September 2013 Ethanol Producer Magazine

INSIDE: WHEN OHSA COMES KNOCKING SEPTEMBER 2013

Corn Oil Goes Advanced Co-location Offers Pathway to High-Value Fuels Page 30

PLUS

Grain Storage Safety Page 44

Training for, Reacting to Ethanol Spills Page 50 www.ethanolproducer.com h l d

Step Up to the Plate

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Visit GrowthEnergy.org/action for more ways to Step Up to the Plate and get involved.

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CONTENTS

SEPTEMBER ISSUE 2013 VOL. 19 ISSUE 9

FEATURES 36

30

DEPARTMENTS 6

Editor’s Note

7

Ad Index

10

The Way I See It

11

12

30 CO-LOCATION

Harnessing Corn Oil Power

36 PROCESS SAFETY

Emphasis on Details, Bolt-on technology converts corn oil to Documentation advanced biofuels

BY HOLLY JESSEN

Ethanol plants are held to comprehensive process safety standards

BY SUSANNE RETKA SCHILL

50

44

14

16

18

20

44 GRAIN HANDLING

50 EMERGENCY RESPONSE

Making grain bin storage safety a high priority

BY CHRIS HANSON

Preparation helps save lives, environmental resources and money

BY CHRIS HANSON

Seconds to React

Remarkably Innovative, Vigorously Responsible

BY TOM BRYAN

Pioneers Get the Arrows, Settlers Get the Gold

BY MIKE BRYAN

Events Calendar

Upcoming Conferences & Trade Shows

View From the Hill

RINs are Free

BY BOB DINNEEN

Drive

Batter Up: Step Up to the Plate for the RFS

BY TOM BUIS

Grassroots Voice

RINsane About Repealing the RFS

BY BRIAN JENNINGS

Europe Calling

Spread the Word About the Land-Grab Hoax

BY ROB VIERHOUT

Business Matters

Crystal Ball: Predicting 2015 Health Care Reform

BY CHARLES P. STEVENS

22

Business Briefs

24

Commodities Report

26

Distilled

54

Marketplace

When Spills Happen

Ethanol Producer Magazine: (USPS No. 023-974) September 2013, Vol. 19, Issue 9. Ethanol Producer Magazine is published monthly by BBI International.

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

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

4 | Ethanol Producer Magazine | SEPTEMBER 2013

ON THE COVER

Bernie Hoffman and Jeff Murphy of WB Services look over plans for the renewable diesel facility under construction in Sedgwick, Kan. PHOTO: CHAUNCEY PHOTOGRAPHY INC.

EDITOR’S NOTE

Today, with nearly 80 percent of American ethanol plants extracting corn oil, our industry is a good-size fish in a not-so-big pond. The global demand for

REMARKABLY INNOVATIVE, VIGOROUSLY RESPONSIBLE TOM BRYAN, PRESIDENT & EDITOR IN CHIEF TBRYAN@BBIINTERNATIONAL.COM

corn oil is growing, but is it developing fast enough to meet output and sustain prices? If not, will some producers consider opportunities to convert their corn oil to higher-value coproducts on site? It seems likely.

This month’s page-30 cover story, “Harnessing Corn Oil Power,” by EPM Managing Editor Holly Jessen, focuses on a Kansas-based company demonstrating the viability of co-locating biodiesel or renewable diesel production with ethanol facilities. As Jessen reports, WB Services is now ready to bolt on biodiesel or renewable diesel production capability to any corn ethanol plant that seeks it. Once integrated, the biobased diesel plant would run in tandem with the ethanol plant, relying on the same automation systems, the same infrastructure and essentially the same people. What’s so compelling about this corn-oil-to-higher-value-products offering is the fact that it’s a bolt on to a bolt on—new coproducts from relatively new byproducts—and another illustration of our industry’s ongoing quest to maximize the value of corn.

From there, we take this issue on an environmental health and safety (EH&S) field trip, examining hazard analysis and recordkeeping, grain storage safety and emergency spill response. The first piece in this EH&S lineup, “Emphasis on Details, Documentation,” on page 36, offers preparedness tips for unannounced OSHA drop ins. In the past three years, nearly 50 U.S. ethanol plants have been spot-visited by OSHA. Some inspections have yielded multiple violations and onerous fines, mostly for misunderstandings over rigorous process safety management rules. In this must-read for anyone responsible for ethanol plant compliance, safety and change management, EPM Senior Editor Sue Retka Schill tells us compliance isn’t just about avoiding process hazards but identifying potential problems and taking steps to prevent them from becoming risks.

Next, EPM Staff Writer Chris Hanson reports on grain engulfment prevention.

Hanson’s story, “Seconds to React,” on page 44, tells us how engulfment happens— unexpectedly and in seconds—and why adequate safety equipment, procedures and rescue training saves lives.

Hanson continues with a page-50 feature on spill prevention, cleanup and emergency response. “When Spills Happen,” gives us an understanding of how ethanol plant emergency spill response service providers enable producers to prepare for and react to accidental discharges. We learn that responding to spills isn’t just about containment and cleanup but also employee safety and environmental compliance. An ethanol plant’s ability to react on the spot, if and when a spill occurs, is the result of thorough contingency planning and, as always, solid training.

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

6 | Ethanol Producer Magazine | SEPTEMBER 2013

TWITTER.COM/ETHANOLMAGAZINE

AdIndex

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

59 2013 National Advanced Biofuels Conference & Expo

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

11 ICM Inc.

MANAGING EDITOR Holly Jessen hjessen@bbiinternational.com

38 2014 International Biomass Conference & Expo

SENIOR EDITOR Susanne Retka Schill sretkaschill@bbiinternational.com

8-9 Inbicon

NEWS EDITOR Erin Voegele evoegele@bbiinternational.com

STAFF WRITER Chris Hanson chanson@bbiinternational.com

58 2014 International Fuel Ethanol Workshop & Expo

33 INTL FCStone Inc.

41 2014 National Ethanol Conference

13 Lallemand Biofuels & Distilled Spirits

34 Aggreko

29 Mole Master Services Corp.

COPY EDITOR Jan Tellmann jtellmann@bbiinternational.com

ART ART DIRECTOR Jaci Satterlund jsatterlund@bbiinternational.com

GRAPHIC DESIGNER Lindsey Noble lnoble@bbiinternational.com

PUBLISHING

3 Ashland Hercules Water Technologies

CHAIRMAN Mike Bryan mbryan@bbiinternational.com

32 Nalco, an Ecolab Company

CEO Joe Bryan jbryan@bbiinternational.com

42-43 BetaTec Hop Products

5 POET-DSM Advanced Biofuels

SALES VICE PRESIDENT, SALES & MARKETING Matthew Spoor mspoor@bbiinternational.com

BUSINESS DEVELOPMENT DIRECTOR

28 Buckman

40 Premium Plant Services, Inc.

53 Cashco, Inc.

27 Salco Products Inc.

60 DuPont Industrial Biosciences

46 Seneca Companies

21 DuPont Pioneer

19 Sygenta: Enogen

26 Fagen Inc.

22 Tower Performance, Inc.

39 Ferm Solutions Inc.

52 United Sorghum Checkoff Program

17 Fermentis - Division of S.I. Lesaffre

15 Verenium - Ethanol

47 Gamajet Cleaning Systems, Inc.

48 Vogelbusch USA, Inc.

Howard Brockhouse hbrockhouse@bbiinternational.com

SENIOR ACCOUNT MANAGER Chip Shereck cshereck@bbiinternational.com

ACCOUNT MANAGER Kelsi Brorby kbrorby@bbiinternational.com

MARKETING DIRECTOR John Nelson jnelson@bbiinternational.com

CIRCULATION MANAGER Jessica Beaudry jbeaudry@bbiinternational.com

ADVERTISING COORDINATOR Marla DeFoe mdefoe@bbiinternational.com

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

Customer Service Please call 1-866-746-8385 or email us at service@bbiinternational.com.

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

Please recycle this magazine and remove inserts or samples before recycling

2 Growth Energy

35 Wabash Power Equipment Co.

23 Himark bioGas

COPYRIGHT Š 2013 by BBI International TM

SEPTEMBER 2013 | Ethanol Producer Magazine | 7

But with Inbicon’s new all-sugar ferm, you’re on the fast track to cellulosic success. Inbicon has HUUV\UJLK MV\Y ]LYZPVUZ VM P[Z 0UIPJVU )PVTHZZ 9LÄULY` 6\Y UL^ WYVJLZZ =LYZPVU ^OPJO JV MLYTLU[Z * HUK * Z\NHYZ `PLSKZ \W [V TVYL VM ;OL 5L^ ,[OHUVS 0[»Z YLHK` MVY SPJLUZPUN 8 9LHK` [V JV SVJH[L UL_[ [V `V\Y JVYU L[OHUVS WSHU[ 9LHK` [V L_WHUK `V\Y WYVK\J[PVU YL]LU\LZ WYVÄ[Z HUK [H_ JYLKP[Z ^OPSL ZOYPURPUN [OL JHYIVU ZJVYL VM `V\Y LU[PYL I\ZPULZZ =

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Without The New Ethanol, E-10 is a dead end.

( (UV[OLY HSS Z\NHY MLYTLU[H[PVU VW[PVU! =LYZPVU ^OPJO PU[LNYH[LZ [OL MYVU[ LUK VM [OL 00UIPJVU WYVJLZZ ^P[O [OL IHJR LUK VM `V\Y NYHPU WSHU[

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THE WAY I SEE IT

Pioneers Get the Arrows, Settlers Get the Gold

By Mike Bryan Corn to ethanol has provided the necessary pathway to a strong renewable fuels program in North America. I think we can safely say that without the corn-to-ethanol program, we likely would not have a renewable fuels program, period.

In today’s hostile environment, corn seems to have gone from the darling of the dance to dregs of the dungeon in just a few short years. Yet it remains the pathway to the future. Without the corn-toethanol program, the renewable fuels industry is dead in the water.

It appears the oil industry is also well aware of that fact, hence the onslaught of ridiculous invitees like Wendy's into the renewable fuels standard (RFS) debate. Seriously, come on, the RFS costs one Wendy’s franchise owner with four restaurants $120,000 per year? Do these people think we’re stupid?

Apparently they do, because each claim is becoming more and

10 | Ethanol Producer Magazine | SEPTEMBER 2013

more unbelievable. Is anyone in Congress actually making them substantiate these crazy claims, or do they just take it at face value and say, “Wow, I didn’t realize that?”

Without the RFS, corn to ethanol is dead! Without corn to ethanol, at least for the present, the renewable fuels industry is dead.

