Renewable Energy Holdings Inc. posted a $1.9 million second-quarter net loss compared with a $12.6 million gain during the same quarter last year. Despite the loss, the ethanol producer and marketer reported that it sold a record 220.3 million gallons of ethanol during this quarter. Archer Daniels Midland Co. posted profits of $372 million in its fourth-quarter earnings statement, down from $954.8 million during the same quarter last year. Boosted by gains from asset sales a year earlier, ADM’s revenue rose 78 percent to $21.78 billion, up from $12.21 billion. Jacksonville, Fla.-based transportation company CSX Corp. posted a record profit of $385 million in its second quarter, compared with a $324 million profit during the same quarter a year ago. Revenue increased to $2.9 billion, up 15 percent from the same period last year, in eight of the company’s 10 markets, including ethanol transportation. —Bryan Sims

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

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: FINANCE 56

Overtaxed and Under-Reviewed: A Simple Way to Save Money By Jesse McCurry

f a plant advertises, employs salespeople or delivers products out-of-state it may have nexus—a tax term used by the federal government to define a business presence or activity within a state. Every state has nexus rules and employs government personnel to search for unregistered companies not paying income or sales-and-use taxes inside its borders. If a plant is audited and has not followed state nexus rules, the cost could be significant. On the other hand, a plant may often pay too much in sales tax and may be due a tax refund of thousands of dollars. As a former tax auditor covering the Great Lakes, Great Plains and Ohio Valley regions, Kennedy and Coe’s Carole Brady has 17 years of first-hand experience with state tax laws. She says that many plant managers have overpaid sales-and-use taxes, and are due a refund. “On the purchase side, a plant manager might miss paying sales tax on supply items or repair parts,” Brady says. “They might have a good handle on fixed assets and big pieces of machinery but when it comes down to repairs, greases, oils, propane, gases, ware-

lars. If she finds a busihousing equipment or ness has not paid taxes machinery, there are a lot appropriately when purof ‘what ifs.’” chasing big items, correcBrady says activities tive measures would be can include using conput in place. tractors, maintaining a It doesn’t matter what sales office, warehouse accounting firm performs or distribution center, a plant’s state or federal advertising via flyers, print income taxes. Brady says ads, radio, TV, mail or an interactive review can phone, participating in McCurry be a one-time service that trade shows and delivercan save a plant thousands of doling products in a personal vehicle. “I would review a plant’s out-of- lars in the long-run. “Managers don’t think about state activities, such as where advertising dollars are spent and if this issue, or if they haven’t been salespeople are authorized to audited yet, they think, ‘What’s my approve credit and make agree- risk?’” Brady says. “But it’s critical to ments,” she says. “One state has a know the depth of the law on state threshold where a business can tax.” attend five trade shows, while another requires a plant to register before Jesse McCurry is a business develattending only one. If you advertise opment specialist at Kennedy and every week, a state may want you to Coe LLC. Reach him at jmccurry @kcoe.com or (316) 691-3758. register, but if you’re only advertising twice a year it might be OK.” If Brady finds an overpayment of sales tax for a plant, she will file for a refund. Most often a plant would be due these overpaid dol-

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

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:LEGALPERSPECTIVES 58

The Implications of Plant Optimization Activities By John Eustermann and Randy Shefman

s crush margins shrink, owners of existing ethanol facilities are under significant pressure to reduce costs and boost revenues. Further, new market participants implementing second-generation technologies with the backing of the latest incentives have changed the competitive landscape for the early industry movers. These dynamics require plant managers to investigate incorporating new technologies and equipment into existing facilities to optimize yields and, in some instances, create additional revenue streams from new coproducts. Management should consider the impact such optimization activities have on operational documents such as previously executed financing or development agreements, technology licenses or permits. The following are some common project-related documents that should be examined when investigating optimization activities or technological modifications to the plant. Technology licenses: As part of the initial construction and development, a technology license agreement is often a key document included in the overall construction or document package. It includes language governing a plant’s use of the initial process technology, including certain duties and obligations related to technological modifications. A close examination of the license agreement and the licensor’s intellectual property rights is warranted in the face of optimization strategies that involve technological modifications. Financing documents: Any modifications should be investigated with the active participation of the company’s lender. For those companies still subject to a term loan, several restrictions require

Eustermann

Shefman

lender review of and consent to any significant changes to the plant. A review of all financial and operational bank covenants is warranted, as a number of provisions might be triggered by such proposed investments in optimizing a facility. For example, how will such activities affect current debt/leverage ratios, new debt restrictions, capital expenditure limits, cash flow sweeps and/or other use restrictions on cash flows from earnings? Additionally, in most instances, before approving new capital investment, lenders will need to review revenue enhancing and payback projections to ensure such figures are based on sound and reasonable assumptions. Also, the lender likely has a blanket lien on all existing and future acquired assets. This is key to the extent management is seeking to finance plant modifications from a source other than its current lender. In such instances, each lender will likely need to agree to appropriate subordination and intercreditor arrangements. Finally, if financing optimization activities, the lender will likely require collateral assignment of relevant project agreements and warranties, such as any technology license agreement, operational agreement or equipment warranties. Off-take agreements: As the primary documents governing the generation of revenue for the biofuel plant, man-

agement is wise to give the off-take agreements a thorough review in the face of any plant optimization activities. The issues to consider in such instances range from the potential for any slowdown or shutdown in production that may be necessary in any plant upgrade to the effect such technology changes may have on the quality of the fuel produced. A production delay or the failure of such production to meet applicable specifications or ASTM standards as negotiated in the off-take agreement can have a direct negative effect on the cash flow of the facility. Permits and site control issues: The effect that any proposed optimization projects may have on a facility’s environmental controls cannot be overlooked. With regard to both air and water, such activities can trigger management’s need to obtain new or revised permits. Physical changes or changes in the method of operation that may result in increased or modified air emissions or changes to water appropriation and/or water discharges at the plant require regulatory review to determine if additional permitting is required. It is important to note that such regulatory review is required even if the increased air emissions or changes to water appropriation and/or water discharges will meet existing permit limits. John Eustermann is an attorney with Stoel Rives LLC. Reach him at jmeustermann@stoel.com or (208) 3874218. Randy Shefman is an attorney with Hogan & Hartson LLP. Reach him at rshefman@hhlaw.com or (303) 8997338.

This article is only a general summary for information purposes and does not constitute legal advice. Consult a qualified and experienced legal advisor for your specific situation or particular questions.

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

EQUIPMENT

IN DYNAMIC PURSUIT OF

EFFICIENCY

Production efficiency is critical in this tough economic environment. A U.K.-based company is working toward commercial availability of its ethanol reactor tower, which uses atomized steam to release intracellular starch in the cook process to boost fermentation efficiency. EPM takes a look at this technology. By Ron Kotrba

olume is king when input costs are low but when margins collapse, it always plays second fiddle to efficiency. A perfect cook and fermentation process utilizes 100 percent of the feedstock’s starch; however, as evidenced by ongoing comprehensive analyses of distillers grains, the industry is not there yet. According to the assistant research director of the National Corn-to-Ethanol Research Center, Yan Zhang, the average content of residual sugars found in distillers grains is about 8 percent on a dry-matter basis. “If an ethanol plant cannot optimize its cooking process, or if it drops the fermentor based on fermentation time instead of the extent of fermentation completion, it is very easy to have high levels of residual sugars in distillers grains,” she says.

A U.K.-based company, Pursuit Dynamics PLC, is preparing to go commercial with its PDX Ethanol Reactor Tower, a device for pretreating slurry with atomized steam and pressure. Rick Eastman, president the company’s U.S. subsidiary, Pursuit Dynamics LLC, says the technology was originally developed for marine power. “It actually pumps by virtue of this annular nozzle that atomizes the steam into a flow of liquid, which causes a vacuum pressure reaction,” he says. “So downstream there’s a vacuum and upstream there’s pressure. That causes an explosion, or cell rupture, and that’s what we are seeing in our starch conversion—we are seeing more starch at less destructive temperatures than with a hydroheater, for example.” The PDX ERT has applications ranging from food ingredient mixing,

Pursuit Dynamics’ Ethanol Reactor Tower, shown here on the side of a liquefaction tank, may help boost ethanol production efficiency through cell disruption from high-impact steam and in a series of individually controlled reactors. PHOTO: PURSUIT DYNAMICS

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

EQUIPMENT

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

EQUIPMENT

to fire suppression, to wort boiling and brewing, but it’s the equipment’s ability to boost ethanol production efficiency that is of interest. Major test triEastman als were conducted on the PDX ERT in December 2007 at NCERC, which is on the campus of Southern Illinois University in Edwardsville, Ill., says director John Caupert. NCERC research director Brian Wrenn oversaw the project but because of a confidentiality agreement, Wrenn could not disclose any information at press time. However, Pursuit Dynamics chief technology officer Jens Thorup presented information and data gathered from its tests at NCERC at the International Fuel Ethanol Workshop & Expo this year. First, though, EPM takes a closer look

at what the reactor is and how it works.

The Inner Workings The reactor tower is installed between the slurry and liquefaction processes of an ethanol plant. Instead of the corn being milled, slurried and pumped directly to the liquefaction tank, the slurry enters the ERT prior to passing through to liquefaction. Inside the ERT are multiple reactor modules, each equipped with individual controls to optimize the temperature profile. “To get fully dispersed phases in our reactors we like to start at a temperature well below the final liquefaction temperature, which is 185 degrees [Fahrenheit],” Eastman says. “We’re at about 125 degrees, requiring minor process modifications to keep that slurry tank under the gelatinization temperature.” The ERT is positioned on the side of the liquefaction tank and, by way of vacuum, the slurry mixture moves

inside the bank of reactors where highly atomized steam, coming from the conditioning chamber wrapped around the core of the reactor, is injected into the slurry stream causing impact. “That causes a fully dispersed condensation phase, which brings it back to between 12 and 15 pounds of pressure,” Eastman says. “There’s tremendous impact there. It happens in four stages in what’s a fairly small reactor. Then there is a final heater—like a trim heater—which is a PDX nozzle, and then the slurry is deposited into the liquefaction tank.” Again, the temperature of each stage is controlled through the use of automated steam valves feeding each one of the reactor banks. Through significant steam impact and material disruption there is instant activation of all of the starch, including the hard to get to intracellular starch. “What we’re doing is separating all of the starch from the cellulose in the corn kernel,” Eastman tells EPM.

EQUIPMENT

Test Trials The equipment trial conducted at NCERC was benchmarked against a

Corn Yellow Dent #2 Conversion to fermentable sugars

120%

100%

80%

PDX yield uplift from conventional including cellulose: 24%

PDX yield uplift from conventional: 14%

60% Compositional Analysis Maximum Conversion

40%

PDX Conversion Conventional Conversion

20%

al To t

n Lig ni

r he Ot

Fa t

Ce ll

ll ice m He

Pr ot ein

0% St ar ch

In addition to making more starches available for downstream fermentation, the steam conditioning and low temperatures reduce so-called hotspots and starch degeneration from what’s called Maillard Reaction loss. The Maillard Reaction, named for chemist Louis-Camille Maillard, who thoroughly investigated this phenomenon in the early 1900s, is a temperature-induced reaction between sugars and amino acids. It’s what causes the browning of meat, for instance, when it’s cooked. If the cook temperature of the slurry is too high, it may render some otherwise fermentable sugars unfermentable. Of note, on the back end of ethanol production high dryer temperatures and the Maillard Reaction are responsible for the over-browning of distillers grains, which degrades the amino acids digestibility.

SOURCE: PURSUIT DYNAMICS

conventional jet cooker. At this year’s FEW Thorup presented results from data collected during the third-party evaluation testing. A 14 percent boost

in ethanol yield was achieved. “That’s from the added starch recovery and activation,” Eastman says. In an economic environment as tight as it is

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today, a 14 percent increase in ethanol yield appears to be a remarkable achievement. The pretreatment device not only improved ethanol yields by double-digit numbers, but according to Thorup it also reduced liquefaction time by 75 percent. Since the grain slurry has been significantly disrupted in the ERT prior to liquefaction, it also means that far fewer alpha amylase enzymes are needed because much of the starches have been made accessible. This allows fewer enzymes to do more. Thorup said a 50 percent reduction in alpha amylase use was documented from the NCERC trials. Lastly, he said a 30 percent reduction in fermentation time resulted from pretreating the slurry with Pursuit Dynamics’ ERT. The first full-scale production trial of the ERT is currently underway at Pacific Ethanol Inc.’s 40 MMgy plant in Boardman, Ore. Tim Raphael, communications director for Pacific Ethanol, tells EPM the testing is going well so far. In mid-August it was too early for the testing to have yielded any results but Raphael Raphael says they are all hopeful and will have hard production data once the testing is complete. “It’s a matter of installing the technology and then beginning to integrate it into the process to see what that does through the systems at the plant,” Raphael says. “Then we’ll be ramping things up to see what it does for production at the plant—to see how well it integrates into our process.” Eastman says while it is premature to talk about results, he says initial work at the Boardman plant indicates they are averaging a yield increase of more than 10 percent. “It’s going well,” he says. “Of course we’ve encountered some ups and downs like any trials.” It’s no accident that Pacific Ethanol is the first company to test Pursuit Dynamics’ ERT in a full-scale trial. “I was involved in and responsible for building and owning a portion of the first dry-grind ethanol plant in California,” Eastman says. “It was built in conjunction with Western Milling.” That plant is in Goshen, Calif., and has since been sold to Altra Biofuels. “A former colleague of mine, Neil Koehler, was driving Pacific Ethanol,” he explains. “He discussed with me the possibility to cooperate rather than compete on some projects. So it was with Pacific Ethanol, as their director of technology, that I was introduced to Pursuit Dynamics and PDX technology.”

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Although there may not be many more greenfield cornethanol plants built in the United States, Eastman says there are tremendous retrofit possibilities. “We can walk into all of

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

PHOTO: PACIFIC ETHANOL INC.

EQUIPMENT

Pacific Ethanol’s Columbia Plant, a 40 MMgy ethanol refinery in Boardman, Ore., is currently conducting full-scale trials with Pursuit Dynamics’ ethanol reactor tower.

demand

RESULTS the 160 or so ethanol plants existing today and make a difference,” he tells EPM. Rather than ethanol plants flatout paying the capital expenses to buy one of these reactor towers, Eastman says the company is looking at a recurring income (i.e. royalty) model. “We’d like to share 20 percent of the benefits, so for example if the overall benefit is a dollar, we’d like 20 cents on an ongoing basis.” There may be some signing costs too, but Eastman says those would be relatively low. “It’s not millions of dollars by any stretch of the imagination,” he says. In addition to “generation one” enhanced starch activation, Pursuit Dynamics is also investigating how its ERT can pretreat corn fiber (generation 1.5) and second-generation feedstocks such as corn cobs. What is characterized as generation 1.5, converting corn fiber, entails conventional ethanol production utilizing the ERT between slurrying and liquefying, followed by conventional processing and distillation after which the stillage would be

targeted. “We’re looking at the fiber that’s been taken all the way through the cook and distillation processes and attacking it again,” Eastman explains. According to Thorup, ethanol yield is boosted 24 percent higher than conventional processing when using a jet cooker instead of an ERT that not only activates more starch but also “attacks” the already-processed corn fiber once again. Recycling the already-cooked material back through the production process elevates the per-unit protein and fat content in the resulting distillers grains because the cellulose and hemicellulose portions of the corn have been reduced and converted into ethanol. Impact trials on second-generation feedstocks, such as wheat straw, have also shown preliminary signs of success. EP Ron Kotrba is an Ethanol Producer Magazine senior writer. Reach him at rkotrba@bbiinternational.com or (701) 738-4942.

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

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TECHNOLOGY

Bayrock in PhibroChem's new laboratory in St. Paul, Minn. PHOTO: PHIBROCHEM

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

TECHNOLOGY

IN THE LAB

PhibroChem, the New Jersey-based supplier of antimicrobials for the ethanol industry worldwide, recently opened a new laboratory in St. Paul, Minn., dedicated to expanding its customer service diagnostic work, research and development for the next generation of products for the biofuels industry. By Jessica Ebert

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s the management teams of currently producing ethanol plants work to scrape by and continue operating in the wake of record-high corn prices one company is gearing up to offer these producers a way to potentially increase their bottom lines. By keeping ethanol plants healthy through the control of microbial contamination, plant managers can prevent the development of a problem that leads to a loss in profits. To that end, PhibroChem, which is based in Ridgefield, N.J., but has a global reach, recently opened a new diagnostics and research and development lab in Minnesota to cater to the evolving biofuels industry. PhibroChem is a division of Phibro Animal Health Corp., a global company focused on manufacturing and marketing performance chemicals including products for the ethanol, paint and coatings, personal care and metal finishing industries, and products for animal health and nutrition. About eight years ago, the company decided to establish a research and development, and a customer service laboratory based in Saskatoon, Saskatchewan, Canada. The primary charge of the lab, which at the time was staffed with five people, was to analyze diagnostic kits coming in from the field. These kits can be likened to a first aid kit for an ethanol plant. To identify microbial contamination, samples are taken from areas such as the yeast propagation tanks, heat exchangers and fermentation mash. These samples are collected, packaged and sent to a diagnostic lab where technicians spread the samples onto agar growth medium. The microbes that grow on the surface of this gelatinous substance can then be identified and an appropriate control strategy employed. An additional goal for the lab was to conduct research toward the development of products to effectively manage microbial contamination in ethanol plants. One of these products is Lactrol, a proprietary combination of virginiamycin and dextrose used to control the growth of bacteria responsible for the production of lactic acid and acetic acid. These acids are toxic

PHOTO: PHIBROCHEM

TECHNOLOGY

Pictured is a bank of ten-7 liter fermentors, fully automated with data logging capabilities.

to yeasts and lead to lower yields and productivity in the ethanol production process. Lactrol is the only product currently approved for ethanol fermentation by the U.S. Food and Drug Administration. But balancing both mandates—customer service and product developmentproved challenging. In the past, there were some weeks the lab handled about 15 diagnostic kits, translating into more than 3,000 microbial plates manually treated. As the company's customer base increased over the years, the company came to the realization that a new facility would be required to provide a higher level of customer service and continue to support basic research and development capabilities, explains Dennis Bayrock, who has been involved with the Saskatoon lab since its inception and will now manage the research and development portion of the new lab.

