October 2011 Biodiesel Magazine

WWW.BIODIESELMAGAZINE.COM

October 2011

INSIDE: THE REBOUNDING EFFECT OF GOOD ENERGY POLICY

Northeast Bioheat Buildout

PlusStreamlining Downstream DeliveryPage 30

ANDThe Complexities of Biofuels LogisticsPage 36

Rising Demand for Bioheat Keeps Infrastructure

Developments MovingPage 24

OCTOBER 2011 BIODIESEL MAGAZINE 3

CONTENTS

OCTOBER 2011 VOLUME 8 ISSUE 10

INFRASTRUCTURE

Building Out for BioheatIf you build it, they will blendBY ERIN VOEGELE

DISTRIBUTION

Streamlining Downstream DeliverySmall producers selling directBY BRYAN SIMS

LOGISTICS

The Complexities of Biofuels LogisticsA new modeling system emergesBY LUKE GEIVER

4 Editor’s NoteBioheat NortheastBY RON KOTRBA

6 Legal PerspectivesDepreciation Opportunities Sunset Dec. 31BY SHERRY JEAN LARSON

8 Talking PointThe Rebounding Effect of Good Energy PolicyBY RANDY OLSON

10 Biodiesel Events

12 FrontEndBiodiesel News & Trends

18 Inside NBB

22 Business BriefsCompanies, Organizations & People in the News

44 Marketplace/Advertiser Index

Biodiesel Magazine: (USPS No. 023-975) October 2011, Vol. 8, Issue 10. Biodiesel Magazine is published monthly. Principal Offi ce: 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. Periodicals Postage Paid at Grand Forks, North Dakota and additional mailing offi ces. POSTMASTER: Send address changes to Biodiesel Magazine/Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, North Dakota 58203.

DEPARTMENTS CONTRIBUTIONSPROCESS

Biodiesel Reaction and Separation TechnologyThe science of biodiesel BY CHRISTINA BORGESE AND MARC PRIVITERA

24 30 36

BIODIESEL MAGAZINE OCTOBER 20114

BIOHEAT NORTHEAST

Experts in biodiesel-blended heating oil will converge in Pittsburgh on Oct. 11 for the Bioheat Northeast workshop, organized by BBI International in conjunction with the National Biodiesel Board. My editorial staff and I developed the solid agenda and we look forward to delivering it to you in October. The workshop will be co-located with BBI’s Northeast Biomass Conference & Trade Show.

The oilheat industry made a commitment two years ago to green its image by em-bracing incrementally increasing Bioheat blends. In order to do that, several issues need to be worked out.

On the policy side, the Northeast states—the region where most U.S. heating oil is consumed—are moving toward mandates that trigger when surrounding states pass similar legislation. Since the region is geographically compact but population dense, the distribution network crosses state lines all the time, making it necessary for New Eng-land states to have uniform heating oil regulations. A panel of experts will discuss these regional policy issues, as well as federal and local or citywide initiatives, in Pittsburgh.

In addition to policy conducive to expanding the Bioheat market, there are techni-cal aspects to consider in the oilheat industry’s move toward increasing Bioheat blends. These questions include: what are the industry plans for moving forward with higher levels of biodiesel in ASTM D396? What levels can be used in existing burners without changing equipment? What’s the industry’s “move forward,” or progressive, blend and why? How does biodiesel affect NOx in home heating oil applications?

Other items of discussion at the Bioheat Northeast workshop will include a panel on the essentials for oilheat distributors who want to move toward Bioheat blends but don’t know where to start. Also, a panel for property owners and building managers regarding the switch to Bioheat will cover the need-to-know information to entice envi-ronmentally conscious tenants and businesses into your property.

Register today at www.biomassconference.com/northeast today and we’ll see you in Pittsburgh on Oct. 11.

Ron KotrbaEditorBiodiesel [email protected]

EDITOR'S NOTE

Luke Geiver looks into the development of a new analysis tool for biodiesel product delivery by researchers in “The Complexities of Biofuels Logistics” on page 36.

Bryan Sims keeps it local by talking to small-scale produc-ers about them selling product directly to consumers in “Stream-lining Downstream Delivery” on page 30.

Erin Voegele writes “Building Out for Bioheat” on page 24, in which she discusses how companies are developing infrastruc-ture in the Northeast to meet demand for Bioheat.

Associate Editors

FOR MORE INFORMATION AND PERSPECTIVE, VISIT KOTRBA’S BLOG AT BIODIESELMAGAZINE.COM/BLOG/READ/


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Depreciation Opportunities Sunset Dec. 31 BY SHERRY JEAN LARSON

Are you are considering purchasing a biodiesel plant or new equipment to expand or upgrade an existing facility? Don’t miss the opportunity to take advan-tage of depreciation deductions since these federal tax advantages sunset this year on Dec. 31.

Section 179 deductions enables small businesses to deduct 100 percent of the cost of an asset or portion of an asset in the year the asset is placed in service. To qualify for this deduction, the property must be tangible section 1245 property (not buildings) and can be new or used; income limitations may apply. Any excess section 179 is carried forward to future years. The section 179 expensing limits and thresholds are as follows:

• For years beginning in 2010 and 2011, the ex-pensing limit is $500,000. This limit is reduced by the amount that section 179 property placed in service in the tax year exceeds $2 million.

• For years beginning in 2012, the expensing limit is $125,000 and the threshold is $500,000.

• For tax years beginning after 2012, the expens-ing limit is $25,000 and the threshold is $200,000.

Bonus depreciation allows 50 percent of the cost of an asset to be deducted in the year placed in ser-vice. To qualify for this deduction, the property must be new and have a recovery period of 20 years or less. This would not apply to most buildings as they typi-cally have a recovery period of 39 years. The expens-ing percentages and dates are as follows:

• The 2010 Tax Relief Act provided for 100 percent bonus depreciation on new assets placed into service Sept. 9, 2010 through Dec. 31, 2011.

• 50 percent bonus depreciation will be available on new assets placed into service Jan. 1, 2012 through Dec. 31, 2012.

Regarding the 100 percent bonus depreciation, there is an election available for the tax year that includes Sept. 9, 2010, that allows a taxpayer to use 50 percent bonus depreciation for dates both before and after Sept. 8, 2010.

What does this mean to biodiesel plant owners? According to Wayne Lee, CEO of Lee Enterprises Consulting, “It means that those in the industry that are looking at purchasing equipment for expansion, renovation, and those buying biodiesel plants, should all be exploring the opportunities that exist in 2011 that might not exist in the future.”

Christianson & Associates PLLP is a strategic partner of Lee Enterprises Consulting, and handles accounting services for the group’s clientele. “As the world’s largest biodiesel consulting fi rm, it is important to us to have someone within our group that stays abreast of tax matters and upcoming changes, Lee said. “These kinds of changes can have very signifi -cant impacts on our clients, and keeping us informed is precisely why we chose Christianson & Associates as a strategic partner,” he said. Lee notes that everyone in the biodiesel industry should make certain to enlist the services of those accountants and attorneys that understand the tax code as it relates to the biodiesel industry.

Biodiesel plant owners and purchasers should get competent advice to ensure that their purchases are structured correctly. For those purchasing biodiesel-related equipment, there is an opportunity available this year that will not be available after Dec. 31.

Author: Sherry Jean LarsonManager of Assurance and Advisory Services, Christianson & Associates PLLP

(320) [email protected]

LEGAL PERSPECTIVE


Rick Davis, general manager of Soy Energy in Mason City, Iowa, recently shared with me his challenges of the past several years. Shortly after hiring him, the company halted plans to build a biodiesel plant in Marcus, Iowa. They were already in early stages of construction. But this year, the implementation of the revised renewable fuel standard (RFS2) and the passage of favorable Iowa legislation gave them new hope to return to the biodiesel business.

Rather than building a new facility, Davis and his board negotiated to buy a shuttered biodiesel plant in Mason City, Iowa. Soy Energy has since resurrected the 30 MMgy facility, transforming it into a state-of-the-art plant, able to handle many feedstocks. Davis expects it to be running at full capacity within a few months.

This is just one of many stories of biodiesel facili-ties on the rebound. The implementation of the RFS2 has breathed new life into the struggling biodiesel industry, and nowhere is this more evident than in Iowa. Home to 15 plants with 315 million gallons of capac-ity annually, virtually all of our state’s plants shut down or operated at reduced capacity in 2010. Today, most of the same plants that held on by their fi ngernails are operating again, many at their full potential. Other idled plants have changed hands, and I am buoyed by the fact that they are not lost to us. The dreary silence of vacant plants will soon be replaced with the humming of American ingenuity—and our slow economic recovery.

The RFS2 has also stimulated an investment in infrastructure, which is critical to the long-term success of biodiesel in our nation’s energy portfolio. In Iowa, Magellan Pipeline has announced plans to install equip-ment for biodiesel blending at its Des Moines terminal. Other Iowa terminals carrying biodiesel are in Mason City, Ottumwa and Fort Madison. The RFS2 serves as a stabilizing force that will make these investments pay off over the long-term. Despite claims of RFS2 oppo-nents, the needed infrastructure is falling into place.

For all our hard work, and everything we’ve done right as an industry, ultimately our anticipated record biodiesel production is the result of policy. It’s our lead-

ers who recognize our nation’s need for domestically produced, renewable advanced biofuel that have helped this important new industry thrive. I’m proud to say that Iowa’s entire congressional delegation signed on as sponsors to federal legislation to extend the biodiesel tax incentive for three years, a move that would support thousands of new U.S. jobs and spur economic growth in Iowa and across the country. Iowa is the fi rst state to have a clean sweep of co-sponsors to the legislation.

At the state level, Iowa successfully passed a bill this year that does three things to promote the growth of Iowa biodiesel. The legislation:

• Extends and expands a tax credit to encourage retailers to make biodiesel available at the pump.

• Provides a production incentive.• Helps fund infrastructure needed to move biodie-

sel in the state.Biodiesel champions in Iowa worked to pass a

requirement, like a handful of other states, that would have ensured Iowa uses its own products while displac-ing foreign oil. Despite our disappointment in the legis-lators rejecting that effort, the legislation they passed is a step in the right direction. States that enact policies to make their own biodiesel industries a priority will be the states where the RFS2 is delivered.

Davis, who is also a soybean farmer, told me that despite four years in limbo, he hasn’t wavered because he is still a believer. He believes in making Iowa the renewable energy capital of the world. He believes that we should use our own products, and in the impor-tance of energy policy that reduces foreign oil. Why should we spend billions of dollars on foreign oil when our farmers can grow so much energy from their own fi elds, and our producers can deliver economic develop-ment through green energy? Let’s help our lawmakers keep that question at the front of their minds as they continue to make diffi cult decisions for America, while making economic development a priority.

Author: Randy OlsonExecutive Director, Iowa Biodiesel Board


The Rebounding Effect of Good Energy Policy BY RANDY OLSON

TALKING POINT


Bioheat Northeast WorkshopOCTOBER 11, 2011Westin Convention CenterPittsburgh, PennsylvaniaPresented by the National Biodiesel Board and Biodie-sel Magazine, Bioheat Northeast will include agenda focusing on federal, state and local biodiesel oilheat mandates, ASTM specs, technical issues and solutions, biodiesel storing, blending, transporting, marketing and branding, reducing our carbon footprint, as well as an evening networking event and reception.(866) 746-8385www.biomassconference.com/northeast

Northeast Biomass Conference & Trade ShowOCTOBER 11-13, 2011Westin Convention CenterPittsburgh, PennsylvaniaWith an exclusive focus on biomass utilization in the Northeast—from Maryland to Maine—the Northeast Biomass Conference & Trade Show will connect cur-rent and future producers of biomass-derived electric-ity, industrial heat and power, and advanced biofuels, with waste generators, aggregators, growers, munici-pal leaders, utilities, technology providers, equipment manufacturers, investors and policymakers. (866) 746-8385www.biomassconference.com/northeast

EVENTS CALENDAR

Algae Biomass SummitOCTOBER 24-27, 2011Hyatt Regency MinneapolisMinneapolis, MinnesotaOrganized by the Algae Biomass Organization and co-produced by BBI International, this event brings cur-rent and future producers of biobased products and energy together with algae crop growers, municipal leaders, technology providers, equipment manufac-turers, project developers, investors and policy mak-ers. It’s a true one-stop shop—the world’s premier educational and networking junction for all algae in-dustries. (866) 746-8385www.algaebiomasssummit.org

Southeast Biomass Conference & Trade ShowNOVEMBER 1-3, 2011Hyatt Regency AtlantaAtlanta, GeorgiaWith an exclusive focus on biomass utilization in the Southeast—from the Virginias to the Gulf Coast—the Southeast Biomass Conference & Trade Show will connect the area’s current and future producers of biomass-derived electricity, industrial heat and power, and advanced biofuels, with waste generators, aggre-gators, growers, municipal leaders, utility executives, technology providers, equipment manufacturers, in-vestors and policy makers. (866) 746-8385www.biomassconference.com/southeast

Steel City to Host Bioheat Northeast Show Pittsburgh in the fall. It’s where you need to be to get the latest information on biodiesel-blended heating oil, the most promising residential heating alternative on the market. The

oilheat industry has latched onto biodiesel as THE No. 1 green path forward for its industry. In order for this to happen―and in order for the oilheat industry to outperform natural gas on performance and environmental bases―there are tech-nical questions that must be addressed. The experts presenting in Pittsburgh on Oct. 11 at BBI International’s Bioheat Northeast are the ones to answer them. The one-day workshop, in conjunction with the National Biodiesel Board and co-located with BBI’s Northeast Biomass Conference & Trade Show, will kick off with a general session conversation between NBB CEO Joe Jobe and the National Oilheat Research Alliance President John Huber. Follow-ing this, the seminar will feature four highly relevant panels in the Bioheat sector.