This is why the focus has been less on the actual use of ethanol, but more on the use of corn to make the ethanol. Corn, like it or not, has become the soft underbelly of our industry, yet it is our lifeblood.

In the years ahead, as cellulose, algae, sweet sorghum and other promising feedstocks emerge, corn will take its rightful place as the pioneer of this industry.

As the saying goes, the “Pioneers get the arrows and the settlers get the gold.” Corn pioneered this industry and remains a vital part of our future. In time, however, as corn growers continue to find other exciting avenues for development, it will become less and less of a target for the arrows flung by the dizzying array of archers bought and paid for

by Big Oil.

Corn farmers have stood toe to toe with Big Oil over the past 30 years and won battle after hardfought battle. Not because they were smarter, richer or better organized, but because they were and are on the right side of the issue.

Agriculture, not Wendy’s, or some other oil industry flunky holds the keys to the future.

So let’s be clear: While corn is taking the arrows, the real target is ethanol and the market share it’s taking from is oil.

That’s the way I see it.

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

EVENTS CALENDAR National Advanced Biofuels Conference & Expo September 10 -12, 2013 CenturyLink Center Omaha Omaha, Nebraska Proving Pathways. Building Capacity.

Produced by BBI International, this national event will feature the world of advanced biofuels and biobased chemicals—technology scale-up, project finance, policy, national markets and more—with a core focus on the industrial, petroleum and agribusiness alliances defining the national advanced biofuels industry.

866-746-8385 | www.advancedbiofuelsconference.com

Algae Biomass Summit September 30 - October 3, 2013 Hilton Orlando Orlando, Florida This dynamic event unites industry professionals from all sectors of the world’s algae utilization industries including, but not limited to, financing, algal ecology, genetic systems, carbon partitioning, engineering and analysis, biofuels, animal feeds, fertilizers, bioplastics, supplements and foods.

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International Biomass Conference & Expo March 24-26, 2014 Orlando Convention Center Orlando, Florida All Things Biomass.

Organized by BBI International and coproduced

by Biomass Magazine, the International Biomass Conference & Expo program will include 30-plus panels and more than 100 speakers, including 90 technical presentations on topics ranging from anaerobic digestion and gasification to pyrolysis and combined heat and power. This dynamic event unites industry professionals from all sectors of the world’s interconnected biomass utilization industries— biobased power, thermal energy, fuels and chemicals.

866-746-8385 | www.biomassconference.com

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

Celebrating its 30th year, the FEW provides the global ethanol industry with cutting-edge content and unparalleled networking opportunities in a dynamic business-to-business environment. The FEW is the largest, longest running ethanol conference in the world—and the only event powered by Ethanol Producer Magazine.

866-746-8385 | www.fuelethanolworkshop.com

VIEW FROM THE HILL

RINs are Free

By Bob Dinneen

$4.00

$1.00

$3.80

$0.80

$3.60

$0.60

$3.40

$0.40

$3.20

$0.20 Ethanol RIN Price (Right Axis) Retail Gasoline Price, All Grades (LeŌ Axis)

$3.00 January-13

February-13

March-13

April-13

May-13

June-13

July-13

SOURCE: EIA & OPIS

when RIN prices spiked in March, and gasoline prices have been falling again since early June while RIN prices have escalated. The correlation of RINs to gas prices since Feb. 1 has been -0.3, meaning that increasing RIN prices correlate best to decreasing gas prices!

At a recent U.S. House Energy and Commerce Subcommittee hearing on the RFS, I sparred with Jack Gerard, president of the American Petroleum Institute, over Big Oil’s false assertion that RINs are impacting gasoline prices.

Curiously, the day after the hearing,

12 | Ethanol Producer Magazine | SEPTEMBER 2013

RIN prices plummeted. It seems rising RIN prices have a better correlation to congressional hearings than to gasoline prices! Hmmm.

Big Oil doesn’t like paying for RINs but the rational solution to their problem is obvious. Blend more ethanol.

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

$0.00

RIN Price ($/RIN)

RINs. Are. Free.

Ethanol producers are required to give RINs to refiners and gasoline marketers when they purchase a gallon of ethanol. It’s simple. Buy a gallon of ethanol, get a RIN for free.

Today, as the renewable fuel standard (RFS) requirement drives ethanol demand beyond 10 percent blends, a thinly traded and opaque market for RINs is developing so that oil companies can trade RINs amongst themselves to ease compliance.

Unfortunately, oil companies would rather drive up the price of RINs than invest in E85 pumps or allow the sale of E15.

Instead of blending to higher levels, Big Oil pulled out a play from their scare tactic playbook. They claim that rising RIN prices are being passed down to consumers and increasing gas prices at the pump. But facts can be nettlesome when you’re trying to mislead folks. You see, gasoline prices were actually falling

2013 Weekly Retail Gasoline Prices and Daily RIN Prices

Retail Gasoline Price($/Gal.)

There's absolutely no correlation between retail gas prices and ethanol renewable identification number (RIN) prices. RINs are free. Let me repeat.

MontrĂŠal InterContinental MontrĂŠal

September 15–20, 2013 A Tradition of Industry Education For 32 years, The Alcohol School has been educating fuel ethanol and distilled beverage producers in the science of alcohol production. The weeklong program is designed for lab, plant, and management personnel and is organized around lectures, laboratory demonstrations, seminars, and plant visits.

The program will cover the process of ethanol and beverage alcohol production from milling and mash preparation through fermentation and distillation.

Enzyme usage, yeast biology, bacterial contamination and control will also be discussed, along with other issues currently affecting both industries.

For More Information Registration is open to fuel ethanol, distilled beverage, and allied industries. Now is a good time to invest in education.

Registration materials and additional information are available online at www.lallemandbds.com

6120 W Douglas Ave | Milwaukee WI 53218 USA +1 414 393-0410 | Fax +1 414 358-8012

DRIVE

Batter Up: Step Up to the Plate for the RFS

By Tom Buis

Step Up

Help us grow our grassroots movement to fight back.

You know why our industry is successful and poised for huge growth. We’ve created the single most dynamic economic market in modern agriculture. We’re single most effective tool at revitalizing our rural economies. encouraging the production We’re making our nation more of ethanol, which, as you energy independent. We’re saving AMERICAN AGRICULTURE, know, is the only large-scale, our neighbors every time they fill RENEWABLE FUELS commercially viable alternative AND THE RFS. up at the pump. We’re cleaning to fossil fuels. our environment and air for Since 2005, our industry today and for future generations. has created and supported Furthermore, it’s a success story nearly 400,000 domestic jobs to see younger generations return here at home that cannot be home to continue the legacy of outsourced. Not only are we their family farm. keeping more jobs at home, But have your members of we’re keeping more money at Congress heard this story? Your home, too. We contribute more Call your representatives and senators at (202) 224-3121 story? We ask you to share your than $40 billion annually to our and urge them to protect the Renewable Fuel Standard. experiences and tell the world why nation’s gross domestic product It’s good for the economy, agriculture and our environment. ethanol matters. Tell Congress and are driving investment into Visit GrowthEnergy.org/action for more ways why the RFS and fuels from new technologies and advanced to Step Up to the Plate and get involved. the farm matter to you, to your biofuels. And, American community and to our nation. ethanol has helped curb our The attacks against our industry Renewable fuels are reducing dependence on volatile foreign oil markets are growing day by day. Big Oil and its our dependence on foreign oil, creating jobs from 60 percent in 2005 to 40 percent in cronies have lined their coffers with years at home and improving our environment, 2012. of absurd subsidies, reaping record profits all while providing consumers with a choice The numbers don’t lie. The RFS and while consumers get robbed at the pump. and savings at the pump. Big Oil will stop homegrown American ethanol have made They’ll do anything to maintain their nearat nothing to block any competition from great contributions to our nation, boosting our monopolistic grasp on the liquid fuels market. renewable fuels and prevent their success. economy, improving our national security and The more our industry grows, the more That is why you must act and call today. fostering future prosperity and innovation. we strengthen, the more nervous Big Oil will become. So, we call on you, our supporters Author: Tom Buis CEO, Growth Energy and allies across the American ethanol 202-545-4000 and biofuels industries, to step up to the tbuis@growthenergy.org plate. While we can’t match Big Oil’s bank accounts, we have strength in numbers.

The renewable fuel standard (RFS) is the most important and innovative U.S. energy policy in the past 40 years. It has been the

to the Plate

TELL CONGRESS TO DEFEND

TAKE ACTION

14 | Ethanol Producer Magazine | SEPTEMBER 2013

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GRASSROOTS VOICE

RINsane About Repealing the RFS

By Brian Jennings

Congress returns to work in September with some proposing to “reform” the renewable fuel standard (RFS) by reducing it. As part of this effort, key lawmakers recently asked the American Coalition for Ethanol to help them understand what is responsible for higher renewable identification number (RIN) prices. Our response was: You’re asking the wrong question.

Congress should be asking who is responsible for rising RIN prices and why.

The answer is that refiners are so RINsane about repealing the RFS and controlling 90 percent of the fuel market that they are willing to pay for RINs and block consumer access to E15, E30 or E85, just to avoid buying ethanol (which costs less than gasoline).

Talk about RINsane, data from the U.S. EPA indicates refiners historically treat RINs as a reward for blending more ethanol than required by the RFS. Because ethanol has been less expensive than gasoline, for years most refiners have blended significantly more ethanol than their annual obligations.

As a result, they’ve been able to keep an oversupply of RINs on hand to limit the potential for more ethanol use. Refiners rolled 2.5 billion excess 2012 RINs over for compliance with the RFS in 2013. The current Big Oil hue and cry isn’t about RIN prices, it is fear of actual competition from blends above 10 percent ethanol and having to let market forces actually decide pump prices.

That oil companies have been willing

16 | Ethanol Producer Magazine | SEPTEMBER 2013

to pay $1 or more for a RIN, just to avoid buying ethanol at 70 cents per gallon less than gasoline and offering consumers safe and tested E15, should tell Congress everything it needs to know about the RFS. It is needed now, more than ever. And the lack of transparency in RIN trading leaves open the possibility that unscrupulous traders or refiners could create skewed transactions for the purpose of manipulating the RIN market for financial gain or to make a political point.

As I’ve written in this column before, frankly, RINs are further proof the RFS works.