Divide and Conquer “Fast-forward to about six months ago and that vision became a reality,” Bayrock says. PhibroChem’s Ethanol Performance Group announced the opening of its new lab, located at the University Enterprise Labs on the campus of the University of Minnesota in St. Paul, in midMarch. The UEL is a nonprofit, public-private partnership created to provide labora-

tory space for bioscience companies. The facility currently houses 29 companies that employ more than 250 people. Locating at the UEL was deemed an advantageous choice by Bayrock because the twin cities of Minneapolis and St. Paul are a courier hub, many of the company’s current clients and its target clients are located in the Midwest and finally, the Twin Cities offer an attractive technical service base. “There were a lot of pluses to moving to Minneapolis/St.Paul,” Bayrock says. “I can confidently say that there is no other laboratory like this.” The new lab will be split into two divisions, each with its own manager and mandates. On the customer service side of things, Wayne Mattsfield, a trained microbiologist with experience at the Minnesota Department of Health and the Minnesota Pollution Control Agency in the areas of indoor air quality and microbiology and in water treatment, will continue the company’s tradition of providing diagnostic services to the industry. With a culture collection of about 500 microbes isolated from ethanol plants across the globe and a new state-of-the-art instrumentation capability, the currently operating lab is well equipped and continues to meet its main customer service mandate. By investing in equipment such as an automated plate counter and

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PHOTO: PHIBROCHEM

TECHNOLOGY

The UEL laboratory is near the University of Minnesota campus in St. Paul.

new plating technologies, the lab is able to respond to customer needs within 48 hours, Mattsfield says. The response includes, filling requests for diagnostic kits, receiving those kits and setting them up for microbial and chemical analyses, generating and analyzing the data based on these tests and then providing an interpretation for the data including recommendations for improving production through process changes or the application of antimicrobials. In addition to maintaining this traditional service offered by PhibroChem’s customer service lab, employees at the new lab will also wear two other “hats,” Mattsfield explains. The first will involve internal work to evaluate products and new technologies. "We anticipate that these technologies will provide our customers better support with respect to [potential] future regulatory issues and [distillers dried grains] analysis," Mattsfield says. The second hat will involve training in basic laboratory techniques and processes common to the ethanol industry such as fermentation. “I think we’ll look back in a year from now and just be amazed at the additional things we’re going to be able to offer and the progress we’ll be making in adding to some of the basic things we’re doing now,” Mattsfield says. In terms of the research and development of new products for bacterial control in ethanol plants, the company has a number of patents and products in the pipeline that will soon be released for trials, Bayrock says. “We're making sure we're rigorous in all

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

PHOTO: PHIBROCHEM

TECHNOLOGY

A staff microbiologist is reviewing a culture plate.

contamination of cellulosic ethanol plants. The microbes associated with these plants will likely be as varied as the feedstocks— ranging from agriculture waste to molasses—that these facilities will be based on, therefore a greater understanding of how these microbes grow and develop in these different environments will be needed. “Our mandate is to understand precisely what these particular organisms are, and under what conditions they flourish,” Bayrock explains. “Are they different from the corn-based flora? Are they different from the molasses-based flora? And if so, do our current products work against them or do we need to develop other products to service those organisms too?” Overall, the two divisions will be founded in the success of the Saskatoon lab with its diagnostic and product development services but with an eye to the future, the lab will aim to grow its repertoire of offerings to service a rapidly evolving industry. “Up in Saskatoon we quickly outgrew our facilities, which limited the services we were able to offer our clients,” Bayrock explains. “We are able to and are on the verge of offering more to our clients in the future than we ever could have in Saskatoon,” he adds. “This lab fills a much-needed gap both for education and training as well as for understanding how bacterial contaminants affect an ethanol plant.” EP

aspects of product development,” he says. “We want to be absolutely convinced that every product that Phibro's Ethanol Performance Group develops will work effectively for a customer to help control harmful contamination. Uncontrolled contaminants cost the industry millions of dollars in lost profits every year.” The new lab will also offer an opportunity to explore and Jessica Ebert is a freelance writer for Ethanol Producer Magazine. anticipate the kinds of organisms that will likely be involved in the Reach her at jebertserp@yahoo.com.

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ETHANOL PRODUCER MAGAZINE OCTOBER 2008

FEEDSTOCK

Beefing Up

Barley

In the ethanol world barley may be cornâ&#x20AC;&#x2122;s poor cousin, but research efforts have made it an attractive feedstock option in the U.S. mid-Atlantic region. By Susanne Retka Schill

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

FEEDSTOCK

arley may just step out of corn’s shadow and become a respectable ethanol feedstock as a result of the research being conducted by the USDA Agricultural Research Service and plant breeders at Virginia Polytech Institute. ARS researchers at the Eastern Regional Research Center in Wyndmoor, Pa., believe that the United States could produce 1 billion to 2 billion gallons of ethanol from barley, not to mention the potential for an equal amount of cellulosic ethanol from the straw once cellulosic technology is commercially viable. For the past two decades, however, U.S. barley acres have declined, largely because prices were well below $2 per bushel. In the mid-Atlantic region, the acreage decline was accompanied by weakening feed demand as larger operations replaced small farms that once raised barley for their own on-farm feed needs. While barley has a better balance of amino acids than corn, the hull and its high fiber and beta-glucan content limit its use in poultry and swine diets. A relatively cheap, plentiful corn supply available for import from the Midwest helped to move barley into the shadows as a feed crop.

Consequently, U.S. production dropped from a high of more than 590 million bushels in the mid-1980s to 180 million bushels in 2006. Lately, however, production has increased as prices have reached $5.40 to $6.40 per bushel. In fact, USDA forecasts 218 million bushels of barley will be produced this year. Virginia producers planted 28 percent more acres in response to last year’s higher prices, says Wade Thomason, Virginia Tech extension agronomist. Barley has potential as an ethanol feedstock because it is a better option than winter wheat for double cropping with soybeans, he explains. Barley’s early maturity allows it to be harvested a couple of weeks before wheat in the spring. That has a significant impact on the soybean crop that’s planted after the harvest. “Planting after the first of May you lose one-half bushel per day in soybean yields,” Thomason explains. The earlier barley harvest allows for earlier soybean planting, which can lead to a four to 10 bushel per acre increase in yields. Additionally, barley is a low-input crop that requires 30 to 40 pounds of nitrogen per acre in the fall; if needed more nitrogen can be top-dressed in

Winter barley is approaching corn’s value as an ethanol feedstock thanks to variety improvements and new processing technology.

the spring. With good management, producers are getting 130 to 140 bushels per acre, although the state average yield is in the mid-80 bushels per acre, Thomason says. Average yields are brought down by growers who plant barley primarily as a cover crop, which requires minimal management. Depending on the stand, the farmer may harvest it for grain before

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

FEEDSTOCK

seeding the summer crop. Barley yields in Virginia compare with average corn yields of 120 bushels per acre and 200 bushels on the top end, he adds. Corn yields are often hurt because the region’s soils can’t hold enough moisture to carry it through hot summer days when rains can’t make up for high evaporation and transpiration rates.

Barley and Ethanol's Performance (%, DWB)

“NOMINI”- HULLED FEED BARLEY (POOR)

“THOROUGHBRED” V.T. ELITE HULLED (BETTER)

“EVE”- V.T. ELITE HULL-LESS (BEST)

STARCH

54.8

59.9

63.8

β-GLUCAN

5.0

3.9

4.1

PROTEIN

8.8

7.6

10.0

OIL

2.5

1.9

ASH

2.3

1.7

NDF

26.0

17.2

11.0

TEST WT (LB/BU)

48.1

52.9

60.8

COMPONENT

Breeding Better Barley Barley breeders have made great strides to improve the crop’s performance, focusing on heavier test weights and the development of hulless varieties. “We needed to make the grade for international markets as well as local feed markets,” Thomason explains. Older varieties would often respond to poor harvest weather or dry spells by producing light, 43- to 45pound test weight grain. Test weights for the new hulled varieties are coming in at the mid-50s while the hulless varieties are approaching 60 pounds per bushel. In breeding hulless varieties, Virginia Tech researchers address barley’s limitations. The hulls, which make up 12 percent to 15 percent of the kernel weight, are a non-nutritional component that make barley less desirable

Three barley varieties are compared in this chart, showing an earlier feed barley compared with newer hulled and hulless varieties developed at Virginia Tech. Along with starch content and test weight, it shows differences in beta-glucan levels and neutral detergent fiber (NDF). SOURCE: ARS ERRC

in poultry or swine rations, and its high silica content is abrasive to milling equipment. While barley is often hulled, or pearled, Virginia Tech researchers have developed hulless cultivars with a loosely attached hull that is easily lost during harvest. Other issues have surfaced when considering barley as an ethanol feedstock. “Barley isn’t usually thought of as a good candidate for fuel ethanol

feedstock because it typically has an abrasive hull and a lower starch content than corn,” says Kevin Hicks, research leader of ERRC’s Crop Conversion Science and Engineering Research Unit. “And it contains a troublesome polysaccharide, beta-glucan, which makes barley mash too viscous to mix, ferment and distill economically.” The low-starch content in older barley varieties—50 percent to 55 percent com-

FEEDSTOCK

conase enzymes to reduce the viscosity of barley in ethanol plants, says John Nghiem, a crop conversion scientist and chemical engineer at ERRC. The team has identified a second enzyme to break down the beta-glucan more completely, boosting ethanol yields by converting the problematic beta-glucan. They have achieved ethanol yields of 2.05 gallons per bushel using the popular hulled variety called Thoroughbred, and 2.41 gallons per bushel using one of the hulless varieties. PHOTO: ARS ERRC

pared with corn’s 72 percent—results in lower ethanol yields. The newer hulless varieties developed at Virginia Tech, however, are achieving starch content closer to 60 percent. In addition, researchers have been trying to break down the 3 percent to 7 percent beta-glucan content of barley into fermentable sugars. Hick’s team at ERRC is collaborating with Genencor, a division of Danisco, to develop enzymes that will do the job. The Europeans have long used beta glu-

Nghiem and Hicks at the ARS ERRC in Pennsylvania have been working to improve barley’s performance as an ethanol feedstock.

Another member of the team, Robert Moreau, an ARS lead scientist and chemist, is looking at valueadded coproducts from barley. While whole grain barley has a low 2 percent oil content, the fines from hulless barley contain 10 percent oil, which when extracted have healthpromoting properties contained in the high levels of phytosterols and a form of vitamin E called tocotrienols. “Physterols lower blood cholesterol,” Moreau says. “Tocotrienols lower blood cholesterol and are active against some types of cancer.”

Converting Barley to Biofuel Osage BioEnergy LLC hopes to break ground in Hopewell, Va., this month on its first barley-based ethanol plant. Other plants are being developed in Carlisle, S.C., and Chase City, Va., with a fourth location nearly finalized. The fledgling ethanol producer is a sister company to Osage Inc., a veteran ethanol marketer in the Southeast and MidAtlantic regions. Earlier this year Osage BioEnergy landed a $300 mil-

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

FEEDSTOCK

lion equity investment from First Reserve Corp. to help fund the construction of the four plants. The 55 MMgy ethanol plants will utilize the ethanol plant technology developed by Katzen International Inc., a company with extensive experience in wheat- and barley-based ethanol plants in Europe. “The throughput rates for corn and barley in the Katzen process are the same,” says Osage Chief Operating Officer Joel Stone. Earlier in his career, Stone was involved in developing the only other barley-based ethanol plant in the United States at Walhalla, N.D. The plant, now owned by Archer Daniels Midland Corp., was built in the 1970s by local farmers and investors to use locally produced barley. It closed and later reopened as a corn ethanol plant, which is the feedstock that’s currently used at the 28 MMgy plant. “The biggest issue is that barley is hard to grind—it eats up hammer mills,” Stone says. “And, like oats, it has high levels of beta-glucan, which creates extremely high viscosity levels when heated.” In addition, when using whole-grain barley, the distillers grains are sold at a deep discount to corn distillers grains because the hull and high fiber send the protein content down to 20 percent. Somewhat analogous to fractionating corn before processing, Stone says Osage plans to dehull the barley before processing. “With dehulling we end up with a barley protein meal that has a value between corn gluten meal and soybean meal,” he says. “It’s actually closer to soybean meal in its amino acids.” Osage will use the enzyme treatment developed by ERRC and Genencor to further improve the quality of the barley ethanol coproduct. “We are in the middle of large-

scale test runs now,” Stone says. Feeding trials follow next. Preliminary analyses show the barley meal has protein content between 40 percent and 45 percent and contain between 9 percent and 11 percent fat. With such good numbers, the company has decided to call the coproduct barley protein meal to differentiate it from the problematic whole grain/nonenzyme treated barley distillers grains. Barley may become the feedstock of choice in the Mid-Atlantic and

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

California barley growing regions as it has the potential to match corn ethanol yields, and as a winter crop it wouldn’t compete with summer food crops. With breeding improvements and improved process technologies, it might even get a second look in the Northern Plains growing region where barley acres have also disappeared in recent years. EP Susanne Retka Schill is an Ethanol Producer Magazine staff writer. Reach her at bbiinternational or (701) 738-4922.

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CELLULOSE

BUILDING BETTER ENERGY CROPS

Seeds will play a vital role in the advancement of the crops needed to produce second-generation biofuels. EPM talks to Ceres Inc., a seed plant genomics firm, about its now widely available commercial energy crop seed and the switchgrass seed it is offering for the 2009 planting season. By Kris Bevill

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

CELLULOSE

eferring to his slender 6-feet-6-inch frame, Ceres Inc. President and Chief Executive Officer Richard Hamilton says that he personifies two of the traits his research team would like to perfect in switchgrass and other energy crops. The taller and skinnier each plant is, the more yield farmers will be able to coax out of every acre. So short plants beware—if Hamilton and his staff have their way those plants’ days are numbered. That’s the gist of genetic engineering. Got floppy plants? Make them

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

more rigid. Need them taller, shorter, greener, disease or drought-resistant? No problem. Well, it’s not quite that easy. However, when listening to Hamilton talk about the work of the 120 employees at Ceres’ laboratory in Thousand Oaks, Calif., it’s all in a day’s work. Researchers in the Los Angeles suburb spend their time examining specimens and altering genes with the goal of making significant changes to the way crops grow and respond to environmental factors so that farmers can grow more productive crops— and in turn provide the world with more efficient, cost-effective fuel.

PHOTO: KRIS BEVILL, BBI INTERNATIONAL

CELLULOSE

Hamilton is pictured next to a stand of mature switchgrass at the company’s greenhouse in Thousand Oaks, Calif.

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During a tour of the laboratory, Hamilton explains that by applying the same technology used in the Human Genome Project, Ceres researchers have sequenced more than 70,000 plant genes since the company was founded in 1997. New technology continues to speed the process of gene sequencing, allowing for everincreasing numbers of genes to be sequenced on a daily basis. Gary Koppenjan, Ceres corporate communications manager, says there are machines available today that can sequence 1 million base pairs per day, compared with the 1,000 base pairs per week that Hamilton was able to sequence as a graduate student two decades ago. That means ethanol producers have a better chance of one day having a constant supply of the perfect energy crop. Hamilton says that the perfect crop has optimized architecture (the tall and skinny part), and is a deep-rooted perennial that is easily propagated. He’s confident Ceres is close to producing seed for the perfect energy crop. Ceres’ modified Human Genome Project process begins when researchers sequence the plant DNA. After discovering the plant’s genes and their functions, scientists can then determine the gene’s potential use. Improvements can then be made to the plants genetic make-up—one gene at a time. It’s a painstaking process, but “we’re scientists,” Hamilton says. “We like to control everything.” Since 1997, Ceres researchers have discovered genes that boost biomass yields, reduce nitrogen applications and increase tolerance to drought, cold and salt. The company owns exclusive rights to more than 40 U.S. and

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

CELLULOSE

PHOTO: CERES INC.

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Focus on Energy A healthy international debate has been waged for some time now concerning the use of genetically modified crops. Hamilton is not bothered by skeptics because he believes the public can draw a distinction between modified plants that are grown for food and those that are grown for fuel. When confronted with that skepticism, Hamilton argues that gene modification is necessary. No agriculture is natural, he says. It’s a uniquely human activity that has been under development for only the past 10,000 years. Considering that land plants first appeared 400 million years ago, Hamilton makes his point that agriculture is a recent phenomenon that should be continually improved. At Ceres the focus is on energy , but that's not to say the company has never worked with traditional row crops. In the beginning, researchers at Ceres worked with more traditional crops such as corn and soybeans and served as a gene and trait provider for traditional row crop seed companies. But Ceres’ specialty has always been developing technology, Koppenjan says. The focus of that work has shifted toward the development of seed for energy crops. “We’ve always been more of the technology development platform company,” Koppenjan says. “Now we’re taking

that same technology and applying it to crops that historically haven’t received a lot of plant breeding and technology.” Switchgrass, miscanthus and sorghum are the energy crops that Ceres’ researchers believe have the most potential and are the focus of current studies. The advancements made by Ceres’ researchers will contribute greatly to the advancement of energy crops and secondgeneration biofuels. Hamilton’s resolution and commitment to the matter is clear when he speaks about the future of biofuels in the United States. He compares the establishment of cellulosic biorefineries to the flat-screen TV market. “The first few are going to be very expensive, but the key is to get the first few built so we can work to drive down the cost,” he says. If comparing biorefineries to televisions, then a steady supply of feedstock would be the electricity needed to turn them on.

What Comes First? The balancing act between creating a new feedstock supply and building a new biorefinery poses the “chicken and egg” question. Which comes first? Ceres employs the philosophy that “seed in the ground” and “steel in the ground” happen simultaneously. According to its plan, identifying the location for a cellulosic ethanol production facility and feedstock should be done in conjunction. The first year of a plant’s existence will consist of

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Continued on page 91

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

CELLULOSE

Collaboration and Competition The advancement of the cellulosic ethanol industry will require the work of many organizations and researchers, as will the development of feedstock to produce the fuel. Ceres has a long list of collaborators, including the Chinese Academy of Ag Sciences, the National Renewable Energy Laboratory and the USDA. Below are details about two of Ceres’ most notable multiyear collaborations. ICM Inc.: As part of this collaboration, announced in early February, Ceres will provide seed to area farmers who will then sow thousands of acres of switchgrass and other energy crops over the next three years at ICM’s St. Joseph, Mo., biorefinery. The plant will be a demonstration-scale facility designed to test the crops’ conversion efficiency, fuel yield and economic viability. Samuel R. Noble Foundation Inc.: Established in 2006, this long-term collaboration was designed to develop and commercialize new biomass feedstock crops. As part of the agreement, Ceres has access to switchgrass varieties developed by breeders at the Noble Foundation. Ceres isn't the only company developing cellulosic feedstocks, other U.S. companies are also involved in the advancement of energy crops nationwide. Mendel Biotechnology Inc.: Mendel is Ceres’ closest competitor. The Hayward, Calif.-based company is also working toward the production of energy crops, but is focusing its efforts on miscanthus and sorghum. Company President Neal Gutterson says he thinks the two crops will

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make an excellent package to offer farmers and refineries in the future. “We have identified our first seed and clone products of miscanthus and those are in an experimental product development phase,” he tells EPM. Product trials are being conducted on those specimens throughout the Midwest. Gutterson sees energy crop seed production as a long-term game and projects the market for those products won’t really develop for the next three to five years. “Early to the middle of the next decade we see an increased demand for the product and we’re preparing our miscanthus products to be able to deliver when the market begins to grow significantly,” he says. Sorghum seeds could be available next year, but Gutterson doesn’t see the demand for it. Mendel will market its seeds under the BioEnergy Seeds brand, and plans to begin making its products available early next decade. More information about Mendel Biotechnology can be found at www.mendelbio.com. Monsanto Co.: The giant of the genetic agriculture world, Monsanto has produced cotton, corn, oilseed and vegetable seeds for years. According to the company, Monsanto is committed to broadly licensing its technology to other companies around the world and providing farmers with seeds that are genetically superior with unique biotechnology traits. More information about Monsanto can be found at www.monsanto.com

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the construction of the facility, while the growers are establishing the perennial feedstock. Year two will be the startup. The plant will run start-up phases while the growers harvest the first year of feedstock, which will amount to approximately 50 percent of the crop’s potential. By year three, the operation should be up and running on both ends. The biorefinery will be able to reach its full capacity and growers will be able to harvest the top yields available from their crops. That’s the plan anyway. Questions remain on both sides of the cellulosic production chain. Biorefineries want to be reassured that ample feedstock supplies will be available. Farmers want a signed contract to supply a business with the crop before they invest their efforts and bankroll into planting and harvesting. One possible solution to the standoff could be the Biomass Crop Assistance Program. This new program is part of the Food, Conservation and Energy Act of 2008, more commonly referred to as the Farm Bill. The program aids in the establishment and production of crops that will be used to produce energy. After the producer’s potential BCAP project area has been approved, funding will be provided to the producer on an annual basis and will cover up to 75 percent of the cost of establishing a perennial crop, including the cost of seeds and planting. BCAP contracts will be valid for five years for perennial and annual crops, and 15 years for woody biomass. However payments to the grower will be reduced once the producer begins delivering crop to a biorefinery, or uses the crop for anything other than energy production. Koppenjan says BCAP could certainly help Ceres’ business and the sale of its seeds. At press time, the company was preparing to debut its Blade Energy Crops seed business. Koppenjan says Ceres expects to sell its energy crop seeds to growers who “want to get ahead of the curve” as well as to biorefineries interested in testing the prod-

uct. The company is offering five seed varietals of switchgrass this fall so that crops can be planted during the 2009 growing season. The EG 1101 and EG 1102 varietals have been bred to prosper in lowland ranges, while the Blackwell and Trailblazer varietals are intended for the southern upland range. One varietal, Sunburst, is a winter hardy switchgrass seed that was designed for the northern Great Plains region. In addition to providing seed, Ceres plans to establish a grower’s guide to assist its customers as they establish these new

crops. It will take two years for switchgrass stands to become fully mature, but Hamilton says they do expect some commercial harvest to occur in the fall of 2009. At press time, a selling price for the seed had not been established. EP Kris Bevill is an Ethanol Producer Magazine staff writer. Reach her at kbevill @bbiinternational.com or (701) 373-8044.