Policy: The policy environment for biodiesel-blended heating oil is strong on all levels: national, state and local. Learn from the experts what policy opportuni-ties exist today, what to expect tomorrow, and how to maximize your company’s bottom line with biodiesel.

Technical: The biodiesel and oilheat industries have formed a Bioheat Tech-nical Steering Committee to spearhead the technical effort needed to support higher levels of biodiesel in the Bioheat market. What are the industry plans for moving forward with higher levels of biodiesel in ASTM D396? What levels can be used in existing burners without changing equipment? What’s the industry’s “move forward,” or progressive, blend and why? How does biodiesel affect NOx in home heating oil applications? Come hear from this panel of industry insiders and technical masters to discover biodiesel-blended heating oil’s path forward.

Distribution: As an oilheat dealer, do you want to follow your industry’s call-ing to make heating oil cleaner than natural gas, but don’t know where to start? Then this is a do-not-miss panel. Hear from those who have ridden the biodiesel learning curve and offer their experience and expertise to get you onboard with the revolutionary reinvention of heating oil. The essentials of success in this mar-ket will be revealed.

Markets and Use: Building managers and property owners, learn what your peers are doing to go green with Bioheat. While wood pellets or other biomass-derived heat and power are gaining popularity in industrial and niche applications, they hold no comparison to the seamlessness of integrating biodiesel-blended heating oil to green city buildings and complexes. It’s about cleaning the air around you, being a responsible property owner and attracting the growing population of environment-conscious tenants. Hear from biodiesel suppliers and building owners who have made the switch to cleaner-burning Bioheat.

Register today for the one-day Bioheat Northeast workshop Oct. 11 in Pitts-burgh at www.biomassconference.com/northeast.

10/11

Register Now!Attendees:Register by November 18 and Save $100!www.biodieselconference.org/2012

HOSTED BY


To say that Imperium Renewables and its 100 MMgy biodiesel facility located on the Port of Grays Harbor in Ab-erdeen, Wash., is on the cusp of fading into obscurity com-pared to when it boisterously entered the market four years ago would be severely premature. In the past couple years, while the company struggled with unstable markets, lost contracts, layoffs, executive changes and other upsets, today’s more reli-able markets are lending the company renewed enthusiasm and optimism to fl ourish again, says CEO John Plaza. “We’re really starting to be more bullish on the future,” Plaza tells Biodiesel Magazine.

Plaza points to his company’s ability to supply canola-based biodiesel to regional markets in Oregon, and Alberta and Brit-ish Columbia, Canada—all of which have mandates in place requiring a certain percentage of diesel to be from renewable sources—as a driving factor behind Imperium’s successful run to remain profi table for much of 2010 and into 2011.

“We do a lot of export into Canada and also export on a global basis where the markets create the demand for high-quality canola biodiesel such as ours,” Plaza says.

Canola sourced in Canada is not yet an approved pathway for biodiesel production under RFS2, but Plaza notes that Imperium has been working with the U.S. EPA, the Canadian Canola Association and the Canadian government to green light it, adding that he expects a decision soon.

“It has sort of prevented us from playing in the RFS2 mar-ket because we can’t produce a RIN-qualifi ed fuel, so really the only market we have is the export market,” Plaza says. “Luckily, the export market has been signifi cant. Once the EPA approves Canadian biomass—which includes Canadian canola—that will give us a chance to supply that market.”

With an established distribution channel stabilized to supply those markets for its canola-based biodiesel, Imperium intends to delve into the aviation fuel market, Plaza says. He testifi ed before the U.S. Senate Aviation Operations, Safety and Security Subcommittee in August, where he announced plans for a $250 million renewable jet fuel production facility to be co-located on site with the company’s existing biodiesel facil-ity in Grays Harbor. Plaza also advocated for the military to be allowed to sign longer-term offtake contracts for fuel, specifi -cally biojet. Subsequent to Plaza’s subcommittee hearing, the U.S DOE, USDA and the U.S. Navy announced a $510 million, three-year expansion of the biojet market, an area to which Plaza, a former pilot, is no stranger. Plaza says that Imperium intends to become a participant in the biojet market.

“The announcement is a signifi cant milestone for the po-tential growth of the industry,” Plaza says. “It will likely be an-other year before actual volumes of biojet fuel enter the market, but we’re going to do everything we can to be the successful bidder of that opportunity, should it arise.” —Bryan Sims

FrontEnd Biodiesel News & Trends

A Sleeping Giant AwakensImperium Renewables poised to reemerge as a leader in the biodiesel, biojet industries

TO THE SKY: Imperium is committed to the biodiesel industry but aspires to produce biojet fuel to the emerging market in a new facility co-located with its existing mega-sized biodiesel refi nery.

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More than Just an IncentiveIllinois, B11 and Vehicle Warranties

Renewables in the Heart of the Middle EastA Dubai entity partners with McDonald’s to convert waste grease to biodiesel

When the $1-per-gallon federal blend-ers tax credit went away in 2010, Illinois’ biodiesel industry managed to thrive while producers in other states struggled. Much of the credit behind that success rides on strong policy that supports biodiesel production and con-

sumption. Specifi cally, the state employs a sales tax exemption for biodiesel blends of B11 or higher sold by retail stations in the state, which is good through Dec. 31, 2013. Created in 2003, the policy also provides a sales tax exemption of 20 percent on biodiesel blends from B1 to B10. Blends above B10 receive a total exemption from the state sales tax of 6.25 percent, which essentially creates an Illinois-specifi c mar-ket for B11.

B11 is a preferred blend sold by retail stations, and while consumers continue to use higher blends in their vehicles with ultra-low sulfur diesel (ULSD), Illinois has been fortunate to not have encountered serious issues related to performance in diesel vehicles, particularly those whose manufacturers typically warranty up to B5, says Rebecca Richardson, consultant for MARC-IV and regulatory and education specialist for the National Biodiesel Board.

Richardson credits the success in minimal issues related to B11 usage to

the proactive work by the Illinois State Bureau of Weights and Measures under the USDA, which provides oversight on fuel quality control to assure the fuel meets proper ASTM specs mixing with ULSD to correct issues before the fuel enters a consumer’s tank.

“Since 2003, there have been virtually no problems or complaints,” Richardson tells Biodiesel Magazine. “Occasionally, there will be a fl ash point out of specifi cation or there’ll be some element of the specifi ca-tion that’s out, but by and large, the fuel samples they pull proactively for surveil-lance, virtually none of them are out of specifi cation.”

In 2006, Richardson organized the Illinois Biodiesel Stakeholder group, which meets collectively with OEMs, petroleum marketers and weights and measures personnel to proactively address con-cerns related to fuel performance and talk about fuel quality surveillance—before it becomes an issue.

“So far it’s worked well,” Richardson says. “We have great partners that come to the table that do their own research.”

In the event that fuel happens to be out of specifi cation, Richardson explains, the weights and measures agency would take proactive steps to address the issue beginning at the retail station level.

“When a fuel is out of specifi cation,” Richardson says, “the agency would go back to the retailer and tell them their fuel is out of specifi cation, and they would pay a fi ne depending on the type of violation.

If it’s a fuel quality issue, the fi ne is lower, but if it’s a [cetane] issue or something that could be perceived by the consumer that the retailer might be doing something on purpose, the fi ne would be higher.”

Richardson says the majority of issues that pop up can be traced back to fuel han-dling, improper storage tank maintenance and so forth, in which case the Weights and Measures agency returns and reedu-cates those parties to remedy the situation. “It’s a constant educational process,” she says. —Bryan Sims

The Middle East is renowned for its crude oil production. Now, a new initia-tive spearheaded by the foreign investment promotion arm of the Dubai Department of Economic Development (Dubai FDI) will bring waste grease recycling and biod-

iesel production to the region. Dubai FDI-supported Neutral Fuels

LLC, under a long-term contract, will convert used vegetable oil collected from fast-food chain McDonald’s Corp. outlets across the United Arab Emirates. The re-

sulting fuel will be used by the UAE in its logistics fl eet to reduce emissions and cut the fl eet’s carbon footprint. According to Dubai FDI, the new enterprise is the fi rst commercial producer of biodiesel in the Middle East. —Erin Voegele

FRONTEND

ANY GIVEN STATION: Pull into any truck stop in Illinois and the diesel fuel of choice is B11, as a result of the state’s fuel tax exemption on blends above 10 percent.

EDUCATING: NBB educational specialist Rebecca Richardson says off-spec biodiesel in Illinois is a nonissue.

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There might be little need for a multi-step algae-to-biodiesel method as long as Lindsay Soh of Yale University continues her research. Soh has developed a process that involves supercritical carbon dioxide (CO2) to extract the lipids from algae and through her work at the Zimmerman lab, led by Julie Zimmerman, associate profes-sor of green engineering, Soh has also cre-ated what she refers to as one-pot biodie-sel. The idea, as Soh explains it, combines the process of supercritical CO2 lipid extraction with the use of a solid catalyst, all in the same reactor. “You can actually put algae in your vessel and you will be get-ting biodiesel out,” she says, all of which will improve the effi ciency of the process and cut down on the number of steps.

According to Soh, CO2 is a great solvent that is ideal for lipid extraction, and it is more environmentally friendly than chlorinated or industrial solvents. The use of CO2 also allows for a more selective extraction process resulting in a better end product, according to Soh. “We found that in our lipid extract, we had fewer pigments and less nitrogen,” which she says “will be better for combustion and it will create less NOx production. Once we transesterifi ed, we were also able to fi nd that the biodiesel we produced had basically the same prop-erties as those produced using industrial solvents.”

To this point in her research, Soh says the challenges have been fi nding the right temperature and pressure conditions

to make the process viable and occur in a reasonable amount of time. In addition to those challenges, she also points to the diffi culty in fi nding a suitable solid catalyst that can be used to drive the reaction after the lipids have been extracted.

Zimmerman calls the research based on the idea of a one-pot algae biodiesel method the most signifi cant accomplish-ment of her three-year-old lab. “The nice thing,” Zimmerman says, “is that you can actually recycle your CO2 so that when you are at industrial-scale and you release your pressure, you can actually capture that CO2 and recycle it for the next extraction.”—Luke Geiver

FRONTEND

A One-Pot Approach to Algae BiodieselYale grad student Lindsay Soh has the research to prove how it works

Anne Steckel believes the political atmosphere in Washing-ton, D.C., is fl uid and unstable, but as the new vice president of federal affairs for the National Biodiesel Board, she believes this is an exciting time for the industry. Steckel was attending a biodiesel retreat in Missouri, just two days into her new role, when Biodiesel Magazine reached her to ask about her experience, view of the industry and goals for the coming months.

Although the easy assumption of Steckel’s near-term focus might be based on renewing the biodiesel tax incentive set to expire at the end of the year, Steckel explains that she has larger plans. “My big-gest goal is to grow the industry,” she says. “The tax incentive is on my agenda, and making sure the RFS is implemented cor-rectly,” but she stresses, “the number one thing is to grow the industry.”