Petroleum marketers who blend ethanol with gasoline are also allowed to “separate” RINs from physical ethanol gallons. It requires more paperwork, but they’ve identified an advantage in purchasing ethanol for much less than gasoline, acquiring a RIN on top of the ethanol savings, using some of the RIN to pay for new infrastructure for E15 or E85, and passing a significant pump savings to consumers. Petroleum marketers are able to do what Big Oil suggests cannot be done— overcome the E10 blend wall—and they are doing so while saving consumers money.

Refiners have choices. As with other arguments they use to attack the RFS, even the volume of gasoline sold in the U.S. is largely under their control. By refining fewer barrels of oil and exporting gallons that could be added to the domestic fuel supply, oil companies are unilaterally reducing their own opportunity to blend ethanol and receive the RINs that come with those gallons at no cost, and they are choosing not to provide enough

supply to the market to bring prices down.

The fact that they are willingly spending more money and raising fuel prices by refusing to blend ethanol indicates the lengths oil companies are prepared to go to protect their continued artificial dominance in the marketplace.

Most ethanol opponents in Congress have rightfully concluded they don’t have the votes to repeal the RFS, so what of this effort to reform the RFS by reducing it?

We’ve got to be clear. Reducing the RFS below 10 percent of the U.S. gasoline market does not constitute reform of the RFS. It’s a capitulation to oil companies who don’t want consumers to have access to low-cost blends such as E15 and E85. Arbitrarily cutting the corn ethanol levels to satisfy demands of Tyson, Smithfield, and Perdue Farms, who feel entitled to cheap corn forever, does not constitute reform either.

And, abandoning the cellulose portion of the RFS, when this promising fuel is at the cusp of commercialization and EPA has the tools it needs to make reasonable adjustments on its own, will drive investment overseas and prevent the U.S. from realizing further reductions in greenhouse gases.

Or, we could say it’s RINsane.

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

EUROPE CALLING

Spread the Word About the Land-Grab Hoax

By Robert Vierhout

The United Kingdom Overseas Development Institute, an independent think tank, recently published a report on biofuel projects in five developing countries, four in Africa and one in Asia.

The project was triggered because of the claims by several nongovernmental organizations (NGOs) that the European Union’s biofuel policy had resulted in major land grabs, especially in Africa and some parts of Asia, pushing people off their land and reducing the land available for growing food crops.

Action Aid, one of the most aggressive antibiofuel NGOs, claimed that a total of 50 million hectares of land had been grabbed for biofuel production. This figure was taken from a database called the Land Matrix that is compiled by the International Land Coalition. Fifty million hectares is the size of Spain.

This database, when published in 2012, received significant media traction and the numbers taken from it were accepted at face value. One year later, we now know that the Land Matrix database is not very reliable.

Earlier this year, in its booklet “Myths and Facts about Bioenergy in Africa,” the NGO Pangea was the first to raise questions on the reliability of the database. The program manager of the

18 | Ethanol Producer Magazine | SEPTEMBER 2013

ILC interviewed admitted that it was “very hard to verify data” and that they were very careful “not to describe any of their data as verified.” Unfortunately antibiofuel advocates never indicate this reality when they make reference to the database.

The ODI work is stunning. When comparing several sources on land acquisitions associated with biofuel, the numbers vary substantially. For Africa, the numbers quoted are between 7.5 million and 18.8 million hectares. The researchers believe that the data is highly sensitive to the time period covered and the methodology used.

In the four African countries investigated by the researchers—Ethiopia, Mozambique, Tanzania and Zambia— fieldwork showed that only 1.5 million hectares of land were allocated for biofuel production, which is less than half of the 3.1 million hectares cited in the database.

But the more shocking result from their work is that only “a tiny proportion (of that allocated land) is actually being cultivated.” For the four countries investigated, the total surface of land under cultivation is 26,600 hectares. Land for ethanol crops is less than 10 percent of that number: 2,280 hectares.

So, the total land allocation for biofuel production is a mere 226 square kilometers; just over one-third of the size of Madrid and less than 1 percent of the 3.1 million hectares that are supposedly allocated to biofuels.

One of their findings also demonstrates what we, the biofuels industry, have always claimed: There

is no food vs. fuel controversy. “The findings suggest that there is little basis for making strong statements that biofuel production in developing countries causes widespread undermining of food security through displacing food or competing for resources,” the report says.

These are important and far-reaching conclusions that should bring some sense back into the European debate on biofuels. Unfortunately, as often is the case: First wild accusations are made, covered broadly by the media, and then once the dust is settled and once the facts surface, there is total radio silence.

The ODI report did not gain any media traction. Maybe it was too painful for journalists to acknowledge that they have been reporting on a land-grab-forbiofuel hoax. The best way for NGOs and the politicians who support them unequivocally to save face is to ignore these findings.

We know what to do next: spread the results and tell the world about the hoax.

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

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BUSINESS MATTERS

Crystal Ball: Predicting 2015 Health Care Reform

By Charles P. Stevens

Following certain plan design changes required by the law, major pieces of the 2010 Affordable Care Act were to go into effect starting in 2014. These included the insurance exchanges and the so-called individual mandate and employer mandate. However, on July 2, the Treasury Department announced that it would not enforce the employer mandate until 2015. Thus, employers of 50 or more full-time and full-time equivalent employees now have a one-year reprieve from pay-or-play. This announcement soon led to calls to delay the individual mandate.

At the same time, we will soon learn how the insurance exchanges will look in terms of insurance products and prices, as the exchanges are anticipated to open their doors in October.

The Treasury Department stated that the employer mandate was delayed to address employer concerns that the reporting requirements are too complex. The delay is welcome and it is expected that clearer guidance will be forthcoming. However, even if rules are clarified, the requirement that large employers must offer coverage to full-time employees in 2015 may still affect employer decision making in 2013 and 2014.

Labor statistics, survey responses and news

20 | Ethanol Producer Magazine | SEPTEMBER 2013

reports indicate employers are hiring a higher percentage of part-time employees than before and that pay-or-play has had a role in this trend. The question is whether the oneyear delay and the anticipated reduction in complexity will motivate employers to now hire more full-time employees.

Beyond dealing with the law’s complexity, employers are also faced with other longterm planning concerns, such as the cost of coverage that is offered to eligible employees, and how their competitors may modify their own workforces and plan designs. Employee benefits continue to be a strong component in attracting and maintaining the best employees. Moreover, how do employers who contemplate using more part-time employees and perhaps more leased employees ensure that the work will be done as effectively as with full-time employees? This is a challenging balancing act.

Similarly, uncertainty exists concerning the manner in which insurance carriers will engage in their own decision making.

Insurance carriers who were interested in selling products on the state and federal insurance exchanges have already submitted bids for the various plan designs that will be available on the exchanges in 2014. However, if the individual mandate is delayed as the employer mandate was, it is anticipated that fewer uninsured but healthy individuals will be motivated to obtain coverage from the exchanges next year. Such a change in assumptions could cause carriers to want to modify the pricing of their exchange products.

Although considerable resources have been expended in creating the exchanges, a delay in the individual mandate could significantly affect their rollout later this year.

Our advice for employers is first, continue to monitor news reports and other alerts to keep abreast of those elements of the law that affect your decision making. Second, because most employers are not insurance experts, communicate early and often with your consultants. Understand that while brokers may know about pricing and available plan designs, an employee benefits attorney will be better suited to advise about strategies for compliance, taking pricing and design into account. Third, be nimble; engage in long-term planning to the extent required but think in terms of alternative possibilities and ranges.

Understand that difficulty in making budget projections will be the “new normal� for some time to come. Through all of this, the goal is to attract and maintain the best employees by offering coverage they value. Thankfully, for many employers, the delay in the employer mandate will temporarily relieve some of this pressure and allow more time for strategic planning.

Author: Charles P. Stevens, Attorney, Michael Best & Friedrich LLP 414-225-8268 cpstevens@michaelbest.com

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BUSINESS BRIEFS

People, Partnerships & Deals

Dan Wegner, right, UWGP commodities manager, is presented with a check for his purchase of a 2013 Ford Focus FFV by Carl Benck, UWGP president.

United Wisconsin Grain Producers LLC, a 60 MMgy plant near Friesland, Wis., is offering its employees a flexible fuel vehicle (FFV) program that provides employees with $2,500 to support the purchase of a new or used FFV. The program is designed to provide UWGP employees with an incentive to purchase a vehicle capable of using higher blends of ethanol, thereby increasing awareness and consumption of renewable fuels.

CPM, a supplier of process engineering, process equipment and aftermarket parts for the biofuels, oilseed, animal feed and food processing industries, has appointed Todd Fierro as Crown Fierro brings diverse leadership Companies general experience to Crown manager. Fierro fills a Companies. new executive management position responsible for global coordination of all sales, operations, engineering, strategy, and administrative functions. He will be based in Roseville, Minn., and will report to CPM CEO Ted Waitman. Most recently, Fierro served as president of Oshkosh Corp.’s commercial segment, focusing on new product introduction and strategic development.

Poet-DSM Advanced Biofuels LLC has hired Michael Nealon as its new corporate controller. He is responsible for planning, organizing, directing and controlling the consolidated accounting and financial reporting function for Poet-DSM. Prior to joining 22 | Ethanol Producer Magazine | SEPTEMBER 2013

Poet-DSM, Nealon spent more than 11 years at Glacial Lakes Corn Processors, where he first worked as a controller, and most recently served as finance manager. While Nealson has more employed at Glacial than 10 years of Lakes, he established experience in the ethanol industry. the company’s accounting system and procedures. Nealon also has accounting and finance experience in the real estate, credit card and gaming industries.

Stoel Rives partner Graham Noyes is transferring his practice to the firm’s Sacramento, Calif., office.

He represents clients involved in conventional and advanced Noyes has extensive biofuels, as well as for- experience in estry, agricultural, and the biofuels and bioenergy sectors. solid waste-to-energy projects, and biogas projects involving anaerobic digestion, thermo chemical gasification, and other advanced technologies. Noyes has extensive experience with the federal renewable fuel standard and California’s low carbon fuel standard. He is also a well-known speaker and writer on renewable energy credits and renewable identification numbers.

DuPont and the National Corn Growers Association have announced a new program to develop corn farmers for agricultural leadership opportunities. The NCGA DuPont New Leader Program will help to empower growers to share their story of their farmers and the benefits of a robust agriculture system with key audiences, including consumers, media and decision makers.

BUSINESS BRIEFS SHARE YOUR INDUSTRY BRIEFS To be included in Business

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Briefs, send information (including photos and logos if available) to: Business Briefs, Ethanol Producer Magazine, 308 Second Ave. N., Suite 304, Grand Forks ND 58203. You may also fax information to 701746-8385, or email it to evoegele@bbiinternational.com. Please include your name and telephone number in all correspondence.