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ENZYMES

Novozymes' Fuel From Grain Discovery group researches first-generation biofuels. The researchers pictured are, left to right, Katie Mevs, research associate; Guilermo Coward-Kelly, senior scientist; Joyce Craig, senior scientist; Jim Liu, staff scientist I; Chee L. Soong, senior scientist; Daniel Weed, scientist; Anne Glud Hjulmand, senior manager; Darnell Bailey, research associate; Randy Deinhammer, staff scientist II; John Mathews, associate scientist; James Palmer, research associate; and Jeremy Saunters, research associate. PHOTO: NOVOZYMES

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

ENZYMES

If You Build it â&#x20AC;Ś Two enzyme companies, Novozymes and Genencor, have made plans to branch out into the Midwest to better serve their ethanol producing customers in the Corn Belt. By Suzanne H. Schmidt

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

ENZYMES

eing situated in the heart of the U.S. corn and ethanol production region has its advantages. The communities of Blair, Neb., and Cedar Rapids, Iowa, have attracted the attention of two of the world leaders in enzyme production. Novozymes chose Nebraska for its newest production site and Genencor, a division of Danisco, is expanding its educational base in Iowa with the building of an Applications and Training Center of Excellence. These companies are producing easily assessable products for their customers in the Midwest and North America. While each company’s focus is unique, both are important for the future of ethanol production. Novozymes’ decision to build a facility in the Midwest was based on several factors, first and foremost being logistics. Railways and main roads are in close proximity to its building site in Blair. Transportation costs vary by shipping location, “but it’s one of the key reasons we chose to put our next factory in the Midwest, to minimize transportation costs,” says Poul. Ruben Andersen, global director of biofuels for Novozymes. The market for this facility will generally be focused on North American ethanol producers, “but we do export enzymes across the world,” Andersen adds. The enzymes used to produce fuel ethanol are usually shipped in liquid form, which is the cheapest and simplest option. Once produced, the liquid enzymes are loaded into trucks and tankers. These loads can weigh up to 20 tons and are generally moved by trains or trucks. The enzymes can be sent by airplane, but typically aren’t because of the cost. The enzymes need to be handled properly as they generally have a year shelf life at room temperature “Enzymes are biological, just like milk or beer or any other biological materi-

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Novozymes expects to hire nearly 100 employees upon completion of its new enzyme production facility in Nebraska.

al,” Andersen says. Depending on the preparation of the enzymes, some must be kept at about 41 degrees Fahrenheit. Novozymes also had to consider the terrain, water supply, travel routes and what it would do with the effluent stream, which must be purified by biological rinsing to break down the remaining nutrients in the process wastewater, Andersen says. “The end product of the effluent stream is a fertilizer that’s used in fields in the United States, Denmark and China,” he says. Although the exact method of distributing the waste product is still being determined for the Nebraska site, Andersen expects it will be a pipeline system. “We have a pipeline in at our Denmark facility and at our enzyme facility in North Carolina,” Andersen explains. Novozymes searched the globe for an ideal location for its newest plant before settling on Blair, a community of about 7,512 residents. The enzyme company considered South America and China for a production site before deciding to build in the United States, where a majority of its customer base is located. But then there was the question of where to build in the United States. “We were looking in the Corn Belt states,” says

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

PHOTO: GREATER OMAHA ECONOMIC DEVELOPMENT PARTNERSHIP

ENZYMES

Novozymes chose this site in Blair, Neb., for its new enzyme production facility because of its proximity to the Corn Belt.

Peder Holk Nielson, executive vice president and head of Novozymes business. Novozymes found that Nebraska has the resources it needs. “Energy at the right price was essential and incentives by the state had a role to play here too,” Nielson says. The community has also shown support for the project. “We approved $800,000 of our economic development funds to help Novozymes make the decision to locate here, so from a community standpoint we have been very positive and very supportive of the whole industry,” says Rodney Storm, Blair city administrator. The facility has the potential to be an economic boom for the community. “The impact on Blair will be significant as an investment in job creation, and it puts us in a better position to be more competitive in global energy projects,” says Richard Baier, the director of the Nebraska Department of Economic Development. “We were able to secure a site for [Novozymes] adjacent to the Blair Biorefinery Campus, and it’s a good fit.” Although Blair is a small community, it is about 25 miles from the Omaha metropolitan area, which will help meet the need for high-tech workers. Beyond these benefits, Novozymes has a relationship with

Cargill Inc.’s ethanol plant in Blair. “I think that the state put together a great incentive package and we showed them we sure wanted them here in Nebraska,” Baier adds. The enzyme production facility will be built on 30 acres of Nebraska plains. The new facility will cost $80 million to $100 million dollars. Novozymes expects to break ground in late 2008 and have enzymes ready for use in 2010. The facility will initially focus on supplying enzymes for the corn-based ethanol industry and for cellulosic ethanol start-ups. The main concern now is whether the cellulosic ethanol demonstration plants will be ready for those enzymes in 2010. “It may be more like 2011, but we will be supplying these demonstration plants,” Nielson says. “This new plant will have the infrastructure to continue growing the cellulosic ethanol enzymes business into the next decade.” The facility is specially designed and can adapt to changes in science and technology. “The way we look at it is initially we can bridge over into Blair with our plant and depending how the technologies pan out we can build many different kinds of technologies in the 2011 to 2012 timeline,” Nielson says. Novozymes says its investment in

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WATERLOO, IOWA ETHANOL PRODUCER MAGAZINE OCTOBER 2008

ENZYMES

These images illustrate the layout, above, and the expansion potential, below, of the new enzyme production plant in Blair, Neb. The facility is designed to allow Novozymes to have flexibility to adapt to cellulosic ethanol technology changes. The image below shows the potential growth of the plant.

the Midwest is not just about producing a product, it’s a commitment to the people, the industry and the area. “In more regional terms, we will also want to be a part of creating jobs in ethanol,” Nielson says. Novozymes initially expects to hire 100 employees. The Novozymes enzyme production facility brings a technological edge to Blair. “I think it’s a wonderful example of how you may think it’s a little area, but next thing you know, they have a high tech company moving in and it actually is a very competitive area,” Nielson says. The size of the facility and the investment leave no doubt about Novozymes’ commitment to the ethanol industry and its North American customers. “We do this as a long-term investment,” Nielsen says. “This plant will sit there for the next 50 years, so take this as a commitment to a long-term development of bioenergy and biofuels in the Midwest.”

Tip-Top Training in Cedar Rapids

SOURCE: NOVOZYMES

Novozymes is not the lone enzyme producer moving to the Midwest. Genencor is expanding its facilities, but it is taking the educational route by building a 20,000-square-foot Applications and Training Center of Excellence. Genencor recently broke ground on its $4.6 million facility in Cedar Rapids, which will provide state-of-the-art training for ethanol producers and carbohydrate processing customers. The facility is expected to be complete by the spring of 2009. “Genencor has been focused on meeting the needs of the grain processing enzyme market since its inception,” says Troy Wilson, vice president and business unit manager of Genencor’s global grain processing business unit. “That led us to locate our principal manufacturing and applications labora-

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

ENZYMES

tories in the Midwest beginning in the 1980s. In the past five years, we've invested over $50 million in capacity expansions to keep pace with the rapid expansion of the fuel ethanol industry, building the Center of Excellence is the natural next step.” The Center of Excellence enhances Genencor’s service to its customers who produce fuel alcohol and sweeteners. The training center will consist of “a laboratory, pilot plant, training classrooms and additional office space,” Wilson says. “It will house the applications development and technical service team.” Nearly 20 experts will be on hand to provide assistance to customers. The facility will have two main sections for applications development and technical service. Applications development uses innovation to meet customers’ needs. Technical service addresses specific customer questions. Some questions that will be addressed at the education center are to determine the phytate content in distillers dried grains with solubles and how fermentor solids correlate with yield. “Our customers look to us to answer questions about alternative feedstocks,” Wilson says. “The facility will allow us to collaborate in answering these questions. It will also enable customers to continue their professional development.” The training center will be available for ethanol plant staff to receive extensive instruction. “We will conduct initial and ongoing training sessions for plant personnel including operators, lab personnel and management,” Wilson says. This will combine classroom presentations with hands-on work in the applications and analytical laboratories.” The ethanol industry has faced some challenges in the form of high feedstock costs and criticism from

the media regarding the use of food to produce fuel. Both companies say that despite these challenges, they are committed to their customers and developments in the Midwest. The enzyme maker is also a welcome addition to the Cedar Rapids community. “Genencor’s decision to locate its new Center of Excellence in Cedar Rapids is a clear sign that we have made some good decisions in the growth and development of our community,” Cedar Rapids Mayor

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

Kay Halloran said in a press release. “Genencor has been a part of that growth and development, by providing highly skilled jobs to our residents and serving as a community leader. We are very excited to see Genencor continue to grow in Cedar Rapids.” EP Suzanne H. Schmidt is an Ethanol Producer Magazine staff writer. Reach her at sschmidt@bbiinternational.com or (701) 7384972.

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TRANSPORTATION

Rail-to-Truck ETHANOL TERMINALS

Large rail terminals that can handle ethanol unit trains are poised to be an integral part of transporting the fuel in the future. The ability to quickly and inexpensively move ethanol long distances becomes more important as our renewable fuel consumption increases. Several companies have recognized this opportunity and are adding ethanol capacity. By Erin Voegele

PHOTO: SAFE HANDLING INC.

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ETHANOL PRODUCER MAGAZINE OCTOBER 2008

TRANSPORTATION

he ability to economically and efficiently ship ethanol long distances is expected to be the key element in the successful implementation of the renewable fuels standard (RFS) created by the Energy Independence & Security Act of 2007. The RFS calls for ethanol consumption to increase from 9 billion gallons this year to 36 billion gallons in 2022. At those levels, consumption must increase approximately 400 percent in less than 15 years. Much of that ethanol will likely continue to be produced in the Midwest, with the heaviest demand remaining concentrated along the East and West coasts. Proper transportation infrastructure will be crucial to delivering ethanol to these markets outside the Midwest. A significant portion of this transportation will likely take place by rail. However, railcars and tracks aren't the only infrastructure needed for rail transportation. Ethanol transloading terminals at both the destination markets and point of origin are essential to providing quick, efficient and economic rail transportation. As ethanol shipments continue to increase, large terminals capable of handling unit trains are expected to be a necessary component to effectively serve key markets. According to John Schmitter, a rail transportation consultant who is involved in the biofuels industry, approximately 70 percent of U.S. ethanol production is currently shipped by rail. This level is expected to remain relatively stable as the industry moves forward. Although, there has been some concern over the railroad’s future capacity, and its ability to handle increased ethanol shipments, Schmitter says it is important to put the amount of projected ethanol shipments into perspective. Even as ethanol production and shipments continue to increase, ethanol will barely constitute 1 percent of total rail volume, and railroads will have plenty of capacity to handle that. However, rail capacity is only one element of efficient rail transportation. The ability to ship unit trains of ethanol, as opposed to single manifest cars, is important to ensuring quick and affordable ethanol shipments. Robert White, the Ethanol Promotion and Information Council’s deputy director, explains the importance of large ethanol transloading terminals. “The continued involvement of

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those larger facilities that can handle multiple cars—or, in fact, a unit train— will ultimately lower [freight prices] because the more people who have to touch the fuel—the more times it has to be touched—the more money will be spent on freight,” White says. Every penny saved on shipping is a penny that can be passed on to the consumer in the form of lower prices. Transportation will continue to be an important aspect of consumer acceptance because of its impact on the price at the pump, he says. Although no comprehensive list of current ethanol rail terminals is known to exist, Schmitter says that approximately nine U.S. rail terminals can currently handle a unit train of ethanol, with nearly eight more in various stages of planning and development.

Terminals in Operation Safe Handling Inc., a bulk product transportation and toll processing

company, operates two rail terminals. One is in Mount Pleasant, Pa., approximately 45 miles southeast of Pittsburgh. The other is in Auburn, Maine. Both terminals have the capacity to transload ethanol. “We are not handing unit trains,” says Andy Meyer, Safe Handling’s vice president of sustainability. “The market we are in doesn’t need unit trains, so they are not unit-train terminals.” Although Meyer doesn’t classify the terminals as unittrain terminals, the Pennsylvania location can handle 145 railcars, while the Maine location has capacity for 210. Each of Safe Handling’s terminals can transload 180,000 gallons of fuel per day. The company is in the process of doubling the Pennsylvania terminal’s capacity. “Pennsylvania has been a giant success for us,” Meyer says. “We are scrambling to keep up with demand. We are in the process of doubling our capacity, and that is already sold out.”

PHOTO: SAFE HANDLING

TRANSPORTATION

Ethanol is transloaded from rail to truck at Safe Handling’s Pennsylvania location.

Meyer says the decision to handle ethanol was a natural extension of the company’s business. Safe Handling already had the rail space, fire suppression, containment, trained staff and utilities. Although ethanol represents a relatively small portion of the products Safe Handling transloads, the company is expecting demand and shipments to

grow. “It has been a great business for us,” he says. “We are pleased with the business, and it has allowed us to create jobs.” Although Safe Handling’s terminals do not offer barge access, Meyer says be believes most ethanol rail terminals currently handling unit trains of ethanol are located on marine terminals that can fill barges. He says that the markets served by Safe Handling’s terminals don’t require unit trains or barges of the product because people simply aren’t using that much ethanol right now. Several other companies are working to add ethanol capability to their terminals. U.S. Development Group LLC currently operates four rail terminals in Houston, Dallas/Fort Worth, Texas, Baltimore, and Linden, N.J. All four locations have the capability to transload unit trains of ethanol. According to Meg Martin, a U.S Development Group spokesperson,

PHOTO: U.S. DEVELOPMENT GROUP LLC

TRANSPORTATION

U.S. Development’s Dallas/Ft. Worth location has the capacity to transload unit trains of ethanol.

the company’s experience handling ethanol has allowed their business to grow. The company expects to add additional ethanol capacity in the future.

Kinder Morgan Energy Products L.P., one of the nation’s largest pipeline transporters and terminal operators, operates approximately 68 rail terminals. Currently, only one terminal has

the capability to transload a unit train of ethanol. That terminal is in Lomita, Calif., and has been in operation for more than two years. According to John Mahon, Kinder Morgan’s director of business development for renewable fuels, the company expects to add ethanol capacity to additional rail terminals in the future. Alternatively, Iowa-based Manly Terminal LLC is serving the producer, Midwest-based side of the market. Located within 300 miles of where 50 percent of our nation’s ethanol is currently produced, and within 100 miles of a billion gallons of annual production, Manly Terminal is positioning itself to be an integral element of outgoing ethanol shipments. Although the terminal’s primary business currently is single manifest cars, the company expects unit-train shipments of ethanol to increase in the future. “We have the capability to build unit trains with multiple customers’

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Manly Terminal has the ability to build unit trains of ethanol with multiple customers’ railcars.

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TRANSPORTATION

cars in that unit,” says Lee Kiewiet, Manly Terminal’s president. This can be highly beneficial to smaller producers. By consolidating the volumes of several small producers into one unittrain shipment, those producers can often get a much better price on logistics and car turns. The company is in the process of launching a trading platform that will allow Manly Terminal users to buy and sell ethanol in order to complete unittrain shipments. For example, if a producer needs 20 cars to fill out a unit train, that producer can place a bid on the gallons needed to fill out the unit. “We believe that with the addition of this trading floor, it is really going to increase our flows,” Kiewiet says.

Moving Ahead Although railroads will be able to accommodate increased ethanol shipments in the future, overall rail capacity will be constrained, Schmitter says.

Ethanol shippers will have all the capacity they are willing to pay for as railroads are private businesses that have the ultimate mandate of making money. “Ethanol is good business for them, and as long as it remains so, they’ll handle it,” Schmitter says. As White notes, the opening of ethanol rail terminals obviously provides more opportunity, but doesn’t necessarily translate into increased ethanol usage; at least not immediately. “I think that as we move forward and more product becomes available … we will need those high-volume opportunities to unload at fuel destinations,” White says. “For products we are involved with, especially on market development, where we are looking not only at E85, but also midlevel blends between E10 and E85, we need to have that volume and we need to have it at an economic price.” While investments in infrastructure such as ethanol rail terminals may

not be imperative to serving most of today’s markets, those in the transportation industry seem to be recognizing the potential need for these types of facilities. Having the proper infrastructure in place is a precondition to increased ethanol usage in the future. These facilities become even more important as ethanol use increases due to the RFS—and the likelihood that a midlevel blend will be approved—and should help regional markets adapt and ensure that producers have a ready market for ethanol products. EP Erin Voegele is an Ethanol Producer Magazine staff writer. Reach her at evoegele@bbiinternational.com or (701) 373-8040.

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SAFETY

Transporting ethanol safely via rail begins at the ethanol plant or terminal. Story and Photos By Ryan C. Christiansen

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n many cases, only the six or eight steel bolts that tighten the manway cover on a general service tank car stand between an ethanol producer with a perfect rail shipper safety record and the producer with a nonaccidental release (NAR) of ethanol on his hands. When an ethanol producer releases a tank car to the railroad, as the shipper, the producer is responsible for any NARs during shipment. The Association of American Railroads defines a hazardous materials NAR as “the unintentional release of a hazardous material while in transportation (including loading and unloading) and doesn’t involve an accident,” including “leaks, splashes, and other releases from improperly secured or defective valves, fittings, and tank shells, and also includes venting of non-atmospheric gases from safety relief devices.” According to the AAR, the vast majority of reported NARs involve small quantities of a product. However, as ethanol rail shipments continue to increase, so do NARs, prompting ethanol producers and rail companies to work together to reverse the trend.