To do that, Steckel plans to draw on her experience in Washington. Since 1997,

she has lived in the nation’s capital and worked in a variety of policy-based roles. “I worked on Capitol Hill for nearly a decade on both the House and the Sen-ate side,” she says. “I’ve done energy and agriculture policy, they’ve kind of been my special-ties.” She has also lobbied for both the American Farm Bureau and Growth Energy, one of two leading trade organizations for the ethanol industry. Steckel's most recent position was as chief

of staff for U.S. Rep. Mike Thompson, D-Calif., and previously she served U.S. Sen-ate Majority Whip Richard Durbin, D-Ill.

One might think the record year for biodiesel production may seem to be a great thing happening during a bad politi-cal time, but that isn’t how Steckel sees it. “Members are very energized and excited, and so I’m thrilled to be part of an organi-zation that is moving in the right direc-tion,” she says. And although the political climate on the Hill is “very fl uid,” she says

people have operated under a certain set of rules for a long time, but those times are changing. “I think we see that the old rules don’t really apply.”

Her entrance into the Washington NBB offi ce couldn’t come at a better time, she says, as Congress will be in recess, allowing her to get acclimated to her new home as she takes over for Manning Feraci, former vice president of federal affairs, who left for a role in the solar industry. In 2010, the NBB was able to get the tax incentive extended through a larger pack-age of tax-based legislation, but given the uncertainty of the current climate (Steckel points to the near debacle with the debt ceiling as an example), she explains that she will be exploring all options for fi nding a vehicle of legislation to renew the tax incentive. “It depends on what is going to be moving in Congress,” she says. “There are not a whole lot of vehicles that are going to be moving through Congress, so assessing what is actually moving and how we can insert ourselves is something we will be looking at.”—Luke Geiver

NBB Federal Affairs VP Eyes Industry GrowthAnne Steckel is excited, energized and ready for the new rules of Washington

NEW BLOOD: NBB’s new vice president of federal affairs, Anne Steckel, says growing the industry is her No. 1 goal.


While canola oil is gaining traction as both a biodiesel feedstock and edible oil, the vast majority of the U.S. crop is grown in North Dakota and Minnesota, where this year’s fl ooding has affected crop produc-tion.

The U.S. Canola Association estimates that approximately 90 percent of crops grown in the U.S. are planted in these two states. USDA statistics show a decrease in the acres of the canola planted and harvest-ed this year compared to last year, and sig-nifi cant spring and summer fl ooding events

in the Northern Plains have clearly played a role in this year’s reduced production.

According to the USDA, the area of planted canola in 2011 is estimated at 1.09 million acres, which is down 4 percent from the department’s June estimates, and a 25 percent reduction when compared to last year’s statistics. The area for harvest has been forecasted at 1.07 million areas, which is also 4 percent down from June’s report. Planted area in North Dakota is currently estimated to be 890,000 acres. This is a 5 percent reduction from June estimates and

a 30 percent reduction when compared to 2010.

“Excessively wet spring weather condi-tions prevented canola growers from plant-ing the intended 1.4 million acres forecast earlier this year in the March 30 Projected Plantings Report,” said the Northern Canola Growers Association in a release reacting to the new USDA fi gures. “Tight supplies of canola are expected to result in continued strong demand for canola.”—Erin Voegele

Sustainability at the Pump Is HereBiodiesel quality assurance at the retail level is important to the SBA

Since 2006, the Sustainable Biodiesel Alliance advocated an independent certifi ca-tion system for sustainable biodiesel sold at the pump, and the program is now beginning to take shape. Introduced last year to provide sustainability during music tours, the organi-zation, alongside Small Business Association members in three states, unveiled the fi rst retail locations scored through the program for biodiesel at the pump, marking the fi rst time a sustainability assurance program has been implemented for an alternative fuel at the retail level in the U.S.

SBA business members participated in the new system that scores biodiesel based on a host of requirements that include feedstock type and origin, how the fuel was produced and how far it traveled to the point of sale. These questions and many others determine a numeric score for the fuel that

translate into a bronze, silver, gold or plati-num rating for biodiesel. The SBA teamed up with Piedmont Biofuels of Pittsboro, N.C., Pacifi c Biodiesel in Hawaii and SeQuential Biofuels in Oregon where they began of-fering SBA-scored sustainable biodiesel at eight retail locations in three states in August. In addition to the eight locations, the SBA plans to announce more retail sites across the country throughout the rest of the year.

“We’ve been waiting for a sustainability labeling system for years and we’re delighted that our fuel scored at the top,” says Lyle Estill, president of Piedmont Biofuels. “Not all biodiesel is created equal. Thanks to the SBA, the driving public now has a way to discern the difference between one biodiesel and another.”

According to SBA Executive Director Jeff Plowman, the purpose of the sustain-

ability scorecard was to provide transparency for consumers to make informed decisions when they purchase biodiesel at the pump.

“This scoring tool will help American consumers make informed decisions about their fuel choice, and I’m confi dent we will see people choosing a more sustainable prod-uct,” Plowman says.

While the SBA is still working on an independent third-party certifi cation system, the retail biodiesel scoring system is a fi rst step toward accomplishing this goal. The SBA intends to mirror successful certifi able programs that have taken hold in consumer markets such as the Organic Food Certi-fi cation and Free Trade Certifi cations and believes sustainable, locally produced fuel is a natural next step in efforts to drive purchas-ing decisions toward environmentally and socially friendly products. —Bryan Sims

FRONTEND

Flooding Out Canola Production USDA revises projections, acreage down

ACRES HARVESTED

ACRES PLANTED

PRODUCTION, MEASURED IN $

PRODUCTION, MEASURED IN LB

YIELD, MEASURED IN LB / ACRE

2011

1,071,400

1,092,800

2010

1,431,000

1,448,800

486,865,000

2,450,947,000

1,713

2009

814,000

827,000

238,932,000

1,474,130,000

1,811

2008

989,000

1,011,000

270,988,000

1,445,064,000

1,461

2007

1,155,500

1,176,000

260,339,000

1,430,734,000

1,238

2006

1,021,000

1,044,000

165,491,000

1,394,312,000

1,366

USDA Canola Statistics

*Data sourced from USDA National Agricultural Statistics Service


FRONTEND

Setting a Record How the Dynamic Fuels renewable diesel plant is hitting full stride

Dynamic Fuels LLC, a 50/50 joint venture between Syntroleum Corp. and Tyson Foods Inc., achieved a signifi cant milestone in July when Syntroleum reported in its quarterly earnings report that the jointly owned renew-able diesel facility in Geismar, La., achieved record production of 5.4 million gallons for the month. While Dynamic Fuels’ Geismar plant has a maximum installed capacity of 75 MMgy, the facility is on pace to produce 65 MMgy if it demonstrates similar production rates to July.

“We have focused 100 percent of our energy since last October on bringing our fi rst-of-a-kind advanced biofuels plant up to commercial production rates,” says Syntroleum CEO Gary Roth. “Now that we have accom-plished this, we intend to focus our efforts on

optimizing the plant’s performance, enabling us to produce more and more of the drop-in renewable fuels needed to meet the growing demand for biofuels.”

The plant, which broke ground in 2008, uses Syntroleum's proprietary Bio-Synfi ning technology to produce renewable diesel from nonfood-grade animal fats produced or pro-cured by Tyson Foods, including beef tallow, pork lard, chicken fat and greases. In addition to renewable diesel, the plant is also capable of producing high-value specialty distillate chemicals that can be used in a wide variety of applications such as base oils, solvents and ink toner. —Bryan Sims

A Bullish RunBiodiesel RINs remain high

While the 2011 return of the biodiesel tax credit was expected to result in depressed RIN prices, this has not happened. “The current market for 11D4’s (2011 biodiesel RINs) is extremely bullish,” says Sam Gray, a fuel trader with Ft. Worth, Texas-based VICNRG LLC. “And, when prices start run-ning as they have recently, you must look to see how the oil majors are going to deal with such increases in compliance cost.”

According to Gray, many of the obligated parties that are short 2011 biodiesel RINs have not adequately developed a wholesale market to distribute product. “Either they develop such markets, purchase other marketers that have developed such markets, or continue to be short RINs and go to the open market to buy compli-ance,” he says.

As we near the next RFS2 compliance period, Gray says he expects RIN prices to continue to climb. “There is simply de-mand that is staying ahead of supply, and this demand is tied to mechanical buying rather than producer or blender margins,” he explains. “Plain and simple, 2011 is the year

of biodiesel. Producers are making the highest margins on record, downstream blenders are seeing wholesale biodiesel prices 30 to 40 cents under rack, and both of these events are tied to the current high RIN price. Any producer or blend-er not seeing a positive bottom line is completely out of touch. If the RIN buying from obligated parties was correlated to producer and blend margins—both at historical highs—then there may be some contraction of these margins and RIN prices would be much lower.

However, short is short, and a short squeeze can persist in this market for some time.”

Regarding the expectation that RIN pric-es would drop with the 2011 reinstatement of the biodiesel tax credit, Gray notes that the RIN prices behaved completely opposite of what he was expecting. He also says that the real shocker was seeing the overall lack of domestic infrastructure available to get biodie-sel blends to the end user. “The industry had been spoiled for too long with a splash and dash model whereby U.S. taxpayers subsidized Europeans to purchase our fuel and there was no feeling as to what other domestic blender

margins would have to be to entice market-ers to splash diesel with biodiesel,” he says. “Clearly this margin is well above the historic margins seen by petroleum diesel market-ers, and the size of this margin this year has guaranteed that infrastructure would be added to achieve necessary blends.”

The pending expiration or renewal of the biodiesel tax credit in 2012 will likely impact the price of RINs next year. Accord-ing to Gray, whether RIN values have to rise proportionally to compensate for the lack of the $1 tax credit will depend, in part, on how much value is carved out of a pound of feedstock in the event the credit vanishes. He also says it’s conceivable that RIN values could be reduced in 2012 due to the wildcard factors of biodiesel imports from Argen-tina, Malaysia and Indonesia, now that those countries have received permission to export biodiesel to the U.S. and generate RINs. Al-ternatively, Gray says if the biodiesel tax credit is reinstated for 2012, we’ll simply continue to have subsidy on top of a mandate. “This will ensure that biodiesel feedstocks continue to carve out their profi t share of volumes up to and above the RFS mandated volumes of biomass-based diesel,” he says. —Erin Voegele

UNEXPECTED: Sam Gray, a fuels trader with VICNRG LLC, says biodiesel RIN prices this year have done opposite of what he and many others expected.

PRIMED: The largest stand-alone renewable diesel plant in the U.S., Dynamic Fuels in Geismar, La., hit 5.4 million gallons of production in July.

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FRONTEND

Speeding Ahead A biodiesel-powered Ford F-250 sets land speed record

The (Bad) Case for Algae?UVA study shows algae’s high-energy, high-environmental impacts

Hajek Motorsports broke two land speed records in August with a 2011 Ford F-250 Super Duty truck fueled with biodiesel and diesel. The team used a mostly stock truck with a new 6.7-liter Power Stroke V8 and achieved a speed of 182 mph using soy-based B20 and 171.123 using regular diesel. The new records were set at the Bonneville Salt Flats. The prior land speed record for biodiesel was 130.614 mph.

According to Ford, every 6.7-liter Power Stroke turbo-diesel can run on a fuel mix containing up to 20 percent biodiesel. To prepare the truck for the event, Ford engineers teamed up with Hajek Motorsports to design and install modifi cations. Information released on the new land speed records notes that changes were made only to the top-end components of the engine. This includes the high-pressure fuel pump, fuel injectors and turbochargers for more fuel fl ow. The compression ratio was also modifi ed.

“Super Duty has always been the leader in the heavy-duty truck segment,” said Brian Rathsburg, Ford Super Duty marketing manager. “Breaking these records reinforces our leadership position, allows us to raise awareness around the truck’s biodiesel capabilities, and gives us an opportunity to reach out to enthusiasts in a fun and engaging way.” —Erin Voegele

It might be a cliché, but the old saying “it takes money to make money” still applies to algae—sort of. A research team from the Uni-versity of Virginia has completed a study, “Environmental Impacts of Algae-Derived Biodiesel and Bioelectricity for Transportation,” which indicates that although algae-based biodiesel may be more energy intense than a canola or switchgrass alternative, the end result of using algae-based energy will always be linked to the idea that it takes petroleum to make petroleum energy replacements. Unfor-tunately, that link, as the study shows, means that algae can have a greater negative impact on the environment because of the petroleum required to turn algae cultures into algae fuels. “This suggests,” the study states, “that both cultivation and conversion processes must be carefully considered to ensure the environmental viability of algae-to-energy processes.”