Germany-based CropEnergies AG has acquired U.K.-based ethanol producer Ensus Ltd., which operates a 400 MMly (105.7 MMgy) wheat ethanol plant in Yarm, England. CropEnergies intends to invest more £50 million ($76.82 million) to improve the competitiveness of the plant, and intends to restart once essential maintenance work is completed.

Fuels America coalition members have announced the launch of a new ad campaign.

The ads highlight the fact that there is a choice when it comes to our energy future, and that our nation does not have to be beholden to oil’s monopoly over the gasoline supply and the negative impacts that entails.

The U.S. Senate has voted to approve Gina McCarthy’s nomination to lead the U.S. EPA by a vote of 59 to 40. Prior to her nomination, McCarthy served as assistant Representatives of the ethanol industry administrator for the have applauded McCarthy’s approval. EPA’s Office of Air and Radiation. She replaces former Administrator Lisa Jackson, who resigned in December.

Chemtex International Inc. and Murphy-Brown LLC have signed a long-term agreement for the supply of purpose-grown energy crops and residues to be used as cellulosic feedstock in Project Alpha, Chemtex’s cellulosic ethanol facility planned for Clinton, N.C. The agreement covers a number of feedstocks to be grown on approximately 6,000 acres of land owned or controlled by Murphy-Brown. The crops will be grown on acreage not typically used for grain production. Final execution of the agreement is contingent upon achieving financial closure for the project.

Flint Hills Resources LLC has announced an agreement with Platinum Ethanol to acquire its 100 MMgy Arthur, Iowa, ethanol plant. The transaction is expected to close later this year, and the purchase price has not been disclosed. Once the purchase is complete, Flint Hills will own six ethanol plants, five of which will be located in Iowa.

USDA Secretary Tom Vilsack and U.S. DOE Secretary Ernest Moniz have appointed Kevin Kephart as the new committee cochair of the Biomass Research and DeKephart has velopment Initiative expertise in biobased Technical Advisory projects and fuels.

Committee. Kephart, vice president of research and development at South Dakota State University, will serve as co-chair beside former Mississippi Gov. Ronnie Musgrove. The committee is made up of 32 volunteers from industry, academia, nonprofit organizations and local government who discuss and work with technical issues involving energy and agriculture.

Poet LLC has hired Rob Walther as director of federal affairs, tasked with opening a Poet office in Washington, D.C. He will represent Poet and highlight the value of domestic, renewable biofuel in talks with members of Congress, their staff and federal agencies regulating renewable fuels.

ICM Inc. has signed a contract with Industria Paraguaya de Alcoholes S.A. for the sale of an evaporator and dryer system at its plant in Nueva Esperanza, Paraguay. Inpasa was founded in 2006 to produce fuel ethanol derived from several feedstocks including sorghum, corn and sugarcane.

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COMMODITIES Natural Gas Report

Hydraulic fracturing may be here to stay Aug. 1—It takes roughly 28,000 Btus of natural gas to produce 1 gallon of ethanol and dry the associated distillers grain. Based on current natural gas market prices, the cost is 0.112 cents per gallon of ethanol produced. A few years ago when natural gas market prices were considerably higher, the fuel cost per gallon was over 25 cents per gallon. Natural gas costs for a 100 MMgy ethanol production plant are more than $10 million lower today than in 2008. Much, if not all, of the drop-in natural gas prices and consequent lower operating costs can be directly attributed to increased natural gas production made possible from newly developed horizontal drilling and hydraulic fracturing (HDHF) techniques.

Opponents of HDHF have contended through a variety of forums that hydraulic fracturing, in particular, presents unreasonable risks to the water supply. A quick Google search produces a long list of problems “documented” in numerous geographic locations. In fact, there is even a big-budget Hollywood film called “Promised Land” focused on the perils brought on by the industry. Of course, the oil and gas industry

BY CASEY WHELAN

maintains that HDHF is safe in all respects including no ground water contamination.

Missing in discussions regarding the safety of HDHF have been facts derived from long-term scientific study. Fortunately, some facts are starting to emerge and it looks good for industry. An Associated Press article states “a landmark federal study on hydraulic fracturing, or fracking, shows no evidence that chemicals from the natural gas drilling process moved up to contaminate drinking water aquifers at a western Pennsylvania drilling site.” The study included a year of monitoring tagged fluids used in the drilling process. The fluids remained thousands of feet below drinking water.

As more study is done and the public gains more confidence in HDHF techniques, it’s likely that more areas will be opened for HDHF oil and gas development and increased production levels. HDHF may be here to stay as are the financial benefits that accrue to energy consumers.

Corn Report

New corn crop prospects looking bright Aug. 1—The market has seen liquidation as new crop prospects seem to improve. Old crop corn was relatively tight but high basis levels seemed to promote movement allowing cash values to collapse in late July. In July, the USDA supply and demand report decreased old crop corn carryout by 40 million bushels to 729 million bushels. Livestock feed demand increased by 50 million bushels; however, imports increased by 10 million bushels. Overall ethanol demand is still expected to consume 4.650 billion bushels. The tight carryout from the drought last year has kept old crop supplies limited and basis levels have been aggressive for most of the year and this summer.

New crop corn has been interesting. The planted acreage number was placed at 97.4 million acres. Traders expected to see the acreage prospects decrease due to wet weather in the spring. Yield prospects of 156.5 bushels per acre will concede to just shy of a 14 billion bushel crop. In return, the demand is projected to be 12.75 billion bushels compared to 11.2 billion bushels last year. The ethanol sector is projected to consume 4.9 billion bushels, the livestock sector 5.15 billion bushels, and exports 1.25 billion bushels, which was lowered from 1.3 billion bushels previously. This would place new crop carryout at 1.959 billion bushels or a 15.4 percent carry out-to-use ratio.

The graph illustrates the current projected USDA carryout-to-use ratio. The current estimate would be the highest figure the market has 24 | Ethanol Producer Magazine | SEPTEMBER 2013

BY JASON SAGEBIE

seen since the 2005-’06 marketing year. Therefore, this is keeping pressure on new crop prices and allows for a lower yield (lower production) to keep traders feeling comfortable with the potential supply/demand scenario today. Threats to this crop still will be weather but even more so if we utter the words “frost talk” as we go into the fall, since this crop was planted late.

REPORT

Regional Ethanol Prices

($/gallon)

Front Month Futures (AC) $23.0444 REGION

SPOT

RACK

West Coast

2.964

3.074

Midwest

3.153

3.639

East Coast

2.886

2.979 SOURCE: DTN

Regional Gasoline Prices

DDGS Report

DDGS prices influenced by corn as well as protein prices BY SEAN BRODERICK Aug. 1—Heading into August, the market is still trying to decipher what the immense drop in August corn basis is going to mean long term. Until recently, there was still a lot of question as to whether plants were going to be able to economically source corn for August and September. Now, corn is cheaper, but ethanol is as well, so the question remains, but now for different reasons.

The price drop has vindicated the hand-to-mouth domestic buyers. They felt as though it had to come eventually and they still feel as though there is more to come. Export container buyers have continued their steady demand, as they need to keep the pipeline full. The drop in DDGS container prices is nowhere near the drop seen in cash corn, a fact

that will more than likely catch up with the distillers markets. Still, plants have been locking in deferred margins with sales as well, as DDGS netbacks to some plants are well over the 100 percent level of local cash corn.

Looking ahead, DDGS prices will continue to be influenced not only by corn, but also by protein prices, which have also been under pressure lately. Demand for distillers grain containers does not look as though it will abate but container supply for the fall and winter will be affected additionally this year by soybean and corn exports as well, potentially affecting shipping prices. With much of the old-crop, new-crop inverse question in the past, the market focus will start to shift toward logistics and timing.

($/gallon)

Front Month Futures Price (RBOB) $2.228 REGION

SPOT

RACK

West Coast

2.460

2.850

Midwest

2.280

2.670

East Coast

2.325

3.020 SOURCE: DTN

DDGS Prices ($/ton) LOCATION

SEP 2013

AUG 2013

Minnesota

225

230

SEP 2012 290

Chicago

255

263

295

Buffalo, N.Y.

255

229

282

Central Calif.

287

286

344

Central Fla.

275

270

299 SOURCE: CHS Inc.

Corn Futures Prices DATE

(Sept. Futures, $/bushel)

HIGH

LOW

CLOSE

JULY 30, 2013

4.97 1/4

4.89 1/2

4.95 1/2

JUNE 28, 2013

5.74 1/4

5.40 1/2

5.47 1/4

JULY 30, 2012

8.23

7.99 3/4

8.20 SOURCE: FCStone

Cash Sorghum Prices ($/bushel) LOCATION

Ethanol Report

Weak corn prices eroding ethanol support Aug. 1—Ethanol futures prices moved sharply lower through the month of July following a strong shift of aggressive liquidation through the corn market.

The grain market turned sharply lower at the end of July based on improving weather conditions and noncommercial traders quickly backing away from the aggressive pricing previously put in the corn complex.

With front-month corn futures now breaking below $5 per bushel and inventory levels of ethanol growing steadily over the past three weeks, ethanol prices are having a hard time finding a sense of

BY RICK KMENT

stability. Front-month August ethanol prices are still trading at a premium based on expected summer driving demand through the next month but prices have fallen nearly 30 cents per gallon over the past two weeks. At the same time, gasoline prices are still holding on to strong gains based on slipping inventory levels across the country. After all of the drama and focus on tight ethanol supplies that drove prices through the first half of the year, traders have reverted back to lower corn prices, which allowed for widespread weakness to develop in ethanol markets at the end of July.

JUL 26, 2013

JUN 27, 2013

JUL 20, 2012

Superior, Neb.

5.52

6.65

7.31

Beatrice, Neb.

5.62

6.72

7.65

Sublette, Kan.

5.70

6.52

8.11

Salina, Kan.

5.30

6.80

7.63

Triangle, Texas

5.77

6.77

8.24

Gulf, Texas

5.41

5.91

7.46

SOURCE: Sorghum Synergies

Natural Gas Prices

($/MMBtu)

LOCATION

AUG 1, 2013

JUL 1, 2013

JUL 1, 2012

NYMEX

3.56

3.57

2.92

NNG Ventura

3.71

3.52

3.23

CA Citygate

3.93

3.73

3.27

SOURCE: U.S. Energy Services Inc.