Ethanol Traffic Increasing Across the board, Class I rail carriers in the United States and Canada are report-

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Students examine the many styles of top valve arrangements atop the GATX TankTrainer tank car.

ing that the upward trend in ethanol production and consumption has been a significant contributing factor to the overall increase in rail shipments of agricultural products from the Midwest to coastal destinations, especially to the Eastern United States. According to the AAR, 85 percent of ethanol is shipped from the Midwest states of Illinois, Nebraska, Iowa, South Dakota, and Minnesota. Norfolk Southern Corp. reported moving more than a billion gallons of ethanol from plants west of the

Mississippi to eastern destinations in 2007. Burlington Northern Santa Fe Railway earned a record $2.7 billion dollars in 2007 for shipping agricultural products. The railroad said that overall, shipments in the category increased by 6 percent, which included record levels of ethanol. According to the AAR, railcar loads of ethanol in the United States increased from more than 25,000 in 2001 to almost 150,000 in 2007. The Federal Railroad Administration said that as of 2006, there were a total of 275,000 tank cars on the rails capable of hauling ethanol. According to American Railcar Industries, a tank car that is designed to carry ethanol can cost between $80,000 and $90,000. Ethanol rail traffic is expected to continue to rise. According to the Renewable Fuels Association, the U.S. ethanol industry has 134 plants in 26 states that produced 6.5 billion gallons in 2007. The current overall capacity is 7.2 billion gallons. Meanwhile, 77 plants with a capacity of 6.2 billion gallons are under construction.

Investing in Infrastructure To handle the increasing traffic, rail companies are investing more in infrastructure. Overall Class I railroad spending increased to an estimated $9.4 billion in 2007, up from $5.7 billion in 2002, according to the AAR. Union Pacific Corp.,

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which links 23 states in the western twothirds of the country, reported investing more than $1 billion in its overall railroad infrastructure, including the parts of its network that serve the ethanol-producing states of Iowa, Minnesota, and Nebraska. The company has dedicated part of its workforce to assisting ethanol producers with choosing locations for new ethanol plants and in developing the necessary rail infrastructure for those plants.

Ethanol Tops for NARs If you were trainspotting somewhere near the nexus of Minnesota, Iowa, Nebraska and South Dakota, you might think that the locomotives there were hauling primarily tank cars filled with ethanol and covered hoppers filled with corn or distillers grains. But to put things in perspective, ethanol comprises less than onehalf of 1 percent of total rail traffic in the United States, according to the AAR. Despite this low profile, however, the shipment of ethanol in railcars continues to loom large on hazardous materials safety data charts. Before shipping, ethanol is denatured with 2 percent to 5 percent natural gasoline to render the product undrinkable. According to the U.S. Department of Transportation Hazardous Materials Regulations, the shipping name for this

THE FASTEST WAY TO GALLON 1

Loading Racks Increase Safety Because tank cars have top railings that are only 28 to 32 inches high, the use of a harness, lanyard, and cable or a loading rack are recommended when someone is working on top of the car. It can be suggested, however, that such safety equipment should be required. “If you stand up and take a ruler or tape measure and put it on the floor behind you and then raise it up to [the height of a tank car’s top railing], you'll see that, regardless of how tall you are, it's right around your knee or maybe a little taller,” said Michael Kenan, technical specialist for SafeRack Inc. in Sumter, S.C. “Would you want to be on top of that tank car without any fall protection or access?” Ethanol is a fluid that requires loading and unloading operators to routinely climb atop tank cars. Kenan said OSHA’s general duty clause requires operators to have fall protection. The top railing on a tank car is not enough, he said. “A lot of this equipment is up north in the wind and ice,” Kenan said. “If you slip and you're falling backwards, [the top railing] is actually going to provide a pivot point for you to fall. It's not going to give you any safety.” Kenan said using a lanyard, bottom harness and cable will help prevent someone from hitting the ground during a fall, “But really,” he said, “that’s just fall restraint, and we sell those products, too, but what you really want is fall protection,” such as loading racks with gangways, platforms, handrails, and mid-rails. “If you’re using tools, you can walk out there carrying the tools instead of having to climb up a ladder with a wrench stuck in your mouth,” he said. Another reason you don’t want to depend on using a harness, lanyard, and cable for safety around ethanol is because ethanol is flammable, Kenan said. “If you catch on fire or if there is a fire at the site and there is a possibility of that tank exploding, you don't want to have to stop and unhook yourself from anything,” he said. “You're going to be running as fast as your little legs will carry you. You're going to want to have access and fall protection that will offer safe egress.” Kenan said providing loading racks for workers will not make an ethanol producer more money, but it will pay off in safer, happier workers and might prevent potential losses due to personal injury claims.

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SAFETY

Automated Rail Safety Systems General service tank cars have specialized equipment to ensure the safe shipment of product. Spray-on linings protect the seven-sixteenths-of-an-inch carbonsteel tank and the product from one another. The cars are tested to withstand 500 pounds-per-square-inch of pressure. Double-shelf couplers prevent the cars from becoming disconnected vertically while traveling. After a loaded tank car is sent on its way, the railroad uses manual safety checks and automated systems to be sure that product is transported safely. Hunting Trucks: The stub still under-frame of a general service tank car includes two trucks, one at each end of the car. The trucks are equipped with draft components for coupling cars, and the car’s wheels, axles and brakes. The parts of a truck fit together like a jigsaw puzzle, which helps the truck to adjust to turns and grades and prevent derailment. The weight of the tank car keeps the trucks together. The excessive side-to-side motion of a truck on a rail car is called hunting. According to Salient Systems Inc., hunting trucks contribute to the wear of rails and rail cars and increase fuel consumption. Severely damaged trucks can cause derailments. Railroads use Salient’s Hunting Truck Detector to identify trucks that exhibit excessive side-to-side motion so that the trucks can be repaired or replaced. High-Impacting Wheels: Hand brakes that are set when a train is in motion can cause flat spots on the wheels of a truck. According to Salient, wheels with spalling, shelling, slid flat, or out-of-round characteristics impart excessive impact loads on rails. High-impacting wheels can dissipate the horsepower of a train, degrade the tracks, and reduce the life of wheel bearings and other car components. Ultimately, faulty wheels can cause derailments. Salient’s wheel impact load detector uses a series of strain gage load circuits that are welded directly to the neutral axis of a rail to continually monitor and measure the vertical forces that are exerted by each wheel of a passing train. Wheels that need repair or replacement are reported to the railroad. Faulty Bearings: If a bearing seal is blown and grease is lost, bearings can become hot and cracked. According to Vipac Engineers and Scientists Ltd. the derailment of trains caused by wheel bearing faults is a significant issue in the rail transport industry. There are more than 2,500 bearings on a typical 320-car train and the failure of just one bearing poses a safety risk. Vipac’s RailBAM rail bearing acoustic monitoring system listens to wheel bearings as rail cars roll by and provide railroads with advanced warning of bearing failures so that they can be repaired or replaced.

mixture is “Alcohols, N.O.S.,” meaning “alcohols, not otherwise specified.” Alcohols, N.O.S. was the top commodity for cumulative NARs from 2005 to 2007. There were 186 NARs for Alcohols, N.O.S. during the past three years, up from 126 during 2003 through 2005 when Alcohols, N.O.S. ranked third overall. The rise in NARs for Alcohols, N.O.S. is a “trend of interest,” according to the AAR. The trend for Alcohols, N.O.S. is concerning at a time when the total number of NARs for all commodities is trending downward. There has been a 46 percent reduction in overall NARs for all commodities since 1996 and the total number of NARs each year leveled off at about 700 in 2004. Unfortunately, there isn’t just one bad apple spoiling the whole barrel. In 2007, 35 individual shippers had one NAR and 11 had multiple NARs. However, while the industry as a whole is taking a step back, some ethanol producers have been recognized for their rail safety practices. For example, BNSF’s Annual Product Stewardship Award recognizes companies for the safe transportation of hazardous materials by rail. The ethanol producers who were recognized by BNSF for 2007 included Abengoa Bioenergy Trading U.S. LLC, AGP Corn Process Inc., Archer Daniels Midland Co., Big River Resources

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SAFETY

LLC, Chief Ethanol Fuels Inc., Chippewa Valley Ethanol Co., Glacial Lakes Energy LLC, Husker Ag LLC, KAAPA Ethanol LLC, Nebraska Energy LLC, Poet Ethanol Products, Red Tail Energy, Standard Ethanol, Trenton Agri Products LLC and VeraSun Energy Corp.

Loose Bolts to Blame The manway cover on a general service tank car is primarily opened during loading and again to vent the tank during unloading, according to an AAR survey. Shippers use the visual gauge at the manway as the primary instrument for detecting the liquid level in the tank. There is a safety valve that will relieve internal pressure from the tank during shipment or in the unlikely event of a fire. Safety valves are typically mounted to a stand-alone safety valve nozzle, although they may be mounted to the fittings cover plate, as well. In 2007, the top specific cause for NARs for general service tank cars in ethanol service was loose manway cover bolts. Loose bottom-outlet valve caps, misapplied liquid product valve plugs and open liquid product valves were also significant contributors. When tightening manway cover bolts, it is recommended that a star pattern is used and to make multiple passes through the bolts, increasing the torque with each pass until the desired torque is achieved. It

The archetypical GATX TankTrainer tank car includes the many styles of top valve arrangements, bottom outlet valves, and safety devices found on all types of tank cars. TankTrainer students are invited to walk through the inside of the carâ&#x20AC;&#x2122;s tank to see how the valves operate.

is important to apply the recommended torque for each specific application and to use a torque wrench when doing so. The amount of torque required varies with the type and size of gasket being used, the size and number of bolts, and whether the bolts are lubricated or dry. Shippers should consult their tank car manufacturers or leasing companies for information about how much torque to use. According to the AAR, while most shippers report using the star pattern when tightening manway cover bolts, more than

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

half report not having a specific torque requirement for tightening the bolts.

Training is Available The AAR routinely captures data concerning NARs in the United States and Canada. When a threshold number of incidents from a specific shipper are reached, the AAR notifies the company and asks for more information about follow-up actions the shipper is taking to address the causes of the NARs. While ethanol producers are encour-

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Environmental Sustainability, Process Efﬁciency. GATX TankTrainer instructor Stu Fuqua talks to students at the front of the GATX SchoolHouse boxcar.

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aged to have standard safety procedures and training in place, some rail companies provide training services. Railcar leasing company GATX Rail, for example, offers GATX TankTrainer sessions, which include classroom instruction inside an air-conditioned boxcar, as well as hands-on instruction in, on and around the GATX TankTrainer tank car. GATX held four TankTrainer sessions July 15-16 at the Manly Terminal near Manly, Iowa, tailored specifically for people in the rapidly expanding biofuels industry. Most of the GATX tank car fleet is dedicated to hazardous materials service, which includes products ranging from ethanol and diesel fuel to liquefied petroleum gas and anhydrous ammonia. Classroom instruction inside the GATX boxcar includes information about the anatomy of tank cars and important safety procedures and regulations. The classroom time is followed by a tour of the archetypical TankTrainer tank car, which includes the many styles of top valve arrangements, bottom outlet valves, and safety devices found on all types of tank cars. Students are invited to walk through the inside of the car’s tank to see how the valves operate.

GATX has one TankTrainer unit and conducts approximately 15 trainings each year. Most of the classes are held at a customer location at the request of the customer. The TankTrainer program has been in operation since 1993. The AAR’s Non-Accident Release Reduction Program, meanwhile, has produced a video entitled “Getting to Zero,” which is designed to impress upon those who load or unload hazardous materials in tank cars the importance of reducing NARs on rail. The video explains how NARs impact the safety of railroad workers, citizens along rail systems, the environment, a shipper’s customers, and the loaders and unloaders themselves. The 10minute video can be ordered from the following address: Association of American Railroads, Publications Department, 50 F Street N.W., Washington, D.C., 20001, or by calling (202) 639-2124. EP Ryan C. Christiansen is an Ethanol Producer Magazine staff writer. Reach him at rchristiansen@bbiinternational.com or (701) 373-8042.

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PHOTO: VICTORY ENERGY OPERATIONS LLC

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Victory

A Taste of

When John Viskup and Jim Sponder established Victory Energy Operations LLC in 1999, ambitions were highâ&#x20AC;&#x201D;but neither expected the company to hit the milestones it has in such a short time. In less than 10 years the company has grown from 3 to 320 employees. By Anna Austin

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PROFILE

f being victorious in the business world requires a company to grow by leaps and bounds then Victory Energy Operations LLC is aptly named. Victory Energy began in then 29-yearold company President John Viskup’s home with three employees. Less than 10 years later, the company occupies a 170,000 square foot building in Collinsville, Okla., and has 320 employees. In its first year, Victory Energy supplied 10 boilers to customers; today that number surpasses 300. Victory Energy has become a leading boiler supplier to a variety of markets, largely within the ethanol industry. In 2007, the company realized more than $121 million in sales. With that kind of growth it’s not surprising that the company’s motto is “Full steam ahead!” In May, Entrepreneur Magazine ranked Victory Energy No. 15 on its 2008 Hot 100 list, a ranking of the fastest growing companies in the United States. Additionally, it was ranked No. 1 in the manufacturing sector. Nearly 21 million companies were on the magazine’s preliminary list, which Entrepreneur Magazine said included new businesses that are making a major impact on the economy based on their revenue and the jobs that are created as a result of that growth. The Hot 100 are expected to employ more than 15,000 individuals by 2009, an increase from a combined total of 517 employees on their first day of business. No other boiler manufacturing company has ever been recognized for such an accomplishment. “Being ranked first in manufacturing—we were surprised and honored at being recognized outside of our specific market,” Viskup says. “The ultimate vision of our organization was to produce a higher quality steam generation system that would provide a better value to our

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customers,” says Viskup, who is described by Victory Energy Market Manager Charles Swallow, as someone who “lives and breathes boilers.” “The goal was to produce competitive products and services, execute well, and continuously improve and maintain a high level of customer satisfaction,” Viskup continues. “We continue to meet—and exceed—these goals, as we diversify into new markets and develop innovative ways to meet the needs of a growing customer base.”

Gaining Marketshare In 2001, Gopher State Ethanol in St. Paul, Minn., was losing the battle with odor and emission complaints from the community—problems generated from the plant’s production process. “The Victory team had an idea,” Viskup says. “Why not attach a heat recovery steam generator (HRSG) to a thermal oxidizer? The oxidizer would burn off the volatile organic compounds while the HRSG would recover the heat and generate more steam in the process. The system worked, and it worked well.” That same year the International Fuel Ethanol Workshop & Expo was held in St. Paul, and the company was allowed to discuss the benefits of thermal oxidation technology to ethanol industry representatives. News of the technology spread through the industry like wildfire, Viskup says. It was smooth sailing for awhile, but because new technology can never be rendered fool proof, the company’s first major issue surfaced. There was a problem with the plant’s thermal oxidizer—a structure which another company had supplied—but was attached to Victory Energy’s boilers. The decision to stand by the product, regardless of that factor, was made without hesitation. “From this point on, everyone in the industry knew that Victory Energy had integrity,” Viskup says.

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

PROFILE

They Shut Us Down For Being PHOTO: ANNAAUSTIN, BBI INTERNATIONAL

TOO POWERFUL!

Victory Energy's, left to right, Charles Swallow, Charles Lockhart and Gary Persichini man the booth at the 2008 American Coalition for Ethanol conference in Omaha, Neb.

“They knew we would support the industry that had supported us.” The problem was remedied and Victory Energy remained a reputable company.

Product Pride Victory Energy manufactures heat recovery steam generators and watertube package boilers, with a focus in the biorenewable fuels and solar energy industries. In addition to boiler systems, Victory Energy offers a range of auxiliary equipment, including ductwork, main stack assemblies, economizers, de-aerators, control systems, and feedwater systems. The company also offers in-house transportation services for all of its products, making Victory Energy a singlesource supplier. “Every boiler is a custom boiler,” Viskup says. The team at Victory Energy begins the boiler construction process for a specific plant by developing the thermal design and size of the boiler, and incorporating job-specific requirements for steam capacity, temperature and pressure, fuels available, emission limitations and space limitations. When necessary, a one-eighth-scale model may be engineered in order to test the boiler pre-installation. Victory Energy says its heat recovery boiler is one of the most flexible, cost-effective and technologically advanced units on the market. “Our fintube design allows us to manufacture our boilers with the smallest footprint in the industry, and greatly reduces radiant heat lost to contain energy costs,” Viskup says. Today, U.S. EPA emissions

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

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PROFILE

‘We continually inspire our employees to assist in the development of new products and technologies. Together, our team has had a hand in changing the world we live in— one day at a time.’ —John Viskup, president of Victory Energy

requirements must be met for a plant to remain operational, he adds. Victory Energy’s HRSG boilers are able to capture heat during processing and use that heat to supply steam to the plant for the manufacturing process. The HRSG boiler serves other industries as

well, including cogeneration, municipal solid waste and other pollution control facilities. The Voyager “O” type and Discovery “D” type boilers are also popular products.

Catering to Customers Victory Energy’s customers don’t have to worry about piecing together a confusing puzzle. “You’ll never receive a bucket of bolts from Victory,” Viskup says. The company has developed a tag-and-crate system that clearly indentifies each part and provides stepby-step directions to enable quick construction, he adds. To ensure that ease of construction, Victory Energy offers an operator training program for employees and recurring training programs to keep veteran employees upto-date on its technology. A spare parts department is also open 24 hours a day, and guarantees delivery within 24 hours of ordering. What makes the process even easier for customers is that each one has a spare parts list on file, which is tailored to their plant and boiler system. If preferred, Victory Energy can also set up an online order page for each of its customers.

PROFILE

PHOTO: VICTORY ENERGY OPERATIONS LLC

moving toward accomplishing our goals, we become the obstacle.” In the future, Victory Energy wants to diversify the application of its technologies, focusing on ways that its products and services can further benefit the biorenewable industries. Victory Energy’s honest, dedicated intent to serve its customers, accompanied by a desire to find solutions to all wants and needs is something that resonates throughout the company. Viskup credits the success of the company to its employees. “It largely stems from them,” he says. “We continually inspire our employees to assist in the development of new products and technologies. Together, our team has had a hand in changing the world we live in—one day at a time.” EP

Victory Energy’s headquarters is in Collinsville, Okla.

If a boiler requires repair time that could negatively impact a plant, a mobile rental boiler is available for temporary installation, which is another 24-hour-a-day service that Victory

Energy offers. “The extra effort that we put forth each and every day helps us keep on track with the goals that we have set within our team,” Viskup says. “We believe that the moment we stop

Anna Austin is an Ethanol Producer Magazine staff writer. She can be reached at bbiinternational.com or 701-738-4968.