One of the researchers who worked on the study, Lisa Colosi, as-sistant professor of civil and environmental engineering at the univer-sity, might have put the entire study into the best perspective possible. Colosi says that it all comes down to “value-driven questions.” As she puts it, “Do we value driving long distances in SUVs that require a lot of fuel? If so, we need to look at algae so we can produce as much fuel as possible.” —Luke Geiver

INTENSE: University of Virginia researchers say algae’s footprint and energy balance may not be the panacea everyone has hoped it would be.

NEW RECORD: A 2011 Ford F-250 Super Duty fueled on soy-based B20 has set a new land speed record.

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Where will you be Feb. 5-8? If you are in the biodiesel business and you said anywhere besides the 2012 National Biodiesel Confer-ence & Expo in Orlando, you may want to reconsider. After the enor-mous turn around the industry had this year and the huge market po-tential created by the federal renewable fuel standard, it is imperative you attend the 2012 National Biodiesel Conference & Expo.

Last year at this time, we were operating in a high level of uncer-tainty with the extension of the tax credit languishing in Congress. Last year at this time, the biodiesel industry was mostly shuttered with the limited production headed towards mandated markets in just a handful of states. Last year at this time, the RFS2 had just been implemented and hadn’t had any impact on volumes or renewable identification number (RIN) values, leaving everyone to wonder how the market would react. What a difference a year can make!

Last year’s conference was, in fact, a springboard for the industry as production and market demand began to rise sharply soon after. That rise has continued ever since. The U.S. biodiesel industry is on pace for this to be a record year of production.

As the RFS2 continues to be the main federal policy support-ing the biodiesel industry, it is important to know the ins and outs of the program. Biodiesel’s role as the only U.S. EPA-designated advanced biofuel to reach commercial-scale production nationwide will become increasingly important to the industry for future growth. The National Biodiesel Board continues to work with the EPA to promote a sustainable level of growth in the biomass-based diesel program. The industry is on pace to meet the 2011 standard of 800 million gallons. NBB testified at an EPA hearing this summer on the proposal to increase the biomass-based diesel volume to 1 billion gal-lons in 2012 and almost 1.3 billion gallons in 2013.

We are confident that we can meet these production goals as an industry and will continue the job creation the industry has seen in 2011. The RFS2 was developed to wean our country off foreign oil with cleaner homegrown fuels, and we believe that for the first time the program is working as intended. Last year’s conference sessions had bits of the RFS2 riddled throughout. Two general sessions were devoted to federal policy and RINs, two track sessions hit RFS2 ba-sics and managing RINs in a commodity market, and the conference closed out with a three-hour, in-depth RFS2 workshop. While the

format may be different at the 2012 conference, the importance of the RFS2 and the markets it creates for biodiesel will be just as prevalent.

Over the years as the biodiesel industry has evolved, the conference has evolved with it. From the beginnings in 2004 in Palm Springs, where most in attendance were there to learn about this thing called biodiesel, to now, where our annual conference is ground zero for the growing business of biodiesel.

As the conference has evolved, it is no lon-ger just a place to learn the latest and greatest information affecting the biodiesel industry; it is becoming a place to do business. I have heard from many of our regular exhibitors that the deals they make at our conference in early February affects their company balance sheet for the entire year.

The National Biodiesel Conference & Expo is the only event that gathers biodiesel decision makers from across the U.S. and the world to explore governmental policy, technical issues and marketing trends in the biodiesel industry. This conference truly has developed into an annual “meeting of the minds” that includes all aspects of the supply chain from the feedstock, production and petroleum indus-tries. The biodiesel business in 2012 will be done at this year’s confer-ence. Those who are there will be two steps ahead of their competi-tors. I hope you can join us Feb. 5-8 for this can’t-miss event.

See you in Orlando!

Donnell Rehagen, Chief Operating Officer, National Biodiesel Board

2012 National Biodiesel Conference & Expo: THE biodiesel event of the year

Donnell Rehagen, Chief Operating Officer, National Biodiesel Board

Register at www.biodieselconference.org/2012 by Nov. 18 and save $100!


The National Biodiesel Board Sustainability program works to build science and awareness to ensure that biodiesel produc-tion meets today’s needs for environmental stewardship, economic prosperity and quality of life. The industry is tasked with doing this without compromising future generations’ ability to meet these needs for themselves.

NBB has recently added a few new tools to use in biodiesel sustainability awareness efforts.

In July, a new study from the University of Idaho and USDA showed an increase in biodiesel’s energy balance. The study found that for every unit of energy needed to produce biodiesel, the re-turn is 5.54 units of renewable energy.

“This study shows the clear trend that biodiesel production continues to improve when it comes to efficient use of resources,” said Don Scott, director of sustainability for NBB. “No other fuel available in the U.S. comes close to such a high energy balance.”

The U.S. DOE and USDA completed two other comprehen-sive life-cycle assessments for U.S. biodiesel production. The first in 1998 found a 3.2-to-1 energy balance. It was updated in 2009 and improved to 4.56-to-1.

“In addition to improved energy efficiency at processing facili-ties, soybean growers have accomplished greater yields with lower inputs of water and fertilizer per bushel, even as cropland has de-clined,” said Jim Duffield, USDA senior agricultural economist, who co-authored all three life-cycle analysis studies. “Biodiesel de-serves some credit for this progress—the demand it creates is help-ing to drive the new technologies that make American agriculture more efficient.”

Along with the new research data, the NBB sustainability pro-gram has added new avenues to get information out to the public. This fall, a Biodiesel Sustainability Blog was launched at www.biod-ieselsustainability.com. This forum allows NBB director of sustain-

ability Don Scott to distribute information to the online commu-nity. Studies such as the University of Idaho/USDA energy balance can be distributed online to a much broader audience and create an online dialogue on the sustainability of biodiesel.

The biodiesel sustainability blog will also be the online-home for the Next Generation Scientists for Biodiesel, another resource for NBB sustainability programs. The next generation of scientific thought leaders are gearing up to lead America’s energy efforts. Stu-dent scientists from all across the country have signed on to be a part of the initiative. The group has formed to demonstrate and grow support for biodiesel among tomorrow’s scientific leaders. To see the list of founding members and co-chairs, or to sign on to the declaration, visit the biodiesel sustainability blog.

As biodiesel production continues to increase, it is extremely important that the industry grow in a sustainable, responsible man-ner. The NBB sustainability program continues to use science and awareness to ensure that happens.

insideNBB

New vice president of federal affairs The National Biodiesel Board welcomes new Vice President of Federal Affairs,

Anne Steckel. [Ed. note: Check out the FrontEnd article on page 14 of this issue to learn more about Steckel, and look for additional coverage of the NBB federal affairs team in an upcoming issue of Biodiesel Magazine. Also, plan to attend the NBB membership meeting in Washington, D.C., Nov. 14-16.]

Biodiesel sustainability program has new tools in arsenalThe top three things responsible for the leap in biodiesel’s energy balance from 4.5:1 to 5.5:1 are:

New data from USDA and the NBB show that soybean crushing facilities and biodiesel production plants have become increasingly energy effi cient.

Soybean farmers have adopted energy-saving farm practices, such has minimum tillage.

Increases in soybean yields through new technologies.

123


insideNBB

The biodiesel industry scored a win in Texas with a change made to a motor fuel tax report-ing rule in the state. The change makes it easier for petroleum companies to take advantage of a tax exemption for blended biodiesel.

The percentage of biodiesel blended with pe-troleum diesel fuel must be disclosed on invoices, storage tanks and retail pumps. To receive the tax exemption for biodiesel, the blend percent previ-ously required reporting to the nearest tenth of a percent. The amendment allows for reporting to now be to the nearest whole percentage or whole gallon.

The change was a result of efforts by the Na-tional Biodiesel Board along with NBB member company Renewable Energy Group Inc., the Tex-as Oil and Gas Association, Valero Energy Corp., and the Texas Petroleum Marketers and Conve-nience Store Association.

“The change in the tax code language in Tex-as is a great example of cooperation among the biodiesel industry, petroleum industry and state regulators,” said NBB Chairman Gary Haer.

Haer added that many obligated parties weren’t taking advantage of the tax exemption because it was simply too complicated to track, re-cord and report the biodiesel blends to such a small percentage, and frankly impossible to enforce.

“This seems like a small change on paper but will make all the difference in real-world report-ing,” said Haer. “It makes it much easier for diesel retailers to offer biodiesel blends and will likely lead to increased markets in Texas.”

The rule change, effective Aug. 1, was posted in the Texas Register. The NBB State Government Affairs program works on biodiesel issues, both legislative and regulatory, in all 50 states.

NBB, petroleum industry team up in Texas for regulation change

The main component of the National Biodiesel Board’s newest project, the Advanced Biofuel Initiative, is a comprehensive advertis-ing campaign. The campaign includes a 30-second TV spot, radio and print media ads, and an online outreach campaign.

The online outreach campaign works to complement the other advertising forms as part of the overall campaign goal to establish biodiesel as an advanced biofuel among opinion leaders and likely de-tractors. The three main components for online outreach are Google, Facebook and targeted blog outreach.

The goals of the online outreach campaign are to drive “Likes” to the NBB Facebook fan page and visits to www.americasadvanced-biofuel.com, the home page for the Advanced Biofuel Initiative cam-paign.

During eight weeks of the campaign over the summer, Google AdWord buys resulted in 77,855 impressions and 1,596 click-throughs to the website. Facebook ad buys resulted in 20,873,103 impressions and 5,322 new “likes” on the NBB fan page. Targeted blog ads resulted in 1,438,947 impressions and 1,536 click-throughs to the website.

“To get over 22 million online impressions in just under eight weeks of ads is really impressive,” said Kaleb Little, NBB commu-nications specialist. “Online advertising is a very cost-effective way to complement a traditional advertising campaign and a great way to reach a large audience.”

One of the biggest changes as a result of the online ad cam-paign is the makeup of the NBB Facebook fan page. Before the ads began driving traffic the page had around 400 followers. It is now a

place where more than 6,000 biodiesel enthusiasts exchange infor-mation on a daily basis.

“The Facebook fan page is another opportunity for NBB to get the message out about biodiesel being America’s advanced biofuel to a constantly growing audience,” said Little. “As technology grows, it is increasingly important to have a voice in the online community.”

NBB’s Advanced Biofuel Initiative is designed as a three-year project to establish biodiesel as an advanced biofuel among educated audiences. The project began in January and is slated to run through December 2013.

NBB social media booms under Advanced Biofuel Initiative online outreach

The online outreach campaign helped drive traffi c to the Advanced Biofuels Initiative landing page and the NBB Facebook fan page.


insideNBB

A new program is mobilizing the nation’s top third-party biod-iesel experts to contribute to the biodiesel industry’s education ef-forts. The National Biodiesel Board launched the Biodiesel Am-bassadors program in August.

The Biodiesel Ambassadors is a group of volunteers inde-pendent of the biodiesel industry representing a broad array of stakeholders. The Ambassadors include fleet managers, academics, scientists and more. Its mission is to help leaders stay informed about the biodiesel industry in the context of technical, market and sustainability issues, and expand the reach of NBB’s education and outreach.

Founding members of the Biodiesel Ambassadors include:• Theresa Alleman, National Renewable Energy Laboratory.• Joe Biluck, Medford, N.J., School District.• Chris Case, Pictured Rocks National Lakeshore.• Jim Duffield, USDA.• Jim Evanoff, Yellowstone National Park. • Michael Ferrante, Massachusetts Oilheat Council. • David Harris, Harvard University. • Ramiro Lopez, City of Irving, Texas.• Robert McCormick, National Renewable Energy Laboratory.• Angela Tin, American Lung Association of the Upper Midwest. Ambassadors may be called upon to speak about biodiesel at

conferences and meetings, mentor potential users, provide input on biodiesel programs and messaging, and work within communities

or professional circles to enhance biodiesel awareness. The NBB will provide ambassadors with materials such as template Power-Point presentations, briefing documents, talking points, and exclu-sive webinar trainings/updates from NBB.