U.S. Ethanol Production

(1,000 barrels)

PER DAY

MONTH

END STOCKS

MAY 2013

877

27,197

16,810

APR 2013

855

25,662

17,645

MAY 2012

894

27,718

21,851

SOURCE: U.S. Energy Information Administration

SEPTEMBER 2013 | Ethanol Producer Magazine | 25

DISTILLED

Ethanol News & Trends

IEA predicts global ethanol production increase Ethanol production 2012

United States 864 29 Canada 386 Brazil

Flex-fuel mower enters marketplace

(in 1,000 of barrels per day)

2013

853 31 436

2014

2015

2016

921 31 452

955 35 492

975 33 519

2017

2018

977 29 530

979 26 536

SOURCE: INTERNATIONAL ENERGY AGENCY

The International Energy Agency has released its second annual Medium-Term Renewable Energy Market Report, predicting that world biofuel production will increase from 1.86 million barrels per day in 2012 to 2.36 million barrels per day in 2018. If the prediction is correct, biofuels will account for 4 percent of global road transportation fuel demand in 2018.

Ethanol is expected to remain the dominant biofuel in 2018, with 1.81 million bar-

rels per day of production. Within the U.S., the IEA expects ethanol production to reach 853,000 barrels per day in 2013, increasing to 979,000 barrels per day in 2018. Production in Brazil is expected to reach 436,000 barrels per day this year, and increase to 536,000 barrels per day in 2018. Ethanol production is also expected to increase in Europe, from 67,000 barrels per day in 2012 to 100,000 barrels per day in 2018.

John Deere has introduced a flex-fuel model to its ZTrak line of commercial lawn mowers, the Z925MFlex Fuel. It is compatible with all fuels ranging from E0 to E85. The 24.6 horsepower mower is available with either 54- or 60-inch blades.

The mower is powered by an aluminum block, air-cooled, vertical shaft, electronically fuel-injected engine. According to Chase Tew, product marketing manager for John Deere Commercial Mowing, the engine’s improved horsepower, torque and fuel efficiency is a result of a closed-loop electronic fuel system that uses an oxygen sensor to continuously monitor oxygen levels in the exhaust gas.

“The flexibility to run machines with fuel blends ranging from straight gasoline up to 85 percent ethanol will appeal to customers who want to be more green, burn less fossil fuel, and still have multiple fuel options available,” said Tew.

DISTILLED

Abengoa begins operations at demo plant Abengoa has inaugurated a 1.5 MMly (396,258 gallon per year) demonstration facility in Babilafuente, Salamanca, Spain. The plant features Abengoa’s Waste-toBiofuels (W2B) technology, which produces cellulosic ethanol from municipal solid waste (MSW) via a fermentation and enzymatic hydrolysis treatment.

Demonstrating Progress Abengoa’s plant in Babilafuente, Spain, is The plant has the capac- converting MSW into ethanol. ity to treat up to 25,000 tons of MSW. During the fuel production process, the organic matter that enters goa’s commitment to technological research and the facility is treated to produce organic fiber innovation, which has enabled it to maintain a rich in cellulose and hemicellulose, which is sub- competitive advantage in its sectors, leading sequently converted into ethanol. According to projects with huge technological potential and Abengoa, the technology can help prevent more programs that involve world-leading research than 80 percent of waste from being landfilled. centers and strategic partners,” said Abengoa “This plant once again highlights Aben- CEO Manuel Sánchez Ortega.

Sugar analysis system wins funding Carbo Analytics was awarded a $150,000 U.S. DOE grant for the development of a sugar analysis system under the Small Business Innovation Research program. The system aims to provide a rapid determination of accessible C5 and C6 sugars in a biomass sample.

According to Carbon Analytics, it has partnered with CEM Corp., a developer of microwave digestion systems, to prepare biomass samples. The combined solution is expected to allow biofuel operators to flag potential feedstock programs, and facilitate suppliers in developing and supplying the highest value products.

“These funds enable us to get the joint solution in the hands of biofuel operators even sooner,” said Thomas Reilly, chief technical officer at Carbo Analytics, which was one of 79 companies selected from 750 applications to receive fiscal year 2013 funding under the program.

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Canadian ethanol production to increase Wheat ethanol plant opens in Hull, UK An annual biofuels report filed with the USDA Foreign Agricultural Service Global Information Network predicts that the Canadian ethanol production will increase by approximately 4 percent this year. Canadian ethanol plants are expected to produce approximately 1.98 billion liters (523.06 million gallons) of ethanol this year, up from 1.09 billion liters in 2012. Production is projected to increase further in 2014, reaching 2.01 billion liters.

According to the report, 15 ethanol plants are expected to be operational in Canada this year, representing a combined capacity of more than 1.8 billion liters. The report estimates that approximately 99 percent of that capacity is currently in use.

In 2013, Canadian producers are expected to use corn as feedstock for 78 percent of the ethanol used, with 21 percent derived from wheat. Corn oil production has also increased in recent years, reaching 96,000 metric tons last year.

Canadian coproduct prodction (in 1,000 metric tons)

Distillers dried grains 2009

736

2010

923

2011

1,037

2012

1,329

2013

1,375

ESTIMATED

2014

1,383

FORECAST

Corn Oil 2009

46

2010

63

2011

74

2012

96

2013

99

ESTIMATED

2014

99

FORECAST

The 420 MMly (110 MMgy) Vivergo Fuels Ltd. wheat-to-ethanol plant in Hull, U.K., began operations in July. The plant, a joint venture between AB Sugar, BP and DuPont Industrial Biosciences, was built for more than $448 million.

The plant’s annual production capacity is equivalent to one-third of the U.K.’s current ethanol demand. The facility will also produce 500,000 metric tons of distillers grains annually, enough to feed about one-fifth of the U.K.’s diary herd.

Praj Industries Ltd. provided the license for the technology as well as basic engineering and some equipment, including the core process block of liquefaction, fermentation, distillation, multi-effect evaporation and molecular sieve dehydration. According to Praj, the highly efficient facility features a unique integrated distillation, dehydration and evaporation system, which reduces energy consumption, including a 30 to 40 percent reduction in water and steam use.

SOURCE: USDA FAS GAIN REPORT: CANADA, BIOFUELS ANNUAL, 2013

Evaporator costs got you steaming? Reduce your pressure.

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Commitment makes the best chemistry.

DISTILLED

EPA approves, proposes new fuel pathways The U.S. EPA has issued a supplemental final rule under the renewable fuel standard (RFS) that finalizes cellulosic pathways for biofuels made from giant reed and napier grass feedstock. The rule contains a life-cycle greenhouse gas (GHG) analysis of biofuels made from these feedstocks and establishes a system of registration, recordkeeping and reporting requirements designed to address concerns over the invasive potential of napier grass and giant reed.

Through a separate rulemaking process, the EPA is also establishing a fuel pathway for ethanol produced from barley. In mid-July agency published a notice of data availability that outlined its analysis to qualify barley as a feedstock for two categories of fuel under the RFS; conventional renewable fuel that meets the 20 percent greenhouse gas (GHG) reduction threshold, and advanced biofuel that meets the 50 percent GHG reduction threshold.

Woodland Biofuels gains demonstration plant loan

GHG emissions (per mm Btu fuel)

Giant reed Napier grass (kgCO2e) (kgCO2e) Nitrogen 1 fertilizer

2.4

N20 4.8

7.6

Phosphorus 0.6 fertilizer

0.1

Potassium 0.4 fertilizer

0.2

Herbicide 0.03 Insecticide 0

0.6 0

Lime 0

2.9

Diesel 1.4

2.2

Electricity 1 (irrigation) SOURCE: U.S. EPA

2.7

Woodland Biofuels has announced it will receive up to $800,000 in funding from the Canadian government under the Federal Economic Development program. The money will be used to operate and optimize its demonstration-scale plant in Sarnia, Ontario.

The funding comes in the form of a loan, with what President and CEO Greg Nuttall called “favorable repayment terms,” through the Investing in Business Innovation initiative.

Woodland Biofuels’ Catalyzed Pressure Reduction technology can be used to produce cellulosic ethanol utilizing a variety of feedstocks. The company plans to test different feedstocks at its demonstration plant, which is in the commissioning phase.

"Our government recognizes that innovation holds the key to long-term economic stability for the people, communities and businesses of Ontario," said Parliament member Pat Davidson. "Our investment in Woodland Biofuels will lead to opportunities for job creation, growth and long-term prosperity in Ontario, and will strengthen Canada's position as a global leader in clean energy."

CO-LOCATION

Progress Report Construction workers assemble the WB Services renewable diesel facility.

The facility is expected to be completed in the fourth quarter.

PHOTO: CHAUNCEY PHOTOGRAPHY INC.

30 | Ethanol Producer Magazine | SEPTEMBER 2013

CO-LOCATION

Harnessing

Corn Oil

POWER A Kansas-based company is offering two bolt-on options for ethanol producers looking to turn crude corn oil into biodiesel or renewable diesel.

BY HOLLY JESSEN

It’s no secret that revenue from corn oil extraction has been key in keeping many ethanol plants producing in recent times of tight margins. It accounts for an increasing portion of total revenue as

the majority of ethanol plants have now adopted and optimized the technology to extract the coproduct, also known as distillers corn oil. Bernie Hoffman, vice president of business development and minority owner of WB Services LLC, says that, according to those in the know, by the end of the year or early next year it’s estimated that about 80 percent of U.S. ethanol plants will be recovering corn oil. That’s a big market.

Now, WB Services is offering ethanol producers a way to turn corn oil into high-value fuels on site. The company has

SEPTEMBER 2013 | Ethanol Producer Magazine | 31

CO-LOCATION

two separate technologies, both commercially available now, that call for co-location of either a biodiesel or renewable diesel facility with an existing ethanol plant. “We think this just adds another arrow to the quiver for an ethanol plant as far as diversifying their product mix and insulating them against tough times,� Hoffman says.

Rachel Overheul, engineering manager for WB Services, agrees. “It brings a lot of po-

tential market value to the ethanol plant, as opposed to being dependent on the corn oil market,� she adds.

The company has built and is operating a 2 MMgy biodiesel plant and is in the process of completing construction on a 3 MMgy renewable diesel facility, both in Sedgwick, Kan. Although neither facility is co-located with an ethanol plant, both serve as a showpiece for potential customers in-

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terested in co-location. “They can come and see the technology at work, feel comfortable with the way they operate,� says Ron Beemiller, company president and CEO. WB Services has two additional reasons for building the facilities, he adds.

For one, they are commercially viable, even factoring in the cost of purchasing corn oil at market value and transporting it in from elsewhere. Co-locating also has many advantages, however, including onsite production of the feedstock, lowered capital expenditure and use of existing infrastructure. Although WB Services has talked to companies interested in building the facilities as stand-alone plants, its main focus is on working within the ethanol industry. “We think that the highest value location is co-located,’� Beemiller says.