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INDUSTRY

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Making the Most of Every

Dollar Despite record-high corn prices, most ethanol producers have managed to stretch their dollars to keep operating at or near break-even. Now that corn prices have started to come down to a more manageable level, producersâ&#x20AC;&#x2122; margins could start to improve. By Bryan Sims

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INDUSTRY

he recent bombardment of information, or misinformation, by the mass media about what’s behind high food prices spurred a spate of global indictments. Politicians blame speculators. Speculators blame the Federal Reserve and a weak U.S. dollar. Free traders blame countries with agricultural subsidies. Countries with agricultural subsidies blame free traders, and then there’s everyone’s favorite scapegoat the ethanol industry. Although ethanol producers would like to see their industry get more positive press coverage, they have more pressing issues to attend to, such as the volatile corn market. Just when ethanol producers thought corn prices could get no higher, summer floods ravaged the central Midwest in mid-June—the worst in 15 years—damaging crops and causing corn prices to again spike to historic levels. Chicago Board of Trade July corn futures closed at a record $7.42 per bushel, which was up 25 percent from

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‘We’re actually seeing a disconnect between the gasoline price and the ethanol price now and more of a reconnect between the price movement in corn and the price movement in ethanol.’

less than $6 per bushel that same month the previous year. At press time, however, prices had started to come down significantly, trading on the CBOT at about $5.28 per bushel. December corn contracts in June were locked in at $7.86 per bushel, which equaled a decline of $2.68. According to Robert Wisner, biofuels economist for Iowa State University’s Ag Marketing Resource Center, the decline in corn prices indicates just how the commodity directly affected operating margins for ethanol producers and their products. “That’s a reduction of 89 cents per gallon in the cost of producing ethanol versus what

we encountered in mid- to late-June,” Wisner tells EPM. Lower corn prices were accompanied by lower prices for ethanol’s coproduct distillers grains. “We’ve seen about a 28 percent drop in the value of dried distillers grains and that’s going to vary a little bit depending on where the ethanol plant is located,” he says. “So we’ve seen on the value side, with the ethanol and the dried distillers grains together, about a 73 cent drop in value there and 89 cent drop in corn prices; in other words, per gallon of ethanol from the lower corn price.” With the steady decline in corn prices, operating margins showed signs of stabilizing and producers experi-

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

INDUSTRY

Input, Output Prices Are Favorable—For Now According to Malchanov, the price of ethanol today is about as high as it has been since 2006, as prices have seen an upward trend in the spot market. According to the CBOT, July ethanol futures contracts closed at $2.89 per gallon, up approximately 20 percent from

Corn Versus Ethanol Prices $8.00

$7.00

$6.00

$5.00

$4.00

$3.00

$2.00

$1.00

Corn Futures Price Per Bushel

8/2/2008

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$0.00 1/2/2006

enced slight break-even to marginal profits. “Clearly, the crush spread has improved since bottoming earlier this summer and certainly right now ethanol economics are no where near as bad as they were at their lows,” says Pavel Malchanov, alternative energy analyst for Raymond James & Associates in Houston. “When we look at the crush spread evolving from its levels of early June—this is of course with corn prices hitting the $7 per bushel level—it reached almost zero at one point and as of [August], it’s actually north of 80 cents per gallon. So, clearly the economics have improved.”

Ethanol Futures Price Per Gallon

SOURCE: DTN

$2.40 a barrel before the flooding occurred. Ethanol futures contracts moved slightly higher following additional buying interest in corn futures markets in August. September contracts posted a 4.4 cent gain, closing at $2.18

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

per gallon, but the sharpest gains have been posted in the October contract, which is the production levels that will be affected most by corn price increases, according to Rick Kment, biofuels industry analyst for DTN. “A lot of that

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gin in the market for the ethanol producers to be able to continue to produce it,” he says. In addition to the decline in corn prices, discretionary blending by oil refiners and the recent decline in gasoline and crude oil prices have contributed to ethanol’s steady price. National average gasoline prices at the pump fell to $3.86 on Aug. 6 from its record high of $4.11 on July 16, according to data compiled by the American Automobile Association. Experts expect a further retreat in gasoline prices because of the demand issues. But there are still some challenges for ethanol producers, Malchanov says. “Obviously, corn prices remain at historically elevated levels,” he says. “Meanwhile, the price of ethanol, while quite high in absolute terms, remains below gasoline. So the spread between the two remains negative as it indeed has been for nearly a year now.” Couple this with the price volatility of natural gas, which fires most ethanol plants, and operating margins are compressed. However, there is a silver lining behind that cloud as natural gas prices were starting to fall in August based on stronger U.S. supplies.

‘The presence of volatility and risk are becoming a fact of life for ethanol producers and the importance of preparing to handle that risk will only continue to increase.’

has to do with the rally in the corn market,” he says. “We’re actually seeing a disconnect between the gasoline price and the ethanol price now and more of a reconnect between the price movement in corn and the price movement in ethanol.” This summer’s high oil price environment did help increase the demand and subsequently the production of ethanol. According to the Energy Information Administration, U.S. ethanol output in May jumped 10 percent; from 1.7 million barrels in April to 18.5 million barrels in May. The EIA also noted in its monthly August “Petroleum Supply Monthly” that refinery utilization dropped to an astounding 85.9 percent of capacity compared with a year Kment ago when the utilization rate was 91.8 percent of capacity. “The blenders are very aware of the economics behind ethanol production,” says Tom Wapp, ethanol market analyst and risk management advisor for United Bio Energy, which provides risk management consulting and market advisory services for ethanol producers. “They need the ethanol and it’s very profitable and economical for them to use the ethanol in their blending but they don’t want to pay any more for it than they have to. So they’re following that corn market closely to make sure that there’s enough mar-

Hedging, Swapping Key to Survival Industry analysts and experts agree that for ethanol producers to survive in a volatile market climate, producers must employ hedging and/or cash swapping strategies to protect themselves against price fluctuations in the corn and ethanol markets.

INDUSTRY

“It’s definitely been a rollercoaster ride,” Malchanov says. “Depending on where companies were hedging their corn costs across that commodity price curve over the past six months, will of course influence their profitability.” According to Wapp, producers have been in the midst of a “mentality shift” from attaining length on the corn side while selling ethanol to lock in margins to protecting themselves against the long corn exposure as they did during the flood in June. “On the way up, people got enamored with long corn positions and it obviously worked well for them,” Wapp says, adding that current ethanol producers should have enough corn coverage to be profitable through the third quarter of this year, although profitability will likely start to drop off sharply as they enter the fourth quarter and work through their remaining corn coverage. “You wanted to have long corn positions in place as this market was going up. Ethanol was going up with it so as long as you had those long positions in place you felt pretty good,” Wapp says. “But, it was very easy to lose sight of the fact that the higher we went and the longer your corn position got the more downside exposure you were all of a sudden picking up on the corn and when this market turned over that became a key factor to start paying attention to.” When corn prices were at their peak in the early summer months, there was speculation that it might have been more profitable for ethanol producers to sell their corn on the open market rather than using it to make ethanol. According to Wapp, there were limited occurrences of that, but it didn’t happen on a wide scale. “Ethanol plants are generally reluctant to do that,” he says. “Most independent plants feel they are there to produce ethanol. A lot of the plants aren’t even set up to sell corn out of their plant.”

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On the ethanol side, Wapp encourages plant managers to carefully analyze fixed and variable expenses to accurately assess breakeven requirements and to coordinate grain purchasing with ethanol sales and cover all necessary expenses to ensure protection against temporary price swings. “Cash sales on ethanol have been pretWapp ty difficult to accomplish on this decline in prices,” he says. “The buyers are well aware of what has been transpiring and they want to see a bottom formed in the corn before they’re willing to step out and commit anything on a priced basis on the ethanol side. That’s pretty much left plants looking at a swap market or over-the-counter environment to hedge that ethanol against.” Looking ahead to the close of this year, experts believe risk will be an inevitable element to the business of ethanol production. However, proper due diligence on hedging approaches will ultimately lead to successful operations. “The presence of volatility and risk are becoming a fact of life for ethanol producers and the importance of preparing to handle that risk will only continue to increase,” Wapp says “There’s going to be plenty of risk moving forward for plants in the next year, but if you’re prepared and positioned correctly it also gives you an opportunity for reward as with high corn prices because—if you’re ready for them—higher ethanol prices also come with it.” EP

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OPTIMIZATION

Emerging Process Optimization Opportunities for Ethanol Facilities By Philip A. Marrone, Kenneth R. Liberty and David J. Turton

n increased demand for corn and product capacity in the market makes it critical for ethanol plants to ensure that operations are fully optimized to avoid profit erosion from increasing feed and decreasing product prices. As a result, it is prudent for ethanol producers to consider whether their plants are being operated as efficiently as possible. This means maximizing ethanol yield and productivity, and the number and value of coproducts, while minimizing waste and energy use. Optimization approaches can be divided into three categories 1) processâ&#x20AC;&#x201D;feedstock preparation, fermentation or downstream separation as related either to physical or chemical processes, 2) energyâ&#x20AC;&#x201D;related primarily to heating, power or drying options, or choice of plant fuel type, and 3) wastes/coproductsâ&#x20AC;&#x201D;minimizing, reusing or finding new applications for unwanted products and increasing the value or yield of desired coproducts. This article, the first in a three-part series, focuses on this first category and reviews options through which established

ethanol plants can achieve process-related optimization goals. While they cover a range of different approaches, these options all strive to improve ethanol yield and/or productivity by 1) allowing operation with a higher sugar feed concentration, 2) allowing operation with a higher ethanol product concentration, or 3) decreasing process time. All of the options presented have been either demonstrated or proven to some extent but are not currently in widespread use or considered standard. The most notable are discussed below. A more detailed discussion of these and additional options can be found in the full-length version of this three-part series, available at www.EthanolProducer.com.

Fractionation Possibilities The wet mill process inherently includes technology that fractionates or separates corn into its components upfront, thereby achieving more efficient fermentation and a greater number of higher-value coproducts. However, the wet mill process is more complex and costly relative to the more common dry grind process. As a

result, several modifications have been developed to incorporate some of the wet mill fractionation benefits into the less expensive dry grind process. The simplest option is to employ dry fractionation. Dry fractionation is a process by which the more easily removable germ and pericarp fiber are mechanically separated from the corn kernel without soaking. Other fractionation approaches such as quick germ, enzymatic milling and Maize Processing Innovator's Quick Germ/Quick Fiber process have also been developed to improve the purity of separated coproducts relative to that of dry fractionation, but at a cost and complexity still lower than that of a wet mill process. Another alternative is to incorporate fractionation at the backend of the process to separate purer coproducts from distillers dried grains with solubles. An example is the Elusieve Process used to recover pericarp fiber through a sieving step. The local market and coproduct demand must be evaluated to determine whether fractionation makes sense and which version is most economical for a given plant.

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

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ETHANOL PRODUCER MAGAZINE OCTOBER 2008

OPTIMIZATION numbers of microorganisms for potentially useful enzymes, but also further alter these selected enzymes to better function under the conditions desired. For example, researchers have recently reported discovery of a glucoamylase enzyme from a bacterial source that was optimally active at 194 degrees Fahrenheit and a pH of 5.5 to 6, which would allow saccharification to take place under the same conditions as liquefaction without any parameter adjustment.

Self-Contained Enzymes

Increased Enzyme Thermal Stability/Efficiency The alpha-amylase and glucoamylase enzymes used in the liquefaction and saccharification steps of ethanol production, respectively, have different preferred process conditions (i.e., temperature, pH and concentration). Adjustment of these conditions during production to accommodate each step costs time and money in the form of added chemicals and energy, and can impact the performance of microorganisms downstream. At the same time, it would be preferable to operate all steps at as high a temperature as possible to minimize reaction time and kill contaminant bacteria. Discovery or development of enzymes that are stable and active at high temperatures under the same process conditions (e.g., pH of 4.5 and temperature of 194 degrees Fahrenheit or higher) could significantly improve the overall rate of starch hydrolysis, and thus ethanol production, by combining fast kinetics with no or minimal batch adjustments. With advances in molecular biology techniques, many researchers and enzyme manufacturers have not only been able to screen large

With the advent of genetic modification techniques, it is now possible to custom engineer both feedstock and microorganisms needed for ethanol production to self-produce starch hydrolysis enzymes or other desired attributes. Having the necessary enzymes already present would streamline the hydrolysis and fermentation processes. Work is being performed to develop hybrid corn strains that will contain starch-hydrolyzing enzymes in the endosperm and/or an increased percentage of starch. Researchers are also trying to develop strains that include the genome responsible for producing cellulase, which would help with the critical need to reduce the cost of cellulosic ethanol production. With respect to microorganisms, genetically modified yeast cells have also been developed to produce hydrolytic enzymes for either starch or cellulose. These organisms are able to hydrolyze a starch or cellulose feedstock directly with less pretreatment, followed by immediate fermentation of the released glucose. As with all genetically modified organisms, the downside is the unknown long-term risks and associated negative public perception.

Contaminant Bacteria Reduction Without Antibiotics Many of the same operating conditions that provide an optimal growth environment for fermenting yeast are also good for the growth of undesirable microorganisms such as lactic acid bacteria, which utilize valuable glucose. While antibiotics have traditionally been used in the ethanol industry to control contaminant bacteria populations, this approach is becoming increasingly unpopular for several reasons including

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

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There is significant incentive to increase the thermal, ethanol and osmotic tolerance of yeast cells to decrease fermentation time, increase final ethanol concentration and increase feed concentration, respectively, while also limiting production of unwanted byproducts. An increase in the thermal tolerance up to 140 degrees Fahrenheit (compared to the current maximum of 95 degrees Fahrenheit) is predicted to substantially decrease fermentation time by about 25 percent due to faster kinetics alone. If combined with improvements in enzyme thermal tolerance, it may be possible to operate hydrolysis and fermentation steps at a single, high temperature, thereby saving energy costs involved in adjusting conditions from one step to the next and, in turn, decreasing process time. Further improvement in ethanol tolerance has been hindered due to the discovery that several genes must be manipulated to alter this trait. Nevertheless, progress continues to be achieved in this regard. For example, genetically modified versions of Saccaromyces cerevisiae have exhibited statistically significant improved cellular viability in tests even up to ethanol concentrations as high as 20 percent, compared to the standard 13 percent to 15 percent. Genetic engineering may also be able to “reprogram” cells to produce less undesirable byproducts or even to metabolize five- and six-carbon sugars, which is of interest for cellulosic ethanol process development.

Very High Gravity Fermentation Developed originally at the University of Saskatchewan, the very high gravity (VHG) fermentation process utilizes a higher concentration of solids and can achieve higher ethanol concentrations than the standard process. VHG requires feeds containing 27 percent by weight dissolved solids or greater. At these high solids concentrations, most feeds are too viscous to handle efficiently. Thus, an important part of the VHG process involves preparing a mash with a sufficiently high solids content and an acceptable viscosity. This can be achieved by employing one or more of several options: addition of enzymes, double mashing, or addition of adjuncts (a high-sugar feed supplement such as grain hydrolysate, sugarcane juice or molasses). Ethanol concentrations as high as 23 percent by volume have been seen with a feed concentration of 38 percent by weight solids at 68 degrees Fahrenheit, with lower ethanol concentrations at higher temperatures. While the conditions necessary for the highest ethanol concentrations may not be practical on a large scale from an economic perspective, it is reasonable to expect to achieve ethanol concentrations in the range of 18 percent by volume using VHG. There are several clear advantages to VHG fermentation relative to conventional fermentation, including increased plant throughput, lower water and energy usage, and decreased reactor size. The insoluble non-starch material also has a higher value since it is separated before fermentation and free of yeast biomass. On the other hand, VHG fermentation is more complex than the standard process, requires equipment designed to handle the higher viscosity feed, and may require yeast strains that have an inherently higher ethanol and osmotic pressure tolerance for the best results. Over the past decade, VHG fermentation has been successfully tested at the pilot-scale and is currently being incorporated in some fullscale plant designs focused on achieving high ethanol concentrations.

Extractive Fermentation The toxicity of ethanol to yeast limits its final concentration during fermentation

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

In an immobilized cell system, the yeast cells are constrained to a limited, defined volume. Typically, they are imbedded or bound to a solid support structure, either on the surface or within a porous medium, and used in a continuous flow system. The most widely used method of immobilization is through physical entrapment within a spherical, porous polymer matrix. Many studies have shown improved ethanol productivity and higher feed concentration tolerance in immobilized cell reactors versus traditional batch reactors with freely suspended yeast cells. This may be a result of decreased ethanol concentration near the cells due to constant removal and/or alteration of the cell membrane

The options presented here are all currently at various levels of maturity, with some beginning to be implemented now and others still at a research/bench-scale level. With some, it is just a matter of time before widespread full-scale use, while others may never fully mature to the extent necessary to be economically viable except under limited circumstances. Each has its own unique advantages and disadvantages that must be weighed with respect to the design and economics of a specific plant to determine whether it is worthwhile to implement. However, all of these options represent the best process improvement modifications currently available and hold sufficient potential and promise to warrant either consideration or careful observation of further development to determine whether they may be applicable for a particular ethanol plant. EP Philip A. Marrone is a chemical, Kenneth R. Liberty is a biochemical engineer and David J. Turton is a civil engineer with Science Applications International Corp. Reach Marrone at marronep@saic.com or (617) 6184686. Reach Turton at david.j.turton@saic .com or (443) 402-9209.

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

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Yeast Immobilization

through the immobilization process to allow for enhanced transfer of substrates into and out of the cell. Other advantages include no cell washout, higher productivity due to higher cell density and better protection, and better control of the microbial environment. However, it is also clear that mass transfer constraints can significantly hinder ethanol production kinetics and nutrient transfer, depending on the material and design of the support structure and the particular conditions of operation. Whether the potential for greater ethanol productivity and avoidance of cell washout balances the greater system design and operational complexity of an immobilized cell system depends on the specifics associated with a given ethanol plant and therefore needs to be evaluated on a case-by-case basis.

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and thus the amount of feed that can be fermented per batch. If ethanol is removed from the fermentation reactor as it is formed, however, its concentration can be kept at a value that would permit cell activity and fermentation to continue unhindered. Such a concept is referred to as extractive fermentation. To achieve this goal, a way must be found to selectively remove ethanol from the fermentation broth in the reactor without impeding the fermentation reaction. Early attempts to continuously remove ethanol from fermentation broth focused on vacuum fermentation or liquid-liquid extraction methods. In recent years, a more effective means of ethanol removal has involved the use of semi-permeable membranes. Membranes have the significant advantage of keeping the broth and solvent liquid phases separate, allowing the transfer of ethanol without contaminating either liquid phase. Impregnated polymer-based membranes, zeolite membranes and microporous hollow-fiber membranes are examples that have been successfully tested in recent years. Most of these options for extractive fermentation have been explored only at a bench-scale size and would clearly increase the complexity of the fermentation system relative to the current standard simple tank reactor. While scale-up is not trivial, the concept holds great potential. Results verify the improved performance expected when the cell-inhibiting ethanol concentration is restricted to an acceptable level.

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POLICY

Punitive Measures Ineffective in the Energy Sector By Tim Sklar

he prospect of increasing crude oil prices and $4- to $5-per gallon gasoline has consumers and politicians lashing out. U.S. politicians have singled out scapegoats for high oil, gasoline and diesel prices. Included on this list are oil companies, whose recent earnings are perceived to be a windfall. There are also public suspicions of collusion between oil companies in price-setting and widespread price gouging. Some politicians are now calling for aggressive enforcement of antitrust laws, imposition of price controls on gasoline and other fuels, and instituting a windfall profits tax on large oil companies. It is also widely Sklar perceived that the ethanol industry has been unduly favored and that increased production of corn ethanol is solely responsible for higher food prices. Many politicians are calling

for the government to eliminate the tax credits now being received by ethanol/gasoline blenders, the agricultural subsidies received by corn growers and the tariffs on imported ethanol. What is not widely discussed in the current energy policy debate are ways the U.S. government can best support the private sector in finding solutions to existing energy problems. This article revisits some of the mistakes made by government intervention in the energy sector. It also explores a range of positive incentives that ought to be considered to support development of a robust biofuels industry in the United States.

Overcoming Obstacles To date, the United States has access to enough crude oil to supply its refineries, but more reliance on foreign oil has made U.S. refiners vulnerable to supply disruptions and oil price spikes. Periodic seasonal and regional shortages of fuels are occurring more frequently and contributing to price increases. There is an

admitted shortage of refinery capacity in the United States and no new refineries have been built in the country in the past 30 years. The reasons for this include the increased cost to build and maintain refineries, intensive environmental requirements, low returns on refinery investment, and increased volatility in realization of acceptable refinery margins. The biofuels industry faces similar obstacles. The renewable fuels standard will require many more first- and secondgeneration biorefineries to be built in the next 10 years, requiring large private sector capital investments. In addition, stable supplies of affordable biorefinery feedstocks have to be developed, and high fuel prices will also be needed to make investments in economically viable biorefineries. Because biorefinery technology is constantly being improved, those now investing in biorefineries are at risk of having their facilities become prematurely obsolete.