The program, led by NBB, is supported by the Biodiesel Alli-ance through the United Soybean Board.

If you would like to nominate someone for this important ef-fort, please e-mail Jenna Higgins Rose: [email protected].

Biodiesel Ambassadors program launches with top experts volunteering

NBB members guide the biodiesel industry year-roundOver the course of the year, National Biodiesel Board mem-

bers have many opportunities to set the direction of their trade as-sociation. While overall industry priorities are set once a year, there are many opportunities throughout the fiscal year to communicate with NBB leadership and staff through less formal avenues.

One platform for feedback is regional membership meetings. NBB leadership has conducted a number of meetings across the country with the goal of providing regional perspective to the na-tional issues the industry is facing and to offer an opportunity for members to provide feedback directly to NBB leadership.

“The meeting in New York offered an invaluable opportunity for one-on-one interaction with our industry’s trade association staff,” said NBB member Steven Levy, Sprague Energy. “It is nice to be able to put a face with the organization and to see that they really care about our input and local issues.”

Staff participation varies depending on key issues in a region, but often includes CEO Joe Jobe and any number of NBB pro-gram managers and staff members.

“The RFS2 and the biodiesel tax incentive are important to all producers, but the other major issues could vary greatly depend-ing on where a producer is located,” said Doug Whitehead, NBB

membership director. “If you are producing in California, your top issues could be very different than someone producing in Texas or New York. We try very hard to address those regional needs as well as the greater national issues.”

The next opportunity for participation is at the NBB board meeting Nov. 14-16 in Washington, D.C. NBB conducts its annual review and update to the organization’s Resolutions and Position Handbook. NBB members have an opportunity prior to the No-vember board meeting to review the current industry positions. The agenda at the meeting then offers time for committee consider-ations and, ultimately, a governing board vote on potential changes to existing resolutions and the adoption of new resolutions.

Members constantly provide input throughout the year to NBB through informal communications as well as with staff and board members.

“If you have a question or input, I would encourage you to pick up the phone and call the NBB office,” Whitehead added. “As a staff, we are here to serve the needs of the membership.”

Founding Biodiesel Ambassador Ramiro Lopez shows off the biodiesel fl eet he manages in Irving, Texas.


BusinessBriefs Companies, Organizations & People in the News

A new fuel terminal in the Minneapolis metro area will offer biodiesel-blended fuels. The Rosemount Clean Energies facility, which sits on a 50-acre industrial site, will offer biofuel injection blending. According to information released by the company, the new site will provide local marketers and end-users increased savings and flexibility to customize products. The terminal, which features a rail spur and 400,000 barrels of fuel storage capacity, is able to receive and ship product via rail, truck, tank and pipe-line. The site also includes insulated, heated tanks for biodiesel. Minnesota will increase its biodiesel mandate from 5 to 10 percent next spring.

A court case in Canada regarding the 2008 release of methanol by a High River, Alberta-based biodiesel producer has finally been resolved. On Aug. 16, Alberta Envi-ronment announced that the Provincial Court of Alberta has fined Western Biod-iesel Inc. $160,000 under the province’s Environmental Protection and Enhance-ment Act for releasing wastewater contain-ing methanol into the environment, and for providing false or misleading informa-tion to investigators. According to Alberta Environment, Jason Freeman, a former manager at the plant, pled guilty to direct-ing the release of contaminated wastewater and knowingly providing false or mislead-ing information to investigators. He was sentenced to four months of house arrest. A statement released by Alberta Environ-ment notes that Freeman directed workers to release the methanol-laden wastewater on Oct. 27, 2008. The flammable waste was released onto the ground at the back of Western Biodiesel’s property. The statement further explains that a welder, who was un-aware of the release, ignited the wastewa-ter the following day. While nobody was injured, Alberta Environment noted that Freeman denied that a release had occurred

when investigators arrived in response to an anonymous complaint.

Brazilian oil and gas conglomerate Petrobras, through its wholly-owned bio-fuel subsidiary Petrobras Biocombustiv-el, plans to invest $2.5 billion in increasing biodiesel and ethanol production between 2011 and 2015. The total amount is part of $4.1 billion earmarked for its total biofuel business, with its business plan calling for investments totaling approximately $224.7 billion in the next five years. Although in-creasing ethanol production will be a pri-ority for Petrobras—accounting for nearly 76 percent of the total investment in bio-fuels production in the four-year span—the company intends to invest $600 million to bolster its biodiesel and agricultural supply segments in hopes of maintaining a 25 per-cent domestic market share in the coming years. This figure, according to the com-pany, would take into account the organic growth in demand for diesel and Brazil’s B5 regulation currently in effect.

In a move that would strengthen its European oilseed pro-cessing, food manu-facturing and biodiesel capabilities, Decatur, Ill.-based agribusiness giant Archer Daniels Midland Co. signed a public tender offer to purchase a majority share in Elstar Oils S.A., a Warsaw-listed company that special-izes in the production of quality refined vegetable oils and fats for the food indus-try and biodiesel market. The purchase is subject to approval by relevant antitrust authorities. Elstar Oils, located in northern Poland, operates a rapeseed crushing, re-fining, solid-fat packaging and oil bottling facility in Czernin and a 100,000-metric-ton-per-year biodiesel facility in Malbork.

Elstar’s core business activity primarily in-volves rapeseed and other vegetable oils production where the products are directed at the domestic, business-to-business mar-ket and industry customers throughout the country. The company’s subsidiary, Biopa-liwa S.A. located in Malbork, has produced biodiesel since 2008. In that same year, the Elstar Group completed the last stage of a four-year-long investment process that resulted in a doubling of annual rapeseed crush capacity from 200,000 to 400,000 metric tons.

Biodiesel is now available via truck and rail from Renewable Energy Group Inc.’s newly acquired facility, REG Albert Lea LLC. The first truckload of biodiesel exceeded ASTM D6751 and was picked up for the Trail’s Travel Center truck stop in Albert Lea, Minn., along I-35. Customers have the option to pick up either B99 or B100 at the 30 MMgy facility. REG was the general contractor and manager for the re-fined vegetable oil feedstock biodiesel plant that began production in April 2005. With

DELIVERY ONE: Trail’s Travel Center picked up its fi rst biodiesel fi ll from REG Albert Lea, in late August.

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SHARE YOUR BUSINESS BRIEFS To be included in Business Briefs, send information (including pho-tos, illustrations or logos, if available) to: Business Briefs, Biodiesel Magazine, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You may also fax in-formation to (701) 746-5367, or e-mail it to [email protected]. Please include your name and telephone number in each correspondence.

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Sponsored by

immense multifeedstock technology and upgrade experience, REG officials noted the facility could be upgraded in order to process a wide variety of lower-cost natu-ral fats and oils including used cooking oil, inedible corn oil from ethanol production, and high free fatty acid materials.

Ontario-based biodiesel producer Biox Corp. secured funding from Farm Credit Canada to upgrade its existing 67 MMly (17.7 MMgy) biodiesel plant located in Ham-ilton, Ontario, to improve the quality of glycerin from crude to technical grade. Farm Credit Canada agreed to replace Biox’s exist-ing term debt loan with a new loan that will include approximately $4.8 million for the fi-nal design and construction costs of a stand-alone glycerin refinement facility co-located on site of the Hamilton biodiesel production plant. Biox has already completed pilot plant testing and evaluations of its glycerin refine-ment solution. The mechanical, piping and structural upgrades to the Hamilton facility are scheduled to coincide with the company’s fall semiannual maintenance shutdown. In-stallation of major equipment is expected to begin in early 2012 during its spring mainte-nance. The company is working to market its own technical-grade glycerin, which is used in a variety of industrial applications such as chemical and pharmaceutical manufacturing.

Artisan Ind-ustries is offering a vertical version of its mechani-cally aided thin film processor, the Rototherm V. The company cites three main bene-fits to using a ver-tical thin film pro-cessor as opposed to a horizontal

version. First, it minimizes floor space re-quired. Second, it’s cheaper to build and op-erate. Third is the size to which either can be built. A horizontal version can total only 200 square feet approximately, while a verti-cal unit can be built to 1,500 to 2,000 square feet. A drawback of the vertical versus the horizontal processor is the ability of the vertical design to process the concentration to a dry state. The horizontal version can completely dry the material, while the verti-cal units cannot go as far. The Rototherm V is suited for concentration, evaporation and stripping applications in the food, chemical, oleochemical, pharmaceutical and polymer industries, and the machine is able to work with high-viscosity, heat-sensitive and sol-ids-containing materials.

The prize for this year’s winner of the Google-sponsored Green Flight Chal-lenge will be $1.65 million, the largest ever for the competition. NASA will pay the bill for the prize for the competition, which re-quires participating teams to travel at least 200 miles in the air going at least 100 mph and reaching at least a 200-passenger miles-per-gallon level. A research and flight testing organization known as the CAFE Foun-dation (Comparative Aircraft Flight Effi-ciency) will conduct the event, which will include several innovative aircrafts fueled by everything from electric power to biodie-sel. In addition to the main prize, teams will also be eligible to win a biofuels prize and a special Lindbergh prize for the quietest aircraft, according to CAFE. Teams com-peting for the biofuels prize must achieve at least 80 mph and get at least 160 mpg. Two teams from California will use a biodiesel-electric hybrid engine for power, and one team from Montana will run straight biod-iesel. The only other biofuel team eligible to win the $150,000 prize, is a team from Kansas that will run ethanol.

Redwood City, Calif.-based fuel retailer Propel Fuels signed a multi-year partner-ship with Pacific Convenience and Fuels to co-locate Propel’s network of green-built, self-serve filling stations—called Clean Fuel Points—with PC&F gas stations and con-venience stores throughout the Western U.S. Propel and PC&F have identified more than 80 potential locations for Clean Fuel Points throughout PC&F’s network of 300 stations in California, Washington, Oregon and Colorado, which operate under various brands including Chevron, 76, Conoco and Circle K. Propel’s partnership with PC&F is expected to provide consumer and fleet vehicles across the Western states with greater access to biodiesel and other renewable fuels and enable both companies to accelerate their respective expansion plans.

A new study by Lux Research Inc. has found that although investment in alternative fuels remained flat last year, funding for feed-stock-agnostic and end-product flexible tech-nologies was more common. In 2010, inves-tors contributed $930 million to alternative fuel startup companies, which represented a four-year low. Conversely, investment dramatically climbed to an all-time high of $698 million for companies that are flexible in terms of feed-stock and end products. Lux Research notes that as this trend continues, startups with less flexible technologies will be forced out of the industry. To complete the study, Lux Research compiled a comprehensive database of all the investments in the alternative fuels space since 2004. The study also contrasted and compared investments that have been made by corporate investors with those made by institutional in-vestors such as private equity firms and venture capitalists.


INFRASTRUCTURE


Building OutBuilding Out for Bioheat

Northeast infrastructure developments facilitate a larger market for Bioheat BY ERIN VOEGELE

INFRASTRUCTURE

The market for biodiesel-blended heating oil is growing swiftly as oilheat dealers look for ways to green their offerings and supply a product that offers comparable economic benefits to natural gas. The lack of proper storage and blending infrastruc-ture in some Northeast markets, however, may make local oilheat deal-ers less willing and able to offer the product to customers. Fortunately, several companies in the region are taking initiative and investing in infrastructure that promises not only to serve today’s demand, but provide valuable transportation, blending and storage services once biodiesel mandates in the region ramp up, creating additional demand for the product.

Paul Nazzaro, petroleum liaison for the National Biodiesel Board, notes there are several different ways that an organization can ap-proach biodiesel blending. “Any petroleum terminal can take control of biodiesel and either blend it directly into a diesel fuel or heating oil tank and make up a blend onsite,” Nazzaro says. “Or they can go to electronic injection and handling systems to bring it in, store it in a fuel vessel, and on-demand bring a specific blend—B2 to B99.9—to the rack. That’s where we want to go as an industry. We want the electric rack blending facilities, because they, without a shadow of a doubt, will ensure the industry the most competitive, operationally sound blend.”


INFRASTRUCTURE

Nazzaro points out that electron-ic blending equipment is expensive, though. In fact, adding that type of in-frastructure to a facility to handle biod-iesel can cost anywhere from $750,000 to several million dollars. A company or organization needs to have a strong business case for making that type of investment. “The spread runs a parallel track with how much volume is going to go through the terminal,” Nazzaro says.