The third, and possibly most important, purpose of the biodiesel and renewable diesel plants is continued research and development. Built next door to the WB Services office, the company’s engineering staff is continuing process development and process improvement projects. “That’s kind of perpetual around here,� he says. “That never stops.�

Although both facilities are designed specifically for corn oil as the feedstock, the technology is feedstock flexible. “You can use almost any organic oil or grease,�

Beemiller says. “There are a few restrictions, but not many.� And, although the facility is designed to use 100 percent of the corn oil production at the co-located ethanol plant, the technology offers the flexibility needed so the company could choose to go to other feedstocks when corn oil values go up.

From construction to commissioning, the biodiesel facility takes about six to eight months to build. The renewable diesel facility, on the other hand, goes up in about 12 to 14 months. Although the economics are very attractive for both plants, Hoffman says the biodiesel facility has a lower per-gallon construction cost than the renewable diesel facility.

The return on investment or payback

CO-LOCATION

period will vary, of course, depending on future commodity prices. However, WB Services estimates it’s about two years or less for both the biodiesel and renewable diesel facilities. “We would hope it would be quicker but in most people’s books, a two-year payback on a capital investment is pretty good,� Hoffman says. “If you improve on that, hallelujah.�

'We saw corn oil as a potential coproduct stream that, in the short term, was very profitable for the plants but we thought long term there were probably higher value products that could be created.'

Ron Beemiller,

company president and CEO of WB Services, on the company’s search for high-value uses for corn oil

Getting There Beemiller purchased the business that is now WB Services in late 2006, after working at ICM Inc. for more than six years. The core business offers ethanol producers and other renewable industries a variety of plant and optimization services. Beemiller and Hoffman are former co-workers who started work at ICM in the same week. The two kept in touch after leaving ICM, working on a few projects together and, as corn oil extraction grew, comparing notes on technologies for biodiesel production from corn oil, Hoffman says, adding that he came on board at WB Services later, as the company grew. “We saw corn oil as a potential coproduct stream that, in the short term, was very profitable for the plants but we thought long term there were probably higher-value products that could be created,� Beemiller says.

The search for a good corn oil-tobiodiesel technology took several years. “We kissed a lot of the proverbial frogs,�

Hoffman says. It was during that search that the renewable diesel technology was discovered. Then, through an existing relationship the company had with Novozymes, they learned about a project in Denmark, for which Novozymes was developing an enzymatic process for corn oil-to-biodiesel. The company was looking for a partner to take it from the laboratory to commercial application, he says, and ended up signing a commercialization agreement.

The biodiesel technology can run either as a traditional biodiesel plant, with the acid esterification and transesterification production steps, or the enzymatic process, Beemiller says. Unlike most other

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CO-LOCATION

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biodiesel technologies, which are limited in the amount of corn oil that can be processed, this technology was specifically designed around the higher free fatty acid content of corn oil and doesn’t have those limitations. “Typically most standalone biodiesel plants can run between 10 and 20 percent corn oil and the rest has to be some other, much lower FFA feedstock to blend it down,” he says, adding that the technology utilized by WB Services does not require pretreatment.

Integrating the bolt-on biodiesel plant with an ethanol plant is quite easy, Hoffman says. The facility is tied into the ethanol plant’s distributed control system and, to cut down on the need for spare parts, uses the same brand of pumps, valves, motors and other components. “It’s a very comfortable operation,” he says. “For an ethanol plant, it looks and feels a lot like making ethanol.”

Another benefit is that very few additional staff are needed to handle the biodiesel production facility. Existing operators and maintenance staff can run it with only the addition of a brew master,

'It’s a really great opportunity to take a byproduct, the corn oil, and turn it into something with much higher value.'

Rachel Overheul,

engineering manager for WB Services

who is in charge of making sure the batches are completed properly. “We’re pretty confident that you can bolt on a biodiesel plant and probably only add one or two people,” Hoffman says.

The renewable diesel facility produces a true drop-in fuel that is molecularly identical to petroleum-based diesel. It meets the standard for ASTM D975 fuel. “The only way to tell the difference is to carbon date the fuel,” Beemiller says.

In contrast to the biodiesel facility, ethanol producers won’t be as familiar with

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Going Advanced A 3 MMgy corn-oil-to-renewable diesel facility is under construction in Sedgwick, Kan. WB Services LLC offers ethanol producers two co-location opportunities, bolt-on biodiesel or renewable diesel technology.

34 | Ethanol Producer Magazine | SEPTEMBER 2013

PHOTO: WB SERVICES LLC

CO-LOCATION

Going Up Interested parties are able to tour the site of the renewable diesel plant, shown here, as well as the biodiesel plant, which is currently in operation.

the renewable diesel plant components or production process. “[It’s] a more complicated process, but the integration is more elegant,” Hoffman says.

The process is energy long, meaning it actually produces excess energy that can be used to power the facility in addition to the coproduct naphtha and a small amount of water. The fuel gas produced, a mix of propane and butane, can be used to displace natural gas use. For a facility producing between 2 and 2.5 MMgy of renewable diesel, an excess of 5 to 6 MMBtu per hour of fuel gas could be used for power generation, Overheul says. Production of naphtha, which can be used as a denaturant for ethanol, would range between 310,000 and 370,000 gallons a year.

While neither the fuel gas nor naphtha production are enough to totally displace the plant’s natural gas or denaturant needs, integrating those coproducts into the ethanol plant would certainly save the facility money.

Which production facility an ethanol producer is interested in will depend on their needs and comfort level with new technology. “Honesty I think it’s a win, win whichever technology you choose,”

Overheul says. “So it’s just which technology or capital expenditure you’re more comfortable with laying out. It’s a really great opportunity to take a byproduct, the corn oil, and turn it into something with much higher value.”

There are lots of benefits for ethanol producers that add either technology, Hoffman agrees. First, the facility will have an opportunity to generate D5 advanced biofuel renewable identification numbers, or RINs. In addition, both are considered very low-carbon intensity fuels, as it relates to the Low Carbon Fuel Standard. That’s likely only going to grow in relevancy as other states besides California are considering implementing a LCFS, Hoffman says. Finally, there’s the reality that ethanol producers are facing increasing criticism right now. “One of things we like about biodiesel and renewable diesel is there doesn’t seem to be the blending pushback,” he says. “The market seems more receptive to the diesel fuels than they do ethanol.”

Author: Holly Jessen Managing Editor, Ethanol Producer Magazine 701-738-4946 hjessen@bbiinternational.com

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PROCESS SAFETY

PHOTO: SUSANNE RETKA SCHILL

36 | Ethanol Producer Magazine | SEPTEMBER 2013

PROCESS SAFETY

Emphasis on

DETAILS , DOCUMENTATION Process safety management requires comprehensive hazard analysis and records.

BY SUSANNE RETKA SCHILL

A good process safety management (PSM) program in an ethanol plant is thorough down to the details, including a diagram of every pipe, valve and sensor, showing model and make—the pipe and instrument diagram (P&ID). Backing that up are files of process safety information (PSI), including, but not limited to material safety data sheets (MSDS). There’s also SOPs, MIPs, the PSSR, MOC and PHA to consider.

“A producer would be wise to have someone who understands all of those acronyms and what they mean,” says Charles Palmer, a partner with the law firm Michael Best and Friedrich LLP. While ethanol producers know well that an accident or complaint can trigger an inspection by the Occupational Health and Safety Administration, in the past two years, OSHA has also randomly selected several plants for inspection. Since November 2011, OSHA has had a national emphasis program on process safety management.

Though ethanol plants are small compared to mammoth oil refineries or petrochemical manufacturers, they are held to the same comprehensive process safety standards. There is one big difference. “One of the nice things about the ethanol industry is that it is a relatively new area of energy production,” says Greg Dale, a partner with Faegre Baker Daniels LLP. “As an industry, it’s relatively new compared to petroleum. We’re dealing with newer equipment, more modern technology and, associated with that, more modern safety parameters built into the system.”

A search of the OSHA database for records involving ethyl alcohol manufacturers shows that, indeed, older facilities generally have the most violations. Over the past three years, the number of violations per plant ranged from just one to the highest at 17, with most being less than five violations. The penalties ranged from just under $1,000 to nearly $10,000

SEPTEMBER 2013 | Ethanol Producer Magazine | 37

per violation. The initial penalty was almost always reduced. In 2011, 23 plants were inspected and in 2012 another 15. Ten plants were inspected through June of this year.

The database reveals that in the 12 inspections conducted between October 2011 and September 2012, there were 77 violations and a total of $160,000 in penalties. By far, the largest category was for process safety management violations, at 37, accounting for $113,000 in penalties. The other categories trailed far behind, with six violations on permit-required confined spaces and five citations each for respiratory protection, hazard communication and general requirements.

Other categories received one or two citations each.

“The guys that got five citations, but who really put a lot of work into their PSM and felt they had their ducks in a row and were really on top it, were surprised that they got five citations,” Palmer says.

“You’re talking about people who take a lot of pride in what they do, and one citation is too much.” It can be challenging, too, to explain the fines to a board of directors, he says. “But there’s hundreds of different ways you can be cited under the PSM standard and it’s unusual that if OSHA is doing a PSM inspection you don’t get a citation.”

The PSM standard requires a thorough examination of all potential safety issues in a process hazard analysis (PHA) that must be reviewed every five years at a minimum by a plant’s PSM committee.

Standard operating procedures (SOPs) must be written for every part of the process, complete with safety protocols. Organizational charts are needed that show employee roles and responsibilities, and records must be kept to document that employees are properly trained and informed on safety procedures. Process safety information (PSI) must be available for each component of the system, including, but not limited to material safety data sheets (MSDS). The P&ID must be kept

PHOTO: SUSANNE RETKA SCHILL

PROCESS SAFETY

Inspection Trigger An accident can mean an OSHA inspection of an ethanol plant. But, for the past two years, OSHA’s national emphasis program on process safety management has provided another reason for OSHA to come knocking.

current, showing every process component, and a mechanical integrity program (MIP) in place that insures equipment is regularly inspected and properly maintained.

The management of change (MOC) process demonstrates the sort of detail and thoroughness required. Palmer uses the example of replacing a tank. “A committee sits down and says here’s the material in the old tank, the valves in the old tank and the features of the old tank that were put in here to provide these safety factors. The new one is different in these five ways: Do they provide all of the old safety features? Will they provide more? Will it interact properly with the rest of the system? People on the committee pick apart potential problems

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PROCESS SAFETY

and there’s notes being taken.” The MOC file for that change to the process should include documentation that the manufacturer agrees that the features on the new tank are equal to or superior to the old, he says, and that features on the new won’t interact adversely on other parts of the process.