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POLICY

Past Punitive Measures In early 1971, in response to high

inflation rates Congress passed legislation allowing the Nixon administration to

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

freeze prices and wages. Six months after the “freeze,” Nixon’s Cost of Living Council lifted price controls on all but the energy sector. The Federal Energy Office (FEO) was temporarily established to administer price controls on "old oil," which is the amount of oil produced in the U.S. in the base year 1972, and refined petroleum products. What happened over the next 10 years of price controls is illustrative of what would happen today if price controls were used as a means of trying to keep fuel consumers happy. In early 1973 the Oil Producing and Exporting Countries-(OPEC) oil embargo caused price increases in U.S. refined products. It severely impacted the supply of home heating oil, as the FEO ceiling prices would not allow refiners to recover their increased costs. The FEO was then forced to allow oil companies to increase heating oil prices in order to increase supplies. In the winter of 1973-‘74 heating oil prices increased again, and FEO reimposed price ceilings on heating oil. A further run-up of imported oil prices

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POLICY reduced the amount of refined products that major integrated refiners normally resold to independent refiners and marketers. In response, FEO created a twotiered price control regimen on domestic oil producers, allowing new production of domestic oil to sell at market prices. FEO also decontrolled a number of refined products, but not transportation fuels. This attempt at partial decontrol failed. FEO’s new rules became too complex to enforce, as most refiners were able to reallocate their increased crude oil costs among all products, allowing them to sell controlled products at market prices. Many refiners were unable to compete, as they only had access to decontrolled oil. To remedy this, the Federal Energy Administration (FEA) established the Oil Entitlements Program in order to equalize profits across refiners and prevent small U.S. crude oil producers from closing. It didn’t work, as lowercost domestic, or old, oil quickly disappeared when refiners and oil traders has access to oil used in “foreignization” schemes. Some of these schemes were illegal but FEA was unable to effectively enforce these rules on old oil. FEA made a number of attempts to amend the Oil Entitlements Program but they only succeeded in creating further distortions.

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President Jimmy Carter wisely put price controls on hold in 1979, and President Ronald Reagan did away with them shortly after he took office, as they no longer served a useful purpose. Clearly, the lesson is that price controls on energy do not work except for short periods, and even though we are facing similar market pressures today we should not repeat the mistakes made in the 1970s. After decontrolling oil prices in 1980, Carter reached a legislative compromise with Congress, allowing for the passage of a windfall profits tax on crude oil producers, as he feared that decontrol would lead to steep price increases. This tax went into effect March 1, 1980, and lasted through January 1988. It was an excise tax on domestic oil production and produced a modest amount of tax revenues, none of which was returned to consumers or taxpayers. In 1986, the price of oil collapsed and windfall profits tax collections were greatly reduced after serving no useful purpose. This tax also proved to be counterproductive, contributing to the reduction of domestic oil production by 3 percent to 6 percent and led to an increase in foreign oil imports by 8 percent to 16 percent. As with price controls, this punitive measure provided no direct benefit to the consumer and

may have contributed to higher energy prices.

Recent Government Actions, Proposals In 2005, Congress enacted a progressive piece of energy legislation titled the Energy Independence and Security Act of 2005. The Energy Bill, which was updated with the Energy Independence and Security Act of 2007, recognized the need for a number of energy initiatives, one of which is the mandate to produce 36 billion gallons per year of renewable fuels in 15 years. Unfortunately, this legislation does not provide funding for meeting this mandate and assumes that the private sector can find the funds. Both candidates running for the presidency have announced their energy policies and recognized the need for a number of positive government incentives to facilitate increases in secure and clean energy supplies and to promote energy conservation. These initiatives are expected to encourage investment in alternative energy, but the candidates are split over how to achieve these goals. In particular, they are split on corn ethanol subsidies and extending subsidies to second-generation renewable fuels, and on funding of renewable energy programs. The Senate Democrats have pro-

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

POLICY posed placing a windfall profits tax on the five largest oil U.S. companies in order to raise as much as $150 billion for an energy fund. This fund is to be used to support a range of projects, including second-generation biofuels plants and biofuels distribution fuel infrastructure. Sen. Barack Obama has also announced a windfall profits tax as part of his energy plan. This would impose a windfall tax penalty on the top-grossing oil companies on oil they sell at more than $80 per barrel. Industry testimony taken at a recent Senate hearing on high oil and gas prices included a number of ideas that could prove useful in promoting development of renewable fuels. Two different, and perhaps controversial, ideas include 1) providing government incentives for increased parity between petroleum diesel and biodiesel, and between E85, E10 and gasoline, and 2) increasing user taxes on fuels to reduce demand and to fund needed energy projects.

Ethanol Part of the Solution If the existing Energy Bill’s renewable fuels standard is met, 10 percent of U.S. fuel requirements will be supplied from renewable fuels. The investment to do this is significant, requiring $11 billion in four years, $46 billion in 10 years and $105 billion in 15 years.

Corn-based ethanol still has a major role to play in meeting the mandate. It currently provides most of this nation’s renewable fuel, roughly 8.7 billion gallons per year. By 2015, corn ethanol production is expected to peak at 15 billion gallons per year, supplying 42 percent of the 36 billion gallons per year mandate. To meet this mandate, the corn ethanol industry must remain viable, but it may not if the government changes the subsidy ground rules and arbitrarily eliminates tax incentives. The renewable fuels standard also requires that by 2022, 58 percent of the total biofuels produced be second-generation, with cellulosic ethanol providing 76 percent of this 21 billion-gallon-per-year requirement. The government will have to take steps to stimulate private sector investment in biofuels plants and related infrastructure if the RFS is to be met. There will be a need for more research and development grants, tariff protections, tax holidays during ramp-up, accelerated amortization of investment in new technologies, and low-cost governmentbacked project financing and government loan guarantees. In addition, conventional fuel surtaxes may need to be employed to support the higher cost of distributing and marketing advanced biofuels. The U.S. DOE’s Loan Guarantee

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

Program already offers loans and loan guarantees for biofuels projects. This program provides a set of rules for qualifying projects and project sponsors for such loans and loan guarantees. However, the $38 billion now authorized for loan guarantees will more than likely have to be increased. Obtaining Congressional approval for such increases should not be a problem, as this program does not create a drain on the U.S. Treasury or U.S. taxpayer unless a default occurs. To develop biofuels projects in which local communities would have a stake, joint venture arrangements such as build-operate-transfer financing should be considered in order to attract local units of government or regional authorities as one of the project’s partners. Finding organizations to blame and passing punitive measures against them is counterproductive. The measures presented here illustrate ways that the U.S. government can facilitate private sector initiatives in biofuels. Such backing should only be offered if proposed projects adequately address energy policy goals and meet due diligence standards for commercially viable projects. EP Tim Sklar is the president of Sklar and Associates. Reach him at sklarincdc@aol .com or (202) 257-5061.

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BYPRODUCT

Carbon Footprint, Trade Evolving with Industry By Sam Rushing

arbon dioxide is one of the greatest challenges with respect to emissions control and greenhouse gas minimization. From a global perspective, some 75 million tons per day are emitted into the atmosphere, of which—in the best case—25 million tons are absorbed by the oceans, which are approaching a point of high saturation. The oceanic sink for carbon emissions is not an answer but a natural mechanism to absorb an ever-growing sum of carbon dioxide emissions, driven by an ever-hungry world with extraordinary energy demands. The world’s oceans are in trouble, losing marine habitats in part due to oceanic acidification. Extraordinary and ever-growing energy demands are driven by the internal combustion engine, as well as coaland natural gas-fired power plants. Power plants alone can account for up to 40 percent of the total carbon emissions in some developed economies. Growing demand for the internal com-

bustion engine, due to the lack of other affordable or technically viable options for day-to-day transportation, will be fueled by huge growth forecasted for growing economies in China and India. This means an increase in greenhouse gas emissions. Ethanol has been a friendly and hopeful means to mitigate this extraordinary global problem. The carbon dioxide industry, as a so-called merchant trade, could have a global, annual consumption of up to 22 million metric tons, of which the United States produces 40 percent. The business is growing at less than 3 percent annually. The ethanol sector, with respect to the supply of raw carbon dioxide into the merchant gas scheme within the United States, accounts for about 40 percent of the total amount of raw gas. Byproduct from anhydrous ammonia production, reformer operations, ethylene oxide and concentrated natural wells are other options for supply of raw gas to the merchant trade. On the other hand, ethanol has

been the saving grace for the carbon dioxide industry, as natural and ammonia sources have been and will continue to be lost in record numbers. An ethanol project can yield a significant multimillion dollar additional revenue stream to the suitable ethanol project. The location of such revenue opportuRushing nities should be fully evaluated in order to squeeze out as much revenue for the ethanol producer. When taking this into consideration, and the growth of both grain- and cellulosebased technologies, certain new ethanolbased carbon dioxide plants will move forward specific to regional market opportunities. Of course, a finite number of new plants for merchant carbon dioxide will be developed in the years ahead in North America. Globally, this issue is also subject to market forces, but a need remains to

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BYPRODUCT

handle the politics, economics and physical control of the growing carbon emission problem. Some methods to handle excess carbon dioxide include enhanced oil recovery (which does not fully sequester the product), various conceptual sequestration schemes, and the development of new types of carbon sinks, many of which are conceptual at best.

Carbon Trading, Energy Billâ&#x20AC;&#x2122;s Impact Years ago, the concept of carbon trading was not much of a consideration. Today, however, the market in greenhouse-gas emissions could well outpace the traditional commodities markets and become the largest traded commodity. This is not overstated, but also an opinion of the U.S. Commodities Futures Trading Commission. Globally, the carbon trading market was worth more than $60 billion in 2007. However, the United States accounted for a small portion of this sum. Approximately $50 billion of this overall sum was

BYPRODUCT

Cap-and-trade scenarios are a future option in the United States as a means of working toward trying to cut carbon emissions.

carried out under the European Unionâ&#x20AC;&#x2122;s emissions trading scheme, with practically the full balance carried out under the Kyoto Protocol. Some estimates show the global carbon market would be worth more than $3 trillion by 2020, assuming the United States should participate via a form of cap-and-trade program to limit carbon emissions, as well as a version of the current Kyoto Protocol. Carbon markets impact the power, oil, gas and coal markets as well. Cap and trade is essentially a ceiling placed on the emissions of companies, whereby the unused quota is traded with one another. This mechanism should ensure that carbon emissions are cut at the lowest possible cost. Such a mechanism will likely become a federal mandate in 2009, which is one step toward positive thinking surrounding emissions reduction. The United States consumes

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approximately 190 billion gallons of gasoline and diesel fuel per year, of which about 65 percent, or 124 billion gallons, is derived from foreign sources. This foreign reliance was a major driver in the passage of the Energy Independence and Security Act of 2007. The act did not address the need to increase electricity growth demands, plus numerous additional energy issues. However, it does address the most important and demanding issue related to energy today. Crude oil as a primary transportation energy source will be reduced under the Energy Bill. The means of reducing gasoline will take place through corporate average fuel economy increases representing a reduction in gasoline use by 1.1 million barrels per day in new vehicles while inserting 36 billion gallons per year of renewable fuels into the fuel supply. The provisions are essentially on

target at this time from a realistic viewpoint covering government mandates, which has not been possible for both the consumer and industry to handle on their own since the oil crisis of the 1970s. Carbon footprint is the common term surrounding the growing concern about greenhouse gases. Companies and individuals are seeking a means to develop a more accurate picture of their emissions, particularly in terms of supply chain, life cycle, and other factors surrounding emissions. Life cycle essentially considers all phases of the product development from raw materials through consumption and disposal. The greenhouse gas protocol is probably the most widely used international accounting tool for government and business leaders to understand, quantify and manage greenhouse gas emissions. The protocol is about 10 years old and is a

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

BYPRODUCT partnership between the World Business Council for Sustainable Development and the World Resources Institute, which is working with government entities, businesses and various environmental groups to develop a new generation of credible and tangible programs for managing climate change problems. Over the past year, many companies and stockholders have been evaluating the greenhouse gas protocol to develop new guidelines on supply chain and lifecycle greenhouse gas emissions accounting capabilities. In turn, the World Resources Institute and the World Business Council for Sustainable Development outlined a survey to assess the need for new guidelines. The survey was sent to 400 companies, stockholders and industry experts. Approximately 100 replies sent a clear answer for the greenhouse gas protocol to develop new guidelines on this subject. The result is action to develop a consultation process and develop new guidelines on supply chain and life-cycle greenhouse gas accounting and reporting during 2008. The ethanol industry is a key component.

Ethanol Plant Effects Since the United States began the development of ethanol as a transporta-

tion fuel, use has grown from 175 MMgy in 1980 to 4.9 billion gallons annually in 2006. Virtually all of this ethanol has been produced from corn. During this growth period, corn farming productivity has grown dramatically, and energy use in the typical ethanol plant has been reduced, in some cases by 50 percent. Most corn-based ethanol plants are fueled by natural gas, which has skyrocketed in price. The high price for natural gas has brought about a switch to other fuels, such as wood chips and coal. The wide range of ethanol plant types and process fuels, combined heat and power, and distillers wet grains are some factors defining plant types. The range in plant types yields distinctly different energy and greenhouse gas emission effects on a full fuel-cycle basis. This means that greenhouse gas emission impacts vary significantly, from a 3 percent increase when using coal to a 52 percent reduction when using wood chips. The end result is an examination of plant types, whereby corn ethanol production can move toward a more sustainable path. Cap-and-trade scenarios are a future option in the United States as a means of working toward trying to cut carbon emissions. With the Energy Bill, the effects should be an eventual reduc-

tion of gasoline usage in new cars while inserting 36 billion gallons per year of renewable fuels into Americaâ&#x20AC;&#x2122;s market. The logical renewable fuel is ethanol. The placement of the greenhouse gas protocol should yield new guidelines on supply chain and life-cycle greenhouse gas accounting and reporting. All of this represents a new generation of programs for managing climate change, which is good news for the ethanol industry. As the ethanol industry transforms into more efficient forms of production, corn-based ethanol will yield more efficient and viable forms of production for tomorrowâ&#x20AC;&#x2122;s non-petroleum fuel options. The future developments in cellulose are another direction whereby lower emissions and greater efficiencies are available as a transportation fuel versus the shrinking global supply of petroleum products. Ethanol as a low-carbon fuel, along with future ethanol industry plant modifications and developments, fits well into life-cycle evaluation and assessment of the industry from feedstock to the final fuel product and handling of carbon dioxide emissions. EP Sam A. Rushing is the president of Advanced Cryogenics Ltd. of Tavernier, Fla. Reach him at rushing@terranova.net or (305) 852-2597.

FERMENTATION

Yield Remains Key to Determining Profitability By Dave Kelsall

ncreased corn prices, inclement weather, decreased ethanol prices and record-high crude oil have put the ethanol industry on a rollercoaster ride the past few months. Due to a combination of these factors, the industry has suffered from having an agricultural product as a raw material and selling its principal product on an energy market in which prices dance to a different tune. Market conditions make ethanol yield increases critical, often distinguishing the difference between profit and loss. For the purposes of understanding this situation more clearly, let’s use an example of a 50 MMgy corn-based ethanol plant using locally grown corn in the U.S. Midwest. First, industry stakeholders have become used to talking about yield in a manner that someone would find odd if not used to the terminology of the American farmer. Yield is discussed in gallons of absolute ethanol per bushel of corn. This doesn’t tell us everything needed to know how much alcohol can

be obtained from a bushel of corn. Alcohol is produced by converting the starch in corn. Corn oil, protein, husk and water are not converted into alcohol. Therefore, the amount of alcohol obtained from a bushel of corn is determined by how much starch the corn contains. How many of the billions of gallons of U.S. ethanol are produced from corn paid for based on its starch content? How many ethanol plants even have an instrument capable of measuring the starch content of incoming corn? Consider a 50 MMgy ethanol plant with a yield of 2.65 gallons per bushel. It would need to purchase approximately 18.9 million bushels of corn per year. The plant would spend approximately $66 million per year on corn if the average bushel price was $3.50. This is by far the plant’s largest expenditure, and the alcohol yield is vital in determining its profitability. Now consider what an increase in yield of 0.1 gallons per bushel would do

for the plant, assuming the same quantity of corn is used. Production would reach approximately 52 MMgy, an increase of 1.9 million gallons. If that alcohol was sold for $2 per gallon, plant revenue would be increased by $3.8 million per year. This represents more than 5 percent of the Kelsall annual costs of corn and is a relatively modest yield increase likely within the reach of most ethanol producers. When corn prices are high and ethanol prices are low, increased yield becomes critical to the bottom line. The past few months have brought a slowdown in planned ethanol facilities. Yield increases—not just throughput— become critical in order for the industry to continue successfully moving forward. The difference between throughput

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FERMENTATION

IF YOU SEE

R E N E WA B L E F U E L S , WE SHOULD TALK.

and yield is that throughput adds volume but at the requirement of additional materials, energy and other variable costs. Because of this, the additional benefit of throughput is generally subject to the percentage of plant profitability being applied to any benefits. Yield improvement does not require additional materials, energy or other variable costs and is generally 100 percent additional profit. Additionally, if the alcohol concentration is increased in addition to increased ethanol volume, energy costs will also be lowered as well. This adds further to the additional alcohol contribution gained by yield increases.

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Accurately Measuring Yield When dealing with items as varied as a bushel of corn, itâ&#x20AC;&#x2122;s important to accurately measure the yield of each fermentation batch (most plants make 500 or more batches per year) and control that yield so itâ&#x20AC;&#x2122;s immedi-

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

customers with a competitive advantage.

West Des Moines, Iowa 2829 Westown Pkwy, Ste. 100 800-422-3087, ext. 3746

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FERMENTATION

Profitability of Fermentor Final Alcohols Improvement Based on Annual Averages (in dollars)* Value of average ethanol increase (throughput)

Value of average ethanol increase (yield)

Plant size (MMgy) 0.10%

0.50%

0.10%

0.50%

$194,000

$965,000

$1,900,000

$645,000

$3,225,000

$6,450,000

100

$388,000

$1,930,000

$3,800,000

$1,290,000

$6,450,000

$12,900,000

* based on $2 per gallon ethanol SOURCE: LALLEMAND ETHANOL TECHNOLOGY

ately known whether it was above or below average, and why. This is the secret of fermentation management and why it is so critical. Most modern ethanol plants have computer process control systems that continuously monitor the plant and determine trends within the facility. Commonly known as a distributed control system (DCS), it scans plant devices every few seconds. One way to measure yield is to measure the mash density in the slurry vessel every few seconds to calculate the average mash density over the fermentor fill period. If the accurate

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average mash density and final alcohol content of the fermentor is known, yield can be determined by dividing the drop alcohol (as measured by high-performance liquid chromatography) by the average mash density. The units of this yield measurement are not gallons per bushel, but percent alcohol per unit of mash density. However, this technique isnâ&#x20AC;&#x2122;t perfect. A true measure of yield is determined by the gallons of ethanol per pound of starch. Considering the constraints of modern measurement methods, the alcohol level per unit of mash

density offers an easily measured figure that is extremely accurate. Further, the DCS can calculate the standard deviation of this yield measurement. A graph of the yield against a fermentation batch number can then be plotted. A cause must be determined when ethanol yield falls outside of plus-orminus one standard deviation. Knowing why things are going well or poorly allows plant management to take actions that improve the process and continually improve yield. One way to achieve this is to ensure that processing aids are operating in an environment suitable for

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

FERMENTATION

Effect of Improving Annual Plant Yield (in dollars) Value of annual yield improvement (in gallons per bushel)

Plant size (MMgy) 0.01

0.05

0.10

$377,000

$1,890,000

$3,780,000

100

$754,000

$3,780,000

$7,560,000

SOURCE: LALLEMAND ETHANOL TECHNOLOGY

optimal yield. This includes making sure that pH and temperature are within the operating parameters for both yeast and enzymes. Yeast optimization is a critical area within fermentation. Yeast must be in its growth phase, which produces ethanol 33 times faster than any other phase, in order for it to produce ethanol at its full potential. Yeast needs proper nutrition in order to maintain its vitality and produce ethanol as long as possible. In the current market, it is essential to monitor the yield of every batch of alcohol that the plant produces. When so much of the cost of running a plant is locked into the raw material, the yield

of every batch is important to overall profitability. The efficiency of fermentation determines the bottom line for every ethanol plant. Yield is made in the fermentor and modest yield improvements can significantly affect profitability. Remember, the only thing that makes alcohol is yeast (a living cell). At best, the percent efficiency of the conversion of starch to alcohol is about 92 percent. The remainder goes to growing yeast, glycerol, organic acids (lactic and acetic) and higher alcohols. Optimizing the conversion from starch to ethanol requires a good, trusted partnership

between enzyme and yeast suppliers. Knowing how to optimize the fermentation process can lift yields to higher levels. Adapting these recommendations can help prolong profitability during times of economic difficulty. Fermentation management and yield maximization is a trend that will continue to pay back ethanol producers into the future. EP Dave Kelsall is the technical service manager for Lallemand Ethanol Technology. Reach him at dkelsall@lallemand.com.