It is much easier to build a business case for making the investment in areas where biodiesel mandates and incen-tives have already gone into effect. Ac-cording to Nazzaro, the NBB estimates there are between 87 and 90 electronic blending facilities nationwide for biod-iesel today, which is a small minority of the roughly 1,200 core terminal loca-tions that are estimated to be located across the U.S. The vast majority of the locations that do blend biodiesel electronically are located in and around states and municipalities with biodiesel mandates in force, such as Minnesota. “Every key pipeline terminal [in Minnesota] with-out a doubt has to have biodiesel configured in their terminal,” adds Nazzaro.

The Northeast oilheat market offers some distribution chal-lenges not typical to the fuel transportation market. Specifically, a large percentage of heating oil dealers in the region is relatively small, family owned operations. “In the Northeast, we obviously have infra-

structure issues with getting good product into a series of small deal-ers,” says John Huber, president of the National Oilheat Research Alliance.

Huber points out that proper infrastructure isn’t just important from a handling point of view, but it also plays a role in ensuring fuel quality. “We have to make sure we have a quality biodiesel product that is ASTM qualified coming in, and that it’s blended uniformly,” Huber says. “That, to an extent, requires significant infrastructure improvements at the significant terminals on the East Coast. I think

BETTER BLEND: Sprague Energy’s new terminal features 132,000 gallons of bulk storage and state-of-the-art rack injection, ensuring a homogeneous blend of fuel.

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we all understand that, for the size of the market we are talking about, having infrastructure improvements made at the terminal level are critical just because they a have the ability to do quality control on the fuel coming in, know who the supplier is and have the correct type of equipment to keep the biodiesel at the right temperature, and then have it blended uniformly into the heating oil.”

One area where biodiesel infrastructure development is tak-ing place is the New York City metro region. Several organizations

have identified the business opportu-nity the city’s pending biodiesel man-date will create and have made invest-ments to serve the growing Bioheat market. Infrastructure development, however, is not limited to inline blend-ing. One company in particular has invested in rail-to-truck transloading infrastructure to more economically bring biodiesel to the region.

Rail-to-Truck TransloadingIn May, Ultra Green Energy

Services LLC celebrated the grand opening of a new biodiesel transload facility, located on a site owned by the Morristown and Erie Railway, in Whippany, N.J. The facility features rail-to-truck transloading, red dye capabilities and is designed to handle and store up to 50 railcars at a time.

According to Michael Cooper, UGES’s vice president and director of sales and marketing, profit margins

in the fuel industry are directly related to transportation costs. The new transloading facility developed by UGES has been specifically designed to enable affordable biodiesel handling and delivery. This economic benefit is due, in part, to UGES now being in the posi-tion to manage its overhead costs for biodiesel. “In Whippany, in our facility, we have a fixed cost of doing business,” Coopers says. “We have the transload costs. We have the facility that we own, and the equipment that we own. We can store our railcars there as long

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CELEBRATING SUCCESS: Attendees at the opening of Sprague Energy’s biodiesel and bioheat handing location at the Sunoco Logistics Newark Terminal in New Jersey pose by a biofuel delivery truck.

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as we need. We’ve established those costs and we know those costs, and we can sell forward using those costs whereas at many other locations in the region, there would be a higher cost to transload, a higher cost to transport and a higher overhead.”

UGES has added several pieces of equipment to the site that make it uniquely equipped to handle biodiesel. “Ultra Green has built a self-contained heating and pump-ing apparatus,” Cooper says. “We are able to

heat two railcars at a time and then those get moved to the pumping area, where trucks come in and load from the railcar.” The pump, which can itself be fueled with biod-iesel, can move 600 gallons of biodiesel per minute.

Cooper also notes the importance of a truck scale his company has added to the location. “Biodiesel has a different charac-teristic than diesel fuel” regarding expansion and contraction related to temperature, he

says. “In New York, all product is adjusted to 60 degrees for volume, and biodiesel is a different volume at 60 degrees than diesel fuel. So by using a scale, we can absolutely be sure how many gallons of product [are loaded into a truck] because the weight of the product can be calculated by the spe-cific gravity.”

According to Cooper, the vast major-ity of the fuel that flows through the sta-tion will be transported to biodiesel storage tanks at regional fuel terminals for blending. It is possible some customers may splash blend on site, he notes, adding that UGES has two more biodiesel rail-to-truck trans-loading facilities in the works and is looking for more possible infrastructure develop-ment opportunities in the Northeast region as well.

Inline BlendingWhether biodiesel enters the North-

east via rail, barge, pipeline or truck, the fuel needs to be stored and blended. In June, Sprague Energy announced the open-ing of a new biodiesel and Bioheat handling location at the Sonoco Logistics Newark Terminal in New Jersey.

“This will be the largest biodiesel blending terminal in New Jersey for all types of rack loading,” says Steven Levy, managing director of Sprague. The facility has the ability to provide multiple biodiesel and Bioheat blends for ultra-low sulfur No. 2 diesel and heating oil. In the future, the terminal will also handle ultra-low sulfur kerosene No. 1 diesel fuel. The location of-fers B2, B5, B10, and B20 blends. It features 132,000 gallons of bulk storage and utilizes state-of-the-art rack injection. According to Levy, injecting biodiesel with the automated rack blending system saves time and money while ensuring a homogeneous blend.

Biodiesel blended at the location will be sourced from a variety of producers, including those manufacturing product us-ing vegetable oil, recycled cooking oils or animal fats. According to Levy, Sprague ex-pects government and private fleets to ini-tially make up a significant portion of the demand for biodiesel-blended fuel from the


INFRASTRUCTURE

terminal. However, he also notes the loca-tion will likely be a big player in the residen-tial heating oil market.

“This particular facility is a key strate-gic point because it allows distribution of all types of distillate fuels to central and north-ern New Jersey,” Levy says. “We were al-ready selling regular distillate product out of this terminal. Now it gives us the opportuni-ty not only to have the biodiesel readily avail-able, but it also reduces our trucking costs as well as our customers’ trucking costs so they don’t have to go long distances to obtain a specific blend that they might require. New-ark and central New Jersey are very high-de-mand areas, so you will find wholesalers who will buy from Sprague. We deliver to end us-ers but we also have our wholesale customer base. It just opens up a whole new world for them.” Like UGES, Sprague is looking to expand its biodiesel infrastructure. “We are looking at many other terminals,” Levy says.

The New York metro area and its sur-rounding regions are not, however, the only markets in the Northeast where biodiesel infrastructure is being developed. At least one company in Vermont recently made an infrastructure investment.

Bourne Energy was recently awarded a $40,000 grant through the Vermont Sustain-able Jobs Fund to support the development of injection blending infrastructure for biod-iesel that will allow the company to supply B5, B10, B20 and B99.9 blends of fuel.

In an effort to utilize locally sourced products, the company’s president Peter Bourne noted the facility will blend biodie-sel manufactured in New Hampshire using recycled cooking oil. “We try to get our sup-plies as local as we can to support the local economy, and also for the carbon footprint, so long as it is financially practical,” Bourne says.

Prior to the addition of the blending infrastructure, Bourne says biodiesel was splash blended by his company’s wholesaler. “We were having to buy it preblended at a B2 or B5,” Bourne says. “Now we’ll be able to blend it to whatever the customer wants or whatever we want to put out there to the consumer.”

Matt Cota, executive director of the Vermont Fuel Dealers Association, also notes that the Vermont Sustainable Jobs Fund has been working with farmers who are growing oilseed crops to help them es-tablish small-scale, on-farm biodiesel pro-duction. “Vermont fuel dealers envision a time in the future were we can produce much of this product on the farm locally,” Cota says. “Vermont is a rural state and the idea that farmers are diversifying, and the

family run fuel dealers are also diversifying, and that at some point in the future the fuel dealers could pick up their fuel on the farm and deliver it throughout their town, is a wonderful vision for sustainability.”

Author: Erin Voegele

Associate Editor, Biodiesel Magazine(701) 540-6986

[email protected]


DISTRIBUTION

Brian Roberts, president of the Cowichan Bio-Diesel Cooperative, shows attendees of the Collective Biofuels Conference in Duncan, Vancouver Island, British Columbia, how the co-op’s new cardlock biodiesel pump works.

PHOTO: BRYAN SIMS, BBI INTERNATIONAL


Selling direct can improve a small-scale producer’s bottom lineBY BRYAN SIMS

DISTRIBUTION

Streamlining Downstream Delivery


Economically, the prospect of producing biodiesel on a small or community scale certainly comes with its chal-lenges. Aside from producing biodie-sel, however, producers are faced with un-predictable swings in feedstock price and availability as well as fees associated with equipment maintenance, transportation, administration, permitting and numerous other ancillary expenses. Not only can up-stream and midstream costs cut into the bottom line of a small producer, but down-stream costs can equally make or break an operation if an effective distribution model isn’t in place to support growth and de-velopment of the business. Because the operation is demand-driven, an increasing number of small-scale biodiesel producers have employed, or are at least considering, unique distribution approaches that allow for speedy, cost-effective delivery of B100 bulk or blended product to customers—sometimes without relying on brokers or distributors. Failing to control or at least possess some ownership of downstream distribution of product could translate into

biodiesel producers being at the mercy of the feedstock suppliers.

Typically, biodiesel is picked up at a fa-cility by a distribution company, blended at a rack with a computerized system, and then brokered and distributed to local retail fuel-ing stations where pockets of supply might be limited. When biodiesel is not offered at a rack, fuel distributors that want to offer it typically splash blend it themselves and maintain their own storage equipment.

While rack blending biodiesel might offer significant benefits to fuel distributors and potential consumers because of the $1-per-gallon blenders tax credit in place, effectively employing the direct sales ap-proach might carry with it several advan-tages, depending on a producer’s resources and cash flow situation, according to Todd Hill, president and founder of Promethean Biofuels Co-op Corp., a 2.1 MMgy biod-iesel facility in Temecula, Calif., that uses waste vegetable oil as feedstock. While Promethean Biofuels is currently relying on distributors to get its biodiesel out to cus-tomers, Hill says he would like to employ the direct sales approach.

One of the biggest advantages about the idea of a direct marketing approach for blended product or B100, according to Hill, is that it can accelerate a producer’s ability to get product out more rapidly to generate revenue. Additionally, direct distribution, he adds, also allows a producer to customize the scale of transactions and the type of customer interaction much better than if a producer relied on distributors.

“I think that it’s actually more impor-tant for a small producer to go direct than a large producer, because a small producer is going to take longer to build up critical mass,” Hill tells Biodiesel Magazine. “It just takes longer to do that. It also gives you that ability to call your local mayor to get people who will come and they’re going to have a relationship with you and it might get you a little bit more margin in the end. A relation-ship is an opportunity to build a brand.”

Some producers, like Midlands Biofu-els LLC, a 300,000-gallon-per-year biodie-sel plant in Winnsboro, S.C., prefer to work with third-party distributors to deliver their blended fuel to municipalities and small businesses. In addition to relying on distrib-

DISTRIBUTION

LOADING UP: A tanker truck fi lls up at Promethean Biofuels’ 2.1 MMgy facility in Temecula, Calif., for local distribution.

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utors, however, Midlands Biofuels also offers B100 on-site where customers can fill their tanks. While relying on distributors might be considered burdensome for some, co-founder Brandon Spence finds that working with a distributor allows his company to focus strictly on biodiesel production while it streamlines the billing pro-cess.

“Another advantage of working with a local distributor for us,” Spence says, “is that we get on a good production schedule. Our production schedule is based on a predetermined amount that’s usually on a weekly basis.”

According to Hill, a direct distribution approach could be an advantageous proposition for those who are, or are considering, delving into blending biodiesel with diesel fuel in order to mon-etize RINs and other state incentives. Doing so, he says, might give a producer more ownership of the end product rather than passing on the incentive to the blender at a rack or distribution terminal.