Another problematic area can be the prestartup safety review (PSSR), which documents that new systems are properly installed and all pertinent operating, maintenance and safety procedures are valid and in place and employees are properly trained. While such a comprehensive requirement for a new plant, or newly installed system, seems achievable, the standard applies all the way back to when the plant was initially built. “The frustration is I can’t recreate history,” Palmer explains. “I can’t, as the person in charge today, go back and correct the things that weren’t done yesterday.” He has seen cases where OSHA wants to go back several years, even to startup. “You can imagine if you have to have every valve, every pipe, every tank, what model, what make, what number, and all the details that are in the system, and you can’t take the system apart and find those things if it wasn’t done right initially.” It is particularly frustrating on acquisitions, he says. “The current ownership and management is being held responsible for the sins of the past.” There has been some success, through not conclusive, with legal challenges seeking a statute of limitations for OSHA, he adds.

With such a daunting standard, what are managers to do if they are concerned about holes in their PSM program?

A number of engineering firms include safety in their consulting services and several companies specialize in safety program management. Many plants manage their safety programs in-house, but rely on these contractors for regular safety audits to help in identifying problem areas.

Required PSM Documentation

The list of tasks for a process safety management program is comprehensive and includes such things as:

PHA

Process hazards analysis that shows the plant’s process safety management (PSM) committee, including management and employees, has evaluated all potential safety hazards.

PSSR

A prestartup safety review that verifies new systems were properly installed and all pertinent operating, maintenance and safety procedures are valid and in place.

PSI

Process safety information is available and complete for all systems, including material safety data sheets (MSDS) and other documentation.

SOP

Standard operating procedures are written up for each system that includes proper safety procedures along with other necessary information.

MIP

A mechanical integrity program is in place to ensure key equipment is receiving proper maintenance, including pressure vessels and storage tanks, piping and vent systems, controls, pumps and emergency shutdown systems, among others.

P&ID

A piping and instrument diagram that shows every process component, and includes make and model.

MOC

Documentation on management of change that shows every change made to the process has been evaluated for its impact on safety.

TRAIN

Training schedules and documentation that every employee has received the proper training.

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Palmer says on occasion, managers express concern that such audits will provide a roadmap for a future OSHA inspector. Involving an attorney can shield some information under attorney/client protection, he says. Part of a PSM program, though, is demonstrating that employers are regularly assessing process hazards, identifying potential problems and taking steps to fix them.

Palmer has other pointers for ethanol producers. When OSHA comes knocking, the employer has the right to know why they are there, he says. “If an employee complains about a forklift being unsafe, the goal is to take them to that forklift and show them the forklift is not unsafe and close the inspection at that point, rather than it expanding into PSM, grain handling and a wall-to-wall inspection.”

If an ethanol producer negotiates a settle-

ment with OSHA to reduce penalties, Palmer recommends the producer get a list of specific steps needed to address the violation that can be checked off as they are completed.

It is important to know that the average OSHA inspector is not qualified to do a full PSM inspection, he adds. “If you are prepared, you’ve got your documentation, your manuals, you’ve got a person who is knowledgeable and is on the ball with respect to PSM, who shows significant training and knows the answers and is prepared in an organized fashion to lay out those answers—the inspector is likely to accept the documentation and may want to look at one component of the process, but not do a full blown inspection.”

Having an inspection expand to fullblown will require OSHA to bring in a qualified PSM team leader, he adds. “These are

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individuals who have worked in the chemical or petroleum industries and they are very familiar with large refineries. They will expect an extreme amount of detail in process safety management, and will be looking under every rock. If there’s a valve missing on your P&ID, you’re going to get a citation for it. If your diagram doesn’t show everything—you can imagine if it’s not drawn to the absolute detail—multiple citations for that. Anytime you made a change and you didn’t go through change management, a citation for that.”

When asked whether such detailed PSM standards are considered onerous, Dale replies, “They are. They do require a great deal of employer attention. They were set out that way.” Process industry facilities are very complex, he points out. “You have various forms of energy coming together—electrical, thermal, mechanical—all in a combined process.

Unless there’s an organized method in which you track things like maintenance and review hazards, things tend to get away from some employers.” While good documentation can be onerous, he admits, it helps with addressing issues before they become a problem or an incident. “World history is replete with examples. By the very nature of these facilities, if something goes wrong, it can go catastrophically wrong.”

Both attorneys say the ethanol industry is proactive and genuinely concerned with providing safe work environments. “OSHA has the ability to factor into its penalty the good faith of the employer,” Dale says. In the view of the inspector, “is this an employer that seeks to do the minimum or is this a very comprehensive program? It’s audited regularly and any issues that are identified are promptly rectified. Those kinds of things can have an effect on penalty levels and just overall perspective of OSHA as to whether this is an employer that means business about the health and safety of workers.”

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

PHOTO: WHITNEY CURTIS

PROCESS SAFETY

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44 | Ethanol Producer Magazine | SEPTEMBER 2013

GRAIN HANDLING

Seconds to React Combatting grain engulfment accidents with proper equipment, procedures and training.

BY CHRIS HANSON

Grain storage safety is a top-priority issue for ethanol producers such as Highwater Ethanol LLC. “One thing I tell my employees,” says Brian Kletscher, CEO, “is if there is any question at all if an employee should be doing something, they need to stop and talk it over and go through it. We don’t want to have to call their family and tell them there has been an accident at Highwater. We want them to go home the same way they showed up to work that day.”

Grain engulfment is currently the leading cause of death inside grain bins, and the U.S. Occupational Safety and Health Organization reports the number of incidents has increased, doubling between 2006 and 2010. More recent studies, including one completed by Bill Field, a professor at Purdue University, found that in 2011 no fewer than 30 incidents across farms and commercial grain handling facilities were reported.

SEPTEMBER 2013 | Ethanol Producer Magazine | 45

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The good news, however is, more thorough safety procedures, first responder training and expanded public awareness of grain engulfment are having a positive impact. Field’s research found that in 2011, the ratio of fatal-to-nonfatal incidents decreased 69 percent. By 2012, the number of documented entrapments had dropped to 19, a 37 percent decrease from the year before.

Engulfment can occur in one of three ways. One scenario involves a person standing on the surface of flowing grain inside a silo. Once the grain begins flowing, the worker has roughly four seconds to react before he or she becomes completely immobilized by the surrounding material. Within 22 seconds, the person can become completely covered.

The most common engulfment situation occurs when workers attempt to loosen grain that has crusted and bridged, restricting the flow of grain. Bridging can occur when grain has more than 15 percent moisture content or mold causes grain to begin spoiling and clumping, forming a crust that stretches across a bin, Kletscher says. Underneath the crust lie potential voids, especially if the bin has been partially emptied. These can unexpectedly collapse beneath a worker, trapping him in seconds.

Field found in his research that the primary cause of entrapment situations in 2011 was victims trying to dislodge crusted grain while the unloading equipment was running. Similarly, dislodging steep piles of grain along the sides of a bin can trigger avalanches and bury unsuspecting workers.

Once engulfed, the trapped person experiences what is described as being squeezed by a constrictor. Glenn Pribbenow, director of the Kansas Fire and Rescue Training Institute from the University of Kansas’ Continuing Education program, explains that with each exhale, the surrounding material fills in the space

around the chest and prevents lungs inhaling to their full capacity, leading to suffocation.

Equipment and Procedures Engulfment scenarios can be frightening to consider for any plant with onsite storage. However, providing adequate safety equipment and better first responder training and enforcing OSHA-approved practices are just a few of the ways engulfment dangers are being addressed.

The OSHA safety standard for grain handling requires that employers provide annual training and specific procedures to guarantee a safe work environment. Shane Rasset, a safety manager at Highwater Ethanol, agrees that training is crucial. “I’d say that either lack of training or lack of hazard information would probably be one of the big reasons why accidents happen,” he says.

Before a person can enter a grain storage bin, an employer must ensure all mechanical, electrical, hydraulic and pneumatic equipment that may pose a threat are de-energized, disconnected or prevented from accidental operation. Next, the environment inside the bin must be tested for combustible gases and oxygen content. If the oxygen content does not meet a 19.5 percent threshold, respirators are required.

Ventilation is mandatory if the environment contains more than 10 percent combustible gas. Additionally, the employer has to ensure the entering worker will not be walking down grain to make it flow or entering underneath bridging grain, practices that are prohibited by OSHA. Once those criteria are met, the employer may permit a worker to enter.

“Inside a grain storage bin, it can be very dangerous,” Kletscher says. “We, generally, would not allow anybody to go inside the grain bin unless they’re completely tied off and can be winched out.”

The company prefers that no one enter the bin at all, he says.

GRAIN HANDLING

'I’d say that either lack of training or lack of hazard information would probably be one of the big reasons why accidents happen.'

Shane Rasset,

LMB PHOTOGRAPHY

safety manager at Highwater Ethanol LLC

If there is sufficient grain that may pose an engulfment hazard, the agency requires a worker to be equipped with a body harness with a lifeline or utilize a boatswain’s chair to ensure the employee will not sink any deeper than the waist. At Highwater, a worker will use a tripod to lower another worker through the top in order to clear grain that may have accumulated along the bin walls.

In addition to the safety equipment, a second employee acts as a point of contact for the bin worker.

This observer maintains a line of communication with the person in the bin and is trained in rescue operations.

Therefore, if an incident were to occur, the observer can assist in digging out the worker from waist-deep grain or call for help, if needed.

Kletscher says Highwater’s observers are equipped with two-way radios to maintain contact with both the person in the bin and the control room. He adds the company’s safety manager is in the vicinity as well.

Rescue Training Suited Up Shane Rasset, safety manager at Highwater Ethanol LLC, demonstrates some safety equipment for bin entries.

Even when adequate safety equipment and training are provided, SEPTEMBER 2013 | Ethanol Producer Magazine | 47

GRAIN HANDLING

accidents can still occur. Therefore, OSHA requires facilities to have suitable rescue equipment on hand. Some first responders and grain industry employers are developing emergency response equipment and training classes, such as the grain engulfment rescue training program developed last winter by the KFRTI. Pribbenow explains the class was created after the institute was approached by a group that was trying to meet grain rescue training needs. The group included the Kansas Cooperative Council, Kansas Grain and Feed Association and the Kansas Farmers Service Association.