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Controllers 147

CORN

Analyzing the Complex 2008 Corn Crop By Elaine Kub

oming off of the largest corn crop in United States history in 2007 and facing favorable corn prices, 2008 promised to provide another bin-bursting crop. Like 2007, the demand for corn would be equally as large. Unfortunately, Mother Nature had other plans and caused notable concern for many corn growers and ethanol producers. Some worry the supply generated from the 2008 corn crop will not be able to support the still-growing demand, while others believe supply will not be an issue and that corn prices could drop to the $5 range for the remainder of 2008 and into 2009. With harvest season well underway, many scenarios exist for what the 2008 corn crop might hold and its long-term implications for both corn growers and ethanol producers.

Early Supply and Demand Projections In the past few years, the large gains in the corn market have been spurred by

increased demand. However, as new crop speculation carried corn prices above $6 per bushel, the market fundamentals shifted as traders began reacting to worries over supplyâ&#x20AC;&#x201D;not demand. The first indication that supply might be an issue came in May, when the USDA projected the United States would use 12.76 billion bushels of corn, 3.95 billion bushels of which would go toward ethanol production. This left an estimated 763 million bushels in ending stocks, which are bushels not in use from immediate demand. The ending stocks are essentially what the United States will have in reserve or inventory. This number, in percentages, is also referred to as the stocks-to-use ratio. Over the past 20 years, the United States has on average kept 15.9 percent of its yearly corn crop in reserve. According to the USDAâ&#x20AC;&#x2122;s May projections, the increased demand for corn will leave the United States with only 5.9 percent in reserve. This by most accounts would be considered extreme-

ly low. These lower stocks-to-use ratios helped fuel speculation of a supply-driven corn market and pushed market prices higher during the early summer months. As summer progressed, traders proved to be sensitive to conditions that might affect the corn cropâ&#x20AC;&#x2122;s yields, further hampering the overall supply. As a result, market prices were Kub increasingly volatile, moving as much as 15 cents each day for days on end. Much of the movement seen in the market was based on new crop speculation. The same concerns over yields will determine how the corn market reacts after harvest. Yield projections have varied through the summer. In late July, Agriculture Secretary Ed Schafer said the USDA projections indicate that,

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despite crop problems in parts of the country including flooding in Iowa, U.S. corn farmers are still expected to raise the second-largest crop in history. Schafer’s comments helped reassure the market that production would not be an issue. However, taking into account this year’s much lower-than-average stocks-to-use ratio, corn and ethanol producers should keep a watchful eye on factors influencing the crop’s yields. A shift in yields, even as small as five to 10 bushels per acre, can have a significant impact on the stocks-to-use ratio. When examining the potential yields for this year’s corn crop, it is important to look at what factors might have already had an effect.

Effects on Yields One of the biggest struggles corn growers faced in 2008 was a late start to planting. A late planting season alters the time during summer when the stalks begin to tassel and silk and kernels are pollinated. If this stage occurs during the hotter parts of summer, pollination will struggle and negatively affect yields. Wet and cooler-than-average conditions kept most Corn Belt farmers out of the fields until late May. Although farmers were able to catch up and put crops in the ground before June, most lagged about one week behind schedule. At press time, it was difficult to determine how many acres have been affected by insufficient pollination and what, if any, effect it will have on the overall yields.

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

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CORN The widespread flooding across Iowa and along the Mississippi River created a surge in corn prices. Prices soared from $5 to nearly $8 per bushel with the prospect of losing millions of valuable corn acres. After the initial reaction subsided, prices began to level out to a more neutral area between $5 and $6. It is possible, however, that some reverberation from the June flooding may be seen. Although it was estimated that the damage was not as significant as first believed, poor field drainage and waterlogged crops could affect yields. The effect will be best measured once the corn is completely harvested. With millions of acres in question, the markets will have a more fundamental reaction once the final numbers are tallied. Late-season weather is always a concern for corn growers, particularly when impacted by a late planting season. A late start causes corn to have shallow roots and not be as resistant to strong winds that accompany severe weather. Hail is another summer weather hazard.

Price and Profitability Scenarios of Corn

SOURCE: DTN

As the temperatures begin to shift in the fall, hail becomes a decreasing threat for corn growers. When corn stalks become uprooted by strong winds or battered by large hail, these are considered to be unrecoverable losses. Frost is another weather condition that might worry some farmers this year.

In most years, freezing temperatures are looked at favorably in corn country during the late harvest season because the cold weather can help speed up the drying process. As a result producers do not need to spend as much money to artificially dry the grain for storage. Due to the late planting and slower-

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CORN

At this price point, farmers will remain comfortably profitable, but with rising seed and fertilizer costs corn producers might need added price incentives to replant corn instead of other profitable crops in 2009.

than-average crop development, an early frost will not be looked at as favorably. DTN agricultural meteorologist Bryce Anderson forecasted a 20 percent to 25 percent chance for early frost for much of the northern Corn Belt including the northern 40 percent of Iowa, northeast Nebraska, far northern Illinois, and all of Minnesota, the Dakotas, Wisconsin and Michigan. Of this area, the biggest threat is in the Dakotas, western and southwestern Minnesota, and northwest Iowa, according to Anderson. The average first frost date is mid-to-late September in North Dakota, late September in South Dakota, and approximately Oct. 1 in southwest Minnesota and northwest Iowa.

planting technology. If this is the case and we have larger ending stocks than currently projected, and assuming demand remains stable, prices will stabilize and could possibly remain in the $5 range. At this price point, farmers will remain comfortably profitable, but with rising seed and fertilizer costs corn producers might need added price incentives to replant corn instead of other profitable crops in 2009. In the second scenario, depending on how tight the inventory supply becomes due to a loss in yield per acre, corn prices could rise significantly. Since supply is elastic but the demand is currently less so, prices could easily reach new all-time highs. If this is the case, ethanol producers could see a difficult 2009 but expect relief as the fundamentals of supply and demand correct themselves in a 12- to 13-month cycle. Generally speaking, with a supplybased spike in prices, farmers would

most likely enter 2009 ready to plant as much corn as possible to capitalize on the higher prices, which will bring prices back down to more relatively reasonable prices. At the same time a supply-driven price spike might help to slightly curb the growing demand. Corn producers have their â&#x20AC;&#x153;customersâ&#x20AC;? in mind this and every year. Although they would have preferred to provide as much profitably produced crop as possible at prices that would keep their ethanol- and livestock-producing customers successful, circumstances beyond their control may have challenged their 2008 product to such a degree that not everyoneâ&#x20AC;&#x2122;s needs will be met. EP Elaine Kub is a grains analyst at DTN. For more information, visit www. dtnprogressivefarmer.com.

Looking Ahead The 2008 corn crop essentially holds two likely scenarios. First, despite the adversity, the corn crop produces average or above-average yields. Second, the crops faced too many irrecoverable yield losses, further tightening the U.S. corn inventories. In the first scenario, the national trend-lines traditionally show better yields each year as a result of better genetics and ETHANOL PRODUCER MAGAZINE OCTOBER 2008

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Next Generation Biofuel Markets October 6-7, 2008 Hotel Okura Amsterdam, Netherlands This fourth annual event will bring together key players to address the latest developments in creating the cost-competitive, industrial-scale production of next-generation biofuels technologies. Agenda topics will include commercialization, financing and investing, global developments, cellulosic ethanol and other biomass-based fuel, and feedstocks such as switchgrass and sorghum. +44 207 801 6333 www.greenpowerconferences.com

EVENTS

RINWorld Summit October 16-17, 2008

Grand Hyatt Singapore

Renaissance Dallas Hotel Dallas, Texas

This event is divided into four topics: ethanol and biofuels, carbon finance, waste to energy, and solar energy. The ethanol and biofuels segment will cover the development of ethanol in Asia, feedstock reliability, next-generation biofuels, pricing and trading, advanced technology, and industry standards and certification. +65 6322 2771 www.terrapinn.com/2008/ethanol/conf.stm

This summit will cover the basics of renewable identification numbers (RINs), the tracking system that will enforce the renewable fuels standard (RFS) implemented in the Energy Independence & Security Act of 2007. Agenda topics will also review how producers should report RINs to the U.S. EPA, blending, credit trading and certification. Speakers include Texas Gov. Rick Perry, who requested a waiver from the RFS in April, and Clayton McMartin, president of Clean Fuels Clearinghouse, a company that helps the ethanol industry meet RFS requirements. (575) 377-3369 www.rinsummit.com

CALENDAR

Bio-Fuels Thailand

Biofuels Markets Africa

November 12-13, 2008

November 20-21, 2008

Canadian Renewable Fuels Summit

Centara Grand at CentralWorld Bangkok, Thailand

Cape Town, South Africa

December 1-3, 2008

This seventh annual event’s keynote address will provide a market overview, and address pricing and challenges of ethanol in Thailand. International perspectives will be presented, along with technology strategies and other critical concerns for the biofuels industry. A roundtable panel will discuss E85, and a tour of the Thai Agro Energy Ethanol Plant, and PTT Research and Technology Institute, will be available to attendees. (66 02) 254 8321-4 www.abf-asia.com/project/c908($).pdf

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Clean Energy Asia October 7-10, 2008

The approval of the Biofuel Industrial Strategy for South Africa in December provides fresh impetus for the country’s biofuels market, along with a foundation and road map to advance the market. The initial 2 percent biofuels penetration scenario totaling 105 MMgy will create 25,000 jobs, according to the strategy. This third annual conference will bring together executives from across Africa to discuss strategies to enhance development of a sustainable, regional biofuels industry. +44 207 801 6333 www.greenpowerconferences.com

Hilton Hotel Lac Leamy Hull, Quebec Themed “Growing Beyond Oil,” the Canadian Renewable Fuels Association’s fifth annual event will continue to discuss the progress, challenges and opportunities facing the Canadian biofuels market. It will focus on policy and marketing, and will be attended by a number of industry representatives from all levels of the ethanol and biodiesel industries. (519) 576-4500 www.canadianrenewablefuelssummit.com

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

International Distillers Grains Conference & Trade Show

World Biofuels Symposium

World Ethanol 2008

October 19-21, 2008

November 3-6, 2008

October 19-21, 2008

Tsinghua University Beijing, China

Le Meridien Montparnasse Hotel Paris, France

This fourth annual event, organized by BBI International Inc., will explore the world energy issues that China currently faces, specifically in regard to biofuels. Agenda topics will include biofuels policy in China compared with Brazil, the United States, Europe and Singapore; Chinese agriculture and food supply; life cycle analyses; blending; feedstocks; cellulosic ethanol; enzymes; coproducts; and plant optimization. (719) 539-0300 www.worldbiofuelssymposium.com

This 11th annual event, hosted by F.O. Licht, will feature top industry experts, including senior representatives from the oil and automotive industries, and assess the outlook for agricultural commodities and nonfood feedstocks. The conference includes an ethanol production workshop, a risk management seminar and an exhibition hall. Last year, the conference attracted more than 800 delegates from 58 countries. +44 (0) 20 7017 7499 www.agra-net.com/worldethanol

National Ethanol Conference

International Fuel Ethanol Workshop & Expo

Indianapolis Marriott Downtown Indianapolis, Indiana This event will seek to educate and empower the end users of distillers grains, and enhance customer outreach activities worldwide. The agenda includes topics such as distillers grains supply and demand; exports, particularly in Asia; fractionation; and global feeding trends, especially in poultry, swine and cattle. (719) 539-0300 www.distillersgrainsconference.com

Waste to Energy: International Exhibition & Conference for Energy from Waste and Biomass

February 23-25, 2009 San Antonio Convention Center San Antonio, Texas

D e c e m b e r 1 0 - 11 , 2 0 0 8 Bremen Exhibition & Conference Centre Bremen, Germany This fourth annual event will discuss waste as a resource for the production of biogas, biofuels and more. Agenda topics will include material flow management, separation and sorting, residues, shredding and grinding, and power and biogas plants. Biofuels, ethanol in particular, will be discussed in a breakout session. +49-421-3505-347 www.wte-expo.com

This event will cover the industryâ&#x20AC;&#x2122;s impact on the U.S. economy, the environment, food prices and the international market. A record of nearly 2,500 people attended in 2008. An agenda will be available as the event approaches. (202) 289-3835 www.ethanolrfa.org

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

June 15-18, 2009 Denver Convention Center Denver, Colorado This will mark the 25th anniversary of the worldâ&#x20AC;&#x2122;s largest ethanol conference, which was recently recognized by Trade Show Week magazine as one of the Fastest 50 events in the United States for the second consecutive year. More details will be available as the event approaches. (719) 539-0300 www.2009few.com

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www.gtsieve.com

www.inlandwaters.com

Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

Emergency Spill Response

Water Treatment Fremont Industries Inc. 952-445-4121

www.hydro-klean.com

www.univarusa.com

www.fremontind.com

Hydro-Klean, Inc. 515-283-0500

www.hydro-klean.com

Yeast

Inland Waters 313-841-5800

Fermentis-Division of SI Lesaffre 800-558-7279 www.fermentis.com

Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

Reach your customers Your Solution. Advertise Today.

EPM MARKETPLACE 154

www.inlandwaters.com

Fans Hydro-Klean, Inc. 515-283-0500 Inland Waters 313-841-5800

Plate-Frame www.hydro-klean.com

Hydro-Klean, Inc. 515-283-0500

www.hydro-klean.com

www.inlandwaters.com

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

EPM MARKETPLACE Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

Mayes Coatings, Inc. 866-93MAYES www.mayescoatings.com

Construction Buildings—Modular

Miller Insulation Co, Inc. 701-258-4323 www.millerinsulation.com

Railcars Hydro-Klean, Inc. 515-283-0500 Inland Waters 313-841-5800

www.hydro-klean.com

Mechanical

www.inlandwaters.com

JIC

JOULÉ Industrial Contractors

Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

OVER 40 YEARS OF PROVIDING QUALITY COST EFFECTIVE SOLUTIONS TO THE INDUSTRIAL INDUSTRY.

Smoke Stack Hydro-Klean, Inc. 515-283-0500 Inland Waters 313-841-5800

www.hydro-klean.com

We provide: • Experienced Supervision • Multi-craft Staff • Logistical Support For: • Plant Outages • Plant Construction and Expansion • Relocations • Capital Projects • On and off site pipe Fabrication To: • Ethanol and Alternative Fuel Plants • Pharmaceutical Manufacturers • Food Plants • Building Material Facilities

www.inlandwaters.com

Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

Tank Cleaning Equipment Spraying Systems Co. 630-665-5000

www.spray.com

Tank Cleaning Services Hydro-Klean, Inc. 515-283-0500 Inland Waters 313-841-5800

www.hydro-klean.com

Toll Free: (800) 445-6853 email-bbosher@jouleinc.com

www.inlandwaters.com

Professional Environmental Cleaning Services 402-212-0949 www.professionalECS.com Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

Fabrication Macomber Welding & Fabricating, Inc. 616-698-0819 www.macomberwelding.com

JIC Mid-States Mechanical Services, Inc. 800-950-0279 www.mid-statesmechanical.com

EPM MARKETPLACE

W. Soule & Company 1-877-976-8531

With all contact information placed in

Plant Construction

one convenient location, Ethanol

Agra Industries, Inc. 715-536-9584

Producer Magazine not only contains top editorial content but also a useful directory in each publication. Whether a first-time advertiser wanting to raise awareness of your business or a frequent display advertiser looking for

VAL-FAB Inc. 877-482-5322 W. Soule & Company 1-877-976-8531

www.valfab.com

www.wsoule.com

CYC Construction 402-333-1652

www.agraind.com

www.agrisystems.net

www.cycconstruction.com

Grain Storage

Reach your customers

added exposure, EPM Marketplace is the perfect solution.

Agri-Systems 406-245-6231

www.wsoule.com

Coverall Building Systems 800-268-3768

www.coverall.net Your Solution. Advertise Today.

Insulation Mavo Systems 763-788-7713

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

EPM MARKETPLACE www.mavo.com 155

EPM MARKETPLACE

9l`c[`e^ 8 GcXek Fe K_\ N\jk :fXjk6

Reimer Welding Inc. 218-773-0886

Environmental www.reimerwelding.com

Wanzek Construction,Inc. 701-282-6171

Air Resource Specialists,Inc. 970-484-7941 www.air-resource.com wanzek.com

Railroad Tracks

ICM, Inc. 316-796-0900

www.icminc.com

Inland Waters 313-841-5800

www.inlandwaters.com

Seneca Companies 800-369-5500 www.senecacompanies.com TKDA 651-292-4602

www.tkda.com

Feasibility Studies Harris Group Inc. 206-494-9422

:fekXZk A?B <G: :XgXY`c`k`\j =lcc$J\im`Z\ @e[ljki`Xc >\e\iXc :fekiXZkfi J\c]$G\i]fid :`m`c :feZi\k\# D`ccni`^_kè^# GifZ\jj G`gè^ =XYi`ZXk`fe Xe[ @ejkXccXk`fe# KXeb <i\Zk`fe# Jk\\c <i\Zk`fe I`^^è^

www.harrisgroup.com

Groundwater Services Leggette, Brashears & Graham, Inc. 651-490-1405 www.lbgweb.com

Personnel Recruiting /)( K_`i[ 8m\el\# Cfe^m`\n# N8 0/-*) *-'%+)*%,,(' nnn%a_b\ccp%Zfd

SearchPath of Chicago 815-261-4403 www.searchpath.com/chicago

Plant Optimization Mortenson, a leader in ‘green’ renewable energy construction, seeks individuals that can thrive in a culture built upon the pillars of ingenuity, expertise, and exceptional people. ENGINEERING, SUPERINTENDENT, & MANAGEMENT POSITIONS AVAILABLE NATIONALLY. We invite you to BUILD your career

at Mortenson. Contact us today! • • • •

Innovative Benefit Programs Career Growth Opportunities Family-Owned Company Industry Leading Career Learning and Development Your Career Choice.