“If you want to commoditize your RINs, that is not a B99 solution—that’s a B80 solution,” Hill says, cautioning that small

producers should evaluate appropriate ad-ministrative resources, personnel and funding in order to maintain accurate RFS2 reporting requirements before considering a direct sales approach for blended product. “From that perspective, you also need to perhaps have some metering equipment, depending on where you are, to make sure you can guaran-tee that when you say it’s B80, it really is B80. Regardless, you still need to have a process in place that allows you to say that you’re de-livering a known quantity of biodiesel into a known quantity of diesel fuel and that there’s reasonable assurance that we’ve got good mixing. You’ve got to keep that inventory separately.”

For producers like Cowichan Bio-Diesel Co-op, a member-owned small-scale producer

located in Duncan, Vancouver Island, British Columbia, deciding on the best model to market and distribute biodiesel from its 365,000-li-ter-per-year (96,000-gallon-per-year) production facility was never a question, according to President Brian Roberts. For six years, the member cooperative, which officially started up its Bing’s Creek Bio-fuels Facility on the site of the Cowichan Valley Regional District Solid Waste Management facility in July, had been supplying biod-iesel from waste vegetable oil to its members in jugs through local farmers’ markets. In response to increased demand for biodiesel, the company now offers B100 to its members at a cardlock fuel pump. Cowichan Bio-Diesel sold about 5,000 liters at the cardlock pump since it opened in November 2010, and “we could’ve sold more,” says Roberts. While selling biodiesel directly to its member-custom-ers was a necessary—and not an optional—approach for Cowichan Bio-Diesel, Roberts says that it serves as a springboard for expand-ing customer relationships outside its core members.

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DIRECT APPROACH: Todd Hill, president and co-founder of Promethean Biofuels, says, even though Promethean is not there yet, a direct marketing approach can accelerate a producer’s ability to move product and generate revenue.


DISTRIBUTION

“The cardlock itself is probably a more expensive option because we’re focused on trying to distribute to a number of smaller consumers of the product,” Roberts says, “but now that we’re growing, we’re starting to look at fleets more and they’re starting

to approach us.” He adds that the barrier for biodiesel entering a given community or municipality is much less when selling direct compared to relying on distributors to sup-ply its customer base.

“A direct marketed community coop-

erative is a really good vehicle for being able to develop something like what we have,” Roberts adds. “It kind of provides a neat cocoon to work within and it’s kind of a little forgiving along the way.”

Straight from the FactorySirona Fuels, a 1.5 MMgy plant in Oak-

land, Calif., is offering B99 to its customers straight out of pumps installed on the prem-ises of its production facility. It’s a model that’s working after previously relying on selling biodiesel to distributors and retailers for two years, according to President Paul Lacourciere. By selling biodiesel direct, La-courciere says he’s been able to offer biodie-sel cheaper than what’s being sold at a regular retail station. Employing this approach, he adds, mitigates the core pressure points that come with incoming feedstock costs and fluctuating diesel prices downstream. La-courciere says Sirona Fuels monetizes RINs and also began monetizing California Low Carbon Fuel credits.

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PRODUCTION FOCUSED: Midlands Biofuels founders “Bio” Joe Renwick, left, and Brandon Spence say working with local distributors allows them to focus on fuel production and streamlining billing.

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“I’ve saved my customers anywhere from $500 to $5,000 a month,” Lacourciere says, adding that his company was able to sell 1,000 gallons to new customers in just the first 10 days of offering biodiesel at its plant.

“That’s a huge win for my customers,” he says, “and that’s a huge win for the en-vironment because they’re going over to an environmentally friendly fuel—and that’s a win for me because I can get a price that’s at least reasonably profitable, at least for making margin, and [I can] stay in business that way.”

Like many small-scale producers, the challenge is to maintain equilibrium when it comes to supply of biodiesel relative to demand for customers. While Sirona Fuels is capable of producing 80,000 to 100,000 gallons each month, demand is outstripping supply, according to Lacourciere,

“I’ve got orders for probably more than 20,000 gallons of fuel that I can’t sup-ply,” he says.

While local biodiesel production may carry with it inherent benefits in avoiding transportation costs, selling direct from the production facility, Lacourciere says, has enabled his company to improve the mar-gin while selling biodiesel for significantly less compared to what it would otherwise be priced at a retail station.

“My retail price of biodiesel tends to run anywhere from 10 cents to 70 cents be-low diesel prices,” Lacourciere says, adding that selling blended biodiesel straight from the site of the production plant could, or should, become more commonplace in the industry.

“From a business model standpoint, I actually think it’s the best way to go because by putting distributed energy production fa-cilities in your community, you keep more dollars in your community,” Lacourciere

says. “The margins are better for the lo-cal producer, and the prices are better for the suppliers and for the fuel customers. By having local production, we keep more money in the community and everyone can be enriched by that.”

Author: Bryan SimsAssociate Editor, Biodiesel Magazine


ON-SITE FUELING: Sirona Fuels President Paul Lacourciere says selling direct to customers from its on-site pump reduces customer costs by $500 to $5,000 a month.

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Can an intricate modeling system solve the problems of getting biofuels to the pump?BY LUKE GEIVER

LOGISTICS

The Complexities of Biofuels

Logistics


LOGISTICS

The difference between run-ning a biodiesel blend in the 850-unit fleet of Athens-Clarke County, Ga., and not, all came down to roughly the distance of a marathon, or 26.6 miles. In 2006, Steve Hinsch, fleet management superintendent for the Athens-Clarke County fleet, began run-ning a B5 blend as part of a pilot pro-gram, eventually increasing the blend to B10. “This program went well, and with very few fueling issues for approximately two years,” Hinsch says. In 2008, however, after two successful years running biod-iesel blends in his fleet through that pilot program, Hinsch was forced to stop using biodiesel. What happened is a reminder that, for all of biodiesel's production ef-ficiencies, novel catalysts, feedstock pre-treatment and tax credits, there is always one overriding factor that can dwarf ev-erything else. “The cost then became pro-hibitive,” Hinsch says, “when our local vendor dropped biodiesel due to lack of adequate sales.”

The cost Hinsch refers to wasn’t the price of biodiesel, though, it was the cost to transport the biodiesel he had purchased for his fleet from the production site to his fueling station at fleet headquarters. “Our closest vendor was then about 80 miles,” Hinsch explains, and because of the addi-tional costs related to the added transport distance, the Athens-Clarke County fleet stopped using biodiesel.

Luckily, Hinsch’s fleet, which consists of a multitude of vehicles and equipment including trailers, concrete saws, large trucks and heavy equipment, is running biodiesel again, however, thanks to Down to Earth Energy, a biodiesel producer that just recently came online. More important-ly, this producer is only about 26.6 miles away. Hinsch began working with the Uni-versity of Georgia on a grant to research and use certain diesel particulate filters, and, as Hinsch says, one afternoon at the university, the operators of the Down to Earth Energy facility “happened to be in a meeting that preceded our meetings.” In-troductions were made, Hinsch says, and he

later met with them to gather preliminary information on their operation. “I was im-mediately taken by their story, vision and passion,” he explains, but even more so, the dollars and distance were right. Now the two are working together.

While the story of Athens-Clarke’s biodiesel usage may have ended well, thanks to Down to Earth Energy, there are many similar fleets throughout the U.S. that continue to face the same prob-lem Hinsch did: trying to make the price of biofuels transport and logistical issues make sense when it comes time to fill out the yearly budget. Nearly 170 miles away from Hinsch and the Down to Earth Ener-gy facility in Georgia, Professor Jae-Dong Hong of South Carolina State University and his team are getting closer to having the information they need to create a tool that will help fleet managers calculate the costs of biofuels logistics—and include more biodiesel in their budgets—using the most “regret-free” biofuels logistics plans.

The Cost of Getting Biofuel to the Pump

Hong, an industrial and electrical en-gineering professor at SCSU, will be joined by other economics professors at the uni-versity to conduct the three-year study, which will be funded by a $449,921 grant awarded by the USDA’s National Institute for Food and Agriculture. The goal of the research is linked to the larger intent of the James E. Clyburn University Transporta-tion Center at SCSU, which is to establish practical and economical ways to reduce logistics costs of transporting fuels.

Hong estimates that nearly 25 per-cent of the cost to make biofuel is related to transportation, which he says must be minimized. Yaunchang Xie, a member of Hong’s team, says that biofuels “get a lot of subsidies” that ultimately help lower the cost of biofuels used today.

In recent years, Hong explains, a num-ber of bioenergy studies have been con-ducted, most of which focus on either the optimization of bioenergy production facility location or feedstock collection, storage or transport operations. Hong’s

work sets out to combine the different areas, starting with the investigation of how a biofuels logistics network could be integrated with optimal feedstock areas, collection centers, blending stations, trans-portation availability and possible inven-tory quantity strategies.

“In this research,” he says, “we will develop a novel formulation for an in-tegrated, robust design of biomass and biofuels logistics network. The model,” he adds, “will be able to capture location, transportation and inventory decisions in a multi-period planning setting. This model will also be able to consider the uncertain-ties in biomass supply.”

Although the task to complete the network design might seem daunting, the end result, according to Hong, could be significant. “Our model will be instru-mental not only in producing solutions to biomass and biofuels logistics problems, but also in developing and testing various bioenergy policies such as biomass pric-ing, supply-demand matching and various incentive programs to encourage farmers’ participation.”

When Biodiesel Magazine first spoke with Hong, he was on the campus of Texas A&M working on this research with another member of the team, Halit Uster, an optimization model researcher and in-dustrial and systems engineering associate professor.

Uster will help Hong develop a bio-fuels logistics model that will feature five major components. The first major feature will focus on the uncertainties involved in biofuels logistics modeling, including the uncertainties in farmer participation and biomass yield, establishing a number to quantify the upper and lower limits of par-ticipation levels and biomass yields.

The second area of the network model will essentially model the amount of regret a certain logistical model or ap-proach would bring the user, or, in other words, how successful or unsuccessful a certain approach would be. The regret is defined as the difference between the op-timum objective value of a scenario and the objective value for the robust solution,


LOGISTICS

according to Hong. To find the level of regret, Hong says, his team will not only take into account the biofuels being trans-ported, the inventory and storage cost of that particular fuel, but more importantly, the model will look at how those types of factors change from situation to situation.

The third focal point of Hong’s re-search involves creating a model that can “handle” multiple periods of time. The model, he explains, could potentially gen-erate a robust solution for each period of time. “The solution includes robust as-signment of farms and collection centers, vehicle routing and inventory decisions for each period.” The model can be re-optimized when accurate and reliable pa-rameter values such as biomass yield for a future year (or period) is made available. “Our model will be general enough to cap-ture this re-optimization as a special case,” he explains, and in doing so, “it will ensure that many important constraints, such as storage limitations of the collection cen-ters…are not violated.”

Fourth, the modeling will take into consideration the optimization of opera-tional decisions such as inventory control and vehicle routing for feedstock collec-tion and the transportation of biofuel.

And, most importantly, the fifth area of focus will look to design, or minimize, total logistics costs (TLC). Those costs, he says, consist of total fixed costs of locat-ing facilities used for collection of feed-stock, production sites or even blending facilities, along with transportation costs of both feedstock and biofuels.

Although the research sounds com-plex given the modeling strategy and the various factors the team hopes to include in their work, the end result isn’t only about how to potentially improve current logistical problems. Both Xie and Hong voiced their belief that the model could help future investment in bioenergy based on the predictive capabilities and logistical problem-solving ability of the research. “If producing or selling biofuels is not profit-able,” Xie says, “the private sector will not come in.” Xie shouldn’t have anything to worry about though, according to Hong.

JatroDiesel, Inc.845 North Main St., Miamisburg, OH 45342Phone: (937) 847-8050 ext. 201 | www.jatrodiesel.com | [email protected]

SIMPLICITYTurnkey Biodiesel Technology

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EXPERTISEProcess (catalyst free and with catalyst), Distillation columns, Automation

COMPATIBILITY 0% to 100% FFA

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RANGETraditional process (Esterification and Transesterification) to Advanced process (catalyst free)

“The mathematical model can be used as a decision-making tool for investors in the biofuels industry,” he says, “as it will esti-mate the real cost of the business.”

The biofuels logistics study will take a few years, and if the complex modeling system does what they say it will, it could help people like Hinsch understand how the logistics costs, inventory strategies and policy decisions all factor in to the use of biodiesel in his fleet. Until then, Hinsch has his own thoughts on how the difficul-ties of using biodiesel and the link to get-ting the fuel from point A to point B, so another user can burn that fuel to get from point C to point D, can be overcome. “As of now,” he explains, “we are paying the same cost of biodiesel as we were for our ultra-low sulfur diesel. This was part of our agreement with our local biodiesel produc-er. In working with biodiesel and the intri-cacies of budgets and my customer base, I would first say that the product has to

be well developed, and the price has to be right.” Then, he says, “You have to coddle the customers” because most people in his position are skeptics.