The one-day class acts as a beginner’s course in addressing the most common rescue methods and the lengthy task of rescuing a person in an engulfment situation.

Pribbenow explains the first half of the training day focuses on OSHA regulations, prevention and grain bin rescue procedures and practices. During the afternoon session, the class then practices with KFRTI’s 35-foot rescue trailer, which was developed to simulate engulfment rescue scenarios.

Created around the same time as the class, the trailer contains a grain bin, hopper and storage compartments for tools and

P ROCESS

materials. Once assembled, the class learns and then demonstrates rescue methods and bin cutting techniques in an open-top hopper and models used for cutting. Afterward, they apply their knowledge at a larger, closed-top bin to simulate the tighter conditions that occur in real-life scenarios. In addition to playing the role of rescuers, Pribbenow says the students also play victims by becoming engulfed up to their waists. This makes the students more empathetic to the victims by understanding how difficult it is to escape those conditions.

Rescue methods to extract an engulfment victim are not a quick process. Pribbenow explains rescuers cannot simply pull a victim from the grain. He says to pull someone buried chest-deep in grain would require 1,200 to 1,400 pounds of force, which would cause serious harm to the victim’s body. Therefore, the most common rescue method is to use coffer dams to dig a victim out.

The coffer dams form a perimeter around the victim and can be made of almost any material, from a repurposed 55-gallon drum to special interlocking, aluminum walls. The rescue tubes used by

ENGINEERING ,

A

E QUIPMENT S UPPLY ,

AND

KFRTI are from Missouri-based KC Supply Co. Inc. Jeff Lavery, owner of KC Supply, explains the tubes are first lowered into the bin in either four or six sections, depending on the size of the opening. The first section is placed perpendicular on the uphill slope of the grain to prevent more material from sliding down and burying the victim even further. Next, the other sides of the tube are slid into the grain, interlocking with the first piece. After the tube is assembled, rescuers may start excavating the grain inside the tube to relieve pressure on the victim.

He adds the bottom of the tube initially only goes 18 inches beneath the grain’s surface; therefore, it can be pushed down using external handles to gradually move the tube downwards as more grain is removed around the victim. Lastly, once the pressure is decreased enough, rescuers can help the victim out of the grain for medical treatment.

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

C ONSULTING S E R V I C E S

HISTORY OF EXCELLENCE FOR OVER

90

YEARS

Vogelbusch USA, Inc. www.vbusa.com (713) 461-7374 48 | Ethanol Producer Magazine | SEPTEMBER 2013

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EMERGENCY RESPONSE

WHEN SPILLS HAPPEN

Prepared plant operators are trained to quickly and efficiently react in the case of a chemical accident.

BY CHRIS HANSON

Prevention comes first, but in the event of a product or chemical spill, proper planning and knowing how to react to an emergency situation can save lives, environmental resources and money for an ethanol producer.

For example, in 2007, an ethanol plant was the site of one of the largest spills in Iowa’s history. Roughly 29,000 gallons of denaturant had spilled out between two railroad spurs, resulting in a 10-day cleanup operation by Seneca Waste Solutions Inc. to recover 32,000 gallons of contaminated water and excavate 5,000 cubic yards of soil. During this operation, the cleanup crew worked in conjunction with regulatory agencies to prevent further adverse environmental impacts without endangering employees.

Be Prepared Contingency planning is key. Matt Deutsch, vice president of Hydro-Klean LLC, says building relationships with local first responders and a response contractor are some of the most important things a producer can do to prepare for a spill.

In many cases, the company with a spill

has unrealistic expectations of local fire departments and hazmat teams, he says.

“The fire department can’t be there days on end doing a remediation-type project,” Deutsch says. “The fire department can help berm and dike an affected area, but they’re not going to help pick up a spilled product, neutralize the soil or help with the disposal.” By understanding those limitations, a producer can understand when response ends and remediation begins, he says.

Chris Biellier, general manager at Seneca, says his company helps producers form emergency plans by conducting vulnerability analyses and assisting with training personnel. During an analysis, Seneca’s representatives complete a walk-through of the plant to identify weak areas requiring attention and assess the plant’s ability to mitigate spills when they occur. Once vulnerabilities are discovered, Seneca offers suggestions on how to minimize hazards, should a spill occur, until responders are on the scene. Biellier notes rural ethanol plants may have to wait hours before response companies reach the site. Therefore, another aim of Seneca’s plan is to assist plants in buying time by either training plant operators or technicians to perform

50 | Ethanol Producer Magazine | SEPTEMBER 2013

various containment tasks, or training local fire departments on how to quickly assist with mitigating spills until help can arrive.

In addition to building relationships with first responders and completing vulnerability analyses, it is recommended that producers routinely simulate spills.

“Get your plans in place and train on your plans,” says Jim Holland, president of Pinnacle Engineering. “That’s the No. 1 thing they can do to be prepared.” Holland recommends simulation exercises be held at least once a year, addressing different spill scenarios. By recreating spill scenarios, producers can gain experience on how to address and refine a plant’s response to various incidents, such as spills from rail load-outs, wet wells and even natural disasters. “If they do that, they got 90 percent of it licked,” Holland adds.

Holland, Deutsch and Biellier agree that working with a designated contractor has multiple, emergency preparedness benefits. All three say they believe the principal benefit is that the contractor will understand how a plant is situated when a spill occurs. Through this shared understanding, cleanup companies will know the plant and first responder limitations, local geography and geology and how those factors

EMERGENCY RESPONSE

Spill Response Conducting a vulnerability analysis can help ethanol producers minimize hazards when spills do occur. Operators can also be trained in performing various containment tasks.

PHOTO: PINNACLE ENGINEERING

PHOTOS: SENECA WASTE SOLUTIONS

On Standby By working with a designated contractor, ethanol plants are able to have tailor-made, spill response strategies.

can affect the spill. Having a designated contractor saves on response time since it eliminates the need to negotiate rates during a spill situation, Deutsch says.

Yellow Alert In the case of a spill, a facility’s initial reaction can affect how the situation turns out. Deutsch says the No. 1 priority is to assure the safety of plant employees.

Workers commonly understand the risks of ethanol and other chemicals that are used during normal operation, he says, however, they should understand what their roles are when an incident occurs, such as evacuating or isolating an affected area until a response team arrives. Some plants even decide to train their own response teams,

which tends to cost more, he says.

Once workers are safe, Deutsch says plant employees should not try to “attack” the spill, but instead try to close drains while evacuating to a safe area. Additionally, plant operators should be knowledgeable about how much material was released and other factors that can affect the spill.

Operator estimates of lost liquid, the presence of other hazardous chemicals and drainage patterns provide responders and contractors with valuable information that can mitigate further risks.

All plants should have a spill contingency or response plan and any employee should know how to initiate it, Biellier says.

If there is a chance a plant’s capabilities will require external assistance, those em-

ployees should notify responders immediately since they can be turned away if it is determined help is not required.

Another resource for response planning is the Renewable Fuel Association’s Fuel Ethanol Guideline for Release Prevention. Once plant personnel, public safety officials and contractors are notified, the guidelines say the three objectives to address within 24 hours of a spill are: prevent ethanol from reaching surface water, collect pooled liquid ethanol, and begin excavating impacted soil. “The further that product gets from its intended area,” Deutsch explains, “the greater the hazard to the environment, to the people working around it, and the expense is going to go up quite a bit, if you have to deal with

SEPTEMBER 2013 | Ethanol Producer Magazine | 51

EMERGENCY RESPONSE

PHOTO: PINNACLE ENGINEERING

more soil, more groundwater and more surface water.”

“Once it’s in the water,” Holland says, “you pretty much lost it.” If that situation occurs, oxygen must be injected into the water with air compressors to bring the body of water back to adequate levels. He explains that keeping the spill contained onsite is much easier to handle and is a relatively lower cost compared to water-based cleanups.

Operation Oxygen A Pinnacle representative, in boat, monitors aeration activity in a waste pond after contact with ethanol.

Grown on one-third less water and producing an equal amount of ethanol per bushel as comparable feed grains, sorghum is paving the way to a brighter, more sustainable future.

Cleanup and Compliance Once it starts, work to clean up and remediate the spill to meet environmental compliance requirements can take days. Deutsch explains the cleanup process for spills, regardless of the material, are similar. After stopping the initial release, the next step is to prevent the escaped material from flowing offsite.

FUELING THE

FUTURE sorghumcheckoff.com

52 | Ethanol Producer Magazine | SEPTEMBER 2013

EMERGENCY RESPONSE

Once the diking process is completed, the collected material can be removed using adsorption pads or other equipment. Finally, the impacted soil is excavated and disposed of, while new soil is placed and compacted, or seeded, depending on the situation.

Communication is one of the biggest challenges in responding to a cleanup, Biellier says. If a leak is still active, disclosure is crucial because responding agencies rely on accurate information to assess the situation. “No agency or response company, such as ourselves, can assume we know everything of what’s going on,” he says.

“So we rely on the plants to have as much information as possible so that good, safe decisions on how to respond are made based on facts.”

Another challenge for site remediation is meeting environmental compliance.

Biellier explains that states may differ on the cleanup protocols required for each of the chemicals used at an ethanol plant. In those cases, Biellier says a plant will have a designated contact, be it a regional environmental protection agency liaison or a department of natural resources representative. Some states, such as Iowa, follow national environmental guidelines while others, such as California, have stricter, state environmental regulations, he says.

Holland further explains that by the time the initial containment is achieved, contractors should have heard from regulators about what level of ethanol is acceptable in the soil before they begin excavating the contaminated earth. The soil could then be remediated onsite using organisms that consume the alcohol or transported for disposal.

In the case of environmental en-

forcement and penalties, Holland says the amount varies. If the spill is contained onsite and remediation is completed, penalties and fines might be fairly limited, he says. On the other hand, if the spill is not contained and makes its way to a river, lake or pond, ethanol plants will be responsible for the cleanup cost of any fish kills and there may be additional charges for specialized contractors to assess environmental restoration needs. Holland adds penalties are a challenging topic to address since they depend on multiple factors, such as if the spill was truly accidental or whether some negligence is found. “Each situation is unique,” he says.

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

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SEPTEMBER 2013 | Ethanol Producer Magazine | 53

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54 | Ethanol Producer Magazine | SEPTEMBER 2013

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SEPTEMBER 2013 | Ethanol Producer Magazine | 55

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56 | Ethanol Producer Magazine | SEPTEMBER 2013

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SEPTEMBER 2013 | Ethanol Producer Magazine | 57

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