Send resume to energyjobs@mortenson.com or call toll free 1-877-MORTENSON www.mortenson.com Mortenson is an EOE. 156

R & R Contracting, Inc. 800-872-5975 Railworks 913-888-4091

www.rrcontracting.net

www.railworks.com

Volkmann Railroad Builders, Inc. 262-252-3377 www.volkmannrr.com

Tanks DCI, Inc. 320-252-8200 Eagle Tanks, Inc. 888-678-0698 WINBCO Tank Company 641-683-1855

Harris Group Inc. 206-494-9422

www.harrisgroup.com

Terratec Biofuels of Solutia 800-742-1476 www.TerratecBiofuels.com www.dciinc.com

www.eagletanks.com

www.winbco.com

Consulting

Project Development Ethanol Productions 813-968-6867 Harris Group Inc. 206-494-9422

jim.plautz@verizon.net

www.harrisgroup.com

Public Relations

Business Plans ICM, Inc. 316-796-0900

Granatus Consulting, Inc. 218-773-0005 www.granatusinc.com

Lanser Public Affairs, LLC 262-797-7876 www.lanserpublicaffairs.com www.icminc.com

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

EPM MARKETPLACE Quality Assurance Eurofins Scientific, Inc. 551-580-9140

Control Systems www.eurofinsus.com

Bachelor Controls 785-284-3482

www.bachelorcontrols.com

Control System Integrators, Inc. 319-377-6538 x19 www.csystemi.com

Design/Build Agra Industries, Inc. 715-536-9584

Optimize the Value of Your Co-Products

Grading, sampling, mycotoxins, proximates, residues, GMOs. QA / QC Consulting: HACCP, GMPs, SOPs, NIR calibration Co-products: Quality assurance testing; Lot certiﬁcation; Export assistance 504-297-4330 ethanol@euroﬁnsus.com

Agri-Systems 406-245-6231

www.agraind.com

www.agrisystems.net

Delta-T Corporation 757-941-0188

www.deltatcorp.com

ECE Design 312-235-6960

www.ecedesign.com

Ethanol Productions 813-968-6867

jim.plautz@verizon.net

GS CleanTech Corp. 678-566-3588

www.gs-cleantech.com

ICM, Inc. 316-796-0900

Regulatory Air Resource Specialists.Inc. 970-484-7941 www.air-resource.com

Risk Management

www.icminc.com

Wanzek Construction, Inc. 701-282-6171

wanzek.com

Process Design

National Fuel Marketing 303-996-6781 www.NationalFuelMarketing.com

Education Iowa BioDevelopment 641-969-4167 www.iabiodevelopment.com Iowa Biofuels Training International 641-969-4167 www.biofuelstraining.org

Agri-Systems 406-245-6231 ChemSim 781-248-5057

Analytical Instruments www.agrisystems.net

www.chemsim.com

Process Engineering Associates, LLC 865-220-8722 www.processengr.com Vogelbusch USA, Inc. 713-461-7374

www.vogelbusch.com

Employment Equipment & Services

Recruiting Hobbs & Towne 610-783-4600x108

Air Pollution/Odor Control www.hobbstowne.com

SearchPath of Chicago 815-261-4403 www.searchpath.com/chicago The Richmond Group USA - BioEnergy Search Division

804-285-2071

Ceco Abatement Systems, Inc. 630-493-0624 www.cecoenviro.com/Abatement ICM, Inc. 316-796-0900

www.icminc.com

www.trgbioenergy.com

Engineering

Reach your customers

Civil Antioch International, Inc. 402-289-2217 www.antioch-intl.com TKDA 651-292-4602

www.tkda.com

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

Your Solution. Advertise Today.

EPM MARKETPLACE

Anton Paar +1-804-550-1051 Perten Instruments, Inc. 801-936-8165

www.anton-paar.com

www.perten.com

Blowers & Fans FlaktWoods 716-845-0900

www.flaktwoods.com

Robinson Industries, Inc. 724-452-6121 www.robinsonfans.com

Boiler Systems Factory Sales and Engineering, Inc. 985-867-9150 www.fsela.com Rentech Boiler Systems, Inc. 325-794-5701 www.rentechboilers.com

Catwalks Lean Technologies LLC 701-352-9620 www.leantechnologiesllc.com

Centrifuge Repair Nosnhoj Services Inc. 317-887-6436

www.nosnhojinc.com 157

EPM MARKETPLACE Centrifuges

Distillation Equipment

Westfalia Separator,Inc. 201-784-4322

www.wsus.com

SRS Engineering Corporation 800-497-5841 www.srsengineering.com

Combustion Equipment

Dryers—Flash

Eclipse.Inc. 815-637-7213

Barr-Rosin,Inc. 630-659-3980

www.eclipsenet.com

John Zink Company LLC 800-421-9242

www.johnzink.com

dbc SMARTsoftware, Inc. 770-427-7633 www.dbcsmartsoftware.com Encore Business Solutions 204-989-4330 www.encorebusiness.com John Deere Agri Services 770-238-5100 www.johndeereagriservices.com

www.summit-soft.com

Control Systems FeedForward, Inc. 770-426-4422

Dryers—Fluid Bed

Emissions Testing & Reduction

Aeroglide Corporation 919-851-2000

Computer Software

Summit Software, Inc. 800-433-5724 x 181

www.barr-rosin.com

www.aeroglide.com

Kahler Automation Corp. 507-235-6648 www.kahlerautomation.com SoftPLC Corporation 512-264-8390

Lantec Products, Inc. 617-265-2171

www.lantecp.com

Dryers—Other Davenport Dryer, LLC 309-786-1500 www.davenportdryer.com

Dryers—Ring

Evaporators GEA NIRO Inc 410-997-8700

www.niroinc.com

HRS Process Technology, Inc. 623-915-4328 www.hrs-americas.com

Barr-Rosin,Inc 630-659-3980

www.barr-rosin.com

Fermentors Dryers—Rotary Drum Barr-Rosin,Inc. 630-659-3980

www.feedforward.com

Continuous Emissions Monitoring Systems Easiest installation, operation and maintenance Meet or exceeds EPA requirements NOx, O2, CO, SO2 and others Turnkey systems for under $100,000.00 P.O. Box 9271, Columbus, Oh 43209 866-682-6771 sales@monitortechcorp.us

WINBCO Tank Company 641-683-1855

www.winbco.com

www.barr-rosin.com

Filters

Aeroglide Corporation 919-851-2000

www.aeroglide.com

Eaton Filtration 800-656-3344 ext 581 BruceCLaw@eaton.com Larox 301-543-1200

www.softplc.com

www.larox.com/cpi

Control Systems—Distributed

Filtration Equipment

Control System Integrators, Inc. 319-377-6538 x19 www.csystemi.com

BWF America 800-733-2043

www.bwf-america.com

W.S. Tyler 1-800-321-6188

www.wstyler.com

Fractionation—Corn Buhler Inc. 763-847-9900

www.buhlergroup.com/us

Cereal Process Technologies 217-779-2595 www.cerealprocess.com FWS Technologies 204-487-2500

Conveyors—Enclosed Grisley Components, Inc. 303-756-6474

FEECO International, Inc. 920-468-1000

www.feeco.com

www.grisley.com

Sturtevant Inc. 781-829-6501

www.fwsgroup.com

www.sturtevantinc.com

Conveyors—Pneumatic

ICM, Inc. 316-796-0900

www.icminc.com

Gas Detectors

Blower Engineering 800-388-1339 www.blowerengineering.com

Ronning Engineering Company, Inc. 913-239-8118 www.ronningengineering.com

UE Systems, Inc. 914-592-1220

Gusmer Enterprises, Inc. 847-277-9785 www.gusmerenterprises.com

Emission Monitoring Systems

Gaskets

MonitorTech Corp. 866-682-6771

Allegheny Coupling Company 814-723-8150 www.alleghenycoupling.com

158

www.monitortechgrp.com

www.uesystems.com

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

EPM MARKETPLACE Grain Handling & Storage Sukup Manufacturing Co. 641-892-4222

Trilogy Analytical Laboratory 636-239-1521 www.trilogylab.com

Pressure Gauge Solutions for the Ethanol Industry

www.sukup.com

Heat Exchangers Custom Metalcraft Inc. 417-862-0707 www.custom-metalcraft.com

Loading Equipment Hemco Industries, Inc. 877-347-7106

www.hemcocpm.com

SafeRack 866-761-7225

www.saferack.com

Maintenance Services Joule’ Industrial Contractors bbosher@jouleinc.com www.jouleinc.com

Maintenance Software Mapcon Technologies, Inc. 800-922-4336 www.mapcon.com Contact Hardy Orzikowski for more information and to schedule your instrument review. 888.945.2872 ext. 5127 ethanol@wika.com

Mills—Hammer CBT Wear Parts, Inc. 888-228-3625 Prater-Sterling 630-679-3254

www.cbtwearparts.com

www.prater-sterling.com

Made in the U.S.A.

www.wika.com

CPM/Roskamp Champion 800-366-2563 www.cpmroskamp.com

Millwright Jet Cookers

Agri-Systems 406-245-6231

ProSonix Corporation 800-849-1130, x. 801

www.pro-sonix.com

Laboratory—Equipment Astoria-Pacific International 800-536-3111 www.astoria-pacific.com Munters - Des Champs Products 540-291-1111 www.deschamps.com

Instrumentation Endress+Hauser, 317-535-2174

Perten Instruments, Inc. 801-936-8165

www.perten.com

Laboratory—Supplies www.us.endress.com

Midland Scientific, Inc. 800-642-5263

www.midlandsci.com

Laboratory—Testing Services

Process Sensors Corp. 508-473-9901 www.processsensors.com

Ethanol Lab Training 620-960-6114 ethanol_labtraining@yahoo.com

Perten Instruments, Inc. 801-936-8165

Eurofins GeneScan, Inc. 504-297-4330 www.gmotesting.com

Shimadzu Scientific Instruments 800-477-1227 www.ssi.shimadzu.com

Midwest Laboratories 402-334-7770

WIKA Instrument Corporation 888-945-2872, x5127

Romer Labs, Inc. 636-583-8600

www.wika.com

Mixers KINEMATICA, INC. 631-750-6653

www.kinematica-inc.com

Moisture Analyzers Perten Instruments, Inc. 801-936-8165

www.perten.com

Sartorius Mechatronies-Omnimark 800-835-3211 www.sartorius-omnimark.com

Instrument Associates 708-597-9880 www.instrumentassociates.com

www.perten.com

www.agrisystems.net

www.midwestlabs.com

www.romerlabs.com

Molecular Sieves Gordon Technologies 570-279-8086

www.gtsieve.com

Vaperma, Inc. 418-839-6989

www.vaperma.com

Zeochem, LLC 502-634-7600

www.zeochem.com

Motors Trico TCWind, Incorporated 320-693-6200 www.tricotcwind.com

SGS North America, Inc. 281-478-8234 www.sgs.com/alternativefuels

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

159

EPM MARKETPLACE Pipe

Safety

American Stainless & Supply 800-845-5511 www.americanstainless.com

SimplexGrinnell 800-746-7539

ISCO Industries 800-345-4726

Seals

www.isco-pipe.com

Robert-James Sales, Inc. 800-666-0088

www.rjsales.com

www.simplexgrinnell.com

Robert-James Sales, Inc. 800-666-0088

www.rjsales.com

St. Louis Pipe & Supply 800-737-7473 www.stlpipesupply.com

Thermal Energy American Waste Removal 505-417-9933 www.americanwasteremoval.com

Aesseal Inc. 865-531-0192

www.aesseal.com

Thermal Oxidizers

Sensors Electro Sensors 800-328-6170

www.electro-sensors.com

Separation Equipment

Pipe—Flanges Robert-James Sales, Inc. 800-666-0088

www.rjsales.com

Puritan Magnetics, Inc. 248-628-3808 www.puritanmagnetics.com

WIKA Instrument Corporation 888-945-2872, x5127

www.wika.com

Westfalia Separator,Inc. 201-784-4322

www.wsus.com

for VOC, CO & PM ABATEMENT

www.winbco.com

Chapel Steel 800-320-6042

davidj@chapelsteel.com

Outokumpu Stainless 847-517-4050

Process Control www.harrisgroup.com

EISENMANN Corporation Crystal Lake, Illinois 815.455.4100 es.info@eisenmann.com

Steel Suppliers

Pressure Vessels WINBCO Tank Company 641-683-1855

PROVEN RELIABILITY

Separators

Pressure & Temperature

www.outokumpu.com

Sandmeyer Steel Company 215-464-7100 www.sandmeyersteel.com

Pumps

Storage—DDGS

ITT Industries Goulds Pumps 315-568-2811 www.gouldspumps.com

Laidig Systems, Inc. 574-256-0204

Watson-Marlow Bredel Pumps 800-282-8823 www.watson-marlow.com

Structural Fabrication

ICM, Inc. 316-796-0900

Cherokee Steel Fabricators, Inc. 903-759-3844 www.cherokeesteelfabricators.com

Pro-Environmental, Inc. 909-989-3010

Tanks

Turbines—Gas

Yamada America, Inc. 800-990-7867 www.yamadapump.com

QA Test Products Perten Instruments, Inc. 801-936-8165 Phenomenex 310-212-0555x3328

www.perten.com

www.phenomenex.com

www.lantecp.com

160

Brown-Minneapolis Tank 281-252-9809

www.laidig.com

www.agraind.com

www.icminc.com

www.pro-env.com

Kawasaki Gas Turbines 281-970-3255x18 www.kawasakigasturbines.com

www.bmt-tank.com

www.cmc-letco.com

Federal Equipment Company 800-652-2466 www.fedequip.com

Your Ad HERE Your Solution. Advertise Today.

EPM MARKETPLACE

Greenberry Industrial 541-757-8458 www.greenberryinc.com

Resource Recovery Eco-Tec, Inc. 905-427-0077

Agra Industries, Inc. 715-536-9584

CMC Letco Industries 417-831-1528

RTO Media Lantec Products, Inc. 617-265-2171

www.winbco.com

Utex Industries, Inc. 432-333-4151/800-873-0946 www.utexind.com

Pipe—Fittings

Harris Group Inc. 206-494-9422

WINBCO Tank Company 641-683-1855

www.eco-tec.com

Paragon Trailer Sales 800-471-8769 www.paragontrailer.com

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

EPM MARKETPLACE Siemens Water Technologies 800-525-0658 www.siemens.com/water

Used Equipment

Mergers & Acquisitions Thomas Group Capital 404-504-6050

Ethanol Production

www.thomassec.com

Existing Producers

Risk Management

Louis Dreyfus Commodities 402-844-2680 LDCommodities.com

First Capitol Risk Management 800-884-8290 www.firstcapitolrm.com

Future Producers

R.J. O’Brien 800-621-0757

Syntec Biofuel, Inc. 604-648-2092

www.syntecbiofuel.com

www.rjobrien.com

Software—Accounting Encore Business Solutions 204-989-4330 www.encorebusiness.com

Finance Accounting Christianson & Associates PLLP 320-235-5937 www.christiansoncpa.com

Summit Software, Inc. 800-433-5724 x 181

www.summit-soft.com

Legal Services

Kennedy and Coe, LLC 800-303-3241

www.kcoe.com

Attorneys BrownWinick Law Firm 515-242-2400 www.biofuellawyers.com

Appraisals

Dorsey & Whitney LLP 612-343-8275

www.dorsey.com

Faegre & Benson, LLP 612-766-6930

www.faegre.com

Stoel Rives LLP 612-373-8800

www.stoel.com/biofuels

VOC Scrubbers

Marketing

Lantec Products, Inc. 617-265-2171

www.lantecp.com Natwick Associates Appraisal Services 800-279-4757 www.natwick.com

Valve Actuators

Due Diligence

Rotork Controls,Inc. 585-247-2304

www.rotork.com Harris Group Inc. 206-494-9422

Valves Central States Group 800-318-2747 www.centralstatesgroup.com

Metso Automation 508-852-0215

Jordan, Knauff & Company 312-254-5900 www.jordanknauff.com

Insurance

Wastewater Treatment Services Biothane Corporation 856-541-3500x501

Armor Companies, Inc. 612-501-5654 acline@armorcompanies.com ERI Solutions, Inc. 316-927-4294

erisolutions.com

www.biothane.com

Lender Representatives Water Treatment Aquatech International Corporation 724-746-5300 www.aquatech.com

Gavilon 402-595-5678

www.gavilon.com

www.hawkgold.com

Fuel Ethanol Atlas Renewable Energy, LLC 800-884-8290 www.atlasenergyllc.com C&N Ethanol Marketing Corp. 952-854-6675 www.candncompanies.com

www.metsoethanol.com

www.nasvi.com

www.chsinc.com

Hawkeye Gold, LLC 515-663-6429

Equity Procurement

www.checkall.com

North American Safety Valve 800-800-8882

CHS, Inc. 651-355-6271

www.harrisgroup.com

Greenman Funding 888-802-7678 greenman.funding@verizon.net

Check-All Valve Mfg. Co. 515-224-2301

Distillers Grains

Gavilon 402-595-5678

www.gavilon.com

Noble Americas Corporation 626-585-1705 www.thisisnoble.com Provista Renewable Fuels Marketing 651-355-8519 www.provistafuels.com

Greenman Funding 888-802-7678 greenman.funding@verizon.net

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

161

EPM MARKETPLACE Transportation

Utilities

Heavy Highway Transport

Natural Gas

Landstar Carrier Group 920-487-3877

www.landstar.com

Rail Ameritrack RailRoad Contractors, Inc. 765-659-2111 www.ameritrackrailroad.com Blacklands Railroad 903-439-0738 www.blacklandsrailroad.com Contact Mark Rundle at marundle@integrysenergy.com or (608) 222-5170.

Rail Consulting Antioch International, Inc. 402-289-2217 www.antioch-intl.com TKDA 651-292-4602

www.tkda.com 124 W. Broadway, Suite 300 Madison, Wisconsin 53716 www.integrysenergy.com

Rail Ties Thompson Industries, Inc. 317-859-8725 www.thompsonindustries.net

Railcar Moving Heyl & Patterson Inc. 412-788-9810

Utility Integrys Energy Services 608-235-2547 www.integrysenergy.com

www.heylpatterson.com

RAILCAR MOVING

Reach your customers

www.BiomassMagazine.com

Your Solution. Advertise Today.

EPM MARKETPLACE The CUB™ is an electromechanical machine designed to move single railcars or groups of cars. Some advantages of the CUB™ are: •Safety of Personnel •One Person Operation •Little Maintenance Requirements •Low Investment/Operating Costs

Ask about our complete line of Railcar Moving Devices

www.heylpatterson.com P

412-788-9810

412-788-9822

Shuttlewagon 816-767-0300

info@heylpatterson.com

With all contact information placed in one convenient location, Ethanol Producer Magazine not only contains top editorial content but also a useful

www.shuttlewagon.com

directory in each publication. Whether a first-time advertiser wanting to raise

Railcar Parts Salco Products, Inc. 630-783-2570

EPM MARKETPLACE

awareness of your business or a www.salcoproducts.com

frequent display advertiser looking for added exposure, EPM Marketplace is

For additional information please contact us at (701) 746-8385 or at advertising@biomassmagazine.com.

the perfect solution. 162

ETHANOL PRODUCER MAGAZINE OCTOBER 2008

g " kin e of o 24 c o g St ran 1 /2" t in ull a f plex Du 05

EXPANDING? UPGRADING? Keep Your Plant Running with our In-Stock Stainless PVF Robert-James Sales—the leading distributor of in-stock stainless pipe, fittings, valves and flanges—got your new plant up and running when it was built. Now look to us to service all your continuing MRO requirements. Over 80% of all orders are shipped the same day from our nine regional warehouses. We also ship the larger size products up to 54” in diameter demanded by the biofuel processing industry today.

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