When Hong and his team finish the research, the findings will most likely con-tinue to be on display at the NIFA Water-front Center where the proposal for the work is now. Even though everyone in the entire biofuels landscape may welcome a predictive modeling system that includes an exhaustive list of factors, all of which will be calculated to show which approach will present the least risk—regret—there might be no need for any of it. Unless someone disagrees with Hinsch’s ways to help expand biodiesel use.

Author: Luke GeiverAssociate Editor, Biodiesel Magazine



Biodiesel Reaction and Separation TechnologyThe chemistry and engineering behind the biodiesel process BY CHRISTINA BORGESE AND MARC PRIVITERA

PROCESS

CONTRIBUTION

The claims and statements made in this article belong exclusively to the author(s) and do not necessarily refl ect the

views of Biodiesel Magazine or its advertisers. All questions pertaining to this article should be directed to the author(s).

Biodiesel reaction and sepa-ration methods range from the time-honored large batch tanks with long residence time reactions and water washes for product separation to intensifi-cation, enzymatic, and super-critical reactions coupled with distillation and mechanical separation methods. Selecting the best reaction and separation method for the process depends upon the feedstock charac-terization, a process we covered in the August

issue of Biodiesel Magazine. This installment highlights the specific drivers behind selecting the best reaction and separation techniques while considering process throughput, overall conversion efficiency and plant economics.

The biodiesel reactions have three ele-ments for driving the conversion of the feed-stock to the finished product: mixing, molar ratio, and residence time. In simple terms, you have to present the reagent molecules with the opportunity, enough energy and enough time to react. It’s kind of like a seventh-grade school dance.

Mixing is the first operation to con-sider. Mixing drives the reagent interface surface area. The interface surface area is increased by decreasing through shear the dispersed phase liquid droplet size to the smallest size possible. In the usual batch re-actor, the mixing is motivated by an agitator. Many high-shear flow strategies have been successfully employed to intensify phase interaction. The number of molecules mo-tivated to react is driven by the surface area of the two immiscible phases. The smaller liquid droplet sizes will create a greater sur-


PROCESS

face area for the phase interface. The proper application goes back to the feedstock and what is being carried forward through the reaction. For example, clean, dry feedstock (the classic 1 percent MIU, or moisture, impurities and unsa-ponifiables, and 1 per-cent free fatty acid, or FFA, feedstock) reacts easily in a batch given the accepted residence time. Feedstocks con-taining phospholip-ids, high moisture, high FFA, and other contaminants may be more difficult to sepa-rate than clean and dry feedstock. It has been demonstrated, when employing high-shear and external energy methods, that over shearing can form too small a liquid drop-let size and create an

emulsion that is very difficult to separate. The real money is in the ability shear the phases to the optimum liquid droplet size that maximizes reaction conversion but minimizes the post reaction product sepa-ration effort. In-line high-shear mixers, high-shear orifices, high-pressure pumps, ultrasonic cavitation, and ultrasonic intensi-fication methods have all been employed in this service to varying degrees of success.

Mixing energy is not enough to provide

economic conversion efficiencies. Catalytic energy is required. The classic way to add this energy is through the addition of caus-tic. Recently, heat and pressure energy has been demonstrated in a supercritical cata-lytic reactor. The supercritical reactor has the added advantage of having the reagents in a single miscible phase as the polarity of the alcohol is minimized in the supercritical state allowing the oil and water to mix with infinite surface area, and separated in later distillation steps.

Molar ratio is the amount of one re-agent compared to another, sort of like the boy-girl ratio at the dance. Increas-ing the molar ratio of the alcohol to the triglyceride/FFA in the reaction increases the probability of the alcohol’s availability for reaction. Only the stoichiometric limit of alcohol will be consumed in the reac-tion. The excess alcohol drives the reac-tion towards the product side of the reac-tion equation as per LeChatlier’s Principle. The trick is to minimize the excess alcohol needed to attain the desired conversion. Due to economic and environmental driv-ers, alcohols should be recovered and the post reaction alcohol separation required is an energy hog. Most alcohols have boil-ing points in the mid-100 to 200 degrees Fahrenheit range. The energy to boil them is high and the recovery of this heat in the cooling condensation is not favorable. Al-cohol will distribute itself in both the wa-ter and the glycerol byproduct phases. The glycerol will also have a higher solubility in the oil phase in the presence of the alco-hol and higher concentrations of alcohol at this step will leave a greater amount of glycerol to be removed from the fuel in the downstream refining operations.

The residence time is dependent upon

the reaction kinetics and is one of the key driving economic factors in any chemical process. The slower the reaction, the larger the vessels or the slower the flow rate of the system. In batch reactors, residence time is defined as the time it takes the reagents to complete conversion into products. In flow reactors, this is described as the space time or space velocity. In any case, the flow rate, reaction time and reactor volumes are the related physical principles. Backyard biod-iesel systems can have residence times on the order of days. Common commercial system residence times are on the order of hours, whereas a supercritical plug flow re-actor could have a space time on the order of seconds. Determining the reaction rate is critical to the economics, and reaction rate optimization using various catalysts will re-main an active research topical area for years to come.

Transesterification proceeds in three steps. Breaking up the triglyceride molecule into diglycerides is an easy first step thermo-dynamically and kinetically. The statistically deterministic reaction intermediate ratios then drive the reaction rate of the second step, which is the diglyceride degradation to monoglycerides. The monoglyceride to FAME is the slowest step in the reaction chain as the linear nature of the monoglyc-eride contributes to the carbon backbone stability. A free fatty acid converts more readily than a monoglyceride at higher tem-perature and pressures so the reaction strat-egy is a balance between FFA and available catalyst versus the use of just temperature and pressure without any homogeneous catalyst. This reaction progression difficulty is also the reason many low-tech reactor systems have such a hard time in the final refinement of the fuel to meet the ASTM

INTENSIFICATION: Co-founding engineer of PreProcess Inc., Christina Borgese, says the ability to shear the phases to the optimum liquid droplet size that maximizes reaction conversion, but minimizes post reaction product separation effort, is where the real money lies.

RESEARCH FOCUS: Marc Privitera, co-founding engineer of PreProcess Inc., says reaction rate optimization using various catalysts will remain an active research topical area for years to come.

The trick is to minimize the excess alcohol needed to attain the desired conversion. Due to economic and environmental drivers, alcohols should be recovered, and the post reaction alcohol separation required is an energy hog.


PROCESS

standards. Many biodiesel plants have great conversion to 95 percent but getting the final conversion is difficult and the separa-tion techniques needed to remove the unre-acted monos have many economic penalties. Many times the monos are hidden in the oil/glycerin separation step and, in that case, it may appear to the producer that the reac-tion is fine, but, in truth, monoglycerides are emulsifying agents that inhibit the dis-engagement of the FAME from the unre-acted reagents and undesirable byproducts. A strategy of using a two-step reaction to optimize the reaction conditions for the tough third mono-to-FAME step has been employed using many methods. Not to be mistaken with the acid base two-step that is commonly employed to convert high FFA material, this two-step reaction first sepa-rates the base catalyzed product from the water and glycerin and then the remaining fuel, glycerin, and triolein is finished in a sec-ond series reactor.

Conversion reactions are affected by the feedstocks and the impurities that are present in the reactor. Water will reverse the transesterification reaction, but water for-mation is unavoidable in the high-FFA reac-tion as it is a byproduct of the reaction. It has been demonstrated that rapid removal of any formed moisture will increase yield from the transesterification reaction. In high-FFA reactions, one technique to se-quester the water back from reaction is in-troducing alcohol in excess. The high molar ratio alcohol blocks the water from reacting with the oil due to statistical probabilities. Alcohol-to-oil molar ratios of 50:1 have produced high-yield, short residence time reaction performance, but distillation of the 50:1 alcohol to the purity required for its re-use is usually detrimental to the economics.

Many operations have learned how to sneak in 5 to 6 percent FFA feedstocks for reaction. One key factor in single digit FFA feedstock conversion is ensuring that the re-agents are bone dry. A centrifuge separation

or another dehydration method could help alleviate the problem of moisture-laden feedstock. In one application, fats, oil and grease (FOG) was separated using common pumper techniques where the feedstock oil was dewatered by conventional low-tem-perature methods; however, the coagulation polymers and the various associated chemi-cals in those processes need to be consid-ered prior to introduction to the reaction system.

Water is completely miscible in most al-cohols used with biodiesel production. The water formed in the transesterification will fully associate with the alcohol, requiring distillation of the alcohol for its recovery and reuse.

Pervaporation separation techniques have been developed to reduce the energy requirements of the distillation chemical methods. Pervaporation will not replace the needed distillations, but implementation could reduce the energy required. Gross dehydration of the alcohol can be accom-plished by pervaporation with final distil-lation returning the alcohol to the usable dehydrated state for reuse in the transesteri-fication reaction. This strategy can fit well with smaller scale, community-based decen-tralized biodiesel efforts.

While water is an unavoidable byprod-uct of high-FFA feedstocks, sulfur is an un-avoidable contaminant. The classic method to remove sulfur from petroleum feedstocks is through the use of hydrogen. In a large-scale refinery, this technique can be sup-ported. On the local-scale, sulfur can be re-moved but it requires a series of steps and careful processing techniques while tracking the sulfur disposition. Sulfur can exist in multiple species. Usually most sulfur species are soluble in the biodiesel fraction of any separation. Water washes and cold surface absorbent techniques will remove a fraction of the sulfur, but not enough when employ-ing sulfur-laden feedstocks. Sulfur removal is definitely an area for an integrated process

system strategy as it may take multiple steps or multiple unit operations to get the sulfur to the needed finished product specification. Sulfur species are split in a range of light, mid, or heavy compounds. The sulfur is usually most concentrated in light and heavy fractions, working to the advantage in con-sidering distillation. One technique that has been successful in removing sulfur is to have a series of distillation steps for the finished fuel. Careful control of the column pres-sure and temperature will allow the removal of the lights in the first distillation step and will leave the heavies behind in the second distillation step. Fuel distillation increases energy consumption, but the refining also allows removal of various residues such as unreacted glycerides and minerals that often prevent the fuel from meeting the ASTM D6751 specification.

The sulfur specifications for both ASTM D6751 and ASTM D975 fuel are 15 ppm. A stretch goal to chase for overall fa-vorable biofuels economics might be to pro-duce a specialized diesel fuel that can meet a 1 ppm sulfur level. As with most specialty chemicals, sulfur that meets a 1 ppm stan-dard commands premium pricing. Oilseed feedstock has lower sulfur levels, so most op-erations have no problem hitting the 15 ppm specification. Feedstock that has a high-FFA percentage typically also has a high sulfur level. This is not the case everywhere, but high-FFA material is degraded trigycerides and many of these feedstock sources come from materials that pick up a wide variety of sulfur-containing degradation products. As more high-FFA waste feedstocks have been introduced into systems through blending or complex reaction techniques, sulfur has become a rising concern.

Authors: Christina Borgese, Marc PriviteraFounding Engineers, PreProcess Inc.

(949) 201-6041 [email protected]

The Liquid Controls Group (LCG) provides a simple, straightforward solution to the perfect biodiesel blend—Toptech Systems’ MultiLoad load rack controllers, Corken pumps, Liquid Controls positive displacement, and Sponsler turbine flowmeters. Toptech Systems’ MultiLoad II’s new 2-meter internal I/O board provides just the right amount of control for biodiesel blends. And selecting blending recipes is easy. With the MultiLoad II’s full alphanumeric keypad and intuitive user interface, you can access the correct recipe in seconds. Toptech’s family of MultiLoad products are available in Division I and Division II enclosures, so you can choose the best load rack control system at the best price. The user-friendly performance and versatility of Toptech Systems’ controls is guaranteed on the rock-solid foundation of Corken pumps and Liquid Controls positive displacement and Sponsler turbine flowmeters. The companies of LCG are constantly working to create custody transfer solutions, like simple biodiesel blending, that ensure your success, making your investments and your efforts worth more.

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Documents

October 2011 Biodiesel Magazine